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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, 1996 Commission File Number 1-6986
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, 1997 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 $20.00 per
share reported by the Wall Street Journal, was $835,481,660.
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 29, 1997--PART III.
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<PAGE>
TABLE OF CONTENTS
Page
----
GLOSSARY............................................................... iv
PART I
ITEM 1. BUSINESS........................................................ 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........................................ 7
Service Area and Customers.................................. 7
Natural Gas Supply.......................................... 7
Natural Gas Sales........................................... 8
RATES AND REGULATION.......................................... 9
Proposed Rulemaking......................................... 9
Fossil-Fueled Plant Decommissioning Costs................... 9
PGAC Continuation Filing.................................... 9
FPPCAC...................................................... 10
Public Regulation Commission................................ 10
ENVIRONMENTAL FACTORS......................................... 10
ITEM 2. PROPERTIES...................................................... 12
ELECTRIC...................................................... 12
Fossil-Fueled Plants........................................ 12
Nuclear Plant............................................... 13
Other Electric Properties................................... 15
NATURAL GAS................................................... 15
OTHER INFORMATION............................................. 15
ITEM 3. LEGAL PROCEEDINGS............................................... 16
PVNGS WATER SUPPLY LITIGATION................................. 16
SAN JUAN RIVER ADJUDICATION................................... 16
PVNGS PROPERTY TAXES.......................................... 16
OTHER PROCEEDINGS............................................. 17
Federal Deposit Insurance Corporation ("FDIC") Litigation... 17
Republic Savings Bank ("RSB") Litigation.................... 18
Four Corners................................................ 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 19
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE COMPANY..................... 20
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS........................................... 22
ITEM 6. SELECTED FINANCIAL DATA......................................... 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................... 24
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-23
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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
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
FASB.................................... Financial Accounting Standards Board
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
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
SEC..................................... Securities and Exchange Commission
SJCC.................................... San Juan Coal Company
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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
USBR.................................... United States Bureau of Reclamation
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 is
pursuing 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 -- Competitive Strategy").
The total population of the area served by one or more of the Company's
utility services is estimated to be approximately 1.3 million, of which 53% live
in the greater Albuquerque area.
For the year ended December 31, 1996, the Company derived 73.1% of its
operating revenues from electric operations, 25.7% from natural gas operations
and 1.2% from energy services operations.
As of December 31, 1996, the Company employed 2,739 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, 1996, approximately 342,000 retail electric customers
were served by the Company, the largest of which accounted for approximately
3.5% of the Company's total electric revenues for the year ended December 31,
1996.
The Company holds 22 long-term, non-exclusive franchise agreements for
its electric retail operations, expiring between June 1997 and November 2028.
The City of Albuquerque (the "City") franchise expired in early 1992. Customers
in the area covered by the expired franchise represent approximately 43.0% of
the Company's 1996 total electric operating revenues, and no other franchise
area represents more than 6.6%. These franchises are agreements that provide the
Company access to public rights-of-way for placement of the Company's electric
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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.
(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 1992 through 1996, retail KWh sales have grown at a
compound annual rate of approximately 4.6%. 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)
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Retail................................. $507,821 $485,568 $506,286 $471,099 $455,387
Firm-requirements wholesale............ $ 12,359 $ 20,282 $ 22,296 $ 18,468 $ 20,173
Other contracted off-system sales...... $ 86,689 $ 43,158+ $ 54,862+ $ 56,214+ $ 62,348
Economy energy sales................... $ 22,281 $ 17,509+ $ 19,663+ $ 25,213+ $ 40,770
</TABLE>
<TABLE>
<CAPTION>
ELECTRIC SALES BY MARKET
(Megawatt hours)
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail............................. 6,406,296 6,029,365 5,953,151 5,446,788 5,358,246
Firm-requirements wholesale........ 282,534 447,629 489,182 342,137 322,177
Other contracted off-system
sales........................... 2,928,321 594,367 1,403,480 1,450,966 1,198,250
Economy energy sales............... 1,364,365 1,548,517 1,469,271 1,582,113 2,164,991
- -----------
</TABLE>
+ 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)
1996 1995 1994 1993 1992
--------- --------- --------- --------- --------
Summer............... 1,217 1,247 1,189 1,104 1,053
Winter............... 1,111 1,076 1,040 982 992
- -----------
* System peak demand relates to retail and firm-requirements wholesale
customers only.
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During 1996 and 1995, the Company's sales in the off-system markets
accounted for approximately 39.1% and 24.9%, respectively, of its total KWh
sales and approximately 17.3% and 11.8% (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 1996, 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 the 1985 power purchase
agreement were unjust, unreasonable and unduly discriminatory. SDG&E requested
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 result in 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.
On March 18, 1996, SDG&E filed a second complaint with the FERC against
the Company, again alleging that charges under the agreement were unjust,
unreasonable and unduly discriminatory. SDG&E is again requesting that the FERC
investigate charges under the agreement. The Company responded to the second
complaint on April 26, 1996. The relief under the second complaint is similar to
that requested under the first complaint. The refund period requested in the
first complaint, if granted, would extend for a fifteen month period beginning
December 26, 1993. The refund period requested under the second complaint would
extend for a fifteen month period beginning May 17, 1996. The FERC has not
issued a ruling on either the first or second complaint and has not indicated
when or if either complaint will be considered. The Company believes that both
complaints are without merit, and the Company intends to vigorously resist both
complaints.
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 its power demand in 1997. This will result in a
peak demand in 1997 of 89 MW.
The Company furnished firm-requirements wholesale power in New Mexico in
1996 to the cities of Farmington and Gallup, and TNP. 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 1996 were approximately 26 MW. 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. During 1996, TNP purchased 15 MW
and gave notice that it will continue to purchase 15 MW in 1997. TNP has also
provided notice of its intent to terminate service after 1998. No
firm-requirements wholesale customer accounted for more than 1.3% of the
Company's total electric operating revenues for the year ended December 31,
1996.
Sources of Power
As of December 31, 1996, 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, expiring in May 2011. The Company may reduce its purchases from SPS by
25 MW annually upon three years' notice. The Company provided such notice to
reduce the purchase by 25 MW in 1999 and by an additional 25 MW in 2000. Also,
the Company has 39 MW of contingent capacity obtained from El Paso under a
transmission capacity for generation capacity trade arrangement that increases
up to 70 MW from 1998 through 2003. In addition, the Company is interconnected
with various utilities for economy interchanges and mutual assistance in
emergencies.
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<PAGE>
The Company anticipates the need for approximately 100 to 200 MW of
additional capacity in the 1998 through 2000 timeframe. To meet this need, on
October 4, 1996, the Company entered into a long-term power purchase contract
with the Cobisa-Person Limited Partnership ("PLP") to purchase approximately 100
MW of unit contingent peaking capacity from a gas turbine generating unit for a
period of 20 years, with an option to renew for an additional five years. The
gas turbine generating unit will be constructed and operated by PLP and will be
located on the Company's retired Person Generating Station site located in
Albuquerque, New Mexico. The site for the generating unit was chosen, in part,
to provide needed benefits to the Company's constrained transmission system.
Depending on the regulatory timing of NMPUC and FERC approvals and the securing
of necessary permits, construction could start in August 1998 with commercial
operation beginning by May 1999. The operational date was chosen to satisfy both
resource and transmission needs for the Company's jurisdictional load. During
October 1996, the Company filed a request for approval from the NMPUC and PLP
filed its application for requisite state commission determinations from the
NMPUC. These two applications were consolidated by the NMPUC. In December 1996,
the NMPUC established a procedural schedule for the consolidated applications.
The Company and PLP have requested a final order from the NMPUC by July 31,
1997. Thereafter, certain actions from the FERC will be required, including
approval of PLP's status as an "exempt wholesale generator" under Section 32 of
the Public Utility Holding Company Act.
In addition to the long-term power purchase contract with PLP, the
Company is pursuing other options to ensure its additional capacity needs are
met.
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:
<TABLE>
<CAPTION>
Coal Nuclear Gas and Oil
------------------------ ------------------------ --------------------------
Percent of Average Percent of Average Percent of Average
------------ ----------- ------------ ---------- ------------ ------------
<C> <C> <C> <C> <C> <C> <C>
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
1996............. 68.9 159.3 30.4 49.7 0.7 238.2
</TABLE>
The estimated generation mix for 1997 is 70.4% coal, 28.9% nuclear and
0.7% 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 114 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
4
<PAGE>
SJGS in the La Plata area of northwestern New Mexico. 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 1997 through
2005. The average cost of fuel, including ash disposal and land reclamation
costs, for SJGS for the years 1994, 1995 and 1996 was 172.1 cents, 184.6 cents
and 167.0 cents, respectively, per million BTU ($33.62, $35.75 and $32.18 per
ton, respectively). For other information related to coal requirements, see PART
II, ITEM 7. -- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- COAL FUEL SUPPLY".
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 surface 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 1994, 1995 and 1996 at Four Corners
was 125.8 cents, 113.4 cents and 125.9 cents, respectively, per million BTU
($22.03, $20.04 and $22.90 per ton, respectively).
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. 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
5
<PAGE>
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. The DOE has announced that it
is not likely to have an operating permanent repository facility before 2015. In
December 1996, DOE sent a letter to the contract holders including APS, advising
that DOE will not be able to fulfill its contractual obligations to accept spent
fuel by January 31, 1998. Because of the uncertainty as to when DOE will be able
to begin spent fuel acceptance, the DOE is inviting the views of all contract
holders on how the delay can best be accommodated. 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 2002 and to safely store spent fuel until
DOE's scheduled shipments from PVNGS begin.
Currently, low-level radioactive waste is being shipped to the low level
waste repository in Barnwell, South Carolina. In addition, a low-level waste
facility was built in 1995 at the PVNGS site. This facility is being used and
has the capability to store an amount of waste equivalent to 10 years of normal
operation of PVNGS.
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 USBR ("USBR Contract") 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 formally initiated the renewal and extension process for requesting
rights through the year 2025. The Company is actively conducting an
environmental assessment with the USBR 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. In June 1996, the Navajo
Nation requested the USBR to withhold renewal of the USBR Contract due to water
shortages of the Navajo Indian Irrigation Project. Other tribes in the Four
Corners area have also voiced concern to the USBR about the renewal by the
Company of the USBR Contract. The Company is currently involved in discussions
with the Navajo Nation to resolve concerns about renewal of the USBR Contract.
The Company is currently unable to predict the outcome of these matters but does
not anticipate any material adverse impact on the Company's financial condition
or results of operation.
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".)
6
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NATURAL GAS OPERATIONS
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 401,000 customers as of December 31, 1996. The Albuquerque
metropolitan area accounts for approximately 54.8% 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' 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 on-system 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. Additionally, PNMGS makes
occasional gas sales to off-system customers. Off-system sales deliveries
generally occur at interstate pipeline interconnects with PNMGS' system.
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, producers and end users for delivery to locations throughout the
PNMGS distribution systems, as well as for delivery to interstate pipelines.
PNMGS provided gas transportation deliveries to approximately 1,050 gas
marketers, producers and end users during 1996.
For the twelve months ended December 31, 1996, PNMGS had throughput of
approximately 100.1 million decatherms, including sales of 53.1 million
decatherms to both sales-service customers and off-system customers. No single
"sales-service" customer accounted for more than 4.4% of PNMGS' therm sales in
1996. During 1996, approximately 47.0% of the PNMGS' total gas throughput was
related to transportation gas deliveries. PNMGS' transportation rates are
unbundled, and transportation customers only pay for the service they receive.
PNMGS' total operating revenues for the year ended December 31, 1996, were
approximately $227.3 million. Cost-of-gas revenues, received from sales-service
and off-system customers, accounted for approximately 45.8% 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 44.1% of PNMGS'
total therm sales in 1996 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 resolved all of the
producer litigation and reformed its supply portfolio so that it better matches
the demands of PNMGS' sales-service customers. These reformations allow 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
PNMGS 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 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)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Residential................ 27.4 25.9 27.1 28.0 27.1
Commercial................. 9.3 8.9 9.8 10.4 10.6
Industrial................. 2.1 0.7 0.8 0.9 0.7
Public authorities......... 2.6 2.4 2.5 2.5 4.2
Irrigation................. 1.4 1.2 1.3 1.3 1.1
Sales for resale........... 0.8 1.3 0.7 1.0 2.0
Unbilled................... 1.4 (1.8) (0.3) (0.6) 0.6
Transportation*............ 47.1 69.8 90.2 91.8 73.6
Off-system sales........... 8.0 1.2 -- -- 0.9
----- ----- ----- ----- -----
100.1 109.6 132.1 135.3 120.8
===== ===== ===== ===== =====
The following table shows gas revenues by customer class**:
GAS REVENUES
(Thousands of dollars)
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Residential................ $129,911 $125,290 $149,439 $149,796 $125,313
Commercial................. 33,022 32,328 42,725 44,575 37,222
Industrial................. 5,179 1,873 2,905 3,369 2,063
Public authorities......... 8,018 7,939 9,969 9,694 12,313
Irrigation................. 3,252 3,077 4,061 4,418 2,713
Sales for resale........... 2,106 3,114 2,462 3,137 4,460
Unbilled................... 2,677 (2,430) 267 (1,573) 716
Transportation*............ 17,215 22,172 27,592 26,729 18,753
Liquids.................... 7,608 13,414 16,090 18,724 26,427
Processing fees............ -- 5,180 10,638 9,761 6,795
Off-system sales........... 14,353 1,927 -- 4 1,410
Other...................... 3,960 4,101 3,362 2,453 4,974
-------- -------- -------- -------- --------
$227,301 $217,985 $269,510 $271,087 $243,159
======== ======== ======== ======== ========
- --------------------
* 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.
8
<PAGE>
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.
Proposed Rulemaking
On June 5, 1995, the NMPUC issued a Notice of Inquiry ("NOI") seeking
comments on whether and how NMPUC Rule 450, which governs affiliate
transactions, should be revised. On June 3, 1996, the NMPUC issued its Notice of
Proposed Rulemaking and Order on the NOI proposing certain amendments to NMPUC
Rule 450 and seeking comments and suggested language changes to its proposed
amendments by August 5, 1996. The proposed amendments would, in effect, limit
the Company's non-utility business ventures. The Company vigorously opposed
these limitations and filed its comments and suggested language changes with the
NMPUC. The Company contends that many of the proposed amendments are unwarranted
or prohibited under the New Mexico Public Utility Act. To date, the NMPUC has
not acted on the comments and suggested language changes it requested.
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 $145 million stated in 1996 dollars, including
approximately $24.0 million (of which $13.7 million has already been expended)
for Person, Prager and Santa Fe Stations which have been retired.
The Company is currently recovering estimated decommissioning costs for its
in-service fossil-fueled generating facilities through rates charged to its
NMPUC retail customers.
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. On February 13, 1997, the NMPUC denied recovery of these same
reservation fees in the ongoing general rate proceeding (see PART II, ITEM 7. --
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- GAS RATE CASE"). 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. In
October 1996, the NMPUC issued an order establishing a working group including
the NMPUC staff, the AG and other New Mexico gas utilities to rewrite the rule.
Several intervenors including New Mexico industrial end users and national gas
marketing companies have been allowed to join the working group.
9
<PAGE>
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 permit 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.
Public Regulation Commission
On November 5, 1996, New Mexico voters approved an amendment to the state
constitution which will replace the present State Corporation Commission and the
NMPUC with a single, elected five member regulatory authority. The new Public
Regulation Commission will be responsible for overseeing registration of all New
Mexico corporations, as well as regulating insurers, transportation and
telecommunications companies, oil and gas pipelines, and gas, electric, water
and sewer public utilities operating in the state. Implementing the new
regulatory structure will require legislation to establish new voting districts
and revise the statutes which now govern the two existing regulatory bodies.
For other rates and regulation issues facing the Company, see PART II, ITEM
7. -- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- OVERVIEW -- OTHER ISSUES FACING THE COMPANY -- GAS RATE CASE --
NMPUC ORDER --THE COMPANY'S JANUARY 1997 PGAC FACTOR VARIANCE REQUEST; ORDER TO
FILE NEW RETAIL ELECTRIC and GAS RATE CASES and TRANSMISSION ISSUES -- FERC
Transmission Issues".
ENVIRONMENTAL FACTORS
The Company, in common with other electric and gas utilities, is subject to
stringent regulations for protection of the environment by state, Federal and
tribal authorities. In addition, 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 to meet environmental regulations in 1997 and 1998.
However, in order to achieve operational efficiencies, the Company and
participants decided to begin a retrofit environmental project at SJGS which
will cost the SJGS participants approximately $80 million over the next two
years.
10
<PAGE>
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 provisions (both sulfur dioxide and nitrogen dioxide) 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 in 1995, as
required. 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 to the Company as of this date.
The Act 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. The Commission submitted its findings and recommendations
to the EPA in June 1996.
The Commission's recommendations regarding stationary sources are to: (i)
implement existing Clean Air Act requirements through the year 2000, (ii)
establish stationary source emission targets as regulatory triggers, (iii)
develop a plan for allocating trading credits under a regulatory program
emissions cap, (iv) review compliance with targets and establish incentives, (v)
complete source attribution studies and (vi) develop an improved monitoring and
accounting system.
The Commission did not recommend any additional emission reductions for
point sources. The recommendations include monitoring the impact of existing
Clear Air Act requirements on emission reductions and the resulting effect on
visibility, setting regional targets for SO2 emissions from stationary sources
for the year 2000 and developing a regulatory program to implement if the
targets are exceeded. The regulatory program will most likely include a
market-based trading of emissions allowances. The targets and the regulatory
program have not yet been developed; however, the Company does not expect a
material adverse effect on the Company's financial condition or results of
operations.
In a related matter, the EPA proposed revisions to the National Ambient Air
Quality Standards for ozone and particulate matter. The nature of and cost of
the impacts of these proposed revisions, if any, to the Company's operations
cannot be determined at this time; however, the Company does not anticipate any
material adverse impact on the Company's financial condition or results of
operations.
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".
11
<PAGE>
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, 1996, 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, 28.8% by M-S-R, 10.04% by Anaheim, 8.475% by
Farmington, 7.2% by Los Alamos and 7.028% by UAMPS. The Company's net aggregate
ownership in SJGS is 750 MW.
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.
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.
12
<PAGE>
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 1996, PVNGS was operated at a capacity factor of 89.1% which was
the highest yearly capacity factor attained at the plant. This capacity factor
was primarily attributable to record setting low refueling outage days.
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 originally 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 stipulated with the NMPUC in 1994, the Company
wrote down the purchased beneficial interests in 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").
In October 1996, the Company purchased $200 million of the PVNGS LOBs.
The bonds are held as an investment on the Company's books. For rating agency
purposes, the PVNGS LOBs are included in the calculation of the debt to equity
ratio and various financial coverage ratios. The purchase of the $200 million of
PVNGS LOBs is treated by the rating agencies as a defeasance of the bonds,
thereby resulting in an improvement to the ratios.
13
<PAGE>
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
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 $147.5 million, a decrease from $157.8 million based on the
previous 1992 study (both amounts are stated in 1995 dollars).
The Company determined that a supplemental investment program will be
needed as a result of both historical cost increases 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.
Pursuant to NMPUC approval, the Company funded an additional $12.5
million into the qualified and non-qualified funds. The estimated market value
of the trusts, including the current life insurance policies, at the end of 1996
was approximately $25.6 million.
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 for all three units is
approximately $24.3 million, with an annual payment limitation of $3 million per
incident. 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". If the funds
provided by this retrospective assessment program prove to be insufficient,
Congress could impose revenue raising measures on the nuclear industry to pay
claims.
14
<PAGE>
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,
1997, a substantial portion of which must be applied to stabilization and
decontamination. The Company has also secured insurance against portions of the
increased cost of generation or purchased power and business interruption
resulting from certain accidental outages of any of the three PVNGS units if the
outage exceeds 21 weeks. The Company is a member of two industry mutual
insurers. These mutual insurers provide both the "all-risk" and increased cost
of generation insurance to the Company. In the event of adverse losses
experienced by these insurers, the Company is subject to an assessment. The
Company's maximum share of any assessment is approximately $3.9 million per
year.
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 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".)
In July 1996, the Company and other SJGS participants signed an agreement
to convert the existing flue gas desulfurization (SO2 removal) system at the
SJGS into a much simpler and cost effective limestone system. The conversion
project will cost the participants approximately $80 million over the next two
years. The NMPUC has been notified of the conversion and expected cost savings.
The NMED approval of a new air permit for the limestone system and a disposal
permit for the mine has been requested. Construction is scheduled to begin in
April 1997 and expected to be completed by the end of 1998.
As of December 31, 1996, the Company owned, jointly owned or leased 2,803
circuit miles of electric transmission lines, 5,333 miles of distribution
overhead lines, 3,299 cable miles of underground distribution lines (excluding
street lighting) and 226 substations.
NATURAL GAS
The natural gas property as of December 31, 1996 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, New Mexico. The transmission systems
consisted of approximately 1,277 miles of pipe with appurtenant compression
facilities. The distribution systems consisted of approximately 10,098 miles of
pipe.
On June 21, 1996, the Company entered into a purchase agreement with the
DOE for the purchase of approximately 130 miles of transmission pipe for $3.1
million for the transmission of natural gas to Los Alamos and to certain other
communities in northern New Mexico. The purchase is subject to the DOE providing
right-of-way satisfactory to the Company. The acquisition by the Company was
approved by the NMPUC in December 1996. Right-of-way resolution is expected to
be completed in the first quarter of 1997.
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.
15
<PAGE>
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
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. In addition, the ultimate outcome of this matter will
not have a material adverse effect on the Company's financial condition or
results of operation.
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 -- 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.
16
<PAGE>
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. In April 1996, the participants and the Arizona
Department of Revenue reached an agreement to settle the pending litigation.
Pursuant to the tentative settlement, the Company will relinquish its claims for
relief with respect to prior years and the defendants will not challenge the
Court of Appeals decision concerning prospective relief (for tax years 1996 and
thereafter).
On July 18, 1996, the Arizona legislature passed, and the Governor of
Arizona subsequently signed, a $200 million property tax reduction which
codifies the terms of the settlement. Final documents are currently being
prepared for the signatures of the parties to this action. The result of the
legislation and the settlement will be a reduction in the Company's Arizona
property tax of approximately $4.0 million annually beginning in 1996 and
extending at least three years, barring any subsequent changes in the applicable
tax law.
OTHER PROCEEDINGS
Federal Deposit Insurance Corporation ("FDIC") Litigation, formerly Resolution
Trust Corporation ("RTC") Litigation ("MDL-995")
On April 16, 1993, the Company and certain current and former employees
of the Company or Meadows ("BCD parties") 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 Savings and Loan Association ("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.
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.
17
<PAGE>
On April 11, 1996, representatives of the BCD parties and the FDIC met
with a mediator to continue settlement discussions. The mediation session
resulted in an agreement to settle the case for approximately $5.8 million,
approximately $3.1 million of which would be paid by the Company and the
remainder to be paid by insurance covering the BCD parties. Settlement documents
are being drafted for submission to the Court for approval. After consideration
of established reserves, the Company believes that there will be no material
adverse effect on the Company's financial condition or results of operations.
The Company continues to believe that all of the claims made by the FDIC
in this case are without merit but, for business reasons, believes that the
settlement is in the best interest of the Company.
Republic Savings Bank ("RSB") Litigation
On July 1, 1996, in a 7-2 decision in the case of United States v.
Winstar Corporation, the United States Supreme Court ruled that the Federal
government had breached its contractual obligations with certain thrifts in
refusing to recognize the accounting practices of supervisory goodwill and
capital credits. Contracts had been negotiated with certain Federal agencies
providing for the purchase of failing thrifts on the condition that supervisory
goodwill and capital credits be recognized for purposes of determining
compliance with regulatory capital requirements. When Congress enacted the
Financial Institutions Reform, Recovery and Enforcement Act in 1989, these
accounting practices were prohibited, thus driving otherwise healthy thrifts out
of compliance with the capital requirements. Many, including RSB, were taken
over and liquidated as a result.
Meadows owns directly a 100% ownership interest in Republic Holding
Company ("RHC"), and RSB was a wholly-owned subsidiary of RHC. Meadows and RHC
have pending before the United States Court of Federal Claims, a lawsuit filed
on April 13, 1992, alleging similar contractual arrangements to those at issue
in the Winstar case. The Federal government has filed a counterclaim alleging
breach by RHC of its obligation to maintain RSB's net worth and has moved to
dismiss Meadows' claim for lack of standing.
RSB was the thrift organized upon the acquisition of Citizens Federal
Savings and Loan Association and Fireside Federal Savings and Loan Association,
both Illinois corporations, in 1985. The plaintiffs invested $17 million of new
capital in the failing institutions. The Federal regulators expressly promised
that approximately $23 million of supervisory goodwill created by the
transaction could be accounted for as an intangible asset to be counted toward
regulatory capital. Additionally, the regulators promised to allow a $3 million
cash contribution by the Federal Savings and Loan Insurance Corporation to be
recorded as a direct credit to regulatory capital. On June 5, 1992, the Office
of Thrift Supervision placed RSB in receivership and appointed the RTC as
receiver. On November 6, 1992, RTC sold RSB as a going concern for a premium of
nearly $1 million, with approximately $215.5 million in assets and $203.9
million in liabilities.
The RSB case has been held in abeyance pending the ruling by the Supreme
Court. The Company believes that the Winstar decision establishes the Federal
government's liability to Meadows and RHC in the RSB litigation and the amount
of damages owed as a result will be vigorously litigated. It is premature to
estimate the amount of recovery, if any, by Meadows and RHC.
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. 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
18
<PAGE>
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 but does not anticipate any material adverse impact
on the Company's financial condition or results of operation.
For a discussion of other legal proceedings, see PART II, ITEM 7. --
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- GAS RATE CASE and NMPUC ORDER
- -- THE COMPANY'S JANUARY 1997 PGAC FACTOR VARIANCE REQUEST; ORDER TO FILE RETAIL
ELECTRIC AND GAS RATE CASES".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
19
<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,
1996, except as otherwise noted:
<TABLE>
<CAPTION>
Initial Effective
Name Age Office Date
---- --- ------ -----------------
<S> <C><C> <C>
B. F. Montoya........ 61 President and Chief Executive Officer August 1, 1993
M. P. Bourque*....... 49 Senior Vice President, Energy Services December 6, 1994
Senior Vice President, Marketing and
Customer Services December 7, 1993
Senior Vice President, Marketing and March 2, 1993
Energy Management
Senior Vice President, Gas Management June 19, 1990
Services
M. D. Christensen.... 48 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.......... 54 Senior Vice President, Electric Services December 1, 1994
M. H. Maerki......... 56 Senior Vice President and Chief Financial December 7, 1993
Officer
Senior Vice President, Administration March 2, 1993
and Chief Financial Officer
Senior Vice President and Chief Financial June 1, 1988
Officer
P. T. Ortiz.......... 46 Senior Vice President, General Counsel December 6, 1994
and Secretary
Senior Vice President, Regulatory Policy, December 7, 1993
General Counsel and Secretary
Senior Vice President, Public Policy, March 2, 1993
General Counsel and Secretary
Senior Vice President, General Counsel February 4, 1992
and Corporate Secretary
Senior Vice President and General October 14, 1991
Counsel
W. J. Real........... 48 Senior Vice President, Gas Services December 6, 1994
Senior Vice President, Utility Operations December 7, 1993
Senior Vice President, Customer Service March 2, 1993
and Operations
Executive Vice President, Gas Operations June 19, 1990
R. B. Ridgeway....... 38 Senior Vice President, Energy Services December 14, 1996
Vice President, Corporate Planning August 10, 1996
Director, Corporate Strategy July 2, 1994
Consultant, Competitive Analysis October 5, 1992
Director, Strategic Planning February 1, 1991
Manager, Gas Supply Planning June 4, 1990
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Initial Effective
Name Age Office Date
---- --- ------ -----------------
<S> <C><C> <C>
J. E. Sterba............41 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 Electric and January 29, 1991
Water Services
Senior Vice President, Business September 1, 1988
Development Group, Electric and Water
Operations
J. A. Zanotti...........56 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
</TABLE>
- -----------
*M. P. Bourque resigned as an executive officer of the Company effective
December 24, 1996.
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 B. F. Montoya and R. J. Flynn. 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.
21
<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), and dividends paid on common stock for 1996 and
1995, by quarters, are as follows:
Quarter Range of
Ended Sales Prices
- ------------------- ------------------------ Dividends
High Low per Share
--------- ---------- -----------
1996:
December 31.......................... 19 7/8 18 1/8 $0.12
September 30......................... 20 3/8 19 $0.12
June 30.............................. 20 1/2 17 1/4 $0.12
March 31............................. 18 3/4 17 3/8 $0.00
-----
Fiscal Year....................... 20 1/2 17 1/4 $0.36
=====
1995:
December 31.......................... 18 1/4 16 1/8 $0.00
September 30......................... 16 3/8 13 3/4 $0.00
June 30.............................. 14 1/4 12 3/8 $0.00
March 31............................. 13 7/8 12 1/4 $0.00
-----
Fiscal Year....................... 18 1/4 12 1/4 $0.00
=====
On January 31, 1997, there were 18,835 holders of record of the Company's
common stock.
On December 31, 1996, the Company's Board of Directors ("Board") declared
a quarterly cash dividend of 12 cents per share of common stock payable February
21, 1997 to shareholders of record as of February 3, 1997. This will be the
fourth quarterly dividend to the Company's common shareholders since the Company
reinstated its common stock dividend in May 1996.
The Board set the dividend payout ratio below the industry average to
allow for dividend growth in the future and to sustain financial flexibility for
the Company to respond to potential opportunities in the evolving energy
marketplace. The Board had not declared cash dividends on common stock since
1989. In establishing its new dividend policy, the Board weighed the Company's
current financial position and its future business plan, as well as the
regulatory and business climate in New Mexico. Future dividend declaration will
be reviewed for action by the Board and coordinated with quarterly earnings
announcements. The payment of future dividends will depend on earnings, the
financial condition of the Company, market conditions and other factors.
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
1996 and 1995.
22
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(In thousands except per share amounts and ratios)
<S> <C> <C> <C> <C> <C>
Total Operating Revenues................ $ 883,386 $ 808,465 $ 904,711 $ 873,878 $ 851,953
Net Earnings (Loss)..................... $ 72,580 $ 75,562 $ 80,318 $ (61,486)* $ (104,255)+
Earnings (Loss) per Common
Share................................ $ 1.72 $ 1.72 $ 1.77 $ (1.64)* $ (2.67)+
Total Assets............................ $2,230,314 $2,035,669 $2,203,265 $2,212,189 $2,375,582
Preferred Stock with Mandatory
Redemption Requirements.............. -- -- $ 17,975 $ 24,386 $ 25,700
Long-Term Debt, less Current
Maturities........................... $ 713,919 $ 728,843 $ 752,063 $ 957,622 $ 911,252
Common Stock Data:
Market price per common
share at year end................. $ 19.625 $ 17.625 $ 13.00 $ 11.25 $ 12.375
Book value per common share
at year end....................... $ 18.06 $ 16.82 $ 15.11 $ 13.29 $ 15.00
Average number of common
shares outstanding................ 41,774 41,774 41,774 41,774 41,774
Cash dividend declared per
common share...................... $ 0.48 -- -- -- --
Return on Average Common
Equity............................... 9.8% 10.7% 12.4% (10.7)% (15.0)%
Capitalization:
Common stock equity.................. 50.9% 48.6% 43.2% 34.8% 38.6%
Preferred stock:
Without mandatory
redemption requirements......... 0.9 0.9 4.1 3.7 3.6
With mandatory redemption
requirements.................... -- -- 1.2 1.5 1.6
Long-term debt, less current
maturities........................ 48.2 50.5 51.5 60 56.2
----------- ----------- ----------- ---------- -----------
100% 100% 100% 100% 100%
=========== =========== =========== ========== ===========
</TABLE>
- -----------
* 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.
23
<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
Restructuring the Electric Utility Industry
The electric utility industry continues to be in 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
levels continue to consider how to promote competition among suppliers of
electricity and how to provide customers with choice among suppliers.
At the state level, the Integrated Water and Resource Planning Committee of
the New Mexico State Legislature (the "IWRPC") held hearings during 1996 which
focused on the issues related to restructuring of the electric industry in New
Mexico. The Company participated extensively in these hearings and, at the
invitation of the IWRPC, submitted draft legislation to be used as a starting
point for the various parties to consider regarding the electric industry
restructuring. The draft legislation would allow an electric utility to recover
all of its prudently incurred stranded costs, and also provide a path for
business flexibility. The AG testified that retail competition should not be
introduced at this time but, if it is, there should be independent ownership of
generation, transmission and distribution facilities, due to market power
concerns. At its November 1996 meeting, the IWRPC voted not to recommend
restructuring legislation in the 1997 session but instead to recommend
continuation of the IWRPC and a study of the tax effects of restructuring. The
IWRPC also sent a letter to the NMPUC calling for no restructuring to be
undertaken by the NMPUC without legislative approval. The New Mexico legislative
session is currently in progress and the Company will closely monitor any
legislative action regarding restructuring of the electric utility industry.
During 1996, the NMPUC conducted a series of workshop meetings in its
"Investigation of Restructuring of Regulation of the Electric Industry in New
Mexico". The Company actively participated in these workshops and presented the
Company's position on various matters related to industry restructuring. The
Company provided data and analysis in the areas of market structure, measurement
and collection of stranded costs, market power, potential changes in Company
structure and issues related to the transition phase. In conjunction with the
workshop meetings, the NMPUC ordered all utilities under its jurisdiction to
file their estimates of stranded costs, absent any recovery method being
adopted, based on the Texas Public Utility Commission Economic Cost Over Market
("ECOM") model. The Company, in its filing, presented two methodologies: (i)
using the ECOM model, the Company's stranded cost estimates run from $657
million for a 1998 full retail access case to $119 million for a 2002 full
retail access case, and (ii) using a second methodology, based upon the
difference between the Company's costs of existing generation and the costs of
new combined cycle and combustion turbine units to serve the same load, the
Company's costs above the level of new gas units, in 1997 dollars, were
estimated at $748 million for a 1998 full retail access case to $327 million for
a 2002 full retail access case. The Company advised the NMPUC that the results
of the ECOM model are highly sensitive to various assumptions, primarily
projections of future gas prices. To date, the NMPUC has not acted on the
requested information.
At the Federal level, two orders and a Notice of Proposed Rulemaking
("NOPR") related to the provision of transmission service by public utilities
were issued in 1996. FERC Order 888, effective July 9, 1996, addresses, among
other things, numerous subjects related to the terms and conditions under which
public utilities are required to provide access to transmission services, to
purchase transmission service on comparable terms for their own wholesale
24
<PAGE>
marketing activities, to recover stranded costs from departing wholesale
customers and to conform existing power pool agreements to the open access
provision of the order. All public utilities were required to have filed, by the
effective date, an Open Access Transmission Tariff based on the provisions of
the order. In July 1996, the Company filed its compliance Open Access
Transmission Tariff under Order 888.
FERC Order 889, effective January 3, 1997, requires public utilities to
install and operate an Open Access Same-time Information System and comply with
certain standards of conduct among employees in transmission operations and
wholesale power marketing, designed to prevent employees of a public utility or
its affiliates engaged in wholesale marketing functions from obtaining
preferential access to transmission-related information or from engaging in
unduly discriminatory business practices regarding access to transmission
service. On January 2, 1997, the Company filed with the FERC its Standards of
Conduct report in compliance with provisions of Order 889.
A NOPR relating to transmission capacity reservation proposed the
elimination of the provision of separate "network" and "point-to-point" service
as provided in Order 888, providing all open access service under a capacity
reservation tariff. Industry comments were submitted to the FERC on October 1,
1996. The FERC has provided no indication of any future activity on the proposed
rulemaking. The Company continues to assess the impact of both the rules and the
potential impact of the proposed rulemaking.
In July 1996, legislation was introduced in the United States Congress to
allow retail competition by the year 2000. Since then, a number of bills have
been drafted for potential introduction in Congress. It is anticipated that
these bills will be heavily lobbied by utilities, industrials, power marketers,
generators, environmental groups, consumer groups and state regulators.
Although it is currently unable to predict the ultimate outcome of possible
retail wheeling initiatives, the Company has been and will continue to be active
at both the state and Federal levels in the public policy debates on the
restructuring of the electric utility industry. The Company will continue to
work with customers, regulators and legislators and other interested parties to
find solutions that bring competitive benefits while recognizing past
commitments.
Competitive Strategy
The Company's strategy for dealing with competition in changing market
places includes ongoing cost reductions, increased productivity, pursuit of
growth opportunities, seeking to improve credit ratings to investment grade and
strengthening of customer relations. To accomplish these objectives, the Company
continues to maintain the focus on its core business and is aggressively
pursuing its efforts to expand its energy related business into carefully
targeted markets for new business opportunities.
In pursuing new business opportunities, the Company is focusing on energy
and utility related activities under its Energy Services Business Unit. These
activities will provide energy marketing 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 in the Southwest. The
Energy Services Business Unit is also pursuing business opportunities in Mexico.
In June 1995, the Company filed an application with the NMPUC for
authorization for the creation of three wholly-owned non-utility subsidiaries as
part of the Energy Services Business Unit. 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. In March 1996, the NMPUC issued an order adopting
the hearing examiner's recommendation and denied NMPUC staff's motion to dismiss
the case. On July 8, 1996, hearings in the case began and were concluded on July
25
<PAGE>
19, 1996. The NMPUC staff alleged that certain activities undertaken by the
Company, that would be transferred to the subsidiaries if approval is granted,
required prior approval thus leaving the Company subject to sanctions. The
Company currently cannot predict the ultimate outcome of this proceeding but has
and intends to continue to vigorously defend against any allegation that it is
in violation of any legal requirements.
In December 1996, the Company filed an application for certain variances
and authorization to invest up to $7.5 million of equity capital in a
partially-owned subsidiary company to be incorporated under the laws of the
United Mexican States, and to provide guarantees, as necessary, of up to $10
million that may be required in connection with the forming of a subsidiary in
Mexico. The Company jointly with Triturados Basalticos y Derivados, S.A.
("Tribasa"), one of the largest construction companies in Mexico, submitted a
bid to develop, design, construct, manage and operate natural gas distribution
systems in the cities of Chihuahua, Cuauhtemoc-Anahuac and Delicias in the State
of Chihuahua, Mexico. If the Company and Tribasa, and possibly a third entity,
were to be awarded the permit jointly, these companies would be required, under
Mexican law, to form and capitalize a Mexican corporation to comply with permit
requirements. In such event, the Company would serve as technical participant
and would be required to maintain a certain equity ownership interest. On
January 17, 1997, the NMPUC gave the Company conditional approval to proceed. On
February 3, 1997, the Company made its compliance filing pursuant to the NMPUC's
conditional approval. The Company is currently unable to predict the outcome of
the bid.
The Company believes that successful operation of the Energy Services
Business Unit activities will better position the Company in an increasingly
competitive utility environment. The Company is currently awaiting NMPUC action
on the formation of the energy and non-utility related subsidiaries under the
Company's general diversification plan discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Capital Requirements and Liquidity
Total capital requirements include construction expenditures as well as
other major capital requirements, including retirement of long-term debt,
long-term debt sinking funds and cash dividend requirements for both common and
preferred stock. The main focus of the Company's construction program is
upgrading generating systems, upgrading and expanding the electric and gas
transmission and distribution systems and purchasing nuclear fuel. Total capital
requirements and construction expenditures for 1996 were $321.0 million and
$103.1 million, respectively. Projections for total capital requirements and
construction expenditures for years 1997-2001 are $914.7 million and $563.7
million, respectively. These estimates are under continuing review and subject
to on-going adjustment. In conjunction with upgrading generating systems, the
Company has begun a retrofit environmental project at the SJGS which will cost
the Company approximately $40 million during the next two years.
The Company's construction expenditures for 1996 were entirely funded
through cash generated from operations. The Company currently anticipates that
internal cash generation will be sufficient to meet capital requirements during
1997 through 2001. 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.
In September 1996, the NMPUC granted the Company's request for the purchase
of up to $300 million of PVNGS LOBs and Eastern Interconnection Project secured
facility bonds over the next three years. In October 1996, the Company purchased
$200 million of PVNGS LOBs at a premium with accrued interest. In purchasing the
LOBs, the Company borrowed $100 million against the credit facility
collateralized by the Company's utility customer accounts receivable and certain
amounts being recovered from gas customers relating to certain gas contract
settlements and utilized $118 million of its cash. Although the PVNGS LOBs are
26
<PAGE>
off-balance sheet debt, these outstanding bonds have been included in the
calculation of the Company's debt to capitalization ratio as well as various
financial coverage ratios by the major rating agencies. The purchase of the LOBS
will not only improve these ratios, but will also increase earnings in the form
of interest income. At the end of 1996, the Company had $20.3 million in cash
and temporary investments and $100.4 million in short-term borrowings.
In addition, at year-end 1996 the Company had $110.6 million of available
liquidity arrangements, consisting of $100 million from the revolving credit
facility ("Facility") and $10.6 million in local lines of credit . The Facility
will expire in June 1998 and includes a maximum allowed debt to capitalization
ratio of 70%. As of December 31, 1996, such ratio was 61.7 %, including the
PVNGS and EIP leases as debt. The Company expects to renew the Facility before
its expiration date.
Financing Capability and Dividend Restrictions
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. In September 1996, Standard &
Poor's Corp. and Moody's Investors Service, Inc. upgraded the Company's credit
ratings to one level below investment grade. Duff & Phelps Credit Rating Co.
maintains an investment grade rating for the Company's first mortgage bonds, but
continues to rate all other securities of the Company below investment grade.
The Company may face limited credit markets and higher financing costs as a
result of its securities being rated below investment grade.
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
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, 1996, based on
the earnings test, the Company could have issued approximately $254 million of
additional first mortgage bonds, assuming an annual interest rate of 8.65
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
9.40 percent, the Company could have issued $379 million of preferred stock as
of year-end.
In December 1996, the Company refinanced $23 million 1984 Series A
Pollution Control Revenue Bonds, $77.045 million 1977 Series Pollution Control
Revenue Bonds and $65 million 1978 Series A Pollution Control Revenue Bonds with
fixed rates of 6.3%, 6.3% and 5.7%, respectively. The maturity dates for these
new bonds are December 2026, December 2016 and December 2016, respectively. In
addition, the Company is currently in the process of refinancing an additional
$190 million of pollution control revenue bonds. On January 21, 1997, the
Company received NMPUC approval for the refinancing of such bonds, and closing
is anticipated for late February 1997. The remaining $60 million of the 1978
Series A Pollution Control Revenue Bonds and $40 million of the Company's 1979
Series A Pollution Control Revenue Bonds will be refinanced as variable rate
bonds in the weekly mode. The initial variable rate will be determined prior to
closing. The remaining $90 million of the 1979 Series A Pollution Control
Revenue Bonds will be refinanced with a fixed rate of 6.375%. The total of the
$190 million bonds will mature in April 2022.
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The Company currently has no requirements for long-term financing during
the period of 1997 through 2001. However, during this period, the Company could
enter into long-term financing 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 resumed the payment of cash dividends on common stock starting
in May 1996 and continued a quarterly cash dividend of 12 cents per common share
during 1996. The Company's board of directors reviews the Company's dividend
policy on a continuing basis. The declaration of common dividends is dependent
upon a number of factors including earnings and financial condition of the
Company and market conditions.
Capital Structure
The Company's capitalization, including current maturities of long-term
debt, at December 31 is shown below:
1996 1995 1994
----- ----- -----
Common Equity..................................... 50.4% 48.6% 39.2%
Preferred Stock................................... 0.9 0.9 4.8
Long-term Debt (including current maturities) .... 48.7 50.5 56.0
------ ------ ------
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, 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
Earnings per share of common stock were $1.72, $1.72 and $1.77 for 1996,
1995 and 1994, respectively. The sales of the gathering and processing assets
and the Company's water division in 1995 had a significant positive earnings
effect in 1995 and impacted 1996 earnings by reducing operating margin, reducing
operating expenses, reducing interest charges and increasing investment income.
Electric gross margin (operating revenues less fuel and purchased power
expense) increased $23.3 million in 1996 as a result of retail load growth and
warmer than normal weather and increased off-system sales margin as a result of
improved wholesale power market conditions.
Electric gross margin decreased $37.9 million in 1995 from 1994 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. An offset to such decreases was the increase in
revenues resulting from retail load growth.
Gas gross margin (operating revenues less gas purchased for resale) was
unchanged from 1995. Higher off-system sales margin and higher retail sales
margin as a result of cooler than normal weather in 1996 were offset by the
absence of the gas gathering and processing margin in 1996 due to the sale of
the gas assets in 1995.
Gas gross margin decreased $16.4 million in 1995 from 1994 due to decreased
gas deliveries resulting from warmer than normal weather in 1995 and reduced
margin as a result of the sale of the gas assets in 1995.
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<PAGE>
Other operation and maintenance expenses ("O&M") decreased $.3 million in
1996 from 1995 due to the following: (i) lower production O&M expenses of $7.9
million as a result of reduced scheduled maintenance outages in 1996, decreased
down time in 1996 for refueling outages and lower property taxes in 1996, (ii) a
decrease of $6.3 million in gas production and products extraction expense
resulting from the gas assets sale in June 1995, (iii) lower pension and benefit
costs of $4.2 million as a result of an adjustment to the retiree's health care
costs and (iv) a decrease in water O&M expense of $3.0 million resulting from
the sale of the Company's water division in July 1995. Such decreases were
offset by higher administrative and general ("A&G") expense of $21.0 million due
to increased labor, increased office supplies and expense and higher outside
services.
Other O&M expenses decreased $12.3 million in 1995 from 1994 due to the
following: (i) a decrease of A&G expense of $7.5 million due to decreased
injuries and damages as a result of the recording of worker's compensation
liability in 1994 and a decrease in temporary office labor and postage expense,
(ii) a decrease in gas production and products extraction expense of $6.2
million resulting from the gas assets sale in 1995, (iii) a $4.1 million
decrease in production O&M expenses as a result of a reduction in scheduled
maintenance outage hours and (iv) a decrease in water O&M expense of $2.1
million resulting from the sale of the Company's water division in 1995. Such
decreases were offset by (i) higher A&G labor expense of $4.7 million and (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.
Depreciation and amortization expenses decreased $2.7 million from a year
ago as a result of the sale of the Company's water division and gas assets in
1995 and an adjustment recorded in 1996 for the over amortization of certain
intangible utility plant. Depreciation and amortization expenses for 1995
increased $6.7 million from 1994 as a result of the implementation of new
depreciation rates approved by the NMPUC in November 1994.
Net other income and deductions decreased $18.8 million from a year ago and
increased $20.3 million in 1995 from 1994. Significant 1996 items, net of taxes,
included the following: (i) a regulatory liability of $10.1 million, (ii) a $1.7
million write-down of certain assets related to the Company's natural gas
vehicle program and (iii) an additional accrual of $1.0 million for
environmental liabilities associated with the 1995 gas assets sale. Offsetting
such decreases was a curtailment gain of $8.0 million related to the change of
the Company's defined benefit pension plan and higher interest income of $7.6
million as a result of increased temporary investments in 1996 and the purchase
of the PVNGS LOBs.
Significant 1995 items, net of taxes, included the following: (i) a gain of
$12.8 million recognized from the gas assets sale, (ii) a gain of $6.4 million
recognized from the sale of the Company's water division, (iii) a $2.6 million
adjustment to the carrying costs related to gas take-or-pay settlement amounts,
(iv) a $1.9 million insurance recovery and (v) the $1.4 million related to
adjusting reclamation reserves for certain mining operations. 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) a
write-off of $3.0 million relating to gas take-or-pay settlement payments which
were not recoverable through rates, (ii) an additional provision for legal
expenses of $3.6 million and (iii) a gain and associated tax benefits of $6.1
million from the sale of generating facilities to UAMPS.
Net interest charges decreased $3.2 million and $12.7 million in 1996 and
1995, respectively, as a result of the retirement of $132.7 million of PVNGS
LOBs in March 1995. An offset to the 1996 decrease was higher short-term
interest charges resulting from short-term borrowings for the purchase of the
PVNGS LOBs and an interest assessment from the IRS. In addition, the 1995
decrease included the effect of the retirement of $45 million of first mortgage
bonds in April 1994.
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<PAGE>
Preferred stock dividend requirements decreased $3.1 million and $2.7
million in 1996 and 1995, respectively, as a result of the retirement of $64
million of preferred stock in August 1995.
OTHER ISSUES FACING THE COMPANY
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 $13.2 million
rate decrease. On February 13, 1997, the NMPUC issued a final order in the gas
rate case, ordering a rate decrease of $7.0 million. In ordering the rate
decrease, among other things, the NMPUC disallowed the recovery of certain
regulatory assets. The Company strongly disagrees with the NMPUC's final order
and filed an appeal with the New Mexico Supreme Court on February 17, 1997. The
Company has evaluated the impacts of the rate reduction and has established
appropriate reserves in its 1996 financial statements, pending the outcome of
the appeal.
NMPUC ORDER -- THE COMPANY'S JANUARY 1997 PGAC FACTOR VARIANCE REQUEST;
ORDER TO FILE NEW RETAIL ELECTRIC AND GAS RATE CASES
Due to rapidly rising gas supply costs in December 1996, PNMGS requested a
variance, on December 18, 1996, from the NMPUC to increase its gas cost factor
by more than 10% without a prior mandatory hearing. Pursuant to NMPUC rules,
PNMGS implemented the new gas cost factor with its January billing cycle. This
increase in gas cost along with increased gas consumption and longer billing
periods for some customers resulted in a substantial increase to customers'
bills. The NMPUC denied PNMGS' variance to increase the factor more than 10%
without a hearing and held public hearings to receive public comment and
testimony. These hearings began on January 22 and concluded on January 30, 1997.
The Company provided testimony regarding the higher gas costs.
The NMPUC issued a final order in this case on February 13, 1997. In the
order, the NMPUC imposed, but suspended, a fine of $2.2 million to the Company
due to an allegedly incorrect cost factor (too low) that was filed in November
1996. In addition, the NMPUC disallowed collection of $1.6 million of gas costs
and ordered an independent audit to be conducted to review the Company's PGAC
factor calculations for the period of December 1995 through January 1997. The
NMPUC also ordered the docketing of two new investigations. The first, which
requires a Company filing by March 15, 1997, will investigate whether or not the
Company should exit the merchant function in providing gas supplies to
customers. The second, will investigate the prudence of the Company's portfolio
strategies and purchase practices. In addition, the NMPUC ordered the Company to
file a new gas rate case by August 1, 1997, and also ordered the Company to file
an electric retail rate case by May 1, 1997.
In the order, the NMPUC accused the Company of intentionally filing an
inaccurate factor to avoid a hearing, thus, impairing the NMPUC's ability to
investigate rising gas prices. The Company strongly disagrees with the NMPUC's
final order and is evaluating its options, including rehearing and a possible
appeal to the New Mexico Supreme Court.
TRANSMISSION ISSUES
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
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<PAGE>
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. In 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 continued to work with the Navajo
Nation in 1996 to resolve this conflict.
The Company continues to assess its options but will not pursue 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.
FERC Transmission Issues
In April 1996, the Company filed a notice of change in rates for firm and
non-firm transmission services. The Company also filed two transmission service
tariffs and a market-based generation tariff. The Company requested that the
rate change filings, as well as the transmission and generation tariff filings,
be consolidated with four Section 206 complaint proceedings of four affected
customers, as well as a rate change proceeding related to the Company's
provision of firm transmission service to EPE. Seven dockets (the "consolidated
dockets") were consolidated for purposes of determining appropriate transmission
service rates.
In addition, two wholesale customers separately filed requests for
transmission service under Section 211 of the Federal Power Act in 1996. One of
these customers notified the Company of its intention to terminate certain
transmission service agreements and the Company filed notice of termination of
this transmission service agreement with the FERC.
Prior to the scheduled hearings in the case, the parties were able to reach
a negotiated settlement of the consolidated dockets, the transmission service
requests and the Company's market-based generation rate tariff. Certain
provisions of the Company's Open Access Transmission Tariff ("the Tariff") were
also incorporated into the settlement, leaving portions of the Tariff subject to
further FERC review. A stipulation on the settlement reached by the parties was
filed with the FERC on December 16, 1996. In accordance with the stipulated
agreement, the Company will refund approximately $3.7 million of revenues it
collected from the customers during the time their Section 206 complaints were
pending. In addition, the Company's firm wholesale transmission service revenues
will be reduced by approximately $1.6 million annually. The stipulation was
certified by the Administrative Law Judge to the FERC on January 22, 1997. The
Company anticipates that the FERC will take action on the stipulation before the
end of the second quarter of 1997. The Company does not anticipate any material
adverse impact on the Company's financial condition or results of operations
from the settlement agreement.
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.
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Electric Operations
Santa Fe Station
The Company and the NMED have conducted investigations of the groundwater
contamination detected beneath the former Santa Fe Generating Station site to
determine the source of the contamination. The Company has been and is
continuing to cooperate with the NMED regarding site investigations and remedial
planning pursuant to a settlement agreement between the Company and the NMED. In
June 1996, the Company received a letter from the NMED, indicating that the NMED
believes the Company is the source of gasoline contamination in a municipal well
supplying the City of Santa Fe and groundwater underlying the Santa Fe Station.
Further, the NMED letter stated that the Company was required to proceed with
interim remediation of the contamination pursuant to the New Mexico Water
Quality Control Commission ("NMWQCC") regulations.
In July 1996, the Company filed an appeal with the NMWQCC protesting the
determination and directives contained in the NMED's June 1996 letter.
Subsequently, negotiation meetings were conducted between the Company and the
NMED for a resolution of the groundwater contamination issue.
On October 3, 1996, the Company and the NMED signed an Amendment to the
Settlement Agreement concerning the groundwater contamination. As part of the
Amendment, the Company agreed to spend approximately $1.2 million ("Settlement
Amount") for certain costs related to sampling, monitoring, and development and
implementation of a remediation plan. The remediation plan is to be developed
jointly by the Company and the NMED. Since the contamination affects a municipal
well supplying the City of Santa Fe, the cooperation of the City of Santa Fe
will also be sought in the development of the plan. The amended Settlement
Agreement does not, however, provide the Company with a full and complete
release from potential further liability for remediation of the groundwater
contamination. After the Company has expended the Settlement Amount, if the NMED
can establish through binding arbitration that the Santa Fe Station is the
source of the contamination, the Company could be required to perform further
remediation that is determined to be necessary. The Company continues to dispute
any contention that the Santa Fe Station is the source of the groundwater
contamination and believes that insufficient data exists to identify the sources
of groundwater contamination. The Company has completed an aquifer
characterization report and a groundwater quality report associated with the 40
day reactivation of the adjacent Santa Fe supply well in July and August of
1996. These reports strongly suggest the groundwater contamination does not
originate from the Santa Fe Station site and has been drawn under the site by
the pumping of the Santa Fe supply well. In addition, other urban wells in Santa
Fe are likely vulnerable to contamination from off-site sources. The Company is
working to provide a remedial approach plan by April 1997 in accordance with the
amended Settlement Agreement.
Person Station
The Company, in compliance with the NMED's 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 was assessed and results were
reported to the NMED. The Company 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 Permit, the Company posted a $5.1 million performance bond
with a trustee. The remediation program continues on schedule.
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Gas Operations
Gas Wellhead Pit Remediation
The New Mexico Oil Conservation Commission issued an order, effective on
January 14, 1993, that affects the gas gathering facilities located in the San
Juan Basin in northwestern New Mexico. The BLM has issued a similar order. The
order prohibits the further discharge of fluids associated with the production
of natural gas into unlined earthen pits in specified areas (designated as
"vulnerable areas") in the San Juan Basin. The order also required the
submission of closure plans for the pits where further discharge was prohibited.
The Company has complied with the orders and has submitted and received approval
for pit closures from the New Mexico Oil Conservation Division ("OCD") and the
BLM.
These gas gathering facilities were sold to Williams on June 30, 1995. As a
part of the sale agreement, the Company agreed to cease discharge to unlined
earthen pits in designated vulnerable areas and to retain the responsibility for
pit closures for a stated period of time and to a stated dollar amount. The
Company has assessed the pits in accordance with OCD/BLM directives, and is now
in the process of closing pits and remediating them, if necessary, at wellhead
locations within the designated vulnerable areas. The Company has submitted a
groundwater management plan to the OCD and has received approval of the plan,
and is proceeding with delineation of groundwater contamination and, as
necessary, cleanup, in accordance with the approved plan. The Company will
address groundwater contamination within the dollar and time limitations imposed
by the sale agreement with Williams, and in accordance with the requirements of
the OCD.
In March 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. In 1995, the Company received a claim for
indemnification by Williams, the purchaser of the Company's gas gathering and
processing assets, for the environmental work required to comply with the
Jicarilla ordinance. The Company submitted a closure/remediation plan to the
Jicarilla, which was approved. The Company's remediation work pursuant to the
plan commenced in mid-1996, and the costs of remediation are being charged
against the $10.6 million indemnification cap contained in the purchase and sale
agreement between the Company and Williams. The Company met the requirement for
closing and remediating pits within the environmentally sensitive area by
December 1996, and anticipates closing and remediating all other pits associated
with the gas gathering and processing assets by the December 1998 deadline
specified in the ordinance.
COAL FUEL SUPPLY
In July 1996, the Company was notified by BHP, fuel supplier to the SJGS,
that the Navajo Nation has proposed to select certain properties within the San
Juan and La Plata Mines (the "mining properties") pursuant to the Navajo-Hopi
Land Settlement Act of 1974 (the "Act"). The mining properties are operated by
BHP under leases from the BLM and comprise a portion of the fuel supply for
SJGS. An administrative appeal by BHP is pending. In the appeal, BHP expressed
concern that transfer of the mining properties to the Navajo Nation may subject
the mining operations to taxation and additional regulation by the Navajo
Nation, both of which could increase the price of coal that might potentially be
passed on to SJGS through the existing Coal Sale Agreement. A stay of all
actions by the BLM has been ordered by the Interior Board of Land Appeals
pending resolution of the issues on appeal. The Company is monitoring closely
the appeal and other developments on this issue and will continue to assess
potential impacts to SJGS and the Company's operations. Currently, the Company
is unable to predict the ultimate outcome of this matter but does not believe it
will have a material adverse effect on the Company's financial condition or
results of operations.
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<PAGE>
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 facilities.
The Company provides service to the area which contributed 43.0% of the
Company's total 1996 electric operating revenues. The absence of a franchise
does not change the Company's right and obligation to serve those customers
under state law. The Company continues to collect and pay franchise fees to the
City.
In 1991, 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.
In October 1996, a local news media reported that the Mayor of the City had
met with two NMPUC Commissioners about his concern that state efforts regarding
retail wheeling were proceeding too slowly and that he was evaluating the City's
option to implement Article XV of the City Charter requiring competitive bids
for electric franchises. The Company has taken the position that the NMPUC does
not have authority to order retail wheeling. (See "OVERVIEW -- Restructuring the
Electric Utility Industry".)
Although a measure designed to start municipalization activities in
Albuquerque was defeated by the City Council, the City continues to maintain its
options by advocating industry restructuring and monitoring the municipalization
activities of the City of Las Cruces. In September 1996, the Court agreed to
decide the question. In August 1996, in an action brought seeking condemnation,
the Federal Magistrate Court ruled that the City of Las Cruces had failed to
prove that condemnation would not materially impair service by El Paso to
customers outside Las Cruces and certified the question of whether state law
allows condemnation of an electric utility to the Court.
The Company filed a "friend of the Court" brief in support of El Paso. The
Court heard oral argument on February 11, 1997, and took the case under
advisement. The Company is currently unable to predict the outcome of these
matters, but does not anticipate any material impact on the Company's financial
condition or results of operation.
ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION
As described in note 3 to the consolidated financial statements, the
Company complies with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 71, Accounting for the Effects of Certain Types of
Regulation. In the event the Company determines that it no longer meets the
criteria for following SFAS No. 71, the accounting impact would be an
extraordinary, non-cash charge to operations of an amount that could be
material. Criteria that may give rise to the discontinuance of SFAS No. 71
include (1) increasing competition that restricts the Company's ability to
establish prices to recover specific costs and (2) a significant change in the
manner in which rates are set by regulators from cost-based regulation to
another form of regulation. The Company periodically reviews these criteria to
ensure that the continuing application of SFAS No. 71 is appropriate. Based on a
current evaluation of the various factors and conditions that are expected to
impact future cost recovery, the Company believes that its regulatory assets
(net of related regulatory liabilities), including those related to generation,
are probable of future recovery.
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<PAGE>
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 1996 dollars and
including installation and replacement power costs) would be approximately $15.3
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. However, a formal decision as to when to
replace the steam generators has not been made by the PVNGS participants.
ACCOUNTING STANDARDS
Environmental Remediation Liabilities. Effective January 1, 1997, the
Company will adopt the provisions for Statement of Position ("SOP") 96-1,
Environmental Remediation Liabilities. This Statement provides authoritative
guidance for recognition, measurement, display and disclosure of environmental
remediation liabilities in financial statements. The Company previously recorded
environmental liabilities of $24.0 million for its retired fossil-fueled plants.
Approximately $13.7 million of the $24.0 million has been expended through
December 31, 1996. The Company does not expect that the adoption of SOP 96-1
will have a material impact on the Company's financial position or results of
operations.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. In June 1996, FASB issued SFAS No. 125. This
Statement establishes, among other things, new criteria for determining whether
a transfer of financial assets should be accounted for as a sale or as a pledge
of collateral in a secured borrowing. SFAS No. 125 also establishes new
accounting requirements for pledged collateral. SFAS No. 125 is effective for
all transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996, and is to be applied
prospectively, and earlier or retroactive application is not permitted.
Nuclear Plant Decommissioning. The staff of the SEC has questioned certain
of the current accounting practices of the electric utility industry regarding
the recognition, measurement and classification of decommissioning costs for
nuclear generating stations in financial statements of electric utilities. In
response to these questions, the FASB has added a project to its agenda to
review 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 1996, and the estimated
cost for decommissioning could be recorded as a liability (rather than as
accumulated depreciation), with recognition of an increase in the cost of the
related nuclear power plant. The Company does not believe that such changes, if
required, would have a material adverse effect on results of operations due to
the fact that decommissioning costs related to its two leased nuclear units are
currently being recovered in rates.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information about their companies without fear of
litigation so long as those statements are identified as forward-looking and are
accompanied by meaningful, cautionary statements identifying important factors
that could cause actual results to differ materially from those projected in the
statement. Accordingly, the Company hereby identifies the following important
factors which could cause the Company's actual financial results to differ
materially from any such results which might be projected, forecasted, estimated
or budgeted by the Company in forward-looking statements: (i) adverse actions of
utility regulatory commissions, (ii) utility industry restructuring, (iii)
failure to recover stranded assets, (iv) failure to obtain new customers or
retain existing customers, (v) inability to carry out marketing and sales plans,
(vi) adverse impacts resulting from environmental regulations, (vii) loss of
favorable fuel supply contracts, (viii) failure to obtain water rights and
rights-of-way, (ix) operational and environmental problems at generating
stations and (x) failure to maintain adequate transmission capacity.
Many of the foregoing factors discussed have been addressed in the
Company's previous filings with the SEC pursuant to the Securities Exchange Act
of 1934. The foregoing review of factors pursuant to the Act should not be
construed as exhaustive or as any admission regarding the adequacy of
disclosures made by the Company prior to the effective date of the Act.
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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 ............................... 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 (the "Company")
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, 1996 and 1995, and the related
consolidated statements of earnings, retained earnings (deficit), and cash flows
for each of the three years in the period ended December 31, 1996. 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, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
February 13, 1997
F-2
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(In thousands except per share amounts)
<S> <C> <C> <C>
Operating Revenues:
Electric..................................................$ 645,639 $ 584,284 $ 621,794
Gas....................................................... 227,301 217,985 269,510
Energy Services........................................... 10,446 -- --
Water..................................................... -- 6,196 13,407
---------- --------- ----------
Total operating revenues..................................... 883,386 808,465 904,711
---------- --------- ----------
Operating Expenses:
Fuel and purchased power.................................. 178,807 140,752 140,411
Gas purchased for resale.................................. 113,059 94,299 129,381
Other operation expenses.................................. 263,432 257,627 264,391
Maintenance and repairs................................... 49,694 55,809 61,386
Depreciation and amortization............................. 78,116 80,865 74,137
Taxes, other than income taxes............................ 34,864 35,531 39,717
Income taxes.............................................. 39,395 30,194 44,210
Total operating expenses............................... 757,367 695,077 753,633
---------- --------- ----------
Operating income....................................... 126,019 113,388 151,078
---------- --------- ----------
Other Income and Deductions:
Other..................................................... 2,367 40,707 (3,512)
Income tax benefit (expense).............................. (1,099) (20,599) 3,339
Net other income and deductions........................ 1,268 20,108 (173)
---------- --------- ----------
Income before interest charges......................... 127,287 133,496 150,905
---------- --------- ----------
Interest Charges:
Interest on long-term debt................................ 49,009 52,637 65,511
Other interest charges.................................... 5,698 5,297 5,341
Allowance for borrowed funds used during construction..... -- -- (265)
---------- --------- ----------
Net interest charges................................... 54,707 57,934 70,587
---------- --------- ----------
Net Earnings ................................................ 72,580 75,562 80,318
Preferred Stock Dividend Requirements........................ 586 3,714 6,433
---------- --------- ----------
Net Earnings Available for Common Stock......................$ 71,994 $ 71,848 $ 73,885
========== ========== ==========
Average Number of Common Shares Outstanding.................. 41,774 41,774 41,774
========== ========== ==========
Net Earnings per Share of Common Stock.......................$ 1.72 $ 1.72 $ 1.77
========== ========== ==========
Dividends Paid per Share of Common Stock.....................$ 0.36 $ -- $ --
========== ========== ==========
</TABLE>
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,
--------------------------------
1996 1995 1994
--------- -------- ----------
(In thousands)
Balance at Beginning of Year.................. $ 25,243 $(46,006) $ (120,848)
Net earnings ................................. 72,580 75,562 80,318
Redemption of cumulative preferred stock...... -- (599) 957
Dividends:
Cumulative preferred stock dividends....... (586) (3,714) (6,433)
Common stock dividends .................... (20,052) -- --
--------- -------- ----------
Balance at End of Year........................ $ 77,185 $ 25,243 $ (46,006)
========= ======== ==========
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
<TABLE>
<CAPTION>
As of December 31,
-----------------------
1996 1995
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Utility Plant, at original cost except PVNGS:
Electric plant in service................................ $ 1,918,238 $ 1,871,897
Gas plant in service..................................... 424,827 419,346
Energy services plant in service......................... 1,241 2,261
Common plant in service.................................. 40,005 35,222
Plant held for future use................................ 639 639
----------- -----------
2,384,950 2,329,365
Less accumulated depreciation and amortization........... 937,228 892,727
----------- -----------
1,447,722 1,436,638
Construction work in progress............................ 76,038 106,892
Nuclear fuel, net of accumulated amortization
of $20,413 and $26,395 ................................ 28,933 30,904
----------- -----------
Net utility plant..................................... 1,552,693 1,574,434
----------- -----------
Other Property and Investments:
Non-utility property, net of accumulated depreciation
of $1,774 and $1,547................................... 3,434 4,063
Other investments, at cost............................... 250,834 29,370
----------- -----------
Total other property and investments.................. 254,268 33,433
----------- -----------
Current Assets:
Cash..................................................... 11,125 4,228
Temporary investments, at cost........................... 9,128 95,972
Receivables, net of allowance for uncollectible
accounts of $709 and $569.............................. 197,025 127,642
Income taxes receivable.................................. 18,825 4,792
Fuel, materials and supplies, at average cost............ 41,260 44,660
Gas in underground storage, at average cost.............. 2,679 5,431
Other current assets..................................... 6,632 7,186
----------- -----------
Total current assets................................ 286,674 289,911
----------- -----------
Deferred Charges............................................ 136,679 137,891
----------- -----------
$ 2,230,314 $ 2,035,669
=========== ===========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock outstanding-- 41,774,083 shares.......... $ 208,870 $ 208,870
Additional paid-in capital............................ 470,358 470,358
Excess pension liability, net of tax.................. (2,102) (1,623)
Retained earnings since January 1, 1989............... 77,185 25,243
----------- -----------
Total common stock equity........................... 754,311 702,848
Cumulative preferred stock without mandatory redemption
requirements........................................... 12,800 12,800
Long-term debt, less current maturities.................. 713,919 728,843
----------- -----------
Total capitalization................................ 1,481,030 1,444,491
----------- -----------
Current Liabilities:
Short-term debt.......................................... 100,400 --
Accounts payable......................................... 130,661 93,666
Dividends payable........................................ 5,159 --
Current maturities of long-term debt..................... 14,970 146
Accrued interest and taxes............................... 23,356 26,856
Other current liabilities................................ 25,477 44,699
----------- -----------
Total current liabilities........................... 300,023 165,367
----------- -----------
Deferred Credits:
Accumulated deferred investment tax credits.............. 62,258 66,734
Accumulated deferred income taxes........................ 110,266 78,829
Other deferred credits................................... 276,737 280,248
----------- -----------
Total deferred credits.............................. 449,261 425,811
----------- -----------
Commitments and Contingencies (notes 2 through 12)
$ 2,230,314 $ 2,035,669
=========== ===========
</TABLE>
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,
---------------------------------
1996 1995 1994
--------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings ................................................... $ 72,580 $ 75,562 $ 80,318
Adjustments to reconcile net earnings to net cash flows from
operating activities:
Depreciation and amortization................................ 91,340 93,125 90,656
Accumulated deferred investment tax credit................... (4,476) (4,830) (6,898)
Accumulated deferred income taxes............................ 31,436 1,622 23,069
Gain on sale of utility property............................. (309) (39,050) (6,576)
Write-down of natural gas vehicle program.................... 2,810 1,445 --
Curtailment gain on defined benefit pension plan............. (13,316) -- --
Changes in certain assets and liabilities:
Receivables................................................ (83,416) 795 23,868
Fuel, materials and supplies............................... 5,795 (26,505) (3,126)
Deferred charges........................................... 5,190 6,731 8,427
Accounts payable........................................... 36,930 (11,527) (11,893)
Accrued interest and taxes................................. (3,500) (1,218) (1,919)
Deferred credits........................................... 12,655 29,185 (5,418)
Other...................................................... (9,279) 5,645 (3,604)
Other, net................................................... 7,278 16,095 14,160
--------- ---------- ----------
Net cash flows from operating activities................ 151,718 147,075 201,064
--------- ---------- ----------
Cash Flows From Investing Activities:
Utility plant additions......................................... (88,904) (106,627) (119,284)
Utility plant sales............................................. 333 206,482 39,562
Other property sales............................................ 702 (801) (1,307)
Net increase in other property and investments.................. (14,706) -- --
Purchase of PVNGS lease obligation bonds........................ (208,446) -- --
Decrease (increase) in temporary investments, net............... 86,844 (21,451) (26,671)
--------- ---------- ----------
Net cash flows from investing activities................ (224,177) 77,603 (107,700)
--------- ---------- ----------
Cash Flows From Financing Activities:
Redemptions of PVNGS lease obligation bonds .................... -- (132,663) --
Redemptions and repurchases of preferred stock.................. -- (64,175) (7,711)
Redemption of first mortgage bonds.............................. -- -- (45,000)
Bond redemption premium and costs............................... (5,158) (505) (2,732)
Proceeds from asset securitization.............................. 100,400 18,758 --
Repayments of long-term debt.................................... (326) (57,768) (31,002)
Dividends paid.................................................. (15,560) (5,126) (6,400)
--------- ---------- ----------
Net cash flows from financing activities................ 79,356 (241,479) (92,845)
--------- ---------- ----------
Increase (Decrease) in Cash........................................ 6,897 (16,801) 519
Cash at Beginning of Year.......................................... 4,228 21,029 20,510
--------- ---------- ----------
Cash at End of Year................................................ $ 11,125 $ 4,228 $ 21,029
========= ========== ==========
Supplemental cash flow disclosures:
Interest paid................................................... $ 55,480 $ 63,366 $ 70,720
========= ========== ==========
Income taxes paid............................................... $ 31,617 $ 52,405 $ 20,000
========= ========== ==========
</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,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Common Stock Equity:
Common Stock, par value $5 per share............................................ $ 208,870 $ 208,870
Additional paid-in capital...................................................... 470,358 470,358
Excess pension liability, net of tax............................................ (2,102) (1,623)
Retained earnings since January 1, 1989......................................... 77,185 25,243
---------- ------------
Total common stock equity.................................................. 754,311 702,848
---------- ------------
</TABLE>
<TABLE>
<CAPTION>
Shares
Outstanding
at Current
Stated December 31, Redemption
Value 1996 Price
------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Cumulative Preferred Stock:
Without mandatory redemption
requirements:
1965 Series, 4.58%.................. $100.00 128,000 $102.00 12,800 12,800
------------ ----------- ----------
Long-Term Debt:
Issue and Final Maturity Interest Rates
- ---------------------------------------- -------------------
First mortgage bonds:
1997................................ 5 7/8% 14,650 14,650
1999 through 2002................... 7 1/4% to 8 1/8% 42,876 43,063
2004 through 2007................... 8 1/8% to 9 1/8% 43,276 43,421
2008................................ % 54,374 54,374
Pollution control revenue bonds:
2007 through 2026................... 5.7% to 7 3/4% 537,045 537,045
2022................................ Variable rate 37,300 37,300
---------- -----------
Total first mortgage bonds........ 729,521 729,853
Other, including unamortized
premium and (discount), net......... (632) (864)
---------- -----------
Total long-term debt.............. 728,889 728,989
Less current maturities................ 14,970 146
---------- -----------
Long-term debt, less current
maturities........................ 713,919 728,843
---------- -----------
Total Capitalization...................... $1,481,030 $ 1,444,491
========== ===========
</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, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies
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. The Company is also engaged in the operation
and management of the City of Santa Fe's Water System and is pursuing new
business activities in the energy and utility related services area.
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").
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. 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 . Utility plant includes certain electric assets not subject to
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, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies (Continued)
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:
1996 1995 1994
------------ ----------- -----------
Electric plant..................... 3.32% 3.32% 3.01%
Gas plant.......................... 3.27% 3.21% 3.15%
Water plant (1).................... -- -- 2.68%
Common plant (2)................... -- -- 4.94%
(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.
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, 1996, 1995 and 1994
(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
resources excluded from NMPUC retail rates 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.
Investments in Debt and Equity Securities
Certain of the Company's other investments are classified as
Held-to-Maturities under the terms of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", and measured at amortized cost in
the statement of financial position.
F-10
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies (Continued)
Accounting Standards
Environmental Remediation Liabilities. Effective January 1, 1997, the
Company will adopt the provisions of Statement of Position ("SOP") 96-1,
Environmental Remediation Liabilities. This Statement provides authoritative
guidance for recognition, measurement, display and disclosure of environmental
remediation liabilities in financial statements. The Company previously recorded
environmental liabilities of $24.0 million for its retired fossil-fueled plants.
Approximately $13.7 million of the $24.0 million has been expended as of
December 31, 1996. The Company does not expect that the adoption of SOP 96-1
will have a material impact on the Company's financial position or results of
operations.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. In June 1996, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities. This Statement establishes,
among other things, new criteria for determining whether a transfer of financial
assets should be accounted for as a sale or as a pledge of collateral in a
secured borrowing. SFAS No. 125 also establishes new accounting requirements for
pledged collateral. SFAS No. 125 is effective for all transfers and servicing of
financial assets and extinguishments of liabilities occurring after December 31,
1996, and is to be applied prospectively, and earlier or retroactive application
is not permitted.
Nuclear Plant Decommissioning. The staff of the Securities and Exchange
Commission has questioned certain of the current accounting practices of the
electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear generating stations in
financial statements of electric utilities. In response to these questions, the
FASB has added a project to its agenda to review 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 1996, and the estimated cost for decommissioning could be
recorded as a liability (rather than as accumulated depreciation), with
recognition of an increase in the cost of the related nuclear power plant. The
Company does not believe that such changes, if required, would have a material
adverse effect on results of operations due to the fact that decommissioning
costs related to its two leased nuclear units are currently being recovered in
rates.
(2) Risks and Uncertainties
The electric utility industry continues to be in 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
levels continue to consider how to promote competition among suppliers of
electricity and how to provide customers with choice among suppliers.
F-11
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(2) Risks and Uncertainties (Continued)
At the state level, the Integrated Water and Resource Planning Committee
of the New Mexico State Legislature (the "IWRPC") held hearings during 1996
which focused on the issues related to restructuring of the electric industry in
New Mexico. The Company participated extensively in these hearings and, at the
invitation of the IWRPC, submitted draft legislation to be used as a starting
point for the various parties to consider regarding the electric industry
restructuring. The draft legislation would allow an electric utility to recover
all of its prudently incurred stranded costs and also provide a path for
business flexibility. The AG testified that retail competition should not be
introduced at this time but, if it is, there should be independent ownership of
generation, transmission and distribution facilities, due to market power
concerns. At its November 1996 meeting, the IWRPC voted not to recommend
restructuring legislation in the 1997 session but instead to recommend
continuation of the IWRPC and a study of the tax effects of restructuring. The
IWRPC also sent a letter to the NMPUC calling for no restructuring to be
undertaken by the NMPUC without legislative approval. The New Mexico legislative
session is currently in progress and the Company will closely monitor any
legislative action regarding restructuring of the electric utility industry.
During 1996, the NMPUC conducted a series of workshop meetings in its
"Investigation of Restructuring of Regulation of the Electric Industry in New
Mexico". The Company actively participated in these workshops and presented the
Company's position on various matters related to industry restructuring. The
Company provided data and analysis in the areas of market structure, measurement
and collection of stranded costs, market power, potential changes in Company
structure and issues related to the transition phase. In conjunction with the
workshop meetings, the NMPUC ordered all utilities under its jurisdiction to
file their estimates of stranded costs, absent any recovery method being
adopted, based on the Texas Public Utility Commission Economic Cost Over Market
("ECOM") model. The Company, in its filing, presented two methodologies: (i)
using the ECOM model, the Company's stranded cost estimates run from $657
million for a 1998 full retail access case to $119 million for a 2002 full
retail access case, and (ii) using a second methodology, based upon the
difference between the Company's costs of existing generation and the costs of
new combined cycle and combustion turbine units to serve the same load, the
Company's costs above the level of new gas units were estimated at $748 million
for a 1998 full retail access case to $327 million for a 2002 full retail access
case. The Company advised the NMPUC that the results of the ECOM model are
highly sensitive to various assumptions, primarily projections of future gas
prices. To date, the NMPUC has not acted on the requested information.
F-12
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(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:
1996 1995
--------- ---------
(In thousands)
Deferred Income Taxes............................ $ 71,682 $ 71,094
Gas Take-or-Pay Costs............................ 36,335 50,870
Purchased Gas Adjustment Clause.................. 28,873 931
Gas Imputed Revenues............................. 10,362 8,113
Loss on Reacquired Debt.......................... 7,850 6,377
Gas Reservation Fees............................. 7,029 5,622
Deferred Customer Expense on Gas Assets Sale..... 5,260 2,755
Gas Retirees' Health Care Costs.................. 4,437 4,437
Proposed Transmission Line Costs................. 3,111 --
Gas Rate Case Costs.............................. 1,571 1,100
Other............................................ 598 422
--------- ---------
Subtotal.................................... 177,108 151,721
--------- ---------
Deferred Income Taxes............................ (56,961) (60,815)
Gas Regulatory Reserve........................... (24,614) (7,328)
Customer Gain on Gas Assets Sale................. (22,230) (31,559)
PVNGS Prudence Audit............................. (6,937) (7,313)
Settlement Due Customers......................... (4,072) (4,101)
Revenue Subject to Refund........................ (3,594) (382)
Gain on Reacquired Debt.......................... (559) (669)
--------- ---------
Subtotal (118,967) (112,167)
--------- ---------
Net Regulatory Assets....................... $ 58,141 $ 39,554
========= =========
As of December 31, 1996, substantially all of the Company's regulatory
assets and regulatory liabilities are being recovered in rates charged to
customers or have been addressed in a regulatory proceeding. 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-13
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(3) Regulatory Assets and Liabilities (Continued)
Effective January 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of.
This statement imposes a stricter criterion for regulatory assets by requiring
that such assets be probable of future recovery at each balance sheet date.
Based on the current regulatory structure in which the Company operates,
adoption of this standard did not have a material impact on the Company's
financial position or results of operations. However, the Company's ability to
meet the criterion may change in the future as competitive factors influence
wholesale and retail pricing in this industry.
(4) Capitalization
Changes in common stock, additional paid-in capital and cumulative
preferred stock are as follows:
<TABLE>
<CAPTION>
Cumulative Preferred Stock
----------------------------------------------
Without Mandatory With Mandatory
Redemption Redemption
Common Stock Requirements Requirements
----------------------------- ---------------------- ----------------------
Number Additional Aggregate Aggregate
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, 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
and 1996........................ 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.
On December 31, 1996, the Company's Board of Directors ("Board") declared
a quarterly cash dividend of 12 cents per share of common stock payable February
21, 1997 to shareholders of record as of February 3, 1997. This will be the
fourth quarterly dividend to the Company's common shareholders since the Company
reinstated its common stock dividend in May 1996.
On September 16, 1996, the Company implemented a dividend reinvestment
and stock purchase plan for investors, including customers and employees. The
plan, called PNM Direct, also includes safekeeping services and automatic
investment features. Initially, the Company's stock will be purchased in the
open market to meet plan requirements.
F-14
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(4) Capitalization (Continued)
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.
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.
The aggregate amounts (in thousands) of maturities for 1997 through 2001
on long-term debt outstanding at December 31, 1996 are as follows:
1997.............................................................. $ 14,970
1998.............................................................. $ 350
1999.............................................................. $ 12,030
2000.............................................................. $ 1,050
2001.............................................................. $ 16,038
Revolving Credit Facility and Other Credit Facilities
At December 31, 1996, the Company has a $100 million revolving credit
facility (the "Facility") with an expiration date of June 30, 1998. The Company
must pay commitment fees of 3/10% per year on the total amount of the Facility.
The Company expects to renew the Facility before its expiration date. The
Company also has a $100 million credit facility, which expires on May 20, 2001,
and is collateralized by the Company's electric and gas customer accounts
receivable and certain amounts being recovered from gas customers relating to
certain gas contract settlements. As of December 31, 1996, the Company has
$110.6 million of available liquidity arrangements, consisting of $100 million
from the Facility and $10.6 million from local lines of credit.
Off-Balance Sheet Items
Although the PVNGS LOBs are off-balance sheet debt, these bonds are
included in the calculation of the Company's debt to equity ratio as well as
various financial coverage ratios by the major rating agencies. The purchase of
the PVNGS LOBs is treated by the rating agencies as a defeasance of the bonds
thereby resulting in an improvement to these ratios. The purchase of the PVNGS
LOBs has also increased earnings in the form of interest income.
F-15
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(5) Fair Value of Financial Instruments
The estimated fair value of the Company's financial instruments
(including current maturities) at December 31, is as follows:
1996 1995
------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
(In thousands)
Long-Term Debt.................. $728,889 $731,358 $728,989 $730,337
Investment in PVNGS LOBs........ $212,979 $211,327 -- --
Fair value is based on market quotes provided by the Company's investment
bankers.
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.
F-16
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(6) Income Taxes
Income taxes consist of the following components:
1996 1995 1994
------- ------- -------
(In thousands)
Current Federal income tax........................... $14,815 $45,940 $24,243
Current state income tax............................. 2,847 5,864 --
Deferred Federal income tax.......................... 22,372 (3,212) 15,449
Deferred state income tax............................ 4,936 7,031 8,077
Amortization of accumulated investment tax credits... (4,476) (4,442) (4,701)
Recognition of accumulated deferred investment tax
credits relating to sales of utility property .... -- (388) (2,197)
------- ------- --------
Total income taxes................................ $40,494 $50,793 $40,871
Charged to operating expenses........................ $39,395 $30,194 $44,210
Charged (credited) to other income and deductions.... 1,099 20,599 (3,339)
------- ------- --------
Total income taxes ............................... $40,494 $50,793 $40,871
======= ======= =======
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:
1996 1995 1994
------- ------- -------
(In thousands)
Federal income tax at statutory rates................$39,576 $44,224 $42,417
Investment tax credits............................... (4,476) (4,442) (4,701)
Depreciation of flow-through items................... 519 723 1,112
Gains on the sale and leaseback of PVNGS
Units 1and 2...................................... (527) (527) (527)
State income tax..................................... 5,192 7,146 5,222
Gains on sale of utility property.................... -- 3,090 (2,139)
Other................................................ 210 579 (513)
------- ------- --------
Total income taxes ...............................$40,494 $50,793 $40,871
======= ======= =======
F-17
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(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:
1996 1995 1994
------- -------- ---------
(In thousands)
Deferred fuel costs.............................. $ 8,234 $ (3,990) $ (1,945)
Depreciation and cost recovery................... 18,048 12,730 22,118
Loss provision for the M-S-R power purchase
contract....................................... -- 3,497 5,632
Contributions in aid of construction............. (4,053) (4,308) (5,055)
Alternative minimum tax in excess of regular
tax............................................ (1,052) (26,002) (24,100)
Net operating losses utilized ................... -- 55,217 35,077
PVNGS decommissioning............................ 537 (2,321) (2,445)
Gains on sale of utility property................ -- (29,868) (8,421)
Contribution to 401(h) plan...................... (510) (885) 1,204
Regulatory liability............................. (6,651) -- --
Curtailment gain (pension plan).................. 5,272 -- --
Transmission project cost........................ 4,898 (3,177) (792)
Other............................................ 2,585 2,926 2,253
-------- -------- ---------
Net deferred taxes provided................... $27,308 $ 3,819 $ 23,526
======= ======== =========
The components of the net accumulated deferred income tax liability
were:
1996 1995
-------- --------
(In thousands)
Deferred Tax Assets:
Alternative minimum tax credit carryforward.......... $ 67,681 $ 66,628
Nuclear decommissioning.............................. 16,303 14,023
Regulatory liabilities............................... 54,430 60,070
Other................................................ 48,944 45,403
-------- --------
Total deferred tax assets......................... $187,358 $186,124
-------- --------
Deferred Tax Liabilities:
Depreciation......................................... $179,430 $168,562
Investment tax credit................................ 62,258 66,734
Fuel costs........................................... 33,038 24,804
Regulatory assets.................................... 69,151 70,348
Other................................................ 16,005 1,239
-------- --------
Total deferred tax liabilities.................... 359,882 331,687
-------- --------
Accumulated deferred income taxes, net.................. $172,524 $145,563
======== ========
F-18
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(6) Income Taxes (Continued)
The following table reconciles the change in the net accumulated deferred
income tax liability to the deferred income tax expense included in the
statement of earnings for the period:
Net change in deferred income tax liability per above table....... $ 26,961
Change in tax effects of income tax related regulatory assets
and liabilities............................................ (4,443)
Tax effect of excess pension liability............................ 314
--------
Deferred income tax expense for the period........................ $ 22,832
========
The Company has no net operating loss carryforwards as of December 31,
1996.
(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:
1996 1995 1994
--------- -------- --------
Service cost................................. $ 8,540 $ 6,770 $ 8,121
Interest cost................................ 20,546 18,332 17,589
Actual loss (return) on plan assets.......... (31,211) (42,148) 1,079
Net amortization and deferral................ 9,577 23,295 (18,731)
--------- -------- --------
et periodic pension cost.................... 7,452 6,249 8,058
Curtailment gain............................. (13,317) -- --
--------- -------- --------
Total pension expense (income)............... $ (5,865) $ 6,249 $ 8,058
========= ======== ========
F-19
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(7) Employee and Post-Employment Benefits (Continued)
In December 1996, the Company's board of directors approved changes to
the Company's defined benefit pension plan and implementation of a defined
contribution plan no later than January 1, 1998. As a result, the Company
recorded a curtailment gain of approximately $13.3 million in the financial
statements for the year ended December 31, 1996.
The following sets forth the plan's funded status and amounts (in
thousands) at December 31:
1996 1995
-------- --------
Vested benefits............................................ $233,687 $222,501
Non-vested benefits........................................ 13,470 10,556
-------- --------
Accumulated benefit obligation............................. 247,157 233,057
Effect of future compensation levels....................... 11,894 46,889
-------- --------
Projected benefit obligation............................... 259,051 279,946
Fair value of plan assets.................................. 273,981 246,670
-------- --------
Projected benefit obligation in excess of (less than)
assets................................................... (14,930) 33,276
Unrecognized prior service cost............................ (180) (214)
Net unrecognized loss from past experience different
from assumed and the effects of changes in assumptions... (5,814) (41,185)
Unamortized asset at transition, being amortized through
the year 2002............................................ 5,814 6,978
-------- --------
Accrued pension asset...................................... $(15,110) $ (1,145)
======== ========
The weighted average discount rate used to measure the projected benefit
obligation was 7.75% and 7.50% for 1996 and 1995, respectively, and the expected
long-term rate of return on plan assets was 8.75% for 1996 and 1995. The rate of
increase in future compensation levels based on age-related scales was 4.1% for
1996 and 1995.
F-20
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(7) Employee and Post-Employment Benefits (Continued)
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:
1996 1995 1994
------- ------- ------
Service cost..................................... $ 1,449 $ 1,869 $1,389
Interest cost.................................... 4,478 4,962 3,250
Actual loss (return) on plan assets.............. (1,208) (2,726) 100
Transition obligation amortization............... 1,817 1,817 1,817
Net amortization and deferral.................... (159) 2,498 (295)
------- ------- ------
Total postretirement benefit expense............. $ 6,377 $ 8,420 $6,261
======= ======= ======
The following sets forth the plan's funded status and amounts (in
thousands) at December 31:
1996 1995
-------- --------
Accumulated benefit obligations for:
Retirees.............................................. $ 25,237 $ 29,088
Fully eligible employees.............................. 15,375 7,144
Active employees...................................... 17,787 39,854
-------- --------
Accumulated benefit obligation........................... 58,399 76,086
Fair value of plan assets................................ 20,930 15,600
--------- ---------
Funded status............................................ (37,469) (60,486)
Net unrecognized loss.................................... 2,416 22,196
Unrecognized transition obligation (being amortized
through the year 2012)................................. 29,074 30,891
--------- ---------
Accrued postretirement liability......................... $ (5,979) $ (7,399)
======== ========
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 7.75% and 7.50% for 1996 and 1995, respectively, and the expected
long-term rate of return on plan assets was 8.75% for 1996 and 1995. The health
care cost trend rate was 8.0%, 8.0% and 7.5% for 1996, 1995 and 1994,
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, 1996 by approximately $10.4 million and the aggregate service
and interest cost components of net periodic postretirement benefit cost for
1996 by approximately $1.1 million. The health care cost trend rate was expected
to decrease to 6.0% by 2010 and to remain at that level thereafter.
F-21
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(7) Employee and Post-Employment Benefits (Continued)
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, 1996, was $18.3 million, of which the accumulated
and vested benefit obligation was $17.4 million. As of December 31, 1996, the
Company has recognized an additional liability of $2.1 million for the amount of
unfunded accumulated benefits in excess of accrued pension costs. The net
periodic pension cost for 1996, 1995 and 1994 was $2.1 million, $2.0 million and
$2.2 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
$10.1 million (fair market value of $13.9 million) are presently in trust. No
additional funds have been provided to the trust since 1989.
Performance Stock Plan
The Company has a non-qualifying stock option plan, covering a group of
management employees. Options are granted at the fair market value of the shares
on the date of the grant. Options granted through December 31, 1995, vested on
June 30, 1996, have an exercise term of up to 10 years. All subsequent awards
granted after December 31, 1995, shall vest three years from the grant date of
the awards and the maximum number of options are five million shares through
December 31, 2000. In addition, the Company has a Director Restricted Stock
Retainer Plan. The number of option shares granted in 1996 under the restricted
stock retainer plan was 4,000 shares with an exercise price of $5.50. No options
under the restricted stock retainer plan were exercised during 1996.
The option price of each option grant is determined on the date of grant
using the Black-Scholes option-pricing model with the following average
assumptions used for grants in 1995 and 1996, respectively: dividend yield of
2.7% and 2.4%; expected volatility of 20% and 18%; risk-free interest rates of
5.5% and 5.59%; and expected lives of four years.
The Company applies APB Opinion 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its plan. Accordingly,
no compensation cost has been recognized for its fixed stock option plan. Had
compensation cost for the Company's stock based compensation plan been
determined consistent with SFAS No. 123, Accounting for Stock-Based
Compensation, the effect on the Company's pro forma net income and pro forma
earnings per share would not be material.
F-22
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(7) Employee and Post-Employment Benefits (Continued)
A summary of the status of the Company's fixed stock option plan
(Performance Stock Plan) at December 31, 1996 and 1995 and changes during the
years then ended is presented below:
1996 1995
--------------------- ---------------------
Weighted Weighted
Average Average
Exercise Exercise
Fixed Options Shares Price Shares Price
- ---------------------------------- -------- --------- --------- --------
Outstanding at beginning of year 508,986 $17.625 -- --
Granted 390,228 $19.480 508,9866 $17.625
Exercised 52,427 -- -- --
Forfeited -- -- -- --
-------- --------
Outstanding at end of year 846,787 $18.480 508,9866 $17.625
======== ========
Options exercisable at year-end 456,559 --
Weighted-average fair value of
options granted during the year $3.56 $3.49
The following table summarizes information about fixed stock options
outstanding at December 31, 1996:
Options Outstanding Options Exercisable
----------------------------------------- ------------------------
Weighted-
Average Weighted
Range of Number Remaining Average Number Weighted
Exercise Outstanding Contractual Exercise Exercisable Average
Prices at 12/31/96 Life Prices at 12/31/96 Price
- --------- -------------- -------------- ---------- ------------- ---------
$ 5.50 -
$19.625 846,787 9.46 years $18.547 456,559 $17.625
F-23
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(8) Construction Program and Jointly-Owned Plants
It is estimated that the Company's construction expenditures for 1997 will
be approximately $165 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.
At December 31, 1996, the Company's interests and investments in
jointly-owned generating facilities are:
Construction
Plant in Accumulated Work in Composite
Station (Fuel Type) Service Depreciation Progress Interest
- ------------------------ -------- ------------ -------- ---------
(In thousands)
San Juan Generating Station (Coal)... $724,525 $319,962 $ 3,755 46.3%
Palo Verde Nuclear Generating
Station (Nuclear)*................ $198,549 $ 43,052 $10,723 10.2%
Four Corners Power Plant Units 4
and 5 (Coal)...................... $117,884 $ 48,879 $ 3,613 13.0%
- -----------
* 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, 1996, 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 Tri-State Generation and Transmission Association,
Inc. Unit 4 is owned 38.457% by the Company, 28.8% by M-S-R Public Power Agency,
California public power agency ("M-S-R"), 10.04% by the City of Anaheim,
California, 8.475% by the City of Farmington, 7.2% by the County of Los Alamos,
and 7.028% by Utah Associated Municipal Power Systems.
Palo Verde Nuclear Generating Station
The Company has a 10.2% undivided 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 the 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-24
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(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 for all three units is
approximately $24.3 million, with an annual payment limitation of $3 million per
incident. 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". If the funds
provided by this retrospective assessment program prove to be insufficient,
Congress could impose revenue raising measures on the nuclear industry to pay
claims.
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,
1997, a substantial portion of which must be applied to stabilization and
decontamination. The Company has also secured insurance against portions of the
increased cost of generation or purchased power and business interruption
resulting from certain accidental outages of any of the three PVNGS units if the
outage exceeds 21 weeks. The Company is a member of two industry mutual
insurers. These mutual insurers provide both the "all-risk" and increased cost
of generation insurance to the Company. In the event of adverse losses
experienced by these insurers, the Company is subject to an assessment. The
Company's maximum share of any assessment is approximately $3.9 million per
year.
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 $147.5 million, a decrease from $157.8 million based on the
previous 1992 study (both amounts are stated in 1995 dollars).
The Company determined that a supplemental investment program will be
needed as a result of both historical cost increases 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
regulations, PVNGS Unit 3 will remain in a non-qualified trust.
Pursuant to NMPUC approval the Company funded an additional $12.5 million
into the qualified and non-qualified funds. The estimated market value of the
trusts, including the current life insurance policies, at the end of 1996 was
approximately $25.6 million.
F-25
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(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 for 1994.
The Company has a power purchase contract with Southwestern Public Service
Company ("SPS") for up to 200 MW, expiring in May 2011. The Company may reduce
its purchases from SPS by 25 MW annually upon three years' notice. The Company
provided such notice to reduce the purchase by 25 MW in 1999 and by an
additional 25 MW in 2000. Also, the Company has 39 MW of contingent capacity
obtained from El Paso Electric Company 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 capacity in the 1998 through 2000 timeframe. To meet this need, on
October 4, 1996, the Company entered into a long-term power purchase contract
with the Cobisa-Person Limited Partnership ("PLP") to purchase approximately 100
MW of unit contingent peaking capacity from a gas turbine generating unit for a
period of 20 years, with an option to renew for an additional five years. The
gas turbine generating unit will be constructed and operated by PLP and will be
located on the Company's retired Person Generating Station site located in
Albuquerque, New Mexico. The site for the generating unit was chosen, in part,
to provide needed benefits to the Company's constrained transmission system.
Depending on the regulatory timing of NMPUC and FERC approvals and the securing
of necessary permits, construction could start in August 1998 with commercial
operation beginning by May 1999. The operational date was chosen to satisfy both
resource and transmission needs for the Company's jurisdictional load. During
October 1996, the Company filed a request for approval from the NMPUC and PLP
filed its application for requisite state commission determinations from the
NMPUC. These two applications were consolidated by the NMPUC. In December 1996,
the NMPUC established a procedural schedule for the consolidated applications.
The Company and PLP have requested a final order from the NMPUC by July 31,
1997. Thereafter, certain actions from the FERC will be required, including
approval of PLP's status as an "exempt wholesale generator" under Section 32 of
the Public Utility Holding Company Act.
In addition to the long-term power purchase contract with PLP, the Company
is pursuing other options to ensure its additional capacity needs are met.
F-26
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(10) Lease Commitments
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. Covenants in the
Company's PVNGS Units 1 and 2 lease agreements 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.
Future minimum operating lease payments (in thousands) at December 31, 1996
are:
1997.............................................................. $ 79,028
1998.............................................................. 78,700
1999.............................................................. 78,333
2000.............................................................. 78,213
2001.............................................................. 78,100
Later years....................................................... 1,026,864
----------
Total minimum lease payments................................... $1,419,238
==========
Operating lease expense, inclusive of PVNGS leases, was approximately
$80.3 million in 1996, $80.0 million in 1995 and $79.1 million in 1994.
Aggregate minimum payments to be received in future periods under noncancelable
subleases are approximately $6.6 million.
(11) Environmental Issues and Retired Fossil-Fueled Plant Decommissioning Costs
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.
F-27
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(11) Environmental Issues and Retired Fossil-Fueled Plant Decommissioning
Costs (Continued)
Electric Operations
Santa Fe Station
The Company and the New Mexico Environmental Department ("NMED") have
conducted investigations of the groundwater contamination detected beneath the
former Santa Fe Generating Station site to determine the source of the
contamination. The Company has been and is continuing to cooperate with the NMED
regarding site investigations and remedial planning pursuant to a settlement
agreement between the Company and the NMED. In June 1996, the Company received a
letter from the NMED, indicating that the NMED believes the Company is the
source of gasoline contamination in a municipal well supplying the City of Santa
Fe and groundwater underlying the Santa Fe Station. Further, the NMED letter
stated that the Company was required to proceed with interim remediation of the
contamination pursuant to the New Mexico Water Quality Control Commission
("NMWQCC") regulations.
In July 1996, the Company filed an appeal with the NMWQCC protesting the
determination and directives contained in the NMED's June 1996 letter.
Subsequently, negotiation meetings were conducted between the Company and the
NMED for a resolution of the groundwater contamination issue.
On October 3, 1996, the Company and the NMED signed an Amendment to the
Settlement Agreement concerning the groundwater contamination. As part of the
Amendment, the Company agreed to spend approximately $1.2 million ("Settlement
Amount") for certain costs related to sampling, monitoring, and development and
implementation of a remediation plan. The remediation plan is to be developed
jointly by the Company and the NMED. Since the contamination affects a municipal
well supplying the City of Santa Fe, the cooperation of the City of Santa Fe
will also be sought in the development of the plan. The amended Settlement
Agreement does not, however, provide the Company with a full and complete
release from potential further liability for remediation of the groundwater
contamination. After the Company has expended the Settlement Amount, if the NMED
can establish through binding arbitration that the Santa Fe Station is the
source of the contamination, the Company could be required to perform further
remediation that is determined to be necessary. The Company continues to dispute
any contention that the Santa Fe Station is the source of the groundwater
contamination and believes that insufficient data exists to identify the sources
of groundwater contamination. The Company has completed an aquifer
characterization report and a groundwater quality report associated with the 40
day reactivation of the adjacent Santa Fe supply well in July and August of
1996. These reports strongly suggest the groundwater contamination does not
originate from the Santa Fe Station site and has been drawn under the site by
the pumping of the Santa Fe supply well. In addition, other urban wells in Santa
Fe are likely vulnerable to contamination from off-site sources. The Company is
working to provide a remedial approach plan by April 1997 in accordance with the
amended Settlement Agreement.
F-28
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(11) Environmental Issues and Retired Fossil-Fueled Plant Decommissioning
Costs (Continued)
Person Station
The Company, in compliance with the NMED's 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 was assessed and results were
reported to the NMED. The Company 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 Permit, the Company posted a $5.1 million performance bond
with a trustee. The remediation program continues on schedule.
Gas Operations
Gas Wellhead Pit Remediation
The New Mexico Oil Conservation Commission issued an order, effective on
January 14, 1993, that affects the gas gathering facilities located in the San
Juan Basin in northwestern New Mexico. The Bureau of Land Management ("BLM") has
issued a similar order. The order prohibits the further discharge of fluids
associated with the production of natural gas into unlined earthen pits in
specified areas (designated as "vulnerable areas") in the San Juan Basin. The
order also required the submission of closure plans for the pits where further
discharge was prohibited. The Company has complied with the orders and has
submitted and received approval for pit closures from the New Mexico Oil
Conservation Division ("OCD") and the BLM.
These gas gathering facilities were sold to Williams Gas
Processing-Blanco Inc., a subsidiary of Williams Field Services Group, Inc., of
Tulsa Oklahoma ("Williams") on June 30, 1995. As a part of the sale agreement,
the Company agreed to cease discharge to unlined earthen pits in designated
vulnerable areas and to retain the responsibility for pit closures for a stated
period of time and to a stated dollar amount (see note 12). The Company has
assessed the pits in accordance with OCD/BLM directives, and is now in the
process of closing pits and remediating them, if necessary, at wellhead
locations within the designated vulnerable areas. The Company has submitted a
groundwater management plan to the OCD and has received approval of the plan,
and is proceeding with delineation of groundwater contamination and, as
necessary, cleanup, in accordance with the approved plan. The Company will
address groundwater contamination within the dollar and time limitations imposed
by the sale agreement with Williams, and in accordance with the requirements of
the OCD.
F-29
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(11) Environmental Issues and Retired Fossil-Fueled Plant Decommissioning
Costs (Continued)
In March 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. In 1995, the Company received a claim for
indemnification by Williams, the purchaser of the Company's gas gathering and
processing assets, for the environmental work required to comply with the
Jicarilla ordinance. The Company submitted a closure/remediation plan to the
Jicarilla, which was approved. The Company's remediation work pursuant to the
plan commenced in mid-1996, and the costs of remediation are being charged
against the $10.6 million indemnification cap contained in the purchase and sale
agreement between the Company and Williams. The Company met the requirement for
closing and remediating pits within the environmentally sensitive area by
December 1996, and anticipates closing and remediating all other pits associated
with the gas gathering and processing assets by December 1998 deadline specified
in the ordinance.
(12) Asset Sales
In 1995, the Company and its subsidiaries sold certain non-strategic gas
assets for approximately $154 million to Williams, recognizing an after-tax gain
of $12.8 million. This gain was adjusted to $11.8 million in 1996 due to an
accrual for additional gas environmental costs. Under the NMPUC order approving
the sale, the Company is required to share approximately $35 million from the
sale with customers, which will be credited to the customers' bills over five
years. After completion of the fifth year, the amount of gain will be
recalculated to include actual expenses specified in the agreement, subject to
NMPUC review. As of December 31, 1996, the Company has a remaining balance of
$22.2 million for future years credit to the customers. In addition, the
Company, in 1995, sold its water division to the City of Santa Fe for $51.2
million (exclusive of current assets netted against current liabilities),
recognizing a after-tax gain of $6.4 million. Pursuant to the purchase and sale
agreement, the Company, through its Energy Service Business Unit, will continue
to operate the water utility up to four years from the closing date for a fee
under a contract with the City of Santa Fe.
F-30
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(13) Segment Information
The financial information pertaining to the Company's electric, gas and
other operations for the years ended December 31, 1996, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
Electric* Gas Other Total
---------- -------- ------- ----------
(In thousands)
1996:
<S> <C> <C> <C> <C>
Operating revenues................................... $ 645,639 $227,301 $10,446 $ 883,386
Operating expenses excluding income taxes............ 509,804 191,922 16,246 717,972
---------- -------- ------- ----------
Pre-tax operating income (loss)...................... 135,835 35,379 (5,800) 165,414
Operating income tax................................. 32,422 8,927 (1,954) 39,395
---------- -------- ------- ----------
Operating income (loss).............................. $ 103,413 $ 26,452 $(3,846) $ 126,019
========== ======== ======= ==========
Depreciation and amortization expense................ $ 64,817 $ 13,122 $ 177 $ 78,116
========== ======== ======= ==========
Construction expenditures............................ $ 76,572 $ 26,497 $ 18 $ 103,087
========== ======== ======= ==========
Identifiable assets:
Net utility plant................................. $1,270,141 $281,348 $ 1,204 $1,552,693
Other............................................. 449,478 202,725 25,418 677,621
---------- -------- ------- ----------
Total assets.................................... $1,719,619 $484,073 $26,622 $2,230,314
========== ======== ======= ==========
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
========== ======== ======= ==========
Contruction 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
========== ======== ======= ==========
</TABLE>
F-31
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(13) Segment Information (Continued)
<TABLE>
<CAPTION>
Electric* Gas Other Total
---------- -------- ------- ----------
(In thousands)
1994:
<S> <C> <C> <C> <C>
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>
- -----------
* Includes the resources excluded from NMPUC retail rates 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).
(14) Subsequent Events
On February 13, 1997, the NMPUC issued a final order in the gas rate
case, ordering a rate decrease of $7.0 million. (See PART II, ITEM 7. --
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- GAS RATE CASE and NMPUC ORDER
- -- THE COMPANY'S JANUARY 1997 PGAC FACTOR VARIANCE REQUEST; ORDER TO FILE RETAIL
ELECTRIC AND GAS RATE CASES" in this report.) In ordering the rate decrease,
among other things, the NMPUC disallowed the recovery of certain regulatory
assets. The Company strongly disagrees with the NMPUC's final order and filed an
appeal with the New Mexico Supreme Court on February 17, 1997. The Company has
evaluated the impacts of the rate reduction and has established appropriate
reserves in its 1996 financial statements, pending the outcome of the appeal.
F-32
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1996, 1995 and 1994
(14) Subsequent Events (Continued)
The NMPUC issued a final order in the Company's January 1997 PGAC Factor
Variance Request on February 13, 1997. In the order, the NMPUC imposed, but
suspended, a fine of $2.2 million to the Company due to an allegedly incorrect
cost factor (too low) that was filed in November 1996. In addition, the NMPUC
disallowed collection of $1.6 million of gas costs and ordered an independent
audit to be conducted to review the Company's PGAC factor calculations for the
period of December 1995 through January 1997. The NMPUC also ordered the
docketing of two new investigations. The first, which requires a Company filing
by March 15, 1997, will investigate whether or not the Company should exit the
merchant function in providing gas supplies to customers. The second, will
investigate the prudence of the Company's portfolio strategies and purchase
practices. In addition, the NMPUC ordered the Company to file a new gas rate
case by August 1, 1997, and also ordered the Company to file an electric retail
rate case by May 1, 1997.
In the order, the NMPUC accused the Company of intentionally filing an
inaccurate factor to avoid a hearing, thus, impairing the NMPUC's ability to
investigate rising gas prices. The Company strongly disagrees with the NMPUC's
final order and is evaluating its options, including rehearing and a possible
appeal to the New Mexico Supreme Court.
F-33
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
QUARTERLY OPERATING RESULTS
The unaudited operating results by quarters for 1996 and 1995 are as follows:
Quarter Ended
-------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
(In thousands except per share amounts)
1996:
Operating Revenues................ $241,904 $197,597 $210,757 $233,128
Operating Income.................. $ 38,475 $ 25,346 $ 32,412 $ 29,786
Net Earnings (1), (2) ............ $ 26,448 $ 13,542 $ 19,940 $ 12,650
Net Earnings per Share (1), (2)... $ 0.63 $ 0.32 $ 0.47 $ 0.30
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
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. The gain amount was adjusted by
$1.0 million or two cents per share in 1996 due to an accrual for
additional gas environmental costs. 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 (see note 12).
(2) During the quarter ended December 31, 1996, the Company made a
provision for loss of $10.0 million, net of tax ($.24 per common
share), as a result of the gas rate order, pending the outcome of the
appeal. In addition, the Company recorded an after-tax curtailment gain
of $8.0 million ($.19 per common share) related to the change of the
Company's defined benefit pension plan.
F-34
<PAGE>
<TABLE>
<CAPTION>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Electric Service Energy Sales -- KWh
(in thousands):
Residential.................................. 1,892,290 1,795,371 1,786,292 1,683,213 1,650,491
Commercial................................... 2,698,087 2,578,243 2,534,507 2,398,725 2,353,152
Industrial................................... 1,505,801 1,434,974 1,268,208 1,145,369 1,087,357
Other ultimate customers..................... 310,118 220,777 364,144 219,481 267,246
----------- ---------- ---------- ---------- ----------
Total sales to ultimate customers......... 6,406,296 6,029,365 5,953,151 5,446,788 5,358,246
Sales for resale............................. 4,575,220 2,590,513 3,361,933 3,375,216 3,685,418
----------- ---------- ---------- ---------- ----------
Total KWh sales........................... 10,981,516 8,619,878 9,315,084 8,822,004 9,043,664
=========== ========== ========== ========== ==========
Electric Revenues (in thousands):
Residential.................................. $ 177,220 $ 168,633 $ 172,559 $ 163,131 $ 158,190
Commercial................................... 226,146 218,222 229,851 218,263 211,086
Industrial................................... 83,651 79,964 79,729 74,157 69,590
Other ultimate customers..................... 20,804 18,749 24,147 15,548 16,521
----------- ---------- ---------- ---------- ----------
Total revenues to ultimate
customers............................... 507,821 485,568 506,286 471,099 455,387
Sales for resale............................. 121,329 80,949* 96,821* 99,895* 123,291
----------- ---------- ---------- ---------- ----------
Total revenues from energy sales.......... 629,150 566,517 603,107 570,994 578,678
Miscellaneous electric revenues.............. 16,489 17,767 18,687 18,734 17,645
----------- ---------- ---------- ---------- ----------
Total electric revenues................... $ 645,639 $ 584,284 $ 621,794 $ 589,728 $ 596,323
=========== ========== ========== ========== ==========
Customers at Year End:
Residential.................................. 304,900 296,821 287,369 278,357 271,155
Commercial................................... 36,292 35,390 34,336 33,568 32,504
Industrial................................... 375 374 384 381 386
Other ultimate customers..................... 632 598 599 576 537
----------- ---------- ---------- ---------- ----------
Total ultimate customers.................. 342,199 333,183 322,688 312,882 304,582
Sales for Resale............................. 56 37 42 37 47
----------- ---------- ---------- ---------- ----------
Total customers........................... 342,255 333,220 322,730 312,919 304,629
=========== ========== ========== ========== ==========
Reliable Net Capability-- KW.................... 1,506,000 1,506,000 1,506,000 1,541,000 1,591,000
Coincidental Peak Demand-- KW................... 1,217,000 1,247,000 1,189,000 1,104,000 1,053,000
Average Fuel Cost per Million BTU............... $ 1.2735 $ 1.3177 $ 1.3488 $ 1.3844 $ 1.3263
BTU per KWh of Net Generation................... 10,768 10,811 10,817 11,036 11,039
Water Service**
Water Sales-- Gallons (in thousands) -- 1,616,544 3,366,388 3,414,950 3,224,271
Revenues (in thousands)...................... -- $ 6,196 $ 13,407 $ 13,063 $ 12,471
Customers at Year End........................ -- 23,752 23,452 22,743 22,098
</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 $20.5 million for
1995, 1994 and 1993, respectively.
** On July 3, 1995, the Company sold its water utility division (see
note 12 of the notes to consolidated financial statements). Water
Service's comparative operating statistics for 1995 are through this
date.
F-35
<PAGE>
<TABLE>
<CAPTION>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
1996 1995 1994 1993 1992
--------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Gas Throughput--Decatherms (in thousands)
PNMGS:
Residential.................................. 27,387 25,865 27,139 28,031 27,063
Commercial................................... 9,310 8,864 9,767 10,428 10,590
Industrial................................... 2,136 661 831 923 707
Public authorities........................... 2,591 2,411 2,465 2,473 4,199
Irrigation................................... 1,418 1,245 1,272 1,259 1,134
Sales for resale............................. 3,094 1,266 680 1,041 2,035
Off-System Sales............................. 5,745 1,176 -- -- --
Unbilled..................................... 1,405 (1,764) (309) (636) 649
--------- --------- -------- -------- ---------
PNMGS sales.................................. 53,086 39,724 41,845 43,519 46,377
Transportation throughput.................... 47,010 49,136 43,135 46,059 48,674
--------- --------- -------- -------- ---------
PNMGS throughput............................. 100,096 88,860 84,980 89,578 95,051
Gathering Company:
Spot market sales............................ -- 39 -- -- 858
Transportation throughput.................... -- 20,695 47,091 45,754 24,889
--------- --------- -------- -------- ---------
Total throughput.......................... 100,096 109,594 132,071 135,332 120,798
========= ========= ======== ======== =========
Gas Revenues (in thousands)
PNMGS:
Residential..................................$ 129,911 $ 125,290 $149,439 $149,796 $ 125,313
Commercial................................... 33,022 32,328 42,725 44,575 37,222
Industrial................................... 5,179 1,873 2,905 3,369 2,063
Public authorities........................... 8,018 7,939 9,969 9,694 12,313
Irrigation................................... 3,252 3,077 4,061 4,418 2,713
Sales for resale............................. 2,106 3,114 2,462 3,137 4,460
Off-System Sales............................. 14,352 1,885 -- -- --
Imbalance penalties.......................... 1,231 1,786 944 -- --
Unbilled..................................... 2,677 (2,430) 267 (1,573) 716
--------- --------- -------- -------- ---------
Revenues from gas sales...................... 199,749 174,862 212,772 213,416 184,800
Transportation............................... 17,215 18,532 19,742 19,376 14,861
Liquids...................................... 7,608 12,782 14,551 18,214 25,620
Other........................................ 2,729 3,606 4,705 3,576 5,810
--------- --------- -------- -------- ---------
PNMGS operating revenues..................... 227,301 209,782 251,770 254,582 231,091
Gathering Company:
Spot market sales............................ -- 42 -- 4 1,410
Transportation............................... -- 3,640 7,850 7,353 3,892
Imbalance penalties.......................... -- 418 26 -- --
Processing Company:
Liquids revenue.............................. -- 632 (621) (311) 807
Processing fees.............................. -- 3,471 10,485 9,459 6,795
--------- --------- -------- -------- ---------
Total operating revenues..................$ 227,301 $ 217,985 $269,510 $271,087 $ 243,159
========= ========= ======== ======== =========
Customers at Year End
PNMGS:
Residential.................................. 367,025 358,822 348,715 337,768 329,385
Commercial................................... 30,757 30,493 30,139 30,151 29,765
Industrial................................... 54 59 57 72 61
Public authorities........................... 2,462 2,444 2,463 1,958 2,004
Irrigation................................... 1,076 886 899 951 1,012
Sales for resale............................. 3 2 3 3 4
Transportation............................... 36 38 43 37 43
--------- --------- -------- -------- ---------
PNMGS customers.............................. 401,413 392,744 382,319 370,940 362,274
Gathering Company:
Off-system sales............................. -- -- -- 1 2
Transportation............................... -- -- 21 21 16
Processing Company.............................. -- -- 32 25 22
--------- --------- -------- -------- ---------
Total customers........................... 401,413 392,744 382,372 370,987 362,314
========= ========= ======== ======== =========
</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). Comparative operating statistics
for Gathering Company and Processing Company are through this date.
<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 29, 1997 (the "1997 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 1997 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 1997 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is hereby made to the 1997 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 1996, 1995,
and 1994 are omitted for the reason that they are not
required or the information is otherwise supplied.
(a) -- 3-A. Exhibits Filed:
Exhibit
No. Description
- ------- -----------
10.9.6 Amendment Number Nine to Coal Sales Agreement, dated as of
December 31, 1995, among San Juan Coal Company, the Company and
Tucson Electric Power Company.
10.19 Facility Lease dated as of July 31, 1986, 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).
E-1
<PAGE>
Exhibit
No. Description
- ------- -----------
10.20* Facility Lease dated as of August 12, 1986, between The First
National Bank of Boston, as Owner Trustee, and Public Service
Company of New Mexico together with Amendments No. 1 and 2
thereto (refiled).
10.21 Facility Lease dated as of December 15, 1986, between The First
National Bank of Boston, as Owner Trustee, and Public Service
Company of New Mexico (Unit 1 Transaction) together with
Amendment No 1 thereto (refiled).
10.22 Facility Lease dated as of December 15, 1986, between The First
National Bank of Boston, as Owner Trustee, and Public Service
Company of New Mexico (Unit 2 Transaction) together with
Amendment No. 1 thereto (refiled).
10.70** Employment Termination and Release Agreement for M. Phyllis
Bourque.
23.1 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
99.5 Participation Agreement dated as of July 31, 1986, 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 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
together with Amendment No. 1 thereto (refiled).
99.6 Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of July 31, 1986, between The First National Bank
of Boston, as Owner Trustee, and Chemical Bank, as Indenture
Trustee together with Supplemental Indenture No. 1 thereto
(refiled).
99.7 Assignment, Assumption, and Further Agreement dated as of
July 31, 1986, between Public Service Company of New Mexico and
The First National Bank of Boston, as Owner Trustee (refiled).
99.9* Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of August 12, 1986, between The First National
Bank of Boston, as Owner Trustee, and Chemical Bank, as
Indenture Trustee together with Supplemental Indenture No. 1
thereto (refiled).
99.15 Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of December 31, 1986, between the First National
Bank of Boston, as Owner Trustee, and Chemical Bank, as
Indenture Trustee (Unit 2 Transaction) (refiled)
99.17* Waiver letter with respect to "Deemed Loss Event" dated as of
August 18, 1986, between the Owner Participant named therein,
and Public Service Company of New Mexico (refiled).
99.18* Waiver letter with respect to "Deemed Loss Event" dated as of
August 18, 1986, between the Owner Participant named therein,
and Public Service Company of New Mexico (refiled).
E-2
<PAGE>
Exhibit
No. Description
- ------- -----------
99.19 Agreement No. 13904 (Option and Purchase of Effluent), dated
April 23, 1973, among Arizona Public Service Company, Salt River
Project Agricultural Improvement and Power District, the Cities
of Phoenix, Glendale, Mesa, Scottsdale, and Tempe, and the Town
of Youngtown (refiled).
99.20 Agreement for the Sale and Purchase of Wastewater Effluent,
dated June 12, 1981, among Arizona Public Service Company, Salt
River Project Agricultural Improvement and Power District and
the City of Tolleson, as amended (refiled).
- -----------
* 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.
(a) -- 3-B. Exhibits Incorporated By Reference:
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:
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
<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)
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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 Agreement to Purchase and Sell Between 4-(b)to the Registration 2-99990
City of Santa Fe, New Mexico and Public Statement No. 2-99990 of
Service Company of New Mexico. the Company.
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.
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.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
3.2 By-laws of Public Service Company of 3.2 to Annual Report of the 1-6986
New Mexico With All Amendments to Registrant on Form 10-K for
and including December 5, 1994. the fiscal year ended
December 31, 1994.
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.
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 the Company.
Corners Project and the Navajo Indian
Tribal Council.
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
10.1.1 Amendment and Supplement No. 1 to 10.1.1 to Annual Report of 1-6986
Supplemental and Additional Indenture the Registrant on Form 10-K
of Lease dated April 25, 1985 between the for fiscal year ended
Navajo Tribe of Indians and Arizona December 31, 1995.
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).
10.2 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.
10.5.3 Modification No. 4 dated October 25, 10.5.3 to Annual Report of 1-6986
1984 and Modification No. 5 dated July Registrant on Form 10-K for
1, 1985 to Co-Tenancy Agreement fiscal year ended December
between the Company and Tucson 31, 1995.
Electric Power Company (refiled).
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.
</TABLE>
E-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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.
10.5.7 Modification No. 10 to San Juan Project 10.5.7 to Annual Report of 1-6986
Co-Tenancy Agreement between Public the Registrant on Form 10-K
Service Company of New Mexico and for fiscal year ended
Tucson Electric Power Company dated December 31, 1995.
November 30, 1995.
10.7 San Juan Project Operating Agreement 5-S to Registration 2-50338
between the Company and Tucson Statement No. 2-50338 of
Gas & Electric Company, executed the Company.
December 21, 1973.
10.7.1 Modification No. 4 dated October 25, 10.7.1 to Annual Report of 1-6986
1984 and Modification No. 5 dated July Registrant on Form 10-K for
1, 1985 to San Juan Project Operating fiscal year ended December
Agreement between the Company and 31, 1995.
Tucson Electric Power Company (refiled).
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.
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.
10.7.5 Modification No. 10 dated November 30, 10.7.5 to Annual Report of 1-6986
1995 to San Juan Project Operating the Registrant on Form 10-K
Agreement between Public Service for fiscal year ended
Company of New Mexico and Tucson December 31, 1995.
Electric Power Company.
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.
</TABLE>
E-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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 10.58 to Annual Report of 1-6986
September 12, 1983, to the Arizona the Registrant on Form 10-K
Nuclear Power Project Participation for fiscal year ended
Agreement. (refiled) 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.
10.8.5 Amendment No. 10 dated as of 10.8.5 to Annual Report of 1-6986
November 21, 1985 and Amendment No. the Registrant on Form 10-K
11 dated as of June 13, 1986 and effective for fiscal year ended
January 10, 1987 to Arizona Nuclear December 31, 1994.
Power Project Participation Agreement
(refiled).
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 10.9 to Annual Report of the 1-6986
August 18, 1980 among San Juan Coal Registrant on Form 10-K for
Company, the Company and Tucson fiscal year ended
Electric Power Company, together with December 31, 1991.
Amendments No. One, Two, Four, and
Six thereto.
</TABLE>
E-8
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit 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).
</TABLE>
E-9
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
10.9.4 First Supplement to Coal Sales 19.4 to the Company's 1-6986
Agreement, dated July 27, 1992 among Quarterly Report on
San Juan Coal Company, the Company Form 10-Q for the quarter
and Tucson 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).
10.9.5 Amendment No. Eight to Coal Sales 10.9.5 to Annual Report of 1-6986
Agreement, dated as of September 1, the Registrant on Form 10-K
1995, among San Juan Coal Company, for fiscal year ended the
Company and Tucson Electric Power December 31, 1995.
Company .
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, December 31, 1987.
executed 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 fiscal year ended the
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 for fiscal year ended
institutions relating to the San Juan Coal December 31, 1992.
Trust dated as of December 31, 1981
(refiled).
</TABLE>
E-10
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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* Facility Lease dated as of December 16, 10.18 to Annual Report of 1-6986
1985 between The First National Bank of the Registrant on Form 10-K
Boston, as Owner Trustee, and Public for fiscal year ended
Service Company of New Mexico together December 31, 1995.
with Amendments No. 1, 2 and 3 thereto.
(refiled).
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-Q
Service Company of New Mexico and the for the quarter ended
First National Bank of Boston, dated as of March 31, 1995.
December 16, 1985.
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.
10.23** 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.
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).
10.24** Management Life Insurance Plan (July 10.24 to Annual Report of 1-6986
1985) of the Company (refiled). the Registrant on Form 10-K
for fiscal year ended
December 31, 1995.
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.
</TABLE>
E-11
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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.
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.
</TABLE>
E-12
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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 for fiscal year ended
a 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** First Restated and Amended Public 99.1 to Registration 333-03303
Service Company of New Mexico Director Statement No. 333-03303
Retainer Plan. filed May 8, 1996.
</TABLE>
E-13
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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** First Restated and Amended Public 99.1 to Registration 333-03289
Service Company of New Mexico Statement No. 333-03289
Performance Stock Plan. filed May 8, 1996.
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.
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.
</TABLE>
E-14
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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 10.3.1 to the Company's 1-6986
for 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.
10.53 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.
</TABLE>
E-15
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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).
10.56.1 Amended and Restated Receivables 10.56.1 to the Company's 1-6986
Purchase Agreement dated May 20, 1996, Quarterly Report on Form
between Public Service Company of New 10-Q for the quarter ended
Mexico, Citibank and Citicorp North June 30, 1996.
America, Inc. and Amended Restated
Collection Agent Agreement dated May
20, 1996, between Public Service
Company of New Mexico, Corporate
Receivables Corporation and Citibank,
N.A.
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 33-65418
November 1, 1992 between Public Service Statement No. 33-65418 of
Company of New Mexico and Canadian the Company.
Imperial Bank of Commerce, New York
Agency.
</TABLE>
E-16
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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.
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 10-Q for the quarter ended
3, 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.
10.67** Deferred Compensation Agreement for 10.67 to Annual Report of 1-6986
Jeffry E. Sterba the Registrant on Form 10-K
for fiscal year ended
December 31, 1995.
</TABLE>
E-17
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
10.68 Master Decommissioning Trust 10.68 to the Company's 1-6986
Agreement for Palo Verde Nuclear Quarterly Report on Form
Generating Station dated March 15, 10-Q for the quarter ended
1996, between Public Service Company March 31, 1996.
of New Mexico and Mellon Bank, N.A.
10.69* Refunding Agreement No. 3 dated as 10.69 to the Company's 1-6986
of September 27, 1996 between Public Quarterly Report on Form
Service Company of New Mexico, The 10-Q for the quarter ended
Owner Participant named therein, September 30, 1996.
State Street Bank and Trust Company,
as Owner Trustee, The Chase Manhattan,
Bank, as Indenture Trustee, and First PV
Funding Corporation.
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 Collateral Trust Indenture dated as of 99.1 to Annual Report of the 1-6986
December 16, 1985 among First PV Registrant on Form 10-K for
Funding Corporation, Public Service fiscal year ended December
Company of New Mexico and Chemical 31, 1995.
Bank, as Trustee together with Series
1986A Bond Supplemental, Series 1986B
Bond Supplemental, Unit 1 Supplemental
and Unit 2 Supplemental thereto (refiled).
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 99.1.6 to the Company's 1-6986
First PV Funding Corporation, Public Quarterly Report on Form
Service Company of New Mexico and 10-Q for the quarter ended
Chemical Bank, as Trustee dated as of March 31, 1995.
February 14, 1995.
</TABLE>
E-18
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
99.2* Participation Agreement dated as of 99.2 to Annual Report of the 1-6986
December 16, 1985, among the Owner Registrant on Form 10-K for
Participant named therein, First PV fiscal year ended December
Funding Corporation. The First National 31, 1995.
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 together with Amendment No.
1 dated July 15, 1986 and Amendment
No. 2 dated November 18, 1986 (refiled).
99.3 Trust Indenture, Mortgage, Security 99.3 to the Company's 1-6986
Agreement and Assignment of Rents Quarterly Report on Form
dated as of December 16, 1985, between 10-Q for the quarter ended
the First National Bank of Boston, as March 31, 1996.
Owner Trustee, and Chemical Bank, as
Indenture Trustee together with
Supplemental Indentures Nos. 1 and 2
(refiled).
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.
99.4* Assignment, Assumption and Further 99.4 to Annual Report of the 1-6986
Agreement dated as of December 16, Registration on Form 10-K
1985, between Public Service Company for fiscal year ended
of New Mexico and The First National December 31, 1995.
Bank of Boston, as Owner Trustee
(refiled).
</TABLE>
E-19
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
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 November 28.8 to the Company's 1-6986
18, 1986, to Participation Agreement Current Report on Form 8-K
dated as of August 12, 1986. dated November 25, 1986.
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.
</TABLE>
E-20
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Filed as Exhibit: File No:
- ------- ---------------------- ---------------- --------
<S> <C> <C> <C>
99.11* Participation Agreement dated as of 2.1 to the Company Current 1-6986
December 15, 1986, among the Owner Report on Form 8-K dated
Participant named therein, First PV December 17, 1986.
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 Current Report on Form 8-K
dated as of December 15, 1986, between dated December 17, 1986.
The 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-21
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit 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).
99.16 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).
99.21* 1996 Supplemental Indenture dated as of 99.21 to the Company's 1-6986
September 27, 1996 to Trust Indenture, Quarterly Report on Form
Mortgage, Security Agreement and 10-Q for the quarter ended
Assignment of Rents dated as of September 30, 1996.
December 16, 1985 between State Street
Bank and Trust Company, as Owner
Trustee, and The Chase Manhattan Bank,
as Indenture Trustee
</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:
None.
E-22
<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 18, 1997 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 18, 1997
- ------------------------------------------ Director
B. F. MONTOYA
President and Chief Executive Officer
/s/ M. H. MAERKI Principal Financial Officer February 18, 1997
- ------------------------------------------
M. H. Maerki
Senior Vice President and
Chief Financial Officer
/s/ D. M. BURNETT Principal Accounting Officer February 18, 1997
- ------------------------------------------
D. M. Burnett
Corporate Controller and
Chief Accounting Officer
/s/ J. T. ACKERMAN Chairman of the Board February 18, 1997
- ------------------------------------------
J. T. Ackerman
/s/ R. G. ARMSTRONG Director February 18, 1997
- ------------------------------------------
R. G. Armstrong
/s/ J. A. GODWIN Director February 18, 1997
- ------------------------------------------
J. A. Godwin
/s/ L. H. LATTMAN Director February 18, 1997
- ------------------------------------------
L. H. Lattman
/s/ M. LUJAN JR. Director February 18, 1997
- ------------------------------------------
M. Lujan Jr.
/s/ R. U. ORTIZ Director February 18, 1997
- ------------------------------------------
R. U. Ortiz
/s/ R. M. PRICE Director February 18, 1997
- ------------------------------------------
R. M. Price
/s/ P. F. ROTH Director February 18, 1997
- ------------------------------------------
P. F. Roth
</TABLE>
E-23
<PAGE>
AMENDMENT NUMBER NINE
TO COAL SALES AGREEMENT
among
SAN JUAN COAL COMPANY, PUBLIC SERVICE COMPANY OF NEW MEXICO
and
TUCSON ELECTRIC POWER COMPANY
December 31, 1995
<PAGE>
AMENDMENT NUMBER NINE
TO COAL SALES AGREEMENT
This Amendment Number Nine to Coal Sales Agreement is executed as of
the 31st day of December, 1995, by and among SAN JUAN COAL COMPANY, a Delaware
corporation ("SJCC"), and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation ("PNM") and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation
("TEP") (collectively, the "Utilities").
RECITALS
--------
A. SJCC and the utilities are parties to that certain Coal Sales
Agreement, dated August 19, 1990, as amended (as so amended, the "Coal Sales
Agreement").
B. The Coal Sales Agreement at Paragraph 5.2 as amended contemplates
that no later than December 31, 1995, an appropriate amendment thereto will be
executed to provide for delivered ash limits with respect to coal from the La
Plata leases.
C. SJCC and the utilities have agreed to extend the date by which said
amendment must be executed and wish to set forth said agreement and certain
related matters in this Amendment Number Nine to Coal Sales Agreement.
<PAGE>
AGREEMENT
---------
In consideration of the mutual covenants and agreements contained
herein, the parties hereby amend the Coal Sales Agreement as follows:
1. The date "December 31, 1995," appearing in paragraph 5.2 of the
Coal Sales Agreement (as amended) is hereby deleted, and the date "December 31,
1999" is inserted in place thereof.
2. This Amendment Number Nine to Coal Sales Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
3. Except as expressly amended hereby, the Coal Sales Agreement and
all prior amendments are in all respects hereby confirmed and ratified.
IN WITNESS WHEREOF, this Amendment Number Nine to Coal Sales
Agreement has been executed as of the day and year first set forth above.
SAN JUAN COAL COMPANY, a
Delaware Corporation
Attest:
By:
---------------------
Its: Senior Vice President
- ------------------------ ---------------------
Secretary
-2-
<PAGE>
PUBLIC SERVICE COMPANY OF NEW
Mexico, a New Mexico
corporation
By:
-------------------------
Its:
--------------------
TUCSON ELECTRIC POWER COMPANY,
an Arizona corporation
By:
-------------------------
Its:
--------------------
-3-
<PAGE>
CONSENT OF GUARANTOR
--------------------
BHP Minerals International Inc., a Delaware corporations (formerly
BHP-Utah International Inc.). the guarantor of the obligations of SJCC under the
Coal Sales Agreement pursuant to guaranty dated August 18, 1990 (the
"Guaranty"), hereby consents to the foregoing Amendment Number Nine 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 all prior amendments thereto and by Amendment Number Nine to Coal
Sales Agreement, dated December 31, 1995.
BHP MINERALS INTERNATIONAL INC.
Attest:
By:
- --------------------- ---------------------------
Secretary Group General Manager and
Senior Vice President, New
Mexico operations
<PAGE>
When Recorded, Return to: Gregg R. Neilsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
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 JULY 31, 1986. 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 July 31, 1996
between
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity, but solely as Owner
Trustee under a Trustee Agreement, dated as of July 31,
1986 with Chase Manhattan Realty Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO
Lessee
================================================================================
Sale and Leaseback of a 1.13333%
Undivided Interest in
Palo Verde Nuclear Generating Station Unit 1
and a .377777% Undivided Interest
in Certain Common Facilities
================================================================================
<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................................................... 1
c Personal Property...................................... 1
d Description............................................ 2
SECTION 3 Rent; Adjustments to
Rent................................................... 2
a Basic Rent............................................. 2
b Supplement Rent........................................ 3
c Form of Payment........................................ 4
d Adjustments to Rent.................................... 4
e Further Adjustments.................................... 5
f Computation of
Adjustments............................................ 6
g Sufficiency of Basic
Rent and Supplemental
Rent................................................... 7
h Rent Differential...................................... 7
SECTION 4 Net Lease.............................................. 8
SECTION 5 Return of the Undivided
Interest............................................... 11
a Return of the Undivided
Interest............................................... 11
b Disposition Services................................... 13
SECTION 6 Warranty of the Lessor................................. 13
a Quiet Enjoyment........................................ 13
b Disclaimer of Other
Warranties............................................. 13
c Enforcement of Certain
Warranties............................................. 13
SECTION 7 Liens ................................................ 15
SECTION 8 Operation and Maintenance;
Capital Improvements................................... 16
<PAGE>
a Operation and
Maintenance............................................ 16
b Inspection............................................. 17
c Capital Improvements................................... 18
d Reports................................................ 19
e Title to Capital
Improvements........................................... 19
f Funding of the Cost of
Capital Improvements................................... 21
SECTION 9 Event of Loss; Deemed
Loss Event............................................. 23
a Damage or Loss......................................... 24
b Repair................................................. 24
c Payment of Casualty
Value.................................................. 24
d Payment of Special
Casualty Value......................................... 25
e Requisition of Use..................................... 26
f Termination of
Obligation............................................. 26
<PAGE>
g Application of Payments
on an Event of Loss.................................... 27
h Application of Payments
Not Relating to an Event
of Loss................................................ 28
I Other Dispositions..................................... 28
SECTION 10 Insurance.............................................. 29
a Required Insurance..................................... 29
b Permitted Insurance.................................... 31
SECTION 11 Rights to Assign or
Sublease............................................... 31
a Assignment or Sublease
by the Lessee.......................................... 31
b Assignment by Lessor as
Security for Lessor's
Obligations............................................ 32
SECTION 12 Lease Renewal.......................................... 32
<PAGE>
SECTION 13 Notices for Renewal or
Purchase; Purchase
Options................................................ 33
a Notice, Determination of
Values, Appraisal
Procedure.............................................. 33
b Purchase Option at
Expiration of the Lease
Term................................................... 34
c Special Purchase Event................................. 34
d Purchase of the
Undivided Interest;
Payment, Etc........................................... 34
SECTION 14 Termination for
Obsolescence........................................... 35
a Termination Notice..................................... 35
b Right of Lessor to
Retain Undivided
Interest upon
Termination............................................ 35
c Events on the
Termination Date....................................... 36
d Early Termination
Notice................................................. 37
<PAGE>
e Events on the Early
Termination............................................ 38
SECTION 15 Events of Default...................................... 38
SECTION 16 Remedies............................................... 42
a Remedies............................................... 42
b No Release............................................. 48
c Remedies Cumulative.................................... 48
d Exercise of Other Rights
or Remedies............................................ 49
e Special Cure Right of
Lessee................................................. 50
SECTION 17 Notices................................................ 51
SECTION 18 Successors and Assigns................................. 51
SECTION 19 Right to Perform for
Lessee................................................. 52
SECTION 20 Additional Covenants................................... 52
SECTION 21 Lease of Real Property
Interest............................................... 53
<PAGE>
SECTION 22 Amendments and
Miscellaneous.......................................... 53
a Amendments in Writing.................................. 53
b Survival............................................... 53
c Severability of
Provisions............................................. 54
d True Lease............................................. 54
e Original Lease......................................... 54
f Governing Law.......................................... 55
g Headings............................................... 55
h Concerning the Owner Trustee........................... 55
i Disclosure............................................. 56
j Counterpart Execution.................................. 56
APPENDIX A Definitions
SCHEDULE 1 Casualty Values
SCHEDULE 2 Special Casualty Values
SCHEDULE 3 Termination Values
SCHEDULE 4 [Intentinally Omitted]
SCHEDULE 5 Real Estate Description
SCHEDULE 6 Undivided Interest Description
<PAGE>
6091.50.2831.47:1
FACILITY LEASE, dated as of July 31, 1986, 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 July
31, 1986, with Chase Manhattan Realty Leasing Corporation (the Lessor), and
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).
WITNESSETH:
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, 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 shall have the
meanings assigned to such terms in Appendix A 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 leases to the Lessee, and
the Lessee hereby leases from the Lessor, the Undivided Interest.
(b) Term. The term of this Facility Lease shall begin on August 1,
1986, 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 be,
and hereby is, severed, and shall be and remain severed, from title to the real
estate constituting the Real Property Interest and the PVNGS Site. The Lessor
and the Lessee intend that the Undivided Interest shall constitute personal
property to the maximum extent permitted by Applicable Law.
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(d) Description. The Real Property Interest is described on Schedule
S hereto. The Undivided Interest is described on Schedule 6 hereto.
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, 1987, an amount equal to .0257526% of the
Facility Cost for each day from, and including, August 1, 1986 to,
but excluding, January 15, 1987, plus or minus the Rent
Differential, if any, referred to in Section 3(h);
(ii) on July 15, 1987 and on each Basic Rent Payment Date
thereafter to and including January 15, 2015, an amount equal to
4.635455% of Facility Cost, 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 aggregate 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 or decreases pursuant to
Section 3(h)), by 56.
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If an interest payment on any Note 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 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, any amount which is to be paid under
Section 6.9, 7.6 or 8.7 of the Indenture and any amount that the
Lessee is required to pay, or provide for the payment of, under
Section 8.5 of the Indenture;
(ii) when due, any amount payable hereunder as Casualty Value,
Termination Value or Special Casualty Value, and an amount equal to
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 or otherwise, 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 Excepted 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 nominal 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 Tax Law other than a Change in respect of a minimum tax; provided,
however, that the aggregate amount of such downward adjustments shall not exceed
the aggregate amount of such upward adjustments. Adjustments under this
paragraph (d) shall be (1) made not more than once a year and (2) limited in the
aggregate to the extent necessary such that the aggregate amount of Basic Rent
theretofore and thereafter payable throughout the Basic Lease Term (computed for
such purposes only without regard to any adjustments theretofore made pursuant
to Section 3(e)) shall not be more than the following percentages of Basic Rent
pay able throughout the Basic Lease Term (calculated as aforesaid): (i) 22% in
the event that the Outstanding Notes have not been reoptimized in accordance
with their terms and (ii) 15.5% if the Outstanding Notes have been reoptimized
in full in accordance with their terms.
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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
Participant's beneficial interest in the Trust 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
appropriately adjusted (upward or downward) to preserve Net Economic Return if
there is (i) any issuance of the Fixed Rate Note, (ii) any Supplemental
Financing, (iii) the payment of Transaction Expenses in an amount which is other
than 2.0% of the Purchase Price or (iv) any change in the Pricing Assumptions.
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(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 within 90 days after
the Owner Participant furnishes the revised amounts to the Lessee, the Loan
participant the Lessor and the Indenture Trustee) 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 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 differs by more than 10% from
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 supplement
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.
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(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 all 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, other than
Excepted Payments, 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 all principal of, and premium, if any, and interest then due 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, "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 (ii) the aggregate amount of
interest that would have been due and payable on such Basic Rent Payment Date on
such Note if such Note had at all times during the relevant period borne
interest at a rate equal to 10.0% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be). If, as
of any Basic Rent Payment Date, (A) the amount determined in accordance with
clause (i) of the immediately preceding sentence shall exceed 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.
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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, rescission, 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 PVNGS Site, PVNGS,
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 PVNGS Site or PVNGS, (iii) any damage to, or removal, abandonment,
decommissioning, 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 Interest, the PVNGS Site or PVNGS, 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 for 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 PVNGS
Site or PVNGS, (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 unenforceability 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
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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 PVNGS Site or PVNGS, or any
part thereof or any interest 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 under Section 6(a) hereof 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 terminated 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 under
takings 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 appli cable 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.
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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
Property Interest to the Lessor (or to a Person specified by the Lessor to the
Lessee in writing not less than 6 months prior to the Lease Termination Date)
with full rights as a "Transferee" and the sole "Participant" with respect to
the Undivided Interest and the Real Property Interest within the meaning of
Section 15.10 of the ANPP Participation Agreement, and will furnish to the
Lessor: (i) copies certified by a senior officer of the Lessee of all
Governmental Action necessary to effect such surrender (including, but without
limitation, appropriate amendments to the License permitting the Lessor (without
the Lessor being required to change its business) or such Person to possess the
Undivided Interest and the Real Property Interest with or without the continued
involvement of the Lessee as Agent), which Governmental Action shall be in full
force and effect; and (ii) an opinion of counsel (which may be Mudge Rose
Guthrie Alexander & Ferdon, Snell & Wilmer or another counsel experienced with
NRC and other nuclear matters reasonably satisfactory to the Owner Participant)
to the effect that (A) the Lessee has obtained all Governmental Action and
action under the ANPP Participation Agreement necessary to effect such surrender
by the Lessee and receipt of possession by the Lessor (or to the Person so
specified by the Lessor) and (B) such Governmental Action is in full force and
effect. 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 PVNGS 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 and the Real Property
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 required by Section 8. In the event that on or prior to the
Lease Termination Date there shall have occurred a default by any ANPP
Participant (other than the Lessee) 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 any 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 and the Real Property
Interest including using the Lessee's reasonable efforts to lease or dispose of
the Undivided Interest and the Real Property 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, so long as no Event of Default shall have occurred and be
continuing, 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 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, PVNGS, the Real
Property Interest or the PVNGS 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
INTEREST, THE REAL PROPERTY INTEREST, THE PVNGS SITE OR PVNGS, 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 PVNGS SITE OR PVNGS, 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
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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, PVNGS, the Real Property Interest or the PVNGS Site that may
arise pur suant 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).
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. - 15 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 substan tially at the ratings at which
it is, from time to time, rated, (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 and enforce all available
warranties and (3) the terms and conditions of all insurance policies maintained
in effect at any time with respect thereto, (C) use, possess, operate and
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maintain Unit 1 in compliance with all material applicable Governmental Actions
(including the License) affecting PVNGS 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, PVNGS, the Real Property Interest and the PVNGS 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) 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 and the Owner Participant and their
respective authorized representatives shall have the right to inspect PVNGS
(subject, in each event, to the ANPP Participation Agreement, Applicable Law,
applicable confidentiality undertakings and procedures established by the
Operating Agent) at a their expense. The Lessor and the Owner Participant and
their respective authorized representatives shall have the right to inspect, at
their expense, the books and records of the Lessee relating to PVNGS, 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. Of the net
proceeds of (i) any sale or other disposition of property removed from Unit 1
receivable (without regard to any right of setoff or other similar right of any
<PAGE>
Person against the Lessee) by, or credited to the account of the Lessee in
accordance with the ANPP Participation Agreement and (ii) 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, 11.1111% in the case of Unit 1, or 3.7037% in the case of Common
Facilities, of either such amount shall be applied as provided in Section 9(g),
(h), or (i), as the case may be. A 1.133333%, in the case of Unit 1, or
.377777%, in the case of Common Facilities, undivided interest 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 Improvement 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 a 1.133333%, in the case of Unit 1, or .377777%, in the case of
Common Facilities, 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 a 14133333%, in the case of Unit 1, or .377777%, in
the case of Common Facilities, undivided interest in such Capital Improvement
shall vest in the Lessor and (ii) such applicable 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 a like undivided interest in the property originally
incorporated or installed in Unit 1. The Lessee warrants and agrees that the
Lessor's 1.133333% undivided 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 reason-able 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 (commencing on March 1, 1987) 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 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, 1987) 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).
<PAGE>
(e) Title to Capital Improvements. Title to a 1.133333%, in the case
of Unit 1, or .377777%, in the case of Common Facilities, undivided interest in
each Capital Improvement to Unit 1 or the Common Facilities, as the case may be,
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 or the Common Facilities, as the case
may be, 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) 1.133333%, in the case of Unit 1, or .377777%, in the
case of Common Facilities, 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 an Additional Equity Investment or a
supplemental Financing, or both) 1.133333%, in the case of Unit 1, or
.377777%, in the case of Common Facilities, of the cost of such Capital
Improvement, the Lessee shall retain title to such undivided interest in
such Capital Improvement Immediately upon title to such 1.133333%, in the
case of Unit 1, or .377777%, in the case of Common Facilities, undivided
interest in any Capital Improvement vesting in the Lessor pursuant to
subparagraph (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 for all purposes hereof.
(f) Funding of the Cost of Capital Improvements. Before placing in
service any Capital Improvement to Unit 1 or the Common Facilities the cost of
which exceeds $100,000,000 in respect of the inter ests 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' 1.133333%, in the case
of Unit 1, or .377777%, in the case of Common Facilities, of the cost of any
such Capital Improvement, or any other Capital Improvement presented to the
Owner Participant 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, 1.133333%, in the case of Unit 1, or .377777%, in the case of
Common Facilities, 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 applicable percentage of the cost of such Capital
Improvement, subject to satisfaction of the following conditions:
<PAGE>
(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 1.133333% 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 Financings 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;
(iv) the total amount of all Supplemental Financings during the
Basic Lease Term shall not exceed one-ninth 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, New York State or New
York City tax purposes, and the Owner Participant and the Lessee shall
have agreed upon the amount and manner of payment of the 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;
(ix) the Lessee shall have made such representations, warranties and
covenants regarding the tax characteristics of the Lessor's undivided
interest in each Capital Improvement as the Owner Participant reasonably
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 to support the amortization of the
Additional Notes issued in respect of such Supplemental Financing and to
preserve Net Economic Return; (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 and 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
<PAGE>
(xiii) the Lessee shall enter into such agreements and shall have
provided such tax indemnities, representations warranties, covenants,
opinions, certificates and other documents as the Owner Participant shall
reasonably request.
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, condemn nation, confiscation, theft or seizure for any reason
whatsoever, such fact shall promptly, and in any case within five Business Days
following 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 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 repair's to or reconstruction of Unit
1.
(c) Payment of Casualty Value. On the Basic Rent Payment Date next
following receipt by the Lessee of a written notice from the Lessor that an
Event of Loss has occurred, 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, 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. An Event of Loss shall not be deemed to have occurred unless and
until the Lessor delivers the notice specified in the preceding sentence. Upon
compliance in full by the Lessee with the foregoing provisions of this Section
(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.
<PAGE>
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 the Owner Participant shall have received under
Section 5.2 of the Indenture all amounts required to be paid by the Lessee
pursuant to this Section 9(c) (including interest, if any, thereon pursuant to
Section 3(b)(iii) hereof), 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 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 shall promptly notify the
other thereof (provided that the failure by the Lessor to furnish to the Lessee
the foregoing notification shall not impair the right of the Lessor to exercise
the option referred to below) and, at the Lessor's option, exercisable by
delivery of written notice to the Lessee, on the day (specified in Schedule 2)
of the month next following the month during which such notice is delivered to
the Lessee, the Lessee shall pay to the Lessor an amount equal to the excess of
(i) Special Casualty Value deter mined as of the date such payment is due over
(ij) the 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 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
the Owner Participant shall have received under Section 5.2 of the Indenture all
amounts required to be paid by the Lessee pursuant to this Section 9(d)
(including interest, if any, thereon pursuant to Section 3(b)(iii)), 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
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.
<PAGE>
(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
receipt by the Owner Participant under Section 5.2 of the Indenture of the
payments specified in Section 9(c) or 9(d) and payment by the Lessee of all
other 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, the Owner Trustee or the Owner Participant) 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.
(h) Application of Payments Not Relating to an Event of Loss.
Payments receivable (without regard to anyright 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 the Undivided Interest 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 the Undivided Interest
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.
<PAGE>
(i) Other Dispositions. Notwithstanding the foregoing provisions of
this Section 9, 50 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 required to make the
payments specified in Section 9(c) or 9(d), 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 an
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 Indemnitees as insureds through an omnibus definition of
"insured" 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, 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 main tained by the ANPP Participants with
respect to PVNGS, (ii) stating that no premiums are then delinquent, and (iii)
<PAGE>
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 (or 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 premiums 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)(iii)(2) may be made in reliance upon a similar
schedule provided by the Lessee (a copy of which shall be attached) identifying
the insurance required to be maintained under this Section 10. All insurance pro
ceeds 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.
(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).
<PAGE>
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 right of the Indenture Trustee to
any such payments shall be absolute and unconditional and shall not be affected
by any 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 one-half of the rental provided in Section 21.
<PAGE>
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, an Event of Default
shall have occurred and be continuing or an Event of Loss 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 Market 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 Event. If, at or before the Refunding Date, the
Owner Participant shall reasonably determine (in consultation with Owner
Participant's Special Counsel and Owner Participant's Special New Mexico
Counsel) that the "weighted annual lease payment factor" (as such term is
defined in the New Mexico Order and as the same may be reasonably interpreted by
the Owner Participant, in consultation with counsel as aforesaid) for all "Lease
Transactions" (as so defined) exceeds 11.5% or there is a material risk that the
same will exceed 11.7% and so notifies the Lessor and the Lessee, or if the
Lessee, in its reasonable judgment, determines that such a material risk exists,
then the Lessee shall purchase the Undivided Interest and the Real Property
Interest from the Lessor, on a Business Day specified by the Lessor to the
Lessee by not less than 30 days prior notice, 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 purchase date shall not be a Basic Rent Payment Date, a pro ration of
Basic Rent to the date of purchase.
<PAGE>
(d) Purchase of the Undivided Interest; Payment, Etc. If the Lessee
shall have elected or be required to purchase the Undivided Interest and the
Real Property Interest pursuant to Section 13(b) or 13(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.
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 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 excess, if any, of the Termination
Value as of the Termination Date over the highest bona fide offer received
pursuant to Section 14(a).
<PAGE>
(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 amount 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
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 (but only if such purchaser has obtained all Governmental
Action by the NRC necessary in connection therewith).
<PAGE>
(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 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 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 Early Termination Date 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 involuntary, 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
<PAGE>
(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 ) , 1 0 ( b )( 3 ) ( i i),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 certificates (other than a
certificate of the Lessee) described therein) or 11 of this Facility
Lease; or
(iii) 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
(iv) the Lessee shall fail to perform its agreements set forth in
Section 5(a) hereof; or
(v) the Lessee shall fail to perform or observe any covenant,
condition or agreement (other than covenants, conditions or agreements
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 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 or other proceeding shall
remain undismissed or unstayed for a period of 60 consecutive days; or
<PAGE>
(viii) final judgment 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 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, in good faith, 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 (or in the case of any operating
lease, an equivalent on the assumption such lease were a lease required to
be capitalized in accordance with generally accepted accounting
principles) is greater than $20,000,000 ($5,000,000 in the case of any
PVNGS operating lease)) 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 knowledge of 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 event or a Responsible Officer of the Lessee shall have
actual knowledge of such default or event.
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 or more of the following remedies as the Lessor
in its sole discretion shall elect:
<PAGE>
(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 the 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) subject to
Applicable Law, enter upon the PVNGS 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
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 in a
commercially reasonable manner, 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 an amount equal to the net proceeds, if
any, received by the Lessor from leasing the Undivided Interest and the
Real Property Interest to any Person other than the Lessee for the same
periods or any portion thereof; Lessee shall pay to the Lessor, on the
Basic Rent Payment Date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent due
after the Basic Rent Payment Date speci fied in such notice), any unpaid
<PAGE>
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, in the
case of (D) below, upon receipt of such payment the Lessor shall (or may
prior to the receipt of such payment) Transfer to the Lessee the Undivided
Interest and the Real Property Interest):
(A) an amount equal to the excess, if any, of (1) Casualty
Value, computed as of the Basic Rent Payment Date specified in such
notice, over (2) 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 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 10% per annum;
(B) an amount equal to the excess, if any, of (1) such
Casualty Value over (2) 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;
(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; or
(D) an amount equal to 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;
(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 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 of the Sale Proceeds under the
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; or
<PAGE>
(vii) in the case of an Event of Default specified in clause (iv) of
Section 15, the Lessor may demand, by written notice to the Lessee
specifying a payment date which shall be not earlier than the date 30 days
after 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 last
payment date, as liquidated damages for loss of a bargain and not as a
penalty, any unpaid Rent due through such last Basic Rent Payment Date
plus an amount (not less than zero) equal to the Fair Market Sales Value
(determined without regard to the obligation 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 actual
condition of Unit 1) determined as of such last Basic Rent Payment Date
(together with interest on such amount at the interest rate specified in
Section 3(b)(iii) from such last Basic Rent Payment Date to the date of
actual payment) and upon receipt of such payment the Lessor shall (or may
prior to the receipt of such payment) Transfer to the Lessee the Undivided
Interest and the Real Property Interest); provided, however, that the
Lessor may not exercise the foregoing remedy if the Lessor shall have
failed to Transfer the Undivided Interest and the Real Property Interest
to the bidder (which shall not be the Lessee or an Affiliate of the
Lessee) that shall have submitted the highest cash bid on or before the
date on which such Event of Default arose excluding, however, any such
cash bid which the Lessor or the Owner Participant determines was not
submitted in good faith, or as to which the bidder fails to certify to the
Lessor such information as the Lessor or Owner Participant may reasonably
request in order to determine whether or not such bid was submitted in
good faith (and the Lessor agrees that it will, if and to the extent so
requested by the Lessee on or after the date 90 days preceding such last
Basic Rent Payment Date, use reasonable efforts (at the expense of the
Lessee) for a period ending on the day 90 days after such last Basic Rent
Payment Date, to find a Person willing to submit such cash bid; provided,
however, that the failure of the Lessor to do so shall not relieve the
Lessee of its obligations under this clause (vii)).
(b) No Release. No rescission 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.
<PAGE>
(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; provided, however, that
notwithstanding anything to the contrary set forth in this Facility Lease, the
remedy set forth in Section l6(a)(vii) shall be the sole and exclusive remedy
under this Section 16 in the case of an Event of Default specified in clause
(iv) of Section 15, unless the Lessee is in default of its payment obliga tions
under Section 16(a)(vii), in which case the Lessor may exercise its other
remedies under Section 16(a); (except that the maximum amount payable by the
Lessee in the event of the exercise by the Lessor of any of the remedies
provided for in Section 16(a)(v) or (vi) shall not exceed the total amount
payable by the Lessee under Section 16(a)(vii) minus the amount provided in
subclause (2) of clause (A), (B) or (C) of such Section 16(a)(v), if the Lessor
elects a remedy speci fied in said clause (A), (B) or (C), or the deficiency
referred to in Section 16(a)(vi), if the Lessor elects the remedy specified in
Section 16(a)(vi) hereof). 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.
(d) Exercise of Other Rights or Remedies. In addition to all other
rights and remedies provided in this Section 16, the Lessor may, except to the
extent expressly limited by provisions of this Section 16, 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(iii), 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
<PAGE>
(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 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 (so long as
no Default or Event of Default shall have occurred and be continuing) 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 the Owner Participant shall have received under Section 5.2
of the Indenture all amounts required to be paid by the Lessee pursuant to this
paragraph (e) (including interest, if any, thereon pursuant to Section
3(b)(iii)), 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 secu rity 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 (with signed receipt of an
officer of the Owner Participant in the case of a delivery to the Owner
Participant) or by means of telex, telecopy, or other wire transmission, or
mailed by registered or certified mail, or delivered by express delivery
service, 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.
<PAGE>
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 incorpo rated 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 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 4.635455% 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.
<PAGE>
(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 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 unenforceability 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 elsewhere 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 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 hereto.
<PAGE>
(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, warranties, 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 representation, 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 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 hereun der 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 Chase Manhattan Realty Leasing
Corporation, a New York corporation whose address is One Chase Manhattan Plaza
(20th Floor), New York, New York 10081, Attention of Leasing Administrator. 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.
<PAGE>
SCHEDULE 1
to
LEASE
SCHEDULE OF CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
------------ ------------- ------------ -------------
15JAN87 109.10599 15JAN98 105.02054
15JUL87 114.76002 15JUL98 103.97373
15JAN88 113.17994 15JAN99 102.04367
15JUL88 117.70456 15JUL99 100.81532
15JAN89 116.07167 15JAN100 98.74684
15JUL89 119.65174 15JUL100 97.31725
15JAN90 117.95016 15JAN101 95.09237
15JUL90 120.53475 15JUL101 93.43984
15JAN91 118.69682 15JAN102 91.07806
15JUL91 120.25014 15JUL102 89.28211
15JAN92 118.20917 15JAN103 86.84308
15JUL92 118.72285 15JUL103 84.92967
15JAN93 116.54349 15JAN104 82.40638
15JUL93 116.42005 15JUL104 80.36623
15JAN94 114.56122 15JAN105 77.75328
15JUL94 114.08476 15JUL105 75.57905
15JAN95 112.43357 15JAN106 72.87080
15JUL95 111.75470 15JUL106 70.55479
15JAN96 110.14794 15JAN107 67.74535
15JUL96 109.41227 15JUL107 65.27947
15JAN97 107.71163 15JAN108 62.36264
15JUL97 106.82849 15JUL108 59.73841
<PAGE>
SCHEDULE 1
to
LEASE
SCHEDULE OF CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15JAN109 56.70765
15JUL109 53.91617
15JAN110 50.76464
15JUL110 47.79658
15JAN111 44.51710
15JUL111 41.36264
15JAN112 37.94767
15JUL112 34.59656
15JAN113 31.03819
15JAN113 27.47963
15JAN114 23.76956
15JUL114 21.85439
15JAN115 20.00000
<PAGE>
SCHEDULE 2
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15AUG86 104.099993 15JAN90 119.27824
15SEP86 103.18569 15FEB90 119.43084
15OCT86 103.65043 15MAR90 119.58739
15NOV86 104.12325 15APR90 118.85885
15DEC86 104.25292 15MAY90 118.98243
15JUN90 117.38007
15JAN87 110.52963 15JUL90 117.48130
15FEB87 110.99000 15AUG90 117.57940
15MAR87 111.45839 15SEP90 116.81803
15APR87 110.27755 15OCT90 116.89414
15MAY87 110.71365 15NOV90 116.97322
15JUN87 108.65107 15DEC90 116.89842
15JUL87 109.06029
15AUG87 109.45859 15JAN91 119.94867
15SEP87 108.52150 15FEB91 120.00169
15OCT87 108.89348 15MAR91 120.05744
15NOV87 109.27223 15APR91 119.44437
15DEC87 109.34400 15MAY91 119.46653
15JUN91 117.99211
15JAN88 114.66863 15JUL91 117.99154
15FEB88 115.00952 15AUG91 117.98593
15MAR88 115.35674 15SEP91 117.25913
15APR88 114.64228 15OCT91 117.23086
15MAY88 114.65149 15NOV91 117.20427
15JUN88 112.75517 15DEC91 117.06632
15JUL88 113.04087
15AUG88 113.32361 15JAN92 119.40380
15SEP88 112.45267 15FEB92 119.34830
15OCT88 112.71259 15MAR92 119.29420
15NOV88 112.97776 15APR92 118.77580
15DEC88 112.99499 15MAY92 118.68865
15JUN92 117.32935
15JAN89 117.49595 15JUL92 117.21979
15FEB89 117.73796 15AUG92 117.10314
15MAR89 117.73796 15SEP92 116.39871
15APR89 117.12413 15OCT92 116.25944
15MAY89 117.33793 15NOV92 116.12050
15JUN89 115.59881 15DEC92 115.90990
15JUL89 115.79155
15AUG89 115.98287 15JAN93 117.56857
15SEP89 115.17614 15FEB93 117.39844
15OCT89 115.34705 15MAR93 117.22832
15NOV89 115.52210 15APR93 116.79146
15DEC89 115.49943 15MAY93 116.62105
<PAGE>
SCHEDULE 2
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15JUN93 115.39274 15NOV96 106.46442
15JUL93 115.22233 15DEC96 10622464
15AUG93 115.04340
15SEP93 114.40251 15JAN97 106.54943
15OCT93 114.22358 15FEB97 106.29766
15NOV93 114.04465 15MAR97 106.04588
15DEC93 113.83133 15APR97 105.79411
15MAY97 105.54233
15JAN94 114.91015 15JUN97 104.83831
15FEB94 114.72228 15JUL97 104.58654
15MAR94 114.53440 15AUG97 104.32218
15APR94 114.26601 15SEP97 103.94549
15MAY94 114.07813 15OCT97 103.68113
15JUN94 113.04848 15NOV97 103.41677
15JUL94 112.86060 15DEC97 103.15240
15AUG94 112.66333
15SEP94 112.13060 15JAN98 103.41930
15OCT94 111.93333 15FEB98 103.14172
15NOV94 111.73605 15MAR98 102.86414
15DEC94 111.53878 15APR98 102.58656
15MAY98 102.30898
15JAN95 112.17156 15JUN98 101.60285
15FEB95 111.96443 15JUL98 101.32527
15MAR95 111.75729 15AUG98 101.03381
15APR95 111.55016 15SEP98 100.63964
15MAY95 111.34302 15OCT98 100.34818
15JUN95 110.51294 15NOV98 100.05672
15JUL95 110.30581 15DEC98 99.76526
15AUG95 110.08832
15SEP95 109.66372 15JAN99 99.97051
15OCT95 109.44623 15FEB99 99.66448
15NOV95 109.22874 15MAR99 99.35845
15DEC95 109.01125 15APR99 99.05241
15MAY99 98.74638
15JAN96 109.39052 15JUN99 98.03656
15FEB96 109.16216 15JUL99 97.73053
15MAR96 108.93379 15AUG99 97.40920
15APR96 108.70542 15SEP99 96.99494
15MAY96 108.47706 15OCT99 96.67361
15JUN96 107.77372 15NOV99 96.35228
15JUL96 107.54535 15DEC99 96.03094
15AUG96 107.30557
15SEP96 106.94399 15JAN100 96.17040
15OCT96 106.70421 15FEB100 95.83299
<PAGE>
SCHEDULE 2
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15MAR100 95.49559 15AUG103 79.14289
15APR100 95.15819 15SEP103 78.64881
15MAY100 94.82079 15OCT103 78.21004
15JUN100 94.10556 15NOV103 77.77126
15JUL100 93.76816 15DEC103 77.33249
15AUG100 93.41388
15SEP100 92.97666 15JAN104 77.24112
15OCT100 92.62239 15FEB104 76.79259
15NOV100 92.26812 15MAR104 76.34407
15DEC100 91.91385 15APR104 75.89555
15MAY104 75.44709
15JAN101 91.98295 15JUN104 74.71978
15FEB101 91.61096 15JUL104 74.28869
15MAR101 91.23898 15AUG104 73.82803
15APR101 90.86699 15SEP104 73.31576
15MAY101 90.49501 15OCT104 72.85509
15JUN101 89.77244 15NOV104 72.39443
15JUL101 89.40045 15DEC104 71.93376
15AUG101 89.00987
15SEP101 88.54651 15JAN105 71.79757
15OCT101 88.15593 15FEB105 71.32668
15NOV101 87.76535 15MAR105 70.85579
15DEC101 87.37476 15APR105 70.38490
15MAY105 69.91403
15JAN102 87.36846 15JUN105 69.18425
15FEB102 86.96239 15JUL105 68.73164
15MAR102 86.55632 15AUG105 68.24801
15APR102 86.15026 15SEP105 67.71661
15MAY102 85.74426 15OCT105 67.23297
15JUN102 85.01636 15NOV105 66.74934
15JUL102 84.62523 15DEC105 66.26571
15AUG102 84.20767
15SEP102 83.72773 15JAN106 66.08259
15OCT102 86.31017 15FEB106 65.58823
15NOV102 82.89261 15MAR106 65.09388
15DEC102 82.47505 15APR106 64.59952
15MAY106 64.10516
15JAN103 82.42598 15JUN106 63.37272
15FEB103 81.99878 15JUL106 62.89753
15MAR103 81.57158 15AUG106 62.38980
15APR103 81.14438 15SEP106 61.83828
15MAY103 80.71726 15OCT106 61.33055
15JUN103 79.99225 15NOV106 60.82282
15JUL103 79.58167 15DEC106 60.31509
<PAGE>
SCHEDULE 2
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15JAN107 60.08285 15JUN110 37.08524
15FEB107 59.56387 15JUL110 36.50803
15MAR107 59.04489 15AUG110 35.89146
15APR107 58.52591 15SEP110 35.24859
15MAY107 58.00692 15OCT110 34.63202
15JUN107 57.27166 15NOV110 34.01544
15JUL107 56.77277 15DEC110 33.39887
15AUG107 56.23975
15SEP107 55.66708 15JAN111 32.94594
15OCT107 55.13407 15FEB111 32.31573
15NOV107 54.60106 15MAR111 31.68553
15DEC107 54.06805 15APR111 31.05532
15MAY111 30.42512
15JAN108 53.78438 15JUN111 29.67637
15FEB108 53.23957 15JUL111 29.07045
15MAR108 52.69475 15AUG111 28.42323
15APR108 52.14993 15SEP111 27.75454
15MAY108 51.60511 15OCT111 27.10732
15JUN108 50.86681 15NOV111 26.46011
15JUL108 50.34306 15DEC111 25.81290
15AUG108 49.78352
15SEP108 49.18861 15JAN112 25.29813
15OCT108 48.62907 15FEB112 24.63662
15NOV108 48.06953 15MAR112 23.97510
15DEC108 47.50999 15APR112 23.31359
15MAY112 22.65208
15JAN109 47.17248 15JUN112 21.89937
15FEB109 46.60056 15JUL112 21.26330
15MAR109 46.02864 15AUG112 20.58394
15APR109 45.45671 15SEP112 19.88810
15MAY109 44.88479 15OCT112 19.20874
15JUN109 44.14324 15NOV112 18.52938
15JUL109 43.59340 15DEC112 17.85002
15AUG109 43.00602
15SEP109 42.38774 15JAN113 17.27048
15OCT109 41.80036 15FEB113 16.57612
15NOV109 41.21299 15MAR113 15.88176
15DEC109 40.62562 15APR113 15.18740
15MAY113 14.49304
15JAN110 40.23173 15JUN113 13.73610
15FEB110 39.63137 15JUL113 13.06842
15MAR110 39.03100 15AUG113 12.35533
15APR110 38.43064 15SEP113 11.63096
15MAY110 37.83027 15OCT113 10.91787
<PAGE>
SCHEDULE 2
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Rent Percentage of Basic Rent Percentage of
Payment Date Facility Cost Payment Date Facility Cost
- ------------ ------------- ------------ -------------
15NOV113 10.20479
15DEC113 9.49170
15JAN114 8.84431
15FEB114 8.11549
15MAR114 7.38666
15APR114 6.65783
15MAY114 5.92901
15JUN114 5.16757
15JUL114 4.46671
15AUG114 3.71824
15SEP114 2.96389
15OCT114 2.21541
15NOV114 1.46694
15DEC114 0.71846
15JAN115 0.00000
<PAGE>
SCHEDULE 3
to
LEASE
SCHEDULE OF TERMINATION VALUES
Basic Rent Percentage Basic Rent Percentage Basic Rent Percentage
Payment of Facility Payment of Facility Payment of Facility
Date Cost Date Cost Date Cost
- ---------- ----------- ---------- ----------- ---------- -----------
15JAN87 109.01599 15JAN98 105.02054 15JAN109 56.70765
15JUL87 114.76002 15JUL98 103.97373 15JUL109 53.91617
15JAN88 113.17994 15JAN99 102.04367 15JAN110 50.76464
15JUL87 117.70456 15JUL99 100.81532 15JUL110 47.79658
15JAN89 116.07167 15JAN100 98.74684 15JAN111 44.51710
15JUL89 119.65174 15JUL100 97.31725 15JUL111 41.36264
15JAN90 117.95016 15JAN101 95.09237 15JAN112 37.94767
15JUL90 120.53475 15JUL101 93.43984 15JUL112 34.59656
15JAN91 118.69682 15JAN102 91.07806 15JAN113 31.03819
15JUL91 120.25014 15JUL102 89.28211 15JUL113 27.47963
15JAN92 118.20917 15JAN103 86.84308 15JAN114 23.76956
15JUL92 118.72285 15JUL103 84.92967 15JUL114 21.85439
15JAN93 116.54349 15JAN104 82.40638 15JAN115 20.00000
15JUL93 116.42005 15JUL104 80.36623
15JAN94 114.56122 15JAN105 77.75328
15JUL94 114.08476 15JUL105 75.57905
15JAN95 112.43357 15JAN106 72.87080
15JUL95 111.75470 15JUL106 70.55479
15JAN96 110.14794 15JAN107 67.74535
15JUL96 109.41227 15JUL107 65.27947
15JAN97 107.71163 15JAN108 62.36264
15JUL97 106.82849 15JUL108 59.73841
<PAGE>
SCHEDULE 5
to
FACILITY LEASE
REAL ESTATE INTEREST DESCRIPTION
The Real Estate Interest is a (i) .333333% a undivided interest in
the land described in I below, a (ii) .377777% undivided interest in the rights
and interests described in II below, and (iii) a .377777% undivided interest in
the right and interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona
PARCEL NO. 3: The East half of Section Four (4), Township One (1) South, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona
PARCEL NO. 4: The West half of Section Twenty-six (26), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of Section 27
PARCEL NO. 6: The Southeast quarter of Section Twenty-eight (28), Township One
(1) North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
PARCEL NO. 7: The East half of Section Thirty-three (33), Township One (1)
North, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO.8: All of Section Thirty-four (34), Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
<PAGE>
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township One (1) North, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGINNING at the Southeast corner of the said East half of the
Southwest quarter of Section 23; thence West, an assumed bearing along the
South line of the said East half of the Southwest quarter of Section 23,
for a distance of 762.04 feet; thence North 0 degrees 03 minutes 39
seconds West; parallel to the East line of the said East half of the
Southwest quarter of Section 23, for a distance of a 1946.46 feet to a
point on the South right-of-way line of the 200 foot wide
HASSAYAMPA-SALOME HIGHWAY, as recorded in Book 12 of Road Maps, page 82,
Maricopa County Recorder, Maricopa County, Arizona; thence continuing
North 0 degrees 03 minutes 39 seconds West for a distance of 234.15 feet
to a point a on the North right-of-way line of said highway; thence South
58 degrees 43 minutes 35 seconds East, along said North right-of-way line
for a distance of 892.17 feet to a point on the said East line of the East
half of the Southwest quarter of Section 23; thence South 0 degrees 03
minutes 39 seconds East, along said East line for a distance of 234.15
feet to a point on the said South right-of-way line; thence continuing
South 0 degrees 03 minutes 39 sec onds East for a distance of 1483.31 feet
to the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in Docket
11652, page 52, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMPA PUMPING STATION AND EFFLUENT PIPELINE
All real property, leases, licenses, easements, rights-of-way and
other property held by Title USA Company of Arizona Trust No. 530 established by
that certain Trust Agreement dated October 15, 1975, as amended, but excluding
therefrom all improvements.
<PAGE>
III. MISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP Participation
Agreement), in addition to the Trust Agreement for Title USA Company of Arizona
Trust 530, consisting of leases, licenses, easements, and permits, which provide
land and land rights for (a) the pipeline to supply waste water effluent to
PVNGS from the 91st Avenue sewage treatment plant serving the Phoenix
Metropolitan area and (b) railroad access to the Nuclear Plant Site (as defined
in the ANPP Participation Agreement).
<PAGE>
SCHEDULE 6
to
FACILITY LEASE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) 1.133333% undivided interest in and
to the property described under A below and (ii) a .377777% undivided interest
in and to the property described in B below.
A. Unit 1 of the Palo Verde Nuclear Generating Station (PVNGS),
located in Maricopa County, Arizona, approximately 55 miles west of the City of
Phoenix, Arizona, and approximately 16 miles west of the City of Buckeye,
Arizona, consisting of:
I. Unit 1 Combustion Engineering "System 80" pressurized water
reactor nuclear steam supply system (the NSSS). The NSSS is
comprised of a reactor vessel containing 241 fuel assemblies
with approximately 100 tons of enriched uranium (fuel
assemblies, however, are not part of Unit 1 and are not
included in the Undivided Interest being sold), two steam
generators, four reactor coolant pumps and various additional
systems and subsystems. The licensed thermal rating of the
NSSS is 3800 MW.
II. Unit 1 GE TC6F-43, 1800 RPM tandem-compound, six flow, reheat
turbine-generator including turbine, generator, moisture
separator-reheater, exciter, controls, and auxiliary
subsystems. The turbine-generator is conductor cooled and
rated at 1,554 MVA at 24,000 V, 3 phase, 60 Hz, 1.5 in Hg ABS
back pressure, and approximately 1,363 MW maximum gross
electric output.
III. Unit 1 146 ft. inside diameter, steel-lined, prestressed
concrete cylindrical containment building with a hemispherical
dome designed for 60 psig. The containment building houses the
reactor system.
IV. Unit 1 auxiliary systems and equipment including engineered
safeguards systems, reactor auxiliary systems and
turbine-generator auxiliary systems associated with items I,
II, and III above, extending to and including the Unit 1
start-up transformer.
V. Unit 1 cooling tower system consisting of three (3) mechanical
draft cooling towers, including a closed cycle circulating
water system, make-up water systems and essential spray ponds.
VI. Unit 1 radioactive waste treatment system, including liquid,
gaseous, and solid waste subsystems, controls,
instrumentation, storage, handling and shipment facilities.
<PAGE>
VII. Unit 1 emergency diesel-generator system, including a
diesel-generator building which contains two diesel
generators, fuel oil systems, storage tanks, control and
instrumentation systems and other equipment.
VIII. Unit 1 internal communication systems, including associated
interconnections and computer data links.
BUT EXCLUDING:
I. Nuclear fuel for Unit 1, including spare fuel assemblies.
<PAGE>
When Recorded, Return to: Greg R. Nielsen
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 JULY
31, 1986, 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 November 18, 1986
to
FACILITY LEASE
Dated as of July 31, 1986
between
THE FIRST NATIONAL BANK OF BOSTON
not in its individual capacity,
but solely as Owner Trustee
under a Trust Agreement, dated as
of July 31, 1926 with Chase
Manhattan. Realty Leasing
Corporation
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on August 1, 1986,
as Instrument No. 86-404570 in Maricopa County
Recorder's Office.
================================================================================
6091.CHASE.DEBT.146:1
<PAGE>
AMENDMENT NO. 1, dated as of November 18, 1986 (Amendment No.
1), to the Facility Lease dated as of July 31, 1986 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 July 31, 1985,
with Chase Manhattan Realty Leasing Corporation, a New York 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 July 31, 1986 (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, of the
refunding (by issuance of the Fixed Rate Notes) of the Initial Series Note;
WHEREAS, the Fixed Rate Notes are being issued pursuant to
Supplemental Indenture No. 1, 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; and
WHEREAS, a Change in Tax Law has occurred;
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 to the Facility Lease.
6091.CHASE.DEBT. 146:1
<PAGE>
SECTION 2. Amendments
(a) Section 3(a)(i) of the Facility Lease is amended to read
in its entirety as follows:
"(i) on January 15, 1987, an amount equal to .02643205% of the Facility
Cost for each day from, and including August 1, 1986 to, but excluding
January 15, plus or minus the Rent Differential, if any, referred to in
Section 3(h):"
(b) (1) Section 3(a) (ii) of the Facility Lease is amended to
read in its entirety as follows:
"(ii) on. July 15, 1987 and on each Basic Rent Payment Date thereafter
to and including January 15, 2015, an amount equal to 4.757769% of
Facility Cost;".
(2) Section 3(a) (iii) is amended to delete from the
parenthetical contained therein the phrase" and any increases and decreases
pursuant to Section 3(h)".
(c) Section 3(e) (iii) of the Facility Lease is hereby amended
to replace "2.0% of the Purchase Price" with "2.2% of the Purchase Price".
Section 3(e) (iv) is hereby amended to insert (x) "(other than a change in items
4, 5, 8 (as to the basis for amortization of Transaction Expenses), 14, 13 and
17, but without limiting the effect of Section 3(d) hereof)" immediately
following the word "change" and (y) the word "Current" before the phrase
"Pricing Assumptions." Section 3(e) of the Facility Lease is hereby further
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 written consent of the Owner Participant."
(d) Schedule 1 to the Facility Lease (Schedule of Casualty
Values) is hereby replaced with Schedule 1 hereto.
(e) Schedule 2 to the Facility Lease (Schedule of Special
Casualty Values) is hereby replaced with Schedule 2 hereto.
-2-
6O91.CHASE.DEBT.146:1
<PAGE>
(f) Schedule 3 to The Facility Lease (Schedule of Termination
Values) is hereby replaced with Schedule 3 hereto.
(g) Section 3(h) of the Facility Lease is hereby amended to
read in its entirety as follows:
"(h) Rent Differential. The installment of Basic Rent due
January 15, 1987 shall be increased or decreased, as the case may be,
by the Rent Differential. For purposes hereof, Rent Differential
shall mean the difference between (i) the aggregate amount of
interest paid or payable on the Initial Series Notes on or before
November 25, 1986 and (ii) the aggregate amount of interest that
would have been paid on such Initial Series Notes if such Notes had
at all times from the date of issuance thereof to November 25, 1986
borne interest at a rate equal to 9.9024175% per annum (computed on
the basis of a 360-day year of twelve 30-day months). If (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 January 15, 1987 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 January 15, 1987
shall be decreased by the Rent Differential."
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 $336,986.30 on November 25, 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 amendments set forth in
Section 2 hereof shall be and become effective upon the execution hereof by the
parties hereto.
-3-
6091.CHASE.DEBT.146:1
<PAGE>
(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 much 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 mandatory
applicable hereto.
(e) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One Chase
Manhattan Plaza, New York, New York 10005. 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 original of this
Amendment No. 1 marked "THE COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
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".
-4-
6091.CHASE.DEBT.146:1
<PAGE>
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 there-unto 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 July 31, 1936, with chase
Manhattan Realty Leasing
Corporation
By:
----------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF
NEW MEXICO,
By:
----------------------------
Vice President and
Corporate Controller
-5-
6O9l.CHASE.DEBT.146:l
<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, 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
Delia T. Santago
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
State of New York )
) ss:
County of New York)
The foregoing instrument was acknowledged before me this 24th day of November,
1986, by Martin P. Henry, Assistant Vice President of THE FIRST NATIONAL BANK OF
BOSTON, a national banking association, on behalf of the banking association as
Owner Trustee under the Trust Agreement dated as of July 31, 1986 with Chase
Manhattan Realty Leasing Corporation.
/s/ David A. Spivak
------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693488
Qualified in New York County
Commission Expires March 10, 1987
6091.CHASE.DEBT. 146:1
SCHEDULE 1
to
AMENDMENT NO.1
SCHEDULE OF CASUALTY VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN87 108.39224 15JAN98 102.28809
15JUL87 107.23024 15JUL98 100.70917
15JAN88 101.51081 15JAN99 99.63607
15JUL88 107.60714 15JUL99 97.93951
15JAN89 110.72584 15JAN100 96.69628
15JUL89 109.72664 15JUL100 94.89680
15JAN90 112.19177 15JAN101 93.52454
15JUL90 111.06507 15JUL101 91.63860
15JAN91 112.87839 15JAN102 90.12880
15JUL91 111.69339 15JUL102 88.15050
15JAN92 112.92483 15JAN103 86.51027
15JUL92 111.68018 15JUL103 84.43301
15JAN93 112.35208 15JAN104 82.66793
15JUL93 111.01255 15JUL104 80.48337
15JAN94 111.08451 15JAN105 78.58288
15JUL94 109.60551 15JUL105 76.28283
15JAN95 109.08161 15JAN106 74.23710
15JUL95 107.62209 15JUL106 71.81301
15JAN96 106.87515 15JAN107 69.61205
15JUL96 105.47391 15JUL107 67.05595
15JAN97 104.68407 15JAN108 64.69021
15JUL97 103.20804 15JUL108 61.99287
Page 1 of 2
6091.CHASE.DEBT.146:l
<PAGE>
SCHEDULE 1
to
AMENDMENT NO.1
SCHEDULE OF CASUALTY VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN109 59.45078
15JUL109 56.60203
15JAN110 53.87142
15JUL110 50.86047
15JAN111 47.92842
15JUL111 44.74379
15JAN112 41.59654
15JUL112 38.22608
15JAN113 34.84909
15JUL113 31.27985
15JAN114 27.65763
15JUL114 23.87600
15JAN115 20.00000
Page 2 of 2
6091.CHASE.DEBT.146:l
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15AUG86 104.27687 11JAN89 110.51760
15SEP86 103.32804 15FEB89 110.68360
15OCT86 103.76229 15MAR89 110.85374
15NOV86 104.20441 15APR89 110.27364
15DEC86 104.30295 15MAY89 110.42615
15JUN89 109.30420
15JAN87 108.37051 15JUL89 109.44686
15FEB87 108.74577 15AUG89 109.57477
15MAR87 109.12807 15SEP89 109.04477
15APR87 108.15899 15OCT89 109.16270
15MAY87 108.51711 15NOV89 109.28411
15JUN87 106.84559 15DEC89 109.27124
15JUL87 107.18467
15AUG87 107.50988 15JAN90 111.81873
15SEP87 101.74809 15FEB90 111.91504
15OCT87 107.05454 11MAR90 112.01453
15NOV87 107.36708 15APR90 111.49867
15DEC87 107.42871 15MAY90 111.58039
15JUN90 110.52636
15JAN88 108.41911 11JUL90 110.59665
15FEB88 108.66143 15AUG90 110.65880
15MAR88 108.90895 15SEP90 110.14733
15APR88 108.24364 15OCT90 110.19806
15MAY88 108.46860 15NOV90 110.25136
15JUN88 107.25568 15DEC90 110.19663
15JUL88 107.46881
15AUG88 107.66817
15SEP88 107.10979
15OCT88 107.29730
15NOV88 107.48926
15DEC88 107.51542
Page 1 of 6
6091.CHASE.DEBT.146:l
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN91 112.29286 15JAN94 109.57539
15FEB91 112.33172 15FEB94 109.42999
15MAR91 112.37308 15MAR94 109.28510
15APR91 111.92973 15APR94 109.01130
15MAY91 111.95239 15MAY94 108.84777
15JUN91 110.97827 15JUN94 108.08218
15JUL91 110.98863 15JUL94 107.90562
15AUG91 110.11543 15AUG14 107.73011
15SEP91 110.51243 15SEP94 107.28037
15OCT91 110.50706 15OCT94 107.09027
15NOV91 110.50366 15NOV94 106.90017
15DEC91 110.41809 15DEC94 106.69743
15JAN92 112.07912 15JAN95 107.16923
15FEB92 112.05940 15FEB95 106.97064
15MAR92 112.04153 15MAR95 106.77204
11APR92 111.66699 15APR95 106.56219
15MAY92 111.63146 15MAY95 106.36360
15JUN92 110.73818 15JUN95 105.69371
15JUL92 110.69141 15JUL95 105.49511
15AUG92 110.63926 15AUG95 105.28762
15SEP92 110.18044 15SEP95 104.90076
15OCT92 110.11712 15OCT95 104.69328
15NOV92 110.05513 15DEC95 104.48579
15DEC92 109.93623 15DEC95 104.27831
15JAN93 111.19851
15FEB93 111.11931
15MAR93 111.04133
15APR93 110 72175
15MAY93 110.62612
15JUN93 109.79976
15JUL93 109.69206
15AUG93 109.57771
15SEP93 109.13192
15OCT93 109.00545
15NOV93 108.87964
15DEC93 108.71924
Page 2 of 6
6091.CHASE.DEBT.146.1
<PAGE>
SCHEDULE 2
to
AMENDMENT NO.1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN96 104.51184 15JAN99 95.63381
15FEB96 104.29506 15FEB99 95.34538
15MAR96 104.07829 15MAR99 95.05694
15APR96 103.64474 15APR99 94.76851
15MAY96 103.08893 15MAY99 94.48007
15JUN96 103.08893 15JUN99 93.91569
15JUL96 102.87215 15JUL99 93.62726
15AUG96 102.64567 15AUG99 93.32418
15SEP96 102.31721 15SEP99 92.94856
15OCT96 102.09072 15OCT99 92.64548
15NOV96 101.86424 15NOV99 92.34241
15DEC96 101.63776 15DEC99 92.03933
15JAN97 101.82213 15JAN100 92.05232
15FEB97 101.58551 15FEB100 91.73903
15MAR97 101.34889 15MAR100 91.42574
15APR97 101.11227 15APR100 91.11244
15MAY97 101.87564 15MAY100 90.79915
15JUN97 100.32043 15JUN100 90.23230
15JUL97 100.08381 15JUL100 89.91901
15AUG97 99.83518 15AUG100 89.59431
15SEP97 99.49429 15SEP100 89.20709
15OCT97 99.24566 15OCT100 88.88238
15NOV97 98.99704 15NOV100 88.55767
15DEC97 98.74841 15DEC100 88.23297
15JAN98 98.87984
15FEB98 98.61859
15MAR98 98.35735
15APR98 98.09611
15MAY98 97.83487
15JUN98 97.27602
15JUL98 97.01478
15AUG98 96.74028
15SEP98 96.38332
15OCT98 96.10882
15NOV98 95.83432
15DEC98 95.55982
Page 3 of 6
6091.CHASE.DEBT
<PAGE>
SCHEDULE 2
to
AMENDMENT NO.1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN101 88.19119 15JAN104 74.98028
15FEB101 87.85568 15FEB104 74.57432
15MAR101 87.50217 15MAR104 74.16836
15APR101 87.18466 15APR104 73.76240
15MAY101 86.84914 15MAY104 73.35645
15JUN101 86.28309 15JUN104 72.77247
15JUL101 85.94758 15JUL104 72.36651
15AUG101 85.59993 15AUG104 71.94734
15SEP101 85.19988 15SEP104 71.49457
15OCT101 84.85223 15OCT104 71.07541
15NOV101 84.50458 15NOV104 70.65624
15DEC101 84.15692 15DEC104 70.23707
15JAN102 84.05837 15JAN105 70.01508
15FEB102 83.69956 15FEB105 69.58389
15MAR102 83.34075 15MAR105 69.15270
15APR102 82.98193 15APR105 68.72151
15MAY102 82.62312 15MAY105 68.29032
15JUN102 82.05737 15JUN105 67.69316
15JUL102 81.69856 15JUL105 67.26197
15AUG102 81.32745 15AUG105 66.81677
15SEP102 80.91417 15SEP105 66.34036
15OCT102 80.54306 15OCT105 65.89515
15NOV102 80.17196 15NOV105 65.44994
15DEC102 79.80085 15DEC105 65.00473
15JAN103 79.65508
15FEB103 79.27288
15MAR103 78.89068
15APR103 78.50847
15MAY103 78.12627
15JUN103 77.55465
15JUL103 77.17245
15AUG103 77.77780
15SEP103 76.34724
15OCT103 75.95260
15NOV103 75.55795
15DEC103 75.16331
Page 4 of 6
6091.CHASE.DEBT
<PAGE>
SCHEDULE 2
to
AMENDMENT NO.1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN106 64.74147 15JAN109 46.88549
15FEB106 64.28351 15FEB109 46.33693
15MAR106 63.82555 15MAR109 45.78837
15APR106 63.36759 15APR109 45.23980
15MAY106 62.90964 15MAY109 44.69124
15JUN106 62.29843 15JUN109 44.03206
15JUL106 61.84047 15JUL109 43.48830
15AUG106 61.36763 15AUG109 42.92193
15SEP106 60.86610 15SEP109 42.33510
15OCT106 60.39326 15OCT109 41.76873
15NOV106 59.92042 15NOV109 41.20236
15DEC106 59.44759 15DEC109 40.63600
15JAN107 59.14089 15JAN110 40.18753
15FEB107 58.65452 15FEB110 39.60498
15MAR107 58.16816 15MAR110 39.02243
15APR107 57.68179 15APR110 38.43988
15MAY107 57.19542 15MAY110 37.85732
15JUN107 56.56925 15JUN110 37.18000
15JUL107 56.08404 15JUL110 36.60430
15AUG107 55.58188 15AUG110 36.00284
15SEP107 55.05365 15SEP110 35.38392
15OCT107 54.55149 15OCT110 34.78247
15NOV107 54.04933 15NOV110 34.18101
15DEC107 53.54716 15DEC110 33.57955
15JAN108 53.19582
15FEB108 52.67929
15MAR108 52.16275
15APR108 51.64622
15MAY108 51.12968
15JUN108 50.48754
15JUL108 49.97390
15AUG108 49.44059
15SEP108 48.88395
15OCT108 48.35064
15NOV108 47.81733
15DEC108 47.28402
Page 5 of 6
6091.CHASE.DEBT.
<PAGE>
SCHEDULE 2
to
AMENDMENT NO.1
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
------- ----------- ------- -----------
15JAN111 33.07824 15JAN114 9.02244
15FEB111 32.45960 15FEB114 8.28170
15MAR111 31.84096 15MAR114 7.54095
15APR111 31.22233 15APR114 6.80021
15MAY111 30.60369 15MAY114 6.05946
15JUN111 29.90703 15JUN114 5.29694
15JUL111 29.29748 15JUL114 4.57315
15AUG111 28.65877 15AUG114 3.80841
15SEP111 28.00574 15SEP114 3.03971
15OCT111 27.36703 15OCT114 2.27497
15NOV111 26.72832 15NOV114 1.51023
15DEC111 26.08961 15DEC114 0.74549
15JAN112 25.53238 15JAN115 (-.00001)
15FEB112 24.87545
15MAR112 24.21851
15APR112 23.56157
15MAY112 22.90463
15JUN112 22.18738
15JUL112 21.54195
15AUG112 20.86371
15SEP112 20.17443
15OCT112 19.49619
15NOV112 18.81794
15DEC112 18.13969
15JAN113 17.52326
15FEB113 16.82565
15MAR113 16.12805
15APR113 15.43044
15MAY113 14.73283
15JUN113 13.99364
15JUL113 13.31020
15AUG113 12.58999
15SEP113 11.86219
15OCT113 11.14197
15NOV113 10.42176
15DEC113 9.70154
Page 6 of 6
6091.CHASE.DEBT.
<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
------- ----------- ------- -----------
15JAN87 108.37051 15JAN99 95.63381
15JUL87 107.18467 15JUL99 93.62726
15JAN88 108.41911 15JAN100 92.05232
15JUL88 107.46881 15JUL100 89.91901
15JAN89 110.51760 15JAN101 88.19119
15JUL89 109.44686 15JUL101 85.94758
15JAN90 111.81873 15JUL102 84.05837
15JUL90 110.59665 15JUL102 81.69856
15JAN91 112.29286 15JAN103 79.65508
15JUL91 110.69141 15JUL103 77.17245
15JAN92 112.07912 15JUL104 74.98028
15JUL92 110.69141 15JUL104 72.36651
15JAN93 111.19851 15JAN105 70.01508
15JUL93 109.69206 15JUL105 67.26197
15JAN94 109.57539 15JAN106 64.74147
15JUL94 107.90562 15JUL106 61.84047
15JAN95 107.16923 15JAN107 59.14089
15JUL95 105.49511 15JUL107 56.08404
15JAN96 104.51184 15JAN108 53.19582
15JUL96 102.87215 15JUL108 49.97390
15JAN97 101.82213 15JAN109 46.88549
15JUL97 100.08381 15JUL109 43.48830
15JAN98 98.87984 15JAN110 40.18753
15JUL98 97.01478 15JUL110 36.60430
Page 1 of 2
6091.CHASE.DEBT.
<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
------- ----------- ------- -----------
15JAN111 33.07824
15JUL111 29.29748
15JAN112 25.53238
15JUL112 21.54195
15JAN113 17.52326
15JUL113 13.31020
15JAN114 9.02244
15JUL114 4.57315
15JAN115 0.0
Page 2 of 2
6091.CHASE.DEBT
<PAGE>
When Recorded, Return to: Greg R. Nielsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS HERETOFORE AMENDED
AND AS FURTHER 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 ASSIGMIENT OF
RENTS DATED AS OF JULY 31, 1986, AS HERETOFORE AMENDED. THIS AMENDMENT NO. 2 HAS
BEEN EXECUTED IN SEVERAL COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO. 2
FOR INF0RMATION CONCERNING THE RIGHTS OF HOLDERS or VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO.2
Dated as of December 11, 1986
to
FACILITY LEASE
Dated as of July 31, 1986,
as heretofore 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 July 31, 1986 with Chase
Manhattan Realty Leasing
Corporation
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on August 1, 1986, as Instrument No. 86-404570
and Amendment No.1 to the Facility Lease Recorded on November 25, 1986, as
Instrument No. 86-650771, all in Maricopa County Recorder's Office.
================================================================================
<PAGE>
AMENDMENT N0. 2, dated as of December 11, 1986 (Amendment No. 2), to
the Facility Lease dated as of July 31, 1986, 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 July 31, 1986, with Chase Manhattan Realty Leasing Corporation, a New York
corporation (the Lessor), and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation (the Lessee).
WITNESSETH:
WHEREAS, the Lessee and the Lessor have heretofore entered into a
Facility Lease dated as of July 31, 1986, 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 execute this Amendment No.
2, to eliminate an overpayment of rent by the Lessee;
WHEREAS, the Indenture Trustee has consented to this Amendment No. 2
pursuant to the Request, Instruction and Consent effective on December 15, 1986;
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 tents
in Appendix A to the Facility Lease.
<PAGE>
SECTION 2. Amendments.
(a) Section 3(a) of the Facility Lease is hereby amended by inserting
the phrase "and the Real Property Interest" immediately following the term
"Undivided Interest".
(b) Section 21 of the Facility Lease is hereby amended to read in its
entirety as follow:
"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 the
respective percentages of the Real Estate Investment for the applicable
period set forth or derived from the respective percentages of Facility
Cost in clauses (i), (ii) and (iii) respectively, of Section 3 (a)
hereof (which rent is included as part of Basic Rent payable pursuant to
Section 3(a) hereof)."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amendments 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 Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One chase
Manhattan Plaza, New York, New York 10005. 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.
-2-
<PAGE>
(e) Amendment No.2. The single executed original 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 this Amendment No. 2 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. 2 may be
created or continued through the transfer or possession of any counterpart other
than the "Original".
-3-
<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 July 31, 1966, with Chase
Manhattan Realty Leasing
Corporation
By
--------------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO,
By /s/ A. J. Robison
--------------------------------
Senior Vice President and
Chief Financial Officer
<PAGE>
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me 15th day of
December, 1986, by A.J. ROBINSON, Senior vice president and Chief Financial
Officer of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation on
behalf of the corporation.
/s/ Delia T. Santiago
-----------------------
Notary Public
Delia T. Santago
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 15th day of
December, 1986, by Martin P. Henry, Assistant Vice President of the NATIONAL
BANK OF BOSTON, a national banking association, on behalf of the banking
association as Owner Trustee under the Trust Agreement dated as of July 31, 1986
with Chase Manhattan Realty Leasing Corporation.
/s/ David A. Spivak
------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693488
Qualified in New York County
Commission Expires March 10, 1987
<PAGE>
When Recorded, Return to: Greg R. Nielsen, Esq.
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER TIE FACILITY LEASE AS HERETOFORE
AMENDED AND AS FURTHER AMENDED BY THIS AMENDMENT NO. E THERETO HAVE BEEN
ASSIGNED TO, AND ARE SUBJECCT TO A SECURITY INTEREST IN FAVOR OF, CHEMICAL BANK,
AS INDENTURE TRUSTEE UNDER A TRUST INDENTRURE, MORTAGAGE, SECURITY AGREEMENT AND
ASSIGNEMNT OF RENTS DATED AS OF JULYY 31, 1986, AS HERETOFORE AMENDED. THIS
AMENDMENT NO. 3 HAS BEEN EXECUTED IN SERVERAL COUNTERPARTS. SEE SECTION 3(e) OF
THIS AMENDMENT NO. 3 FOR INFORMATION CONCERNING THE RIGHTS OF HOLDRS OF VAROUS
COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINIAL COUNTERPART.
================================================================================
AMENDMENT NO. 3
Dated as of April 8, 1987
to
FACILITY LEASE
Dated as of July 31, 1986,
as heretofore 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 July 31, 1986,
with Chase Manhattan Realty
Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on, August 1, 1986, as Instrument No.
86-404570, Amendment No. 1 Recorded on November 25, 1986, as instrument No.
86-650771, and Amendment No. 2 Recorded on December 17, 1986, as Instrument No.
86-695945, all in Maricopa County Recorder's Office.
================================================================================
6091CHASE.DEBT.160:1
AMENDMENT NO. 3, dated as of April 8, 1987 (Amendment No. 3),
to the Facility Lease dated as of July 31, 1986, 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 July 31, 1986, with Chase Manhattan Realty Leasing Corporation, a New York
corporation (the Lessor), and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation (the Lessee).
WITNESSETH
WHEREAS, the Lessee and Lease the Lessor have heretofore entered
into a Facility dated as of July 31, 1986, 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 April 8,
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:
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.
6091.CHASE.DEBT.160:l
<PAGE>
Section 2. Amendments.
(a) Section 5(a) of the Facility Lease is hereby amended to
read in its entirety as follows:
"(a) Return of the undivided Interest. On the Lease Termination
Date, the Lessee will (1) surrender possession of the Undivided Interest
and the Real Property Interest to the Lessor (or to a Person specified
by the Lessor to the Lessee in writing not less than 6 months prior to
the Lease Termination Date) (i) with full rights as a "Transferee" and
the sole "Participant" with respect to the Undivided Interest and the
Real Property Interest within the meaning of Section 15.10 of the ANPP
Participation Agreement and (ii) without a Price-Anderson Event (as
hereinafter defined) having arisen prior to, or arising upon, or
immediately following, such surrender and (2) furnish to the Lessor: (i)
copies certified by a senior officer of the Lessee of all Governmental
Action necessary to effect such surrender (including, but without
limitation, appropriate amendments to the License permitting the Lessor
(without the Lessor being required to change its business) or such
Person to possess the Undivided Interest and the Real Property Interest
with or without the continued involvement of the Lessee as Agent), which
Governmental Action shall be in full force and effect; and (ii) an
opinion of counsel (which may be nudge Rose Guthrie Alexander & Ferdon,
Snell & Wilmer or another counsel experienced with NRC and other nuclear
matters reasonably satisfactory to the Owner Participant) to the effect
that (A) the Lessee has obtained all Governmental Action and action
under the ANPP Participation Agreement necessary to effect such
surrender by the Lessee and receipt of possession by the Lessor (or by
the Person so specified by the Lessor) and (3) such Governmental Action
is in full force and effect. 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
-2-
609l.CHASE.DEBT.160:l
<PAGE>
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 PVNGS 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 and the Real Property 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)1
(ix) and (x) of the definition of such term) and in the condition and
state of repair required by Section 8. In the event that on or prior to
the Lease Termination Date there shall have occurred a default by any
ANPP Participant (other than the Lessee) 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 any 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
-3-
6091.CHASE.DEBT.160:l
<PAGE>
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). For purposes of this
Section 5(a) a "Price-Anderson Event" shall mean any Change in, or new
interpretation by Governmental Authority having jurisdiction of,
Applicable Law, including without limitation the Price-Anderson Act, the
Atomic Energy Act and the regulations of the NRC, in each case as in
effect on the Closing Date, but only if such change is specified in
clauses (2) (i) through (iv) of the definition of "Deemed Loss Event"
(other than a change which is specified in clause (A) of the definition
of "Acceptable Change")."
(b) A new section 8(g) of the Facility Lease is inserted
therein, to read in its entirety as follows:
"(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) "
-4-
6091.CHASE.DEBT. 160:1
<PAGE>
(c) Section 15(iv) of the Facility Lease is hereby amended to
read in its entirety as follows:
"(iv) (1) the Lessee shall fail to perform its agreements set
forth in Section 5(a) hereof or (2) the remaining Economic Useful Life
of Unit 1, as determined under Section 8(g) if required thereby to be so
determined, shall be (x) as of the data six months prior to the end of
the Basic Lease Term, less than five and one-half years or (y) as of the
date six months prior to the end of the Renewal Term, three and one-half
years; or"
(d) Section 16(a) (vii) of the Facility Lease is hereby
amended to read in its entirety as follows:
"(vii) in the case of an Event of Default specified in clause
(iv) of Section 15, the Lessor may demand, by written notice to the
Lessee specifying a payment date which shall be (A) in the case of an
Event of Default specified in subclause (1) of said clause (iv), not
earlier than the data 30 days after the last Basic Rent Payment Date of
the Lease Term, and (B), in the case of an Event of Default specified in
subclause (2) of said clause (iv), 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 payment date, as liquidated damages for loss
of a bargain and not as a penalty, any unpaid Rent due through such last
Basic Rent Payment Date plus an amount (not less than zero) equal to the
Fair Market Sales Value (determined without regard to the obligation of
the Lessee under Section l0(b)(3)(xi) of the Participation Agreement) of
the Undivided Interest and the Real Property Interest (determined on the
basis of the actual condition of Unit 1) determined as of such last
Basic Rent Payment Date (together with interest on such amount at the
interest rate specified in Section 3(b) (iii) from such last Basic Rent
Payment Date to the date of actual payment) and upon receipt of such
payment the Lessor shall (or may prior to the receipt of such payment)
-5-
609l.CHASE.DEBT. 160:1
<PAGE>
Transfer to the Lessee the Undivided Interest and the Real Property
Interest); provided, however, that the Lessor may not exercise the
foregoing remedy if the Lessor shall have failed to Transfer the
Undivided Interest and the Real Property Interest to the bidder (which
shall not be the Lessee or an Affiliate of the Lessee) that shall have
submitted the highest cash bid on or before the date on which such Event
of Default arose excluding, however, any such cash bid which the Lessor
or the Owner Participant determines was not submitted in good faith, or
as to which the bidder fails to certify to the Lessor such information
as the Lessor or Owner Participant may reasonably request in order to
determine whether or not such bid was submitted in good faith (and the
Lessor agrees that it will, if and to the extent so requested by the
Lessee on or after the date 90 days preceding such last Basic Rent
Payment Date, use reasonable efforts (at the expense of the Lessee) for
a period ending on the day 90 days after such last Basic Rent Payment
Date, to find a Person willing to submit such cash bid; provided,
however, that the failure of the Lessor to do so shall not relieve the
Lessee of its obligations under this clause (vii))."
(e) The definition of "Acceptable Change" set forth in
Appendix A to the Facility Lease is hereby amended to read in its entirety as
follows:
"Acceptable Change shall mean any change in or new
interpretation by Governmental Authority having jurisdiction of the
Price-Anderson Act or the Atomic Energy Act (or the regulations of the NRC
relating thereto) if, after giving effect to such change or new interpretation:
(A) (a) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed $6.563 billion (assuming 101
operating nuclear facilities participating in the deferred premium or
similar plan referred to in clause (c) below and subject to adjustment
in an amount not exceeding (X) $63 million for each increase or decrease
in said number of operating nuclear facilities and (V)
-6-
6091.CHASE.DEBT.l60:l
<PAGE>
the aggregate of all changes in such "aggregate liability" to reflect
the effects of inflation contemplated pursuant to clause (c) below);
(b) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed the sum of, without duplication,
(X) the amount of insurance coverage available from commercial insurance
underwriters on terms substantially equivalent (in the reasonable
opinion of the owner Participant) to the terms in effect on the closing
Date under Applicable Law and required to be maintained by each licensee
with respect to any single nuclear facility, and (IC) the maximum
aggregate amount payable with respect to a single. "nuclear incident" by
all licensees of nuclear facilities participating in any deferred
premium or similar plan required under Applicable Law, by more than $40
million.
(c) the amount payable by all licensees of a single nuclear facility
with respect to such facility under any deferred premium or similar plan
required under Applicable Law shall not exceed $63 million per "nuclear
incident" (subject to an annual adjustment upward for each calendar year
after the enactment of a change in the Price-Anderson Act (if such
change increases the standard deferred premium) by an amount equal to,
if specified by such change or otherwise by Applicable law, (X) the
annual percentage change during the immediately prior calendar year in
the implicit price deflator for the Gross National Product published by
the United States Department of Commerce or (Y) the annual percentage
change in the consumer price index since the immediately prior calendar
year; provided, however, that (i) in the event that Applicable Law shall
not specify an inflation adjustment, then the inflation adjustment
permitted by this parenthetical shall be that specified in the preceding
subclause (X) and (ii) in the event that Applicable Law shall specify a
standard deferred premium below $63 million, the inflation adjustment
factor shall not be available to increase the standard deferred premium
permissible under this clause (c) beyond $63 million until such lower
deferred premium (as so inflated) equals or exceeds $63 million);
-7-
6091.CHASE.DEBT.160:l
<PAGE>
(d) the amount payable by all licensees of a single nuclear facility
with respect to such facility in any one year with respect to any one
"nuclear incident" under any deferred premium or similar plan required
under Applicable Law shall not exceed $12 million;
(e) insurance or other financial protection shall be in effect under
which the providers of such insurance or other financial protection
shall agree to pay any amount payable by any licensee under any deferred
premium or similar plan upon a default in such payment by such licensee
up to a maximum aggregate amount for all such defaults in payment of not
less than $30 million;
(f) a provision shall be included (X) which authorizes (whether or not
subject to appropriation acts) the NRC or other Governmental Authority
to barrow from the United States Treasury (1) to make payments on behalf
of any licensees under any deferred premium or similar plan and (2) to
make payments to claimants in the event that funds available to pay
valid claims in any year are insufficient as a result of any limitation
on the amount of deferred premiums that may be required of a licensee
under Applicable Law (in both cases the reimbursement obligation of such
licensees in any calendar year shall not exceed $12 million, plus
interest), or CY) which makes the exclusive source of payments for
public liability claims the funds provided by financial protection
required by Applicable Law and, where appropriate, funds provided as a
result of NRC or other Governmental Authority borrowings or (Z) which
establishes another mechanism under which the maximum potential
liability of all Persons during any calendar year as a result of a
"nuclear incident" shall not exceed the amount of insurance or other
financial protection required to be available during such calendar year
to pay all amounts which may become payable by any such person, when and
as they become payable, in respect of such liability;
-8-
609l.CHASE.DEBT.160:l
<PAGE>
(g) there shall be no claim, liability or expense excluded (1) from the
limitation of liability established by the Price-Anderson Act (as in
effect on the closing Date) (through modification of the definitions of
"aggregate liability", "persons indemnified", "nuclear incident" or
otherwise) or (2) under commercially available insurance or other
financial protection required under Applicable Law (as in effect on the
closing Date) (other than an exclusion of the coats of investigating and
settling claims and defending suits for damages), except, for purposes
of subclauses (1) and (2) of this clause (g), to the extent excluded
pursuant to Applicable Law as in effect on the closing Date;
(h) subject only to clause (b) above, policies of insurance, including
policies in respect of any deferred premium or similar plan, shall
provide, or shall have been amended or modified to provide, in both
timing and amount, and make available, or shall have been mended or
modified to make available, financial protection required under
Applicable Law; and
(i) neither the Owner Trustee nor the Owner Participant shall be (in the
opinion of independent counsel to the Owner Participant) exposed to any
other increase in its real or potential liability with respect to a
Nuclear incident", either during or subsequent to the Lease Term; or
(B) at all times from the date of such Change to, but not
including, the Lease Termination Date,
(a) a provision shall be included,. with language reasonably
satisfactory to the Owner Participant, which exempts the Owner Trustee
and the Owner Participant from all real or potential liability in
respect of a "nuclear incident" so long as neither the owner Trustee nor
-9-
6091.CHASE.DEBT.l6O:l
<PAGE>
the Owner Participant is in actual possession and control of Unit 1 or
the Undivided Interest, unless (in the opinion of independent counsel to
the Owner Participant) (x) a court could reasonably hold that the
statute incorporating such provision is unconstitutional or (y) there
shall have occurred a subsequent change in, or new interpretation by
Governmental Authority having jurisdiction of, the exemption from
liability provided by such provision as to interests of the Owner
Trustee and the Owner Participant in Unit 1 which change or new
interpretation renders ineffective such exemption;
(b) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed $13 billion (assuming 101
operating nuclear facilities participating in the deferred premium or
similar plan referred to in clause (c) of paragraph (A) above and
subject to adjustment in an amount not exceeding (X) $126 million for
each increase or decrease in said number of operating nuclear facilities
and (Y) the aggregate of all changes in such "aggregate liability" to
reflect the effects of inflation contemplated pursuant to clause (C) of
paragraph (A) above (but without giving effect to clause (ii) of the
proviso set forth in such clause)); and
(c) the amount payable by all licensees of a single nuclear facility in
respect of such facility in any one year and with respect to any one
"nuclear incident" under any deferred premium or similar plan required
by Applicable Law shall not exceed $36 million (subject to adjustment as
provided in subclause CY) of the preceding clause (b)).
For purposes at this definition, "nuclear facility" shall mean and refer
to a facility designed for producing substantial amounts of electricity
and having a rated capacity of 100,000 electrical kilowatts or more."
-10-
6091.CHASE.DEBT.l6O:1
<PAGE>
(f) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
"Decommissioning shall mean the ecommissioning and retirement
from service of Unit 1, and the related possession, maintenance and
disposal of radioactive material used in or produced incident to the
possession and operation of Unit 1, including, without limitation, (i)
placement and maintenance of Unit 1 in a state of protective storage,
(ii) in-place entombment and maintenance of Unit 1, (iii) dismantlement
of Unit 1, (iv) any other form of decommissioning and retirement from
service required by or acceptable to the NRC and (v) all activities
undertaken incident to the implementation thereof and to the obtaining
of NRC authority therefor, including, without limitation, maintenance,
storage, custody, removal, decontamination, and disposition of
materials, equipment and fixtures, razing of Unit 1, removal and
disposition of debris from the PYNGS site, and restoration of the PVNCS
Site related to Unit 1 for unrestricted use."
(g) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
"Decommissioning Costs shall mean all costs, liabilities and
expenses relating or allocable to, or incurred in connection with, the
Decommissioning of Unit 1, including, without limitation, (i) any and
all costs of activities undertaken to terminate NRC licensing authority
and requirements to own, operate and possess Unit 1 and to possess
radioactive material used in or produced incident to the possession and
operation of Unit 1; and (ii) any and all costs of activities
undertaken, prior to termination of all NRC licensing authority and
requirements with respect to Unit 1 and the radioactive material used in
or produced incident to the possession and operation of Unit 1, to
possess, maintain, and dispose of radioactive material used in or
produced incident to the possession and operation of Unit 1."
-11-
6091.CHASE.DEBT.l60:l
<PAGE>
(h) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
"Economic Useful Life shall mean that period (commencing on
the date as of which the determination of Economic Useful Life is to be
made as provided in Section 8(g) of the Facility Lease and ending on the
date upon which either of the states of affairs described in clauses (i)
and (ii) below ceases to apply, or can reasonably be expected to cease
to apply, to Unit 1) during which (i) Unit 1 will be useful to, and
usable by, any owner or lessee thereof as a facility for the generation
of electric power and (ii) Unit 1 is an economic and commercially
practical facility for the generation of electric power capable of
producing (after taking into account costs of capital) a reasonable
economic return to the owner thereof. For the purposes of determinations
under clauses (i) and (ii) above, the following factors, among others,
shall be taken into account (as such factors obtain on the date of
determination and as such factors are reasonably expected to obtain in
the future): (a) provisions of the ANPP Project Agreements (including,
without limitation, the ANPP Participation Agreement and the Material
Project Agreements (or substitutes for such Material Project Agreements
in effect on the date of determination)); (b) the actual condition and
performance of Unit it (c) the actual condition and performance of such
other facilities constituting PVNGS (including, without limitation, the
Common Facilities) as are integral to the operation of Unit 1; (d) the
actual condition of, and access of the ANPP Participants to, the ANPP
Switchyard and such other transmission facilities as are available and
necessary to permit the transmission of the maximum amount of power
generated by PVNGS; (e) the cost of obtaining, handling, storing and
disposing of nuclear fuel for Unit it (f) the projected cost (including,
-12-
6091.CHASE.DEBT.l60:l
<PAGE>
without limitation, costs attributable to obligations to fund any
reserve fund maintained (or funded) by licensed owners and/or lessees of
Unit 1 to the extent dedicated to (or attributable to and freely
available with respect to) Unit 1 (the Unit 1 Fund)) or the
Decommissioning or retirement from service of Unit 1 including, without
limitation, Decommissioning Costs (taking into account the balance (plus
projected investment earnings thereon) of the Unit 1 Fund): (g) the cost
of Capital improvements to Unit 1 then planned to be made, or reasonably
expected to be made; (h) the cost of acquiring or leasing the Unit 1
Retained Assets; (i) the current status of all Governmental Action with
respect to Unit 1 (including, without limitation, the License) required
to permit licensed owners and/or lessees to possess and (in the case of
the operating Agent) to operate Unit 1 and such other facilities
constituting PVNGS (including, without limitation, the Common
Facilities) as are integral to the operation of Unit 1; and (j) the
relative cost of producing an amount of electric power and energy
equivalent to the generating capacity of Unit 1 from other facilities
then available in the region serviced, or reasonably expected to be
serviced, by PVNGS."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amendments set forth in
section 2 hereof shall be and became 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.
-13-
6091.CHASE.DEBT.16O:l
<PAGE>
(d) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One Chase
Manhattan Plaza, New York, New York 10081. 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 original 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 this Amendment No. 3 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. 3 may be created or continued through the transfer or possession of any
counterpart other than the "Original".
-14-
609l.CHASE.DEBT.l60:l
<PAGE>
IN WITNESS WHUBOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed 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 July 31, 1986, with Chase
Manhattan Realty Leasing Corporation
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
---------------------------------
Vice President and
Corporate Controller
-15-
6091.CHASE.DEBT.l60:l
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed 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 July 31, 1986, with Chase
Manhattan Realty Leasing Corporation
By
--------------------------------
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------------
Vice President and
Corporate Controller
-15-
6091 CHASE. DEBT. 160:1
<PAGE>
State of New Mexico )
) ss:
County of Bernalillo )
The foregoing instrument was acknowledged before me this 8th
day of April, l987, 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 Massachusetts )
) ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 8th day
of April, 1987, by James E. Mogavero, Assistant Cashier of THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, on behalf of the banking
association as Owner Trustee under the Trust Agreement dated as of July 31, 1986
with Chase Manhattan Realty Leasing Corporation.
/s/ Carol Malley
---------------------
Notary Public
CAROL MALLEY
Notary Public
6091.CHASE.DEBT.160:l
<PAGE>
State of New Mexico )
)ss:
County of Bernalillo )
The foregoing instrument was acknowledged before me this 8th
day of April, 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 Massachusetts )
)ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 8th day
of April, 1987, by James E. Mogavero, Assistant cashier of THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, on behalf of the banking
association as Owner Trustee under the Trust Agreement dated as of July 31, 1986
with Chase Manhattan Realty Leasing corporation.
/s/ Carol Malley
---------------------
Notary Public
CAROL MALLEY
Notary Public
609l.CHASE.DEBT.160:l
When Recorded, Return to: Greg R. Nielsen, Esq.
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 15, 1986. THIS FACILIY LEASE HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 22(e) OF THIS AMENDMENT NO1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
FACILITY LEASE
Dated as of August 12, 1986
between
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity ,a
but solely as Owner Trustee
under a Trust Agreement, dated as
of August 12, 1986,
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 2 and
an Undivided Interest in
Certain Common Facilities
================================================================================
6091.BURNHAM.1106.47:1
<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................................................... 1
c Personal Property...................................... 2
d Description............................................ 2
SECTION 3 Rent; Adjustments to
Rent................................................... 2
a Basic Rent............................................. 2
b Supplement Rent........................................ 3
c Form of Payment........................................ 4
d Adjustments to Rent.................................... 4
e Further Adjustments.................................... 5
f Computation of
Adjustments............................................ 6
g Sufficiency of Basic
Rent and Supplemental
Rent................................................... 7
SECTION 4 Net Lease.............................................. 8
--i--
6091.BURNHAM.1106.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 5 Return of the Undivided
Interest............................................... 11
a Return of the Undivided
Interest............................................... 11
b Disposition Services................................... 12
SECTION 6 Warranty of the Lessor................................. 13
a Quiet Enjoyment........................................ 13
b Disclaimer of Other
Warranties............................................. 13
c Enforcement of Certain
Warranties............................................. 14
SECTION 7 Liens ................................................ 15
SECTION 8 Operation and Maintenance;
Capital Improvements................................... 15
a Operation and
Maintenance............................................ 15
b Inspection............................................. 16
c Capital Improvements................................... 17
d Reports................................................ 18
e Title to Capital
Improvements........................................... 18
f Funding of the Cost of
Capital Improvements................................... 20
--ii--
6091.BURNHAM.1106.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 9 Event of Loss; Deemed
Loss Event............................................. 22
a Damage or Loss......................................... 22
b Repair................................................. 23
c Payment of Casualty
Value.................................................. 23
d Payment of Special
Casualty Value......................................... 24
e Requisition of Use..................................... 25
f Termination of
Obligation............................................. 25
g Application of Payments
on an Event of Loss.................................... 26
h Application of Payments
Not Relating to an Event
of Loss................................................ 27
i Other Dispositions..................................... 27
j Assumption of Notes;
Creation of Lien on
Undivided Interest .................................... 27
SECTION 10 Insurance.............................................. 28
a Required Insurance..................................... 28
b Permitted Insurance.................................... 29
SECTION 11 Rights to Assign or
Sublease............................................... 30
--iii--
6091.BURNHAM.1106.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
a Assignment or Sublease
by the Lessee.......................................... 30
b Assignment by Lessor as
Security for Lessor's
Obligations............................................ 31
SECTION 12 Lease Renewal.......................................... 31
SECTION 13 Notices for Renewal or
Purchase; Purchase
Options................................................ 31
a Notice, Determination of
Values, Appraisal
Procedure.............................................. 31
b Purchase Option at
Expiration of the Lease
Term................................................... 32
c Special Purchase Event................................. 32
SECTION 14 Termination for
Obsolescence........................................... 33
a Termination Notice..................................... 33
b Right of Lessor to
Retain Undivided
Interest upon
Termination............................................ 34
c Events on the
Termination Date....................................... 34
d Early Termination
Notice................................................. 35
--iv--
6091.BURNHAM.1106.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
e Events on the Early
Termination............................................ 36
SECTION 15 Events of Default...................................... 36
SECTION 16 Remedies............................................... 40
a Remedies............................................... 40
b No Release............................................. 44
c Remedies Cumulative.................................... 45
d Exercise of Other Rights
or Remedies............................................ 46
e Special Cure Right of
Lessee................................................. 46
SECTION 17 Notices................................................ 47
SECTION 18 Successors and Assigns................................. 47
SECTION 19 Right to Perform for
Lessee................................................. 47
SECTION 20 Additional Covenants................................... 48
SECTION 21 Lease of Real Property
Interest............................................... 49
SECTION 22 Amendments and
Miscellaneous.......................................... 49
a Amendments in Writing.................................. 49
b Survival............................................... 49
--v--
6091.BURNHAM.1106.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
c Severability of
Provisions............................................. 50
d True Lease............................................. 50
e Original Lease......................................... 50
f Governing Law.......................................... 50
g Headings............................................... 50
h Concerning the Owner Trustee........................... 50
i Disclosure............................................. 51
j Counterpart Execution.................................. 51
SCHEDULE 1 Casualty Values
SCHEDULE 2 Special Casualty Values
SCHEDULE 3 Termination Values
SCHEDULE 4 Description of Undivided Interest
SCHEDULE 5 Description of Real Property Interest
APPENDIX A Definitions
--vi--
6091.BURNHAM.1106.47:1
<PAGE>
FACILITY LEASE
THE FACILITY LEASE, dated as of August 12, 1986, between THE
FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as
Owner Trustee under a Trust Agreement, dated as of August 12, 1986, with Burnham
Leasing Corporation, as Lessor (the Lessor), and PUBLIC SERVICE COMPANY OF NEW
MEXICO, a New Mexico corporation (the Lessee).
WITNESSETH:
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
consideration, the receipt and sufficiency of which are hereby acknowledged, the
par-ties 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 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 leases to the Lessee,
and the Lessee hereby lessee from the Lessor, the Undivided Interest.
6091. BURNHAM. 1106.47:1
<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
shall be severed, and shall be and remain severed, from title to the real estate
constituting the Real Property Interest and the PVNGS Site. The Lessor and the
Lessee intend that the Undivided Interest shall constitute personal property to
the maximum extent permitted by Applicable Law.
(d) Description. The Real Property Interest is described in
Schedule 4. The Undivided Interest is described in Schedule 5.
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 and the Real
Property Interest, the following amounts:
(i) On January 15, 1987, an amount equal to 0.0244547%
of Facility Cost times the actual number of day. from and
including the Closing Date to, but excluding, January 15, 1987,
plus or minus the Rent Differential, if any, referred to in
Section 3(h);
(ii) On July 15, 1987 and on each Basic Rent Payment
Date thereafter to and including January 15, 2016, an amount
equal to 4.40184%, of Facility Cost, plus or minus the Rent
Differential, if any, referred to in Section 3(h); and (iii) if
the Lessee shall elect the Fixed Rate Renewal Term, on July 15,
2016, and on each Basic Rent Payment Date thereafter during the
Fixed Rate Renewal Term, an amount equal to one-half of an
amount determined by dividing the sum 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
adjustment pursuant to Sections 3(d) and ace) and any increases
and decreases pursuant to Section 3(h)), by 58.
-2-
6091.BURNHAM. 1106.47:1
<PAGE>
If an interest payment on any Note shall be due on a date other than a Basic
Rent Payment Date, the Lessee shall pay additional Basic Rent on such date in an
amount equal to such interest 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):
(1) 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;
(ii) When due any amount payable hereunder as Casualty
Value, Termination Value or Special Casualty Value, and an
amount equal to 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
-3-
6091.BURNHAM.1106.47:1
<PAGE>
(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.
The Lessor shall have all rights, powers and remedies provided for in this
Facility Lease, at law, in equity or otherwise, in the case of non-payment of
Basic Rent or Supplemental Rent.
(c) Form at 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 Excepted 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 flay,
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 nominal date
provided in this Facility Lease.
(d) Adjustments to Rent for Changes in Tax law. Basic Rent
shall be adjusted (upward or downward) to preserve Net Economic Return if there
is any Change in Tax Law. Any adjustments under this Section 3(d) shall be made
not more than once a year and shall be limited in the aggregate to the extent,
if any, necessary such that the Basic Rent (excluding any Rent Differential)
payable on the Basic Rent Payment Date immediately following such adjustment
shall not vary from the Basic Rent (excluding any Rent Differential) which would
have been payable on such Basic Rent Payment Date had no adjustments (other than
adjustments to reflect actual Transaction Expenses) been made pursuant to this
Section 3(d) or pursuant to Section 3(e), (i) prior to the Refunding Date, by
more than 14% and (ii) on at after the Refunding Date, by more than the
percentage that would cause the Weighted Factor to equal
-4-
6091.BURNHAM.1106.47:1
<PAGE>
11.08%; provided1 however, that if, by reason of the limitation set forth in
clause (i) above, any adjustment made prior to the Refunding Date is less than
the adjustment that would have been required to preserve Net Economic Return,
then after the Refunding Date there will be a further upward adjustment to Basic
Rent in order to preserve Net Economic Return, subject to the limitation set
forth in clause (ii) above, and if, by reason of the limitation set forth in
clause (i) or (ii) above, any upward adjustment contemplated by this Section
3(d) was less than the adjustment that would have been required to preserve Net
Economic Return, then the amount of any subsequent downward adjustments
otherwise required hereunder shall be reduced to the extent necessary to cause
the aggregate effect of such upward adjustment and such subsequent downward
adjustments to preserve Net Economic Return; and provided further, however, that
no downward adjustments shall be made pursuant to this section 3(4) in excess of
any upward adjustments made pursuant to this section 3(d) unless and until the
excess of the aggregate amount of all such downward adjustments aver the
aggregate of all such upward adjustments would exceed 1%.
For purposes of determining whether a statutory or regulatory
change constitutes a Change in Tax Law, the original Owner Participant shall be
deemed to be the Owner Participant notwithstanding any transfer of its interest
as such (whether or not permitted by Section 15 of the Participation Agreement),
provided1 however, that a successor Owner Participant shall be treated as the
Owner Participant for such purposes if the transfer to such successor Owner
Participant was permitted by Section 15 of the Participation Agreement and if
both the original Owner Participant and such successor Owner Participant are
members of the same affiliated group of corporations that files a consolidated
return for Federal income tax purposes.
The schedules of casualty Values, special Casualty Values and
Termination Values attached hereto shall be appropriately adjusted in the event
of any adjustment to Basic Rent under this section 3(d).
(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 (i) in
-5-
6O9S1.BURNHAM. 1106.47:1
<PAGE>
consequence of any releveraqing or refunding of the Notes or the issuance of
Additional Notes the unpaid principal amount of Notes Outstanding shall be
greater or less than the unpaid principal amount of Motes Outstanding
immediately prior to such transaction, (ii) in consequence of events described
in clause (i) above, the schedule of amortization of principal of Notes
Outstanding after such transaction shall be other than the schedule of
amortization of principal of Notes immediately prior to such transaction or the
interest rate applicable to such Notes shall be other than contained in the
Pricing Assumptions, (iii) Transaction Expenses are paid by the Lessor in
amounts greater or less than an amount equal to 0.8% of Facility Cost, or (iv)
there is any change in the Pricing Assumptions.
(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 made within 45 days
after the Owner Participant shall have furnished the revised amounts to the
Lessee) by the Owner Participant's nationally recognized independent public
accountants (to whom the Owner Participant shall have provided all information
necessary to perform such verification), 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 calculations, or (ii) if such
accountants shall for any reason be unable to provide such confirmation, compute
and provide to the Lessee, the Lessor, the Owner Participant, the Loan
Participant and the Indenture Trustee revised amounts and percentages 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, and the
-6-
6091. BURNHAM. 1106.47:1
<PAGE>
Owner Participant. 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
differs by more than 10% from the amount 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 2 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 supplement 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 75-2a, 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 such Basic
Rent Payment Date on all Notes then Outstanding, and (ii) unless the Lessee
shall have assumed the Notes or acquired the Owner Participant's beneficial
interest in the Trust following the grant of a security interest in the
Undivided Interest and the Real Property Interest, in each case in accordance
with the terms of the Indenture, each payment of Casualty Value, Special
Casualty Value and Termination Value shall in no event be less (when added to
all other amounts other than Excepted Payments required to be paid by the Lessee
under this Facility Lease in respect of any Event of Loss or Deemed Loss Event
or the termination of this Facility Lease) than an amount sufficient, as of the
date of payment, to pay in full all principal of, and premium, if any, and
interest then due on all Notes Outstanding on and as of such date of payment.
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(h) Rent Differential. Prior to the Refunding Date, each
installment (if any) of Basic Rent shall be increased or decreased, as the case
may be, by the Rent Differential. For purposes hereof, Rent Differential shall
mean, as of any Basic Rent Payment Date, the difference between (i) the
aggregate amount of interest due and payable on such Basic Rent Payment Date on
the Notes then Outstanding, and (ii) the aggregate amount of interest that would
have been due and payable on such Basic Rent Payment Date on such Notes if such
Notes had at all times during the relevant period borne interest at a rate equal
to 10.5% per annum (computed on the basis of a 36O-day year of twelve 30-day
months). If, as of any Basic Rent Payment Date, (A) the amount determined in
accordance with clause (y) 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 imitation, (i) any set-off, abatement,
counterclaim, suspension, recoupement, reduction, rescission, 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
2, any Capital Improvement, the Real Property Interest, the PVNGS site, PVNGS,
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
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of the Undivided Interest, Unit 2, any Capital Improvement, the Real Property
Interest, the WNGS Site or PVNGS, (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 2, any Capital Improvement, the
Real Property Interest, the PVNGS Site or PVNGS, 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 2, any Capital Improvement, the Real Property Interest, the PVNGS
Site or PVNGS, (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 unenforceability 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 Occurrence, or any
doctrine of force majeure, impassability, 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
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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 2, any Capital
Improvement, the Undivided Interest, the Real Property Interest, the PVNGS Site
or PVNGS, or any part thereof or any interest 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 contained in section 6(a) hereof 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 flow 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 here-under, 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
terminated 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 or elsewhere shall be construed as a
guaranty by the Lessee of any residual value in the Undivided Interest or as a
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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 and Disposition.
(a) Return of the Undivided Interest and the Real Property
Interest. On the Lease Termination Date, the Lessee will surrender possession of
the Undivided Interest, at which time Unit 2 shall have a net rated power level
of at least 630 megawatts electric, and the Real Property Interest to the Lessor
(or to a Person specified by the Lessor to the Lessee in writing not less than 6
months prior to the Lease Termination Date) and will furnish to the Lessor:. (i)
copies certified by a senior officer of the Lessee of all Governmental Action
necessary to effect such surrender and receipt of possession ion (including, but
without limitation, appropriate amendments to the License), which Governmental
Action shall be in full force and effect; and (ii) an opinion of counsel (which
may be nudge Rose Guthrie Alexander & Ferdon, Snell & Wilmer or another counsel
experienced with NRC and other nuclear matters reasonably satisfactory to the
Owner Participant) to the effect that (A) the Lessee has obtained all
Governmental Action and action under the ANPP Participation Agreement necessary
to effect such surrender by the Lessee and receipt of possession by the Lessor
(or the Person so specified by the Lessor) and (B) such Governmental Action is
in full force and effect. 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, unless the Lessor shall have transferred the Undivided Interest and
the Real Property Interest to another Person, all amounts payable with respect
to any and all Capital Improvements to Unit 2 or the PVNGS Site approved or
authorized (without the concurrence of the Owner Participant) prior to the end
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of the Lease Term, whether or not implementation thereof has been completed on
or prior to the Lease Termination Date), and the undivided Interest and the Real
Property Interest shall be free and clear of all Liens (other than Permitted
Liens described in clauses (i), (iv), (v) (other than those arising by, through
or under the Lessee alone), (vi), (vii) (other than as aforesaid), (viii) (other
than as aforesaid), (ix), (x), (xi) and (xiii) of the definition of such term)
and in the condition and state of repair required by Section A. The Lessor shall
not abandon 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 the Lessee) 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 any 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).
(b) Disposition. If the Lessee 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 Lessor will attempt to lease
or dispose of the Undivided Interest and the Real Property Interest. The Lessee
will fully cooperate with the Lessor in connection with the Lessor's efforts to
lease or dispose of the Undivided Interest and the Real Property Interest
including using the Lessee's reasonable efforts to lease or dispose of the
Undivided Interest and the Real Property Interest.
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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. The Lessor
agrees that it may not exercise the remedy contained in Section 16(a) (vii)
hereof as a result of the failure of the Lessee to comply with Section (5) a
hereof if the Lessor shall have failed to Transfer the Undivided Interest and
the Real Property Interest to a purchaser (which shall not be the Lessee or an
Affiliate of the Lessee) that shall have (i) submitted a bid on or before the
date on which such Event of Default arose which is the highest bona fide cash
bid so submitted and is in an amount not less than the fair market value of the
Undivided Interest and the Real Property Interest and (ii) tendered payment in
full to the Owner Participant prior to the date upon which payment by the Lessee
would otherwise be required from the Lessee under section 16(a) (vii).
SECTION 6. Warranty of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that until the Lease
Termination Date, so long as the Lessee is in compliance with each and every
provision of this Facility Lease and each other Transaction Document, the
Lessee's use and possession of Unit 2, 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 lieu of all other warranties of the Lessor or the Owner
Participant, whether written, oral or implied, with respect to this Facility
Lease, Unit 2, any Capital Improvement, the Undivided Interest, PVNGS, the Real
Property Interest or the PVNGS 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 Lessee shall be conclusive
proof of the compliance of Unit 2 (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 OR
SUCH KIND AND (ii) THE LESSOR LEASES AND THE LESSEE TAKES THE UNDIVIDED INTEREST
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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 2, ANY CAPITAL IMPROVEMENT, THE UNDIVIDED
INTEREST, THE REAL PROPERTY INTREST, THE PVNGS SITE OR PYNGS, OR ANY PART
TKEREOF, THE MERCKANTABIUTY IS OF OR THE FITNESS THEREOF FOR ANY PARTICULA
PURPOSE, TITLE TO UNIT 2, ANY CAPITAL IMPROVEMENT, THE UNDIVIDED INTEREST, THE
REAL PROPERTY INTEREST, THE PVNGS SITE OR PVNGS, 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 5(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 2 (including any Capital Improvement), the
Undivided Interest, PVNGS, the Real Property Interest or the PVNGS 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 Lessee 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 2
(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
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<PAGE>
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).
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 2
in such condition that Unit 2 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 at which it
is, from time to time, rated, (B) operate, service, maintain and repair Unit 2
and replace all necessary or useful parts and components thereof so that the
condition and operating efficiency of Unit 2 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 and enforce all
available warranties and (3) the terms and conditions of all insurance policies
maintained in effect at any time with respect thereto, (C) use, possess, operate
and maintain Unit 2 in compliance with all material applicable Governmental
Actions (including the License) affecting PVNGS or Unit 2 or the use,
possession, operation and maintenance thereof and (D) otherwise act in
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accordance with the standards set forth in the ANPP Participation Agreement. The
Lessee will comply with all its obligations under Applicable Law affecting Unit
2, the Undivided Interest, PVNGS, the Real Property Interest and the PVNGS 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) 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 Fund. to the operation and maintenance of Unit 2 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 2, 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 2, 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 and the Owner Participant and their
respective authorized representatives shall have the right to inspect PVNGS
(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, and
their respective authorized representatives, shall have the right to inspect, at
their expense, the books and records of the Lessee relating to PVNGS, 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, 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
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Trust Trustee shall have any duty whatsoever to make any inspection or inquiry
referred to in this Section a(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 2. Of the net
proceeds of (i) any sale or other disposition of property removed from Unit 2
receivable (without regard to any right of setoff 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 (ii) 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, the Lessor's Portion, in the case of property not constituting
Common Facilities, or the Common Facilities Interest, in the case of Common
Facilities, (of either) such amount shall be applied as provided in Section
9(g), (h) or (i)1 as the case may be. The Unit 2 Interest, in the case of
property not constituting Common Facilities, or the Unit 2 Common Facilities
Interest, in the case of Common Facilities, in property at any time removed from
Unit 2 or the Common Facilities shall remain the property of the Lessor, no
matter where located, until such time as a Capital Improvement constituting a
replacement of such property shall have been installed in unit 2 or the Common
Facilities 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 Unit 2 Interest, in the case of
property not constituting Common Facilities, or the Unit 2 Common Facilities
Interest, in the case of Common Facilities, 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 2 or the
Common Facilities, without further act, (i) title to a Unit 2 Interest, in the
case of property not constituting Common Facilities, or the Unit 2 Common
Facilities Interest, in the case of Common Facilities, in such Capital
Improvement shall vest in the Lessor and (ii) such applicable undivided interest
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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 a like undivided interest in the property originally
incorporated or installed in Unit 2 or the Common Facilities. 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 types
specified in clauses (iii), (xii) and (xiii) 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 2, 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, commencing March 1, 1987, 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 Improvements) made during the period from the date
hereof to December 31, 1926 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, 1987) 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 the Unit 2 Interest,
in the case of property not constituting Common Facilities, or the Unit 2 Common
Facilities Interest, in the case of Common Facilities, in each Capital
Improvement to Unit 2 or the Common Facilities, as the case may be, shall vest
as follows:
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(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 2 or the Common Facilities,
as the case may be, 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) a Unit 2 interest, in the case of
property not constituting Common Facilities, or a unit 2 Common
Facilities Interest, in the case of Common Facilities, 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) a Unit 2 Interest, in
the case of property not constituting Common Facilities, or a Unit 2
Common Facilities Interest, in the case of Common Facilities, of the
cost of such Capital Improvement, the Lessee shall retain title to such
undivided interest in such Capital Improvement.
Immediately upon title to such a Unit 2 Interest, in the case of
property not constituting Common Facilities, or such a Unit 2 Common Facilities
Interest, in the case of Common Facilities, in any Capital Improvement vesting
in the Lessor pursuant to sub-paragraph (1) or sub-paragraph (2) of this Section
S (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 2 or the Common Facilities, as the case may be, for
all purposes hereof.
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(f) Funding of the Cost of Capital Improvements. Before
placing in service any Capital Improvement to Unit 2 or the Common Facilities
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 a Unit 2 Interest, in
the case of property not constituting Common Facilities6 or a Unit 2 Common
Facilities interest, in the case of Common Facilities, of the cost of any such
Capital Improvement, or any other Capital Improvement presented to the Owner
Participant for financing, including or not including the making of an
investment by the Owner Participant (an Additional Equity Investment) and the
issuance of 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, a Unit 2 Interest, in the case of property not constituting Common
Facilities, or a Unit 2 Common Facilities Interest, in the case of Common
Facilities, 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 the Lessee or any Person affiliated with the Lessee within
the meaning of section 318 of the Code) Additional Notes and to use the proceeds
thereof to pay the applicable percentage of the cost of such Capital
Improvement, subject, however, 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 Lessor's Portion 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 Lessor's Portion of
$100, 000,0007
(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 sum of the Supplemental Financing Amount and
any Additional Equity Investment 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 or 1016 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 Lessee shall have agreed upon the amount and manner of
payment of the indemnity, if any, payable by the Lessee as a
consequence of such Supplemental Financing;
(viii) the Additional Motes shall have a final maturity date
no later than January 15, 2016;
(ix) the Lessee shall have made such representations,
warranties and covenants regarding the tax characteristics of
the Lessor's undivided interest in each Capital Improvement as
the Owner Participant reasonably 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 and 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:
(xiii) the Lessee shall enter into such agreements and shall
have provided such tax indemnities, representations, warranties,
covenants, opinions, certificates and other documents as the
Owner Participant shall reasonably request; and
(xiv) in the reasonable opinion of the Owner Participant,
such Supplemental Financing shall not result in any adverse
accounting or financial consequences to the Owner Participant.
(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,
2015, the Lessee shall initiate the Appraisal Procedure to determine the
remaining Economic Useful Life of Unit 2 as of July 15, 2015 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 2 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, 2015 (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) or any similar
provision of the ANPP Participation Agreement (as in effect on such date) shall
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become applicable, or an Event of Loss, a Requisition of Use or a Requisition of
Title shall occur, or Unit 2 or the Common Facilities 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 following 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 2 or the Common Facilities
or any portion thereof; provided, however, that the Lessee shall 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 2 or the Common Facilities.
(a) Payment of Casualty Value. Except as otherwise provided in
the definition of the term "Final Shutdown", an Event of Loss shall not occur
unless. and until the Owner Participant delivers to the Lessor and the Lessee a
written notice identifying the applicable event and declaring that such event
constitutes an Event of Loss hereunder. On the Basic Rent Payment Date next
following receipt by the Lessee of a written notice from the Lessor that an
Event of Loss has occurred, 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 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. (a) 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 (b)
at any time after the occurrence of an Event of Loss the Lessor may:
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(i) if Section 16.2 of the ANPP Participation Agreement
(as in effect on the date hereof) or any similar provision of
the ANPP Participation Agreement (as in effect on such date)
shall be applicable and the Lessee shall have declined, but one
or more of the other ANPP Participants shall have elected, to
reconstruct or restore Unit 2, 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 "salvage value" purchase price allocable
to the Undivided Interest and he Real Property Interest; or
(ii) if clause (i) above 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 the Owner Participant shall have received under
Section 5.2 of the Indenture all amounts required to be paid by the Lessee
pursuant to this section 9(c) (including interest, if any, thereon pursuant to
section 3(b) (iii) hereof, 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 then outstanding
and (ii) this Facility Lease shall become a security agreement for all purposes
of Applicable Law.
(d) Payment of special Casualty Value. A Deemed Loss Event
shall not occur unless and until the Owner Participant delivers to the Lessee a
written notice identifying the applicable event and declaring that such event
constitutes a Deemed Loss Event hereunder. On the fifteenth day of the month
during which a Deemed Loss Event shall have occurred (or, if such Deemed Loss
Event shall occur after the fifteenth day of such month, the fifteenth day of
the next following month), the Lessee shall pay to the Lessor (x) an amount
equal to the excess of (i) special Casualty Value determined as of the date such
payment is due over
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(ii) the 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 day, plus (y) if such fifteenth day is a Basic Rent Payment Date, all Basic
Rent due on such Basic Rent Payment Date. (a) 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 (b) 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 the Owner Participant shall have
received under Section 5.2 of the Indenture all amounts required to be paid by
the Lessee pursuant to this section 9(d) (including interest, if any, thereon
pursuant to Section 3(b) (iii)), 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
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.
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(f) Termination or Continuation of Obligations. 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 receipt by the Owner Participant under Section 5.2 of the
Indenture of the payments specified in Section 9(c) or 9 (d) and payment by the
Lessee of all other 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. So long as no Event of Default shall have occurred and be
continuing, if as a consequence of a Deemed Loss Event, a Special Purchase
Event, an exercise of the Cure Option or otherwise, the Lessee is required to
purchase the Undivided Interest and the Real Property Interest, this Facility
Lease shall not be terminated nor shall the use or possession of the Undivided
Interest or the Real Property Interest be transferred by the Lessee to the
Lessor or to any other Person prior to the actual purchase of the Undivided
Interest and the Real Property Interest by the Lessee.
(g) Application of Payments on an Event of Loss. My payments
received 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 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
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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 bet'4een the Lessor and the Lessee,
as their interests may appear.
(xi) Application of Payments Not Relating to an Event of Loss.
Payments received 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 2 or the Common
Facilities, 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 3 or the Common Facilities, 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) Disposition at rise of Event of Default. Notwithstanding
the foregoing provisions of this Section 9, if an 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 the Lessee shall have cured any such Event of Default, 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 and of the Indenture.
(j) Assumption of Notes; Creation of Lien on Undivided
Interest. In connection with a declared Event of Loss, a declared 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
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Owner Trustee under the Indenture and the Outstanding 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 Outstanding 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 required to make the payments specified in Section 9(c), 9(d) or
16(e), 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 nuclear liability and other liability in5urance 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 2, the
Caution Facilities or any part thereof shall name the Lessor (and, to the extent
practicable, the Owner Participant) as an 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 2, the Common Facilities, or any part thereof, shall include all
Indemnitees as insureds, through an omnibus definition of "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, 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
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the broker or brokers for the PVNGS insurance (or if insurance is placed
directly by the Operating Agent, 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 Lessees
insurance (or 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 premiums
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 (0) 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) (iii) (2) may be made in reliance upon a similar
schedule provided by 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) above, 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.
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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 2, the Common Facilities, the Undivided Interest or the Real Property
Interest or the operation of Unit 2, 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 encumber (except for
Permitted Liens), or assign, sublease or transfer its leasehold interest in the
Undivided Interest or the Real Property Interest under this Facility Lease,
except that the Lessee may assign its leasehold interest under this Facility
Lease in the Undivided Interest or the Real Property Interest to a wholly owned
subsidiary of the Lessee or of the Lessee's parent if such subsidiary's
obligations under this Facility Lease and any other Transaction Documents which
may be assumed by such subsidiary shall be guaranteed by the original Lessee
under this Facility Lease pursuant to a valid and enforceable guarantee
satisfactory in all respects to the Lessor and the Owner Participant. 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
(including, without limitation, the first sentence of this Section 11(a)), or
any other Transaction Document.
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(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 (x) 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 (y) if and when required by Section 9(j), its right, title
and interest in the Undivided Interest and the Real Property Interest. The
Lessee hereby (a) consents to such assignment pursuant to clause (x) of the
first sentence of this paragraph (b) and the terms of the Indenture, (b) agrees
to pay directly to the Indenture Trustee at the Indenture Trustee's Office (50
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, Cc) agrees that the right of
the Indenture Trustee to any such payments shall be absolute and unconditional
and shall not be affected by any circumstances whatsoever, including, without
limitation, those circumstances set forth in Section 4, and (4) 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 right. 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 or Event of
Default shall have occurred and be continuing hereunder, or Event of Loss or
Deemed Loss Event shall have occurred, and all 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, 2016, and ending on January 15, 2018 (the
Fixed Rate Renewal Term), during which period the Basic Rent payable shall be
the rental provided in Section 3(a)(iii).
SECTION 13. Notices for Renewal or Purchase; Purchase Options.
(a) Notice; Determination of Values; Appraisal Procedure. Not
later than (i) three years nor earlier than five years prior to the expiration
date of the Basic Lease Term or (ii) two years, six-months 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
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Interest and the Real Property Interest to the Lessor pursuant to Section 5 or
(B) (x) in the case of clause (i) above, (I) exercise the renewal option
permitted by Section 12 or (II) exercise the purchase option permitted by
Section 13(b) or (y) in the case of clause (ii) above, exercise such purchase
option. If the notice specified in clause (B) (x) of the preceding sentence is
given 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 purchase option permitted by Section 13(b) or the renewal option
permitted by Section 12. 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, an Event of Default shall have occurred and be continuing or an
Event of Loss or a Deemed Loss Event shall have occurred. Promptly after giving
notice pursuant to clause (B) (x) (II) or (B) (y) of the first sentence of this
Section 13(a), 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 within three months after the date of the Lessee's notice the Lessee and the
Owner Participant shall be unable so to agree, such values shall be determined
by the Appraisal Procedure.
(b) Purchase Option at Expiration of the Term Subject to the
notice requirements set forth in Section 13(a), unless an Event of Default shall
have occurred and be continuing, or an Event of Loss or a Deemed Loss Event
shall have been declared, 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 Event. If, or before the Refunding Date,
the Owner Participant shall reasonably determine (in consultation with Milbank,
Tweed, Hadley & McCloy and Rodey, Dickason, Sloan, Akin & Robb, P.A.), or if the
Lessee, in its reasonable judgment, shall determine, that there is a material
risk that the Weighted Factor will exceed ll.25%, then, unless (subject to
Section 3(h) hereof in all events) by unilateral action of the Lessor the Basic
Rent shall have been reduced such that the Weighted Factor does not exceed
11.25%, the Lessee shall purchase the Undivided Interest and the Real Property
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Interest from the Lessor, on a Business Day specified by the Lessor to. the
Lessee by not less than 30 days (or, if there is a material risk that the
Weighted Factor will exceed 11.25% within a shorter period, a number of days one
day less than such shorter period) prior notice, 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 purchase date shall not be a Basic Rent Payment Date, a
proration of Basic Rent to the date of purchase.
(d) Purchase of the Undivided Interest; Payment, Etc. If the
Lessee shall have elected or be required to purchase the Undivided Interest and
the Real Property Interest pursuant to section 13(b) or 13(c), payment by the
Lessee of the purchase price for the Undivided Interest and the Real Property
Interest shall be made in immediately available fund., whereupon the Lessor
shall Transfer the Undivided Interest and the Real Property Interest to the
Lessee.
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 Deemed Loss Event shall have
occurred, the Lessee shall, if the Lessee's Board of Directors has adopted and
there is in effect on or after January 15, 1997 and on or prior to January 15,
2013 a resolution determining that Unit 2 is (A) uneconomic to the Lessee or (B)
economically obsolete for any reason, give prompt written notice (a Termination
Notice) to the Lessor, the Owner Participant and the Indenture Trustee (which
notice shall be irrevocable) of such resolution and shall terminate this
Facility Lease on the first Basic Rent Payment Date occurring after the later of
January 1, 1997 and the date of such resolution (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
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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 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 L4(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 excess, if
any, of the Termination Value as of the Termination Date aver the highest bona
tide 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 amount 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
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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 in section 15.10 thereof) 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 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 (but only if such purchaser
has obtained all requisite Governmental Action in connection therewith)
(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.
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(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 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 Early Termination Date
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 in Section 15.10
thereof) 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 involuntary, or come about or be effected by
operation of law, or be pursuant to or in compliance with any Applicable Law or
Governmental Action):
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(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 S 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) (iv) of the Participation Agreement or section 7,
10 (other than failure of the Lessee to cause to be delivered
the insurance certificates (other than the Certificate of the
Lessee) described therein provided that the Owner Participant
shall have received within S Business Days after its request
therefor other confirmation reasonably satisfactory to it of the
existence in full force and effect of the insurance referred to
in Section 10), or it of this Facility Lease; or
(iii) the remaining Economic Useful Life of Unit 2, as
determined under Section 8(g) if required thereby to be so
determined, shall be (x) as of the date six months prior to the
end of the Basic Lease Term, less than five and one-half years
or (y) as of the date six months prior to the end of the Renewal
Term, three and one-half years: 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
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(v) the Lessee shall fail to perform its agreements set
forth in the first sentence of Section 5(a); or
(vi) the Lessee shall fail to perform or observe any
covenant, condition or agreement (other than those referred to
in clauses (i) through (v) 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
(vii) 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 made or
given and shall remain material and materially incorrect at the
time in question: or
(viii) the Lessee (which term shall include, for purposes
of this clause (viii) and clauses (ix), (x) and (xi) below, any
predecessor Lessee that guarantees the obligations of the Lessee
hereunder pursuant to Section 11(a) hereof) 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
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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 or other proceeding shall remain
undismissed or unstayed for a period of 60 consecutive days; or
(ix) final judgment 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 6O day. from the entry thereof:
or
(x) (1) a default by the Lessee under the ANPP
Participation Agreement in consequence of which the Lessee's
right to receive its Generation 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 in good
faith 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
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(xi) (1) the Lessee shall fail to pay when due (whether
by scheduled maturity, required prepayment, acceleration, demand
or otherwise) any Debt 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 knowledge of 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 event or a Responsible
officer of the Lessee shall have actual knowledge of such
default or event.
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, except as hereinbelow expressly otherwise set forth,
exercise one or 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 the
undivided Interest oand 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)
subject to Applicable Law, enter upon the PVNGS Site and take
immediate possession of (to the exclusion of the Lessee)
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the Undivided Interest and the Real Property Interest, by
summary proceedings or otherwise, all without 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 in a commercially reasonable manner, 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 an amount equal
to the net proceeds, if any, received by the Lessor from leasing
the Undivided Interest and the Real Property Interest to any
Person other than the Lessee for the same periods or any portion
thereof;
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(v) except in the case of an Event of Default specified
in clause (iii) or clause (v) of Section 15 (subject, however,
to the proviso to the first sentence of Section 16(c) hereof),
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 for loss of a bargain and not
as a penalty (in lieu of the Basic Rent due after the Basic Rent
Payment Date 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, in the case of (D) below,
upon receipt of such payment the Lessor shall (or may prior to
the receipt of such payment) Transfer to the Lessee the
Undivided Interest and the Real Property Interest):
(A) an amount equal to the excess, if any, of
(1) Casualty Value, computed as of the Basic Rent
Payment Date specified in such notice, over (2) 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 2) until the end of
the remaining useful life of Unit 2, after discounting
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 ; of per annum;
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(B) an amount equal to the excess, if any, of
(1) such Casualty Value over (2) 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 2) as of the Basic Rent Payment Date
specified in such notice;
(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 2) 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; or
(D) an amount equal to higher of (1) the
Casualty Value, 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;
(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, but not in the case
of an Event of Default specified in clause (iii) or clause (v)
of Section 15 (except as provided in the proviso to the first
sentence of Section 16(c) hereof), demand that the Lessee pay to
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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 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 difference 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) subject to section 5(b) hereof, in the case of an
Event of Default specified in clause (iii) or clause (v) of
Section 15, the Lessor may demand, by written notice to the
Lessee specifying a payment date which shall be, in the case of
an Event of Default specified in said clause (iii), the last
Basic Rent Payment Date of the Lease Term, or, in the case of an
Event of Default specified in said clause (V), the date thirty
day. after the last Basic Rent Payment Date, that the Lessee pay
to the Lessor, and the Lessee shall pay to the Lessor, on such
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 (not less than zero) equal to the
Fair Market Sales Value of the Undivided Interest and the Real
Property Interest determined as of such Basic Rent Payment Date
(together with interest on such amount at the interest rate
specified in section 3(b) (iii) from the payment date specified
in such notice to the date of actual payment) and upon receipt
of such payment the Lessor shall (and may prior to receipt of
such payment) Transfer to the Lessee the Undivided Interest and
the Real Property Interest.
(b) No Release. No rescission 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
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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. Except as expressly set forth therein,
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;
provided, that if the Lessee is in default of its payment obligations under
Section 16(a)(vii), the Lessor may exercise its other remedies under section
16(a) (except that the maximum amount payable by the Lessee in the event of the
exercise by the Lessor of any of the remedies provided for in Section 16(a) (V)
or (vi) shall not exceed the total amount payable by the Lessee under Section
16(a) (vii) minus the amount provided in subclause (2) of clause (A), (B) or (C)
of such Section 16(a) (v), if the Lessor elects a remedy specified in said
clause (A), (B) or (C) , or the difference referred to in Section 16(a)(vi), if
the Lessor elects the remedy specified in section 16(a) (vi) hereof. 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 (including the related
Generation Entitlement Share) or Unit 2 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 at Other Rights or Remedies. In addition to all
other rights and remedies provided in this Section 16, the Lessor may, except to
the extent expressly limited by the provisions of this Section 16, 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
damage. for the breach hereof.
(e) Special Cure Right of Lessee. In the event a "Notice of
Default" is given under Section l5(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; provided, however, that such Value, for
purposes of this paragraph (e), shall be determined on the assumption that the
purchaser shall be required to pay the full amount of the decommissioning cost
of the Undivided Interest. 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 due and payable on
such date. Upon compliance in full by the Lessee with the foregoing provisions
of this paragraph (a) 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
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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
the Owner Participant shall have received under Section 5.2 of the Indenture all
amounts required to be paid by the Lessee pursuant to this paragraph (e)
(including interest, if any, thereon pursuant to Section 3(b) (iii)), 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: in which case, without further act an the part of the Lessor or the
Lessee, (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 then Outstanding and (ii) this Facility Lease shall become a security
agreement for all purposes of Applicable Law.
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,
or delivered by express delivery service, 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.
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
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agreements contained in any ANPP Project Agreement, either the Lessor or the
Owner Participant may, but shall not be obligated to (i) if permitted by
Applicable Law, tender such payment, or (ii) if permitted by Applicable Law and
the ANPP Project Agreements, 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 and the ANPP Project Agreements) to receive the
Generation Entitlement Share of the Lessee under the ANPP Participation
Agreement (not limited to Unit 2), with each contributor to such cure 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 and to pay all amounts (if any) which are to be paid by the Lessee
under the terms of the Indenture, 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 7(b)(4),
10(b), 14 and 16 of 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.
-43-
6091.BURNHAM.1106.47:1
<PAGE>
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.
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
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 2 or
any other property referred to 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 Indernnitee.
-49-
6091.BURNHAM.1106.47:1
<PAGE>
(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 unenforceability 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 is intended as and shall
constitute an agreement of lease and nothing herein or elsewhere contained 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 CONTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon ohall be the "Original"
of this Facility Lease. To the extent that this Facility Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Facility
Lease may be created through the transfer or possession of any counterpart 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.
-50-
6091. BURNHAM. 1106.47:1
<PAGE>
(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, warranties, 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 representation, 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 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 Burnham Leasing Corporation, a
New York corporation, whose address is so 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.
(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.
-51-
6091.BURNHAM. 1106.47:1
<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 Trustee under a
Trust Agreement dated as of
August 12, 1986, with
Burnham Leasing Corporation
By
--------------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------------
Vice President, Revenue Management
6O9l.BURNHAM.1106.47B:l
<PAGE>
State of New York )
)ss:
County of New York )
The foregoing instrument was acknowledged before me this 17th
day of August, 1986, by J.E. STERBA, the Vice President, Revenue Management of
PUBLIC SERVICE CONPANY OF NEW MEXICO, a New Mexico corporation, on behalf of
said corporation.
---------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693468
Qualified In New York County
Commission Expires March 30, 1987
State of Rev York )
)ss:
County of New York )
The foregoing instrument was acknowledged before me this 17th
day of August, 1986, by M. .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
August 12, 1986, with Burnham Leasing Corporation.
---------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693468
Qualified In New York County
Commission Expires March 30, 1987
6091.BURNHAM.1106.47B:1
<PAGE>
SCHEDULE 1
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Basic Basic
Rent Rent
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
7/15/1987 107.3214792 1/15/2005 68.4786850
1/15/1988 109.3866622 7/15/2005 65.9549845
7/15/1988 108.7324908 1/15/2006 63.6084475
1/15/1989 110.2890342 7/15/2006 61.2034113
7/15/1989 109.1565103 1/15/2007 58.7383750
1/15/1990 110.2811458 7/15/2007 56.2081600
7/15/1990 108.7437008 1/15/2008 53.5961840
1/15/1991 109.4409749 7/15/2008 50.9465850
7/15/1991 107.4430512 1/15/2009 48.4068189
1/15/1992 107.6449054 7/15/2009 46.0019776
7/15/1992 105.1184914 1/15/2010 43.8093499
1/15/1993 104.7898085 7/15/2010 41.8269965
7/15/1993 104.2034408 1/15/2011 40.1464641
1/15/1994 104.4621918 7/15/2011 38.7720939
7/15/1994 105.0746043 1/15/2012 37.4741344
1/15/1995 105.3313670 7/15/2012 36.0172097
7/15/1995 105.4258440 1/15/2013 34.4124193
1/15/1996 104.3460229 7/15/2013 32.5888575
7/15/1996 103.2076348 1/15/2014 30.5794579
1/15/1997 102.0075284 7/15/2014 28.3092521
7/15/1997 100.7423843 1/15/2015 25.8069882
1/15/1998 98.9769915 7/15/2015 22.9931020
7/15/1998 96.8379410 1/15/2016 20.0000000
1/15/1999 94.7183084
7/15/1999 92.3466042
1/15/2000 89.9930168
7/15/2000 87.3598679
1/15/2001 84.9164720
7/15/2001 83.2856328
1/15/2002 81.1200173
7/15/2002 79.4045153
1/15/2003 77.1226200
7/15/2003 75.3166896
1/15/2004 72.9124246
7/15/2004 71.0116226
<PAGE>
Schedule 2
to
Lease
SCHEDULE OF SPECIAL CASUALTY VALUES
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ------- ----------- ------- -----------
1986-Aug 102.1288350 Jul 107.9900354
Sep 103.551082 Aug 106.3566164
Oct 104.7577969 Sep 107.2079214
Nov 105.9690500 Oct 108.0387451
Dec 107.1890001 Nov 108.8729188
1987-Jan 104.7469334 Dec 109.7104940
Feb 105.8953117 1991-Jan 106.1221028
Mar 107.0514101 Feb 106.9356524
Apr 108.1807222 Mar 107.7523828
May 109.2806319 Apr 108.5615682
June 110.3875084 May 109.3499550
July 107.0603718 June 110.1411302
Aug 105.6584574 July 106.5057575
Sep 106.7443686 Aug 104.7904266
Oct 107.8004092 Sep 105.5587490
Nov 108.8628041 Oct 106.3059750
Dec 109.9316515 Nov 107.0554541
1988-Jan 106.5659987 Dec 107.8072206
Feb 107.6060402 1992-Jan 104.1319920
Mar 108.6522601 Feb 104.8572360
Apr 109.6884203 Mar 105.5845013
May 110.6998752 Apr 106.3032497
June 111.7170637 May 107.0033501
July 108.3047423 June 107.7050799
Aug 106.8162363 July 103.9820366
Sep 107.8143593 Aug 104.6586589
Oct 108.7874341 Sep 105.3366619
Nov 109.7657228 Oct 105.9957573
Dec 110.7493057 Nov 106.6559602
1989-Jan 107.3029779 Dec 107.3172872
Feb 108.2610033 1993-Jan 103.5533963
Mar 109.2240893 Feb 104.1884686
Apr 110.1786578 Mar 104.8243968
May 111.1134663 Apr 105.4521169
June 112.0529737 May 106.0605617
July 108.5676894 June 106.6694473
Aug 107.0049947 July 102.8524714
Sep 107.9279406 Aug 103.4335629
Oct 108.8309099 Sep 104.4997786
Nov 109.7381681 Oct 105.0764842
Dec 110.6497812 Nov 105.6532650
1990-Jan 107.1363037 Dec 106.8642699
Feb 108.0260386 1994-Jan 103.0346527
Mar 108.9199462 Feb 103.6028310
Apr 109.8071307 Mar 104.4553998
May 110.6740871 Apr 105.6489107
June 111.5448610 May 106.2173221
<PAGE>
Schedule 2
to
Lease
SCHEDULE OF SPECIAL CASUALTY VALUES (Continued)
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ------- ----------- ------- -----------
Jun 107.4102001 May 98.3566627
July 103.5719724 June 98.5366882
Aug 104.1313271 Jul 94.6108969
Sep 105.3057290 Aug 95.0805240
Oct 105.8652448 Sep 95.2326961
Nov 106.4248420 Oct 95.7025449
Dec 107.5978253 Nov 96.1725056
1995-Jan 103.7505297 Dec 96.3225100
Feb 104.3005918 1999-Jan 92.3853005
Mar 105.1260528 Feb 92.8385708
Apr 106.2796494 Mar 93.1561225
May 106.8299640 Apr 93.2768904
June 107.6204041 May 93.7328080
July 103.7635586 June 93.8524921
Aug 104.3038346 July 89.8985362
Sep 104.8441977 Aug 90.3393038
Oct 105.3846483 Sep 90.4281252
Nov 105.9251870 Oct 90.8691330
Dec 106.4658145 Nov 91.3102621
1996-Jan 102.5989118 Dec 91.3966737
Feb 103.1288819 2000-Jan 87.4275047
Mar 103.6589425 Feb 87.8526842
Apr 104.1890943 Mar 88.1248451
May 104.7193378 Apr 88.1788585
June 105.2496736 May 88.6044141
July 101.3721795 June 88.6572213
Aug 101.8912963 July 84.6720319
Sep 102.4105073 Aug 85.0807963
Oct 102.9298132 Sep 85.0994062
Nov 103.4492145 Oct 85.5084307
Dec 103.9687120 Nov 85.9175865
1997-Jan 100.0800638 Dec 85.9335180
Feb 100.3877511 2001-Jan 82.1020842
Mar 101.0955363 Feb 82.4951670
Apr 101.6034203 Mar 82.7186145
May 102.1114036 Apr 83.1119670
June 102.6194869 May 83.5181857
July 98.7190924 June 83.9247396
Aug 99.2147432 July 80.3579202
Sep 99.5644633 Aug 80.7448529
Oct 100.0603188 Sep 80.7128549
Nov 100.5562777 Oct 81.1000693
Dec 100.7636596 Nov 81.4874259
1998-Jan 96.8508951 Dec 81.8749247
Feb 97.3338705 2002-Jan 78.0511202
Mar 97.6923678 Feb 78.4253795
Apr 97.8733668 Mar 78.6152248
<PAGE>
Schedule 2
to
Lease
SCHEDULE OF SPECIAL CASUALTY VALUES (Continued)
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ------- ----------- ------- -----------
Apr 78.9897761 Mar 59.8452512
May 79.3779493 Apr 60.1390817
June 79.7664805 May 60.4501342
July 76.2061444 June 60.7617674
Aug 76.5739367 July 56.6826356
Sep 76.4988577 Aug 56.9579842
Oct 76.8669550 Sep 57.2335405
Nov 77.2352064 Oct 57.5266386
Dec 77.6036117 Nov 57.8202176
2003-Jan 73.7716915 Dec 58.1142829
Feb 74.1261158 2007-Jan 54.0165502
Mar 74.2855097 Feb 54.2784579
Apr 74.6402503 Mar 54.5405818
May 75.0093948 Apr 54.8105461
June 75.3789216 May 55.0987103
July 71.8254603 June 55.3874938
Aug 72.1730779 July 51.2861507
Sep 72.0525336 Aug 51.5366040
Oct 72.4004815 Sep 51.7872821
Nov 72.7485963 Oct 52.0564975
Dec 73.0968779 Nov 52.3262265
2004-Jan 69.2563525 Dec 52.5964750
Feb 69.5898695 2008-Jan 48.4746932
Mar 69.7172195 Feb 48.7144424
Apr 70.0510791 Mar 48.9545044
May 7034001690 Apr 49.2029319
June 70.7496674 May 49.4707190
July 67.2035191 June 49.7392476
Aug 67.5298725 July 45.6106931
Sep 67.3613448 Aug 45.8719451
Oct 67.6880560 Sep 46.1342662
Nov 68.0149478 Oct 46.4175034
Dec 68.3420203 Nov 46.7021465
2005-Jan 64.4924555 Dec 46.9882150
Feb 64.8039363 2009-Jan 42.8781341
Mar 64.8974848 Feb 43.1578937
Apr 65.2093366 Mar 43.4394544
May 65.5372924 Apr 43.7314754
June 65.8656845 May 44.0464023
July 61.08013766 June 44.3636692
Aug 62.1003736 July 40.2859016
Sep 62.3995624 Aug 40.5982101
Oct 62.7153385 Sep 40.9132931
Nov 63.0315647 Oct 41.2531699
Dec 63.3482461 Nov 41.5962444
2006-Jan 59.2725820 Dec 41.9425639
Feb 59.5588168 2010-Jan 37.8950478
<PAGE>
Schedule 2
to
Lease
SCHEDULE OF SPECIAL CASUALTY VALUES (Continued)
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ------- ----------- ------- -----------
Feb 38.2377974 2014-Jan 22.4047630
Mar 38.5842871 Feb 22.6613287
Apr 38.9441336 Mar 22.9213712
May 39.3311627 Apr 23.1965436
June 39.7226118 May 23.5015807
July 35.7216245 June 23.8108366
Aug 36.1113307 July 19.7486393
Sep 36.5060251 Aug 19.9665246
Oct 36.9301379 Sep 20.1872659
Nov 37.3597676 Oct 20.4370098
Dec 37.7949972 Nov 20.6900970
2011-Jan 33.8392989 Dec 20.9465759
Feb 34.2746875 2015-Jan 16.8307614
Mar 34.7163197 Feb 16.9941762
Apr 35.1748850 Mar 17.1595803
May 35.6657370 Apr 17.3386034
June 36.1636855 May 17.5459565
July 32.2888086 June 17.7559696
Aug 32.7192845 July 13.5929463
Sep 33.1560274 Aug 13.7083977
Oct 33.6251963 Sep 13.8250716
Nov 34.1012270 Oct 13.9690892
Dec 34.5842234 Nov 14.1147652
2012-Jan 30.6985566 Dec 14.2621213
Feb 31.0958065 2016-Jan 10.0000000
Mar 31.4987908
Apr 31.9191123
May 32.3716265
June 32.8307241
July 28.9207704
Aug 29.2933390
Sep 29.6712416
Oct 30.0806639
Nov 30.4959860
Dec 30.9172966
2013-Jan 26.9689514
Feb 27.3025146
Mar 27.6407882
Apr 27.9954449
May 28.3812389
June 28.7725446
July 24.7937101
Aug 25.0962920
Sep 25.4030845
Oct 25.7402557
Nov 26.0821678
Dec 26.4288911
<PAGE>
Schedule 3
to
Lease
SCHEDULE OF TERMINATION VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ------- ----------- ------- -----------
7/15/1987 106.2908686 1/15/2005 64.3187250
1/15/1988 105.8330228 7/15/2005 61.6258250
7/15/1988 107.6163400 1/15/2006 59.1032129
1/15/1989 106.6463755 7/15/2006 56.5149370
7/15/1989 107.9477195 1/15/2007 53.8592081
1/15/1990 106.5420793 7/15/2007 51.1305447
7/15/1990 107.4345809 1/15/2008 48.3120487
1/15/1991 105.5974986 7/15/2008 45.4475301
7/15/1991 103.0252750 1/15/2009 42.6841030
1/15/1992 103.6003535 7/15/2009 40.0465039
7/15/1992 103.5830405 1/15/2010 37.6116513
1/15/1993 103.1919068 7/15/2010 41.8269965
7/15/1993 102.5405483 1/15/2011 40.1464641
1/15/1994 102.7316651 7/15/2011 38.7720939
7/15/1994 103.2736925 1/15/2012 37.4741344
1/15/1995 103.4572075 7/15/2012 36.0172097
7/15/1995 103.4754575 1/15/2013 34.4124193
1/15/1996 102.3163090 7/15/2013 32.5888575
7/15/1996 101.0953671 1/15/2014 30.5794579
1/15/1997 99.8093493 7/15/2014 28.3092521
7/15/1997 98.4547994 1/15/2015 25.8069882
1/15/1998 96.5933646 7/15/2015 22.9931020
7/15/1998 94.3604877 1/15/2016 20.0000000
1/15/1999 92.1400906
7/15/1999 89.6635235
1/15/2000 87.2008083
7/15/2000 84.4540929
1/15/2001 81.8925115
7/15/2001 80.1386799
1/15/2002 77.8450696
7/15/2002 75.9963669
1/15/2003 73.5758532
7/15/2003 71.6256665
1/15/2004 69.0712779
7/15/2004 67.0142464
<PAGE>
SCHEDULE 4
to
FACLILITY LEASE
REAL ESTATE INTEREST DESCRIPTION
The Real Property Undivided Interest is a (i) 0.6548444%
undivided interest in the land described in I below, a (ii) 0.7555556% undivided
interest in the rights and interests described in II below, and (iii) a
0.7515556% undivided Interest in the right and interests described in III below.
I. PVNGS PLAHT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Qua and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 3: The East half of Section Four (4), Township One (1) South, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 4: The West half of Section Twenty-six (26), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of Section 27.
PARCEL NO. 6: The Southeast quarter of Section Twenty-eight (28), Township One
(1) North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona: EXCEPT 50% of~a11 oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
6091. BURNHAM. 1106.47:1
<PAGE>
PARCEL NO. 7: The East half of Section Thirty-three (33), Township One (1)
North, Range Six (6) West of the Gila and salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 8: All of Section Thirty-four (34), Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of section Thirty-five (35), Township One (1) North,
Range Six (6) West of the Qua and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township One (1) North, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGINNING at the Southeast corner of the said East half of the Southwest quarter
of Section 23; thence West, an assumed bearing along the South line of the said
East half of the Southwest quarter of Section 23, for a distance of 762.04 feet;
thence North 0 degrees 03 minutes 39 seconds West; parallel to the East line of
the said East half of the Southwest quarter of Section 23, for a distance of
1946.46 feet to a point on the South right-of-way line of the 200 foot wide
HM5AYAMPA-5ALCME HIGHWAY, as recorded in Book 12 of Road Maps, page 82, Maricopa
County Recorder, Maricopa County, Arizona; thence continuing North 0 degrees 03
minutes 39 seconds West for a distance of 234.15 feet to a point on the North
right-of-way line of said highway; thence South 58 degrees 43 minutes 35 seconds
-2-
60911.BURNHAM.1106.47:1
<PAGE>
East, along aid North right-of-way line for a distance of 892.17 feet to a point
on the said East line of the East half of the Southwest quarter of Section 23;
thence South 0 degrees 03 minutes 39 seconds East, along said East line for a
distance of 234.15 feet to a point on the said South right-of-way line: thence
continuing South 0 degrees 03 minutes 39 seconds East for a distance of 1483.31
feet to the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 53, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMPA PUMPING STATION AND EFFLUENT PIPELINE
All real property, leases, licenses, easements, rights-of-way
and other property held by Title USA Company of Arizona Trust NO. 530
established by that certain Trust Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.
III. MISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the Nuclear Plant Site (as
defined in the ANPP Participation Agreement).
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6091.BURNHAM.1106.47:l
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SCHEDULE 5
to
FACILITY LEASE
UNDIVIDED Interest DESCRIPTION
The Undivided interest is (i) a 2.2666667% undivided interest
in and to the property described under A below and (ii) a 0.7555556% undivided
interest in and to the property described in B below.
A. Unit 2 of the Palo Verde Nuclear Generating Station
(PNVGS), located in Maricopa County, Arizona, approximately 55 miles west of the
City of Phoenix, Arizona, and approximately 16 miles west of the City of
Buckeye, Arizona, consisting of:
I. Unit 2 Combustion Engineering "System 80" pressurized
water reactor nuclear steam supply system (the MISS). The NO
is comprised of a reactor vessel containing 241 fuel
assemblies with approximately 100 tons of enriched uranium
(fuel assemblies, however, are not part of Unit 2 and are
not included in the Undivided Interest being sold), two
steam generators, four reactor coolant pumps and various
additional systems and subsystems. The licensed thermal
rating of the NSSS is 3800 MW.
II. Unit 2 GE TCEF-43, 1800 RPM tandem-compound, six flow,
reheat turbine-generator including turbine, generator,
moisture separator-reheater, exciter, controls, and
auxiliary subsystems. The turbine-generator is conductor
cooled and rated at 1,554 DWA at 24,000 V, 3 phase, 60 HZ,
1.5 in Hg ASS back pressure, and approximately 1,363 MW
maximum gross electric output.
III. Unit 2 146 ft. inside diameter, steel-lined,
prestressed concrete cylindrical containment building with a
hemispherical dome designed for 60 psig. The containment
building houses the reactor system.
psig. The containment building houses the reactor system.
6091.BURNHAM.1106.47:1
<PAGE>
IV. Unit 2 auxiliary systems and equipment including
engineered safeguards systems, reactor auxiliary systems
and turbine-generator auxiliary Systems associated with
items I, II, and III above, extending to and including the
Unit 2 start-up transformer.
V. Unit 2 cooling tower system consisting of three (3)
mechanical draft cooling towers, including a closed cycle
circulating water system, make-up water systems and
essential spray ponds.
VI. Unit 2 radioactive waste treatment system, including
liquid, gaseous, and solid waste subsystems, controls,
instrumentation, storage, handling and shipment facilities.
VII. Unit 2 emergency diesel-generator system, including a
diesel-generator building which contains two diesel
generators, fuel oil systems, storage tanks, control and
instrumentation systems and otner equipment.
VIII. Unit 2 internal communication systems, including
associated interconnections and computer data links.
BUT EXCLUDING:
I. Nuclear fuel for Unit 2, including spare fuel assemblies.
II. Spare Parts (Unit 2)
III. Transmission facilities (including any and all facilities
and equipment providing interconnection between the Unit 2
turbine generator and the ANPP High Voltage Switchyard,
including step-up transformers and standby equipment and
Systems).
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IV. Oil and diesel fuel inventories (Unit 2)
B. All PVNGS common facilities, INCLUDING BUT NOT LIMITED TO:
I. Surveillance systems, including associated radioactive
monitoring systems and equipment.
II. Water treatment facilities and transport systems forsupply
of waste water effluent.
BUT EXCLUDING:
I. Nuclear fuel, including spare fuel assemblies.
II. All transmission and ANPP High Voltage
Switchyard facilities.
III Administration Building.
IV. Administration Annex Building.
V. Technical Support Center.
VI. Visitor Center.
VII. External communication systems and equipment, including
associated interconnections and computer data links.
VIII. Parking lot improvements, road improvements, fencing and
dikes.
IX. Spare parts (common facilities).
X. Simulator.
XI. Oil and diesel fuel inventories.
XII. Real property, beneficial interest in Title USA Company of
Arizona Trust No. 530, and Project Agreement interests
described in Schedule 4.
XIII. Warehouse.
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6091.BURNHAM.1106.47:1
<PAGE>
Appendix A.
DEFINITION OF TERMS
The terms defined herein relate to the participation Agreement
(as defined below) and certain Transaction Documents executed, or to be
executed, in connection with the participation Agreement. Such terms include the
plural as well as the singular. Any agreement defined or referred to below shall
include each amendment, modification and supplement thereto and waiver thereof
as may become effective from time to time, except where otherwise indicated. Any
term defined below by reference to any agreement shall have such meaning whether
or not such document is in effect. The terms "hereof", "herein", "hereunder" and
comparable terms refer to the entire agreement with respect to which such terms
are used and not to any particular article, section or other subdivision
thereof.
If, and to the extent that, either the participation Agreement
or any other Transaction Document which incorporates this Appendix shall be
amended from time to time pursuant to the respective terms thereof, this
Appendix shall be, or be deemed to have been, amended concurrently with the
execution and delivery of each such amendment in order to conform the
definitions herein to the new or amended definitions set forth in or required by
each such amendment.
Additional Bards shall mean Bonds in addition to the Initial
Series Bonds.
Additional Equity Investment shall have the meaning specified
in Section 8(f) of the Facility Lease.
Additional Notes shall have the meaning set forth in the
recitations in the Indenture, which Additional Notes shall be issued, if at all,
pursuant to Section 3.5 of the Indenture.
Affiliate, with respect to any Person, shall mean any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such person. For purposes of this definition, the
6091.BURNHAM.1106.47:1
<PAGE>
term "control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
After-Tax Basis shall mean, with respect to any payment
received or deemed to have been received by any Person, the amount of such
payment supplemented by a further payment to that Person so that the sum of the
two payments shall, after deduction of all taxes and other charges (taking into
account any credits or deductions arising therefrom and the timing thereof)
computed at the highest marginal statutory tax rate resulting from the receipt
(actual or constructive) of such two payments imposed under any Applicable Law
or by any Governmental Authority, be equal to such payment received or deemed to
have been received.
Agent and Agency Period shall have the respective meanings set
forth in Section 7.01 of the Assignment and Assumption.
ANPP Administrative Committee shall mean the committee
established pursuant to section 6.1.1 of the ANPP Participation Agreement (or
any comparable successor provision).
ANPP operating Committee shall mean the committee established
pursuant to Section 6.1.2 of the ANPP Participation Agreement (or any comparable
successor provision).
ANPP Participants shall have the meaning assigned to the word
Participant under the ANPP Participation Agreement.
ANPP Participation Agreement shall mean the Arizona Nuclear
Power Project Participation Agreement, dated as of August 23, 1973, among APS,
Salt River, Southern California, PNM, El Paso, LADWP and SCPPA, as heretofore
and hereafter amended pursuant to the terms thereof.
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<PAGE>
ANPP Project Agreements shall mean the ANPP Participation
Agreement and the other Project Agreements (as such term is defined in the ANPP
Participation Agreement)
ANPP switchyard shall mean the ANPP High Voltage switchyard
located at the PVNGS site, the owner-ship, construction, operation and
maintenance of which are governed by the AN?? High Voltage switchyard
Participation Agreement executed as of August 20, 1921 (APS Contract No.
2252-419,00), the parties to which are APS, PNM, salt River, El Paso, LADWP and
southern California.
ANPP Transferee shall have the meaning set forth in Section
4.01 of the Assignment and Assumption.
Applicable Law shall mean all applicable laws, statutes,
treaties, rules, codes, ordinances, regulations, permits, certificates, orders,
licenses and permits of any Governmental Authority, interpretations of any of
the foregoing by a Governmental Authority having jurisdiction, and judgments,
decrees, injunctions, writs, orders or like action of any court, arbitrator or
other judicial or quasi judicial tribunal (including those pertaining to health,
safety, the environment or otherwise).
Appraisal procedure shall mean a procedure whereby two
independent appraisers, one chosen by the Lessee and one by the Lessor, shall
mutually agree upon the value, period or amount (including Economic useful Life)
then the subject of an appraisal. If either the Lessor or the Lessee, as the
case may be, shall determine that a value, period or amount to be determined
(other than fair market value under section 5(b) of the Facility Lease) under
the Facility Lease or any other Transaction Document cannot be established
promptly by mutual agreement, such party shall appoint its appraiser and deliver
a written notice thereof to the other party. Such other party shall appoint its
appraiser within 15 days after receipt from the other party of the foregoing
written notice. If within 20 days after appointment of the two appraisers, as
described above, the two appraisers are unable to agree upon the value, period
or amount in question, a third independent appraiser shall be chosen within ten
days thereafter by the mutual consent of such first two appraisers or, if such
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6091.BURNHAM.1106.47:1
<PAGE>
first two appraisers fail to agree upon the appointment of a third appraiser
within such period, such appointment shall be made by the American Arbitration
Association, or any organization successor thereto, from a panel of arbitrators
having experience in the business of operating a nuclear electric generating
plant and a familiarity with equipment used or operated in such business. The
decision of the third appraiser so appointed and chosen shall be given within
ten days after the selection of such third appraiser. If three appraisers shall
be so appointed and the determination of one appraiser is disparate from the
middle determination by more than twice the amount, period or value by which the
third determination is disparate from the middle determination, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive on the Lessor and the Lessee; otherwise the average of all three
determinations shall be binding and conclusive on the Lessor and the Lessee. The
fees and expenses Of appraisers incurred in connection with any Appraisal
Procedure relating to any transaction contemplated by any provision of any
Transaction Document shall be divided equally between the Lessor and the Lessee
(except pursuant to section 16 of the Facility Lease, which shall be paid solely
by the Lessee)
APS shall mean Arizona public service Company, an Arizona
corporation.
Arizona Public utility Act 5 shall mean Chapter 2, Title 40,
Arizona Revised Statutes.
Assigned Payments shall have the meaning specified in section
2.1(1) of the Indenture.
Assignment and Assumption shall mean the Assignment,
Assumption and Further Agreement. dated as of August 12, 1986, between PNM and
the Owner Trustee.
Assignment of Beneficial interest shall mean the Deed and
Assignment of Beneficial Interest under Title USA Company of Arizona Trust No.
530, dated as of August 18, 1986, from PNM to the owner Trustee.
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6091.BURNHAM.1106.47:1
<PAGE>
Assumption Agreement shall mean the Assumption Agreement of
PNM substantially in the form of Exhibit B to the Indenture.
Assumptions shall mean the Pricing Assumptions and the Tax
Assumptions.
Atomic Energy Act shall mean the Atomic Energy Act of 1954, as
amended, and regulations from time to time issued, published or promulgated
pursuant thereto.
Authorized officer shall mean, with respect to the Indenture
Trustee, any officer of the Indenture Trustee who shall be duly authorized by
appropriate corporate action to authenticate a Note and shall mean, with respect
to the owner Trustee, any officer of the owner Trustee who shall be duly
authorized by appropriate corporate action to execute any Transaction Document.
Bankruptcy code shall mean the Bankruptcy Reform Act of 1978,
as amended, and any law with respect to bankruptcy, insolvency or reorganization
successor thereto.
Basic Lease Tern shall mean the initial term of the Facility
Lease, which shall begin on the Closing Date and end on January 15, 2016, unless
earlier terminated.
Basic Rent shall have the meaning set forth in section 3(a) of
the Facility Lease.
Basic Rent Payment Dates shall mean and include January 15,
1987, and each January 15 and July 15 of each year thereafter through and
including January 15, 2016, and, if the Lessee shall elect the Renewal Term,
each January 15 and July 15 of each year during the Renewal Term, commencing
July 15, 2016 and ending on the last day of the Renewal Term.
Bill of Sale shall mean the Deed and Bill of sale, dated as of
August 18, 1986, between PNM and the owner Trustee.
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6091.BURNHAM.1106.55:1
<PAGE>
Bonds shall mean all bonds, notes and other evidences of
indebtedness from time to time issued and outstanding under the Collateral Trust
rndenture, including. but without limitation, the Initial series Bonds, the
Releveraging Bonds, the Refunding Bonds and any other Additional Bonds.
Business Day shall mean any day other than a Saturday or
Sunday or other day on which banks in Albuquerque, New Mexico, new York, New
York or Boston, Massachusetts are authorized or obligated to be closed.
Capital Improvement shall mean (a) the addition, betterment or
enlargement of any property constituting part of Unit 2 or the Common Facilities
or the replacement of any such property with other property, irrespective of
whether (i) such replacement property constitutes an enlargement or betterment
of the property which it replaces, (ii) the cost of such addition, betterment,
enlargement or replacement is or may be capital ized, or charged to maintenance
or repairs, in accordance with the Uniform System of Accounts or (iii) such
addition, betterment or enlargement is or is not included or reflected in the
plans and specifications for Unit 2 or the Common Facilities, as built, and (b)
any alteration, modification, addition or improvement to Unit 2, other than
original, substitute or replacement parts incorporated into Unit 2 or the Common
Facilities.
Casualty value, as of any Basic Rent payment Date, shall mean
the percentage of Facility Cost set forth opposite such date in Schedule 1 to
the Facility Lease. casualty value as of any Basic Rent Payment Date during the
Renewal Term shall mean the unamortized portion as of such Basic Rent Payment
Date of the Fair Market sales value of the undivided Interest, determined by the
straight-line amortization of such Fair Market sales value at the corrurencement
of the itenewal Term over the period from such commencemant date through the
remaining term of the License determined pursuant to the Appraisal procedure
undertaken in accordance with the last sentence of section 13(a) of the Facility
Lease. Anything contained in the participation Agreement or the Facility Lease
to the contrary notwithstanding, Casualty Value shall be, when added to all
other amounts which the Lessee is required to pay under Section 9(c) of the
Facility Lease (taking into account any assumption of Notes by the Lessee),
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6091.BURNHAM.llO6.55:l
<PAGE>
a under any circumstances and in any event, in an amount at least sufficient to
pay in full, as of any Basic Rent Payment Date, the aggregate unpaid principal
amount of all Notes Outstanding at the close of business on such date, together
with accrued and unpaid interest on such Notes.
Change in Tax raw shall mean any change in the Code or
successor legislation enacted by either the Ninety-ninth or the One Hundredth
Congress (other than a change in respect of an alternative minimum tax or an
add-on minimum tax having the same effect as an alternative minimum tax), or if
prior to January 15, 1997 Ci) there is enacted any technical correction thereto,
or (ii) there are adopted, promulgated, issued or published any proposed,
temporary or final Regulations resulting therefrom (regardless of the effective
date of such technical corrections or Regulations, but only if such technical
corrections or Regulations would affect Net Economic Return), provided, however,
that a Change in Tax Law shall occur in the event the provision set forth in
Section 1509(b) of H.R. 3838 as passed by the U.S. House of Representatives on
December 17, 1985 and Section 1809(b) of H.R. 3838 as passed by the U.S. Senate
on June 24, 1986 shall fail to be enacted into law in the form therein set forth
or, if such provision is so enacted into law, it shall not apply to the Common
Facilities.
Chemical Bank shall mean chemical Bank, a New York banking
corporation.
Chief Financial officer shall mean the person designated by
the Board of Directors of PNN as the chief financial officer of PNM.
Claim shall mean liabilities, obligations, losses, damages,
penalties, claims (including, without limitation, claims involving liability in
tort, strict or otherwise), actions, suits, judgments, costs, interest, expenses
and disbursements, whether or not any of the foregoing shall be founded or
unfounded (including, without limitation, legal fees and expenses and costs of
investigation) of any kind and nature whatsoever without any limitation as to
amount.
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6091.BURNHAM.1106.47:1
<PAGE>
Closing shall mean the proceedings which are contemplated by
Section 4 of the Participation Agreement
Closing Date shall mean August 18, 1986.
Code shall mean the Internal Revenue Code of 1954, as amended,
or any comparable successor law.
Collateral Trust Indenture shall mean the Collateral Trust
Indenture, dated as of December 16, 1985, among PNM, Funding Corp and the
Collateral Trust Trustee.
Collateral Trust Indenture supplement shall mean a supplement
to the Collateral Trust Indenture.
Collateral Trust Trustee shall mean Chemical Bank, not in its
individual capacity, but solely as Collateral Trust Trustee under the Collateral
Trust Indenture, and the successors or assigns of such Trustee.
Common Facilities shall mean all PVNGS common facilities, as
set forth in rtem B of Exhibit B to the Bill of Sale, other than common
facilities excluded therefrom in said item B.
Common Facilities Interest shall mean the Owner Trustee's
portion of the Lessee's original 10.2% undivided interest in all Common
Facilities at PVNGS, the percentage of which is set forth in Schedule 2 to the
Participation Agreement.
Coverage Ratio shall mean the fraction (i) the denominator of
which shall be the sum (calculated as of a date no earlier than 135 days prior
to the date of calculation) of (x) the interest that will be payable during the
twelve-month period following the date of the transaction with respect to which
a calculation is required to be made on the debt (both long-term and short-term)
of the Surviving Lessee, and (y) the interest portion of payments due during the
twelve-month period following the date of such transaction on lease obligations
of the Surviving Lessee with a term in excess of one year, and (ii) the
numerator of which shall be the sum of (x) the pro forma net sarnings (before
taxes and excluding allowance for funds used during construction) of the
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6091. BURNHAM. 1106.55:1
<PAGE>
Surviving Lessee for a twelve-month period ending no earlier than 135 days prior
to the date of such transaction, and Cy) such denominator.
Cure option shall have the meaning set forth in section 16(e)
of the Facility Lease.
Debt 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, if the principal amount (or equivalent) thereof is greater than
$20,000,000 for any one item of Debt or $30,000,000 in the aggregate for all
items of Debt of the Lessee).
Decommissioning shall mean the decommissioning and retirement
from service of Unit 2, and the related possession, maintenance and disposal of
radioactive material used in ot produced incident to the p05session and
operation of Unit 2, including, without limitation, (i) placement and
maintenance of Unit 2 in a state of protective storage, (ii) in-place entombment
and maintenance of Unit 2, (iii) dismantlement of Unit 2, (iv) any other form of
decommissioning and retirement from service required by or acceptable to the NRC
and (v) all activities undertaken incident to the implementation thereof and to
the obtaining of NRC authority therefor, including, without limitation,
maintenance, storage, custody, removal, decontamination, and disposition of
materials, equipment and fixtures, razing of Unit 2, removal and disposition of
debris from the PVNGS Site, and restoration of the PVNGS Site related to Unit 2
for unrestricted use.
Decommissioning Costs shall mean all costs, liabilities and
expenses relating or allocable to, or incurred in connection with, the
Decommissioning of Unit 2, including, without limitation, (i) any and all costs
of activities undertaken to terminate NRC licensing authority and requirements
to own, operate and p05sess Unit 2 and to possess radioactive material used in
or produced incident to the possession and operation of Unit 2; and (ii) any and
all costs of activities undertaken, prior to termination of all NRC licensing
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6091.BURNHAM.1106.47:1
<PAGE>
authority and requirements with respect to Unit 2 and the radioactive material
used in or produced incident to the possession and operation of Unit 2, to
possess, maintain, and dispose of radioactive material used in or produced
incident to the possession and operation of Unit 2.
Deed shall mean the Deed, dated as of August 12, 1986, from
PNM to the Owner Trustee.
Deemed Loss Event shall mean any of the following events
(unless waived by the Owner Participant, which waiver shall be in writing and
may be either indefinite or for a specified period):
(1) Regulation. If at any time after the closing Date and
before the Lease Termination Date, the Owner Trustee or the Owner
Participant, by reason of the ownership of the Undivided Interest or the
Real Property Interest or any part thereof by the Owner Trustee (or any
beneficial interest therein by the Owner Participant) dr the lease of
the Undivided Interest or the Real Property rnterest to the Lessee or
any of the other transactions contemplated by the Transaction Documents
(the term Owner Participant, as used in this definition, not including
any Transferee who at the time of transfer to such Transferee is a
non-exempt entity of the type referred to in this clause (1), whether by
reason of such ownership or lease transactions, or otherwise) shall be
deemed by any Governmental Authority having jurisdiction to be, or shall
become subject to regulation (other than Non-Burdensome Regulation) as,
an "electric utility" or a "public utility" under any Applicable Law or
a holding company under the Holding Company Act, or as a consequence of
any Governmental Action, and the effect thereof on the Owner Trustee or
the Owner Participant would be, in the sole judgment of either such
Person, acting on advice of counsel, adverse, and the Owner Trustee and
the Owner Participant have not waived application of this definition,
except that if the Lessee, at its sole cost and expense, is contesting
diligently and in good faith any action by any Governmental Authority
which would otherwise constitute a Deemed Loss Event under this clause
Cl), such Deemed Loss Event shall be deemed not to have occurred so long
as (i) such contest does not involve ariy danger of the foreclosure,
sale, forfeiture or loss of, or the creation of any Lien
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6091.BURNHAM.1106.47:1
<PAGE>
on, the Undivided Interest, the Real property rnterest or any part
thereof or any interest therein, (ii) such contest does not adversely
affect the Undivided Interest, the Real property Interest or any part
thereof or any other property, assets or rights of the owner Trustee or
the owner participant or the Lien of the Indenture thereon, (iii) the
Lessee shall have furnished the owner Trustee, the owner Participant,
and the Indenture Trustee with an opinion of independent counsel
satisfactory to each such person to the effect that there exists a
reasonable basis for contesting such determination and the effects
thereof, (iv) such determination and the effects thereof shall be
effectively stayed or withdrawn during such contest (and shall not be
subject to retroactive application at the conclusion of such contest) in
a manner satisfactory to the owner Trustee and the owner participant,
and the Owner Participant shall have determined that the Owner Trustee's
continued ownership of the Undivided Interest and the Real Property
rnterest during the pendency of such contest or such contest will not
adversely affect its or its Affiliates' business, and (V) the Lessee
shall have indemnified the owner Trustee and the owner participant in a
manner satisfactory to each such Person for any liability or loss which
either such person may incur as a result of the Lessee's contest;
(2) Price-Anderson Act Change. If there shall be, at any time
during the Lease Term, any change in the price-Anderson Act, the Atomic
Energy Act or the regulations of the NRC, or any other Applicable Law,
in each case as in effect on the Closing Date, as a result of which, in
the opinion of independent counsel for the Owner Participant, (i) the
aggregate liability for a single Nuclear Incident of "persons
indemnified" (as each such term is defined in the price-Anderson Act) is
increased, unless the change is such that neither the owner Trustee nor
the Owner participant may be exposed, either during or subsequent to the
Lease Term, to any increased real or potential liability in respect of a
Nuclear Incident, (ii) the aggregate liability for a single Nuclear
Incident of "persons indemnified" (as such term is defined in the
price-Anderson Act) exceeds the amount of financial protection
established by the NRC as a condition to the License, unless the change
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6091.BURNHAM.1106.47:1
<PAGE>
is such that neither the Owner Trustee nor the Owner Participant may be
exposed, either during or subsequent to the Lease Term, to any
increased real or potential liability in respect of a Nuclear Zncident,
(iii) the amount of financial protection required, including but flat
limited to the limitation on the amount of deferred premiums for such
financial protection, is increased, unless the change is such that
neither the Owner Trustee nor the Owner Participant may be exposed,
either during or subsequent to the Lease Term, to any increased real or
potential liability in respect of a Nuclear Incident, or (iv) either
the Owner Trustee or the Owner Participant may be exposed to any other
increase in its real or potential liability in respect of a Nuclear
Incident, either during or sub-sequent to the Lease Term, it being
understood for purposes of this definition that the requirement or
existence of insurance, retrospective premiums, indemnities (whether by
the Lessee or any other person) or other forms of financial protection
(similar or dissimilar to the foregoing) shall not be deemed to reduce
or eliminate any exposure of the Owner Trustee or the owner Participant
to real or potential liability in respect of a Nuclear Incident except
to the extent Cx) such financial protection is provided by the United
States Government under Congressional action which does not require any
further appropriation or other act of congress or any other
Governmental Authority, (y) the terms of such financial protection are
otherwise satisfactory to the Owner Trustee and the Owner Participant,
and (z) the Owner Trustee or Owner Participant may not otherwise be
exposed, either during or subsequent to the Lease Term, to any
increased real or potential liability in respect of a Nuclear Incident;
provided, however, that such change shall not constitute a "Deemed Loss
Event9' if such change shall include a provision drafted in a manner
reasonably satisfactory to the Owner Participant which exempts the
Owner Trustee and the owner Participant from all real and potential
liability in respect of a Nuclear Incident so long as neither the Owner
trustee or the Owner Participant is in actual possession and control of
Unit 2 or the Undivided Interest, unless (in the opinion of independent
counsel to the Owner Participant) a court could reasonably hold that
the statute incorporating such provision is unconstitutional;
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(3) Liability for Termination obligation. If there shall be
any change in Applicable Law as a result of which the owner Trustee
shall become liabLe in its individual capacity, or the owner
participant shall become liable in any capacity, in respect of any
portion of the Termination obligation (as defined in the ANPF
Participation Agreement) or ~ecommissioning Costs or, during the Lease
Term, any other liability or obligation imposed as of the date hereof
on licensees of the NRC;
(4) Illegality. If there shall be any change in Applicable Law
or any Governmental Action the effect of which is to make the
transactions contemplated by the Transaction Documents unauthorized,
illegal or otherwise contrary to Applicable Law;
(5) Limitation on Exercise of Rights. Any change in, or new
interpretation by Governmental Authority having jurisdiction of, the
License and the License Amendment (each as in effect on the Closing
Date) constituting an assertion to the effect that the exercise by the
owner Trustee or the owner participant of any right (irrespective of
the event giving rise to such right) under any Transaction Document
would constitute impermissible control over Unit 2 or the licensees of
Unit 2, other than an assertion that affects such rights in a manner
consistent with the second sentence of section 184 of the Atomic Energy
Act and the NRC'S regulations thereunder (including, without
limitation, 10 CYR section 50.81, as now and hereafter in effect);
(6) Early Licensee Status. If as a result of any expiration,
revocation, suspension, amendment or interpretation by any Governmental
Authority of the License, the License Amendment or any other
Governmental Action or change in Applicable Law, either the owner
Trustee or the owner Participant shall be required to become a licensee
of the NRC prior to the Lease Termination Date;
(7) Suspension or Termination of Insurance. If any policy of
liability insurance with respect to Unit 2 shall be suspended or
terminated, or the. coverage thereunder reduced, for any reason
whatsoever or shall be amended or supplemented, in either case in a
manner which may expose the owner Trustee or
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the Owner Participant, either during or subsequent to the Lease Term1
to any increased real or potential liability in respect of a Nuclear
Incident and such policy of insurance shall not be immediately replaced
by insurance or other financial protection satisfactory to the Owner
Participant effective immediately upon such suspension, termination,
reduction, amendment or supplementation which, in the reasonable
opinion of the Owner Participant, is at least as protective of it (in
all respects deemed by it to be material) as the policy of insurance so
terminated, suspended, reduced, amended or supplemented, urdess the
aggregate liability for a Nuclear Incident of "persons indemnified" (as
such term is defined in the Atomic Energy Act of 1954, as amended) is
reduced by an amount equal to the amount of liability insurance so
terminated, suspended, reduced, amended or supplemented and, in the
reasonable opinion of the Owner Participant, it may not otherwise be
exposed1 either during or subsequent to the Lease Term, to any
increased real or potential liability in respect of a Nuclear rncident
as a consequence of such suapenston, termination, reduction, amendment
or supplementation.
Default shall mean an event or condition which, with the
giving of notice or lapse of time, or both, would constitute an Event of
Default.
Directive shall mean an instrument in writing executed in
accordance with the terms and provisions of the Indenture by the Holders, or
their duly authorized agents or attorneys-in-fact, representing a Majority in
Interest of Holders of Notes, directing the Indenture Tru5tee to take or refrain
from taking the action specified in such instrument.
Early Termination Date shall have the meaning specified in
Section 14(d) of the Facility Lease.
Early Termination Notice shall have the meaning specified in
Section l4Cd) of the Facility Lease.
Economic Useful Life shall mean that period (commencing on the
date as of which the determination of Economic Useful Life is to be made as
provided in section 8(g) of the Facility Lease and ending on the date upon which
either of the states of affairs described in clauses ci) and Cii) below cease to
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6091.BURNHAM.1106.47:1
<PAGE>
apply, or can reasonably be expected to cease to apply, to Unit 2) during which
(i) Unit 2 will be useful to, and usable by, any owner or lessee thereof as a
facility f6r the generation of electric pdwer'and (ii) Unit 2 is an economic and
commercially practical facility for the generation of electric power capable of
producing (after taking into account costs of capital) a reasonable economic
return to the owner thereof. For the purposes of determinations under clauses
(i) and (ii) above, the following factors, among others, shall be taken into
account (as such factors obtain on the date of determination and as such factors
are reasonably expected to obtain in the future): (a) provisions of the ANPP
Project Agreements (including, without limitation, the ANPP Participation
Agreement and the Material Project Agreements (or substitutes for such Material
Project Agreements in effect on the date of determination)); (b) the actual
condition and performance of Unit 2: (C) the actual condition and performance of
such other facilities constituting PVNGS (including, without limitation, the
Common Facilities) as are integral to the operation of Unit 2; (d) the actual
condition of, and access of the ANPP Participants to, the ANPP switchyard and
such other transmission facilities as are available and necessary to permit the
transmission of the maximum amount of power generated by PVNGS; (e) the cost of
obtaining, handling, storing and disposing of nuclear fuel for Unit 2; (f) the
projected cost (including, without limitation, costs attributable to obligations
to fund any reserve fund maintained (or funded) by licensed owners and/or
lessees of Unit 2 to the extent dedicated to (or attributable to and freely
available with respect to) Unit 2 (the Unit 2 Fund)) or the Decommissioning or
retirement from service of Unit 2 including, without limitation, Decommissioning
Costs (taking into account the balance (plus projected investment earnings
thereon) of the Unit 2 Fund); (g) the cost of Capital Improvements to Unit 2
then planned to be made, or reasonably expected to be made; (h) the cost of
acquiring or leasing the Unit 2 Retained Assets; (i) the current status of all
Governmental Action with respect to Unit 2 (including without limitation, the
License) required to permit licensed owners and/or lessees to possess and (in
the case of the operating Agent) to operate unit 2 and such other facilities
constituting PVNGS (including, without limitation, the Common Facilities) as are
integral to the operation of unit 2; and (j) the relative cost of producing an
amount of electric power and energy equivalent to the generating
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6O9l.BURNHAM. 1106.55:1
<PAGE>
capacity of Unit 2 from other facilities then available in the region serviced,
or reasonably expected to be serviced by PVNGS.
El Paso shall mean El Paso Electric Company, a Texas
corporation.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
Estimated Transaction Expenses S h a 1 1 h ave the meaning set
forth in Section 5(a) of the Participation Agreement.
Event of Default shall have the meaning set forth in Section
15 of the Facility Lease.
Event of Loss shall mean any of the following events: (a) a
Final Shutdown, (b) a Requisition of Title, or (a) 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).
Excepted Payments shall mean (i) all payments of Supplemental
Rent, other than payments by the Lessee (x) of Casualty Value, Termination Value
br Special Casualty Value or in connection with the exercise of the Cure Option
or the occurrence of the Special Purchase Event or (y) of indemnity payments to
which either the Loan Participant or any Indemnitee other than the owner Trustee
or the Owner Participant or any of their respective Affiliates (or the
respective successors, assigns, agents, officers, directors or.employees
thereof) is entitled; (ii) any amounts payable under any Transaction Document to
reimburse the Lessor or the Owner Participant or any of their respective
Affiliates (including the reasonable expenses of the Lessor or the Owner
Participant incurred in connection with any such payment) for performing or
complying with any of the obligations of the Lessee under and as permitted by
any Transaction Document, (iii) any amount payable to the Owner Participant by
any Transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (iv) so long as no Indenture Default or Indenture Event of Default
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6091. BURNHAM. 1106.55:1
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shall have occurred and be continuing, all payments of Basic Rent in excess of
amounts then due and owing in respect of the principal of and premium, if any,
and interest on all Notes outstanding; (v) any insurance proceeds with respect
to an Event of Loss in excess of amounts then due and owing in respect of the
principal of and premium, if any, and interest on all Notes outstanding, (vi)
any insurance proceeds (or payments with respect to risks self-insured) under
liability policies and (vii) any payments in respect of interest to the extent
attributable to payments referred to in clauses (i) through (vi) above.
Existing Mortgage shall mean the Indenture of Mortgage and
Deed of Trust dated as of June 1, 1947, between PNM and Irving Tuust Company, as
heretofore supplemented by all supplemental Indentures thereto.
Expenses shall mean liabilities, obligations, losses, damages,
taxes (other than taxes on income), claims, actions, suits, costs, expenses and
disbursements (including legal fees and expenses) of any kind and nature
whatsoever.
Extension Letter shall mean the Extension Letter, dated August
18, 1986 and addressed to the Collateral Trust Trustee by the parties to the
Participation Agreement.
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
offaite, 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 off-site 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
fron 'the location' or 'the contract location' as defined in the applicable
Commission indemnity agreement, enterea into pursuant to section 2210 of this
title."
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Facility cost shall mean the Purchase Price plus the sum of
(x) all supplemental Financing Amounts, and (y) all Additional Equity Investment
amounts.
Facility Lease shall mean the Facility Lease, dated as of
August 12, 1986, between PNM, as Lessee, and the owner Trustee, as Lessor.
Fair Market Rental value or Fair Market Sale' Value of any property or service
shall mean (other than for purposes of section 5(b) of the Facility Lease) the
value of such property or service for lease or sale determined on the basis of
an arm's-length transaction for cash between an informed and willing lessee or
purchaser (under no compulsion to lease or purchase) and an informed and willing
lessor or seller (under no compulsion to lease or selt), and shall take into
account the Lessor's rights and obligations under the Assignment and Assumption
and the Assignment of Beneficial Interest and rights under the Deed and the Bill
of sale, but shall be without regard to any rights of the Lessee (including any
renewal options) under the Facility Lease. Except pursuant to section 6.01 of
the Assignment and Assumption, Fair Market Rental Value and Fair Market sales
value of the undivided Interest and the Real Property Interest shall be
determined on the assumption that (i) Unit 2 has been maintained in accordance
with, and the Lessee has complied with, the requirements of the Facility Lease,
the other Transaction Documents and the ANPP Participation Agreement, and (ii)
the Lessee or PNM, as possessor of the Undivided Interest and the Real Property
Interest, is otherwise in compliance with the requirements of all Transaction
Documents. Fair Market Rental value shall be determined on the assumption that
rent will. be payable in equal semi-annual installments in arrears.
Federal Power Act shall mean the Federal Power Act,as amended.
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6091.BURNHAM.1106.47:1
<PAGE>
Federal securities shall have the meaning set forth in section
2.3(c) of the Indenture.
FERC shall mean the Federal Energy Regulatory Commission of
the United States of America or any successor agency.
Final Prospectus shall mean the Prospectus included in the
Registration statement on the date the same becomes effective, including
documents incorporated into said Prospectus by reference, including any
applicable prospectus supplements.
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 2 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 2, which suspension remains in effect
for three consecutive calendar months; or
(3) the permanent or temporary cessation of operation of Unit
2 as a result of a Nuclear Incident at Unit 2 (or if Unit 2 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 (3) such Nuclear Incident causes the radiation level in the
containment building of Unit 2, as measured by the average of two high range
radiation monitors in such containment building of Unit 2 (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 e however, this subsection (B) shall not
apply in respect of a Nuclear Incident arising solely from a fuel handling
accident; or
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6091. BURNMAM. 1106.55:1
<PAGE>
(4) the permanent or temporary cessation of operation of Unit
2 as a result of a Nuclear Incident at Unit 1 or 3 (the Affected Unit) (or if
Unit 2 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 PYNGS Site
or (B) a discharge or dispersal of Source, special Nuclear or Byproduct Material
from its intended place of confinement in amounts of f 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 2 and,
unless the 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 or 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 2 in accordance with Section 16.2 of the ANPP
Participation Agreement) to restore or reconstruct Unit 2 to completion priot to
the day sixty calendar months after the date of such agreement and (B)
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<PAGE>
thereafter to complete the restoration and reconstruction of unit 2 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 2 is in operation at a rated core power level of at least
1900 megawatts thermal; or
(7) the non-operation of Unit 2 or the operation of Unit 2 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 2.
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
2 to a level three feet above the nuclear fuel.
Financing Documents shall mean the Collateral Trust Indenture,
the Term Note Supplemental Indenture, the Underwriting Agreement, the Term Loan
Agreement, the Supplemental Indenture of Pledge and the Refunding Supplemental
Indenture.
Fixed Rate Nate shall mean the non-recourse promissory note or notes to be
issued by the Owner Trustee and authenticated by the Indenture Trustee on the
Refunding Date to refund the Initial series Note.
Fixed Rate Renewal Term shall have the meanings set forth in
Section 12 of the Facility Lease.
FNB shall mean The First National Bank of Boston, in its
individual capacity, and its successors and assigns.
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<PAGE>
Form U-7D shall mean the certificate to be filed pursuant to
Rule 7(d) of the Holding Company Act for the purpose of exempting the Owner
Participant and the Owner Trustee from registration under the Holding Company
Act.
Funding Corp shall mean First PV Funding Corporation, a
Delaware corporation.
Generating Unit shall mean Unit 1, 2, or 3.
Generation Entitlement Share shall have the meaning assigned thereto in
the ANPP Participation Agreement and (i) when used in reference to Unit 2, shall
mean the Generation Entitlement Share of PNM as the ANPP Participant with
respect to its interest in Unit 2,. (ii) when used in reference to the Undivided
Interest, shall mean that portion of the Generation Entitlement Share
attributable to the Undivided Interest and (iii) when used in Section 19 of the
Facility Lease, shall refer to the Generation Entitlement Share of the Lessee in
all Generating Units as PVNGS.
Governmental Action shall mean all authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses, exemptions,
publications, filings, notices to and declarations of or with any Governmental
Authority (other than routine reporting requirements the failure to comply with
which will not affect the validity or enforceability of any of the Transaction
Documents or have a material adverse effect on the transactions contemplated by
any Transaction Document or any Financing Document) or any other action in
respect of any Governmental Authority and shall include, without limitation, all
siting, environmental and operating permits and licenses which are required for
the use and operation of Unit 2, including the Undivided Interest and the Real
Property Interest.
Governmental Authority shall mean any Federal, state, county,
municipal, foreign, international, regional or other governmental authority,
agency, board, body, instrumentality or court, and the staff thereof pursuant to
their official responsibilities.
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<PAGE>
Holders shall mean the holders of the Notes or the Bonds, as
the case may be.
Holding Company Act shall mean the Public utility Holding
Company Act of 1935, as amended.
Indemnitee shall mean the Owner Participant, the Owner
Trustee, FNB, the Loan Participant, the stockholder of Funding Corp and its
officers and directors, Chemical Bank, the Indenture Trustee, each Holder of a
Note from time to time Outstanding, the Collateral Trust Trustee, the Trust, the
Trust Estate, the Lease Indenture Estate, the indenture estate under the
Collateral Trust Indenture, any Affiliate of any of the foregoing and the
respective successors, assigns, agents, officers, directors or employees of the
foregoing, excluding, however, any ANYP Participant other than the Owner Trustee
or the owner Participant.
Indenture shall mean the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of August 12, 1986, between the
Owner Trustee and the Indenture Trustee.
Indenture Default shall mean an event which, after giving of
notice or lapse of time, or both, would become an Indenture Event of Default.
Indenture Event of Default shall mean any of the events
specified in Section 6.2 of the Indenture.
Indenture Trustee shall mean Chemical Bank, a New York banking
corporation, not iri its individual capacity, but solely as Indenture Trustee
under the Indenture and each successor trustee and co-trustee thereunder.
Indenture Trustee's Liens shall mean Liens against the Lease
Indenture Estate which result from acts of, or any failure to act by, or as a
result of claims against, the Indenture Trustee, in its individual capacity,
unrelated to the transactions contemplated by the Transaction Documents.
Indenture Trustee's office shall mean the office of the
Indenture Trustee located at 55 Water Street, New York, New York 10041, or such
other office as may be designated by the Indenture Trustee to the Owner Trustee
and each Holder of a Note Outstanding under the Indenture.
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<PAGE>
Initial series Bonds shall mean the promissory notes of
Funding Corp evidencing the loans made to Funding Corp under the Term Loan
Agreement, issued, authenticated and delivered under the Term Loan Agreement and
the Collateral Trust Indenture, as supplemented by the Term Note Supplemental
Indenture.
Initial series Nate shall mean the nonrecourse promissory
note,. substantially in the form of Exhibit A to the Indenture, to be issued by
the Owner Trustee and authenticated by the Indenture Trustee on the Closing Date
to finance a portion of the Purchase Price.
Investment shall have the meaning set forth in Section 3 of
the Participation Agreement.
Investment Company Act shall mean the Investment Company Act
of 1940, as amended.
Investment Percentage shall mean the percentage identified as
such in Schedule 2 to the Participation Agreement.
IRS shall mean the Internal Revenue Service of the United
States Department of the Treasury or any successor agency.
LADWP shall mean the Department of Water and Power of The City of Los Angeles, a
department organized and existing under the charter of the City of Los Angeles,
a municipal corporation of the State of California.
Lease Indenture Estate shall have the meaning set forth in
Section 2.1 of the Indenture.
Lease Term shall mean the aggregate of the Basic Lease Term
and the Renewal Term, if any.
Lease Termination Date shall mean the last day of the Lease
Term (whether occurring by reason of a termination or expiration of the Lease
Term).
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6091. BURNHAM. 1106.55:1
<PAGE>
Lessee shall mean Public Service Company of New Mexico, a flew
Mexico corporation, and its successors and assigns, as lessee under the Facility
Lease and as party to the other Transactions Documents and Financing Documents
to which it is a signatory.
Lessee Request shall mean a request of the Lessee delivered
pursuant to section 6.03 of the Collateral Trust Indenture.
Lessor shall mean the Owner Trustee as lessor under the Facility Lease (and for
purposes of the definition of "Deemed 1055 Event" and where the context
otherwise so requires, the owner Trustee in its individual capacity), and its
successors and assigns.
Lessor's Interest shall have the meaning set forth in Section
8(c) (3) of the Participation Agreement.
Lessor' s Liens or Owner Trustee' s Liens shall mean Liens
against the Trust Estate or the Lease Indenture Estate (other than permitted
Liens described in the definition of such term, except "Lessor's Liens" and
"Owner Participant's Liens" referred to in clause (vi) of such definition) for
which the Lessee is not responsible and which result from acts of, or any
failure to act by, or as a result of claims against, niB or the Lessor,
unrelated to the ownership of the Undivided Interest or the Real Property
Interest, the administration of the Trust Estate or the transactions
contemplated by the Transaction Documents or the Financing Documents.
Lessor's portion shall mean the owner Trustee's portion of the
original 10.2% undivided interest of the Lessee in Unit 2, the percentage of
which is set forth in Schedule 2 to the Participation Agreement.
License shall mean NRC Facility Operating License No. NPF-5l,
issued April 24, 1986 (superseding NRC Facility operating License No. NPF-46,
issued on December 9, 1985), as the same may be amended, modified, extended,
renewed or superseded from time to time.
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<PAGE>
License Amendment shall mean amendment number No. 2 to the
License, issued August 12, 1986, approving the sale and leaseback transaction
contemplated by the Transaction Documents.
License Expiration Date shall mean December 9, 2025, or any
later or earlier date on which the License shall expire or be terminated.
Lien shall mean any mortgage, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction.
Loan shall have the meaning set forth in Section 2(a) of the
Participation Agreement.
Loan Participant shall mean Funding Corp.
Loan Percentage shall mean the percentage identified as such
in schedule 2 to the Participation Agreement.
Majority in Interest of Holders of Notes shall mean Holders of
a majority in principal amount of all Notes Outstanding under the Indenture at
the time of any such determination.
Material Project Agreements S h a 1 1 m a a n (i) Nuclear Fuel
Contract between Arizona Nuclear Power Project and Combustion Engineering, Inc.
(CE), dated as of August 20, 1973, (ii) Nuclear Steam Supply Contract between
APS and CE, dated as of August 20, 1973, as amended (iii) Turbine Generator
Contract between APS and General Electric Company, dated as of March 21, 1974,
as amended (iv) Uranium Enrichment Services Contract between the United States
of America (USA) and APS, dated November 15, 1984, as amended and the Associated
Supplemental Agreement of Settlement between USA and APS, dated November 15,
1984, (v) Contract between APS and Westinghouse Electric Corporation for fuel
fabrication services for reload batches of nuclear fuel, dated August 7, 1974,
as amended, (vi) Agreement for the Sale and Purchase of.Waste Water Effluent
between the City of Tolleson, APS and Salt River, dated June 12, 1981, as
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<PAGE>
amended (vii) Agreement for Construction of Arizona nuclear Power Project
between Bechtel power Corporation (Bechtel) and APS, dated January 15, 1973,
(viii) Agreement for Engineering and Procurement Services between APS and
Bechtel, dated January 15, 1973, (ix) Option and Purchase of Effluent dated
April 23, 1973, among the Cities of Phoenix, Glendale, Mesa, Tempe and
Scottsdale, the Town of Youngtown, APS and Salt River, APS, and salt River,
dated April 23, 1973, (x) Agreement for Conversion Services between Allied
Chemical Corporation and An, dated November 17, 1975, as amended, (xi) Uranium
Concentrate Sales Agreement between Energy Fuels Exploration company and APS,
dated as of December 1, 1983, (xii) Uranium Concentrate Sales Agreement between
Energy Fuels Exploration and APS, dated as of October 23, 1981, as amended,
(xiii) Agreement for Sale of Uranium Concentrates between Pathfinder Mines
Corporation and APS, dated December 1, 1983, (xiv) Contract for Disposal of
Spent Nuclear Fuel and/or High Level Radioactive Waste between USA and APS,
dated July 21, 1984, and the ANPP Participation Agreement.
Minimum Net Worth means a Net Worth equal to the greater of
(x) $700,000,000 and Cy) (1) $950,000,000 less (2) with respect to each
Generating Unit as to which PNM shall have entered into one or more transactions
constituting sale and leaseback transactions under the ANPP Participation
Agreement (including, but without limitation, the transaction contemplated by
the Participation Agreement), (A) $50,000,000 (in the case of Unit 1) and
$100,000,000 (in the case of each other Generating Unit) times (B) the aggregate
percentage of the Lessee's undivided interest in such PVNGS unit subject to such
transactions.
Mortgage Release shall mean the Indentures of Partial Release,
each dated August 18, 1986, under and with respect to the Existing Mortgage.
Net Economic Return shall mean the after-tax economWc yield
and periodic after-tax cash flows (after all Federal, state and local taxes) and
the periodic return on investment and the timing of tecognition of income
originally expected by the Owner Participant with respect to the Undivided
Interest, utilizing the same assumptions as used by the Owner Participant in
making the original cojnputation upon which its evaluation of investment in the
Undivided Interest and the initial computation of Basic Rent, Casualty Value,
Special Casualty Value and Termination Value were based.
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<PAGE>
Net Worth means the excess of assets over liabilities
determined by the Lesseets auditors on the basis of generally accepted
accounting principles.
New Mexico Public utility Act shall mean the New Mexico Public
Utility Act, as amended.
NMPSC shall mean the New Mexico Public Service Commission
established pursuant to Section 62-5-1 of New Mexico Statutes Annotated, 1978.
NMPSC order shall mean the order issued by the NMPSC on July
8, l986 in Case No. 2019 (Phase I), approving, among other things, the terms of
the Facility Lease and the execution and delivery of the Facility Lease by PNM.
Non-Burdensome Regulation s h a 1 1 m e a n (i) regulation to
which the Owner Participant or the Owner Trustee is otherwise subject by reason
of its lease financing or other activities unrelated to the transactions
contemplated by the Transaction Documents, (ii) ministerial regulatory
requirements which do not impose limitations or regulatory requirements on the
business or activities of the Owner Participant and which are deemed, in the
reasonable discretion of the Owner Participant, not to be burdensome, (iii)
regulation resulting from any possession of the Undivided Interest on or after
the Lease Termination Date or (iv) regulation of the Owner Trustee which would
be terminated by the appointment of a successor Owner Trustee or a co-Owner
Trustee pursuant to the terms of the Trust Agreement.
Nonseverable, when used with respect to any Capital
Improvement, shall mean any Capital Improvement which is not a Severable Capital
Improvement.
Noteholder shall mean any Holder from time to time of a Note
Outstanding under the Indenture.
Notes shall mean the Initial Series Note and the Fixed Rate
Note, the Releveraging Note and any other Additional Notes.
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Notice of Closing shall have the meaning set forth in Section
5(a) of the Participation Agreement.
NRC shall mean the Nuclear Regulatory Commissiofl of the
United States of America or any successor agency.
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 rx 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."
Nuclear Waste Act shall mean the Nuclear Waste Policy Act of
1982, as amended, or any comparable successor law.
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<PAGE>
Officers' Certificate Shall m e a n a certificate signed by
the President or any Vice President and by the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Person with respect
to which such term is used.
Operating Agent shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Original of the Facility Lease shall mean the fully executed
counterpart of the Facility Lease, marked "This Counterpart is the Original
Counterpart", pursuant to Section 22(e) of the Facility Lease and contaming the
receipt of the Indenture Trustee.
Outstanding, when used with respect to the Notes, shall mean,
as of the date of determination, all such Notes theretofare issued,
authenticated and delivered under the Indenture, except (a) Notes theretofore
cancelled by the Indenture Trustee or delivered to the Indenture Trustee for
cancellation, (b) Notes or portions thereof for the payment of which the
Indenture Trustee holds (and has notified the holders thereof that it holds) in
trust for that purpose an amount sufficient to make full payment thereof when
due, (c) Notes or portions thereof which have been pledged as collateral for any
obligations of the obligor thereof to the extent that an amount sufficient to
make full payment of such obligations when due has been deposited with the
pledge. of such Notes for the purpose of holding such amount in trust for the
payment of such obligations in accordance with the indenture or agreement under
which such obligations are secured and Cd) Notes in exchange for, or in lieu of,
which other Notes have been issued, authenticated and delivered pursuant to the
rndenture; provided, however, that any Note owned by the Lessee or the owner
Trustee or any Affiliate of either thereof shall be disregarded and deemed not
to be Outstanding for the purpose of any Directive.
Overdue Interest Rate shall mean the weighted average rate per
annum of interest payable with respect to overdue payments of principal on the
Notes Outstanding, computed as set forth in such Notes.
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Owner Participant shall mean Burnham Leasing Corporation, and
the successors and assigns of such Person in accordance with the Trust Agreement
and the Participation Agreement.
Owner Participant's Liens shall mean Liens against the Trust
Estate or the Lease Indenture Estate (other than Permitted Liens described in
the definition bf such term, except "Lessor's Liens" and "Owner Participant's
Liens" referred to in clause (vi) of such definition) for which the Lessee is
not responsible and which result from acts of, or any failure to act by, or as a
result of claims against, the owner Participant unrelated to the transactions
contemplated by the Transaction Documents or the Financing Documents.
Owner Trustee shall mean The First National Sank of Boston, a
national banking association, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement (unless the context otherwise requires),
and each successor as trustee, separate trustee and co-trustee thereunder.
Participation Aqrecment shall mean the Participation
Agreement, dated as of August 12, 1986, among the Owner Trustee, the Indenture
Trustee, Funding Corp, the Owner Participant and PNM.
Penalty Rate shall mean 2% per annum in excess of the Prime
Rate.
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.
Permitted Liens shall mean (i) the respective rights and
interests of the Lessee, the Owner Participant, the Lessor, the Loan Participant
and the Indenture Trustee, as provided in the Transaction Documents; (ii) the
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rights of any sublessee or assignee under a sublease or an assignment permitted
by the terms of the Facility Lease; (iii) the Lien of the Existing Mortgage on
the leasehold estate under the Facility Lease; (iv) Liens for taxes either not
yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, so long as such proceedings shall not (x)
involve any danger of the sale, forfeiture or loss of the undivided Interest or
the Real property Interest or any part thereof or interest therein of the Lessor
or the Owner participant, (y) interfere with the use, possession or disposition
of the Undivided Interest or the Real Property Interest, or any part thereof or
interest therein, or (z) impair payment of Rent; (v) inchoate materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehouse-men's, or
other like Liens arising in the ordinary course of business for PVNGS, and not
delinquent; (vi) Lessor's Liens, owner participant's Liens and Indenture
Trustee' S Liens; (vii) choate Liens that have been bonded for the full amount
in dispute or as to which other satisfactory security arrangements shall have
been made and which are being contested diligently by the appropriate party in
good faith and by appropriate proceedings so long as such proceedings shall not
violate clause (x), (y) or (z) of clause (iv) above; (viii) choate Liens of any
of the types described in clause (v) above that have been bonded for the full
amount in dispute or as to which other satisfactory security arrangements shall
have been made and which arise out of judgments or awards and with respect to
which (A) an appeal or proceeding for review is being prosecuted in good faith
and for the payment of which adequate reserves shall have been provided as
required by generally accepted accounting practice and (B) there shall have been
secured a stay of execution pending such appeal or proceeding for review, so
long as such proceedings shall not violate clause (x), (y) or (z) of clause (iv)
above; (ix) the rights and interests of the Lessee under the Assignment and
Assumption; (x) the rights of the NRC under the License; (xi) the rights of the
ANPP Participants (other than (i) the Lessee and (ii) any Person who shall
become an ANPP Participant in respect of the undivided Interest and the Real
Property Interest) under the ANPP Participation Agreement or any other ANPP
Project Agreement; (xii) Liens on the undivided ownership interests in Unit 2 of
the ANPP participants and other Persons (other than the Lessee) and (xiii) any
Liens arising by virtue of the ANFP participation Agreement.
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Person shall mean any individual, partnership, corporation,
trust, unincorporated association or joint venture, a government or any
department or agency thereof, or any other entity.
PNM shall mean Public Service Company of New Mexico, a New
Mexico corporation.
Price-Anderson Act shall mean the price-Anderson Act, Pub. L.
No. 85-256, 71 Stat. 576 (1957), as amended to the Closing Date.
Pricing Assumptions shall mean the pricing assumptions set
forth in schedule 2 to the Participation Agreement.
Prime Rate shall mean the rate of interest publicly announced
from time to time by Chemical Bank at its principal office in New York City as
its prime or base lending rate. Any change in the Prime Rate shall be effective
on the date such change in the Prime Rate is announced.
Project Insurance shall have the meaning assigned thereto in
the ANPP Participation Agreement.
Project Manager shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Purchase Documents shall mean the Bill of Sale, the Deed and
the Assignment of Beneficial Interest and such other documents as the Owner
Participant, the Owner Trustee, the Indenture Trustee, the Loan Participant or
their respective counsel shall deem desirable to convey good and marketable
title to the Undivided Interest and the Real Property Interest to the Trust.
Purchase Price shall have the meaning set forth in Section
4(a) of the Participation Agreement.
PVNGS shall mean the Arizona Nuclear Power Project, as that
term is defined in the ANPP Participation Agreement.
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PVNGS Site shall mean the beneficial interest in the Arizona
land trust and the real property described in Exhibit A to the Bill of Sale.
Real Estate Investment shall have the meaning set forth in
Section 3(a) of the Participation Agreement.
Real Property rnterest shall mean the right, title and
interest of the Owner Trustee acquired pursuant to the Deed and the Assignment
of Beneficial rnterest.
Reasonable Basis for a pcsition shall exist if tax counsel may
properly advise reporting such position on a tax return in accordance with
Formal opinion 85-352 issued by the Standing Committee on Ethics and
Professional Responsibility of the American Bar Association.
Refunding Bonds shall mean Funding Corp's Lease Obligation
Bonds series 19865, issued, authenticated and delivered under the Collateral
Trust rndenture, as supplemented by the Refunding Supplemental Indenture, as
described in the Underwriting Agreement.
Refunding Date shall mean the date of issuance of the
Refunding Bonds.
Refunding Loan shall have the meaning set forth in Section
2(d) of the Participation Agreement.
Refunding Supplemental Indenture shall mean the Refunding Sand
Supplemental Indenture, among PNM, Funding Corp and the Collateral Trust
Trustee, supplementing the Collateral Trust Indenture and providing, among other
things, for the issuance of the Refunding Bonds.
Registration Statement shall mean the registration statement
on Form S-fl, as amended, and any other similar registration statement,
including all exhibits and all documents incorporated therein by reference,
filed with the SEC under the Securities Act in connection with the offer, issue
and sale of the Refunding Bonds.
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Regulations shall mean the income tax regulations issued,
published or promulgated under the Code.
Releveraging Amount shall (i) mean the mitial principal amount
of each series of Releveraging Bonds, but only in an amount equal to the amount
of the related Note or Notes issued in connection with such Bonds, or (ii) the
initial principal amount of the Refunding Bonds to the extent such amount is in
excess of the Initial Series Bands being refunded, but only in an amount equal
to the amount that the related Fixed Rate Note or Notes exceed the aggregate
amount of the Initial Series Note and any Releveraging Notes theretofore issued.
Releveraging Bonds shall mean a series of securities issued,
authenticated and delivered under the Collateral Trust Indenture in accordance
with Section 2.03 thereof, part of the proceeds of which is used to refund to
the Owner Participant a portion of its Investment as provided in Section 3(b) of
the Participation Agreement.
Releveraging Date shall mean the date of issuance of the
Releveraging Bonds.
Releveraging roan shall have the meaning specified in Section
2(c) of the Participation Agreement.
Releveraging Note shall mean the non-recourse promissory note,
substantially in the form of the Initial Series Note or, if the Refunding Date
shall have occurred, the Fixed Rate Note, to be issued by the Owner Trustee and
authenticated by the Indenture Trustee on the Releveraging Date to refund to the
owner Trustee a portion of the Investment.
Renewal Term shall mean the Fixed Rate Renewal Term as
provided in Section 12 of the Facility Lease. Rent. Rent shall mean Basic Rent
and Supplemental.
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Rent Differential shall have the meaning set forth in Section
3(h) of the Facility Lease.
Requisition of Title shall mean any circumstance or event in
consequence of which Unit 2 or the Undivided Interest shall be condemned or
seized or title thereto shall be requisitioned or taken by any Governmental
Authority under power of eminent domain or otherwise and all administrative or
judicial appeals opposing such condemnation, seizure or taking shall have been
exhausted or the period for such appeal shall have expired.
Requisition of Urn shall mean any circumstance or event in
consequence of which the use of Unit 2 or the Undivided Interest shall be
requisitioned or taken by any Governmental Authority under power of eminent
domain or otherwise, other than a Requisition of Title.
Responsible officer shall mean, with respect to the subject
matter of any covenant, agreement or obligation of any party contained in any
Transaction Document, the President, or any Vice President, Assistant Vice
President, Treasurer, Assistant Treasurer or other officer who in the normal
performance of his operational responsibility would have knowledge of such
matter and the requirements with respect thereto.
Retained Assets shall mean (i) the Lessee's interest in PVNGS
(other than the Undivided Interest, the related Generation Entitlement Share,
and the Real Property Interest), (ii) Severable Capital Improvements title to
the undivided interest in which is retained by the Lessee in accordance with
Section 8(e) of the Facility Lease, and (iii) any additional interest in and to
PVNGS (other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest) to which the Lessee becomes entitled in
consequence of Sections 16.2 or 23.5 of the ANPP Participation Agreement (except
as otherwise provided in Section 5(a) or 19 of the Facility Lease).
Sale Proceeds shall mean, with respect to any sale of the
Undivided Interest and the Real Property Interest by the Lessor to any Person
other than the Lessee, the gross proceeds of such sale payable in cash, less all
costs and expenses whatsoever incurred by the Lessor and the Owner participant
in connection therewith.
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<PAGE>
Salt River shall mean Salt River Project Agricultural
Improvement and power District, an Arizona agricultural improvement district.
SCPPA shall mean southern California public power Authority, a
California joint powers agency (doing business in Arizona as southern California
public power Authority Association).
SEC shall mean the securities and Exchange commission of the
United States of America, or any successor agency.
Section 6(c) Application shall mean Funding Corp's Application
for an Order under Section 6(c) of the Investment company Act of 1940 exempting
First PV Funding Corporation from all provisions of such Act, as filed with the
SEC on September 20, 1985, as amended.
Secured obligations shall have the meaning set forth in
section 7(b)(4) of the participation Agreement.
Securities Act shall mean the securities Act of 1933, as
amended.
Securities Exchange Act shall mean the Securities Exchange Act
of 1934, as amended.
Severable, when used with respect to any capital improvements
shall mean any capital improvement which can readily be removed from Unit 2 or
the Common Facilities without materially damaging unit 2 or the Common
Facilities or materially diminishing or impairing the value, utility or
condition of Unit 2 or the common Facilities.
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.
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Southern California shall mean Southern California Edison
Company, a California corporation.
Special Casualty Value as of any date, shall mean (i) during
the Basic Lease Term, the percentage of Facility Cost set forth opposite such
date in Schedule 2 to the Facility Lease, and (ii) during the Renewal Term, if
any, the unamortized portion of the Fair Market Sales Value of the Undivided
Interest determined by amortizing ratably the Fair Market Sales Value of the
Undivided Interest as of the day following the last day of the Basic Lease Term
in semi-annual steps over the period from such date to the License Expiration
Date. Anything contained in the Facility Lease to the contrary notwithstanding,
Special Casualty Value shall be, when added to all other amounts which the
Lessee is required to pay under Section 9(d) of the Facility Lease (taking into.
account any assumption of Notes by the Lessee), under any circumstances and in
any event, in an amount at least sufficient to pay in full, as of any date of
payment, the aggregate unpaid principal amount of all Notes Outstanding at the
close of business on such date, together with accrued and unpaid interest on
such Notes.
Supplemental Financing shall mean a financing of the
Supplemental Financing Amount of Capital Improvements made pursuant to Section
8(f) of the Facility Lease.
Special Purchase Event shall have the meaning specified in
section 13(c) of the Facility Lease.
Substituted Lessee shall have the meaning specified in Section
6.8(c) of the Indenture.
Supplemental Financing Amount shall mean a Unit 2 Interest in
the cost of a Capital Improvement to Unit 2, and a Common Facilities Interest in
the cost of a Capital Improvement to the Common Facilities, or that portion of
such interest in such cost which shall not exceed (i) the amount of the
increase, if any, in the Owner Participant's basis in the Undivided Interest for
purposes of section 1012 or 1016 of the Code as a result of such Capital
Improvement less (ii) the amount of the related Additional Equity Investment of
the Lessor, if.
any.
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Supplemental Indenture of Pledge shall have the meaning
specified in the Term Note Supplemental Indenture.
Supplemental Rent shall have the meaning set forth in section
3(b) of the Facility Lease.
Surviving Leessee shall have the meaning specified in Section
10(b) (3) (ii) of the Participation Agreement.
Tax shall mean any and all fees (including, without
limitation, documentation, recording, license and registration fees), taxes
(including, without limitation, net income, franchise, value added, ad valorem,
gross income, gross receipts, sales, use, property (personal or real, tangible
or intangible) excise and stamp taxes), levies, imposts, duties, charges,
assessments, or withholdings of any nature whatsoever, general or special,
ordinary or extraordinary, together with any and all penalties, tines, additions
to tax and interest thereon.
Tax Assumptions shall mean the assumptions set forth in
Section 1(a) of the Tax Indemnification Agreement, with respect to the Federal
income tax consequences of the transactions contemplated by the Transaction
Documents.
Tax Indemnification Agreement shall mean the Tax
Indemnification Agreement, dated as of August 12, 1986, between PNM and the
Owner Participant.
Term Loan Agreemant shall mean the Term Loan Agreement dated
as of August 12, 1986 among Funding Corp, PNM and the banks named on the
signature pages thereto.
Term Note Supplemental Indentre shall mean the Series 19868
Term Note Supplemental Indenture dated as of August 12, 1986 among PNM, Funding
Corp and the Collateral Trust Trustee, supplementing the Collateral Trust
Indenture and providing, among other things, for the issuance of the Initial
series Bonds.
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Termination Date shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination Event shall mean any early termination of the
Facility Lease in accordance with Section 14 thereof.
Termination Notice shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination obligation shall have the meaning set forth in
Section 15.10.2 of the ANPP Participation Agreement (or any comparable successor
provision).
Termination Value, as of any Basic Rent Payment Date during
the Basic Lease Term, shall mean the percentage of Facility Cost set
forth.opposite such date in schedule 3 to the Facility Lease. Anything contained
in the Facility Lease to the contrary notwithstanding, Termination Value shall
be, when added to all other amounts which the Lessee is required to pay under
section 14 of the Facility Lease, under any circumstances and in any event, in
an amount at least sufficient to pay in full as of any Basic Rent Payment Date
the aggregate unpaid principal amount of all Notes Outstanding at the close of
business on such date, together with accrued and unpaid interest on such Notes.
Transaction Documents shall mean the Participation Agreement,
the Facility Lease, the Trust Agreement, the Indenture, the Extension Letter,
the Tax Indemnification Agreement, the Mortgage Release, the Assignment and
Assumption, each Purchase Document and the Notes.
Transaction Expenses shall have the meaning set forth in
Section 14(a) of the Participation Agreement.
Transfer shall mean the transfer, by bill of sale or
otherwise, by the Lessor of all the Lessor's right, title and interest in and to
the Undivided Interest and the Real Property Interest and under the Assignment
and Assumption on an "as is, where is" basis, free and clear of all Lessor's
Liens and Owner Participant's Liens, but otherwise without recourse,
representation or warranty (including an express disclaimer of representations
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and warranties in a manner comparable to that set forth in the second sentence
of Section 6(b) of the Facility Lease), together with the due assumption by the
transferee of, and the due release of the Lessor from, all of the Lessor's
obligations under the Assignment and Assumption and the Assignment of Beneficial
Interest by an instrument or instruments satisfactory in form and substance to
the Lessor and the Owner Participant.
Transferee shall have the meaning assigned thereto in Section
15 of the Participation Agreement.
Trust shall mean the trust created by the Trust Agreement.
Trust Agrement shall mean the Trust Agreement, dated as of
August 12, 1986, between Burnham Leasing Corporation and FNB.
Trust Estate shall have the meaning set forth in Section 2.03
of the Trust Agreement.
Trust Indenture Act shall mean the Trust Indenture Act of
1939, as amended.
Trustee's Expenses shall mean any and all liabilities,
obligations, casts, compensation, fees, expenses and disbursements (including,
without limitation, legal fees and expenses) of any kind and nature whatsoever
(other than such amounts as are included in Transaction Expenses) which may be
imposed on, incurred by or asserted against the Indenture Trustee or any of its
agents, servants or personal representatives, in any way relating to or arising
out of the Indenture, the Lease Indenture Estate, the Participation Agreement or
the Facility Lease, or any document contemplated thereby, or the performance or
enforcement of any of the terms thereof, or in any way relating to or arising
out of the administration of such Lease Indenture Estate or the action or
inaction of the Indenture Trustee under the Indenture; provided, however, that
such amounts shall not include any Taxes or any amount expressly excluded from
the Lessee's indemnity obligations pursuant to Section 13(a) or 13(b) of the
Participation Agreement.
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UCC or Uniform commercial Code shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
Underwriting Agreement shall mean the agreement with the
underwriters named therein relating to the purchase, sale and delivery of the
Refunding Bonds.
Undivided Interest shall mean the Unit 2 Interest in Unit 2
and the Unit 2 Common Facilities Interest in the Cannon Facilities. Where the
context so requires, the Undivided Interest includes the related Generation
Entitlement Share.
Undivided Interest Indenture Supplment shall mean the
supplement to the Indenture, substantially in the form of Exhibit C thereto,
pursuant to which the Owner Trustee causes the Undivided Interest and the Real
Property Interest to be subjected to the Lien of the Indenture.
Uniform System of Accounts shall mean the Uniform System of
Accounts prescribed for Public Utilities and Licensees subject to the provisions
ot the Federal Power Act (Class A and Class B), 18 CER 101, as in effect on the
date of execution of the Participation Agreement, as amended or modified from
time to time after such date.
Unit 1 and Unit 3 shall mean the Generating Units bearing such
designations at PVNGS.
Unit 2 shall mean the 1,270 megawatt unit, commonly known as
Unit 2, at PVNGS, all as more fully described in Item A of Exhibit B to the Bill
of sale, together with all Capital Improvements thereto, but excluding all
Common Facilities.
Unit 2 Common Facilities Interest shall mean the Owner
Trustee's 0.7555556% undivided interest in all Common Facilities.
Unit 2 Interest shall mean a percentage equal to the Owner
Trustee's 2.2666667% undivided interest in all of Unit 2.
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<PAGE>
Unit 2 Retained Assets shall mean (i) all resident fuel
assemblies, equipment and personal property constituting part of the Generating
Unit (as defined in the ANPP Participation Agreement) designated as Palo Verde
Nuclear Generating Station Unit 2 (other than common facilities) but excluded
from Unit 2 as set forth in Stem A of Exhibit B to the Bill of Sale and (ii) all
equipment and personal and real property constituting PVNOS common facilities
under the ANPP Participatipn Agreement but excluded from the Common Facilities
as set forth in Stem B of Exhibit a to the Bill of Sale.
User shall mean a Person unrelated to PNM (within the meaning
of Section 318 of the Code) possessing the Undivided Snterest after the Lease
Termination Date.
Weighted Factor means the weighted average of the annual
percentage rates (averaged over the Basic Lease Term and (x) if the Pricing
Assumptions contemplate the Lessor claiming investment tax credits, the basic
term of all other leases so contemplating (the SIC Leases) entered into by PNM
pursuant to the authority granted by the NMPSC Order or (y) if the Pricing
Assumptions do not contemplate the Lessor claiming investment tax credits, the
basic term of all other leases not so contemplating (the Non-ITC Leases) entered
into by PUn pursuant to the authority granted by the NMPSC Order) Ci) as such
percentage rates may be adjusted from time to time pursuant to the terms of the
Facility Lease and the rrc Leases or the Non-STC Leases, as the case may be, but
excluding any such adjustments in connection with supplemental financing of
capital improvements, and (ii) adjusted to reflect the amortization over the
Basic Lease Term and the basic term of the rrc Leases or the Non-ITC Leases, as
the case may be, of any gain or loss to the Lessee from any hedging or interest
protection program implemented by the Lessee with respect to the Notes and with
respect to the comparable notes to be issued with respect to the ITC Leases or
the Non-ITC Leases, as the case may be, which, when multiplied by the aggregate
of the Purchase Price and the comparable purchase prices payable by the lessors
under the ITC Leases or the Non-ITC Leases, as the case may be, determines,
respectively, the amount of Basic Rent payable under the Facility Lease and the
comparable basic rent payable under the ITC Leases or the Non-ITC Leases, as the
case may be.
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When Recorded, Return to: Greg R. Nielsen
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 OR RENTS DATED AS OF
AUGUST 12, 1986, 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 November 18, 1986
to
FACILITY LEASE
Dated as of August 12, 1986
between
THE FIRST NATIONAL BANK OF BOSTON
not in its individual capacity,
but solely as Owner Trustee
under a Trust Agreement, dated as
of August 12, 1986 with Burnham
Leasing Corporation
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on August 18, 1986,
as Instrument No. 86-439392 in Maricopa County
Recorder's Office.
================================================================================
6O91.BURNHAM.DEBT.146:1
<PAGE>
AMENDMENT NO. 1, dated as of November 18, 1986 (Amendment No.
1), to the Facility Lease dated as of August 12, 1986 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 August 12,
1986, with Burnham Leasing Corporation, a New York corporation (the Lessor), and
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).
WITNESSETH:
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of August 12, 1986 (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, of the
refunding (by issuance of the Fixed Rate Notes) of the Initial Series Note;
WHEREAS, the Fixed Rate Notes are being issued pursuant to
Supplemental Indenture No. 1, 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; and
WHEREAS, a Change in Tax Law has occurred;
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 to the Facility Lease.
6091.BURNHAM.DEBT.146:l
<PAGE>
SECTION 2. Amendments.
(a) Section 3(a)(i) of the Facility Lease is amended to read
in its entirety as follows:
"(i) on January 15, 1987, an amount equal to .024553111% of Facility
Cost times the actual number of days from and including August 18, 1986
to, but excluding, January 15, 1987, plus or minus the Rent
Differential, if any, referred to in Section 3(h);"
(b) (1) Section 3(a)(ii) of the Facility Lease is amended to
read in its entirety as follows:
"(ii) on July 15, 1987 and on each Basic Rent Payment Date thereafter to
and including January 15, 2016, an amount equal to 4.4195600% of
Facility Cost;".
(2) Section 3(a) (iii) is amended to delete from the
parenthetical contained therein the phrase "and any increases and decreases
pursuant to Section 3(h)".
(c) Section 3 (e) (iii) of the Facility Lease is hereby
amended to replace "0.8% of Facility Cost" with "1.3% of Facility Cost". Section
3(e) (iv) is hereby amended to insert (x) "(other than a change in items 4, 9
(as to the basis for amortization of Transaction Expenses), 15, 17 and 19, but
without limiting the effect of Section 3(d) hereof)" immediately following the
word "change" and (y) the word "Current" before the phrase "Pricing
Assumptions." Section 3(e) of the Facility Lease is hereby further 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 written consent of the Owner Participant."
(d) Schedule 1 to the Facility Lease (Schedule of Casualty
Values) is hereby replaced with Schedule 1 hereto.
(e) Schedule 2 to the Facility Lease (Schedule of Special
Casualty Values) is hereby replaced with Schedule 2 hereto.
-2-
6091.BURNHAM.DEBT.146:l
<PAGE>
(f) Schedule 3 to the Facility Lease (Schedule of Termination
Values) is hereby replaced with Schedule 3 hereto.
(g) Section 3(h) of the Facility Lease is hereby amended to
read in its entirety as follows:
"(h) Rent Differential. The installment of Basic Rent due January 15,
1987 shall be increased or decreased, as the case may be, by the Rent
Differential. For purposes hereof, Rent Differential shall mean the
difference between (i) the aggregate amount of interest paid or payable
on the Initial Series Notes on or before November 25, 1986 and (ii) the
aggregate amount of interest that would have been paid on such Initial
Series Notes if such Notes had at all times from the date of issuance
thereof to November 25, 1986 borne interest at a rate equal to 7.54978%
per annum (computed on the basis of a 360-day year of twelve 30-day
months). If (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 January 15, 1987 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 January 15, 1987 shall be
decreased by the Rent Differential."
(h) (1) The second sentence of Section 9(d) is hereby amended
to read in its entirety as follows:
"On the fifteenth day of the month during which a Deemed Loss
Event shall have occurred (or, if such Deemed Loss Event shall occur
after the fifteenth day of such month, the fifteenth day of the next
following month), the Lessee shall pay to the Lessor 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 installment due and payable on such day."
-3-
6091.BURNHAM.DEBT.146:l
(2) The following new sentence is hereby inserted immediately following
the second sentence of Section 9(d), as amended by the preceding paragraph (1):
"If such fifteenth day is a Basic Rent Payment Date, the portion of such
amount equal to Basic Rent otherwise due on such date shall be deemed to be
an installment of Basic Rent for all purposes hereof and of Sections 5.1
and 5.2 of the Indenture."
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
$1,512,636.49 on November 25, 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 amendments 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 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.
-4-
609l.BURNHAM.DEBT.146:l
<PAGE>
(f) Amendment No. 1. The single executed original 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" 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".
-5-
6091.BURNHAM.DEBT. 146:1
<PAGE>
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 August 12, 1986, with
Burnham Leasing Corporation
By
--------------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO,
By /s/ B. D. Lackey
--------------------------------
Vice President and Corporate
Controller
-6-
6091.BURNHAM.DEBT.146:l
<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, 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
Delia T. Santiago
Notary Public, State of New York
No. 41-345160
Qualified in Queens County
Commission Expires March 30, 1987
State of New York )
) ss:
County at New York )
The foregoing instrument was acknowledged before me this 24th
day of November, 1986, by Martin P. Henry, Assistant Vice President at THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as Owner Trustee under the Trust Agreement dated as of
August 12, 1986 with Burnham Leasing Corporation.
/s/ David A. Spivak
--------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693463
Qualified in New York County
Commission Expires March 30, 1987
-7-
6091.BURNHAM.DEBT.146:l
<PAGE>
SCHEDULE 1
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
1/15/1987 104.0505748 1/15/2005 69.0763910
7/15/1987 105.8018101 7/15/2005 67.3933069
1/15/1988 105.1525583 1/15/2006 64.7514850
7/15/1988 104.5152596 7/15/2006 62.6287747
1/15/1989 105.4381490 1/15/2007 60.4185648
7/15/1989 104.4749057 7/15/2007 58.1488078
1/15/1990 105.0854100 1/15/2008 55.7958028
7/15/1990 103.7620773 7/15/2008 53.3846790
1/15/1991 104.0421878 1/15/2009 51.0230738
7/15/1991 102.4512318 7/15/2009 48.7033199
1/15/1992 102.4826532 1/15/2010 46.4482298
7/15/1992 100.6234215 7/15/2010 44.2745691
1/15/1993 100.3856266 1/15/2011 42.2110179
7/15/1993 100.0054158 7/15/2011 40.2799103
1/15/1994 99.4690803 1/15/2012 38.5171132
7/15/1994 98.7690349 7/15/2012 36.9518951
1/15/1995 97.8900254 1/15/2013 33.3071917
7/15/1995 98.6232891 7/15/2013 33.4139011
1/15/1996 98.9722892 1/15/2014 31.2993913
7/15/1996 97.6544891 7/15/2014 28.9352572
1/15/1997 95.9561142 1/15/2015 26.3007332
7/15/1997 94.0536182 7/15/2015 23.3623639
1/15/1998 92.1839260 1/15/2016 20.6281891
7/15/1998 90.3855211
1/15/1999 88.8457839
7/15/1999 87.6920480
1/15/2000 86.0511887
7/15/2000 84.8210534
1/15/2001 83.0720147
7/15/2001 81.7621018
1/15/2002 79.8978801
7/15/2002 78.3031112
1/15/2003 76.5162549
7/15/2003 75.0312334
1/15/2004 72.9138145
7/15/2004 71.3328071
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF SPECIAL CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
15 SEP 1986 104.59195 15 SEP 1989 103.39672
15 OCT 1986 105.17691 15 OCT 1989 104.20612
15 NOV 1986 106.23461 15 NOV 1989 105.04647
15 DEC 1986 106.43730 15 DEC 1989 105.89036
15 JAN 1987 106.45542 15 JAN 1990 106.69602
15 FEB 1987 104.51180 15 FEB 1990 103.05927
15 MAR 1987 105.58777 15 MAR 1990 103.88038
15 APR 1987 106.58044 15 APR 1990 104.68615
15 MAY 1987 107.56967 15 MAY 1990 105.46547
15 JUN 1987 108.61131 15 JUN 1990 106.27527
15 JUL 1987 109.58322 15 JUL 1990 107.04630
15 AUG 1987 106.13307 15 AUG 1990 103.39445
15 SEP 1987 105.38861 15 SEP 1990 102.42679
15 OCT 1987 106.32935 15 OCT 1990 103.17890
15 NOV 1987 107.32841 15 NOV 1990 103.96101
15 DEC 1987 108.33354 15 DEC 1990 104.74578
15 JAN 1988 107.06393 15 JAN 1991 105.49135
15 FEB 1988 103.54673 15 FEB 1991 101.84293
15 MAR 1988 104.48928 15 MAR 1991 102.61596
15 APR 1988 105.40607 15 APR 1991 103.37303
15 MAY 1988 106.29643 15 MAY 1991 104.10341
15 JUN 1988 107.22367 15 JUN 1991 104.86331
15 JUL 1988 108.10805 15 JUL 1991 105.58423
15 AUG 1988 104.55589 15 AUG 1991 101.91001
15 SEP 1988 103.70422 15 SEP 1991 100.89844
15 OCT 1988 104.56406 15 OCT 1991 101.60677
15 NOV 1988 105.46229 15 NOV 1991 102.34412
15 DEC 1988 106.36498 15 DEC 1991 103.08359
15 JAN 1989 107.22039 15 JAN 1992 103.78420
15 FEB 1989 103.64084 15 FEB 1992 100.08898
15 MAR 1989 104.52005 15 MAR 1992 100.81485
15 APR 1989 105.38040 15 APR 1992 101.52442
15 MAY 1989 106.21814 15 MAY 1992 102.21227
15 JUN 1989 107.08726 15 JUN 1992 102.92533
15 JUL 1989 107.91856 15 JUL 1992 103.60454
15 AUG 1989 104.30785 15 AUG 1992 99.88324
Page 1 of 5
6091.BURNHAM.DEBT.146:1
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF SPECIAL CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
15 SEP 1992 100.58271 15 SEP 1995 96.07057
15 OCT 1992 101.24859 15 OCT 1995 96.62388
15 NOV 1992 101.93917 15 NOV 1995 97.17727
15 DEC 1992 102.63130 15 DEC 1995 97.73075
15 JAN 1993 103.28980 15 JAN 1996 98.28432
15 FEB 1993 99.54696 15 FEB 1996 94.41009
15 MAR 1993 100.22467 15 MAR 1996 94.95505
15 APR 1993 100.88807 15 APR 1996 95.50010
15 MAY 1993 101.52839 15 MAY 1996 96.04524
15 JUN 1993 102.19280 15 JUN 1996 96.59048
15 JUL 1993 102.82365 15 JUL 1996 97.13581
15 AUG 1993 99.05227 15 AUG 1996 93.25294
15 SEP 1993 99.70108 15 SEP 1996 93.78927
15 OCT 1993 100.61661 15 OCT 1996 94.32570
15 NOV 1993 100.95566 15 NOV 1996 94.86223
15 DEC 1993 101.59566 15 DEC 1996 95.39884
15 JAN 1994 102.20232 15 JAN 1997 95.93556
15 FEB 1994 98.40583 15 FEB 1997 92.04367
15 MAR 1994 99.02924 15 MAR 1997 92.57099
15 APR 1994 99.63812 15 APR 1997 93.09841
15 MAY 1994 100.22395 15 MAY 1997 93.62592
15 JUN 1994 100.83260 15 JUN 1997 94.15354
15 JUL 1994 101.40799 15 JUL 1997 94.68125
15 AUG 1994 97.57920 15 AUG 1997 90.77860
15 SEP 1994 98.16994 15 SEP 1997 91.29515
15 OCT 1994 98.72770 15 OCT 1997 91.81180
15 NOV 1994 99.30764 15 NOV 1997 92.32856
15 DEC 1994 99.8784 15 DEC 1997 92.84542
15 JAN 1995 100.43497 15 JAN 1998 93.36238
15 FEB 1995 96.57690 15 FEB 1998 89.44841
15 MAR 1995 97.13802 15 MAR 1998 89.95364
15 APR 1995 97.69922 15 APR 1998 90.45898
15 MAY 1995 98.26050 15 MAY 1998 90.96443
15 JUN 1995 98.82187 15 JUN 1998 91.97065
15 JUL 1995 99.32333 15 JUL 1998 91.97065
15 AUG 1995 95.51766 15 AUG 1998 88.05147
15 SEP 1998 88.54650
Page 2 of 5
6091.BURNHAM.DEBT.146:1
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
15 OCT 1998 89.04164 15 OCT 2001 79.51497
15 NOV 1998 89.53689 15 NOV 2001 79.95860
15 DEC 1998 90.03225 15 DEC 2001 80.40237
15 JAN 1999 90.54443 15 JAN 2002 80.86667
15 FEB 1999 86.59955 15 FEB 2002 76.86359
15 MAR 1999 87.08502 15 MAR 2002 77.29734
15 APR 1999 87.57060 15 APR 2002 77.72925
15 MAY 1999 88.07359 15 MAY 2002 78.18240
15 JUN 1999 88.56545 15 JUN 2002 78.62197
15 JUL 1999 89.07486 15 JUL 2002 79.08297
15 AUG 1999 85.11106 15 AUG 2002 75.05889
15 SEP 1999 85.58995 15 SEP 2002 75.48268
15 OCT 1999 86.06895 15 OCT 2002 75.90663
15 NOV 1999 86.54808 15 NOV 2002 76.33074
15 DEC 1999 87.02733 15 DEC 2002 76.75500
15 JAN 2000 87.52455 15 JAN 2003 77.20119
15 FEB 2000 83.56212 15 FEB 2003 73.47885
15 MAR 2000 84.03082 15 MAR 2003 73.59029
15 APR 2000 84.49964 15 APR 2003 74.00189
15 MAY 2000 84.98907 15 MAY 2003 74.43620
15 JUN 2000 85.46259 15 JUN 2003 74.85099
15 JUL 2000 85.95688 15 JUL 2003 75.29869
15 AUG 2000 81.97426 15 AUG 2003 71.25179
15 SEP 2000 82.43595 15 SEP 2003 71.6575
15 OCT 2000 82.89776 15 OCT 2003 72.05788
15 NOV 2000 83.35970 15 NOV 2003 72.46117
15 DEC 2000 83.82178 15 DEC 2003 72.86463
15 JAN 2001 84.30306 15 JAN 2004 73.29153
15 FEB 2001 80.3292 15 FEB 2004 69.24602
15 MAR 2001 80.77274 15 MAR 2004 69.63631
15 APR 2001 81.22369 15 APR 2004 70.02626
15 MAY 2001 81.69453 15 MAY 2004 70.44049
15 JUN 2001 82.15265 15 JUN 2004 70.83920
15 JUL 2001 82.63083 15 JUL 2004 71.26239
15 AUG 2001 78.62814 15 AUG 2004 67.19117
15 SEP 2001 79.07148 15 SEP 2004 67.57192
Page 3 of 5
6091.BURNHAM.DEBT.146:1
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
15 OCT 2004 67.95285 15 OCT 2007 53.98194
15 NOV 2004 68.53396 15 NOV 2007 54.29457
15 DEC 2004 68.71525 15 DEC 2007 54.60760
15 JAN 2005 69.12158 15 JAN 2008 54.95157
15 FEB 2005 65.05242 15 FEB 2008 50.77987
15 MAR 2005 65.41912 15 MAR 2008 51.06719
15 APR 2005 65.78600 15 APR 2008 51.36810
15 MAY 2005 66.17882 15 MAY 2008 51.69209
15 JUN 2005 66.55506 15 JUN 2008 51.99590
15 JUL 2005 66.93746 15 JUL 2008 52.53180
15 AUG 2005 62.86032 15 AUG 2008 48.20391
15 SEP 2005 63.21740 15 SEP 2008 48.49580
15 OCT 2005 63.57466 15 OCT 2008 48.82139
15 NOV 2005 63.93213 15 NOV 2008 49.12621
15 DEC 2005 64.78979 15 DEC 2008 49.43193
15 JAN 2006 64.57421 15 JAN 2009 49.77180
15 FEB 2006 60.57791 15 FEB 2009 45.64596
15 MAR 2006 60.91863 15 MAR 2009 45.91033
15 APR 2006 61.27117 15 APR 2009 46.25020
15 MAY 2006 61.64393 15 MAY 2009 46.58662
15 JUN 2006 61.99900 15 JUN 2009 46.90166
15 JUL 2006 62.38217 15 JUL 2009 47.25303
15 AUG 2006 58.24530 15 AUG 2009 43.13635
15 SEP 2006 58.57439 15 SEP 2009 43.44146
15 OCT 2006 58.93160 15 OCT 2009 43.73421
15 NOV 2006 59.27049 15 NOV 2009 44.10493
15 DEC 2006 59.60975 15 DEC 2009 44.42770
15 JAN 2007 59.97797 15 JAN 2010 44.79614
15 FEB 2007 55.83424 15 FEB 2010 40.68098
15 MAR 2007 56.14877 15 MAR 2010 40.99417
15 APR 2007 56.47601 15 APR 2010 41.32551
15 MAY 2007 56.82482 15 MAY 2010 41.63727
15 JUN 2007 57.15472 15 JUN 2010 42.02655
15 JUL 2007 57.51465 15 JUL 2010 42.40673
15 AUG 2007 83.34818 15 AUG 2010 38.31557
15 SEP 2007 53.64975 15SEP2010 38.64649
15 OCT 2009 39.02069
15 NOV 2009 39.37173
15 DEC 2009 39.72610
Page 4 of 5
6091.BURNHAM.DEBT.146:1
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
15 JAN 2011 40.12442 15 OCT 2013 26.39005
15 FEB 2011 36.04908 15 NOV 2013 26.73997
15 MAR 2011 36.39654 15 DEC 2013 27.09489
15 APR 2011 36.76528 15 JAN 2014 27.50297
15 MAY 2011 37.16883 15 FEB 2014 23.14938
15 JUN 2011 37.54874 15 MAR 2014 23.42703
15 JUL 2011 37.97548 15 APR 2014 23.72939
15 AUG 2011 33.92654 15 MAY 2014 24.06982
15 SEP 2011 34.30133 15 JUN 2014 24.38303
15 OCT 2011 34.72530 15 JUL 2014 24.74872
15 NOV 2011 35.12507 15 AUG 2014 20.35295
15 DEC 2011 35.52991 15 SEP 2014 20.59892
15 JAN 2012 35.98474 15 OCT 2014 20.87032
15 FEB 2012 31.96165 15 NOV 2014 21.12698
15 MAR 2012 32.36322 15 DEC 2014 21.32693
15 APR 2012 32.78981 15 JAN 2015 21.69851
15 MAY 2012 33.25636 15 FEB 2015 17.24736
15 JUN 2012 33.69833 15 MAR 2015 17.42486
15 JUL 2012 34.19360 15 APR 2015 17.62597
15 AUG 2012 30.04604 15 MAY 2015 17.86351
15 SEP 2012 30.44516 15 JUN 2015 18.07216
15 OCT 2012 30.89753 15 JUL 2015 13.33161
15 NOV 2012 31.32460 15 AUG 2015 13.82749
15 DEC 2012 31.75991 15 SEP 2015 13.95116
15 JAN 2013 32.24565 15 OCT 2015 14.12428
15 FEB 2013 27.97353 15 NOV 2015 14.26748
15 MAR 2013 28.33295 15 DEC 2015 14.41234
15 APR 2013 28.71865 15 JAN 2016 14.60697
15 MAY 2013 29.14395
15 JUN 2013 29.54340
15 JUL 2013 29.99673
15 AUG 2013 25.68962
15 SEP 2013 26.01349
Page 5 of 5
6091.BURNHAM.DEBT.146:1
<PAGE>
SCHEDULE 3
to
AMENDMENT NO. 1
SCHEDULE OF CASUALTY VALUES
Payment Percentage of Payment Percentage of
Date Facility Cost Date Facility Cost
------- ------------- ------- -------------
1/15/1987 103.0602435 1/15/2005 64.9164310
7/15/1987 104.7711995 7/15/2005 63.0641505
1/15/1988 102.3213300 1/15/2006 60.2462503
7/15/1988 103.3991088 7/15/2006 57.9403004
1/15/1989 102.5379014 1/15/2007 55.5393979
7/15/1989 103.2661149 7/15/2007 53.0711925
1/15/1990 102.0687545 1/15/2008 50.5116675
7/15/1990 102.4529575 7/15/2008 47.8856240
1/15/1991 100.9211226 1/15/2009 45.3003578
7/15/1991 101.0334556 7/15/2009 42.7478461
1/15/1992 99.2485124 1/15/2010 40.2505313
7/15/1992 99.0879706 7/15/2010 37.8247939
1/15/1993 98.7877249 1/15/2011 35.4989135
7/15/1993 98.3425233 7/15/2011 33.2948070
1/15/1994 97.7385536 1/15/2012 31.2489074
7/15/1994 96.9681431 7/15/2012 29.3870317
1/15/1995 96.0158658 1/15/2013 27.4346454
7/15/1995 96.6729025 7/15/2013 25.221157
1/15/1996 96.9425753 1/15/2014 22.7734275
7/15/1996 95.5422215 7/15/2014 20.0625201
1/15/1997 93.7579350 1/15/2015 17.0671186
7/15/1997 91.7660333 7/15/2015 13.7531940
1/15/1998 89.8052991 1/15/2016 10.6291891
7/15/1998 87.9080679
1/15/1999 86.2675661
7/15/1999 85.0089674
1/15/2000 83.5589801
7/15/2000 81.9152784
1/15/2001 80.0480541
7/15/2001 78.6151489
1/15/2002 76.6229324
7/15/2002 75.0949627
1/15/2003 72.9694881
7/15/2003 71.3402103
1/15/2004 69.0726678
7/15/2004 67.3354309
6091.BURNHAM.DEBT.146:1
<PAGE>
When Recorded, Return to: Greg R. Nielsen
Snell & Wilmer
3100 Valley Bank Carter
Phoenix, Arizona 89073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS HERETOFORE
AMENDED AND AS FURTHER 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
ASSIGMIENT OF RENTS DATED AS OF AUGUST 12, 1986, AS HERETOFORE AMENDED. THIS
AMENDMENT NO. 2 HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. SEE SECTION 3(e) OF
THIS AMENDMENT NO. 2 FOR INF0RMATION CONCERNING THE RIGHTS OF HOLDERS or VARIOUS
COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO. 2
Dated as of November 25, 1986
to
FACILITY LEASE
Dated as of August 12, 1986,
am heretofore 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 August 12, 1986, with Burnham
Leasing Corporation, as
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO, as
Lessee
================================================================================
Original Facility Lease Recorded on August 18, 1986,
as Instrument No. 86-439392 and Amendment No.1 to
the Facility Lease Recorded on November 25, 1986, as
Instrument No. 86-650751, all in Maricopa county
Recorder's office.
================================================================================
<PAGE>
AMENDMENT N0. 2, dated as of November 25, 1986 (Amendment No.
2), to the Facility Lease dated as of August 12, 1986, 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 August 12, 1986, with Burnham Leasing Corporation, a New York
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 August 12, 1986 (the Facility Lease),
providing for the lease by the Lessor to the Lessee of the Undivided Interest
and the Real Property Interest;
WHEREAS, the Leases and the Lessor have heretofore entered
into Amendment No.1 to the Facility Lease, dated as of November 18, 1986
(Amendment No. 1), providing for, among other things, certain amendments to
section 3(a) of the Facility Lease;
WHEREAS, the Lessee and the Lessor desire to make a correction
to Amendment No. 1, to correct a mathematical mistake made in the calculation of
Basic Rent in connection therewith; and
WHEREAS, the Indenture Trustee has consented to this Amendment
No. 2 pursuant to the Request, Instruction and Consent effective on December 15,
1986;
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 to the Facility Lease.
<PAGE>
SECTION 2. Amendments.
(a) section 3(a) (i) of the Facility Lease (as amended by
Amendment No. 1) is deleted in its entirety.
(b)(l) section 3(a)(ii) of the Facility Lease, as amended by
Amendment No. 1, becomes "Section 3(a)(i)" and is further amended to read in its
entirety as follows:
"(i) on January 15, 1987 and on each Basic Rent Payment Date thereafter
to and including January 15, 2016, an amount equal to 4.4195613% of
Facility Cost, plus or minus the Rent Differential, if any, referred to
in section 3(h) hereof; and".
(2) section 3(a)(iii) of the Facility Lease becomes section 3(a)
(ii) and the phrase "clause (ii) of this Section 3 (a)" immediately preceding
the parenthetical is deleted and replaced by the phrase "clause (i) of this
section 3(a)".
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amendments set forth in
section 2 hereof shall be and became 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 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.
-2-
<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. 2. The single executed original of this
Amendment No. 2 marked "THIS COUTTERPART 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 this Amendment No. 2 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. 2 may be created or continued through the transfer or possession of any
counterpart other than the "Original".
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to Facility tease 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
August 12, 1986, with Burnham
Leasing Corporation
By /s/ Martin P. Henry
------------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO,
By /s/ A. J. Robison
-----------------------------
Senior Vice President and
Chief Financial officer
6091.BURNHAM.DEBT.146A:
<PAGE>
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 15th
day of December, 1986, by A. J. ROBISON, Senior vice President and Chief
Financial Officer of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
Corporation, on behalf of the corporation.
----------------------------
/s/ Delia T. Santiago
Notary Public
DELIA T. SANTIAGO
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 15th
day of December, 1986, by Martin P. Henry, Assistant vice President of THE FIRST
NATIONAL BANK of BOSTON, a national banking association, on behalf of the
banking association as Owner Trustee under the Trust Agreement dated as of
August 12, 1985, with Burnham Leasing Corporation.
/s/ David A. Spivak
-------------------------
Notary Public
DAVID A. SPIVAK
Notary Public, State of New York
No. 31-4693468
Qualified in New York County
Commission Expires March 30, 1987
<PAGE>
When Recorded, Return to: Greg R. Nielsen, Esq.
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 15, 1986. THIS FACILIY LEASE HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 22(e) OF THIS AMENDMENT NO1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
FACILITY LEASE
Dated as of December 15, 1986
between
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity ,a
but solely as Owner Trustee
under a Trust Agreement, dated as
of December 15, 1986,
with Chase Manhattan Realty
Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Sale and Leasebaaack of a 1.700000% Undivided Interest
in Palo Verde Nuclear Generating Station Unit 1 and
a 5.666667% Undivided Interest in Certain Common
Facilities
================================================================================
6091 CHASEU1 LEASE 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................................................... 1
c Personal Property...................................... 2
d Description............................................ 2
SECTION 3 Rent; Adjustments to
Rent................................................... 2
a Basic Rent............................................. 2
b Supplement 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
SECTION 4 Net Lease.............................................. 7
--i--
6091.CHASEU1.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
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................................. 12
a Quiet Enjoyment........................................ 12
b Disclaimer of Other
Warranties............................................. 12
c Enforcement of Certain
Warranties............................................. 13
SECTION 7 Liens ................................................ 13
SECTION 8 Operation and Maintenance;
Capital Improvements................................... 14
a Operation and
Maintenance............................................ 14
b Inspection............................................. 15
c Capital Improvements................................... 15
d Reports................................................ 16
e Title to Capital
Improvements........................................... 17
f Funding of the Cost of
Capital Improvements................................... 18
--ii--
6091.CHASEU1.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 9 Event of Loss; Deemed
Loss Event............................................. 20
a Damage or Loss......................................... 20
b Repair................................................. 21
c Payment of Casualty
Value.................................................. 21
d Payment of Special
Casualty Value......................................... 22
e Requisition of Use..................................... 23
f Termination of
Obligation............................................. 23
g Application of Payments
on an Event of Loss.................................... 24
h Application of Payments
Not Relating to an Event
of Loss................................................ 24
i Other Dispositions..................................... 25
j Assumption of Notes;
Creation of Lien on
Undivided Interest .................................... 25
SECTION 10 Insurance.............................................. 25
a Required Insurance..................................... 25
b Permitted Insurance.................................... 27
SECTION 11 Rights to Assign or
Sublease............................................... 27
--iii--
6091.CHASEU1.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
a Assignment or Sublease
by the Lessee.......................................... 27
b Assignment by Lessor as
Security for Lessor's
Obligations............................................ 28
SECTION 12 Lease Renewal.......................................... 28
SECTION 13 Notices for Renewal or
Purchase; Purchase
Options................................................ 29
a Notice, Determination of
Values, Appraisal
Procedure.............................................. 29
b Purchase Option at
Expiration of the Lease
Term................................................... 29
c Special Purchase Event................................. 30
SECTION 14 Termination for
Obsolescence........................................... 30
a Termination Notice..................................... 30
b Right of Lessor to
Retain Undivided
Interest upon
Termination............................................ 31
c Events on the
Termination Date....................................... 31
d Early Termination
Notice................................................. 32
--iv--
6091.CHASEU1.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
e Events on the Early
Termination............................................ 32
SECTION 15 Events of Default...................................... 33
SECTION 16 Remedies............................................... 37
a Remedies............................................... 37
b No Release............................................. 42
c Remedies Cumulative.................................... 42
d Exercise of Other Rights
or Remedies............................................ 43
e Special Cure Right of
Lessee................................................. 43
SECTION 17 Notices................................................ 44
SECTION 18 Successors and Assigns................................. 45
SECTION 19 Right to Perform for
Lessee................................................. 46
SECTION 20 Additional Covenants................................... 46
SECTION 21 Lease of Real Property
Interest............................................... 46
SECTION 22 Amendments and
Miscellaneous.......................................... 46
a Amendments in Writing.................................. 46
b Survival............................................... 46
--v--
6091.CHASEU1.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
c Severability of
Provisions............................................. 47
d True Lease............................................. 47
e Original Lease......................................... 47
f Governing Law.......................................... 48
g Headings............................................... 48
h Concerning the Owner Trustee........................... 48
i Disclosure............................................. 49
j Counterpart Execution.................................. 49
APPENDIX A Definitions
SCHEDULE 1 Casualty Values
SCHEDULE 2 Special Casualty Values
SCHEDULE 3 Termination Values
SCHEDULE 4 Real Property Interest Description
SCHEDULE 5 Undivided Interest Description
--vi--
6091.CHASEU1.LEASE.47:1
<PAGE>
FACILITY LEASE, dated as of December 15, 1986, 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 15, 1986, with Chase Manhattan Realty Leasing Corporation (the Lessor),
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the
Lessee).
WITNESSETH:
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, 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 shall have
the meanings assigned to such terms in Appendix A 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 leases to the Lessee,
and the Lessee hereby leases from the Lessor, the undivided Interest.
(b) Term. The term of this Facility Lease shall begin on
December 17, 1986, and shall end on the last day of the Lease Term.
6091.CHASEU1.LEASE.47:1
<PAGE>
(c) Personal Property. It is the express intention of the Lessor
and the Lessee that title to the Undivided Interest and every portion thereof
be, and hereby is, severed, and shall be and remain severed, from title to the
real estate constituting the Real Property Interest and the PVNGS Site. The
Lessor and the Lessee intend that the Undivided Interest shall constitute
personal property to the maximum extent permitted by Applicable Law.
(d) Description. The Real Property Interest is described on
schedule 4 hereto. The Undivided Interest is described on Schedule 5 hereto.
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 and the Real
Property Interest, the following amounts:
(i) on January 15, 1987, an amount equal to .02583079%
of the Facility Cost for each day from, and including,
December 17, 1986 to, but excluding, January 15, 1987;
(ii) on July 15, 1987 and on each Basic Rent Payment
Date thereafter to and including January 15, 2015, an amount
equal to 4.649542% of Facility Cost: and
(iii) if the Lessee shall elect the Renewal Term1 on
July 15, 2015 and on each Basic Rent Payment flats thereafter
during the Renewal Term, an amount equal to one-half of an
amount determined by dividing the aggregate 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)),
by 56.
If an interest payment on any Note 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 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.
-2-
6091. CHASEUl. LEASE. 47:1
<PAGE>
(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,
any amount which is to be paid under section 6.9, 7.6, or 8.7 of
the Indenture and any amount that the Lessee is required to pay,
or provide for the payment of, under Section 8.5 of the
Indenture;
(ii) when due, any amount payable hereunder as Casualty
Value, Termination Value or special Casualty Value, and an
amount equal to 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.
-3-
6091.CHASEU1.LEASE.47:1
<PAGE>
The Lessor shall have all rights, powers and remedies provided for in this
Facility Lease, at law, in equity or other-tie, 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 Excepted 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 nominal 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 Tax Law other than a change in respect of a minimum tax;
provided, however, that the aggregate amount of such downward adjustments shall
not exceed the aggregate amount of such upward adjustments. Adjustments under
this paragraph (d) shall be (1) made not more than once a year and (2) limited
in the aggregate to the extent necessary such that the aggregate amount of Basic
Rent theretofore and thereafter payable throughout the Basic Lease Term
(computed for such purposes only without regard to any adjustments theretofore
made pursuant to Section 3(e)) shall not exceed by more than 4% the aggregate
amount of Basic Rent which would have been payable throughout the Basic Lease
Term (calculated as aforesaid) had no such adjustments been made.
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
-4-
6091. CHASEUl LEASE .47:1
<PAGE>
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 Section 3.(d) ; provided, however, that this sentence shall not apply to
the initial transfer of the owner Participant's beneficial interest in the Trust
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 appropriately adjusted (upward or downward) to preserve Net Economic
Return if there is (i) any Supplemental Financing, (ii) the payment of
Transaction Expenses in an amount which is other than 1.5% of the Purchase Price
or (iii) any other change (other than a change in items 4, 5, a (as to the basis
for amortization of Transaction Expenses), 14, 15 and 17, but without limiting
the effect of Section 3(d) hereof) in the Pricing Assumptions.
(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 within 90 days after
the Owner Participant furnishes the revised amounts to the Lessee, the Loan
Participant, the Lessor and the Indenture Trustee) 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 or' a basis consistent with the original calculations, or
(ii) compute and provide to the Lessee, the Lessor, the Owner Participant, the
-5-
6091.CHASEU1.LEASE.47:1
<PAGE>
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 arid percentages
originally provided by the owner Participant which differs by more than 10% from
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 supplement
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 Rant 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 all 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, other than Excepted Payments, 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 all principal of, and premium, if any, and interest then
due on all Notes outstanding on and as of such date of payment (taking into
account any assumption of the Notes by the Lessee).
-6-
6091 CHASEUl. LEASE. 47:1
<PAGE>
SECTION 4. Net Lease.
This Facility Lease (as originally executed and as -a tied,
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, rescission, 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 PVNGS Site,
PVNGS, 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 PVNGS Site or PVNGS, (iii) any damage to, or
removal, abandonment, decommissioning, 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 Interest,
the PVNGS Site or PVNGS; 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 ANPF 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 PVNGS Site or PVNGS, (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 unenforceability 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
-7-
6091.CHASEU1.LEASE.47:1
<PAGE>
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 PVNGS Site or PVNGS, or any part thereof or any interest
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 under Section 6(a) hereof 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
-8-
6091.CHASEU1.LEASE.47:1
<PAGE>
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 32-343, except in accordance with the express terms
hereof. If for any reason whatsoever this Facility Lease. shall be terminated in
whole or in part by operation of law or otherwise, except as specifically
provided herein, the 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 9(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 (1) surrender possession of the Undivided Interest and the
Real Property Interest to the Lessor (or to a Person specified by the Lessor to
the Lessee in writing not less than 6 months prior to the Lease Termination
Date) (i) with full rights as a Transferee" and the sole "Participant" with
respect to the Undivided Interest and the Real Property Interest within the
meaning of Section 15.10 of the ANPP Participation Agreement and (ii) without a
Price-Anderson Event (as hereinafter defined) having arisen prior to, or arising
upon, or immediately following, such surrender and (2) furnish to the
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Lessor: (i) copies certified by a senior officer of the Lessee of all
Governmental Action necessary to effect such surrender (including, but without
limitation, appropriate amendments to the License permitting the Lessor (without
the Lessor being required to change its business) or such Person to possess the
Undivided Interest and the Real Property Interest with or without the continued
involvement of the Lessee as Agent), which Governmental Action shall be in full
force and effect; and (ii) an opinion of counsel (which may be nudge Rose
Guthrie Alexander & Ferdon, Snell & Wilmer or another counsel experienced with
NRC and other nuclear matters reasonably satisfactory to the Owner Participant)
to the effect that (A) the Lessee has obtained all Governmental Action and
action under the ANPP Participation Agreement necessary to effect such surrender
by the Lessee and receipt of possession by the Lessor (or by the Person so
specified by the Lessor) and (B) such Governmental Action is in full force and
effect. 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 PVNGS 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 and the Real Property
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 required by Section 8. In the event that on or prior to the
Lease Termination Date there shall have occurred a default by any ANPP
Participant (other than the Lessee) 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 any and all obligations under
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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 transfered 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). For purposes of this
Section 5(a) a "Price-Anderson Event" shall mean any change in, or new
interpretation by Governmental Authority having jurisdiction of, Applicable Law,
including without limitation the Price-Anderson Act, the Atomic Energy Act and
the regulations of the NRC, in each case as in effect on the Closing Date, but
only if such change is specified in clauses (2) (i) through (iv) of the
definition of "Deemed Loss Event" (other than a change which is specified in
clause (A) of the definition of "Acceptable Change).
(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 and the Real Property
Interest, including using the Lessee's reasonable efforts to lease or dispose of
the Undivided Interest and the Real Property 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.
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SECTION 6. Warranty of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that until the Lease
Termination Date, so long as no Event of Default shall have occurred and be
continuing, 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 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, PVNGS, the Real
Property Interest or the PVNGS 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 Intere5t 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 INPROVEENT, 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 HERESY 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
INTEREST, THE REAL PROPERTY INTEREST, THE PVNGS SITE OR PVNGS, 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 PVNGS SITE OR FINGS, 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
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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, PVNGS, the Real Property Interest or the PVNGS 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 received (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).
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.
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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 at which it
is, from time to time, rated, (B) operate, service, maintain and repair Unit 1
and replace all necessary or useful parts and components thereof so that its
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 and enforce all available
warranties and (3) the terms and conditions of 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 PVNGS 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, PVNGS, the Real Property Interest and the PVNGS 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) 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
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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 l 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 and the Owner Participant and their
respective authorized representatives shall have the right to inspect PVNGS
(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 and
their respective authorized representatives shall have the right to inspect, at
their expense, the. books and records of the Lessee relating to PVNGS, 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.
(a) 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 or the Common
Facilities. Of the net proceeds of (i) any sale or other disposition of property
removed from Unit 1 or the Common Facilities receivable (without regard to any
right of setoff 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
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Agreement and (ii) any insurance proceeds receivable (without regard to any
right of setoff or other similar right at 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, lo.6o6666% in the case of Unit 1, or
5.555555% in the case off Common Facilities, of either such amount shall be
applied as provided in section 9(g), (h) or (i), as the case may be. A
1.700000%, in the case of Unit 1, or .566667%, in the case of Common Facilities,
undivided interest in property at any time removed from Unit 1 or the Common
Facilities shall remain the property of the Lessor, no matter where located,
until such time as a Capital improvement constituting a replacement of such
property shall have been installed in Unit 1 or the Common Facilities 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 a 1.700000%, in the case of Unit 1, or .566667%, in
the case of Common Facilities, 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
or the Common Facilities, without further act, (i) title to a 1.700000%, in the
case of Unit 1, or .566667%, in the case of Common Facilities, undivided
interest in such Capital Improvement shall vest in the Lessor and (ii) such
applicable 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 a like undivided
interest in the property originally incorporated or installed in Unit 1 or the
Common Facilities. The Lessee warrants and agrees that the Lessor's 1.700000% or
.566667%, as the case may be, undivided 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
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or the Real Property Interest or the condition or operation thereof that shall
be requited to be filed with any governmental or regulatory authority. On or
before March 1 of each year (commencing on March 1, 1988) 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 Improvements) made during the period from the date hereof to December
31, 1987 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, 1987) 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 a 1.700000%, in
the case of Unit 1, or .566667%, in the case of Common Facilities, undivided
interest in each Capital Improvement to Unit 1 or the Common Facilities, as the
case may be, 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 or the Common Facilities,
as the case may be, 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) 1.700000%, in the case of Unit 1, or
.566667%, in the case of Common Facilities, of the cost of such
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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 an Additional Equity investment or a
supplemental Financing, or both) 1.700000%, in the case of Unit 1, or
.566667%, in the case of Common Facilities, of the cost of such capital
improvement, the Lessee shall retain title to such undivided interest in
such capital Improvement.
Immediately upon title to such 1.700000%, in the case of Unit 1,
or .566667%, in the case of Common Facilities, undivided interest in any capital
Improvement vesting in the Lessor pursuant to subparagraph (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 for all purposes hereof.
(f) Funding at the Cost of capital Improvements. Before placing
in service any Capital Improvement to Unit 1 or the Common facilities 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 1.700000%, in the case
of Unit 1, or .566667%, in the case of Common Facilities, of the cost of any
such Capital Improvement, or any other Capital Improvement presented to the
Owner Participant 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, 1.700000%, in the case or Unit 1, or .566667%, in the case of
Common Facilities, 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
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proceeds thereof to pay the applicable percentage of the cost
of such Capital Improvement, subject to satisfaction of the following conditions
(i) there shall be no more than one supplemental Financing
it' any calendar year;
(ii) the sum of the Supplemental Financing Amounts in any
calendar year, shall equal or exceed 1.700000% 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;
(iv) the total amount of all supplemental Financings
during the Basic Lease Term shall not exceed 16.666666% 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, New York state or New York city tax
purposes, and the owner Participant and the Lessee shall have
agreed upon the amount and manner of payment of the indemnity
(if any) payable by the Lessee as a consequence of such
supplemental Financing;
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(viii) the Additional Notes shall have a final maturity
date no later than January 15, 2015;
(ix) the Lessee shall have made such representations,
warranties and covenants regarding the tax characteristics of
the Lessor1s undivided interest in each Capital Improvement as
the Owner Participant reasonably 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 to support the amortization of the Additional Notes
issued in respect of such Supplemental Financing and to preserve
Net Economic Return;
(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 and 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
have provided such tax indemnities, representations, warranties,
covenants, opinions, certificates and other documents as the
owner Participant shall reasonably request.
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,
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damage, loss, condemnation, confiscation, theft or seizure for any reason
whatsoever, such fact shall promptly, and in any case within five Business Days
following such event, be reported by the Lessee to the Lessor and the Owner
Participants.
(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 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 receipt by the Lessee of a written notice from the Lessor that an
Event of Loss has occurred, 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 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. An Event of Loss shall not be deemed to have occurred unless and
until the Lessor delivers the notice specified in the preceding sentence. 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
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(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 the owner Participant shall have received under
Section 5.2 of the Indenture all amounts required to be paid by the Lessee
pursuant to this Section 9(c) (including interest, if any, thereon pursuant to
Section 3(b)(iii) hereof), 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 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 shall promptly notify the
other thereof (provided that the failure by the Lessor to furnish to the Lessee
the foregoing notification shall not impair the right of the Lessor to exercise
the option referred to below) and, at the Lessor's option, exercisable by
delivery of written notice to the Lessee, on the day (specified in Schedule 2)
of the month next following the month during which such notice is delivered to
the Lessee, the Lessee shall pay to the Lessor 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 installment 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
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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
the Owner Participant shall have received under Section 5.2 of the Indenture all
amounts required to be paid by the Lessee pursuant to this Section 9(d)
(including interest, if any, thereon pursuant to Section 3(b)(iii))L,, 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 a~1 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
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 Motes pursuant to Section 3.9(b) of the Indenture, upon
receipt by the Owner Participant under Section 5.2 of the Indenture of the
payments specified in Section 9(c) or 9(d) and payment by the Lessee of all
other 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.
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(g) Application of Payments on an Event of Lass. 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, the Owner Trustee or the Owner Participant) 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.
(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 the undivided Interest or any part thereof not constituting an Event of
Loss shall be applied first to reimburse the Lessee for all amounts expended in
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respect of the repair, replacement or reconstruction of the undivided Interest
or any cart 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 flay 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
therefore 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.
(1) 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
required to make the payments specified in Section 9(c) or 9(d), 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
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will at all times maintain, directly or through the perating 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 an
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 Indemnitees as insureds through an omnibus definition of
"insured" or through endorsement; provided, however, that if the Operating
Agent, as trustee, shall become the loss payee tinder 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, 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, (3) a report signed by the broker or brokers for the
Lessee's insurance (or 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 premiums 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 (C) '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
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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) (iii) (2) may be made in reliance upon a similar
schedule provided by 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.
(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
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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 at 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 right of the Indenture Trustee to
any such payments shall be absolute and unconditional and shall not be affected
by any 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
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Renewal Term), during which the Basic Rent payable shall be the rental provided
in Section 3(a) (iii) and one-half of the rental provided in 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 (S) 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, an
Event of Default shall have occurred and be continuing or an Event of Loss 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 Market 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
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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 sates Value thereof.
(c) Purchase of the Undivided interest; Payment, Etc. If the
Lessee shall have elected or be required to purchase the Undivided Interest and
the Real Property Interest pursuant to Section 13(b), 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.
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 Officers1 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 an Affiliate of the Lessee)
submitting such bid.
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(b) Right of Lessor to Retain Undivided Interest upon
Termination. If a Termination Notice has been delivered pursuant to Section
14(a), the Lessor may elect to retain, rather than sell, the Undivided Interest
and the Real Property Interest by giving notice to the Lessee and 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 excess, if any, of the Termination
Value as of the Termination Date over the highest bona tide 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 amount 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
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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 inter 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 with-out
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 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 (but only if such purchaser has obtained all
Governmental Action by the NRC necessary in connection therewith).
(4) 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.
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(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
an 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 the
unpaid principal amount of all Votes 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 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 Early Termination Date
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 involuntary, 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
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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 ) C 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 certificates (other than a certificate of the Lessee)
described therein) or 11 of this Facility Lease; or
(iii) 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
(iv) the Lessee shall fail to perform its agreements set
forth in Section 5(a) hereof; or
(v) the Lessee shall fail to perform or observe any
covenant, condition or agreement (other than covenants,
conditions or agreements 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
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(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 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 or
other proceeding shall remain undismissed or unstayed for a
period of 60 consecutive days; or
(viii) final judgment 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
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(ix) (1) a default by the Lessee under the ANPP
Participation Agreement in consequence of which the Lessee's
right to receive its Generation 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, in good
faith, 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 (or in the case of any operating lease, an
equivalent on the assumption such lease were a lease required
to be capitalized in accordance with generally accepted
accounting principles) is greater than $20,000,000 ($5,000,000
in the case of any PVNGS operating lease)) 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 knowledge of such failure; or (2) any other
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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 event or a Responsible
Officer of the Lessee shall have actual knowledge of such
default or event.
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 or 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 the
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)
subject to Applicable Law, enter upon the PVNGS 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 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;
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(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 in a commercially reasonable manner, 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 an amount equal
to the net proceeds, if any, received by the Lessor from leasing
the Undivided interest and 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 (iv) of Section 15 (subject, however, to the provisos
to the first sentence of Section 16(c) hereof), the Lessor may,
whether or not the Lessor shall have exercised or shall
thereafter at any time exercise its rights under clause (i),
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(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 for loss of a bargain and not
as a penalty (in lieu Of the Basic Rent due after the Basic Rent
Payment Datespecified 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, in the case of (C) below,
upon receipt of such payment the Lessor shall (or may prior to
the receipt of such payment) Transfer to the Lessee the.
Undivided Interest and the Real Property Interest):
(A) an amount equal to the excess, if any, of
(1) Casualty Value, computed as of the Basic Rent
Payment Date specified in such notice, over (2) 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 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
10% per annum:
(B) an amount equal to the excess, if any, of
(1) such Casualty Value over (2) 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;
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(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 I)
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; or
(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;
(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 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 of the Sale Proceeds under the 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; or
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(vii) in the case of an Event of Default specified in clause
(iv) of Section 15, the Lessor may demand, by written notice to
the Lessee specifying a payment date which shall be not earlier
than the date 30 days after 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 last payment date, as
liquidated damages for loss of a bargain and not as a penalty,
any unpaid Rent due through such last Basic Rent Payment Date
plus an amount (not less than zero) equal to the Fair Market
Sales value (determined without regard to the obligation of the
Lessee under Section l0(b)(3)(xi) of the participation
Agreement) of the Undivided Interest and the Real Property
Interest (determined on the basis of the actual condition of
Unit 1) determined as of such last Basic Rent Payment Date
(together with interest on such amount at the interest rate
specified in Section 3(b)(iii) from such last Basic Rent
Payment Date to the date of actual payment) and upon receipt of
such payment the Lessor shall (or may prior to the receipt of
such payment) Transfer to the Lessee the Undivided Interest and
the Real Property Interest); provided, however, that the Lessor
may not exercise the foregoing remedy if the Lessor shall have
failed to Transfer the undivided Interest and the Real Property
Interest to the bidder (which shall not be the Lessee or an
Affiliate of the Lessee) that shall have submitted the highest
cash bid on or before the date on which such Event of Default
arose excluding, however, any such cash bid which the Lessor or
the Owner Participant determines was not submitted in good
faith, or as to which the bidder fails to certify to the Lessor
such information as the Lessor or Owner Participant may
reasonably request in order to determine whether or not such
bid was submitted in good faith (and the Lessor agrees that it
will, if and to the extent so requested by the Lessee on or
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after the date 90 days preceding such last Basic rent payment
Date, use reasonable efforts (at the expense off the Lessee)
for a period ending :n the day 90 days after such last Basic
Rent Payment Date, to find a Person willing to submit such cash
bid; provided, however, that the failure of the Lessor to do so
shall not relieve the Lessee of its obligations under this
clause (vii)).
(b) No Release. No rescission 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; provided, however, that
notwithstanding anything to the contrary set forth in this Facility Lease, the
remedy set forth in Section 16(a) (vii) shall be. the sole and exclusive remedy
under this Section 16 in the case of an Event of Default specified in clause
(iv) of Section 15, unless the Lessee is in default of its payment obligations
under Section 16 (a) (vii), in which case the Lessor may exercise its other
remedies under Section 16(a); (except that the maximum amount payable by the
Lessee in the event of the exercise by the Lessor of any of the remedies
provided for in Section 16(a) (v) or (vi) shall not exceed the total amount
payable by the Lessee under Section 16(a) (vii) minus the amount provided in
subclause (2) of clause (A), (3) or (C) of such Section 16(a) (v) , if the
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Lessor elects a remedy specified in said clause (A) , (B) or (C), or the
deficiency referred to in Section 16(a) (vi), if the Lessor elects the remedy
specified in Section 16(a) (vi) hereto). 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.
(d) Exercise of Other Rights or Remedies. In addition to all
other rights and remedies provided in this Section 16, the Lessor may, except td
the extent expressly limited by provisions of this Section 16, 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 l5(iii) 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,
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the Lessee shall pay to the Lessor all Rent due on such Basic Rent Payment Date,
plus an amount equal to the excess at (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 due and
payable on such date. Upon compliance in full by the Lessee with the foregoing
provisions of this paragraph (a) and assumption by the Lessee of all the
obligations and liabilities of the Owner Trustee under the Indenture and the
Motes 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) 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 the Owner Participant shall have received under Section 5.2
of the Indenture all amounts required to be paid by the Lessee pursuant to this
paragraph (a) (including interest, if any, thereon pursuant to Section
3(b)(iii)), 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 (with signed receipt of
an officer of the Owner Participant in the case of a delivery to the Owner
Participant) or by means of telex, telecopy, or other wire transmission, or
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<PAGE>
mailed by registered or certified mail, or delivered by express delivery
service, 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.
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.
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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 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 the respective
percentages of the Real Estate Investment for the applicable period set forth or
derived from the respective percentages of Facility Cost in clauses (i), (ii)
and (iii), respectively, of Section 3(a) hereof (which rent is incorporated as
part of Basic Rent payable pursuant to Section 3(a) hereof).
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.
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(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
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.
(a) 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 unenforceability 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 or 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 elsewhere 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
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".
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(f) Governing Law. This Facility Lease shall be governed by and construed in
accordance with the law of the state of flew 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 hereto.
(g) Headings. The division of this Facility Lease into
sections, the provision of a table of con-tents 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, warranties, 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 representation, 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 owner Trustee or its
successor interest, 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
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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 Chase Manhattan Realty Leasing
Corporation, a New York corporation whose address is One Chase Manhattan Plaza
(20th Floor), New York, New York 10081, Attention of Leasing Administrator. 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.
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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
Trustee under a Trust
Agreement, dated as of December
15, 1986, with Chase Manhattan
Realty Leasing Corporation
By
-----------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By
-----------------------------
Senior Vice President and
Chief Financial Officer
6091.CHASEU1.LEASE.47:1
<PAGE>
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 15th day of December,
1986, by A.J. Robison, Senior Vice President and Chief Financial Officer of
Public Service Company of New Mexico, a New Mexico Corporation, on behalf of the
corporation.
/s/ Delia T. Santiago
-----------------------
Notary Public
Delia T. Santago
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 15th day of December,
1986, by Martin F. Henry, Assistant Vice President of The First Natiohal Bank of
Boston, a national banking association, on behalf of the banking association as
Owner Trustee under that certain Trust Agreement dated as of December 15, 1986.
/s/ David A. Spivak
------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693488
Qualified in New York County
Commission Expires March 10, 1987
<PAGE>
SCHEDULE 1
TO FACILITY
LEASE
SCHEDULE OF CASUALTY VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN87 105.94334
15JUL87 104.82779
15JAN88 106.20642
15JUL88 105.17772
15JAN89 108.21549
15JUL89 107.07107
15JAN90 109.47569
15JUL90 108.31785
15JAN91 110.15808
15JUL91 108.97072
15JAN92 110.21149
15JUL92 108.95844
15JAN93 109.62035
15JUL93 108.26330
15JAN94 108.30191
15JUL94 106.80048
15JAN95 106.29835
15JUL95 104.89817
15JAN96 104.18824
15JUL96 102.85333
15JAN97 102.10833
15JUL97 100.70463
15JAN98 99.83623
15JUL98 98.33687
15JAN99 97.32303
15JUL99 95.71397
15JAN100 94.53854
15JUL100 92.80428
15JAN101 91.45971
15JUL101 89.82730
<PAGE>
SCHEDULE OF CASUALTY VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN102 88.14857
15JUL102 86.22766
15JAN103 84.62272
15JUL103 82.60677
15JAN104 80.88149
15JUL104 78.76212
15JAN105 76.90592
15JUL105 74.67525
15JAN106 72.67859
15JUL106 70.32818
15JAN107 68.18158
15JUL107 65.70404
15JAN108 63.39779
15JUL108 60.78382
15JAN109 58.30671
15JUL109 55.54644
15JAN110 52.88659
15JUL110 49.96951
15JAN111 47.11428
15JUL111 44.02926
15JAN112 40.96522
15JUL112 37.70042
15JAN113 34.41334
15JUL113 30.95620
15JAN114 27.43099
15JUL114 23.76819
15JAN115 20.00000
<PAGE>
SCHEDULE 2
TO
FACILITY LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15JAN87 105.93953 15JUN90 107.84240
15FEB87 106.39611 15JUL90 107.91093
15MAR87 106.86087 15AUG90 107.97717
15APR87 105.85050 15SEP90 107.46000
15MAY87 106.19610 15OCT90 107.51432
15JUN87 104.47466 15NOV90 107.57126
15JUL87 104.79951 15DEC90 107.51733
15AUG87 105.11218
15SEP87 104.31547 15JAN91 109.64942
15OCT87 104.60756 15FEB91 109.69166
15NOV87 104.90548 15MAR91 109.73644
15DEC87 104.94556 15APR91 109.28655
15MAY91 109.31183
15JAN88 106.14985 15JUN91 108.32723
15FEB88 106.38006 15JUL91 108.33966
15MAR88 106.61522 15AUG91 108.34874
15APR88 105.91697 15SEP91 107.86031
15MAY88 106.12748 15OCT91 107.85663
15JUN88 104.87501 15NOV91 107.85491
15JUL88 105.07218 15DEC91 107.76886
15AUG88 105.25702
15SEP88 104.66908 15JAN92 109.45422
15OCT88 104.84050 15FEB92 109.43576
15NOV88 105.01603 15MAR92 109.41913
15DEC88 105.02104 15APR92 109.03902
15MAY92 109.00388
15JAN89 108.05718 15JUN92 108.10129
15FEB89 108.20650 15JUL92 108.05429
15MAR89 108.35960 15AUG92 108.00214
15APR89 107.74554 15SEP92 107.53770
15MAY89 107.87894 15OCT92 107.47373
15JUN89 106.71734 15NOV92 107.41103
15JUL89 106.83931 15DEC92 107.28985
15AUG89 106.95663
15SEP89 106.40377 15JAN93 108.56550
15OCT89 106.50984 15FEB93 108.48510
15NOV89 106.61914 15MAR93 108.40583
15DEC89 106.59029 15APR93 108.08086
15MAY93 107.98296
15JAN90 109.16669 15JUN93 107.14780
15FEB90 109.26305 15JUL93 107.03709
15MAR90 109.36257 15AUG93 106.91991
15APR90 108.83335 15SEP93 106.46755
15MAY90 108.91403 15OCT93 106.33746
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15NOV93 106.20789 15MAR97 98.92106
15DEC93 106.04267 15APR97 98.69482
15MAY97 98.46857
15JAN94 106.90052 15JUN97 97.92681
15FEB94 106.75067 15JUL97 97.70056
15MAR94 106.60116 15AUG97 97.46285
15APR94 106.32122 15SEP97 97.13509
15MAY94 106.15192 15OCT97 96.89738
15JUN94 105.37730 15NOV97 96.65967
15JUL94 105.20324 15DEC97 96.42196
15AUG94 105.02141
15SEP94 104.58183 15JAN98 96.55907
15OCT94 104.40000 15FEB98 96.30932
15NOV94 104.21817 15MAR98 96.05956
15DEC94 104.02334 15APR98 95.80980
15MAY98 95.56004
15JAN95 104.50146 15JUN98 95.01569
15FEB95 104.31151 15JUL98 94.76594
15MAR95 104.12156 15AUG98 94.50352
15APR95 103.92206 15SEP98 94.16087
15MAY95 103.73211 15OCT98 93.89845
15JUN95 103.07090 15NOV98 93.63604
15JUL95 102.88096 15DEC98 93.37362
15AUG95 102.68252
15SEP95 102.30494 15JAN99 93.45452
15OCT95 102.10651 15FEB99 93.17880
15NOV95 101.90807 15MAR99 92.90309
15DEC95 101.70963 15APR99 92.62737
15MAY99 92.35165
15JAN96 101.94689 15JUN99 91.80293
15FEB96 101.73958 15JUL99 91.52721
15MAR96 101.53228 15AUG99 91.23752
15APR96 101.32498 15SEP99 90.87752
15MAY96 101.11768 15OCT99 90.58782
15JUN96 100.57447 15NOV99 90.29813
15JUL96 100.36717 15DEC99 90.00844
15AUG96 100.15060
15SEP96 99.83425 15JAN100 90.02972
15OCT96 99.61768 15FEB100 89.72534
15NOV96 99.40112 15MAR100 89.42096
15DEC96 99.18455 15APR100 89.11658
15MAY100 88.81220
15JAN97 99.37356 15JUN100 88.25712
15FEB97 99.14731 15JUL100 87.95274
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15AUG100 87.63464 15JAN104 73.32182
15SEP100 87.25627 15FEB104 72.92437
15OCT100 86.93817 15MAR104 72.52692
15NOV100 96.62007 15APR104 72.12947
15DEC100 86.30198 15MAY104 71.73202
15JUN104 71.15925
15JAN101 86.26162 15JUL104 70.76180
15FEB101 85.93294 15AUG104 70.35147
15MAR101 85.60426 15SEP104 69.90958
15APR101 85.27558 15OCT104 69.49925
15MAY101 84.94690 15NOV104 69.08892
15JUN101 84.39059 15DEC104 68.67859
15JUL101 84.06191
15AUG101 93.72136 15JAN105 68.46113
15SEP101 83.33069 15FEB105 68.03909
15OCT101 82.99014 15MAR105 67.61705
15NOV101 82.64959 15APR105 67.19500
15DEC101 82.30904 15MAY105 66.77296
15JUN105 66.18738
15JAN102 82.21225 15JUL105 65.76533
15FEB102 81.86080 15AUG105 65.32961
15MAR102 81.50935 15SEP105 64.86454
15APR102 81.15790 15OCT105 64.42882
15MAY102 80.80645 15NOV105 63.99309
15JUN102 80.25110 15DEC105 63.55736
15JUL102 79.89965
15AUG102 79.53619 15JAN106 63.29973
15SEP102 79.13288 15FEB106 62.85157
15OCT102 78.76943 15MAR106 62.40341
15NOV102 78.40598 15APR106 61.95525
15DEC102 78.04252 15MAY106 61.50709
15JUN106 60.90786
15JAN103 77.89921 15JUL106 60.45970
15FEB103 77.52494 15AUG106 59.99702
15MAR103 77.15066 15SEP106 59.50733
15APR103 76.77639 15OCT106 59.04465
15MAY103 76.40211 15NOV106 58.58197
15JUN103 75.84136 15DEC106 58.11930
15JUL103 75.46709
15AUG103 75.08068 15JAN107 57.81968
15SEP103 74.66059 15FEB107 57.34380
15OCT103 74.27418 15MAR107 56.86793
15NOV103 73.88776 15APR107 56.39205
15DEC103 73.50135 15MAY107 55.91618
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15JUN107 55.30241 15NOV110 33.40813
15JUL107 54.82804 15DEC110 32.82000
15AUG107 54.33674
15SEP107 53.82087 15JAN111 32.33061
15OCT107 53.32957 15FEB111 31.72573
15NOV107 52.83828 15MAR111 31.12085
15DEC107 52.34698 15APR111 30.51597
15MAY111 29.91109
15JAN108 52.00389 15JUN111 29.22912
15FEB108 51.49859 15JUL111 28.63357
15MAR108 50.99328 15AUG111 28.00911
15APR108 50.48798 15SEP111 27.37107
15MAY108 49.98267 15OCT111 26.74661
15JUN108 49.35342 15NOV111 26.12215
15JUL108 48.85134 15DEC111 25.49770
15AUG108 48.32967
15SEP108 47.78597 15JAN112 24.95370
15OCT108 47.26430 15FEB112 24.31147
15NOV108 46.74262 15MAR112 23.66923
15DEC108 46.22095 15APR112 23.02700
15MAY112 22.38477
15JAN109 45.83185 15JUN112 21.68291
15FEB109 45.29531 15JUL112 21.05240
15MAR109 44.75877 15AUG112 20.38938
15APR109 44.22223 15SEP112 19.71588
15MAY109 43.68570 15OCT112 19.05287
15JUN109 43.03996 15NOV112 18.38985
15JUL109 42.50852 15DEC112 17.72684
15AUG109 41.95461
15SEP109 41.38135 15JAN113 17.12501
15OCT109 40.82744 15FEB113 16.44313
15NOV109 40.27353 15MAR113 15.76124
15DEC109 39.71962 15APR113 15.07936
15MAY113 14.39748
15JAN110 39.28180 15JUN113 13.67445
15FEB110 38.71211 15JUL113 13.00689
15MAR110 38.14242 15AUG113 12.30295
15APR110 37.57273 15SEP113 12.30295
15MAY110 37.00305 15OCT113 10.88784
15JUN110 36.33976 15NOV113 10.18390
15JUL10 35.77719 15DEC113 9.47996
15AUG110 35.18906
15SEP110 34.58439 15JAN114 8.81689
15OCT110 33.99626 15FEB114 8.09292
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15MAR114 7.36895
15APR114 6.64498
15MAY114 5.92101
15JUN114 5.17546
15JUL114 4.46863
15AUG114 3.72125
15SEP114 2.97008
15OCT114 2.22270
15NOV114 1.47531
15DEC114 0.72793
15JAN115 0.00000
<PAGE>
Schedule 3
to
Facility Lease
SCHEDULE OF TERMINATION VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN87 105.94334
15JUL87 104.82779
15JAN88 106.20642
15JUL88 105.17772
15JAN89 108.21549
15JUL89 107.07107
15JAN90 109.47569
15JUL90 108.31785
15JAN91 110.15808
15JUL91 108.97072
15JAN92 110.21149
15JUL92 108.95844
15JAN93 109.62035
15JUL93 108.26330
15JAN94 08.30191
15JUL94 106.80048
15JAN95 106.29835
15JUL95 104.89817
15JAN96 104.18824
15JUL96 102.85333
15JAN97 102.10833
15JUL97 100.70463
15JAN98 99.83623
15JUL98 98.33687
15JAN99 97.32303
15JUL99 95.71397
15JAN100 94.53854
15JUL100 92.80428
15JAN101 91.45971
15JUL101 89.62720
<PAGE>
SCHEDULE OF TERMINATION VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN102 88.14857
15JUL102 86.22766
15JAN103 84.62272
15JUL103 82.60677
15JAN104 80.88149
15JUL104 78.76212
15JAN105 76.90592
15JUL105 74.67525
15JAN106 72.67859
15JUL106 70.32818
15JAN107 68.18158
15JUL107 65.70404
15JAN108 63.39779
15JUL108 60.78382
15JAN109 58.30671
15JUL109 55.54644
15JAN110 52.88659
15JUL110 49.96951
15JAN111 47.11428
15JUL111 44.02926
15JAN112 40.96522
15JUL112 37.70042
15JAN113 34.41334
15JUL113 30.95620
15JAN114 27.43099
15JUL114 23.76819
15JAN115 20.0000
<PAGE>
SCHEDULE 4
to
FACILITY LEASE
REAL PROPERTY INTEREST DESCRIPTlON
The Real Property Interest is a (i) 0.5% undivided interest in the land
described in I below, a (ii).566667% undivided interest in the rights and
interests described in II below, and (iii) a .566667% undivided interest in
the rights and interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter;
and the West half of the Southwest quarter, all in Section Two (2), Township
One (1) South, Range Six (6) West of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa county,
Arizona.
PARCEL NO. 3: The East half of Section Four (4), Township One (l) South,
Range Six (6) West of the Gila and Sa1t River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 4:The West half of Section Twenty-six (26), Township One (1)
North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona; EXCEPT the Northwest quarter of Section 27.
PARCEL NO. 6: The Southeast quarter of Section Twentyeight (28), Township
One (1) North, Range Six (6) West of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other
mineral deposits and geothermal resources recovered from or developed on the
property, as reserved in instrument recorded May 10, 1974 in Docket 10647,
page 136.
6091. CHASEUl. LEASE.47:l
<PAGE>
PARCEL No. 7: The East half of Section Thirty-three (33), Township One (1)
North, Range Six (6) West of the Gila ant Salt River Base and Meridian,
Maricopa County, Arizona.
PARCEL NO. 8: All of Section Thirty-four (34), Township One (1) North, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1)
North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona; EXCEPT the East half of the Southeast quarter thereof; and EXCEPT
the North half of the South half of the Northwest quarter of the Northwest
quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of
Section Twenty-three (23), Township One (1) North, Range Six (6) West of the
Gila and Salt River Base and Meridian, Maricopa County, Arizona, more
particularly described as follows:
BEGINNING at the Southeast corner of the said East half of the
Southwest quarter of Section 23; thence West, an assumed bearing along
the South line of the said East half of the Southwest quarter of Section
23, for a distance of 762.04 feet; thence North. 0 degrees 03 minutes 39
seconds West; parallel to the East line of the said East half of the
Southwest quarter of Section 23, for a distance of 1946.46 feet to a
point on the South right-of-way line of the 200 foot wide
HASSAYAMPA-SALDME HIGHWAY, as recorded in Book 12 of Road Maps, page 82,
Maricopa County Recorder, Maricopa County, Arizona; thence continuing
North 0 degrees 03 minutes 39 seconds West for a distance of 234.15 feet
to a point on the North right-of-way line of said highway; thence South
-2-
609l.CHASEUl.LEASE.47:1
58 degrees 43 minutes 35 seconds East, along said North right-of-way
line for a distance of 892.17 feet to a point on the said East line of
the East half of the Southwest quarter of Section 23; thence South 0
degrees 03 minutes 39 seconds East, along said East line for a distance
of 234.15 feet to a point on the said South right-of-way line; thence
continuing South 0 degrees On minutes 39 seconds East for a distance of
1483.31 feet to the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 52, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (l) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMA PUMPING STATION AND EFFLUENT PIPEINE
All real property, leases, licenses, easements, rights-of-way
and other property held by Title USA Company of Arizona Trust No. 530
established by that certain Trust Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.
III. MISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the Nuclear Plant Site (as
defined in the ANPP Participation Agreement).
-3-
6091. CHASEUl LEASE. 47:1
<PAGE>
SCHEDULE 5
to
FACILITY LEASE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) 1.700000% undivided interest
in and to the property described under A below and (ii) a .566667% undivided
interest in and to the property described in B below
A. Unit 1 of the Palo Verde Nuclear Generating Station
(PVNGS), located in Maricopa County, Arizona, approximately 55 miles west of the
City of Phoenix, Arizona, and approximately 16 miles west of the City of
Buckeye, Arizona, consisting of:
I. Unit 1 Combustion Engineering "System 80" pressurized water reactor nuclear
steam supply system (the NSSS) . The NSSS is comprised of a reactor vessel
containing 241 fuel assemblies with approximately 100 tons of enriched uranium
(fuel assemblies, however, are not part of Unit 1 and are not included in the
Undivided Interest being sold), two steam generators, four reactor coolant pumps
and various additional systems and subsystems. The licensed thermal rating of
the NSSS is 3800 MW.
II. Unit 1 GE TC6F-43, 1800 RPM tandem-compound, six flow, reheat
turbine-generator including turbine, generator, moisture separator-reheater,
exciter, controls, and auxiliary subsystems. The turbine-generator is conductor
cooled and rated at 1,554 MVA at 24,000 V, 3 phase, 60 Hz, 1.5 in Hg ABS back
pressure, and approximately 1,363 MW maximum gross electric output.
III. Unit 1 146 ft. inside diameter, steel-lined, prestressed concrete
cylindrical containment building with a hemispherical dome designed for 60 psig.
The containment building houses the reactor system.
6091.CHASEUl.LEASE.47:1
<PAGE>
IV. Unit 1 auxiliary systems and equipment including engineered safeguards
systems, reactor auxiliary systems and turbine-generator auxiliary systems
associated with items I, II, and III above, extending to and including the Unit
1 start-up transformer.
V. Unit 1 cooling tower system consisting of three (3) mechanical draft cooling
towers, including a closed cycle circulating water system, make-up water systems
and essential spray ponds.
VI. Unit 1 radioactive waste treatment system, including liquid, gaseous, and
solid waste subsystems, controls, instrumentation, storage, handling and
shipment facilities.
VII. Unit 1 emergency diesel-generator system, including a diesel-generator
building which contains two diesel generators, fuel oil systems, storage tanks,
control and instrumentation systems and other equipment.
VIII. Unit 1 internal communication systems, including associated
interconnections and computer data links.
BUT EXCLUDING:
I. Nuclear fuel for Unit 1, includinq spare fuel assemblies.
II. Spare Parts (Unit 1)
III. Transmission facilities (including any and all facilities
and equipment providing interconnection between the Unit 1
turbine generator and the ANPP High Voltage Switchyard,
including step-up transformers and standby equipment and
systems).
-2-
6O91.CHASEUl. LEASE. 47:1
<PAGE>
IV. Oil and diesel fuel inventories (Unit 1). =2219
=(2219)
B. All PVNGS common facilities, INCLUDING BUT NOT LIMITED
TO: =2221
=(2221)
I. Surveillance systems, including associated =2225
radioactive monitoring systems and equipment. =2226
=(2226)
II. Water treatment facilitaies and transport systems for supply =2228
of waste water effluent. =2229
=(2229)
III. Warehouse and related storage facilities =2231
and equipment. =(2231)
BUT EXCLUDING:
I. Nuclear fuel, including spare fuel =2236
assemblies. =(2236)
II. All transmission and ANPP High Voltage Switchyard =2238
facilities. =(2238)
III. Adminstration Building. =2240
IV. Adminstration Annex Builidng. =2242
V. Technical Support Center. =2244
VI. Visitor Center. =2246
VII. External communication systems and equipment, =2248
including associated interconnections and computer =2249
data links. =(2249)
VIII. Parking lot improvements, road improvemnts, fencing =2251
and dikes. =2252
IX. Spare parts (common facilities). =2254
X. Simulator. =2256
XI. Oil and diesel fuel inventories. =2258
XII. Real property, beneficial interest in Title USA Company of =2260
Arizona Trust No. 530, and Project Agreement interests =2261
described in Schedule 4.
-3-
6091.CHASEU1.LEASE.47:1
<PAGE>
When Recorded, Return to: Greg R. Nielsen, Esq.
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 15, 1986. THIS AMENDMENT NO.1 HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO.1
Dated as of April 8, 1987
to
FACILITY LEASE (Unit 1)
Dated as of December 15, 1986
between
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity ,a
but solely as Owner Trustee
under a Trust Agreement, dated as
of December 15, 1986,
with Chase Manhattan Realty
Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on DECEMBER 17, 1986,
as Instrument No. 86-695925, in Maricopa County
Recorder's Office.
================================================================================
6091 CHASEU1 LEASE 204:1
<PAGE>
AMENDMENT NO. 1, dated as of April 8, 1987 (Amendment No. 1),
to the Facility Lease dated as of December 15, 1986, between THE FIRST NATIONAL
BANK or BOSTON, a national banking association, not in its individual capacity,
but solely as Owner Trustee under a Trust Agreement, dated as of December 15,
1986, with chase Manhattan Realty Leasing Corporation, a New York corporation
(the Lessor), and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(the Lessee).
WITNESSETH:
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 15, 1986 (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. 1 pursuant to the Request, Instruction and Consent effective on April 8,
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:
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 ante in Appendix A to the Facility Lease.
6091.CHASEEU1.LEASE.204:1
<PAGE>
SECTION 2. Amendments.
(a)A new section 8(g) of the Facility Lease is inserted
therein, to read in its entirety as follows:
"(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) an 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)
(b) section l5(iv) of the Facility Lease is hereby amended to
read in its entirety as follows:
"(iv) (1) the Lessee shall fail to per-form its agreements set
forth in section 5(a) hereof or (2) the remaining Economic Useful Life
of Unit 1, as determined under Section e(g) if required thereby to be so
determined, shall be (x) as of the date six months prior to the end of
the Basic Lease Term, less than five and one-half years or (y) as of the
date six months prior to the end of the Renewal Term, three and one-half
years; or"
-2-
6091.CHASEU1.LEASE.204:1
<PAGE>
(C) section 16(a) (vii) of the Facility Lease is hereby
amended to read in its entirety as follows:
"(vii) in the case of an Event of Default. specified in clause
(iv) of section 15, the Lessor may demand, by written notice to
the Lessee specifying a payment date which shall be (A) in the
case of an Event of Default specified in subclause (1) of said
clause (IV), not earlier than the date 30 days after the last
Basic Rent Payment Date of the Lease Term, and (B), in the case
of an Event of Default specified in subclause (2) of said
clause (iv), 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 payment date, as liquidated damages
for loss of a bargain and not as a penalty, any unpaid Rent due
through such last Basic Rent Payment Date plus an amount (not
less than zero) equal to the Fair Market Sales Value
(determined without regard to the obligation of the Lessee
under Section 1o(b)(3)(xi) of the Participation Agreement) of
the undivided Interest and the Real Property Interest
(determined on the basis of the actual condition of Unit 1)
determined as of such last Basic Rent Payment Date (together
with interest on such amount at the interest rate specified in
section 3(b) (iii) from such last Basic Rent Payment Date to
the date of actual payment) and upon receipt of such payment
the Lessor shall (or may prior to the receipt of such payment)
Transfer to the Lessee the Undivided Interest and the Real
Property Interest); provided, however, that a the Lessor may
not exercise the foregoing I. remedy if the Lessor shall have
failed to Transfer the Undivided Interest and the Real Property
Interest to the bidder (which shall not be the Lessee or an
Affiliate of the Lessee) that shall have submitted the highest
cash bid on or before the date on which such Event of Default
arose excluding, however, any such cash bid which the Lessor or
the Owner Participant determines was not submitted in good
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<PAGE>
faith, or as to which the bidder fails to certify to the Lessor such
information as the Lessor or Owner Participant may reasonably request in
order to determine whether or not such bid was submitted in good faith
(and the Lessor agrees that it will, if and to the extent so requested
by the Lessee on or after the date 90 days preceding such last Basic
Rent Payment Date, use reasonable efforts Cat the expense of the Lessee)
for a period ending on the day 90 days after such last Basic Rent
Payment Date, to find a Person willing to submit such cash bid:
provided, however, that the failure of the Lessor to do so shall not
relieve the Lessee of its obligations under this clause (vii))."
(d) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
"Decommissioning shall mean the decommissioning and retirement
from service of Unit 1, and the related possession, maintenance and
disposal of radioactive material used in or produced incident to the
possession and operation of Unit 1, including, without limitation, (i)
placement and maintenance of Unit 1 in a state of protective storage,
(ii) in-place entombment and maintenance of Unit 1, (iii) dismantlement
of Unit 1, (iv) any other form of decommissioning and retirement from
service required by or acceptable to the NRC and (v) all activities
undertaken incident to the implementation thereof and to the obtaining
of NRC authority therefor, including, without limitation, maintenance,
storage, custody, removal, decontamination, and disposition of
materials, equipment and fixtures, razing of Unit 1, removal and
disposition of debris from the PVNGS Site, and restoration of the PVNGS
Site related to Unit 1 for unrestricted use."
(e) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
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<PAGE>
"Decommissioning Costs shall mean all costs, liabilities and
expenses relating or allocable to, or incurred in connection with, the
Decommissioning of Unit 1, including, without limitation, (i) any and
all costs of activities undertaken to terminate NRC licensing authority
and requirements to own, operate and possess Unit 1 and to possess
radioactive material used in or produced incident to the possession and
operation of Unit 1) and (ii) any and all costs of activities
undertaken, prior to termination of all NRC licensing authority and
requirements with respect to Unit 1 and the radioactive material used in
or produced incident to the possession and operation of Unit 1, to
possess, maintain, and dispose of radioactive material used in or
produced incident to the possession and operation of Unit 1."
(f) A new definition is hereby added Appendix A to the
Facility Lease, to read in entirety as follows:
"Economic Useful Life shall mean that period (commencing on
the date as of which the determination of Economic Useful Life is to be
made as provided in section 8(g) of the Facility Lease and ending on the
date upon which either of the states of affairs described in clauses (i)
and (ii) below ceases to apply, or can reasonably be expected to cease
to apply, to Unit 1) during which (i) Unit 1 will be useful to, and
usable by, any owner or lessee thereof as a facility for the generation
of electric power and (ii) Unit I is an economic and commercially
practical facility for the generation of electric power capable of
producing (after taking into account costs of capital) a reasonable
economic return to the owner thereof. For the purposes of determinations
under clauses (i) and, (ii) above, the following factors, among others,
shall be taken into account (as such factors obtain on the date of
determination and as such factors are reasonably expected to obtain in
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6091.CHASEU1.LEASE.204:1
<PAGE>
the future): (a) provisions of the Project Agreements (including, without
limitation, the ANPP Participation Agreement and the Material Project Agreements
(or substitutes for such Material Project Agreements in effect on the date of
determination)); (b) the actual condition and performance of Unit 17 (c) the
actual condition and performance of such other facilities constituting PVNGS
(including, without limitation, the Common Facilities) as are integral to the
operation of Unit 1; (d) the actual condition of, and access of the ANPP
Participants to, the ANPP switchyard and such other transmission facilities as
are available and necessary to permit the transmission of the maximum amount of
power generated by PVNGS; (e) the cost of obtaining, handling, storing and
disposing of nuclear fuel for Unit 17 (f) the projected cost (including, without
limitation, costs attributable to obligations to fund any reserve fund
maintained (or funded) by licensed owners and/or lessees of Unit 1 to the extent
dedicated to (or attributable to and freely available with respect to) Unit 1
(the Unit 1 Fund)) or the Decommissioning or retirement from service of Unit 1
including without limitation, Decommissioning Costs (taking into account the
balance (plus projected investment earnings thereon) of the Unit 1 Fund) ; (g)
the cost of Capital Improvements to Unit 1 then planned to be a made, or
reasonably expected to be made; (h) the cost of acquiring or leasing the Unit 1
Retained Assets; (i) the current status of all Governmental Action with respect
to Unit 1 (including, without limitation, the License) required to permit
licensed owners and/or lessees to possess and (in the case of then Operating
Agent) to operate Unit 1 and such other facilities constituting PVNGS
(including, without limitation, the Common Facilities) as are integral to the
operation of Unit 1; and (j) the relative cost of producing an amount of
electric power and energy equivalent to the generating capacity of Unit 1 from
other facilities then available in the region serviced, or reasonably expected
to be serviced, by PVNGS."
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<PAGE>
(e) Paragraph (B) (a) of the definition of "Acceptable Change"
set forth in Appendix A to the Facility Lease is hereby amended to read in its
entirety as follows:
"(a) the amount payable by all licensees of a single nuclear
facility in respect of such facility in any one year and with respect to
any one "nuclear incident" under any deferred premium or similar plan
required by Applicable Law shall not exceed $36 million (subject to
adjustment as provided in subclause (V) of the preceding clause (b))."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amendments 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. 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.
(c) Governing raw. 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.
(d) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One Chase
Manhattan Plaza, New York, New York 10081. 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.
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6091.CHASEU1.LEASE.204:1
<PAGE>
(e) Amendment No. 1. The single executed original 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"
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".
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6091.CHASEU1.LEASE.204:1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1
to Facility Lease to be duly executed 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 15, 1986, with
Chase Manhattan Realty Leasing
Corporation
By
-----------------------------------
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
-----------------------------------
Vice President and
Corporate Controller
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6091.CHASEUl.LEASE.204:l
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Amendment No. 1 to Facility Lease to be duly executed 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 15, 1986, with
Chase Manhattan Realty Leasing
Corporation
By
---------------------------------
Assistant Cashier
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By
---------------------------------
Vice President and
Corporate Controller
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6091.CHASEU1.LEASE.204:1
<PAGE>
State of New York )
)ss:
County or Bernalillo )
The foregoing instrument was acknowledged before me this 8th
day of April, 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 Massachusetts )
)ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 8th day
of April, 1987, by James E. Mogavero, an Assistant Cashier of THE FIRST NATIONAL
BANK OF BOSTON,THE FIRST NATIONAL BANK, a national banking association, on
behalf of the banking association as Owner Trustee under the Trust Agreement
dated as of December 15, 1986 with Chase Manhattan Realty Leasing Corporation.
/s/ Carol Malley
-----------------------------
Notary Public
CAROL MALLEY
Notary Public
My Commission Expires January 28, 1994
6091.CHASEU1.LEASE.204:1
When Recorded, Return to: Greg R. Nielsen, Esq.
Snell & Wilmer
3100 Valley Bank Canter
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS AMENDED BY THIS
AMENTMENT NO.1 THERETO HAVE BEEN ASSIGNED TO, AND ARE TO A SECURITY IN FAVOR OF,
CHEMICAL BANK, AS INDEUTURE, TRUSTEE UNDER A ASSIGNMENT OF RENTS DATED AS OF
DECEMBER 15,1986. THIS FACILITY LEASE HAS BEEN EXECUTED IN SERVERAL
COUNTERPARTS.SEE SECTION 22(e) OF THIS AMENDMENT NO.1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
FACILITY LEASE
Dated as of December 15, 1986
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 15, 1986,
with Chase Manhattan Realty
Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Sale and Leaseback of a .7933333% Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2 and
a .2644444% Undivided Interest in Certain Common
Facilities
================================================================================
6091.CHASEU2.LEASE.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................................................... 1
c Personal Property...................................... 1
d Description............................................ 2
SECTION 3 Rent; Adjustments to
Rent................................................... 2
a Basic Rent............................................. 2
b Supplement 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
SECTION 4 Net Lease.............................................. 7
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6091.CHASEU2.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
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................................. 12
a Quiet Enjoyment........................................ 12
b Disclaimer of Other
Warranties............................................. 12
c Enforcement of Certain
Warranties............................................. 13
SECTION 7 Liens ................................................ 13
SECTION 8 Operation and Maintenance;
Capital Improvements................................... 14
a Operation and
Maintenance............................................ 14
b Inspection............................................. 15
c Capital Improvements................................... 14
d Reports................................................ 16
e Title to Capital
Improvements........................................... 17
f Funding of the Cost of
Capital Improvements................................... 18
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6091.CHASEU2.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 9 Event of Loss; Deemed
Loss Event............................................. 20
a Damage or Loss......................................... 20
b Repair................................................. 21
c Payment of Casualty
Value.................................................. 21
d Payment of Special
Casualty Value......................................... 22
e Requisition of Use..................................... 23
f Termination of
Obligation............................................. 23
g Application of Payments
on an Event of Loss.................................... 24
h Application of Payments
Not Relating to an Event
of Loss................................................ 24
i Other Dispositions..................................... 25
j Assumption of Notes;
Creation of Lien on
Undivided Interest .................................... 25
SECTION 10 Insurance.............................................. 25
a Required Insurance..................................... 25
b Permitted Insurance.................................... 27
SECTION 11 Rights to Assign or
Sublease............................................... 27
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6091.CHASEU2.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
a Assignment or Sublease
by the Lessee.......................................... 27
b Assignment by Lessor as
Security for Lessor's
Obligations............................................ 28
SECTION 12 Lease Renewal.......................................... 28
SECTION 13 Notices for Renewal or
Purchase; Purchase
Options................................................ 29
a Notice, Determination of
Values, Appraisal
Procedure.............................................. 29
b Purchase Option at
Expiration of the Lease
Term................................................... 29
c Special Purchase Event................................. 30
SECTION 14 Termination for
Obsolescence........................................... 30
a Termination Notice..................................... 30
b Right of Lessor to
Retain Undivided
Interest upon
Termination............................................ 31
c Events on the
Termination Date....................................... 31
d Early Termination
Notice................................................. 32
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6091.CHASEU2.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
e Events on the Early
Termination............................................ 32
SECTION 15 Events of Default...................................... 33
SECTION 16 Remedies............................................... 37
a Remedies............................................... 37
b No Release............................................. 42
c Remedies Cumulative.................................... 42
d Exercise of Other Rights
or Remedies............................................ 43
e Special Cure Right of
Lessee................................................. 43
SECTION 17 Notices................................................ 44
SECTION 18 Successors and Assigns................................. 45
SECTION 19 Right to Perform for
Lessee................................................. 46
SECTION 20 Additional Covenants................................... 46
SECTION 21 Lease of Real Property
Interest............................................... 46
SECTION 22 Amendments and
Miscellaneous.......................................... 46
a Amendments in Writing.................................. 46
b Survival............................................... 46
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6091.CHASEU2.LEASE.47:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
c Severability of
Provisions............................................. 47
d True Lease............................................. 47
e Original Lease......................................... 47
f Governing Law.......................................... 48
g Headings............................................... 48
h Concerning the Owner Trustee........................... 48
i Disclosure............................................. 49
j Counterpart Execution.................................. 49
APPENDIX A Definitions
SCHEDULE 1 Casualty Values
SCHEDULE 2 Special Casualty Values
SCHEDULE 3 Termination Values
SCHEDULE 4 Real Property Interest Description
SCHEDULE 5 Undivided Interest Description
<PAGE>
FACILITY LEASE, dated as of December 15, 1986, 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 15, 1986, with Chase Manhattan Realty Leasing Corporation (the Lessor),
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico Corporation (the Lessee).
WITNESSETH:
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, 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 shall have
the meanings assigned to such terms in Appendix A hereto. References in this
Facility Lease to sections, paragraphs and clauses are to sections, paragraphs
and clauses in this Facility Lease unless other-wise 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 leases to the Lessee,
and the Lessee hereby leases from the Lessor, the Undivided Interest.
(b) Term. The term of this Facility Lease shall begin on
December 17, 1986, and shall end on the last day of the Lease Term.
6091.CHASEU2.LEASE.47:1
<PAGE>
(c) Personal Property. It is the express intention of the
Lessor and the Lessee that title to the Undivided Interest and every portion
thereof be, and hereby is, severed, and shall be and remain severed, tram title
to the real estate constituting the Real Property Interest and the PVNGS Site.
The Lessor and the Lessee intend that the Undivided Interest shall constitute
personal property to the maximum extent permitted by Applicable Law.
(d) Description. The Real Property Interest is described on
Schedule 4 hereto. The Undivided interest is described on Schedule S hereto.
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 and the Real
Property Interest, the following amounts:
(i) on January 15, 1987, an amount equal to .02585778%
of the Facility Cost for each day from, and including,
December 17, 1986 to, but excluding, January 15, 1987;
(ii) on July 15, 1987 and on each Basic Rent Payment
Date thereafter to and including January 15, 2016, an amount
equal to 4.654400% of Facility Cost; and
(iii) if the Lessee shall elect the Renewal Term1 on July
15, 2016 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 aggregate 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)),
by 58.
It an interest payment on any Note 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 payment and such payment of additional Basic Rent shall be
credited against the Basic Rent due on the Basic Rent Payment Date next
succeeding tie date that such additional Basic Rent shall have been paid.
6091.CHASEU2.LEASE.47:1
<PAGE>
(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,
any amount which is to be paid under Section E.9,.7.E or 9.7 of
the Indenture and any amount that the Lessee is required to pay,
or provide for the payment of, under Section 8.5 of the
Indenture:
(ii) when due, any amount payable hereunder as Casualty
Value, Termination Value or Special Casualty Value, and an
amount equal to 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 CS) 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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<PAGE>
The Lessor shall have all rights, powers and remedies provided tar in this
Facility Lease, at law, in equity or otherwise, 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 Excepted 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 nominal 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 Tax Law other than a Change in respect of a minimum tax;
provided, however, that the aggregate amount of such downward adjustments shall
not exceed the aggregate amount of such upward adjustments. Adjustments under
this paragraph (d) shall be (1) made not more than once a year and (2) limited
in the aggregate to the extent necessary such that the aggregate amount of Basic
Rent theretofore and thereafter payable throughout the Basic Lease Term
(computed for such purposes only without regard to any adjustments theretofore
made pursuant to Section 3(e)) shall not exceed by more than 4% the aggregate
amount of Basic Rent which would have been payable throughout the Basic Lease
Term (calculated as aforesaid) had no such adjustments been made.
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 consequences of the transfer
-4-
6091.CHASEU2.LEASE.47:1
<PAGE>
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 Section 3 (d); provided, however, that this sentence shall not apply to the
initial transfer of the Owner Participant's beneficial interest in the Trust 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 appropriately adjusted (upward or downward) to preserve Net Economic
Return if there is (i) any Supplemental Financing, (ii) the payment of
Transaction Expenses in an amount which is other than 3.0% of the Purchase Price
or (iii) any other change (other than a change in items 4, 5, 9 (as to the basis
for amortization of Transaction Expenses) , 14, 15 and 17, but without limiting
the effect of Section 3(d) hereof) in the Pricing Assumptions.
(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 Lessee9s request within 90 days after
the Owner Participant furnishes the revised amounts to the Lessee, the Loan
Participant, the Lessor and the Indenture Trustee) 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 calculations, or
(ii) compute and provide to the Lessee, the Lessor, the Owner Participant, the
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<PAGE>
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 differs by more than 10% from
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 supplement
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 oadjustment
otherwise required pursuant to this Section 3.
(g) sufficiency of Basic Rent arid 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 all 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, other than Excepted Payments, 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 all principal of, and premium, if any, and interest then
due on all Notes Outstanding on and as of such date of payment (taking into
account any assumption of the Notes by the Lessee).
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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-off1 abatement,
counterclaim, suspension, recoupment, reduction, rescission, 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
2, any Capital Improvement, the Real Property interest, the PVNGS Site, PINGS,
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 2, any Capital Improvement, the Real Property
Interest, the PVNGS Site or PVNGS, (iii) any damage to, or removal, abandonment,
decommissioning, shutdown, salvage, scrapping,' requisition, taking, loss, theft
or destruction of all or any part of the Undivided interest1 Unit 2, any Capital
Improvement, the Real Property Interest, the PVNGS Site or PVNGS, 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 2, any capital Improvement, the Real Property Interest, the PVNGS
Site or PVNGS, (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 unenforceability 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
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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
Documents 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 2, any Capital
Improvement, the undivided interest, the Real Property Interest, the PVNGS Site
or PVNGS, or any part thereof or any interest 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 under Section 6(a) hereof 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 aid all rights
which it may now have or which at any time hereafter may be conferred upon it,
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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 terminated 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 or 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 (1) surrender possession of the
Undivided Interest and the Real Property Interest to the Lessor (or to a Person
specified by the Lessor to the Lessee in writing not less than 6 months prior to
the Lease Termination Date) (i) with full rights as a Transferee" and the sole
"Participant" with respect to the Undivided Interest and the Real Property
Interest within the meaning of Section 15.10 of the ANPP Participation Agreement
and (ii) without a Price-Anderson Event (as hereinafter defined) having arisen
prior to, or arising upon, or immediately following, such surrender and (2)
furnish to the
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Lessor: (i) copies certified by a senior officer of the Lessee of all
Governmental Action necessary to effect such surrender (including, but without
limitation, appropriate amendments to the License permitting the Lessor (without
the Lessor being required to change its business) or such Person to possess the
Undivided Interest and the Real Property interest with or without the continued
involvement of the Lessee as Agent), which Governmental Action shall be in full
force and effect; and (ii) an opinion of counsel (which may be Mudge Rose
Guthrie Alexander & Ferdon, Snell & Wilmer or another counsel experienced with
NRC and other nuclear matters reasonably satisfactory to the Owner Participant)
to the effect that (A) the Lessee has obtained all Governmental Action and
action under the ANPP Participation Agreement necessary to effect such surrender
by the Lessee and receipt of Possession by the Lessor (or by the Person so
specified by the Lessor) and (B) such Governmental Action is in full force and
effect. 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 2
or the PVNGS 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 and the Real Property
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 required by Section 8. In the event that on or prior to the
Lease Termination Date there shall have occurred a default by any ANPP
Participant (other than the Lessee) 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 any and all obligations under
the ANPP
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Participation Agreement with respect to contributions or payrnents 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). For purposes of this
Section 5(a) a "Price-Anderson. Event" shall mean any change in, or new
interpretation by Governmental Authority having jurisdiction of, Applicable Law,
including without limitation the Price-Anderson Act, the Atomic Energy Act and
the regulations of the NRC, in each case as in effect on the Closing Date, but
only if such change is specified in clauses (2) (i) through (iv) of the
definition of "Deemed Loss Event" (other than a change which is specified in
clause (A) of the definition of "Acceptable Change").
(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 Term1 the
Lessee will fully cooperate with the Lessor in connection with the Lessor's
efforts to lease or dispose of the Undivided interest and the Real Property
Interest, including using the Lessee's reasonable efforts to lease or dispose of
the Undivided Interest and the Real Property 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.
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SECTION 6. Warranty of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that until the Lease
Termination Date, so long as no Event of Default shall have occurred and be
continuing, the Lessee's use and possession of Unit 2, 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 lieu of all other warranties of the Lessor or the Owner
Participant, whether written, oral or implied, with respect to this Facility
Lease, Unit 2, any Capital Improvement, the Undivided Interest, PVNGS, the Real
Property Interest or the PVNGS 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 2 (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 DISCLOSE, AMY OTHER REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, THE DESIGN OR CONDITION OF UNIT 2, ANY CAPITAL IMPROVEMENT, THE
UNDIVIDED INTEREST; THE REAL PROPERTY INTEREST, THE PVNGS SITE OR PVNGS, OR ANY
PART THEREOF, THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY
PARTICULAR PURPOSE, TITLE TO UNIT 2, ANY CAPITAL IMPROVEMENT, THE UNDIVIDED
INTEREST, THE REAL PROPERTY INTEREST, THE PVNGS SITE OR PVNGS, 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
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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 2 (including any Capital
Improvement), the Undivided Interest, pvngs, the Real Property Interest or the
PVNGS Site that may arise pursuant to any law now or hereafter in effect, or
otherwise.
(a) 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 2
(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 received (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).
Section 7. Liens.
The Lessee will not directly or indirectly create, incur6 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.
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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 2
in such condition that Unit 2 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 at which it
is, from time to time, rated, (B) operate, service, maintain and repair Unit 2
and replace all necessary or useful parts and components thereof so that its
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 and enforce all available
warranties and (3) the terms and conditions of all insurance policies maintained
in effect at any time with respect thereto, (C) use, possess, operate and
maintain Unit 2 in compliance with all material applicable Governmental Actions
(including the License) affecting PVNGS or Unit 2 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 2, the Undivided
Interest, PVNGS, the Real Property Interest and the PVNGS Site, and the use,
operation and maintenance thereof. The Lessee agrees to (i) exercise its rights
under the AMP? Participation Agreement so that there will always be an Operating
Agent under the AN?? 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 AMP?
Participation Agreement. The Lessee will keep and maintain proper books and
records (i) 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 2 and the acquisition, construction and
installation of Capital Improvements, all in accordance with the Uniform System
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of Accounts. The Lessor shall not be obliged in any way to maintain, altar,
repair, rebuild or replace Unit 2, 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 2, 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 and the Owner Participant and their
respective authorized representatives shall have the right to inspect .PVNGS
(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 and
their respective authorized representatives shall have the right to inspect, at
their expense, the books and records of the Lessee relating to PVNGS, and make
copies of and extracts therefrom (subject as aforesaid) and may, at their
expense, discuss the Lessee's affairs, finances and account 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 2 or the Common
Facilities. Of the net proceeds of (i) any sale or other disposition of property
removed from Unit 2 or the Common Facilities receivable (without regard to any
right of setoff 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
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Agreement and (ii) 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, 7 777778% in the case of Unit 2, or
2.592593% in the case of Common Facilities, of either such amount shall be
applied as provided in Section 9(g), (h) or (i), as the case may be. A
.7933333%, in the case of Unit 2, or .2644444%, in the case of Common
Facilities, undivided interest in property at any time removed from Unit 2 or
the Common Facilities shall remain the property of the Lessor, no matter where
located, until such time as a Capital improvement constituting a replacement of
such property shall have been installed in Unit 2 or the Common Facilities or
such removed property has been disposed of by the Operating Agent in accordance
with the NAP Participation Agreement. Simultaneously with such disposition by
the Operating Agent, title to a .7933333%, in the case of Unit 2, or .2644444%,
in the case of Common Facilities, undivided interest in the removed property
shall vest in the Person designated by the Operating Agent1 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 2 or the Common Facilities, without further act, (i) title to a .7933333%,
in the case of Unit 2, or .2644444%, in the case of Common Facilities, undivided
interest in such Capital improvement shall vest in the Lessor and (ii) such
applicable 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 a like undivided
interest in the property originally incorporated or installed in Unit 2 or the
Common Facilities. The Lessee warrants and agrees that the Lessor's .7933333% or
.2644444%, as the case may be, undivided interest in all Capital Improvements
shall be tree and clear of all Liens, except Permitted Liens other than the type
specified in clauses (ii), (iii) and (xii) at 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 2, the Undivided Interest
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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 (commencing on March 1, 1988) 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 Improvements) made during the period from the date hereof to December
31, 1987 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, 1987) 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 a .7933333%, in the
case of Unit 2, or .2644444%, in the case of Common Facilities, undivided
interest in each Capital Improvement to Unit 2 or the Common Facilities, as the
case may be, 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 2 or the Common Facilities,
as the case may be, 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) .7933333%, in the case of unit 2, or
.2644444%, in the case of Common Facilities, of the cost of such
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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 an Additional Equity Investment or a
Supplemental Financing, or both) .7933333%, in the case of Unit 2, or
.2644444%, in the case of Common Facilities, of the cost of such Capital
Improvement, the Lessee shall retain title to such undivided interest in
such Capital Improvement.
Immediately upon title to such .7933333%, in the case of Unit
2, or .2644444%, in the case of Cannon Facilities, 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 for all purposes hereof.
(f) Funding of the Cast or Capital Improvements. Before
placing in service any Capital Improvement to Unit 2 or the Common Facilities
the cost of which exceeds $1OO,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 .7933333%, in the case
of Unit 2, or .2644444%, in the case of Common Facilities, of the cost of any
such Capital Improvement, or any other Capital Improvement presented to the
Owner Participant 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, .7933333%, in the case of Unit 2, or .2644444%, in the case of
Common Facilities, 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
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proceeds thereof to pay the applicable percentage of the cost of such Capital
Improvement, subject to satisfaction off 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 .7933332% 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;
(iv) the total amount of all Supplemental Financings
during the Basic Lease Term shall not exceed 7.777778% 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, New York State or New York City tax
purposes, and the Owner Participant and the Lessee shall have
agreed upon the amount and manner of payment of the indemnity
(if any) payable by the Lessee as a consequence of such
supplemental Financing:
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(viii) the Additional Notes shall have a final maturity
date no later than January 15, 2016:
(ix) the Lessee shall have made such representations,
warranties and covenants regarding the tax characteristics of
the Lessor's undivided interest in each Capital Improvement as
the Owner Participant reasonably 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 to support the amortization of the Additional Notes
issued in respect of such Supplemental Financing and to preserve
Met Economic Return;
(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 and 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 have provided such tax indemnities, representations,
warranties1 covenants, opinions, certificates and other
documents as the Owner Participant shall reason-ably request.
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 .2 or any substantial4 part thereof shall suffer
destruction, damage, loss, condemnation, confiscation, theft or seizure for any
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reason whatsoever, such fact shall promptly, and in any case within five
Business Days following 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 AMP? Participation Agreement
relating to damage or destruction or the like to Unit 2 or any portion thereof;
provided, however, that the Lessee shall in no event be obligated to make or
join in any agreement under Section 16.2 of the AN?? Participation Agreement (as
in effect on the date hereof) concerning repairs to or reconstruction of Unit 2.
(c) Payment of Casualty Value. On the Basic Rent Payment Date
next following receipt by the Lessee of a written notice from the Lessor that an
Event of Loss has occurred, 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 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. An Event of Loss shall not be deemed to have occurred unless and
until the Lessor delivers the notice specified in the preceding sentence. 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 2, 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
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(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 the Owner Participant shall have received under
Section 5.2 of the Indenture all amounts required to be paid by the Lessee
pursuant to this Section 9(c) (including interest, if any, thereon pursuant to
Section 3(b) (iii) hereof), 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 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 shall promptly notify the
other thereof (provided that the failure by the Lessor to furnish to the Lessee
the foregoing notification shall not impair the right of the Lessor to exercise
the option referred to below) and, at the Lessor's option, exercisable by
delivery of written notice to the Lessee, on the day (specified in Schedule 2)
of the month next following the month during which such notice is delivered to
the Lessee, the Lessee shall pay to the Lessor 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 installment 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
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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
the Owner Participant shall have received under Section 5.2 of the Indenture all
amounts required to be paid by the Lessee pursuant to this Section 9(d)
(including interest1 if any, thereon pursuant to Section 3(b)(iii)), 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 became 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 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
receipt by the Owner Participant under Section 5.2 of the Indenture of the
payments specified in Section 9(c) or 9(d) and payment by the Lessee of all
other 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.
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(g) Application of Payments on an Event of Loss. Any payments
receivable (without regard to any right at 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, the Owner Trustee or the Owner Participant) 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.
(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 the Undivided Interest or any part thereof not constituting an Event of
Loss shall be applied first to reimburse the Lessee for all amounts expended in
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respect of the repair, replacement or reconstruction of the Undivided Interest
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 tease 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 required to make the
payments specified in Section 9(c) or 9(d), 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
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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 2 or any part thereof shall
name the Lessor (and, to the extent practicable, the Owner Participant) as an
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 2, or any part thereof,
shall include all Indemnities as insureds through an omnibus definition of
"insured" 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, 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 (or it insurance is placed directly by the Lessee, a
certificate signed by the Lessee) showing the separate insurance, if arty, then
maintained by the Lessee with respect to its interest in PVNGS and stating that
no premiums 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
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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) (iii) (2) may be made in reliance upon a similar
schedule provided by 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.
(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 2, the Undivided Interest or the Real Property Interest or the operation of
Unit 2, 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
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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 right of the Indenture Trustee to
any such payments shall be absolute and unconditional and shall not be affected
by any 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, 2016, and ending
oh the later of January 15, 2018 and the end of the Maximum Option Period (the
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renewal Term), during which the Basic Rent payable shall be the rental provided
in Section 3(a)(iii) and one-halt of the rental provided in 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 arid 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 12(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, an Event of Default
shall have occurred and be continuing or an Event of Loss 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 Market 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
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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) Purchase of the Undivided Interest; Payment, Etc. If the
Lessee shall have elected or be required to purchase the Undivided Interest and
the Real Property Interest pursuant to Section 13(b), 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.
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 2 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 2), 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, 1999, and prior to January 15, 2013 (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 an Affiliate of the Lessee)
submitting such bid.
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(b) Right of Lessor to Retain Undivided Interest upon
Termination. If a Termination Notice has been delivered pursuant to Section
14(a), the Lessor may elect to retain, rather than sell, the Undivided Interest
and the Real Property Interest by giving notice to the Lessee and 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 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 amount of all Notes Outstanding on the Termination bate 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
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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 Rant 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
Lessee to obtain bias 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 (but only if such purchaser has obtained all Governmental
Action by the NRC necessary in connection therewith).
(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). My Early Termination Notice may be revoked
by the Lessor at any time on or prior to the Early Termination Date.
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(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
an 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 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 by the Lessee
with the applicable provisions of this Section 14, the obligation of the Lessee
to pay Basic Rent due thereunder for any period after the Early Termination Date
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 AMP?
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 involuntary, 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 rail 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 S
Business Days after the same shall Become due or (z) any
payment of Supplemental Rent (other than Casualty Value,
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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 Sect ion 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 certificates (other than a certificate
of the Lessee) described therein) or 11 of this Facility
Lease: or
(iii) 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
(iv) the Lessee shall fail to perform its agreements set
forth in Section 5(a) hereof; or
(v) the Lessee shall fail to perform or observe any
covenant, condition or agreement (other than covenants,
conditions or agreements 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
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(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 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 or other proceeding shall remain
undismissed or unstayed for a period of 60 consecutive days;
or
(viii) final judgment for the payment of money in excess
of $l,O0O,0O0 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
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which the Lessee's right to receive its Generation 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, in good faith, 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 (or in the
case of any operating lease, an equivalent on the assumption
such lease were a lease required to be capitalized in
accordance with generally accepted accounting principles) is
greater than $20,000,000 ($5,000,000 in the case of any PVNGS
operating lease)) 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
it the Lessee shall have received notice of such failure or a
Responsible Officer of the Lessee shall have actual knowledge
of such failure; or (2) any other default under any agreement
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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 event or a Responsible Officer of the Lessee shall have
actual knowledge of such default or event.
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 or 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
the 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) subject to Applicable Law, enter upon the
PVNGS 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
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;
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(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 in a commercially reasonable manner,
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 an amount equal
to the net proceeds, if any, received by the Lessor from leasing
the Undivided Interest and 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 (iv) of Section 15 (subject, however, to the provisos
to the first sentence of Section 16(c) hereof), the Lessor may,
whether or not the Lessor shall have exercised or shall
thereafter at any time exercise its rights under clause (i),
(ii),
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(iii) or (iv) above, demand, by written notice to the Lessee
specifying a payment data 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 for loss of a bargain and not as
a penalty (in lieu of the Basic Rent due after the Basic Rent
Payment Date 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, in the case
of (D) below, upon receipt of such payment the Lessor shall (or
may prior to the receipt of such payment) Transfer to the
Lessee the Undivided Interest and the Real Property Interest):
(A) an amount equal to the excess, if any, of
(1) Casualty Value, computed as of the Basic Rent
Payment Date specified in such notice, over (2) 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 2) until
the end of the remaining useful life of Unit 2, after
discounting 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
10% per annum;
(B) an amount equal to the excess, if any, of
(1) such Casualty Value over (2) 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 2) as of the Basic Rent Payment Date
specified in such notice;
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(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 2) 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:
or
(D) an amount equal to the higher of (1) the
Casualty Value (Special Casualty Value if the
(pound)vent 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;
(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 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 of the Sale Proceeds under the 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: or
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(vii) in the case of an Event of Default specified in
clause (iv) of Section 15, the Lessor may demand, by written
notice to the Lessee specifying a payment date which shall be
not earlier than the date 30 days after 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 last
payment date, as liquidated damages for loss of a bargain and
not as a penalty, any unpaid Rent due through such last Basic
Rent Payment Date plus an amount (not less than zero) equal to
the Fair Market Sales Value (determined without regard to the
obligation of the Lessee under Section l0(b)(3)(xi) of the
Participation Agreement) of the Undivided interest and the Real
Property Interest (determined on the basis of the actual
condition of Unit 2) determined as of such last Basic Rent
Payment Date (together with interest on such amount at the
interest rate specified in Section 3(b)(iii) from such last
Basic Rent Payment Date to the date of actual payment) and upon
receipt of such payment the Lessor shall (or may prior to the
receipt of such payment) Transfer to the Lessee the Undivided
Interest and the Real Property Interest); provided, however,
that the Lessor may not exercise the foregoing remedy if the
Lessor shall have failed to Transfer the Undivided Interest and
the Real Property Interest to the bidder (which shall not be the
Lessee or an Affiliate of the Lessee) that shall have submitted
the highest cash bid on or before the date on which such Event
of Default arose excluding, however, any such cash bid which the
Lessor or the Owner Participant determines was not submitted in
good faith, or as to which the bidder fails to certify to the
Lessor such information as the Lessor or Owner Participant may
reasonably request in order to determine whether or not such bid
was submitted in good faith (and the Lessor agrees that it will,
if and to the extent so requested by the Lessee on or after the
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date 90 days preceding such last Basic Rent Payment Date, use
reasonable efforts (at the expense of the Lessee) for a period
ending on the day 90 days after such last Basic Rent Payment
Date, to find a Person willing to submit such cash bid;
provided, however, that the failure of the Lessor to do so
shall not relieve the Lessee of its obligations under this
clause (vii)).
(b) No Release. No rescission 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; provided, however, that
notwithstanding anything to the contrary set forth in this Facility Lease, the
remedy set forth in section 16(a) (vii) shall be the sole and exclusive remedy
under this Section 16 in the case of an Event of Default specified in clause
(iv) of Section 15, unless the Lessee is in default of its payment obligations
under Section 16(a) (vii), in which case the Lessor may exercise its other
remedies under Section 16(a); (except that the maximum amount payable by the
Lessee in the event of the exercise by the Lessor of any of the remedies
provided for in Section 16 (a) (v) or (vi) shall not exceed the total amount
payable by the Lessee under Section 16(a) (vii) minus the amount provided in
subclause (2) of clause (A), (S) or (C) of such Section 16(a) (v) , if the
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Lessor elects a remedy specified in said clause (A) , (S) or (C) , or the
deficiency referred to in Section 16(a)(vi), if the Lessor elects the remedy
specified in section 16 (a) (vi) hereof) . 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 2 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.
(d) Exercise of Other Rights or Remedies. In addition to all
other rights and remedies provided in this Section 16, the Lessor may, except to
the extent expressly limited by provisions of this Section 16, 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(iii), 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,
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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 due 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 indenture1 the Lessor shall (so long as
no Default or Event of Default shall have occurred and be continuing) 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 the Owner Participant shall have received under Section 5.2
of the indenture all amounts required to be paid by the Lessee pursuant to this
paragraph (e) (including interest, if any, thereon pursuant to Section
3(b)(iii)), 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 (with signed receipt of
an officer of the Owner Participant in the case of a delivery to the Owner
Participant) or by means of telex, telecopy, or other wire transmission, or
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mailed by registered or certified mail, or delivered by express delivery
service, 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 l8. 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.
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 Owned 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 2), with each contributor to receive a percentage of such
Generation Entitlement Share equal to the percentage of the cure contributed
thereby.
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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 or 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 the respective
percentages of the Real Estate investment for the applicable period set forth or
derived from the respective percentages of Facility Cost in clauses (i), (ii)
and (iii), respectively, of Section 3(a) hereof (which rent is incorporated as
part of Basic Rent payable pursuant to Section 3(a) hereof).
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.
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(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
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 2 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 writ-ten 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 unenforceability 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 elsewhere 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"
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6091.CHASEU2.LEASE.47:1
<PAGE>
of this Facility Lease. To the extent that this Facility Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Facility
Lease may be created through the transfer or possession of any counterpart other
than the "Original".
(f) Governing raw. 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 hereto.
(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, warranties, 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 r~8 or any successor in trust or the Owner
Participant on account of any representation, 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 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
-48-
6091.CHASEU2.LEASE.47:1
<PAGE>
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 Chase Manhattan Realty Leasing
Corporation, a New York corporation whose address is One Chase Manhattan Plaza
(20th Floor), flew York, New York 10081, Attention of Leasing Administrator. 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.
-49-
6091.CHASEU2.LEASE.47:1
<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 RANK OF BOSTON, not
in its individual capacity, but solely as
Owner Trustee under a Trust Agreement,
dated as of December 15, 1986, with Chase
Manhattan Realty Leasing Corporation
By
---------------------------------
Assistant Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
---------------------------------
Senior Vice President and
Chief Financial Officer
6091.CHASEU2.LEASE.47:1
<PAGE>
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 15th
day of December, 1986, by A.J. Robison, Senior Vice President and Chief
Financial Officer of Public Service Company of New Mexico, a New Mexico
corporation, on behalf of the corporation.
/s/ Delia T. Santiago
-----------------------
Notary Public
Delia T. Santago
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 15th
day of December, 1986, by Martin P. Henry, Assistant Vice President of The First
National Bank of Boston, a national banking association, on behalf of the
banking association as owner Trustee under that certain Trust Agreement dated as
of December 15, 1986.
/s/ David A. Spivak
------------------------
Notary Public
David A. Spivak
Notary Public, State of New York
No. 31-4693488
Qualified in New York County
Commission Expires March 10, 1987
6091.CHASEU2.LEASE.47:1
<PAGE>
SCHEDULE 1
TO FACILITY
LEASE
SCHEDULE OF CASUALTY VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN87 106.53611
15JUL87 105.53335
15JAN88 107.07918
15JUL88 106.17858
15JAN89 109.42323
15JUL89 108.43402
15JAN90 111.01369
15JUL90 109.97758
15JAN91 112.00086
15JUL91 110.94964
15JAN92 112.38274
15JUL92 111.28104
15JAN93 112.14605
15JUL93 110.95717
15JAN94 111.21117
15JUL94 109.88662
15JAN95 109.49132
15JUL95 108.10138
15JAN96 107.43704
15JUL96 106.11823
15JAN97 105.42555
15JUL97 104.04483
15JAN98 103.23626
15JUL98 101.76861
15JAN99 100.82360
15JUL99 99.25609
15JAN100 98.15967
15JUL100 96.47795
15JAN101 95.22783
15JUL101 93.45710
<PAGE>
SCHEDULE OF CASUALTY VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN102 92.07347
15JUL102 90.21857
15JAN103 88.71529
15JUL103 86.77283
15JAN104 85.15757
15JUL104 83.11902
15JAN105 81.38095
15JUL105 79.23904
15JAN106 77.36934
15JUL106 75.11630
15JAN107 73.10563
15JUL107 70.73318
15JAN108 68.57156
15JUL108 66.07099
15JAN109 63.74791
15JUL109 61.10991
15JAN110 58.61418
15JUL110 55.82895
15JAN111 53.14878
15JUL111 50.20591
15JAN112 47.32863
15JUL112 44.21696
15JAN113 41.12929
15JUL113 37.83716
15JAN114 34.52492
15JUL114 31.83716
15JAN115 27.48785
15JUL115 23.79647
15JAN116 20.00000
<PAGE>
SCHEDULE 2
TO
FACILITY LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15JAN87 106.53255 15JUN90 109.50229
15FEB87 107.01607 15JUL90 109.59771
15MAR87 107.50825 15AUG90 109.69058
15APR87 106.50559 15SEP90 109.19018
15MAY87 106.87841 15OCT90 109.27162
15JUN87 105.15431 15NOV90 109.35606
15JUL87 105.50694 15DEC90 109.32859
15AUG87 105.84743
15SEP87 105.06266 15JAN91 111.52602
15OCT87 105.38322 15FEB91 111.59608
15NOV87 105.71011 15MAR91 111.66906
15DEC87 105.77597 15APR91 111.24112
15MAY91 111.29506
15JAN88 107.02636 15JUN91 110.31900
15FEB88 107.28351 15JUL91 110.36054
15MAR88 107.54606 15AUG91 110.39851
15APR88 106.86252 15SEP91 109.92992
15MAY88 107.10110 15OCT91 109.95564
15JUN88 105.85414 15NOV91 109.98371
15JUL88 106.08006 15DEC91 109.92689
15AUG88 106.29372
15SEP88 105.72306 15JAN92 111.67582
15OCT88 105.92405 15FEB92 111.68749
15NOV88 106.12965 15MAR92 111.70138
15DEC88 106.16281 15APR92 111.34764
15MAY92 111.34349
15JAN89 109.27545 15JUN92 110.45252
15FEB89 109.45576 15JUL92 110.43700
15MAR89 109.64037 15AUG92 110.41618
15APR89 109.04760 15SEP92 109.97484
15MAY89 109.21337 15OCT92 109.94272
15JUN89 108.06254 15NOV92 109.91229
15JUL89 108.21768 15DEC92 109.82333
15AUG89 108.35955
15SEP89 107.82054 15JAN93 111.16133
15OCT89 107.95166 15FEB93 111.11368
15NOV89 108.08639 15MAR93 111.06757
15DEC89 108.08146 15APR93 110.77365
15MAY93 110.70939
15JAN90 110.72523 15JUN93 109.88905
15FEB90 110.84723 15JUL93 109.81248
15MAR90 110.97275 15AUG93 109.72935
15APR90 110.46123 15SEP93 109.30353
15MAY90 110.56836 15OCT93 109.20803
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15NOV93 109.11348 15MAR97 102.43914
15DEC93 108.98371 15APR97 102.22241
15MAY97 102.00569
15JAN94 109.90295 15JUN97 101.45723
15FEB94 109.78866 15JUL97 101.24050
15MAR94 109.67514 15AUG97 101.01314
15APR94 109.43114 15SEP97 100.69041
15MAY94 109.29832 15OCT97 100.46305
15JUN94 108.54183 15NOV97 100.23570
15JUL94 108.39558 15DEC97 100.00834
15AUG94 108.24139
15SEP94 107.82253 15JAN98 100.17698
15OCT94 107.65470 15FEB98 99.93844
15NOV94 107.48698 15MAR98 99.69990
15DEC94 107.30680 15APR98 99.46136
15MAY98 99.22283
15JAN95 107.81390 15JUN98 98.67364
15FEB95 107.63082 15JUL98 98.43510
15MAR95 107.44774 15AUG98 98.18483
15APR95 107.25645 15SEP98 97.84920
15MAY95 107.07337 15OCT98 97.59892
15JUN95 106.40136 15NOV98 97.34865
15JUL95 106.21828 15DEC98 97.09838
15AUG95 106.02733
15SEP95 105.65088 15JAN99 97.21230
15OCT95 105.45994 15FEB99 96.94969
15NOV95 105.26899 15MAR99 96.68708
15DEC95 105.07804 15APR99 96.42447
15MAY99 96.16186
15JAN96 105.34471 15JUN99 95.61030
15FEB96 105.14554 15JUL99 95.34769
15MAR96 104.94637 15AUG99 95.07212
15APR96 104.74719 15SEP99 94.72130
15MAY96 104.54802 15OCT99 94.44573
15JUN96 103.99654 15NOV99 94.17016
15JUL96 103.79737 15DEC99 93.89459
15AUG96 103.58961
15SEP96 103.27654 15JAN100 93.95063
15OCT96 102.06878 15FEB100 93.66145
15NOV96 102.86102 15MAR100 93.37227
15DEC96 102.65326 15APR100 93.08309
15MAY100 92.79391
15JAN97 102.87260 15JUN100 92.23815
15FEB97 102.65587 15JUL100 91.94897
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15AUG100 91.64572 15JAN104 78.10052
15SEP100 91.27744 15FEB104 77.72275
15OCT100 90.97585 15MAR104 77.34498
15NOV100 90.67428 15APR104 76.96722
15DEC100 90.37273 15MAY104 76.58945
15JUN104 76.02017
15JAN101 90.37535 15JUL104 75.65062
15FEB101 90.06210 15AUG104 75.26080
15MAR101 89.74885 15SEP104 74.83520
15APR101 89.43560 15OCT104 74.44539
15MAY101 89.12343 15NOV104 74.05557
15JUN101 88.56778 15DEC104 73.66576
15JUL101 88.26182
15AUG101 87.93741 15JAN105 73.49763
15SEP101 87.55829 15FEB105 73.09685
15OCT101 87.23403 15MAR105 72.69607
15NOV101 86.90977 15APR105 72.29529
15DEC101 86.58552 15MAY105 71.89451
15JUN105 71.31376
15JAN102 86.53183 15JUL105 70.92151
15FEB102 86.19716 15AUG105 70.50794
15MAR102 85.86248 15SEP105 70.06087
15APR102 85.52780 15OCT105 69.64729
15MAY102 85.19313 15NOV105 69.23372
15JUN102 84.63866 15DEC105 68.82015
15JUL102 84.31128
15AUG102 83.96535 15JAN106 68.61405
15SEP102 83.57514 15FEB106 68.18884
15OCT102 83.22921 15MAR106 67.76363
15NOV102 82.88328 15APR106 67.33842
15DEC102 82.53735 15MAY106 66.91321
15JUN106 66.32021
15JAN103 82.43880 15JUL106 65.90395
15FEB103 82.08273 15AUG106 65.46515
15MAR103 81.72665 15SEP106 64.99524
15APR103 81.37057 15OCT106 64.55645
15MAY103 81.01449 15NOV106 64.11765
15JUN103 80.45596 15DEC106 63.67885
15JUL103 80.10784
15AUG103 79.74041 15JAN107 63.43265
15SEP103 79.33501 15FEB107 62.98150
15OCT103 78.96758 15MAR107 62.53034
15NOV103 78.60015 15APR107 62.07918
15DEC103 78.23272 15MAY107 61.62802
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15JUN107 61.02195 15NOV110 40.33502
15JUL107 60.58029 15DEC110 39.77883
15AUG107 60.11471
15SEP107 59.62051 15JAN111 39.34802
15OCT107 59.15492 15FEB111 38.77615
15NOV107 58.68934 15MAR111 38.20428
15DEC107 58.22375 15APR111 37.63242
15MAY111 37.06055
15JAN108 57.93519 15JUN111 36.39286
15FEB108 57.45650 15JUL111 35.83382
15MAR108 56.97781 15AUG111 35.24363
15APR108 56.49912 15SEP111 34.63599
15MAY108 56.02043 15OCT111 34.04579
15JUN108 55.40040 15NOV111 33.45560
15JUL108 54.93186 15DEC111 32.86541
15AUG108 54.43786
15SEP108 53.91784 15JAN112 32.38166
15OCT108 53.42383 15FEB112 31.77483
15NOV108 52.92982 15MAR112 31.16799
15DEC108 52.43581 15APR112 30.56116
15MAY112 29.95433
15JAN109 52.10246 15JUN112 29.26861
15FEB109 51.59453 15JUL112 28.67581
15MAR109 51.08660 15AUG112 28.04955
15APR109 50.57867 15SEP112 27.40897
15MAY109 50.07074 15OCT112 26.78271
15JUN109 49.43582 15NOV112 26.15644
15JUL109 48.93884 15DEC112 25.53018
15AUG109 48.41465
15SEP109 47.86718 15JAN113 24.99040
15OCT109 47.34299 15FEB113 24.34648
15NOV109 46.81881 15MAR113 23.70257
15DEC109 46.29462 15APR113 23.05866
15MAY113 22.41475
15JAN110 45.91393 15JUN113 21.70984
15FEB110 45.37498 15JUL113 21.08124
15MAR110 44.83603 15AUG113 20.41669
15APR110 44.29708 15SEP113 19.74111
15MAY110 43.75813 15OCT113 19.07657
15JUN110 43.10734 15NOV113 18.41202
15JUL10 42.58022 15DEC113 17.74748
15AUG110 42.02403
15SEP110 41.44741 15JAN114 17.14841
15OCT110 40.89121 15FEB114 16.46511
<PAGE>
SCHEDULE OF SPECIAL CASUALTY VALUES
BASIC RENT PERCENTAGE OF BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST PAYMENT DATE FACILITY COST
- ------------ ------------- ------------ -------------
15MAR114 15.78181
15APR114 15.09851
15MAY114 14.41521
15JUN114 13.68984
15JUL114 13.02337
15AUG114 12.31816
15SEP114 11.60536
15OCT114 10.90016
15NOV114 10.19495
15DEC114 9.48974
15JAN115 8.82800
15FEB115 8.10291
15MAR115 7.37781
15APR115 6.65272
15MAY115 5.92763
15JUN115 5.18048
15JUL115 4.47388
15AUG115 3.72551
15SEP115 2.97317
15OCT115 2.22480
15NOV115 1.47643
15DEC115 0.72805
15JAN116 0.00000
<PAGE>
Schedule 3
to
Facility Lease
SCHEDULE OF TERMINATION VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN87 106.53611
15JUL87 105.53335
15JAN88 107.07918
15JUL88 106.17858
15JAN89 109.42323
15JUL89 108.43402
15JAN90 111.01369
15JUL90 109.97758
15JAN91 112.00086
15JUL91 110.94964
15JAN92 112.38274
15JUL92 111.28104
15JAN93 112.14605
15JUL93 110.95717
15JAN94 111.21117
15JUL94 109.88662
15JAN95 109.49132
15JUL95 108.10138
15JAN96 107.43704
15JUL96 106.11823
15JAN97 105.42555
15JUL97 104.04483
15JAN98 103.23626
15JUL98 101.76861
15JAN99 100.82360
15JUL99 99.25609
15JAN100 98.15967
15JUL100 96.47795
15JAN101 95.22783
15JUL101 93.45710
<PAGE>
SCHEDULE OF TERMINATION VALUES
BASIC RENT PERCENTAGE OF
PAYMENT DATE FACILITY COST
- ------------ -------------
15JAN102 92.07347
15JUL102 90.21857
15JAN103 88.71529
15JUL103 86.77283
15JAN104 85.15757
15JUL104 83.11902
15JAN105 81.38095
15JUL105 79.23904
15JAN106 77.36934
15JUL106 75.11630
15JAN107 73.10563
15JUL107 70.73318
15JAN108 68.57156
15JUL108 66.07099
15JAN109 63.74791
15JUL109 61.10991
15JAN110 58.61418
15JUL110 55.82895
15JAN111 53.14878
15JUL111 50.20591
15JAN112 47.32863
15JUL112 44.21696
15JAN113 41.12929
15JUL113 37.83716
15JAN114 34.52492
15JUL114 31.03977
15JAN115 27.48785
15JUL115 23.79647
15JAN116 20.00000
<PAGE>
SCHEDULE 4
to
FACILITY LEASE
REAL PROPERTY INTEREST DESCRIPTION
The Real Property interest is a (i) .2333334% undivided
interest in the land described in r below, a (ii) .2644444% undivided interest
in the rights and interests described in III below, and (iii) a .2644444%
undivided interest in the rights and interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 3: The East half of Section Four (4), Township One (1) South, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 4: The West half of Section Twenty-six (26), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of Section 27.
PARCEL NO. 6: The Southeast quarter of Section Twenty-eight (28), Township One
(1) North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
6091.CHASEU2.LEASE.47:1
<PAGE>
PARCEL NO. 7: The East half of Section Thirty-three (33), Township One (1)
North, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 8: All of Section Thirty-four. (34) Township One (1) Worth, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township One (1) Worth, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGINNING at the Southeast corner of the said East half of the
Southwest quarter of Section 23; thence West, an assumed bearing along
the South line of the said East half of the Southwest quarter of Section
23, for a distance of 762.04 feet; thence North 0 degrees 03 minutes 39
seconds West; parallel to the East line of the said East half of the
Southwest quarter of Section 23, for a distance of i946.46 feet to a
point on the South right-of-way line of the 200 foot wide
HASSAYAMPA-SALOME HIGHWAY, as recorded in Book 12 of Road Maps, Page 82,
Maricopa County Recorder, Maricopa County, Arizona; thence continuing
North 0 degrees 03 minutes 39 seconds West for a distance of 234.15 feet
to a point on the North right-of-way line of said highway; thence South
-2-
6091.CHASEU2.LEASE.47:1
<PAGE>
58 degrees 43 minutes 35 seconds East, along said North right-of-way
line for a distance of 892.17 tact to a point on the said East line of
the East half of the Southwest quarter of Section 23; thence South 0
degrees On minutes 39 seconds East, along said East line for a distance
of 234.15 feet to a point on the said South right-of-way line; thence
continuing South 0 degrees On minutes 39 seconds East for a distance of
1483.31 feet to the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 52, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMPA PUMPING STATION AND EFFLUENT PIPELINE
All real property, leases, licenses, easements, rights-of-way
and other property held by Title USA Company of Arizona Trust No. 530
established by that certain Trust Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.
III. MISCELLANOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the AMP?
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the Nuclear Plant Site (as
defined in the ANPP Participation Agreement).
-3-
6091.CHASEU2.LEASE.47:1
<PAGE>
SCHEDULE 5
to
FACILITY LEASE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) .7933333% undivided interest
in and to the property described under A below and (ii) a .2644444% undivided
interest in and to the property described in B below.
A. Unit 2 cc the Palo Verde Nuclear Generating Station (PVNGS),
located in Maricopa County, Arizona, approximately 55 miles west of the City of
Phoenix, Arizona, and approximately 16 miles west of the City of Buckeye,
Arizona, consisting of:
I. Unit 2 Combustion Engineering "System 80" pressurized water
reactor nuclear steam supply system (the NSSS). The NSSS is
comprised of a reactor vessel containing 241 fuel assemblies
with approximately 100 torn of enriched uranium (fuel
assemblies, however, are not part of Unit 2 and are not included
in the Undivided Interest being sold) two steam generators,
four reactor coolant pumps and various additional systems and
subsystems. The licensed thermal rating of the NSSS
is 3800 MW.
II. Unit 2 GE TC6F-43, 1800 RPM tandem-compound, six flow, reheat
turbine-generator including turbine, generator, moisture
separator-reheater, exciter, controls, and auxiliary subsystems.
The turbine-generator is conductor cooled and rated at 1,554 MVA
at 24,000 V, 3 phase, 60 Hz, 1.5 in Hg ABS back pressure, and
approximately 1,363 MW maximum gross electric output.
III. Unit 2 146 ft. inside diameter,steel-lined, prestressed concrete
cylindrical containment building with a hemispherical dome
designed for 60 psig. The containment building houses the
reactor system.
6091.CHASEU1.LEASE.47:1
<PAGE>
IV. Unit 2 auxiliary systems and equipment including engineered
safeguards systems, reactor auxiliary systems and
turbine-generator auxiliary systems associated with items r, II,
and III above, extending to and including the unit 2 start-up
transformer.
V. Unit 2 cooling tower system consisting of three (3) mechanical
draft cooling towers, including a closed cycle circulating water
system, make-up water systems and essential spray ponds.
VI. Unit 2 radioactive waste treatment system, including liquid,
gaseous, and solid waste subsystems, controls, instrumentation,
storage, handling and shipment facilities.
VII. Unit 2 emergency diesel-generator system, including a
diesel-generator building which contains two diesel generators1
fuel oil. systems, storage tanks, control and instrumentation
systems and other equipment.
VIII. Unit 2 internal communication systems, including associated
interconnections and computer data links.
BUT EXCLUDING:
I. Nuclear fuel for Unit 2, including spare fuel assemblies.
II. Spare Parts (Unit 2).
III. Transmission facilities (including any and all facilities
and equipment providing interconnection between the Unit 2
turbine generator and the ANPP High Voltage Switchyard,
including step-up transformers and standby equipment and
systems).
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6091.CHASEU2.LEASE.47:1
<PAGE>
IV. Oil and diesel fuel inventories (Unit2).
B. All PVNGS common facilities, INCLUDING BUT NOT LIMITED TO:
I. Surveillance Systems, including associated radioactive
monitoring systems and equipment.
II. Water treatment facilities and transport Systems for
supply of waste water effluent.
III. Warehouse and related storage facilities and equipment.
BUT EXCLUDING:
I. Nuclear fuel, including spare fuel assemblies.
II. All transmission and ANPP High Voltage Switchyard facilities.
III. Administration Building.
IV. Administration Annex Building.
V. Technical Support Center.
VI. Visitor Center.
VII. External communication Systems and equipment, including
associated interconnections and computer data links.
VIII. Parking lot improvements, road improvements, fencing and dikes.
IX. Spare parts (common facilities)
X. Simulator.
XI. Oil and diesel fuel inventories.
XII. Real property, beneficial interest in Title USA Company of
Arizona Trust No. 530, and Project Agreement interests described
in Schedule 4.
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6091.CHASEU2.LEASE.47:1
<PAGE>
When Recorded, Return to: Greg R. Nielsen, Esq.
Snell & Wilmer
3100 Valley Bank Canter
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS AMENDED BY THIS
AMENTMENT NO.1 THERETO HAVE BEEN ASSIGNED TO, AND ARE TO A SECURITY IN FAVOR OF,
CHEMICAL BANK, AS INDEUTURE, TRUSTEE UNDER A ASSIGNMENT OF RENTS DATED AS OF
DECEMBER 15,1986. THIS AMENDMENT NO. 1 HAS BEEN EXECUTED IN SERVERAL
COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO.1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO.1
Dated am of April 8, 1987
to
FACILITY LEASE (Unit 2)
Dated as of December 15, 1986
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 15, 1986,
with Chase Manhattan Realty
Leasing Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease Recorded on December 17, 1986, as Instrument No.
86-695936, in Maricopa County Recorder's Office.
================================================================================
6091.CHASEU2.LEASE.203:1.
<PAGE>
AMENDMENT NO. 1, dated as of April 8, 1987 (Amendment No. 1),
to the Facility Lease dated as of December 15, 1986, between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, not in its individual capacity1
but solely as Owner Trustee under a Trust Agreement, dated as of December 15,
1986, with Chase Manhattan Realty Leasing Corporation a New York corporation
(the lessor), and PUBUC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(the Lessee).
WITNESSETH
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 15, 1986 (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. 1 pursuant to the Request, Instruction and Consent effective on April 8,
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:
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 term in Appendix A to the Facility Lease.
6091.CHASEU2.LEASE.203:1
<PAGE>
SECTION 2. Amendments.
(a) A new Section 8(g) of the Facility Lease is inserted
therein, to read in its entirety as follows:
"(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, 2015, the Lessee shall initiate the Appraisal
Procedure to determine the remaining Economic Useful Life of Unit 2 as
of July 15, 2015 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 2 as of the date six months prior to the end of the Renewal
Term. The Lessee and the Lessor agree to use their beet efforts to
ensure that such determination of remaining economic useful life is made
no later than July 15, 2015 (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) "
(b) Section l5(iv) of the Facility Lease is hereby amended to
read in its entirety as follows:
(iv) (1) the Lessee shall fail to perform its agreements sat
forth in section 5(a) hereof or (2) the remaining Economic Useful Life
of Unit 2, as determined under Section 8(g) if required thereby to be so
determined, shall be (x) as of the date six months prior to the end of
the Basic Lease Term, less than five and one-half years or (y) as of the
date six months prior to the end of the Renewal Term, three and one-half
years or"
-2-
6091.CHASEU2.LEASE.203:1
<PAGE>
(c) Section 16(a) (vii) of the Facility Lease is hereby
amended to read in its entirety as follows:
"(vii) in the case of an Event of Default specified in clause
(iv) of Section 15, the Lessor may demand, by written notice to the
Lessee specifying a payment date which shall be (A) in the case of an
Event of Default specified in subclause (1) of said clause (iv), not
earlier than the date 30 days after the last Basic Rent Payment Date of
the Lease Term, and (B), in the case of an Event of Default specified in
subclause (2) of said clause (iv), 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 payment date, as liquidated damages for loss
of a bargain and not as a penalty, any unpaid Rent due through such last
Basic Rent Payment Date plus an amount (not less than zero) equal to the
Fair Market Sales Value (determined without regard to the obligation of
the Lessee under Section l0 (b) (3) (xi) of the Participation Agreement)
of the Undivided Interest and the Real Property Interest (determined on
the basis of the actual condition of Unit 2) determined as of such last
Basic Rent Payment Date (together with interest on such amount at the
interest rate specified in Section 3 (b) (iii) from such last Basic Rent
Payment Date to the date of actual payment) and upon receipt of such
payment the Lessor shall (or may prior to the receipt of such payment)
Transfer to the Lessee the Undivided interest and the Real Property
Interest); provided, however, that the Lessor may not exercise the
foregoing remedy if the Lessor shall have failed to Transfer the
Undivided interest and the Real Property interest to the bidder (which
shall not be the Lessee or an Affiliate of the Lessee) that shall have
submitted the highest cash bid on or before the date on which such Event
of Default arose excluding, however, any such cash bid which the Lessor
or the owner Participant determines was not submitted in good faith, or
-3-
6091.CHASEU2.LEASE.203:l
<PAGE>
as to which the bidder fails to certify to the Lessor such information
as the Lessor or owner Participant may reasonably request in order to
determine whether or not such bid was submitted in good faith (and the
Lessor agrees that it will, if and to the extent so requested by the
Lessee on or after the date 90 days preceding such last Basic Rent
Payment Date, use reasonable efforts (at the expense of the Lessee) for
a period ending on the day 90 days after such last Basic Rent Payment
Date, to find a Person willing to submit such cash bid; provided,
however, that the failure of the Lessor to do so shall not relieve the
Lessee of its obligations under this clause (vii))."
(d) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
"Decommissioning shall mean the decommissioning and retirement
from service of Unit 2, and the related possession, maintenance and
disposal of radioactive material used in or produced incident to the
possession and operation of Unit 2, including, without limitation, (i)
placement and maintenance of Unit 2 in a state of protective storage,
(ii) in-place entombment and maintenance of Unit 2, (iii) dismantlement
of Unit 2, (iv) any other form of decommis5ioning and retirement from
service required by or acceptable to the NRC and (V) all activities
undertaken incident to the implementation thereof and to the obtain-in;
of NRC authority therefor, including, without limitation, maintenance,
storage, custody, removal, decontamination, and disposition of
materials, equipment and fixtures, razing of Unit 3, removal and
disposition of debris from the PVNGS Site, and restoration of the PVNGS
site related to Unit 2 for unrestricted use."
(e) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
-4-
6091.CHASEU2.LEASE.203:1
<PAGE>
Decommissioning Costs shall mean all costs, liabilities and
expenses relating or allocable to, or incurred in connection with, the
Decommissioning of Unit 2, including, without limitation, (i) any and
all costs of activities undertaken to terminate NRC licensing authority
and requirements to own, operate and possess Unit 2 and to possess
radioactive material used in or produced incident to the possession and
operation of Unit 2r and (ii) any and all costs of activities
undertaken, prior to termination of all NRS licensing authority and
requirements with respect to Unit 2 and the radioactive material used in
or produced incident to the possession and operation of Unit 2, to
possess, maintain, and dispose of radioactive material used in or
produced incident to the possession and operation of Unit 2."
(f) A new definition is hereby added to Appendix A to the
Facility Lease, to read in its entirety as follows:
Economic Useful Life shall mean that period (commencing on the
date as of which the determination of Economic Useful Life is to be made
as provided in Section 8(g) of the Facility Lease and ending on the date
upon which either of the states of affairs described in clauses (i) and
(ii) below ceases to apply, or can reasonably be expected to cease to
apply, to Unit 2) during which (i) Unit 2 will be useful to, and usable
by, any owner or lessee thereof as a facility for the generation of
electric power and (ii) Unit 2 is an economic and commercially practical
facility for the generation of electric power capable of producing
(after taking into account costs of capital) a reasonable economic
return to the owner thereof. For the purposes of determinations under
clauses (i) and (ii) above, the following factors, among others, shall
be taken into account (as such factors obtain on the date of
determination and as such factors are reasonably expected to obtain in
-5-
6091.CHASEU2.LEASE.203:1
<PAGE>
the future): (a) provisions of the ANPP Project Agreements (including,
without limitation, the ANPP Participation Agreement and the Material
Project Agreements (or substitutes for such Material Project Agreements
in effect on the date of determination)); (b) the actual condition and
performance of Unit 2; (c) the actual condition and performance of such
other facilities constituting PVNGS (including, without limitation, the
Common Facilities) as are integral to the operation of Unit 2; (4) the
actual condition of, and access of the ANPP Participants to, the ANPP
Switchyard and such other transmission facilities 15 are available and
necessary to permit the transmission of the maximum amount of power
generated by PVNGS; (e) the cost of obtaining, handling, storing and
disposing of nuclear fuel for Unit 2; (f) the projected coat (including,
without limitation, costs attributable to obligations to fund any
reserve fund maintained (or funded) by licensed owners and/or lessees of
Unit 2 to the extent dedicated to (or attributable to and freely
available with respect to) Unit 2 (the Unit 2 Fund)) or the
Decommissioning or retirement from service of Unit 2 including, without
limitation, Decommissioning Costs (taking into account the balance (plus
projected investment earnings thereon) of the Unit 2 Fund); (g) the cost
of Capital Improvements to Unit 2 then planned to be made, or reasonably
expected to be made; (h) the cost of acquiring or leasing the Unit 2
Retained Assets; (i) the current status of all Governmental Action with
respect to Unit 2 (including, without limitation, the License) required
to permit licensed owners and/or lessees to possess and (in the case of
the Operating Agent) to operate Unit 2 and such other facilities
constituting PVNGS (including, without limitation, the Common
Facilities) as are integral to the operation of Unit 2; and (j) the
relative cost of producing an amount of electric power and energy
equivalent to the generating capacity of Unit 2 from other facilities
then available in the region serviced, or reasonably expected to be
serviced, by PVNGS."
-6-
6091.CHASEU2.LEASE.203:1
<PAGE>
(e) Paragraph (B) (a) of the definition of "Acceptable Change"
set forth in Appendix A to the Facility Lease is hereby amended to read in its
entirety as follows:
"(c) the amount payable by all licensees of a single nuclear
facility in respect of such facility in any one year and with respect to
any one "nuclear incident" under any deferred premium or similar plan
required by Applicable Law shall not exceed $36 million (subject to
adjustment as provided in subclause (y) of the preceding clause (b))."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amendments 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. 1 may be
executed in any number of counterpart 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. 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.
(d) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One Chase
Manhattan Plaza, New York, New York 10081. 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.
-7-
6091.CHASEU2.LEASE.203:1
<PAGE>
(e) Amendment No. 1. The single executed original 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"
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".
-8-
6091.CHASEU2.LEASE.203:1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to Facility raise to be duly executed 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 15, 1986, with
Chase Manhattan Realty Leasing
Corporation
By
-------------------------------
Assistant Cashier
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By
------------------------------
Vice President and
Corporate Controller
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6091.CHASEU2.LEASE.203:l
<PAGE>
State of New Mexico )
) ss:
County of Bernalillo )
The foregoing instrument was acknowledged before me this 8th
day of April, 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 Massachusetts )
) ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 8th
day of April, 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 Owner Trustee under the Trust Agreement dated as of
December 15, 1985 with Chase Manhattan Realty Leasing Corporation.
/s/ Carol Malley
-------------------
Notary Public
CAROL MALLEY
Notary Public
My commission Expires January 28,1994
609l.CHASEU2.LEASE.203:l
EMPLOYMENT TERMINATION AND RELEASE AGREEMENT
FOR
M. PHYLLIS BOURQUE
THIS EMPLOYMENT TERMINATION AND RELEASE AGREEMENT FOR M. PHYLLIS
BOURQUE ("the "Agreement") by and between the Public Service Company of New
Mexico, a New Mexico corporation, (the "Company") and M. PHYLLIS BOURQUE
("Employee"), is effective as of the date Employee signs the Agreement as set
forth below.
R E C I T A L S
WHEREAS, Employee has been continuously employed by the Company since
March 2, 1987.
WHEREAS, Employee is resigning from the Company effective December 24,
1996 and is also resigning from all other positions she holds with Company, or
its affiliates (including any affiliated entity over which the Company, directly
or indirectly, has a controlling interest (an "Affiliate"));
WHEREAS, the parties desire to compromise all claims and disputes that
may currently exist between them; and
WHEREAS, with respect to the foregoing, the Company has agreed to
provide Employee with severance benefits, pursuant to the following terms and
conditions.
NOW, THEREFORE, in consideration of the promises and benefits set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the parties hereto, it is hereby agreed as
follows:
1. Employee's Termination. Employee is resigning from the Company and
hereby resigns from any and all other positions she currently holds with Company
and Affiliates thereof, including all officer, committee, and director positions
currently held with such entities, such termination and resignations to be
effective as of December 24, 1996 (the "Termination Date").
2. Severance Benefits. Company agrees to provide Employee with
severance benefits equal to Senior Management Plan severance benefits as set
forth in the PNM Non-Union Severance Pay Plan (the "Severance Plan") as follows:
(a) Severance Pay. Severance Pay totaling $208,964.15.
(b) Placement Assistance. Employee shall also receive
placement assistance benefits by reimbursement of her placement assistance
expenses during the twelve (12) month period following the Termination Date. The
amount of such reimbursement shall not exceed five percent (5%) of Employee's
base salary, for a total reimbursement not to exceed $6,750. Placement
assistance shall include, but shall not be limited to: (i) out-of-town travel
(i.e., airfare, mileage, rental cars, lodging and meals), (ii) services for out
placement, (iii) resume preparation and mailing, and (iv) recruitment or
employment agencies fees.
1
<PAGE>
(c) Health Care Coverage. Employee shall receive Health Care
Benefits for the next twelve (12) calendar months immediately following
Employee's Termination Date, with the Company paying for all such Health Care
Benefits for Employee and her enrolled eligible dependents on such terms and
conditions as was provided by the Company immediately prior to the Termination
Date. Employee will not be allowed to change her level of benefits (including
the elected family coverage) during such twelve (12) month period. If Employee
was receiving a monthly refund immediately prior to her Termination Date due to
the elected level of Health Care Benefits, she will continue to receive such
refund during such twelve (12) month period. If Employee was required to
contribute to the monthly cost of the Health Care Benefits (e.g., by payroll
withholding), she will be required to continue making any applicable monthly
premium payments to retain the level of coverage being provided immediately
prior to such Termination Date. "Health Care Benefits" as used herein shall mean
the medical and dental benefits provided to Employee under the PNM Benefit Trust
and Master Plan, maintained by the Company or a health maintenance organization
benefits sponsored by the Company, although the Company reserves the right from
time to time, in its absolute and sole discretion, to amend such plans, in any
and all respects, including the right to reduce or change the level of benefits
provided thereunder, or to provide alternative forms of benefits. The Health
Care Benefits provided hereunder for the first six (6) month period shall be tax
free, whereas the second six (6) month period (i) shall be a taxable benefit to
Employee and (ii) shall reduce by six (6) months the available Consolidated
Omnibus Budget Reconciliation Act ("COBRA") medical continuation coverage period
available to Employee.
(d) Insurance Benefits. Term life insurance, accidental death and
dismemberment coverage in the amount of $135,000 for a period of twelve (12)
calendar months immediately following the Termination Date.
3. Payment of Benefits and Health Care and Life Insurance Coverage. The
payment for the benefits described in paragraphs 2 (a) and (b) above, and the
health care and life insurance coverage shall be made to, or arranged for,
Employee at the end of the seven (7) day revocation period for this Agreement,
following Employee's timely execution of this Agreement and without the same
being revoked by Employee.
4. Release Provisions. Various state and federal statutes (laws)
prohibit employment discrimination based on age, sex, race, color, national
origin, religion, ancestry, physical or mental handicap and disability, mental
condition or veteran status. These statutes are enforced through state, federal
and local agencies, including the EEOC and the New Mexico Department of Labor,
Human Rights Division. Employee should carefully consider this Agreement and the
Release provisions of this Section 4, and thoroughly understand its effect
before signing it. Employee is strongly encouraged to consult with her own
attorney before signing this Agreement. Employee understands that the decision
to consult with an attorney is solely the decision of Employee. Employee
acknowledges that she has been given a period of at least twenty-one (21) days
(the "Review Period") to review and consider this Agreement before signing it.
Employee understands that she may use as much of this Review Period as she
wishes prior to signing. Employee may revoke this Agreement within seven (7)
days after signing it and this Agreement will become effective and enforceable
only after this revocation period has expired. Revocation will be made by
returning a copy of this Agreement to JUDY ZANOTTI of the Company with a written
signature in the space provided at the end of the Agreement indicating that
Employee has elected to revoke this Agreement. For this revocation to be
effective, written notice must be received by the Company no later than the
close of business on the seventh (7th) day after Employee signs this Agreement.
If Employee does not sign the Agreement during the Review Period or if she
revokes this Agreement during the seven (7) day revocation period, it shall not
be effective nor enforceable and Employee will not receive the benefits provided
under this Agreement.
2
<PAGE>
(a) Release of the Company. By signing this Agreement, Employee agrees
to release and discharge the Company and Affiliates, their directors, officers,
agents, supervisors, employees, subsidiaries and successors from any and all
claims which Employee has or may have arising out of or related to Employee's
relationship, in any capacity, with the Company or Affiliates or the termination
of employment with the Company or Affiliates ("Claims"). This Agreement
includes, but is not limited to any Claims arising under Title VII of the Civil
Rights Act, as amended, which prohibits discrimination based on race, color,
national origin, religion, or sex; the Age Discrimination in Employment Act,
which prohibits discrimination based on age; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Rehabilitation Act of 1973,
which prohibits discrimination based on handicap; the Americans with
Disabilities Act, which prohibits discrimination based upon disability; the
Vietnam Era Veterans Readjustment Act of 1974, which prohibits discrimination
against veterans; the Family Medical Leave Act of 1993 which provides certain
employee's rights with respect to employee absences; the Employee Retirement
Income Security Act of 1974 ("ERISA"), which governs rights in employee benefit
plans; the New Mexico Human Rights Act, which prohibits discrimination based on
race, color, national origin, religion, ancestry, sex, or mental or physical
handicap; or any of these statutes, as amended, as of the date of signing of
this Agreement, or any other federal, state, or local statute, law, executive
order or regulation. This Agreement also includes a release by Employee for any
Claims arising from state or federal common law or statute including any claims
relating to the Company's right to terminate its employees, including but not
limited to any claims for wrongful discharge, retaliatory discharge, breach of
covenant of good faith and fair dealing or breach of employment contract.
Employee also releases the Company, by way of illustration, but not limitation,
for any personal injury or stress damages in connection with her treatment by
the Employer or arising out of her termination. Employee agrees not to file any
lawsuit or assert any Claim, without limitation, based upon the foregoing state
or federal common laws or statutes.
3
<PAGE>
This Agreement does not extend to a release of the Company for any
benefits payable pursuant to the Agreement, nor to any benefits that Employee
might otherwise be entitled pursuant to any of the Company's pension plans (as
that term is defined in Section 3(2)(A) of ERISA), benefits pursuant to the then
applicable PNM health insurance plans, any health maintenance organization, or
Benefits My Way. Pursuant to 29 U.S.C. ss. 626, this Agreement does not extend
to any claims or rights under the federal Age Discrimination in Employment Act
which may arise out of the actions of the Company or an Affiliate after the date
of this Agreement. Notwithstanding anything herein to the contrary, nothing
herein shall be construed as to abrogate or supersede any obligation or
agreement of the Company or Affiliates that may exist outside of this Agreement,
pursuant to applicable bylaw provisions of the Company or Affiliates, to
indemnify Employee, or to provide Employee with director and officer liability
insurance. This Agreement shall not increase or adversely impact any such rights
or obligations to which Employee may be entitled under such indemnification or
directors and officers liability insurance referred to in the immediately
preceding sentence.
(b) No Release of Employee. The Company and Affiliates do not release
Employee from any claim which the Company or an Affiliate has or may have
against Employee arising out of or relating to Employee's relationship, in any
capacity, with the Company or Affiliates. This Agreement also does not release
Employee for expressly contracted debts or loans due the Company or Affiliates,
evidenced by written notes or agreements, or for willful, wanton or
intentionally wrongful acts, nor does this Agreement extend to matters or events
occurring after the date of this Agreement.
5. Confidential Information.
(a) Employee Acquired Confidential Information. Except as required by
law, Employee agrees to keep confidential all "Confidential Information" (as
defined in this Agreement) obtained during the course of employment with the
Company and the positions she has held with Affiliates. Employee agrees that she
will not reveal any Confidential Information to any other person, corporation or
entity, without the prior written consent from an authorized Company
representative. The term "Confidential Information" as used in this Agreement
means information, written or otherwise, which Employee has received in the
course of her relationship, in any capacity with the Company or Affiliates and
includes, without limitation, all reports, forecasts, contracts, customer
information, confidential commercial information, trade secrets, business
secrets, personnel information or any information that is not available to the
general public. Any information, analysis or interpretation which is public
information as a result of (A) a public filing made by the Company or Affiliates
or (B) information supplied by the Company or Affiliates pursuant to formal
discovery procedures (unless such information, analysis or interpretation is
public as a result of a breach of this Agreement) shall not be considered
Confidential Information.
(b) Confidential Employment Information. PNM and Affiliates agree that,
consistent with current policy, they will only release information confirming
dates of employment and positions held by Employee.
(c) This Agreement Confidential. The parties, and each of them, agree
that this Agreement has been entered into with the understanding that all of the
terms and conditions hereof will remain confidential and that they or their
legal representatives will not, except as provided herein, disclose to any Third
Party the terms and conditions of this Agreement unless the other party hereto
consents in writing to such disclosure. As used herein, "Third Party" means any
person, corporation, partnership, firm, consultant, or governmental entity, or
representatives of any of the foregoing, other than officers, employees and
attorneys of the parties to this Agreement.
4
<PAGE>
(d) Protective Order. In the event that Employee is requested or
required to disclose the Confidential Information pursuant to Section 5(a), (b)
or (c) above, it is agreed that Employee shall provide the Company with prompt
written notice of such request(s) at least ten (10) days prior to making any
such disclosure and advise whether or not Employee intends to seek an
appropriate protective order to preclude disclosure of such information. If
Employee seeks a protective order, the Company or any Affiliate may join in such
action. If Employee does not seek a protective order, then the Company or an
Affiliate shall have such right to seek a protective order. The parties to the
Agreement agree to cooperate in seeking a protective order if any party hereto
so requests.
If Employee seeks such protective order, without the Company or the
Affiliate joining such action, or if the Company and/or the Affiliate commences
such action, without Employee seeking or joining in such action, then the party
seeking such protective order shall pay the attorney fees and expenses
associated therewith, including the reasonable attorney fees and costs of any
other party to this Agreement who requires such legal counsel to protect her or
its interest pursuant to such action. If Employee or the Company (and/or
Affiliate) both join in such action, then each shall be responsible for her or
its respective attorney fees and costs. If, in the absence of a protective order
or the receipt of a waiver hereunder, a party is legally bound, in the written
opinion of its counsel, to disclose the Confidential Information, it may legally
do so without a breach of this Agreement. PNM and Affiliates shall instruct
their directors, officers, employees, agents and attorneys to maintain the
confidentiality provisions hereof. Notwithstanding the foregoing, all parties
hereby consent to the disclosure of information contained in or related to this
Agreement to the extent required, in the opinion of counsel to a party hereto,
to comply with applicable securities laws and regulations or the laws and
regulations administered by the NMPUC which bind such party.
6. Agreement to Assist Company. Employee agrees to assist the Company
when requested from time to time in the future, such as in providing testimony
or providing information to the Company or its counsel.
7. Accord and Satisfaction. Employee agrees that the payments and
benefits provided for pursuant to this Agreement and the provisions included
hereunder constitute full settlement and satisfaction of all claims released by
Employee as described in Section 4(a), and agrees that this Agreement and the
benefits provided pursuant to this Agreement are not to be construed as an
admission of liability by the Company, Affiliates, or their directors, officers,
supervisors, agents, employees or any other persons or entities being released.
Employee further agrees that acceptance of the payments and benefits provided
under this Agreement constitute a waiver of all rights Employee may have to
pursue any rights and privileges under any internal grievance procedure or
policy.
5
<PAGE>
8. Entire Agreement. The benefits provided hereunder are in lieu of any
other benefits to which Employee may be eligible under (i) severance plans
(including employment option programs) or agreements maintained by Company or
Affiliates thereof (including any right to receive a notice of position
impaction under Company or Affiliates severance plans, which right is hereby
specifically waived), (ii) executive or employee retention plans or similar type
change in control plans or agreements maintained by Company or Affiliates
thereof, or (iii) any other benefit plan of the Company or its Affiliates not
otherwise mentioned in the following sentence of this paragraph. The benefits
provided hereunder are not, however, in lieu of nor is the Agreement intended to
increase or decrease or in any way impact the benefits otherwise provided to
Employee under plans that are specifically not released by Section 4(a).
9. Payroll Taxes. Any amounts due pursuant to this Agreement shall be
reduced by applicable federal, social security (FICA) (Employee's portion only)
and state payroll withholding taxes.
10. Interpretation and Appeals. The interpretation, administration and
appeals of any dispute regarding this Agreement shall be resolved under the
interpretation, administration and appeal provision of the Severance Plan,
Articles VI and XI thereof, which are incorporated herein by reference.
11. Controlling Laws. This Agreement shall be interpreted under the
laws of the State of New Mexico.
12. Headings. The headings and subheadings in this Agreement are
inserted for convenience and reference only and are not to be used in construing
this Agreement or any provision thereof.
13. Revocation Contingency. It is hereby agreed that the benefits
provided hereunder are contingent upon the Employee properly completing and
delivering this Agreement without revoking the same as otherwise provided in
Section 4 hereof.
14. Signature by Employee. Employee has twenty-one (21) days from the
date this Agreement is delivered to her to sign and return it to the Company. If
she does not sign, as provided below, and return the same within the twenty-one
(21) day period, this Agreement shall no longer be of any force or effect.
Following the signing of the Agreement by Employee, she shall have seven (7)
days to revoke the same by returning a revoked copy of the Agreement to the
Company. The date of the signature and delivery by Employee shall be determined
by the date set forth in the notarial acknowledgment with respect to such
signature.
EMPLOYEE HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS
OF THIS TERMINATION AND RELEASE AGREEMENT WHICH SETS FORTH THE ENTIRE AGREEMENT
BETWEEN (I) THE COMPANY AND EMPLOYEE WITH REGARD TO EMPLOYEE'S EMPLOYMENT WITH
THE COMPANY, AND HER TERMINATION AND (II) AFFILIATES AND EMPLOYEE WITH REGARD TO
EMPLOYEE'S EMPLOYMENT WITH AFFILIATES AND TERMINATION. EMPLOYEE HEREBY
ACKNOWLEDGES THAT EMPLOYEE HAS NOT RELIED UPON ANY REPRESENTATION OR STATEMENTS,
WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT, WITH RESPECT TO THIS AGREEMENT
OR (I) AND (II) ABOVE.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto, have signed this Agreement to
be effective as of the date signed and delivered by Employee.
PUBLIC SERVICE COMPANY OF NEW
MEXICO, INC.
By
-------------------------------
BENJAMIN F. MONTOYA,
President and Chief Executive Officer
EMPLOYEE
-----------------------------------
M. PHYLLIS BOURQUE
STATE OF NEW MEXICO )
) ss:
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me this ____ day of
_______________, 1996, by Benjamin F. Montoya, its President and Chief Executive
Officer, on behalf of Public Service Company of New Mexico.
---------------------------------
NOTARY PUBLIC
My commission expires:
---------------------------------
7
<PAGE>
STATE OF NEW MEXICO )
) ss:
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me this ____
day of _______________, 1996, by M. PHYLLIS BOURQUE.
---------------------------------
NOTARY PUBLIC
My commission expires:
---------------------------------
8
<PAGE>
REVOCATION
I, M. PHYLLIS BOURQUE, do hereby revoke the attached
Employment Termination and Release Agreement.
--------------------------------
M. PHYLLIS BOURQUE
STATE OF NEW MEXICO )
) ss:
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me this ____
day of ______________, 1996, by M. PHYLLIS BOURQUE.
---------------------------------
NOTARY PUBLIC
My commission expires:
---------------------------------
9
ARTHUR ANDERSEN LLP
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 13, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Statements of Earnings, Consolidated Balance Sheets and
Consolidated Statement of Cash Flows for the period ended December 31, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,552,693
<OTHER-PROPERTY-AND-INVEST> 254,268
<TOTAL-CURRENT-ASSETS> 286,674
<TOTAL-DEFERRED-CHARGES> 136,678
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,230,313
<COMMON> 208,870
<CAPITAL-SURPLUS-PAID-IN> 468,256
<RETAINED-EARNINGS> 77,185
<TOTAL-COMMON-STOCKHOLDERS-EQ> 754,311
0
12,800
<LONG-TERM-DEBT-NET> 713,919
<SHORT-TERM-NOTES> 100,400
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 14,970
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 633,913
<TOT-CAPITALIZATION-AND-LIAB> 2,230,313
<GROSS-OPERATING-REVENUE> 883,386
<INCOME-TAX-EXPENSE> 40,494
<OTHER-OPERATING-EXPENSES> 717,972
<TOTAL-OPERATING-EXPENSES> 757,367
<OPERATING-INCOME-LOSS> 126,019
<OTHER-INCOME-NET> 1,268
<INCOME-BEFORE-INTEREST-EXPEN> 127,287
<TOTAL-INTEREST-EXPENSE> 54,707
<NET-INCOME> 72,580
586
<EARNINGS-AVAILABLE-FOR-COMM> 71,994
<COMMON-STOCK-DIVIDENDS> 20,052
<TOTAL-INTEREST-ON-BONDS> 49,009
<CASH-FLOW-OPERATIONS> 151,718
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.71
</TABLE>
================================================================================
PARTICIPATION AGREEMENT
dated as of July 31, 1986
among
CHASE MANHATTAN REALTY LEASING CORPORTION
as Owner Participant
FIRST PV FUNDING CORPORATION
as Loan Participant
THE FIRST 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, as Owner Trustee
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, as Indenture Trustee
and
PUBLIC SERVICE COMPANY Of NEW MEXICO,
as Lessee
================================================================================
Sale and Leaseback of a 1.133333% Undivided Interest
in Palo Verde Nuclear Generating Station unit 1
and a .377777% Undivided Interest in Certain Common
Facilities
================================================================================
6091.50.2831.27:2
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 Definitions ......................................... 2
SECTION 2 Participation by the
Loan Participant;
Refunding ........................................... 2
SECTION 3 Participation by the
Owner Participant ................................... 4
SECTION 4 Purchase, Sale,
Financing and Lease of
the undivided Interest;
Purchase, Sale and Lease
of the Real Property
Interest ............................................ 4
SECTION 5 Notice of Closing;
Closing ............................................. 5
SECTION 6 Representations,
Warranties and
Agreements of the Loan
Participant; Direction
to the Indenture Trustee ............................ 6
SECTION 7 Representations,
Warranties and
Agreements of the Owner
Participant ......................................... 9
SECTION 8 Representations,
Warranties and
Agreements of the Owner
Trustee and FNB ...................................... 16
SECTION 9 Representations,
Warranties and
Agreements of Chemical
Bank ................................................. 23
-i-
6091.50.2831.27:2
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 10 Representations,
warranties and
Agreements of the Lessee ............................. 25
SECTION 11 Conditions Precedent ................................. 51
SECTION 12 Consent to Assignment of
the Facility Lease;
Consent to Indenture;
Consent to Assignment of
Notes ................................................ 66
SECTION 13 Lessee's Indemnities and
Agreements ........................................... 67
SECTION 14 Transaction Expenses ................................. 82
SECTION 15 Owner Participant's
Transfers ............................................ 84
SECTION 16 Brokerage and Finders'
Tees and Commissions ................................. 87
SECTION 17 Survival of
Representations and
Warranties; Binding
Effect ............................................... 87
SECTION 18 Notices .............................................. 89
SECTION 19 Miscellaneous ........................................ 90
-ii-
6091.56.2831.27:2
<PAGE>
SCHEDULES
TABLE OF CONTENTS (continued)
Page
----
Schedule 1 Notice of Closing
Schedule 2 Pricing Assumptions
Schedule 3 Bill of Sale and Assignment (Section 7(b)(4))
Schedule 4 Recordations and Filings
Schedule 5 Affidavit of Owner Trustee (Section 7(c)(6))
APPENDIX
Appendix A Definitions
-iii-
6091.50.2831.27:2
<PAGE>
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of July 31, 1986 among CHASE
MANHATTAN REALTY LEASEING CORPORATION, a New York corporation (the Owner
Participant), THE FIRST PV FUNDING CORPORATIOND a Delaware corporation (the Loan
Participant), THE FIRST NATIONAL BANK OF BOSTON, a national banking association,
in its individual capacity (FNB) and as Owner Trustee (the Owner Trustee) under
a Trust Agreement, dated as of July 31, 1986, with the Owner Participant,
CHEMICAL BANK, a New York banking corporation, in its individual capacity
(Chemical Bank) and as Indenture Trustee (the 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 MEW MEXICO,
a New Mexico Corporation (the Lessee).
WITNESSETH:
WHEREAS, the Owner Participant desires to cause the Trust to
acquire the Undivided Interest and the Real Property Interest and to lease the
Undivided Interest and the Real Property Interest to the Lessee under the
Facility Lease;
WHEREAS, the Lessee desires to sell the Undivided Interest and
the Real Property Interest to the Trust and lease the Undivided Interest. and
the Real Property Interest back from the Trust under the Facility Leases.
WHEREAS, the Owner Trustee and the Lessee will enter into the
Purchase Documents with respect to the sale and purchase of the Undivided
Interest and the Real Property Interest;
WHEREAS, pursuant to the terms and provisions of the
Indenture, the Owner Trustee will authorize the creation, issuance, sale and
delivery of the Initial Series Note and the granting of the security therefor,
and the Indenture Trustee will authenticate the Initial Series Note; and
WHEREAS, the Loan Participant is willing to purchase the
Initial Series Note on the terms and conditions set forth herein;
6091.5O.2831.27:2
<PAGE>
NOW, THEREFORE in consideration of the premises and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions.
For the purposes hereof, capitalized terms used herein shall
have the meanings assigned to such terms in Appendix A. References in this
Participation Agreement to sections, paragraphs and clauses are to sections,
paragraphs and clauses in this Participation Agreement unless otherwise
indicated.
SECTION 2. Participation by the Loan Participant; Refunding.
(a) Loan Participant's Commitment. Subject to the.
satisfaction of the conditions in Sections 5(a) and 11(a), on the closing Date
the Loan Participant agrees to lend to the Owner Trustee, on a non-recourse
basis, an amount (the Loan) equal to 8O% of the Purchase Price.
(b) Payment; Terms of the Initial series Note.
(1) Payment. Proceeds of the Loan shall be paid directly to
the Indenture Trustee, for the account of the Owner Trustee, in
immediately available funds, at the Indenture Trustee's Office,
(2) Terms of the Initial series Note. The Loan shall be
evidenced by the Initial Series Note. The Initial Series Note shall be
issued by the Owner Trustee under and pursuant to the Indenture, shall
be in the principal amount of the Loan and shall bear interest at the
rate or rates per annum and shall be payable as set forth in the
Indenture.
-2-
6091.50.2831.27:2
<PAGE>
(a) Refunding of the Initial Series Note. Subject to the
satisfaction of the conditions set forth in Section 11(c), on the Refunding Date
the Loan Participant agrees to lend to the Owner Trustee, on a non-recourse
basis, an amount (the Refunding Loan) equal to the amount necessary to refund
the Initial Series Note. Proceeds of the Refunding Loan shall be paid directly
to the Indenture Trustee to the extent necessary to refund the Initial Series
Note in immediately available funds, at the Indenture Trustee's Office. The
Refunding Loan shall be represented by the Fixed Rate Note, which Note shall be
issued by the Owner Trustee under and pursuant to the Indenture and shall be in
the principal amount of the Refunding Loan and shall bear interest at the rates
per annum and shall be payable 85 set forth in the Indenture. On the Refunding
Date the Fixed Rate Note shall be exchanged by the Owner Trustee for the Initial
Series Note. Not less than 1 Business Day prior to the Refunding Date, the Loan
Participant shall deliver to the Owner Participant and the Lessee a certificate
setting forth the information necessary to complete the form of Fixed Rate Note
(including the schedules thereto) set forth in the Indenture. Upon such
delivery, and upon approval by the Lessee and the Owner Participant of the terms
thereof, the Owner Participant and the Lessee shall cause the form of Fixed Rate
Note to be completed. The parties hereto shall make a good faith effort to
cooperate to effect such amendments of the Transaction Documents as may be
necessary or appropriate to effect such refunding. The refunding contemplated by
this section 2(c) shall be effected at the request of the Lessee given in
writing at least 5 Business Days prior to the Refunding Date; provided, however,
that (i) no such request shall be made or refunding occur while an Event of
Default shall have occurred and be continuing; (ii) unless waived by the Owner
Participant, Net Economic Return shall not be adversely affected thereby (or
appropriate adjustments shall have been made or shall be made on the Refunding
Date pursuant to Section 3(e) of the Facility Lease to preserve Net Economic
Return); (iii) unless waived by the Owner Participant, any modifications of the
Transaction Documents 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
-3-
6091.50.2831.27:2
<PAGE>
subject matter of such revenue procedures; and (iv) unless waived by the Owner
Participant, such modifications (after giving effect to any adjustments pursuant
to clause (ii) above) shall not, in the opinion of the Owner Participant's
Special Counsel, adversely affect the tax benefits contemplated by the Owner
Participant in entering into the transactions contemplated by this Participation
Agreement and the other Transaction Documents.
SECTION 3. Participation by the Owner Participant.
Subject to the satisfaction of the conditions in Sections 5(a)
and 11(a), on the Closing Date the Owner Participant agrees to (i) make an
equity investment with respect to the Undivided Interest in an amount (the
Investment) equal to 20% of the Purchase Price, (ii) make an equity investment
with respect to the Real Property Interest in the amount of $19,417 (the Real
Estate Investment), and (iii) provide to the Owner Trustee an amount equal to
the Estimated Transaction Expenses. Proceeds of the Investment and the Real
Estate Investment shall be paid directly to the Indenture Trustee, in
immediately available funds, at the Indenture Trustee's Office. The Estimated
Transaction Expenses shall be paid to the Owner Trustee, in immediately
available funds, at 100 Federal Street, Boston, Massachusetts 02110 Attention:
Manager, Corporate Trust Department.
SECTION 4. Purchase, sale, Financing and Lease of the Undivided
Interest; Purchase, Sale and Lease of the Real Property Interest.
(a) The Undivided Interest. Subject to (x) the satisfaction of
the conditions in Sections 5(a) and 11(a), (y) receipt from the Owner
Participant of the Investment and an amount equal to Estimated Transaction
Expenses and (a) receipt from the Loan Participant of the proceeds of the Loan,
on the Closing Date the Owner Trustee shall (i) cause the Trust to purchase the
Undivided Interest from the Lessee for $50,000,000 (the Purchase Price) and (ii)
-4-
6091.50.2831.27:2
<PAGE>
disburse an amount equal to the Estimated Transaction Expenses as contemplated
by Section 14. Subject to the satisfaction of the conditions in Section 11(b),
on the Closing Date the Lessee shall sell the Undivided Interest to the Trust
for the Purchase Price. Concurrently with such purchase and sale, the Trust
shall lease the Undivided Interest to the Lessee, and the Lessee shall lease the
Undivided Interest from the Trust, pursuant to the Facility Lease.
(b) The Real Property Interest. Subject to (x) the satisfaction
of the conditions in Sections 5(a) and 11(a) and (y) receipt from the
Owner Participant of the Real Estate investment, on the Closing Date the
Owner Participant shall cause the Trust to purchase the Real Property
Interest from the Lessee for a purchase price equal to the Real Estate
Investment. Subject to the satisfaction of the conditions in Section
11(b), on the Closing Date the Lessee shall sell the Real Property
Interest to the Trust for such purchase price. Concurrently with such
purchase and sale, the Trust shall lease the Real Property Interest to
the Lessee, and the Lessee shall lease the Real Property Interest from
the Trust, pursuant to the Facility Lease.
SECTION 5. Notice of Closing; Closing.
(a) Notice of Closing. Not later than the Closing Date, the
Lessee shall deliver to the Owner Participant, the Owner Trustee, the Loan
Participant,. the Collateral Trust Trustee and the Indenture Trustee a notice,
substantially in the form of Schedule 1 (the Notice of Closing), which shall (i)
state that the Closing Date shall occur on the date specified therein, (ii) set
forth a list of the then known Transaction Expenses payable by the Owner Trustee
pursuant to Section 14(a)(the Estimated Transaction Expenses) and (iii) provide
payment instructions in respect of the disposition of the Purchase Price and the
amount of the Real Estate Investment.
-5-
6O9l.50.2831.27:2
<PAGE>
(b) Closing. Upon satisfaction of the conditions in Section
5(a) and Section 11(a) and upon receipt from the Owner Participant of the amount
of the Investment, the Real Estate Investment and the Estimated Transaction
Expenses and from the Loan Participant of the Loan, on the Closing Date the
Owner Trustee shall (i) instruct the Indenture Trustee to pay to the Lessee an
amount equal to the Purchase Price and the amount of the Real Estate Investment
in immediately available funds and (ii) disburse the Estimated Transaction
Expenses as contemplated by Section 14. Upon satisfaction of the conditions in
Section 11(b), on the Closing Date, the Lessee shall deliver to the Owner
Trustee the Bill of Sale, the Deed and the Assignment of Beneficial Interest.
SECTION 6. Representations, warranties and Agreements of the
Loan Participant; Direction to the Indenture Trustee.
(a) The Loan Participant represents and war rants that:
(1) Due Organization. The Loan Participant is a corporation
duly organized and validly existing in good standing under the laws of
the State of Delaware and has the corporate power and authority to carry
on its business as presently conducted, own its properties, and enter
into and perform its obligations under this Participation Agreement and
each other Transaction Document and each Financing Document to which it
is, or is to become on or before the Closing Date, a party.
(2) Due Authorization; Enforceability. The execution, delivery
and performance by the Loan Participant of this Participation Agreement
and each other Transaction Document and each Financing Document to
which it is, or is to become, a party on or before the Closing Date,
have been duly authorized by all necessary corporate action on the part
of the Loan Participant and do not require the consent or approval of
the stockholder of the Loan Participant. This Participation Agreement
and each other Transaction Document and each Financing
-6-
6091.50.2831.27:2
<PAGE>
Document to which the Loan Participant is, or is to become, a party,
have been, or on or before the Closing Date will have been, duly
executed and delivered by the Loan Participant and constitute, or upon
execution and delivery thereof will constitute, legal, valid and binding
agreements of the Loan Participant enforceable against it in accordance
with their respective terms.
(3) No Violation. Neither the execution, delivery or
performance by the Loan Participant of this Participation Agreement, any
other Transaction Document or any Financing Document to which it is, or
is to become on or before the Closing Date, a party, nor the
consummation by the Loan Participant of the transactions contemplated
hereby or thereby, nor compliance by the Loan Participant with the
provisions hereof or thereof conflicts or will conflict with, or results
or will result in the breach of any provision of, the Certificate of
Incorporation or By-Laws of the Loan Participant or any Applicable Law
or any indenture, mortgage or agreement to which the Loan Participant is
a party or by which it or its property is bound or requires any
Governmental Action, except such as have been, or on or before the
Closing Date will have been, duly obtained, given or accomplished.
(4) No Other Business. Except as contemplated by this
Participation Agreement, the other Transaction Documents and the
Financing Documents and except as otherwise contemplated by the Section
6(c) Application, the Loan Participant has not engaged, and will not
engage, in any business or activity of any type or kind whatever.
(5) ERISA. The Loan Participant is not acquiring any Note with
the "plan assets" of any "employee benefit plan" within the meaning of
section 3(3) of ERISA or any "plan" within the meaning of section
4975(e)(l) of the Code.
-7-
6091.50.2831.27:2
<PAGE>
(6) Securities Act.. The Loan Participant understands that
none of the Notes to be acquired by it has been registered under the Securities
Act and will bear the legend set forth in the form of such Note.
(b) Agreements of the Loan Participant. The Loan Participant
agrees that:
(1) Transfers of the Notes. Any transfer or assignment of any
Note or of all or any part of the Loan Participant's interest hereunder
or under any other Transaction Document or any Financing Document shall
be effected in a transaction constituting an exempted transaction under
the Securities Act and on the express condition that the transferee,
assignee or participant shall agree to be bound by the terms and
provisions hereof and thereof. Neither the Loan Participant nor any
subsequent Holder of a Note may sell, exchange or transfer any Note to
any other Person (other than the Collateral Trust Trustee) unless such
transferee delivers to the other parties hereto a representation and
warranty (and an opinion of counsel satisfactory to each of the other
parties hereto) to the effect that neither the transfer of such Note
to, nor the ownership of such Note by, such transferee will cause such
transferee, or any other party hereto, to be engaged in a "prohibited
transaction", as defined in section 406 of ERISA or section 4975 of the
Code, which is not at such time subject to an exemption contained in
ERISA or in the rules, regulations, releases or bulletins adopted
thereunder.
(2) Quiet Enjoyment. The Loan Participant acknowledges Section
6(a) of the Facility Lease.
(3) No Other Business. During such time as any Note is
outstanding and held by the Loan Participant or the Collateral Trust
Trustee, the Loan Participant will not (i) engage in any business or
activity other than (1) in connection with the Transaction Documents or
the Financing Documents or (2) as otherwise contemplated by the section
6(c) Application or (ii) amend or engage in any activity or take any
action not permitted by Article THIRD, FOURTH or SIXTH of its
Certificate of Incorporation, as in effect on the date of execution and
delivery hereof, without, in each case, the consent of the other
parties hereto.
-8-
6091.50.2831.27:2
<PAGE>
(c) Direction to the Indenture Trustee. The Loan Participant, as
purchaser of the Initial Series Note, (i) hereby authorizes and directs
the Indenture Trustee to execute, deliver and perform this Participation
Agreement, (ii) hereby authorizes and directs the Indenture Trustee to
register such Note in the name of the Loan Participant and, upon
authentication and delivery thereof pursuant to this Participation
Agreement and the Indenture, to deliver such Mote (upon completion by
the Loan Participant of the assignment attached to the Initial series
Note) to the Collateral Trust Trustee pursuant to the Collateral Trust
Indenture, (iii) acknowledges and agrees that, in connection with this
Participation Agreement, the Indenture Trustee shall have the benefits
and protections of Article VIII of the Indenture and (iv) agrees that,
in the event of a conflict between the provisions of this Participation
Agreement and the Indenture, the Indenture Trustee shall, as between the
Indenture Trustee and the Loan Participant, be fully protected in
relying on the express terms of the Indenture.
SECTION 7. Representations, Warranties and Agreements of the
Owner Participant.
(a) Representations and warranties. The Owner Participant
represents and warrants that:
(1) Due Organization. The Owner Participant is a corporation
duly organized and validly existing in good standing under the laws of
the state of its incorporation and has the corporate power and authority
to enter into and perform its obligations under this Participation
Agreement and each other Transaction Document to which it is, or is to
become, a party.
-9-
6091.50.2831.27:2
<PAGE>
(2) Due Authorization. This Participation Agreement and each
other Transaction Document to which the Owner Participant is, or is to
become on or before the Closing Date, a party have been duly authorized
by all necessary corporate action on the part of the Owner Participant
and do not require the consent or approval of its stockholders or any
trustee or holder of any of its indebtedness or other obligations,
except such as have been, or on or before the closing Date will have
been, duly obtained, given or accomplished.
(3) Execution. This Participation Agreement and each other
Transaction Document to which the Owner Participant is, or is to become
on or before the Closing Date, a party have been, or on or before the
Closing Date will have been, duly executed and delivered by the Owner
Participant and constitute, or upon execution and delivery thereof will
constitute, its legal, valid and binding agreements, enforceable against
it in accordance with their respective terms (except as may be limited
by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally).
(4) No Violation. Neither the execution, delivery or
performance by the Owner Participant of this Participation Agreement or
any other Transaction Document to which it is, or is to become on or
prior to the closing Date, a party, nor the consummation by the Owner
Participant of the transactions contemplated hereby or thereby, nor
compliance by the Owner Participant with the provisions hereof or
thereof, conflicts with, or results in the breach of any provision of,
or is inconsistent with, its documents of incorporation or By-Laws or
contravenes any Applicable Law applicable to it or any of its
Affiliates, or any indenture, mortgage or agreement for borrowed money
to which the Owner Participant is a party or any other agreement or
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instrument to which the Owner Participant is a party or by which it or
its property is bound or requires any Governmental Action with respect to
the Owner Participant under Federal or New York law on or before the
Closing Date, except such as are contemplated by the Transaction
Documents or the Financing Documents or such as have been, or on or
before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that the Owner Participant makes no
representation or warranty as to any Applicable Law or Governmental
Action relating to the Securities Act, the Securities Exchange Act, the
Trust Indenture Act, the Federal Power Act, the Atomic Energy Act, the
Nuclear Waste Act, ERISA (except to the extent set forth in paragraph (9)
below), the Holding Company Act, the New Mexico Public Utility Act, the
Arizona Public Utility Act, energy or nuclear matters, public utilities,
the environment, health and safety or Unit 1.
(5) No Owner Participant's Liens. Neither the execution and
delivery by the Owner Participant of this Participation Agreement or any
other Transaction Document to which the Owner Participant is, or is to
become on or before the Closing bate, a party, nor the performance by
the Owner Participant of its obligations hereunder or thereunder, will
subject the Trust Estate or the Lease Indenture Estate, or any portion
of either thereof, to any Owner Participant's Lien.
(6) Acquisition. The Owner Participant is acquiring the
beneficial interest in the Trust Estate for its own account in the
ordinary course of its business and the Owner Participant has no
intention of making any sale or other distribution of the beneficial
interest in the Trust Estate in violation of any legislation, rule or
regulation relating to limitations upon the sale or other distribution
of interests such as such beneficial interest.
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(7) No Prior Security Interest. There exists no security
interest in or other Lien on the Lease Indenture Estate in the state of
the chief place of business of the Owner Participant, the State of New
Mexico or the State of Arizona arising as a result of claims against
the Owner Participant unrelated to the transactions contemplated by the
Transaction Documents or the Financing Documents which is prior to the
Indenture Trustee's security interest in the Lease Indenture Estate.
(8) No Sales or Solicitations. Except as contemplated by the
Financing Documents and as described in a letter to the Lessee dated
July 31, 1986, neither the Owner Participant nor anyone acting on its
behalf has directly or indirectly offered or sold, or solicited any
offer to acquire, any beneficial interest in the Trust Estate or any
Note or any Bond.
(9) ERISA. The Owner Participant is not acquiring its interests
in the Trust with the "plan assets" of any "employee benefit plan"
within the meaning of section 3(3) of ERISA or any "plan" within the
meaning of section 4975(e)(l) of the Code.
(b) Agreements of the Owner Participant. The Owner Participant
agrees that:
(1) No Owner Participant's Liens. The Owner Participant will not
create or permit to exist, and, at its own cost and expense, will
promptly take such action as may be necessary duly to discharge, all
Owner Participant's Liens.
(2) Quiet Enjoyment. The Owner Participant acknowledges the
provision. of Section 6(a) of the Facility Lease and Section 8(c) of
this Participation Agreement.
(3) No-Petition Agreement.. Prior to the 181st day following
the payment in full of the Bonds and the discharge in accordance with
its terms of the Collateral Trust Indenture, the Owner Participant
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agrees that it will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or composition
of, or in respect of, the Loan Participant under the Bankruptcy Code, or
any other applicable Federal or state law or the law of the District of
Columbia.
(4) Transfer of Interest in the Trust Estate. Unless the Lessee
shall have assumed the Notes as contemplated by Section 3.9(b) of the
Indenture, upon receipt by the Owner Participant under Section 5.2 of
the Indenture of the payments to be made to the Lessor as provided in
Section 9(c), 9(d), 13(c) or 16 of the Facility Lease and, if
applicable, compliance in full by the Lessee with Section 9(f) of the
Facility Lease, the Owner Participant shall (so long as no Default or
Event of Default shall have occurred and be continuing), and at any time
following the occurrence of an Event of Loss, Deemed Loss Event or a
Special Purchase Event or a Default or Event of Default or event giving
rise to the exercise of the Cure Option the Owner Participant may,
assign, convey and transfer to the Lessee all of the Owner Participant's
right, title and interest in, to and under the Trust Estate (except the
right to receive Excepted Payments), such transfer (i) to be free and
clear of Owner Participant's Liens but otherwise without recourse,
representation or warranty and (ii) if the Owner Participant so elects,
to be effected by the execution and delivery by the Owner Participant to
the Lessee of a Bill of Sale and Assignment substantially in the form of
Exhibit A hereto (and upon the execution and delivery thereof and the
furnishing of executed counterparts thereof to the Owner Trustee such
transfer shall be and become effective automatically and without further
action by the Owner Trustee6 the Owner Participant, the Lessee, the
Lessor, the Indenture Trustee or any other Person). The Lessee hereby
agrees to accept the transfer contemplated by this Section 7(b)(4) and
the parties hereto acknowledge and agree that at the time of such
transfer the Lessee shall be deemed to be a Transferee that has
satisfied all conditions set forth in Section 15(a) of this
Participation Agreement and Section 11.09 of the Trust Agreement.
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If, in accordance with the preceding paragraph, the Owner
Participant shall assign, convey and transfer to the Lessee all of the
Owner Participant's right, title and interest in, to and under the Trust
Estate (except the right to receive Excepted Payments) following the
occurrence of an Event of Loss, Deemed Loss Event or a Special Purchase
Event or a Default or Event of Default or event giving rise to the Cure
Option, but the transferring Owner Participant shall not have received
under Section 5.2 of the Indenture the payments to be made to the Lessor
as provided in Section 9(c), 9(d), 13(c) or 16 of the Facility Lease, as
the case may be, the obligation of the Lessee to make such payments
(together with interest thereon in accordance with Section 3(b)(iii) of
the Facility Lease) (or to make other payments in a like amount with
respect to Basic Rent or Supplemental Rent paid by application of such
payments (and in which Owner Trustee has thereby acquired an interest)
pursuant to Section 5.1 or 5.3 of the Indenture) shall not be deemed to
be cancelled or discharged but shall continue until all such amounts are
so received by the Lessee, as successor Owner Participant, or by the
transferring Owner Participant pursuant to the following provisions of
this Section 7(b)(4). The Lessee as successor Owner Participant hereby
agrees to pay to the transferring Owner Participant on the date of
transfer an amount equal to the amount of the payments to be made to the
Lessor as provided in Section 9(c), 9(d), 13(c) or is together with
interest thereon at the Penalty Rate (computed in accordance with the
Facility Lease) from the date of transfer, such payments (the Secured
Obligations) to be made only from amounts payable to the Owner
Participant from the Trust Estate. The Secured Obligations shall be
secured by (and the Lessee hereby grants to the transferring Owner
Participant a security interest in and general lien upon) all of the
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<PAGE>
right, title and interest of the Lessee as successor Owner Participant
in, to and under the Trust Estate. In connection therewith, the Lessee
as successor Owner Participant hereby agrees as follows:
(i) The transferring Owner Participant shall have all of
the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New York (as such
law may at any time be amended).
(ii) Upon the occurrence of such transfer, the Lessee as
successor Owner Participant shall appoint, and hereby does
appoint, the transferring Owner Participant Its
attorney-in-fact, irrevocably, with full power of substitution,
to the exclusion of the Lessee as successor Owner Participant,
to ask, require, demand, receive and give acquittance for any
and all moneys and claims for moneys due and to become due to
the Lessee as successor Owner Participant under or arising out
of the Trust Estate, to endorse any checks or other instruments
or orders in connection therewith, and to take any action
(including the filing of financing statements or other documents
and the delivery of written instructions to the Owner Trustee
and the Indenture Trustee specifying that all payments to be
made to the Lessee as successor Owner Participant under the
Trust Agreement and the Indenture shall be made directly to the
transferring Owner Participant so long as any portion of the
Secured Obligations remains outstanding) or institute any
proceedings which the transferring Owner Participant may deem
necessary or appropriate to protect and preserve the security
interest of the transferring Owner Participant in the Trust
Estate and the rights of the transferring Owner Participant to
receive payments thereunder.
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<PAGE>
(iii) Upon the occurrence of such transfer, and until the
Secured obligations have been paid in full, the Lessee (in its
capacity as such and as successor Owner Participant) shall
not, without the prior written consent of the transferring
Owner Participant (1) take any action or deliver any
instruction under any Transaction Document the effect of which
would be to (A) relieve or otherwise affect the obligation of
the Lessee to make such payments, (B) terminate the Trust
Agreement, (C) terminate or rescind the Facility Lease, (D)
sell, assign, transfer or deliver the Trust Estate to any
Person (except, in the case of the Trust Estate, as
contemplated by section 9(j) of the Facility Lease) or (2)
accept, or approve, any amendment to any Transaction Document.
(iv) The Lessee (as such and as successor Owner
Participant) covenants and agrees to do all such acts and
execute all such instruments of further assurance as shall be
reasonably requested from time to time by the transferring
Owner Participant for the purpose of fully carrying out and
effectuating the provisions of this Section 7(b)(4) and the
intent thereof.
Upon the payment in full of the Secured Obligations, the security interest
hereinabove provided shall terminate and the transferring Owner Participant, at
the request of the Lessee as successor Owner Participant, shall execute and
deliver to the Lessee as successor Owner Participant such termination
statements, releases or other instruments presented to the transferring Owner
Participant as shall be reasonably required to effect such termination.
SECTION 8. Representations, Warranties and Agreements of the
Owner Trustee and FNB.
(a) Representations and warranties. FNB as Owner Trustee and
(except as otherwise provided in the last sentence of this Section a(a)) in its
individual capacity, represents and warrants that:
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<PAGE>
(1) Due Organization. FNB is a national banking association duly
organized and validly existing in good standing under the laws of the
united States of America and has all requisite corporate power and
authority to enter into and perform its obligations under (x) the Trust
Agreement and, to the extent it is a party hereto in its individual
capacity, this Participation Agreement and (y) acting as Owner Trustee,
this Participation Agreement and each other Transaction Document to
which FNB is, or is to become on or before the Closing Date, a party as
Owner Trustee
(2) Due Authorization; Enforceability; etc. This Participation
Agreement and each other Transaction Document to which FNB is, or is to
become on or before the Closing Date, a party have been duly authorized
by all necessary corporate action of ma (in its individual capacity or
as Owner Trustee, as the case may be) and, upon execution and delivery
hereof and thereof, this Participation Agreement and each such other
Transaction Document will be duly executed and delivered and will be
legal, valid and binding agreements of FNB (in its respective
capacities), enforceable against it (in its respective capacities) in
accordance with their respective terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally); it being understood that FNB is not
making any representation or warranty as to the priorities of the Liens
created or to be created under any Transaction Document, title to the
Trust Estate or recordings or filings necessary in connection therewith.
(3) Notes. Upon execution of the Initial Series Note,
authentication thereof by the Indenture Trustee pursuant to the
Indenture and delivery thereof against payment therefor in accordance
with this Participation Agreement, such Note will be a legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally).
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<PAGE>
(4) No Violation. Neither the execution and delivery by (x) FNB of the
Trust Agreement and, to the extent FNB is a party hereto in its
individual capacity, this Participation Agreement and (y) the Owner
Trustee of this Participation Agreement and each other Transaction
Document (other than the Trust Agreement) to which the Owner Trustee is,
or is to become on or before the Closing Date, a party, nor the
performance by FNB, in its individual capacity or as Owner Trustee, as
the case may be, of its obligations under each, conflicts with, or
results in the breach of any provision of, its Articles of Association or
By-Laws and does not contravene any Applicable Law of the United States
of America or The Commonwealth of Massachusetts governing the banking or
trust powers of FNB, and does not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which FNB is a party or by which it is bound or require any
Governmental Action with respect to the Owner Trustee under any Federal
or Massachusetts law, except such as are contemplated by the Transaction
Documents or the Financing Documents or such as have been, or on or
before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that no representation or warranty is
made with respect to the right, power or authority of FNB or the Owner
Trustee to act under the ANPP Participation Agreement or the License in
respect of the undivided interest or Unit 1, and the Owner Trustee makes
no representation or warranty as to any Applicable Law or Governmental
Action relating to the Securities Act, the securities Exchange Act, the
Trust Indenture Act, the Federal Power Act, the Atomic Energy Act, the
Holding Company Act, the New Mexico Public Utility Act, the Arizona
Public utility Act, the Nuclear Waste Act, ERISA, energy or nuclear
matters, public utilities, the environment, health and safety or unit 1.
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<PAGE>
(5) Defaults. To the best knowledge of the Owner Trustee, no
Indenture Default or Indenture Event of Default has occurred and is
continuing. The Owner Trustee is not in violation of any of the terms of
this Participation Agreement or any other Transaction Document to which
it is, or is to become on or before the Closing Date, a party.
(6) Litigation. There is no action, suit, investigation or
proceeding pending or, to the knowledge of FNB, threatened against FNB (in any
capacity) before any court, arbitrator or administrative or governmental body
and which relates to its banking or trust powers which, individually or in the
aggregate, if decided adversely to the interests of FNB in such capacity, would
have a material adverse effect upon the ability of FNB (in any capacity) to
perform its obligations under this Participation Agreement or any other
Transaction Document to which it is, or is to become on or before the Closing
Date, a party (in any capacity).
(7) Location of the Chief Place of Business and Chief Executive
Office, etc. The chief place of business and chief executive office of
the Owner Trustee and the office where its records concerning the
accounts or contract rights relating to the transactions contemplated
hereby are kept is located in Boston, Massachusetts.
(8) No Prior Security Interest. There exists no security
interest in the Lease Indenture Estate in the States of New Mexico, New
York or Arizona or in The Commonwealth of Massachusetts arising as a
result of any claim against FNB unrelated to the transactions
contemplated by the Transaction Documents or the Financing Documents
which is prior to the Indenture Trustee's security interest in the Lease
Indenture Estate.
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(9) No Owner Trustee's Liens. Neither the execution by FNB (in
any capacity) of this Participation Agreement or any other Transaction
Document to which it (in any capacity) is, or is to become on or before
the Closing Date, a party, nor the performance in such capacity by it
of its obligations hereunder or thereunder, will subject the Trust
Estate or the Lease Indenture Estate, or any portion thereof, to any
Owner Trustee's Lien.
The representations and warranties in Section 8(a)(2) and Section 8(a)(2), as to
Transaction Documents and the Initial Series Mote being legal, valid and binding
obligations enforceable in accordance with their respective terms, are given
only by FNB in its capacity as Owner Trustee and not in its individual capacity,
except that FNB does represent in its individual capacity that it is authorized
under the laws of The Commonwealth of Massachusetts to execute and deliver the
Transaction Documents to which it is a party.
(b) Agreements. FNB agrees, in its individual capacity, that:
(1) Discharge of Liens. FNB will not create or permit to exist,
and will, at its own cost and expense, promptly take such action as may
be necessary duly to discharge, all Owner Trustee's Liens.
(2) Certain Amendments. FNB agrees that unless a Default or an
Event of Default has occurred and is continuing or an Event of Loss or
Deemed Loss Event has occurred, FNB will not amend any of the payment
terms of any Note, or take any action to refund any Note after the date
of issue thereof pursuant to the terms of this Participation Agreement
and the Indenture without the prior written consent of the Lessee. FNB
agrees that except for amendments or supplements, if any, made pursuant
to Article x of the Trust Agreement or contemplated by Section 7(b)(4),
FNB will not amend or supplement, or consent to any amendment of or
supplement to, the Trust Agreement if such amendment would materially
and adversely affect the rights of the Lessee under the Facility Lease
and this Participation Agreement, without the prior written consent of
the Lessee unless a Default or an Event of Default has occurred and is
continuing or the Lease Termination Date has occurred.
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(3) Change in Location of Chief Place of Business and chief
Executive Office, etc. FNB shall notify the Lessee, the Loan
Participant and the Indenture Trustee promptly after any change in its
chief executive office, principal and chief place of business or place
where its records concerning the accounts or contract rights relating
to the transactions contemplated hereby are kept.
(4) No Petition Agreement. Prior to the 181st day following the
payment in full of the Bonds and the discharge in accordance with its
terms of the Collateral Trust Indenture, FNB (in all capacities) agrees
that it will not file a petition, or join in the filing of a petition,
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Loan Participant under the Bankruptcy Code or any other
applicable Federal or state law or the law of the District of Columbia
(5) Quiet Enjoyment. FNB acknowledges Section 6(a) of the
Facility Lease.
(C) Agreements of the Owner Trustee. The Owner Trustee agrees
that:
(1) Subject and Subordinate. The rights and remedies of the
Owner Trustee and the Owner Participant in the Undivided Interest, the
Real Property Interest and the related Generation Entitlement Share are
subject and subordinate to the rights and remedies of the ANPP
Participants (other than (i) the Lessee or (ii) any Person who shall
become an ANPP Participant in respect of the Lessor's Interest (as
defined in Section B(c)(3)) under the ANPP Project Agreements.
(2) Lessee to be Participant. Except as provided in Sections
15.2.2, 15.6.4 and 15.10 (or any comparable successor provisions) of the
ANPP Participation Agreement, the Lessee shall be and remain the sole
"Participant for all purposes of the ANPP Participation Agreement and
the sole representative (with power to bind the Lessor and the Indenture
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<PAGE>
Trustee) in all dealings with the other ANPP Participants in relation
to the property, rights, titles and interests of the Lessee transferred
to the Lessor pursuant to the Transaction Documents; provided, however,
that the foregoing shall not limit in any way the effect of Section 15
or 16 of the Facility Lease or any liability or obligation that the
Lessee may incur to the Owner Trustee or the Owner Participant under
any Transaction Document as a result thereof (including, without
limitation, any liability that PNM may incur under Section 16 of the
Facility Lease as the result of an Event of Default).
(3) Cash Bids. Upon the expiration of the Facility Lease and
upon the Lessee failing to purchase or otherwise reacquire all the
right, title and interest in PVNGS and contractual rights related
thereto necessary for the operation of the interest (the Lessor's
Interest) acquired by the Lessor pursuant to the Transaction Documents,
the Lessor shall entertain cash bids from each ANPP Participant for the
Lessor's Interest.
(4) Survival. The provisions of this paragraph (4) and Sections
8(c)(1), (2) and (3) shall remain in full force and effect until such
time as the ANPP Administrative Committee or the ANPP Participants shall
otherwise consent.
(5) License Matters. The Owner Trustee acknowledges that before
taking possession of the Undivided Interest or any part thereof or of
any other interest in PVNGS, either of the following may be required:
(i) the issuance of an appropriate license from the NRC, whether by
amendment to the License or otherwise, or (ii) a partial transfer of the
License authorizing the Lessor to possess its interest in PVNGS, to the
extent of the undivided Interest, upon application for partial transfer
of such License to such extent filed pursuant to Applicable Law. Neither
the Owner Trustee nor the Owner Participant shall have any
responsibility whatsoever to take or initiate any action with respect to
any NRC licensing matter.
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(6) Acknowledgment and Agreement. The Owner Trustee hereby
acknowledges and agrees to the provisions of Section 7(b)(4) of this
Participation Agreement. The Owner Trustee hereby agrees, upon the
request of the Owner Participant, to execute and cause to be filed with
the County Recorder, Maricopa County, Arizona a duly completed affidavit
in substantially the form of Schedule 5 hereto.
SECTION 9. Representations, Warranties and Agreements of
Chemical lank.
(a) Representations and Warranties. Chemical Bank represents
and warrants that:
(1) Due Organization. Chemical Bank is a banking corporation
duly organized and validly existing in good standing under the laws of
the State of New York and has the corporate power and authority and
legal right to enter into and perform its obligations under the
Indenture, this Participation Agreement and each other Transaction
Document to which it is, or is to become on or before the Closing Date,
a party.
(2) Due Authorization. This Participation Agreement and each
other Transaction Document to which Chemical Bank Is, or is to become on
or before the Closing Date, a party have been or will be duly authorized
by all necessary corporate action of Chemical lank and each has been or
will have been duly executed and delivered by Chemical Bank.
(3) Authentication of the Initial Series Note. The officer of
Chemical Bank who shall authenticate the Initial Series Note to be
issued pursuant to the Indenture shall be, at the time of such
authentication, an Authorized Officer.
(4) No Violation. Neither the execution and delivery by
Chemical Bank of this Participation Agreement or the Indenture, nor the
authentication by it of the Initial Series Note, nor the consummation
by it of the transactions contemplated hereby or thereby, nor the
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<PAGE>
compliance by it with the provisions hereof or thereof will contravene
any Applicable Law governing its banking or trust powers, or
contravenes or results in a breach of, or constitutes a default under,
its Articles of Incorporation or By-laws, or requires any Governmental
Action under any Federal or New York law, except such as have been, or
on or before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that no representation or warranty is
made as to (i) any Applicable Law or Governmental Action relating to
the Securities Act, the Securities Exchange Act, the Trust Indenture
Act, the Federal Power Act, the Atomic Energy Act, the Holding Company
Act, the New Mexico Public Utility Act, the Arizona Public Utility Act,
the Nuclear Waste Act, ERISA, energy or nuclear matters, public
utilities, the environment, health and safety or Unit 1 or (ii) the
Lease Indenture Estate to the extent it may constitute real property
under Applicable Law.
(b) Agreements. The Indenture Trustee agrees that:
(1) Agreement to Discharge Liens. The Indenture Trustee will
not create or permit to exist, and will promptly take such action as
may be necessary duly to discharge, all Indenture Trustee's Liens.
(2) No Petition Agreement. Prior to the 181st day following
the payment in full of the Bonds and the discharge in accordance with
its terms of the Collateral Trust Indenture, the Indenture Trustee
agrees that it will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or
composition of or in respect of the Loan Participant under the
Bankruptcy Code or any other applicable Federal or state law or the law
of the District of Columbia.
(3) Quiet Enjoyment. The Indenture Trustee agrees to be bound
by Section 6(a) of the Facility Lease.
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(4) Acknowledgment. The Indenture Trustee hereby acknowledges
the provisions of Section 7(b)(4) of this Participation Agreement.
SECTION 10. Representations, Warranties and Agreements of the
Lessee.
(a) Representations and Warranties. The Lessee represents and
warrants that:
(1) Due Organization. The Lessee is a corporation duly organized
and validly existing in good standing under the laws of the State of New
Mexico and has the corporate power and authority to carry on its
business as presently conducted, to own or hold under lease its
properties and to enter into and perform its obligations under this
Participation Agreement and each other Transaction Document and
Financing Document to which it is, or is to become, a party. The Lessee
is duly qualified and in good standing to do business as a foreign
corporation in the State of Arizona and has not failed to qualify to do
business or to be in good standing in any other jurisdiction where
failure so to qualify or be in good standing would materially and
adversely affect the financial condition of the Lessee or its ability to
perform any obligations under this Participation Agreement, any other
Transaction Document or any Financing Document to which it is, or is to
become on or before the Closing Date, a party.
(2) Due Authorization. The execution, delivery and performance
by the Lessee of this Participation Agreement and each other Transaction
Document and each Financing Document to which it is, or is to become on
or before the Closing Date, a party, have been duly authorized by all
necessary corporate action on the part of the Lessee and do not, and
will not, require the consent or approval of the stockholders of the
Lessee or any trustee or holder of any indebtedness or other obligation
of the Lessee, other than (i) the Mortgage Release, (ii) the finding of
the ANPP Administrative Committee described in Section 15.6.2 of the
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ANPP Participation Agreement and (iii) such other consents and
approvals as have been, or on or before the closing Date will have
been, duly obtained, given or accomplished, with true copies thereof
delivered to the Owner Participant prior to the Closing Date.
(3) Execution. This Participation Agreement and each other
Transaction Document and each Financing Document to which the Lessee is,
or is to become on or before the closing Date, a party, will have been
duly executed and delivered by the Lessee, and this Participation
Agreement constitutes, and upon execution and delivery thereof, each
such Transaction Document and each such Financing Document will
constitute, the legal, valid and binding agreement of the Lessee,
enforceable against the Lessee in accordance with their respective
terms.
(4) No Violation, etc. Neither the execution, delivery or
performance by the Lessee of this Participation Agreement or any other
Transaction Document or any Financing Document to which it is, or is to
become on or before the closing Date, a party, nor the consummation by
the Lessee of the transactions contemplated hereby or thereby, nor
compliance by the Lessee with the provisions hereof or thereof,
conflicts or will conflict with, or results or will result in a breach
or contravention of any of the provisions of, the Restated Articles of
Incorporation or By-Laws of the Lessee or any Affiliate of the Lessee,
or any Applicable Law, or any indenture, mortgage, lease or any other
agreement or instrument to which the Lessee or any Affiliate of the
Lessee is a party or by which the property of the Lessee or any
Affiliate of the Lessee is bound, or results or will result in the
creation or imposition of any Lien (other than Permitted Liens) upon any
property of the Lessee or any Affiliate of the Lessee. There is no
provision of the Restated Articles of Incorporation or By-Laws of the
Lessee or any Affiliate of the Lessee, or any Applicable Law, or any
such indenture, mortgage, lease or other agreement or instrument which
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<PAGE>
materially adversely affects or in the future is likely (so far as the
Lessee can now foresee) to materially adversely affect the business,
operations, affairs, condition, properties or assets of the Lessee, or
its ability to perform its obligations under this Participation
Agreement or any other Transaction Document or any Financing Document
to which it is, or is to become on or before the Closing Date, a party.
(5) Governmental Actions. No Governmental Action is or will be
required in connection with the execution, delivery or performance by
the Lessee of, or the consummation by the Lessee of the transactions
contemplated by, this Participation Agreement, any other Transaction
Document or any Financing Document, except such Governmental Actions (i)
as have been, or on or before the closing Date will have been, duly
obtained, given or accomplished, with true copies thereof delivered to
the Owner Participant and the Loan Participant, (ii) as may be required
under existing Applicable Law to be obtained, given or accomplished from
time to time after the closing Date in connection with the maintenance,
use, possession or operation of Unit 1 or otherwise with respect to Unit
1 and the Lessee's or the Operating Agent's involvement therewith and
which are, for PVNGS, routine in nature and which the Lessee has no
reason to believe will not be timely obtained and (iii) as may be
required under Applicable Law not now in effect. No Governmental Action
(except Governmental Action as may be required by any Governmental
Authority of or in New York or Delaware) is or will be required (a) in
connection with the participation by the Owner Trustee, the Indenture
Trustee, the Owner Participant or the Loan Participant in the
consummation of the transactions contemplated by this Participation
Agreement, any other Transaction Document or any Financing Document or
(b) to be obtained by any of such Persons during the term of the
Facility Lease with respect to Unit 1 except such Governmental Actions
(i) as have been, or on or before the Closing Date will have been, duly
obtained, given or accomplished, with true copies thereof delivered to
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<PAGE>
the Owner Participant, the Owner Trustee and the Loan Participant prior
to the closing Date, (ii) as may be required by Applicable Law not now
in effect, (iii) as may be required in consequence of any transfer of
ownership of the Undivided Interest or the Real Property Interest by
the Owner Trustee, (iv) as would be required by existing Applicable Law
upon termination or expiration of the Facility Lease in connection with
taking possession of an interest in Unit 1, (V) as may be required by
existing Applicable Law if, after termination or expiration of the
Facility Lease, the Lessee should provide transmission services for the
Owner Trustee or cease to be agent for the Owner Trustee as provided
under the Assignment and Assumption, or (vi) as may be required in
consequence of any exercise of remedies or other rights by any such
Person in connection with taking possession of an interest in Unit 1.
(6) Securities Act. Neither the Lessee nor anyone acting on its
behalf has directly or indirectly offered or sold any Bond, any interest
in any Note, any note issued with respect to any other undivided
interest in Unit 1, the Undivided Interest or any other undivided
interest in Unit 1, the Facility Lease or any other lease of an
undivided interest in Unit 1, or any similar security or lease, or any
interest in any security or lease the offering of which, for purposes of
the Securities Act, would be deemed to be part of the same offering as
the offering of the aforementioned securities or leases, in either case,
or solicited any offer to acquire any of the aforementioned securities
or leases in violation of Section 5 of the Securities Act, and except as
contemplated by this Participation Agreement, neither the Lessee nor any
one authorized to act on its behalf will take any action which would
subject the issuance or sale of any Note or any interest in the Facility
Lease or any other debt instrument (other than the Refunding Bonds)
issued or to be issued to finance the Undivided Interest to the
registration requirements of such Section 5.
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(7) Title to the Undivided Interest and Real Property
Interest; Security Interest. On the Closing Date, (A) good and
marketable title to the Undivided Interest and the related Generation
Entitlement Share will be duly, validly and effectively conveyed and
transferred to the Owner Trustee, free and clear of all Liens, except
Permitted Liens (other than those described in clause (ii) of the
definition of such term and that portion of clause (iv) of such
definition relating to Liens for taxes being contested), (B) good and
marketable title to the Real Property Interest will be duly, validly
and effectively conveyed and transferred to the Owner Trustee, as
provided in the Deed and the Assignment of Beneficial Interest, (C) the
Lessee will have good and marketable title to its ownership interest in
the Retained Assets, free and clear of all Liens except Permitted
Liens, the Lien of the Existing Mortgage and matters disclosed in the
title report referred to in Section 11(a)(33), (D) the Lessee will have
good and valid title to its ownership interest in the PVNGS Site, (E)
Unit 1 will be wholly located on the PVNGS Site without any material
encroachments by any portion thereof on any other property, (F) all
filings and recordings necessary or advisable to perfect the Owner
Trustee's right, title and interest in and to the Undivided Interest,
the related Generation Entitlement Share and the Real Property
Interest, and to perfect for the benefit of the Indenture Trustee and
the holders of the Notes the first priority security interest, mortgage
and assignment of rents provided for in the Indenture, will have been
duly made and (G) no other action, including any action under any
fraudulent conveyance statute, will be required to protect the title
and interests of the Owner Trustee in and to the Undivided Interest,
the related Generation Entitlement Share and the Real Property Interest
against the claims of all Persons other than the ANPP Participants
under the AMPP Project Agreements (in accordance with the terms
thereof), or to perfect such first priority security interest, mortgage
and assignment of rents in favor of the Indenture Trustee.
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(8) Non-Interference. None of the Permitted Liens will, on and
after the Closing Date, materially interfere with the use or possession
of the Undivided Interest, the related Generation Entitlement Share or
the Real Property Interest or the use of or the exercise by the Owner
Trustee of its rights under the Bill of Sale, the Deed, the Assignment
of Beneficial Interest and the Assignment and Assumption with respect
to, the interests in PVNGS granted or to be granted under the Bill of
Sale, the Deed, the Assignment of Beneficial Interest and the
Assignment and Assumption.
(9) Personal Property. Unit 1, based on the agreements of the
Lessee and the other ANPP Participants in the ANPP Participation
Agreement and of the Lessee and the Owner Trustee herein and in the
other Transaction Documents, is to the full extent permitted by
Applicable Law personal property under the laws of the State of Arizona.
(10) Location of Chief Executive Office. The chief executive
office and place of business of the Lessee and the office where it keeps
its records concerning its accounts or contract rights is at Alvarado
Square, Albuquerque, Bernalillo County, New Mexico 87158.
(11) Financial Statements. The consolidated balance sheets of
the Lessee and subsidiaries (A) as of December 31, 1985 and 1984,
respectively, and the related consolidated. statements of earnings,
retained earnings and changes in financial position for each of the
years in the three-year period ended December 31, 1985, together with
the notes accompanying such financial statements, all certified by Peat,
Marwick, Mitchell & Co., and (B) as of March 31, 1986 and 1985,
respectively, and the related consolidated statements of earnings,
retained earnings and changes in financial position for the three-month
period ended March 31, 1986 and March 31, 1985 respectively, all
certified by the Controller or an Assistant Controller of the Lessee, as
furnished to the Owner Participant, fairly present the financial
position of the Lessee and its subsidiaries taken as a whole at each
such date and the results of their operations for each of the
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periods then ended, in conformity with generally accepted accounting
principles applied on a consistent basis and in conformity with
applicable Accounting Practice.
(12) Disclosure. None of the financial statements to which
reference is made in paragraph 11 above nor the reports to which
reference is made in this paragraph 12 nor any (other than publicly
available documents of any Governmental Authority, (other than documents
prepared by or on behalf of the Lessee), and any press reports,
insurance reports, if delivered on or before the Closing Date, and
appraisals) certificate., written statement or other document furnished
to the Owner Participant or the Appraiser by the Lessee in connection
with the transactions contemplated hereby (under the circumstances at
the time and for the purposes for which any statement made therein was
made) contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein not misleading.
There is no fact known to the Lessee that materially and adversely
affects or, so far as the Lessee can now reasonably foresee, is likely
to materially and adversely affect, the business or financial condition
of the Lessee or any material portion of its properties or its ability
to perform its obligations under this Participation Agreement or any
other Transaction Document or any Financing Document to which the Lessee
is, or is to become, a party. The Lessee has heretofore delivered to the
Owner Participant the Lessee's Annual Report on Form 10-K for the year
ended December 31, 1985, the Lessees Quarterly Report on Form l0-Q for
the quarter ended March 31, 1986 and the Current Reports on Form 8-K
filed on February 12, 1985 (as amended by Form 8 filed April 12, 1985),
January 14, March 3, June 30 and July 16, 1986 and to be filed on or
about July 31, 1986.
(13) Litigation. Except as disclosed in the reports to which
reference is made in paragraph 12 above, there is no action, suit,
investigation or proceeding pending or, to the knowledge of the
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Lessee, threatened against the Lessee before any court, arbitrator or
administrative or governmental body which questions the validity or
enforceability of this Participation Agreement or any other Transaction
Document or any Financing Document to which the Lessee is, or is to
become, a party, or which, individually or in the aggregate, if decided
adversely to the interests of the Lessee, would have a material adverse
effect on the business or financial condition of the Lessee or
materially and adversely affect the ability of the Lessee to per-form
its obligations under this Participation Agreement or any other
Transaction Document or any Financing Document to which it is or is to
become a party.
(14) Tax Returns. The Lessee has filed all Federal, state, local
and foreign, if any, tax returns which were required to be tiled, and
has paid all Taxes shown to be due and payable on such returns and has
paid all other Taxes in respect of the Lessee's interest in Unit 1 and
in the PVNGS Site which are payable by the Lessee to the extent the same
have become due and payable and before they have become delinquent,
except (i) for any Taxes the amount, applicability or validity of which
may be in dispute and which are currently being contested in good faith
by appropriate proceedings and with respect to which the Lessee has set
aside on its books reserves (segregated to the extent required by
generally accepted accounting principles) deemed by it to be adequate
and (ii) for any Taxes relating to PVNGS in respect of which the
Operating Agent has not given notice to the Lessee that the same are due
and payable. The Federal income tax returns of the Lessee have been
audited by the ms for taxable years through 1980.
(15) ERISA. In reliance upon, and subject to the accuracy of,
the representations made by the Loan Participant in Section 6(a)(5) and
the Owner Participant in Section 7(a)(9), the execution and delivery of
this Participation Agreement, the other Transaction Documents and the
Financing Documents by the Lessee will not involve any prohibited
transaction within the meaning of ERISA or section 4975 of the Code.
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(16) Regulation. So long as the Facility Lease is in effect,
assuming the proper filing of Form U 7D with the SEC on or within 30
days after the Closing Date, under Applicable Law now in effect, neither
the Loan Participant, the Owner Participant, FNB nor the Owner Trustee
will be or become, solely by reason of either its entering into this
Participation Agreement or any other Transaction Document to which any
of them is, or is to become, a party, or the transactions contemplated
hereby or thereby, subject to regulation (i) as an "electric utility",
an "electric utility company", a "public utility", a "public utility
company", a "holding company", or a "public utility holding company" by
any Federal, state (other than, as to the Owner Participant, New York,
as to which no representation. or warranty is given) or local public
utility commission or other regulatory body, authority or group
(including, without limitation, the SEC, the FERC, the MMPSC or the
Arizona Corporation Commission). or (ii) in any manner by the NRC. The
Lessee is not, and covenants that (except in connection with a
transaction permitted by Section l0(b)(3)(ii) hereof) it will not
become, a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of
the Holding Company Act. The Lessee is not subject to regulation by the
Arizona Corporation Commission as a public utility or a public service
corporation.
(17) Authorizations, etc. The Lessee has not failed to obtain
any Governmental Action or other authorization, license, approval,
permit, consent, right or interest, where a failure to obtain such would
materially and adversely affect the ability of the Lessee to carry on
its business as presently conducted or as described in the Registration
Statement.
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<PAGE>
(18) No Default, etc. The Lessee is not in default, and no
condition exists that, with the giving of notice or lapse of time or
both, would constitute a default by the Lessee, under any material
mortgage, deed of trust, indenture, lease, contract or other instrument
or agreement to which the Lessee is a party or by which it or any of
its properties or assets may be bound.
(19) Certain Documents. True and correct copies of the ANPP
Participation Agreement, the Material Project Agreements and the
Existing Mortgage have been delivered to the Owner Participant's Special
Counsel for and on behalf of the Owner Participant prior to the date of
execution hereof. No ANPP Project Agreement will, on and after the
closing Date, materially and adversely interfere with ( i ) (except for
the AMP? Participation Agreement in the case of the Generation
Entitlement Share only) the title of the Owner Trustee to the Undivided
Interest, the related Generation Entitlement Share or the Real Property
Interest or (ii) except for the ANPP Participation Agreement, the use
of, or the exercise by the Owner Trustee of its rights under the
Facility Lease, the Deed, the Assignment of Beneficial Interest and the
Assignment and Assumption with respect to, the Undivided Interest, the
related Generation Entitlement Share, and the interests in the PVNGS
Site (including the Real Property Interest) granted or to be granted
under the Deed, the Assignment of Beneficial Interest and the Assignment
and Assumption. No payment default or other default of a material nature
by the Lessee has occurred and is continuing under the Existing Mortgage
or any ANPP Project Agreement. The AMPP Participation Agreement and each
other ANPP Project Agreement are in full force and effect and no breach
of any thereof, to the Lessee's knowledge, by any other party thereto
has occurred and is continuing, except where the failure to be in force
and effect or such breach would not have a material and adverse effect
on the Undivided Interest, the related Generation Entitlement Share, the
Real Property Interest, Unit 1 or the rights, interests and benefits of
the Owner Trustee or the Owner Participant under any Transaction
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<PAGE>
Document. Upon execution and delivery of the Mortgage Release and the
recordation thereof or of UCC releases in respect thereof, (i) the
mortgagee and secured party thereunder will have released the lien of
the Existing Mortgage on the Undivided Interest, the related Generation
Entitlement Share and the Real Property Interest and (ii) the rights of
the Owner Trustee in the Undivided Interest and the Real Property
Interest and the related Generation Entitlement Share will not be, and
will not become, subject or subordinate to the rights of any Person,
except the Indenture Trustee under the Indenture and the ANPP
Participants to the extent expressly set forth in the ANPP
Participation Agreement (as in effect on the Closing Date) and except
as may otherwise expressly be permitted by the Facility Lease. The lien
of the Existing Mortgage does not extend to rights of PNM under
Transaction Documents (other than the Lessee's leasehold interest under
the Facility Lease) or to the Generation Entitlement Share related to
the Undivided Interest. Neither Section 15.6.3.5 of the ANPP
Participation Agreement nor Section 8(c)(3) of this Participation
Agreement (i) requires the Owner Trustee to accept any cash bid
referred to therein or (ii) otherwise materially impedes the Owner
Trustee's right, upon a failure by the Lessee to purchase or otherwise
reacquire the Undivided Interest and the Real Property Interest, to
conclude a sale or lease to a Person constituting a "Transferee" under
Section 15.10 of the ANPP Participation Agreement
(20) Unit 1. The description of unit 1 set forth in Exhibit B
to the Bill of Sale is correct and sufficiently complete to identify
such property.
(21) Investment Company Act. The Lessee is not, and will not
become1 an "investment company or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act.
(b) Agreements of Lessee.
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<PAGE>
(1) Delivery of Documents. The Lessee agrees that it will
deliver to the Owner Participant and the Loan Participant (and, in the
case of sections l0(b)(1)(iii) and (v) hereof, the Owner Trustee)
(i) Financial Statements: (A) as soon as practicable, and
in any event within 120 days, after the end of each fiscal year
of the Lessee, a consolidated balance sheet of the Lessee and
subsidiaries as of the end of such fiscal year and related
consolidated statements of earnings, retained earnings and
changes in financial position for such year, all in reasonable
detail and certified in an opinion by a nationally recognized
term of independent public accountants, and the annual and
interim reports of the Lessee to its stockholders as soon as the
same have been mailed to such stockholders, (B) as soon as
practicable, and in any event within 60 days, after the end of
each fiscal quarter (other than the last fiscal quarter) of each
fiscal year of the Lessee, a consolidated balance sheet of the
Lessee and subsidiaries as of the end of said period and a
related consolidated statement ~f earnings, retained earnings
and changes in financial position for said period, all in
reasonable detail, and certified by the Controller or an
Assistant Controller or the Chief Financial Officer of the
Lessee and (C) as soon as practicable after the same have been
filed, a copy of all documents filed by the Lessee with the SEC
pursuant to the reporting requirements of the securities
Exchange Act;
(ii) Other Reports: promptly upon their becoming
available, any registration statement, offering statement,
investment memorandum or prospectus prepared by the Lessee in
connection with the public offering of securities (other than
public offerings of securities under employee stock option,
consumer stock or dividend reinvestment plans);
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<PAGE>
(iii) Notice of Default: promptly upon the Lessee becoming
aware of the existence thereof, written notice specifying any
condition which constitutes a Default or an Event of Default or
a default by any ANPP Participant under the ANPP Participation
Agreement and the nature and status thereof;
(iv) Annual Certificate: within 120 days after the end of
each fiscal year of the Lessee, a certificate of the Lessee,
signed by the Controller or an Assistant Controller or the Chief
Financial Officer of the Lessee, to the effect that such officer
has reviewed, or caused to be reviewed by individuals under his
supervision, this Participation Agreement and each other
Transaction Document and each Financing Document to which the
Lessee is a party and has made, or caused to be made under his
supervision, a review of the transactions contemplated hereby
and thereby and the condition of the Lessee during such
preceding fiscal year, and such review has not disclosed the
existence during such fiscal period, nor does such officer have
knowledge of the existence as at the date of such certificate,
of any condition or event that constitutes a Default or Event of
Default or, if any such condition or event exists, specifying
the nature and period of existence thereof and any action the
Lessee has taken, is taking, or proposes to take with respect
thereto;
(v) Opinion of Counsel: within 120 days after the end of
each fiscal year of the Lessee, an opinion or opinions,
satisfactory to the Owner Participant, the Owner Trustee, the
Collateral Trust Trustee and the Indenture Trustee, of Keleher &
McLeod, P.A., as general counsel for the Lessee, Snell & Wilmer,
as special Arizona counsel for the Lessee, and/or other counsel
acceptable to the Owner Participant (A) either to the effect
that (1) all filings and recordations (or refilings and
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<PAGE>
rerecordations) required to (i) convey to the Owner Trustee,
and establish, preserve, protect and perfect the title of the
Owner Trustee to, the Undivided Interest, the related
Generation Entitlement Share and the Real Property Interest
and establish, preserve and protect the Owner Trustee's rights
under this Agreement and the other Transaction Documents, and,
(ii) so long as any Note is Outstanding, grant, perfect and
preserve the security interest of the Indenture Trustee in the
Lease Indenture Estate have been duly made, or (2) no such
additional filings, recordations, refilings or rerecordations
are necessary, to (i) convey to the Owner Trustee, and
establish, preserve, protect and perfect the title of the
Owner Trustee to, the Undivided Interest, the related
Generation Entitlement Share and the Real Property Interest
and establish, preserve and protect the Owner Trustee's rights
under this Agreement and the other Transaction Documents, and
(ii) so long as any Note is Outstanding, grant, perfect and
preserve the security interest of the Indenture Trustee in the
Lease Indenture Estate and (B) specifying the particulars of
all action required during the period from the date of such
opinion through the last day of the next succeeding calendar
year, including, in the case of each UCC continuation
statement required to be filed during such period, the office
in which each such continuation statement is to be filed and
the filing date and filing number of the original financing
statement or fixture filing to be continued, and the dates
within which such continuation statement may be filed under
Applicable Law; such opinion shall also address such
additional matters relating to actions taken by the Lessee
pursuant to Section 1O(b)(2) as the Loan Participant or the
Owner Participant may reasonably request;
(vi) ANPP Information: upon receipt by the Lessee, copies or
advice of all Systematic Assessment of Licensee Performance
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<PAGE>
Reports (or comparable successor report) and of all material
notices, data, information and other written communications
received by the Lessee under or pursuant to any ANPP Project
Agreement or otherwise with respect to Unit 1, PVNGS or the
PVNGS Site, subject in each case to applicable confidentiality
undertakings with respect thereto, unless prohibited by
Applicable Law;
(vii) Other PVNGS Information: the Lessee having undertaken to
furnish a letter to the Owner Participant to be dated August
12, 1986, describing its internal procedures for monitoring
PVNGS and reporting to the Owner Participant with respect
thereto, prior writ. ten notice of any material change in such
procedures; and, upon receipt by the Lessee, copies or advice
of all notices of violation or other material communications
from the NRC and all notices of nuclear incidents or other
material occurrence at PVNGS given to the NRC;
(viii) Annual PVNGS Report: within 120 days after the end of
each fiscal year of the Lessee, a certificate of the Lessee
with respect to the status and operations of Unit 1 for such
fiscal year and current information respecting the status of
decommissioning funding arrangements for Unit 1;
(ix) Information Relating to Weighted Annual Lease Rate
Factor under New Mexico Order: through the Refunding Date,
promptly after any change (other than a change resulting from
changes in the interest rate borne from time to time by the
Initial Series Notes) in the "weighted annual lease rate factor"
referred to in Section 13(c) of the Facility Lease, a notice
specifying the amount of such change,. the amount of such factor
after giving effect to such change and the event or events which
resulted in such change and, promptly following the Owner
Participant's request therefor, from time to time, such other
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<PAGE>
information regarding such factor and any events which have
resulted or may result in a change therein; and
(x) Requested Information: with reasonable promptness,
such other data and information as to the business and
properties of the Lessee or as to Unit 1, PVNGS or the PVNGS
Site as from time to time may be reasonably requested by the
Owner Participant, subject in each case to applicable
confidentiality undertakings with respect thereto, unless
prohibited by Applicable Law.
(2) Further Assurances. The Lessee will cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as the Owner Participant may from time to time
reasonably request in order to carry out more effectively the intent and
purposes of this Participation Agreement, the other Transaction
Documents and the Financing Documents, and the transactions contemplated
hereby and thereby. The Lessee will cause the financing statements (and
continuation statements with respect thereto) and the documents
enumerated and described in Schedule 3, and all other documents
necessary or advisable in that connection, to be recorded or filed at
such places and times, and in such manner, and will take all such other
actions or cause such actions to be taken, as may be necessary or
reasonably requested by the Owner Participant, the Collateral Trust
Trustee, the Owner Trustee or the Indenture Trustee, in order to
establish, preserve, protect and perfect the title of the Owner Trustee
to the Undivided Interest, the related Generation Entitlement share and
the Real Property Interest, and the Owner Trustee's rights and interests
under this Participation Agreement and the other Transaction Documents
and, so long as any Note is Outstanding, the first and prior security
interest of the Indenture Trustee in the Lease Indenture Estate and the
Indenture Trustee's rights under this Participation Agreement and the
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<PAGE>
other Transaction Documents, all referred to and included under the
granting clause of the Indenture.
(3) Covenants. The Lessee covenants and agrees as follows:
(i) Maintenance of Corporate Existence, etc. The Lessee
shall at all times maintain its existence as a corporation under
the laws of the State of New Mexico, except as permitted by
paragraph (ii) below. The Lessee will do or cause to be done all
things necessary to preserve and keep in full force and effect
its rights (charter and statutory) and franchises; provided,
however, that the Lessee may discontinue any right or franchise
if its board of directors shall determine that such
discontinuance is necessary or desirable in the con duct of its
business and does not materially and adversely affect or
diminish any right of the Owner Participant or the Loan
Participant.
(ii) Merger, Sale, etc.: Owner Participant. Without the
consent 6f the Owner Participant, the Lessee shall not (1)
consolidate with any Person, (2) merge with or into any Person,
or (3) except in connection with normal dividend policy of the
Lessee, convey, transfer, lease, or dividend (other than
transfers and dividends described in the Lessee's proxy
statement dated April 11, 1986 and transfers and conveyances
constituting sale and leaseback transactions under the AMP?
Participation Agreement) to any Person more than 5% of its
assets, including cash, in any single transaction or series of
related transactions; unless, immediately after giving effect to
such transaction:
(A) the Person who is the Lessee immediately
following such consolidation, merger, conveyance,
transfer or lease (the Surviving Lessee) shall be a
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corporation or (with the prior consent of the Owner
Participant, which consent shall not be unreasonably
withheld) other legal entity which (i) is organized
under the laws of the United States of America, a state
thereof or the District of Columbia, (ii) is a "public
utility" under applicable state and Federal laws, (iii)
is an ANPP Participant under the ANPP Participation
Agreement with respect to Unit 1 (including the
Undivided Interest), (iv) if other than the Lessee
immediately prior to such transaction, shall have
assumed each covenant and condition of the Lessee under
the ANPP Participation Agreement and each other ANPP
Project Agreement and (v) holds a valid and subsisting
license from the NRC to possess Unit 1 (including the
Undivided Interest);
(B) the Surviving Lessee, if other than the
Lessee immediately prior to such transaction, shall
execute and deliver to the Owner Participant an
agreement, in farm and substance reasonably
satisfactory to the Owner Participant, containing the
assumption by the Surviving Lessee of each covenant
and condition of this Participation Agreement, each
other Transaction Document and each Financing
Document to which the Lessee immediately prior to
such transaction was a party immediately preceding
such transaction;
(C) no Default (other than a failure to deliver
documents and other information specified in Section
10(b)(l)(vi), (vii) or (viii) hereof), Event of
Default, Event of Loss or Deemed Loss Event shall
have occurred and be continuing;
(D) the Bonds (or, if the Bonds are not then
rated, the preferred stock of
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<PAGE>
the Surviving Lessee) after giving effect to such
transaction, (1) shall be rated at least "investment
grade" by Standard & Poor's Corporation and Moody's
Investors Service, Inc. and (2) shall have an
investment rating by Standard & Poor's Corporation and
Moody's Investors Service, Inc. not less than one
'smallest notch" below the rating assigned to the Bonds
(or, if the Bonds are not then rated, the preferred
stock of the Surviving Lessee) immediately prior to
such transaction (or, if neither of such rating
organizations shall rate the Bonds (or, if applicable,
the preferred stock of the surviving Lessee) at the
time, by any nationally recognized rating organization
in the United States of America);
(E) the Surviving Lessee shall have a Minimum
Net Worth;
(F) the Surviving Lessee shall have delivered to
the Qwner Participant and the Indenture Trustee an
Officers' Certificate and an opinion, reasonably
satisfactory to the Owner Participant, of counsel to
the Surviving Lessee, each stating that (1) such
transaction complies with this subparagraph (ii) and
(2) all conditions precedent to the consummation of
such transaction have been satisfied and any
Governmental Action required in connection with such
transaction has been obtained, given or accomplished;
(G) the Surviving Lessee shall have delivered to
the Owner Participant an opinion, reasonably
satisfactory to the Owner Participant, of independent
counsel (if other than nudge Rose Guthrie Alexander &
Ferdon, such counsel to be reasonably satisfactory to
the Owner Participant) to the Surviving Lessee
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stating that such transaction does not and will not
cause a Loss (as defined in the Tax Indemnification
Agreement);
(H) such transaction is otherwise permitted by
and in accordance with the ANPP Participation
Agreement; and
(I) the Coverage Ratio of the Surviving Lessee
shall be at least 1.6 to 1.
Upon the consummation of such transaction the Surviving Lessee,
if other than the Lessee immediately prior to such transaction,
shall succeed to, and be substituted for, and may exercise
every right and power of, the Lessee immediately prior to such
transaction under this Participation Agreement and each other
Transaction Document and each Financing Document to which the
Lessee immediately prior to such transaction was a party
immediately preceding the date of such transaction, with the
same effect as if the Surviving Lessee had been named herein
and therein.
(iii) Merger, Sale, etc.: Bondholders. The Lessee shall not
enter into any transaction constituting a consolidation, merger,
conveyance, transfer, lease or dividend not permitted by Section
l0(b)(3)(ii), irrespective of any consent or waiver of the Owner
Participant, unless immediately after giving effect to such
transaction, the Bonds (or, if the Bonds are not then rated, the
preferred stock of the Surviving Lessee), after giving effect to
such transaction, shall be rated at least "investment grade" by
Standard & Poor's Corporation and Moody's Investors Service,
Inc.
(iv) Prior Notice to Rating Agencies. Prior to entering into
any transaction as to which the conditions set forth in
paragraphs (ii) and (iii) above shall be applicable, the Lessee
shall give notice thereof to the rating agencies specified in
such paragraphs, such notice to be sufficiently in advance of
such transaction to enable the rating agencies to respond
thereto prior to consummation thereof.
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(V) Incurrence of Debt. Without the consent of the Owner
Participant, the Lessee shall not issue or assume any secured or
unsecured indebtedness maturing more than eighteen months after
the date of issuance thereof, if, immediately after such issue
or assumption, the total amount of all secured and unsecured
indebtedness of the Lessee maturing more than one year after the
date of such issue or assumption shall exceed 65% of the
aggregate of (x) such total amount and (y) the total of the
capital and surplus of the Lessee.
(vi) Change in Chief Executive Office. The Lessee will
notify the Owner Trustee, the Owner Participant, the Loan
Participant and the Indenture Trustee promptly after any change
of location of its chief executive office and place of business,
principal place of business or place where the Lessee maintains
its business records.
(vii) No Petition Agreement. Prior to the 181st day
following the payment in full of the Bonds and the discharge in
accordance with its terms of the Collateral Trust Indenture, the
Lessee will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or
composition of or in respect of the Loan Participant under the
Bankruptcy Code or any other applicable Federal or state law or
the law of the District of Columbia.
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(viii) ANPP Project Agreements. Except where the failure to
do so would not have a material and adverse effect on the
Undivided Interest, the Real Property Interest, Unit 1 or the
rights, interests and benefits of the Owner Trustee or the Owner
Participant under any Transaction Document the Lessee (without
limiting its obligations under the next sentence) at all times,
unless the Owner Participant shall otherwise consent, (1) will
perform its obligations under and comply with the terms of each
ANPP Project Agreement to be complied with by it, (2) will
exercise its rights under the ANPP Participation Agreement to
maintain each ANPP Project Agreement in full force and effect,
(3) will keep unimpaired all of the Lessee's rights, powers and
remedies under each ANPP Project Agreement and prevent any
forfeiture or impairment thereof, (4) will enforce the ANPP
Participation Agreement in accordance with its terms and (5)
will not take or fail to take or join in (i) any action with
respect to1 nor accept or approve any amendment to or any other
change in, the ANPP Participation Agreement or any other ANPP
Project Agreement, or (ii) any action or change the effect of
which would be to relieve the Lessee of any obligation under the
ANPP Participation Agreement on or after the Closing Date. The
Lessee will not, unless the Owner Participant otherwise
consents, accept or approve any amendment to any ANPP Project
Agreement the effect of which would be to (A) reduce the
Generation Entitlement Share related to the Undivided Interest,
(B) impose, directly or indirectly, at any time on the Owner
Trustee or the Owner Participant any obligations (unless such
Person is then an ANPP Participant), (C) discriminate against
(x) the Owner Trustee or the Owner Participant in its capacity
as lessor in a sale and lease-back transaction or (y) any
present or future ANPP Participant because such ANPP Participant
derived or will derive its status as "Participant" under the
ANPP Participation Agreement from a lessor in a sale and
lease-back transaction, (K) deprive the Owner Trustee or the
Owner Participant, as the case may be, of the benefit of
Sections 15.2.2, 15.10 and 32.1 of the ANPP Participation
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<PAGE>
Agreement (or any comparable successor provisions), or (F) amend
or otherwise change section 15.10 of the ANPP Participation
Agreement. The Lessee shall (A) provide copies of any proposed
amendment to or modification of the ANPP Participation Agreement
to the Owner Participant not less than 45 days prior to the
execution thereof by the Lessee (except where the Lessee is
unaware thereof 45 days prior to such execution, in which case
the Lessee shall provide notice thereof as promptly as possible
after becoming so aware) and (B) upon such execution furnish to
the Owner Participant a copy of any such amendment or
modification as executed. The Lessee will not, except as
permitted by paragraph (ii) above or by the Assignment and
Assumption, sell, transfer, assign or otherwise. dispose of all
or any of its rights or interests in and to PVNGS.
(ix) Notes and Bands. The Lessee will not, and will not
permit any of its Affiliates to, acquire any of the Notes or,
except in connection with the selection of Bonds for redemption
pursuant to the Collateral Trust Indenture, the Bonds.
(x) Cooperation. The Lessee will cooperate with the Owner
Participant and the Owner Trustee in obtaining the valid and
effective issue, or, as the case may be, transfer or amendment
of all Governmental Actions (including, but without limitation,
the License) necessary or, in the opinion of the Owner
Participant, desirable for the ownership, operation and
possession of the Undivided Interest, the Real Property Interest
or any portion of Unit 1 represented thereby by the Owner
Trustee or any transferee, lessee or assignee thereof for the
period from and after the Lease Termination Date. The Lessee
agrees to accept and cooperate in receiving any transfer of the
Owner Participant's right, title and interest in the Trust
Estate made pursuant to Section 7(b)(4)
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(xi) Decommissioning. (A) The Lessee will comply with its
obligations under Applicable Law concerning the decommissioning
and retirement from service of Unit 1 (which term shall include,
for all purposes of this paragraph (xi), (i) the cost of
removal, decontamination and disposition of equipment and
fixtures, the cost of safe storage for later removal,
decontamination and disposal and the cost of entombment of
equipment and fixtures, and (ii) the cost of (x) razing of Unit
1, (y) removal and disposition of debris from the PVNGS Site and
(z) restoration of relevant portions of the PVNGS Site) . If
Applicable Law or Governmental Action shall not, on or before
December 31, 1990, impose upon the Lessee the obligation to
create, fund and maintain an external reserve fund dedicated to
paying all the costs of decommissioning and removing from
service the Undivided Interest, then the Lessee will create and
maintain the Decommissioning Fund; if Applicable Law or
Governmental Action shall thereafter impose upon the Lessee an
obligation to create and maintain such a fund, any fund in
compliance with Applicable Law or such Governmental Action shall
be deemed satisfactory to the Owner Participant for purposes of
the preceding sentence; provided, however, the Lessee shall in
any and all events maintain and fund such an external reserve in
accordance with prudent utility practice and thereafter review
such fund, at least every five years after its creation, and
modify the same as to amount or rate of accumulation to bring
the same, if necessary, into conformity with prudent utility
practice. (B) Except to the extent provided in clauses (C) and
(D) below, as between the Lessee, the Owner Trustee, the Owner
Participant and any transferee (including by way of lease) or
assignee of any of the Lessor's or the Owner Participant's
right,
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<PAGE>
title or interest in Unit 1, the Lessee agrees to pay, be
solely responsible for, and to indemnify such parties against,
all costs and expenses relating or allocable to, or incurred in
connection with, the decommissioning and retirement from
5ervice of Unit 1, notwithstanding (i) the occurrence of the
Lease Termination Date, any Event of Default, Default, Event of
Loss, Deemed Lass Event or any other event or occurrence, (ii)
any provision of any Transaction Document, or other document,
instrument or agreement, including the ANPP Participation
Agreement, (iii) any provision of the License or any other
license or permit, or (iv) any Applicable Law, charter or
by-law provision, Governmental Action or other impediment,
including, without limitation, the bankruptcy or insolvency of
the Lessee, either now or hereafter in effect; it being
understood that the obligations of the Lessee under this clause
(3) are and shall be absolute and unconditional. (C) In the
event that (i) the Facility Lease shall have expired upon
expiration (or early termination pursuant to section 14(e) of
the Facility Lease) of the Lease Term (other than in connection
with an Event of Loss, Deemed Loss Event or Event of Default)
and (ii) thereafter the Lessor shall (1) re-lease the Undivided
Interest to any Person or (2) retain the Undivided Interest and
sell power and energy from its Generation Entitlement Share
through PNM, as agent, then after the Lessor has received (x)
in the case of clause (1) above, gross rents in an aggregate
amount (when discounted back to such Lease Termination Date at
a rate per annum equal to the Prime Rate) equal to 20% of
Facility Cost, or (y) in the case of clause (2) above, net
electric revenues in an aggregate amount (discounted as
aforesaid) equal to 20% of Facility Cost, the Lessor shall
thereafter reimburse the Lessee in respect of the
decommissioning obligation of the Lessee hereunder in an amount
equal to any further rent received or proceeds received
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<PAGE>
from the sale of power and energy to the extent that such rent
or proceeds are attributable to the decommissioning obligation
of the Lessee under this Section l0(b)(3)(xi) with respect to
the period from and after such Lease Termination Date (payable
on an annual basis with respect to each year or portion thereof
during the term of such lease referred to in clause (1) above
or such agency period referred to in clause (2) above);
provided, however, that when such amount has been paid the
Lessor shall be relieved of all obligations to make further
reimbursement to the Lessee for such purpose. (D) In the event
that (i) the Facility Lease shall have expired upon the
expiration (or early termination pursuant to Section 14(e) of
the Facility Lease) of the Lease Term (other than in connection
with an Event of Loss, Deemed Loss Event or Event of Default,
(ii) the Lessor shall sell (other than in connection with the
termination by the Lessee of the Facility Lease for
obsolescence pursuant to Section 14 of the Facility Lease) the
Undivided Interest to any Person (including the Lessee in
connection with the exercise by the Lessee of the purchase
option provided by Section 13(b) of the Facility Lease), and
(iii) the net sales proceeds (discounted back to such Lease
Termination Date at a rate per annum equal to the Prime Rate)
received by the Lessor in connection therewith shall exceed 20%
of Facility Cost (reduced by the percentage of Facility Cost,
if any, actually realized by the Lessor pursuant to clause (C
above), then the Lessor shall reimburse the Lessee in respect
of the decommissioning obligation of the Lessee hereunder in an
amount equal to any net proceeds of such sale to the extent
that such proceeds are attributable to the decommissioning
obligation of the Lessee under this Section l0(b)(3)(xi) with
respect to the period from and after the date of such sale
through the remaining useful life of Unit 1 (whereupon the
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<PAGE>
reimbursement obligations of the Lessor under this Section
l0(b)(3)(xi) shall terminate); provided, however, that any such
reimbursement shall not reduce the amount of such net sales
proceeds retained by the Lessor to an amount (discounted as
aforesaid) equal to less than 20% of Facility Cost (reduced by
the percentage of Facility Cost, if any, actually realized by
the Lessor pursuant to clause (C) above). The reimbursement
obligations of the Lessor under clauses (C) and (D) above are
for the sole benefit of the Lessee, and no other Person shall be
a third party beneficiary with respect thereto. In the event
that the Lessee and the Lessor shall not agree as to the amount
of gross rents, net electric revenues or net sales proceeds
attributable to the decommissioning obligation of the Lessee
under this Section 10(b)(3)(xi), such amount shall be determined
by the Appraisal Procedure. For purposes of deter mining
Facility Cost under clauses (C) and (D) of this Section
l0(b)(3)(xi), Facility Cost shall be adjusted to reflect any
inflation or deflation from the Closing Date to the time of the
determination.
(xii) Acknowledgment and Agreement.
The Lessee hereby acknowledges and agrees to the provisions of
Section 7(b)(4) of this Participation Agreement.
SECTION 11. Conditions Precedent.
(a) Owner Participant and Loan Participant Conditions. The
obligation of (x) the Loan Participant to make the Loan on the Closing Date, and
(y) the Owner Participant to make the Investment and the Real Estate Investment
on the Closing Date, shall be subject to the fulfillment on or prior to the
Closing Date of the following conditions precedent (each instrument, document,
certificate or opinion referred to below to be in form and substance
satisfactory to the Loan Participant and the Owner Participant):
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<PAGE>
(1) Notice of Closing; Transaction Documents. Each shall have
received executed copies, or sets of executed counterparts, of (x) the
Notice of Closing, and (y) each Transaction Document (other than the
Tax Indemnification Agreement), the Mortgage Release, each Financing
Document being executed on the closing Date and such other documents.
as are contemplated by this Participation Agreement.
(2) Tax Indemnification Agreement. The Owner Participant shall
have received an executed copy of the Tax Indemnification Agreement.
(3) Authentication Request etc. The Owner Trustee shall have
delivered to the Indenture Trustee (x) a request, dated the Closing
Date, authorizing the Indenture Trustee to authenticate and deliver the
Initial Series Note to the Loan Participant upon its payment to the
Indenture Trustee, for the account of the Owner Trustee, of the
proceeds of the Loan, and (y) the Original of the Facility Lease.
(4) Due Authorization, Execution and Delivery. All of the
documents described in clauses (1) and (2) of this Section 11(a) shall
have been duly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect on the Closing
Date, and the Loan Participant and the Owner Participant shall have
received evidence as to such authorization, execution and delivery.
(5) Initial Series Note and Bond Transactions; Investment. In
the case of the Loan Participant, (A) the Loan Participant shall have
received the proceeds from the sale of the Initial Series Bonds as a
result of the consummation of the transactions contemplated by the Term
Loan Agreement, (6) the Owner Trustee shall have executed, and the
Indenture Trustee shall have authenticated and delivered to the Loan
Participant, the Initial series Note evidencing the Loan made on the
Closing Date, (C) the Collateral Trust Trustee shall have accepted the
Term Note Supplemental Indenture and shall have
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released the amount of the Loan from the lien of the Collateral Trust
indenture, and CD) the Owner Participant shall have made the Investment
and the Real Estate Investment on the Closing Date.
(6) Loan. in the case of the Owner Participant, the Loan
Participant shall have made the Loan.
(7) ANPP Administrative Committee. The ANPP Administrative
Committee shall have made the finding required by section 15.6.2 of the
ANPP Participation Agreement, and the Lessee shall have delivered
evidence of such finding having been made.
(8) No Violation. The making by the Owner Participant of the
Investment and the Real Estate Investment and by the Loan Participant
of the Loan shall not violate any Applicable Law.
(9) No Default. No Default or Event of Default or, in the case
of the, Loan Participant, Indenture Default or indenture Event of
Default, shall have occurred and be continuing.
(10) Recording and Filing. The financing statements and fixture
filings under the Uniform Commercial Code and certain Transaction
Documents, in each case as enumerated and described in Schedule 3, shall
have been duly filed or recorded in the respective places or offices set
forth in such Schedule and all recording and filing fees with respect
thereto shall have been paid.
(11) Representations and Warranties of the Loan Participant. in
the case of the Owner Participant, the representations and warranties of
the Loan Participant set forth in Section 6(a) shall be true and correct
on and as of the Closing Date with the same effect as though made on and
as of the Closing Date, and the Owner Participant shall have received an
Officers' Certificate of the Loan Participant, dated the Closing Date,
to such effect.
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(12) Opinion of the Loan Participant's Counsel. In the case of
the Owner Participant, it shall have received a favorable opinion of the
Loan Participant's counsel, dated the Closing Date and addressed to the
Owner Participant, addressing such matters relating to the transactions
contemplated hereby and by the other Transaction Documents as the Owner
Participant may reasonably request.
(13) Representations and Warranties of the Owner Participant. In
the case of the Loan Participant, the representations and warranties of
the Owner Participant set forth in Section 7(a) shall be true and
correct on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, and the Loan Participant shall have
received a certificate of an officer of the Owner Participant, dated the
Closing Date, to such effect.
(14) Opinion of the Owner Participant's Special Counsel. In the
case of the Loan Participant, it shall have received a favorable opinion
of the Owner Participant's Special Counsel, dated the Closing Date and
addressed to the Loan Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents, as the Loan Participant may reasonably request.
(15) Representations and Warranties of the Owner Trustee. The
representations and warranties of FNB and the Owner Trustee set forth in
Section 8(a) shall be true and correct on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, and
the Loan Participant and the Owner Participant shall have received a
certificate from an officer of FNB and a certificate of the Owner
Trustee, dated the Closing Date, to such effect.
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<PAGE>
(16) Opinion of the Owner Trustee's Counsel. The Loan
Participant and the Owner Participant shall have received a favorable
opinion of the Owner Trustee's counsel, dated the Closing Date and
addressed to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant may reasonably
request.
(17) Representations and Warranties of the Indenture Trustee.
The representations and warranties of the Indenture Trustee set forth in
Section 9(a) shall be true and correct on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, and
the Loan Participant and the Owner Participant shall have received a
certificate of the Indenture Trustee, dated the closing Date, to such
effect.
(18) Opinion of the Owner Participant's Special NRC Counsel. The
Owner Participant shall have received a favorable opinion of the Owner
Participant's special NRC Counsel, dated the Closing Date and addressed
to the Owner Participant, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Owner Participant may reasonably request.
(19) Representations and warranties of the Lessee. (A) The
Representations and Warranties of the Lessee set forth in Section 10(a),
in each other Transaction Document, in the Term Loan Agreement and in
each certificate or other document to which the Lessee is a party
executed or delivered in connection with the transactions contemplated
hereby or thereby shall be true and correct on and as of the Closing
Date with the same effect as though made on and as of the Closing Date
and (3) no Default, Event of Default, Deemed Loss Event or Event of Loss
shall have occurred and be continuing and the Loan Participant and the
Owner Participant shall have received an Officers' Certificate of the
Lessee, dated the Clo5ing Date, to such effect. Such Officers'
Certificate shall state that there has been no material adverse change
in the properties, business, prospects or financial condition of the
Lessee since March 31, 1986, and no event has
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occurred since that date which would materially adversely affect the
ability of the Lessee to perform its obligations under this Participation
Agreement or any other Transaction Document to which it is or is to
become a party.
(20) Opinion of the Lessee's Special Counsel. The Loan
Participant and the Owner Participant shall have received a favorable
opinion of the Lessee's Special Counsel, dated the Closing Date and
addressed to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant shall reasonably
request.
(21) Opinion of Lessee's General Counsel. The Loan Participant
and the Owner Participant shall have received a favorable opinion of the
Lessee's General Counsel, dated the Closing Date and addressed to each
such Person, addressing such matters relating to the transactions
contemplated hereby and by the other Transaction Documents as the Loan
Participant or the Owner Participant shall reasonably request.
(22) Opinion of Lessee's Arizona Counsel. The Loan Participant and the
Owner Participant shall have received a favorable opinion of the
Lessee's Special Arizona Counsel, dated the Closing Date and addressed
to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant shall reasonably
request.
(23) Opinion of Owner Participant's Special Arizona Counsel. The Owner
Participant shall have received a favorable opinion of the Owner
Participant's Special Arizona Counsel, dated the Closing Date and
addressed to the Owner Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents as the Owner Participant shall reasonably request.
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(24) Opinion of Owner Participant's Special New Mexico Counsel. The
Owner Participant shall have received a favorable opinion of the Owner
Participant's Special New Mexico Counsel, dated the Closing Date and
addressed to the Owner Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents as the Owner Participant may reasonably request.
(25) Opinion of the Owner Participant's special Counsel. The Owner
Participant shall have received a favorable opinion of the Owner
Participant's Special Counsel, dated the Closing Date and addressed to
the Owner Participant, with respect to such Federal tax and other tax
matters as the Owner Participant may reasonably request.
(26) Opinion of the Loan Participant's Counsel. The Loan Participant
shall have received a favorable opinion of the Loan Participant's
Counsel, dated the Closing Date and addressed to it, with respect to
such matters as the Loan Participant shall reasonably request.
(27) Taxes. All Taxes, if any, payable in connection with the execution,
delivery, recording and filing of the Transaction Documents and all the
documents and instruments enumerated and described in Schedule 3, or in
connection with the issuance and sale of the Initial Series Note and the
Initial Series Bonds and the making by the Owner Participant of the
Investment and the Real Estate Investment, and all Taxes payable in
connection with the consummation of the transactions contemplated hereby
and by the other Transaction Documents, shall have been duly paid in
full by the Lessee.
(28) Form U-7D. A certificate on Form U-7D with respect to the Facility
Lease shall have been duly executed and delivered by the Owner Trustee
and the Owner Participant and shall be in due form for filing.
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(29) Appraisal. The Owner Participant shall have received a
letter, dated the Closing Date and addressed to the Owner Participant, from the
Appraiser containing an appraisal of the Undivided Interest, which appraisal
shall reflect the Appraiser's reasonable conclusion that (w) the fair market
value in the hands of the Owner Trustee of the Undivided Interest on the Closing
Date, taking into account the effect and existence of the Real Property
Interest, the Assignment and Assumption and the ANPP Participation Agreement, is
equal to the Purchase Price as set forth in the Notice of Closing, (x) the
estimated remaining economic useful life of Unit 1 (including the undivided
Interest) is at least 38 years and 6 months, (y) at the expiration of the first
two years of the Renewal Term the undivided Interest will have an estimated
residual value taking into account the effect and the existence of this
Participation Agreement, the Real Property Interest, the Assignment and
Assumption and the ANPP Participation Agreement, in the hands of the Owner
Trustee or a Person (unrelated to the Lessee) who could lease or purchase the
Undivided :Interest from the Owner Trustee for commercial use, equal to at least
20% of the Purchase Price, determined without including in such value any
increase or decrease for inflation or deflation during the period from the
Closing Date through the expiration of the first two years of the Renewal Term,
and (2) taking into account the effect and the existence of the Real Property
Interest, the Assignment and Assumption and the ANPP Participation Agreement,
the use of the Undivided Interest at the Lease Termination bate by any User is
feasible from an engineering and economic point of view and is commercially
reasonable.
(30) Offering and Sale at Interest. The Loan Participant,
the Owner Trustee and the Owner Participant shall have received a letter from
Kidder Peabody with respect to the offering and sale of the interests in the
transactions contemplated by this Participation Agreement and each other
participation agreement relating to an undivided interest in Unit 1.
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(31) Extension Letter. The Extension Letter shall have been
duly executed by the respective parties thereto and delivered to the
collateral Trust Trustee.
(32) Governmental Action. The Lessee shall have obtained all
Governmental Actions (including, without limitation, the New Mexico
Order and the FERC Order, which order. shall be final and
non-appealable, and the NRC Order, which order shall be final) required
or, in the opinion of the Owner Participant, advisable for the
consummation of all the transactions contemplated by this Participation
Agreement and the other Transaction Documents and the Financing
Documents in accordance with their terms
(33) Title Report Title Insurance. The Owner Participant shall have
received (i) an updated title report, dated the Closing Date, with
respect to the nuclear plant site, which report does not disclose any
exceptions materially adverse to the possession or operation of Unit 1
or the performance by the Lessee of its obligations under this
Participation Agreement and the other Transaction Documents to which the
Lessee is, or is to become, a party; and (ii) such title insurance.
policies with respect to the nuclear plant site and improvements thereon
(including the Owner Trustee's interests therein) as it shall have
reasonably requested, such policies to be in form and substance
satisfactory to the Owner Participant.
(34) No Change or Proposed Change in Tax Laws. No change shall have
occurred or been proposed in the Code or any other tax statute, the
regulations thereunder or any interpretation thereof that would
adversely affect the tax consequences anticipated by the Owner
Participant with respect to the transactions contemplated by the
Transaction Documents, unless the Lessee shall have agreed in writing to
protect the Owner Participant, in the Tax Indemnification Agreement or
otherwise, in a manner reasonably satisfactory to it, against the effect
of such change or proposed change.
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(35) Insurance. The Owner Participant shall have received a
written report from its independent insurance consultant in form and
substance satisfactory to the Owner Participant.
(36) Site Arrangement Plan. The Owner Participant's special
Counsel shall have received a site arrangement plan of the nuclear
plant site prepared subsequent to January 1, l979
(37) special Certificate of the Lessee. The Owner
Participant shall have received a certificate of the Lessee, dated
the Closing Date, to the effect that, except as set forth on the
Schedule thereto, (A) Unit 1 has been in all material respects
completed in a good and workmanlike manner and in accordance with the
plans and specifications relating thereto (as the same may have been
modified from time to time to reflect Unit 1 as actually completed),
Applicable Law (including, but without limitation, the regulations of
the NRC), the License and the AN?? Participation Agreement, (B) all
Governmental Action necessary for the commercial operation of Unit 1
(including the Undivided Interest) have been received, other than
Governmental Action that is routine in nature for PVNCS or that
cannot be obtained under Applicable Law, or is typically not applied
for, prior to the time it is required, and that the Lessee reasonably
expects to be obtained in due course, (C) the plans and
specifications relating to Unit 1 are complete in all material
respects (modified or to be modified as aforesaid) and consistent
with prudent engineering practice, (D) the testing and startup
procedures for Unit 1 were and the operation and maintenance programs
for Unit 1 are consistent with such plans and specifications,
Applicable Law and prudent engineering practice, (I) Unit 1 has been
tested in accordance with all customary testing and startup
procedures which would have been performed on or prior to the Closing
Date, and such tests and procedures indicate that Unit 1 will have
the capacity and functional ability to perform in commercial
operation, on a continuing basis, the function for which it is
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designed in accordance with such plans and specifications and has a
nominal capacity of 1,270 megawatts electric, (F) all material
Governmental Actions relating to the construction, operation or
maintenance of Unit 1 are listed in a schedule to such certificate, (G)
there is no present event or condition which would materially adversely
affect the capability of Unit 1 to operate in accordance with such
plans and specifications and (H) based upon the Lessee's present
reasonable expectations, and subject to Applicable Law, the rights and
interests made available to the ANPP Participants (including the
Lessee) pursuant to the ANPP Participation Agreement, as such rights
and interests are made available to the Owner Trustee, any successor or
assign of the Owner Trustee or any "Transferee" of the Owner Trustee
under Section 15.10 of the ANPP Participation Agreement, under and
pursuant to this Agreement, the Deed, the Assignment of Beneficial
Interest or the Assignment and Assumption, together with the rights to
be made available under and pursuant to the Assignment and Assumption,
are adequate to permit, during the period following the Lease
Termination Date or the taking of possession of the Undivided Interest
and the Real Property Interest in the exercise of remedies under
section 16 of the Facility Lease, in accordance with the ANPP Project
Agreements (i) the construction, location, occupation, connection,
maintenance, replacement, renewal, repair or removal of Unit 1, (ii)
the use, operation and possession of Unit 1, (iii) the construction,
use, operation, possession, maintenance, replacement, renewal and
repair of all alterations, modifications, additions, accessions,
improvements, appurtenances, replacements and substitutions thereof and
thereto, (iv) adequate ingress to and egress from Unit 1 for any
reasonable purpose in connection with the exercise of rights under the
Assignment and Assumption and the Owner Trustee's or any transferee's
ownership and possession of the Undivided Interest and (v) the
obtaining of nuclear fuel, of water and of transmission services to the
ANPP switchyard sufficient to enable delivery of the Generation
Entitlement share related to the undivided Interest in a commercially
efficient manner and on commercially reasonable
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terms. Nothing in the foregoing clause (H) shall be deemed to be or be
construed as a warranty by the Lessee as to the performance by the
Operating Agent of its obligations under the ANPP Participation
Agreement. Such certificate shall also be attested to by J.L. Wilkins,
Senior Vice President, Power Supply, PNM Electric, who shall state that
(i) he has made such investigation, inspection and review as he deems
necessary to make the statements in the certificate and (ii) to the best
of his knowledge, the statements of the Lessee in such certificate are
true and correct.
(38) Real Estate Appraisal. The Owner Participant shall have received an
appraisal of the Real Property Interest, which appraisal shall reflect
the appraiser's reasonable conclusion that the fair market value in the
hands of the Owner Trustee of the Real Property Interest on the Closing
Date is equal to the Real Estate Investment. Such appraisal shall cover
such other matters as the Owner Participant shall have requested.
(39) Other Unit 1 Leases. The Lessee shall have obtained the consent
required by Section 10 (b)(3)(xii) of each of the three Participation
Agreements dated as of December 16, 1985, relating to separate sale and
leaseback transactions involving undivided interests in Unit 1 in
respect of which the Lessee is lessee.
(40) opinion of Lessee's FERC Counsel. The Loan Participant and the
Owner Participant shall have received a favorable opinion of Lessee's
FERC Counsel, dated the Closing Date and addressed to each such Person,
addressing such FERC matters as the Loan Participant or the Owner
Participant may reasonably request.
(41) Other Matters. The Loan Participant and the Owner Participant shall
have received such other documents, certificates and opinions as the
Loan Participant or the Owner Participant, or their respective counsel,
shall reasonably request.
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(b) Lessee Conditions. The obligation of the Lessee to sell
and lease back the undivided Interest and the Real Property Interest on the
Closing Date pursuant to Section 4 shall be subject to the fulfillment on or
prior to the Closing Date of the following conditions precedent, in each case in
form and substance satisfactory to the Lessee:
(1) Paragraph (a) Documents. The Lessee, the Owner Trustee and
the Indenture Trustee shall have received executed copies of the
documents, certificates, opinions (other than the opinion referred to
in Section 11 (a)(25)), appraisals, letters and forms described in
paragraph (a) of this Section 11. All such opinions shall be addressed
to the Lessee, the Owner Trustee and the Indenture Trustee except the
opinions or documents to which reference is made in clauses (18), (23),
(24) and (251 of said paragraph (a).
(2) Payment of Purchase Price. The Owner Trustee shall have
paid to the Lessee an amount, in immediately available funds, equal to
the Purchase Price and the Real Estate Investment.
(3) Special Opinion of the Lessee's Special Counsel. The
Lessee shall have received a favorable opinion of the Lessee's Special
Counsel, dated the Closing Date and addressed to the Lessee, with
respect to such Federal tax and other matters as the Lessee may
reasonably request.
(4) Accountant's Letter. The Lessee shall have received a
letter satisfactory to it from Peat, Marwick, Mitchell & Co., to the
effect that, under generally accepted accounting principles and FASS
No. 13, the Facility Lease is an "operating lease".
(5) Changes in Pricing Assumptions. If any change or changes
in the Pricing Assumptions shall have occurred on or before the Closing
Date, the effect of such change or changes will not require the payment
of Basic Rent (as to be adjusted pursuant to Section 3(e)(iv) 0(pound)
the Facility Lease) on an annual basis to exceed 11.7% of Facility
Cost.
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(C) Conditions to Refunding. In addition to the limitations
set forth in Section 2(c), the obligation of the Owner Participant and the Loan
Participant to participate in a refunding of the Initial Series Note as provided
in section 2(c) shall be subject to the fulfillment on or before the Refunding
Date of the following conditions precedent (each instrument, document,
certificate or opinion to be in form and substance satisfactory to the Loan
Participant and the Owner Participant):
(1) Authentication Request, etc. The Owner Trustee shall have delivered
to the Indenture Trustee a request, dated the Refunding Date,
authorizing the Indenture Trustee to authenticate and deliver the Fixed
Rate Note to the Loan Participant against redelivery of the Initial
series Note to the Indenture Trustee for cancellation.
(2) Fixed Rate Note and Bond Transaction. (A) The Loan Participant shall
have received the proceeds from the sale of Refunding Bonds in an amount
sufficient to make the Refunding Loan, (B) the Owner Trustee shall have
executed, and the Indenture Trustee shall have authenticated and
delivered to the Loan Participant, the Fixed late Note evidencing the
Refunding Loan made on the Refunding Date and (C) the Collateral Trust
Trustee shall have accepted the Refunding Supplemental Indenture
subjecting the Fixed Rate Note to the lien of the Collateral Trust
Indenture and shall have released the Initial Series Note from the lien
of the Collateral Trust Indenture.
(3) No Default. No Default or Event of Default or Indenture
Event of Default shall have occurred and be continuing.
(4) Representations and warranties of the Owner Participant. The
representations and warranties of the Owner Participant set forth in
section 7(a) shall be true and correct on and as of the Refunding Date
with the same effect as though made on and as of the Refunding Date
(with all references to the Closing Date in such representations and
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warranties being changed to references to the Refunding Date), and the
Loan Participant shall have received a certificate of the Owner
Participant, dated the Refunding Date, to such effect.
(5) Representations and warranties of the Owner Trustee. The
representations and warranties of FNB and the Owner Trustee set forth in
Section 8(a) shall be true and correct on and as of the Refunding Date
with the same effect as though made on and as of the Refunding Date
(with all references to the Closing Date in such representations and
warranties being changed to references to the Refunding Date), and the
Loan Participant and the Owner Participant shall have received a
certificate from an officer of FNB and a certificate of the Owner
Trustee, dated the Refunding Date, to such effect.
(6) Representations and warranties of the Lessee. (A) The
representations and warranties of the Lessee set forth in Section 10(a)
shall be true and correct on and as of the Refunding Date with the same
effect as though made on and as of the Refunding Date (with all
references to the Closing Date in such representations and warranties
being changed to references to the Refunding Date), (B) no Event of
Default, Deemed Loss Event or Event of Loss shall have occurred and be
continuing and the Loan Participant and the Owner Participant shall have
received an Offic9rs' Certificate of the Lessee, dated the Refunding
Date, to such effect and (C) on the date it became effective and on the
Refunding Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading, and
the Final Prospectus did not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements contained therein not misleading under the circumstances
under which any such shall have been made.
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(7) Opinions at Counsel. The Loan Participant and the Owner
Participant shall have received a favorable opinion of each of the
Owner Participant's special Counsel, the Owner Trustee's Counsel, the
Lessee's Special Counsel and the Lessee's General Counsel, each dated
the Refunding Date and addressing such matters relating to the
transactions in connection with the Refunding Note as the Loan
Participant or the Owner Participant (or any other party hereto) may
reasonably request.
SECTION 12. Consent to Assignment of the Facility Lease;
Consent to Indenture; Consent to Assignment of Notes.
(a) Consent to Assignment of Facility Lease. The Lessee hereby
acknowledges, and consents in all respects to, the partial assignment of the
Facility Lease by the Owner Trustee to the Indenture Trustee under and pursuant
to the Indenture and agrees:
(i) to make each payment of Basic Rent and supplemental Rent due
or to become due thereunder to the extent constituting Assigned
Payments (excluding, in any event, all Excepted Payments)
directly to the Indenture Trustee at the Indenture Trustee's
Office, so long as any of the Notes shall be Outstanding and
unpaid; and
(ii) not to seek to recover any payment (other
than a payment that both the Owner Trustee and the Lessee agree
was made in mistake) made to the Indenture Trustee in accordance
with the Indenture once such payment is made.
(b) Consent to Indenture. The Lessee hereby consents in all
respects to the execution and delivery of the Indenture, and to all of the terms
thereof, and the Lessee acknowledges receipt of an executed counterpart of the
Indenture; it being understood that such consent shall not be construed to
require the Lessee's consent to any future supplement to, or amendment, waiver
or modification of the terms of, the Indenture or any Note, except to the extent
expressly provided for.
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(C) Consent to Assignment by Loan Participant. Each of the
parties hereto acknowledges that the Loan Participant is assigning its right,
title and interest in and to the Notes to the Collateral Trust Trustee as
security for the Bonds to the extent set forth in the Collateral Trust
Indenture, and each of the parties hereto consents to such assignment.
SECTION 13. Lessee's Indemnities and Agreements.
(a) General Indemnity. The Lessee agrees, whether or not any
of the transactions contemplated hereby shall be consummated and whether or not
the Facility Lease, any other Transaction Document or any Financing Document
shall have expired or have been terminated, to assume liability for, and the
Lessee does hereby agree to indemnify, protect, defend, save and keep harmless
each Indemnitee, on an After-Tax-Basis, from and against, any and all Claims
which may be imposed on, incurred by or asserted against any Indemnitee (whether
because of act or omission by such Indemnitee or otherwise and whether or not
such Indemnitee shall also be indemnified as to any such Claim by any other
Person) in any way relating to or arising out of (i) Unit 1, the Undivided
Interest, the Real Property Interest, PYNGS or the PVNGS Site, or any part of
any thereof (or any beneficial interest therein) , any ANPP Project Agreement,
the' issuance or payment of the Bonds or the Notes, this Participation Agreement
or any other Transaction Document or any Financing Document (including, without
limitation, the performance or enforcement of any of the obligations and terms
hereunder or thereunder), (ii) a disposition of all or any part of the Undivided
Interest, the Real Property Interest, Unit 1 or any other interest of the Owner
Trustee or Owner Participant in connection with any termination of the Facility
Lease, or (iii) the design, manufacture, financing, erection, purchase,
acceptance, rejection, ownership, acquisition, delivery, nondelivery, lease,
sublease, preparation, installation, repair, transfer of title, abandonment,
possession, use, operation, maintenance, condition, sale, return, storage,
disposition, or decommissioning (including, but without limitation, with respect
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to the Termination Obligation) of the Undivided Interest, Unit 1, the Real
Property Interest, any Capital Improvement, the PVNGS Site, any other facilities
on the PVNGS Site or any other interest of the Owner Trustee or Owner
Participant in any thereof or any accident, nuclear incident or extraordinary
nuclear occurrence in connection therewith (including, without limitation, (A)
claims or penalties arising from any violation of law or liability in tort
(strict or otherwise) or from the active or passive negligence of any
Indemnitee, (B) loss of or damage to any property or the environment or death or
injury to any Person, (C) latent and other defects, whether or not discoverable,
(D) any claim for patent trademark, service-mark or copyright infringement and
(E) any claim of any Indemnitee incurred in the administration of this
Participation Agreement, any other Transaction Document or any Financing
Document and not paid as Transaction Expenses or included in Facility Cost and,
if not included in Transaction expenses, the reasonable fees and disbursements
of counsel and other professionals incurred in connection therewith); provided,
however, that the Lessee shall not be required to indemnify any Indemnitee
pursuant to this section 13(a), (1) for any Claim in respect of unit 1, the
undivided Interest or the Real Property Interest arising from acts or events not
attributable to the Lessee which occur after redelivery of the undivided
Interest to the Owner Trustee in accordance with section 5 of the Facility
Lease, except to the extent expressly provided in any Transaction Document, the
ANPP Participation Agreement or any other agreement or undertaking of the
Lessee, (2) for any Claim against such Indemnitee resulting solely from acts
which would constitute the willful misconduct or gross negligence of such
Indemnitee (unless imputed to such Indemnitee by reason of Unit 1, the undivided
Interest, the Real Property Interest, PVNGS, the PVNGS Site or any other
facilities at the PVNGS Site or any occurrence in connection with any thereof),
(3) for any Transaction Expense to be paid by the Owner Trustee pursuant to
Section 14(a) or (4) for any Claim resulting solely from a transfer by the Owner
Trustee or the Owner Participant of all or part of its interest in the Facility
Lease, unit 1, the Real Property Interest or the undivided Interest other than
in connection with any early termination of the Facility Lease or any exercise
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of remedies under Section 16 thereof or the transfer contemplated by Section
7(b)(4) or the first transfer by the Owner Participant to an Affiliate of the
Owner Participant. To the extent that an Indemnitee in fact receives
indemnification payments from the Lessee under the indemnification provisions of
this Section 13(a), the Lessee shall be subrogated, to the extent of such
indemnity paid, to such Indemnitee's rights with respect to the transaction or
event requiring or giving rise to such indemnity, but only so long as such
subrogation shall not materially adversely affect the rights of such Indemnitee
or any other Indemnitee hereunder. Nothing herein contained shall be construed
as constituting a guaranty by the Lessee of the principal of or premium, if any,
or interest on the Notes or the Bonds or of the residual value or useful life of
the undivided Interest.
(b) General Tax Indemnity.
(1) Indemnity. All payments by the Lessee in connection with the
transactions contemplated by the Transaction Documents shall be free of
withholdings of any nature whatsoever (and at the time that the Lessee
is required to make any payment upon which any withholding is required,
the Lessee shall pay an additional amount such that :he net amount
actually received by the Person entitled to receive such payment will,
after such withholding, equal the full amount of the payment then due)
and shall be free of expense to each Indemnitee for collection or other
charges. If, for any reason, the Lessee is required to make any payment
to a taxing authority with respect to, or as a result of, any
withholding tax imposed on any Indemnitee in respect of the transactions
contemplated by the Transaction Documents by reason of the Indemnitee
not being a united States person, then such Indemnitee shall pay to the
Lessee on an After-Tax-Basis an amount which equals the amount paid by
the Lessee with respect to or as a result of such withholding tax.
whether or not any of the transactions contemplated hereby are
consummated, except as provided in Section 13(b)(2), the Lessee shall
pay, and shall indemnify, defend and hold each Indemnitee harmless, on
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an After-Tax Basis, from and against, any and all Taxes howsoever
imposed (whether imposed on or with respect to the Indemnitee, the
Lessee, Unit 1, the undivided Interest, the Real Property Interest, any
Capital Improvement or the PVNGS Site or any part thereof or interest
therein or otherwise) by any Federal, state or local government or
subdivision thereof or taxing authority in the United States or by any
foreign country or subdivision thereof or by any foreign or
international taxing authority in connection with or relating to (A)
the design, construction, financing, purchase, acquisition, acceptance,
rejection, delivery, nondelivery, transport, ownership, assembly,
possession, repossession, operation, use, condition, maintenance,
repair, improvement, sale, return, abandonment, decommissioning,
preparation, installation, storage, replacement, redelivery,
manufacture, insuring, leasing, subleasing, modification, transfer of
title, rebuilding, rental, importation, exportation or other
application or disposition of, or the imposition of any Lien (or
incurrence of any liability to refund or pay over any amount as a
result of any Lien other than Owner Participant's Liens and Owner
Trustee's Liens) other than Owner Participant's Liens and Owner
Trustee's Liens on, Unit 1, the Undivided Interest, the Real Property
Interest, any Capital Improvement or the PVNGS Site, or any part
thereof or interest therein, (B) the payment of Rent or the receipts or
earnings arising from or received with respect to, and the indebtedness
with respect to, Unit 1, the undivided Interest, the Real Property
Interest or any Capital Improvement, or any part thereof, interest
therein or application or disposition thereof, (C) any amount paid or
payable pursuant to, or contemplated by, this Participation Agreement,
any other Transaction Document or any Financing Document or the
transactions contemplated hereby or thereby (D) Unit 1, the Undivided
Interest, the Real Property Interest, any Capital Improvement or the
PVNGS Site, or any part thereof, or interest there-in, or the
applicability of the Facility Lease to the Undivided Interest or any
Capital Improvement, or any part thereof or interest therein, (2) this
Participation Agreement, any other Transaction
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Document or any Financing Document or (F) otherwise with respect to or in
connection with the transactions contemplated by this Participation
Agreement, any other Transaction Document or any Financing Document.
(2) Exclusions from General Tax Indemnity. Section
13(b)(l)(except for the first sentence thereof) shall not apply to:
(i) Taxes based on, or measured by, net income imposed by
the united States federal government (including, without
limitation, any minimum Taxes, capital gains Taxes, any Taxes
on, or measured by; items of tax preference, surcharge.,
additions to tax, penalties, fines or other charges in respect
thereof);
(ii) Taxes (other than sales, use or rental
Taxes) imposed by any state or local government or subdivision
thereof or other taxing authority in the United States or by any
foreign country or subdivision thereof or by any foreign or
international taxing authority that are based on, or measured
by, the net income, items of tax preference, net worth or
capital of an Indemnitee, or other taxes imposed in lieu of any
such Taxes, except, with respect to the Owner Trustee, the
Trust, the Trust Estate,. the Owner Participant and any
Affiliate of any thereof, any such Taxes imposed by a
jurisdiction as a result of a relation or asserted relation of
such jurisdiction to the transactions contemplated by the
Transaction Documents or the Financing Documents or as a result
of the activities of the Lessee, any ANPP Participant or any
Affiliate of any thereof in such jurisdiction; provided,
however, that the amount of any such excepted Taxes shall be
calculated (i) on a pro forma basis assuming that such
Indemnitee has no other taxable income or loss in the taxing
jurisdiction imposing the Tax (provided that such calculation
shall take into account any allocation or apportionment method
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used by such jurisdiction except to the extent that such
method takes into account the income or activities of business
entities organized outside the united States) and is able to
use any net operating loss carryovers (generated solely by
reason of and solely attributable to the transactions
contemplated by the Transaction Documents or the Financing
Documents, and for this purpose a similar pro forma
calculation shall be made) to the fullest extent, reasonably
determined, in good faith, by the Indemnitee, and (ii) by
taking into account any actual reduction in Taxes in such
jurisdiction or in any other jurisdiction in which such
Indemnitee is subject to tax (whither such reduction results
from the operation of allocation or apportionment formulas,
from credits or otherwise, except that no account shall be
taken of any actual reductions of tax benefits described in
the Tax Indemnification Agreement or any tax liability
generated by transactions other than those contemplated by the
Transaction Documents or the Financing Documents) which
reduction results from the transactions contemplated by the
Transaction Documents or the Financing Documents; provided
further, however, that, with respect to any Tax based on, or
measured by, capital or net worth, the Lessee's indemnity
obligation shall not exceed the incremental portion of such
Tax attributable to the transactions contemplated by the
Transaction Documents;
(iii) Taxes attributable to the undivided Interest or the Real
Property Interest to the extent that such Taxes are imposed
with respect to any period after (a) the Lease Termination
Date and (b) the date possession of the undivided Interest and
the Real Property Interest has been delivered to the Lessor as
provided in Section 5(a) of the Facility Lease, unless such
Taxes relate to events occurring or matters arising prior to
or simultaneously with either at the aforementioned dates;
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(iv) Taxes on or with respect to an Indemnitee
arising from any voluntary transfer by such Indemnitee of any
interest in the undivided Interest, the Real Property Interest,
the Trust Estate, the Indenture Estate, the Notes or any other
right or interest arising under the Transaction Documents or the
Financing Documents, unless an Event of Default has occurred and
is continuing, or Taxes arising from an involuntary transfer by
such Indemnitee of any such interest arising from a bankruptcy
or similar proceeding in which such Indemnitee is the debtor
unless such bankruptcy or other proceeding was caused, in whole
or in part, by the Lessee or any Affiliate thereof;
(v) Taxes based on or measured by any fees, commission or
compensation received by an Indemnitee for acting as trustee, or
for other services rendered, in connection with any of the
transactions contemplated by the Transaction Documents or the
Financing Documents;
(vi) Taxes on or with respect to an Indemnitee
arising by reason of. such Indemnitee's failure to file proper
and timely reports or returns (unless the filing of such reports
or returns is the obligation of the Lessee under the Transaction
Documents or the Financing Documents) and any penalties or
additions to tax imposed by reason of such Indemnitee's failure
to comply with the laws imposing such Tax or its material
failure to comply with its obligations under Section 13 (b)(6),
unless such failure results from any action of the Lessee or
failure by the Lessee to comply with any provision of the
Transaction Documents or the Financing Documents, including the
failure to provide necessary information;
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(vii) Taxes on or with respect to an Indemnitee arising as a
result of a material failure of such Indemnitee to fulfill its
obligations with respect to the contest of any claim in
accordance with Section l3(b)(4) of this Participation
Agreement;
(viii) Taxes imposed on or with respect to a transferee (or
subsequent transferee) of an original Indemnitee (other than a
transferee or subsequent transferee that is an Affiliate of its
transferor) to the extent that the amount of such Taxes exceeds
the amount of taxes that would have been imposed on or with
respect to such original Indemnitee but for the transfer to such
transferee or, if imposed, would not have been subject to
indemnification under this Section 13(b), provided, however,
that the exception in this clause shall not apply to any
transferee where such transfer shall have occurred during the
continuance of an Event of Default;
(ix) any Taxes imposed on the Lessor or the Owner Participant
resulting from, or which would not have occurred but for,
Lessor's Liens or Owner Participant's Liens and any Taxes
imposed on the Indenture Trustee which would not have occurred
but for Indenture Trustee's Liens;
(x) any Tax that results solely from the activities of an
Indemnitee in any taxing jurisdiction which activities are
unrelated to the transactions contemplated by the Transaction
Documents or the Financing Documents;
(xi) any Tax on or with respect to an Indemnitee resulting from
any amendment or modification entered into by such Indemnitee to
any Transaction Document or Financing Document if the Lessee is
not a party to such amendment or modification or has not
consented to such amendment or modification, in each
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case unless an Event of Default shall have occurred and be
continuing; and
(xii) any Tax on or with respect to an Indemnitee
resulting from the gross negligence or willful misconduct of
such Indemnitee (it being understood that no Indemnitee is
responsible for determining whether a Tax is payable if the
Lessee is required to indemnify the Indemnitee for such Tax
under this section 13(b));
provided, however, that the foregoing subclauses (i) through (xii) shall
not apply to any Tax imposed on the Loan Participant or the indenture
estate under the Collateral Trust Indenture.
(3) Calculation of General Tax Indemnity Payments. If any
Indemnitee realizes a net permanent tax benefit by reason of the payment
of any indemnity under section 13(b), such Indemnitee shall pay the
Lessee, but not before the Lessee shall have made all payments
theretofore due to such Indemnitee pursuant to this Section 13(b), an
amount equal to the lesser of (x) the sum of such tax benefit plus any
other net tax benefit realized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence (determined in
a manner consistent with the definition of After-Tax-Basis set forth in
Appendix A and with the last sentence of section 13 (b)(6) hereof) or
(y) the amount of such payment by the Lessee to such Indemnitee and any
other payment by the Lessee to such Indemnitee theretofore made pursuant
to this Section 13(b) less the aggregate amount of all prior payments by
such Indemnitee to the Lessee pursuant to this clause (y) with respect
to amounts paid pursuant to section 13(b) (1), it being intended that no
Indemnitee should realize a net tax benefit pursuant to this Section
13(b) unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 13(b);
provided, however, that in computing any permanent tax benefit, such
Indemnitee shall be deemed first to have utilized all deductions and
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credits available to it otherwise than by reason of any payment by the
Lessee pursuant to this Section 13(b); provided further, however, that
notwithstanding the provisions of this clause (3), such Indemnitee
shall not be obligated to make any payment to the Lessee pursuant to
this clause (3) if at the time such payment shall be due an Event of
Default shall have occurred and be continuing.
(4) General Tax Indemnity-Contests. If a written claim shall be made
against any Indemnitee for any Tax for which the Lessee is obligated
pursuant to this Section 13(b), such Indemnitee shall notify the Lessee
promptly of such claim but the failure so to notify the Lessee shall not
affect any obligation of the Lessee pursuant to this Section 13(b). If
the Lessee shall reasonably request in writing within 30 days after
receipt of such notice, such Indemnitee shall in good faith and at the
Lessee's expense contest the imposition of such Taxes; provided,
however, that such Indemnitee may in its sole discretion select the
forum for such contest and determine whether any such contest shall be
by (A) resisting payment of such Taxes, (B) paying such Taxes under
protest or (C) paying such Taxes and seeking a refund thereof; provided
further, however, that (W) such Indemnitee shall not be obligated to
contest any claim in which the amount in question is less than $250,000,
(X) at such Indemnitee's option, such contest shall be conducted by the
Lessee in the name of such Indemnitee (subject to the preceding proviso)
and (Y) in no event shall such Indemnitee be required or the Lessee
permitted to contest the imposition of any Taxes for which the Lessee is
obligated pursuant to this Section 13(b) unless (u) the Lessee shall
have acknowledged its liability to such Indemnitee for an indemnity
payment pursuant to this Section 13(b) as a result of such claim if and
to the extent such Indemnitee or the Lessee, as the case may be, shall
not prevail in the contest of such claim; (v) such Indemnitee shall have
received from the Lessee (i) satisfactory indemnity for any liability,
expense or loss arising out of or relating to such contest including,
but not limited to, (A) all reasonable legal, accountants' and
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investigatory fees and disbursements, (B) the amount of any interest,
additions to tax or penalties that may be payable as a result of
contesting such claim and (C.) if such contest is to be initiated by the
payment of, and the claiming of a refund for such Tax, sufficient funds
to make such payment on an After-Tax-Basis and (ii) an opinion of
independent tax counsel selected by the Lessee and approved by such
Indemnitee (which approval shall not be unreasonably withheld) and
furnished at the Lessee's sole expense to the effect that a Reasonable
Basis exists for contesting such claim or, in the event of an appeal,
that there exists a substantial possibility that an appellate court or an
administrative agency with appellate jurisdiction, as the case may be,
will reverse or substantially modify the adverse determination that the
Lessee desires to contest; (w) the Lessee shall have agreed to pay such
Indemnitee on demand, and on an After-Tax-Basis, all reasonable costs and
expenses that such Indemnitee may incur in connection with contesting
such claim (including, without limitation, all costs, expenses, losses,
reasonable legal and accounting fees, disbursements, penalties, interest
and additions to tax); (x) such Indemnitee shall have reasonably
determined that the action to be taken will not result in any danger of
sale, forfeiture or loss of, or the creation of any Lien (except if the
Lessee shall have adequately bonded such Lien or otherwise made provision
to protect the interests of such Indemnitee in a manner satisfactory to
such Indemnitee) on, Unit 1, any part thereof, the Undivided Interest,
the Real Property Interest, or any interest in any of the foregoing; and
(y) if such contest shall be conducted in a manner requiring the payment
of the claim, the Lessee shall have paid the amount required. The Lessee
agrees to give such Indemnitee reasonable notice of any contest prior to
the commencement thereof. If any Indemnitee shall obtain a refund of. all
or any part of any Taxes paid by the Lessee, or if any such refund would
be payable to the Indemnitee in the absence of an offsetting liability
for Taxes payable to the taxing authority in question, such Indemnitee
shall pay the Lessee, but not before the Lessee
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shall have made all payments theretofore due to such Indemnitee pursuant
to this Section 13(b), an amount equal to the lesser of (xx) the amount
of such refund so received or receivable, including interest received or
receivable and attributable thereto, plus any net permanent tax benefit
realized by such Indemnitee (determined in a manner consistent with the
definition of After-Tax-Basis set forth in Appendix A and with the last
sentence of Section 13(b)(E) hereof) as a result of any payment by such
Indemnitee made pursuant to this sentence (but only to the extent that
such net permanent tax benefit was not taken into account pursuant to
Section 13(b)(3)), and after taking into account the tax consequences of
the receipt of such refund and such interest) or (yy) such tax payment by
the Lessee to such Indemnitee plus any other payment by the Lessee to
such Indemnitee theretofore made pursuant to this Section 13(b), in
either case, net of any expenses not already paid or incurred by the
Lessee; provided, however, that in computing any net permanent tax
benefit, such Indemnitee shall be deemed first to have utilized all
deductions and credits available to it otherwise than by reason of any
payment by the Lessee pursuant. to this Section 13(b)1 provided, further,
however, that not-withstanding the provisions of this clause (4), such
Indemnitee shall not be obligated to make any payment to the Lessee
pursuant to this clause (4) if at the time such payment shall be due a
Default or an Event of Default shall have occurred and be continuing
under the Facility Lease. An Indemnitee shall not be required to make any
payment pursuant to this clause (4) before such time as the Lessee shall
have made all payments and indemnities then due under the Transaction
Documents to such Indemnitee. Notwithstanding anything contained in this
clause (4) to the contrary, no Indemnitee shall be required to contest
any claim if the subject matter thereof shall be of a continuing nature
and shall have previously been decided pursuant to the contest provisions
of this clause (4) unless there shall have been a change in the law
(including, without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after
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such claim shall have been so previously decided, and such Indemnitee
shall have received an opinion of independent tax counsel selected by the
Lessee and approved by such Indemnitee (which approval shall not be
unreasonably withheld) and furnished at the Lessee's sole expense to the
effect that such change provides a Reasonable Basis for the position
which such Indemnitee and the Lessee, as the case may be, had asserted in
such previous contest or for an alternative position based upon such
change that the Lessee now desires to assert. Nothing contained in this
section 13(b) shall require any Indemnitee to contest or permit the
Lessee to contest a claim which it would otherwise be required to contest
pursuant to this Section 13(b) if such Indemnitee shall waive payment by
the Lessee of any amount that might otherwise be payable by the Lessee
under this Section 13(b) by way of indemnity in respect of such claim. If
Lessee 4oes not request that a Tax be contested pursuant to this
paragraph (5), Lessee shall pay the Indemnitee therefor unless such Tax
was not included in the indemnification under Section 13 (b)(l) or was
excluded by Section 13 (b) (2).
(5) General Tax Indemnity-Reports. If any report, return or statement is
required to be filed with respect to any obligations of the Lessee under
or arising out of this Section 13(b), the Lessee shall timely notify the
Indemnitee and timely file the same, except for any such report, return
or statement which such Indemnitee has notified the Lessee that it
intends to file. The Lessee shall either file such report, return or
statement so as to show the ownership of the undivided Interest or the
Real Property Interest, as the case may be, in the Owner Trustee and
send a copy of such report, return or statement to the Owner Trustee and
such Indemnitee or, where not so permitted, notify the Owner Trustee and
such Indemnitee of such requirement and prepare and deliver such report,
return or statement to the Owner Trustee and such Indemnitee in a manner
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satisfactory to the Owner Trustee and Such Indemnitee within a
reasonable time prior to the time such report, return or statement is
to be filed or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee
under or arising out of this Section 13(b), provide the Owner Trustee
and such Indemnitee with information sufficient to permit such return,
statement or report properly to be made with respect to any obligations
of the Lessee under or arising out of this Section 13(b) (and the
Lessee shall hold each Indemnitee harmless from and against any
liabilities, obligations, losses, damages, penalties, claims, actions,
suits and reasonable costs arising out of any insufficiency or
inaccuracy in any such return, statement report or information). The
Lessee shall not have any right to examine the tax returns of any
Indemnitee.
(6) General Tax Indemnity-Payment. All Taxes
shall be paid when due and payable and, unless otherwise requested by
the appropriate Indemnitee, the Lessee shall pay any Taxes for which it
is liable pursuant to this Section 13(b) directly to the appropriate
taxing authority and shall pay such appropriate Indemnitee promptly on
demand in immediately available funds any amount due such Indemnitee
pursuant to this Section 13(b) with respect to such Taxes. Any such
demand shall specify in reasonable detail the payment and the facts upon
which the right to payment is based. Each Indemnitee shall promptly
forward to the Lessee any notice, bill or advice received by it
concerning any Taxes. Within 30 days after the date of each payment by
the Lessee of any Taxes, the Lessee shall furnish the appropriate
Indemnitee the original or a certified copy of a receipt for the
Lessee's payment of such Taxes or such other evidence of payment of such
Taxes as is acceptable to such Indemnitee. The Lessee shall also furnish
promptly upon request such data as any Indemnitee may require to enable
such Indemnitee to comply with the requirements of any taxing
jurisdiction. whenever any payment is to be made by
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the Lessee under this Section 13(b) and it shall be necessary, in
calculating the After-Tax-Basis amount of such payment, to compute the
amount of any liability for federal, state or local tax imposed on or
measured by the net income of any Indemnitee, such computation shall be
based on the assumption that such taxes shall be payable at the highest
marginal statutory rate in effect for the relevant period.
(7) Definition of Indemnitee. For purposes of this Section 13(b), the
term Indemnitee shall mean and include the successors and assigns of
each respective Indemnitee, and for purposes of federal income taxes,
the affiliated group of corporations and each member thereof (within the
meaning of Section 1504 of the Code) of which such Indemnitee is a
member, if such group shall file a consolidated united States federal
income tax return, and, for purposes of income or franchise taxes
imposed by a particular state or local taxing jurisdiction, shall mean
and include any consolidated or combined group of which such Indemnitee
is or shall be a member that is treated as such by such state or local
taxing jurisdiction.
(C) Supporting Material. Upon receipt of any payment provided for by
this Section 13, the Indemnitee receiving the same shall provide to the Lessee
such supporting material (other than tax returns) as the Lessee shall reasonably
request. The Lessee shall reimburse to any Indemnitee, on an After-Tax-Basis,
any expenses incurred in providing requested supporting material to the Lessee.
(d) Coordination with Tax Indemnification Agreement. Any amounts that
the Lessee is liable to pay pursuant to this Section 13(b) shall be payable by
the Lessee hereunder even if such Taxes are not the liability of the Lessee
pursuant to the Tax Indemnification Agreement.
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SECTION 14. Transaction Expenses.
(a) Transaction Expenses. Subject to the provisions of
paragraph (c) below, with funds provided by the Owner Participant, the Owner
Trustee hereby agrees that it will pay when due an appropriate portion (taking
into account the other undivided interests in Unit 1 sold on December 31, 1985)
of the following costs and expenses (Transaction Expenses):
(i) the reasonable legal fees and disbursements of the
Loan Participant's Counsel, the Owner Participant's Special
Arizona Counsel, the Owner Participant's Special New Mexico
Counsel, the Owner Participant's Special Counsel, the Owner
Participant's Special NRC Counsel, the Owner Trustee's Counsel
and the Indenture Trustee's Counsel for their services
rendered in connection with the execution and delivery of this
Participation Agreement and the other Transaction Documents
and all fees, expenses and disbursements incurred by them in
connection with such transactions; and reasonable legal fees,
expenses and disbursements in connection with NRC and ANPP
Participant approvals in connection with such transactions;
(ii) the initial (but not and expenses of the Owner
Indenture Trustee; the ongoing) fees Trustee and the
(iii) all stenographic, printing, reproduction, and other
reasonable out-of-pocket expenses (other than investment
banking or brokerage fees) incurred in connection with the
execution and delivery of this Participation Agreement and the
other Transaction Documents and all other agreements,
documents or instruments prepared in connection therewith
(including all computer analysis and travel related costs);
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(iv) the fees of the Appraiser for services rendered as
contemplated by Section 11(a)(29), the fees of the appraiser for
services rendered as contemplated by Section 11(a)(38) and the
fees of the insurance consultant for services rendered as
contemplated by Section 11(a)(35);
(V) all costs of issue of the Initial Series Bonds and
the Refunding Bonds including, without limitation, the costs of
preparing the Financing Documents, filing fees relating to the
Registration Statement and the fees, expenses and disbursements
of Collateral Trust Trustee's Counsel, Bank Counsel, Loan
Participant's special Arizona counsel and special New Mexico
counsel, underwriter's Counsel, the initial fees of the
Collateral Trust Trustee and its out-of-pocket expenses through
the Refunding Date, rating agency fees, the fees and commissions
of the underwriters of the Refunding Bonds and the fees,
expenses and disbursements of the Loan Participant; and
(vi) the fees and out-of-pocket expenses of Kidder
Peabody in connection with the placement of the beneficial
interest in the Trust.
Subject to the provisions of paragraph (c) below, funds for the payment of
Transaction Expenses will be provided by the Owner Participant to the Owner
Trustee and the Owner Trustee will promptly disburse such funds.
(b) Post-closing Expenses. The Lessee will pay, as
Supplemental Rent, (i) the ongoing fees, expenses, disbursements and costs
(including legal and other professional fees and expenses) of or incurred by the
Owner Trustee, the Indenture Trustee and the collateral Trust Trustee, including
in connection with the issue, sale and purchase of Notes and Bonds after the
Closing Date, and (ii) all fees, expenses, disbursements and costs (including
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legal and other professional fees and expenses) incurred by the Loan
Participant, the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Collateral Trust Trustee in connection with (a) any Default, Event of
Default, Indenture Default or Indenture Event of Default, (b) the entering into
or giving or withholding of any amendment, modification, supplement, waiver or
consent with respect to any Transaction Document or Financing Document, (c) any
Event of Loss or Deemed Loss Event, (d) any transfer of all or any part of the
right, title and interest of the Indenture Trustee in, to and under the
Transaction Documents, (e) any transfer of all or any part of the right, title
and interest of the Owner Trustee in the undivided Interest, the Real Property
Interest or in, to and under the Transaction Documents, (f) any transfer
contemplated by Section 7(b)(4), (g) the fees and expenses of Owner
Participant's special Counsel in connection with the review of changes in the
Price-Anderson Act up to $25,000 and (h) any refunding referred to in section
2(c) (except to the extent constituting Transaction Expenses).
(C) Lessee's Obligation. Notwithstanding Section 14(a) hereof,
(i) in the event the transactions contemplated by this Participation Agreement
shall not be consummated, the Lessee shall pay or cause to be paid, and shall
indemnify and hold harmless the Loan Participant, the Indenture Trustee, the
Collateral Trust Trustee, the Owner Trustee and the Owner Participant in respect
of all Transaction Expenses unless such failure to consummate shall result
solely from the Owner Participant's default in making its Investment hereunder
and (ii) the Lessee shall pay or cause to be paid that portion of Transaction
Expenses which exceeds a percentage of the Purchase Price equal to 2.50%.
SECTION 15. Owner Participant's Transfers.
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(a) Transfers. After the Closing Date, except as contemplated
by Section 7(b)(4), the Owner Participant shall not assign, convey or otherwise
transfer all or any part of (including without limitation an undivided interest
in) its right, title or interest in and to this Participation Agreement, any of
the other Transaction Documents or the Trust Estate (except its right to receive
Excepted Payments) to any Person (a Transferee) except on the following
conditions:
(i) the Transferee shall enter into an agreement or
agreements whereby such Transferee confirms that (1) it shall
be bound by the terms of this Participation Agreement and each
other Transaction Document, to the extent of the interest
transferred, as if it had been originally named as the Owner
Participant hereunder and thereunder and (2) if such
Transferee is a public utility company, it shall have waived
its right to claim Special Casualty Value upon the occurrence
of a Deemed Loss Event (of the type specified in clause (1) of
the definition thereof) under the Facility Lease;
(ii) the Transferee shall be either (A) a financial
institution, a corporation or a partnership with a net worth
or capital and surplus of at least $25,000,000 (or, in the
case of a partnership, at least one of whose general partners
has such a net worth or capital and surplus), or a direct or
indirect wholly owned subsidiary of such a financial
institution or corporation, (B) a direct or indirect wholly
owned subsidiary of (1) the Owner Participant or (2) any
parent of the Owner Participant, (C) the Lessee or such other
Person as shall have been approved by the Lessee or (D) any
Person; provided, however, that if the Transferee is a
subsidiary referred to in clause (A) above or a Person
referred to in clause (D) above, the transferring Owner
Participant (and any parent thereof secondarily liable
pursuant to this section l5(a)(ii)) shall continue to be
liable for (or the parent of such Transferee, which shall
otherwise be a permitted Transferee,
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shall enter into an agreement whereby such parent confirms that
it shall be secondarily liable for) the obligations of such
Transferee under section 7(b)(1) notwithstanding such transfer;
and
(iii) such transfer shall not violate the securities Act or any
provision of, or create a relationship which would be in
violation of, any Applicable Law or agreement to which the
transferring Owner Participant or the Transferee is a party or
by which its property is bound
Upon any such transfer, the transferring Owner Participant shall, except as
expressly provided in clause (ii) above, be released from its obligations under
this Participation Agreement and the other Transaction Documents to the extent
of the interest transferred. An agreement to transfer shall not in and of itself
constitute a transfer for purposes of this Section 15
(b) Procedure. If the Owner Participant transfers all or any
part of its interest hereunder pursuant to this Section 15, it shall give
written notice thereof to the Lessee, the Owner Trustee, the Indenture Trustee
and the Loan Participant, specifying the name and address for notices to the
Transferee, such other information and evidence as shall be necessary to
establish compliance with this Section 15 and the extent of the interest
transferred to such Transferee. If, as a result of any such transfer, the
original Owner Participant is not to continue to receive all payments to be made
by the Indenture Trustee to the "Owner Participant" under the Indenture, the
original Owner Participant shall from time to time, by notice to the Indenture
Trustee, with copies to the Lessee, the Owner Trustee and the Collateral Trust
Trustee, designate the manner in which any such payments to the "Owner
Participant" are to be allocated, and the Indenture Trustee shall be entitled to
rely on such notice for all purposes. This Section 15 (other than the notice
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provisions contained in the first sentence of this section 15(c)) is for the
benefit of the Lessee, the Owner Trustee and the Owner Participant and may not
be enforced by any other party hereto.
SECTION 16. Brokerage and Finders' Fees and Commissions.
Except to the extent of amounts payable by the Owner Participant
pursuant to Section 14, the Lessee will indemnify and hold harmless the Loan
Participant, the Indenture Trustee, the Owner Trustee and the Owner Participant
in respect of any commissions, fees, judgments or other expenses of any nature
and kind which any of them may become liable to pay by reason of any claims by
or on behalf of brokers, finders, agents, advisors or investment bankers in
connection with the transactions contemplated by this Participation Agreement,
any other Transaction Document or any Financing Document, or any litigation or
similar proceeding arising from any such claim, other than those claims arising
out of written undertakings of the party claiming indemnification under this
Section 16 or any Affiliate or shareholder (or Affiliate of such shareholder) of
such Person with any such broker, finder, agent, advisor' or investment banker.
SECTION 17. Survival of Representations and warranties; Binding
Effect.
(a) Survival. All indemnities, representations and warranties
contained in this Participation Agreement, in any other Transaction Document, in
any Financing Document and in any agreement, document or certificate delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
survive, and shall continue in effect following, the execution and delivery of
this Participation Agreement, the making of the investments and the loans
referred to herein, any disposition of any interest in the undivided Interest,
Unit 1 or any other property referred to in this Participation Agreement and the
expiration or other termination of any of the Transaction Documents or
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Financing Documents and shall be and continue in effect notwithstanding (i) any
investigation made by the Owner Participant or the Loan Participant or (ii) the
fact that any of the Indenture Trustee, the Owner Trustee, the Loan Participant
or the Owner Participant may waive compliance with any of the other terms,
provisions or conditions of any of the Transaction Documents or Financing
Documents. The obligations of the Lessee under sections l0 (b)(l)(x), 10 (b)(2),
10 (b)(3)(vii), 10(b)(3)(x), 10(b)(3)(xi), 13, 14, 16 and 19(f) shall survive
the expiration or other termination of this Participation Agreement or any other
Transaction Document or Financing Document. 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 Indemnitee shall not affect
such survival.
(b) Binding Effect. All agreements, representations and warranties in
this Participation Agreement, the other Transaction Documents and the Financing
Documents and in any agreement, document or certificate delivered concurrently
with the execution of this Participation Agreement or from time to time
thereafter, shall bind the party making the same and its successors and
permitted assigns and shall inure to the benefit of each party for whom made and
its successors and permitted assigns, and, to the extent provided in the next
sentence, each Indemnitee and its successors and assigns. The obligations of the
Lessee under Section 13 hereof and Section 20 of the Facility Lease are
expressly made for the benefit of, and shall be enforceable by, any Indemnitee,
separately or together, without declaring the Facility Lease to be in default
and notwithstanding any assignment by the Lessor of the 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 Participation Agreement, or in this Participation Agreement
or any other Transaction Document or any Financing Document. All payments
required to be made pursuant to Section 13 hereof shall be made directly to, or
as otherwise
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requested by, the Indemnitee entitled thereto upon written demand by such
Indemnitee. The Lessee shall not assign any of its rights. or obligations
hereunder without the prior written consent of the Owner Participant and the
Owner Trustee. Except as otherwise indicated, all references herein to any party
to this Participation Agreement and the other Transaction Documents shall
include the permitted successors and assigns of such party.
SECTION 18. Notices.
All communications, notices and consents provided for herein
shall be in writing, including telex, telecopy or other wire transmission
containing a request for assurance of receipt in a manner typical with respect
to communications of that type, or mailed by registered or certified mail,
personally delivered (with signed receipt of an officer of the Owner Participant
in the case of delivery to the Owner Participant) or delivered by express
delivery service, and shall be addressed (1) if to the Owner Participant, at One
Chase Manhattan Plaza (20th floor), New York, New York 10081, Attention of
Leasing Administrator; (ii) if to First PV Funding Corporation at Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, Attention of
President; (iii) if to The First National Bank of Boston, at 100 Federal Street,
Boston, Massachusetts 02110, Attention of Corporation Trust Division; (iv) if to
Chemical Bank, at 55 Water Street, New York, New York 10041, Attention of
Corporate Trustee Administration; and (v) if to Public Service Company of New
Mexico, at Alvarado Square, Albuquerque, New Mexico 87158, Attention: Secretary;
or at such other address as any party hereto may from time to time designate by
notice duly given in accordance with the provisions of this Section to the other
parties hereto. All such communications, notices and consents given in the
manner provided above shall be effective on the date of receipt of such
communication or notice.
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SECTION 19. Miscellaneous.
(a) Execution. This Participation Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Although this Participation Agreement is dated as of the date
first above written for convenience, the actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
and this Participation Agreement shall be effective on the latest such date.
(b) Intention of the Owner Trustee and the Owner Participant.
Each of the Owner Trustee and the Owner Participant intends to exercise its
rights and carry out its obligations hereunder and under the other Transaction
Documents solely with a view to furthering its own best interests and does not
have, and does not expect to have, any form of joint profit motive with any
other Person. The Owner Trustee and the Owner Participant shall not be required
to share any Rent to which they are entitled under the Facility Lease, or the
residual value of the Undivided Interest or the Real Property Interest, with any
other person. The Owner Trustee and the Owner Participant are not under the
control of nor shall they be deemed to be under the control of any other Person
having any interest in Unit 1, and shall not be the agent of or have a right or
power to bind any such Person (other than the Owner Participant as regards the
Owner Trustee) without its express written consent. The Owner Trustee and the
Owner Participant accordingly do not intend to create any form of partnership or
joint venture with any other Person by virtue of the transactions contemplated
hereby or by any of the Transaction Documents. In the event that it is
determined, contrary to the intent of the Owner Trustee and the Owner
Participant, that, for purposes of the Code or any other income tax law, a form
of partnership or joint venture exists between the Owner Trustee or the Owner
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Participant and any other Person, the Owner Trustee and the Owner Participant
hereby elect to the extent permitted by law (i) not to have the partnership
provisions of the Code or such other income tax law apply to any of the
transactions contemplated hereby or by any of the Transaction Documents and (ii)
to be treated solely as owning the Undivided Interest.
(c) Governing Law. This Participation Agreement 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 Mew York.
(d) Amendments, Supplements, etc. Neither this Participation
Agreement nor any of the terms hereof may be amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which enforcement of such change is sought.
(e) Headings. The headings of the sections and paragraphs of
this Participation Agreement have been inserted for convenience of reference
only and shall in no way restrict or otherwise modify any of the terms or
provisions hereof.
(f) Bankruptcy of Owner Participant. If (a) the Owner
Participant or the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, or any successor provision, (b) pursuant to
such reorganization provisions the Owner Participant or the Owner Trustee is
required, by reason of the Owner Participant being held to have recourse
liability directly or indirectly to the Holder of any Note or the Indenture
Trustee, to make payment on account of any amount payable as principal or
interest, and premium (if any), on such Note and (c) such Holder or the
Indenture Trustee actually receives any Excess Amount (as hereinafter defined)
which reflects any payment by the Owner Participant on account of clause (b) of
this Section, then such Holder or the Indenture Trustee, as the case may be,
shall promptly refund to the Owner Participant such Excess Amount. For purposes
of this Section, "Excess Amount" means the amount by which such payment exceeds
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the amount which would have been received on or prior to the date of such
payment by such Holder or the Indenture Trustee if the Owner Participant or the
Owner Trustee had not become subject to the recourse liability referred to in
clause (b) of this Section. Nothing contained in this Section shall prevent such
Holder or the Indenture Trustee from enforcing any personal recourse obligation
(and retaining the proceeds thereof) of the Owner Participant expressly provided
for under this Participation Agreement.
(g) Entire Agreement. This Participation Agreement (including the
Schedules hereto), the other Transaction Documents and the Financing Documents
supersede all prior agreements, written or oral, between or among any of the
parties hereto relating to the transactions contemplated hereby and thereby and
each of the parties hereto represents and warrants to the others that this
Participation Agreement and the other Transaction Documents and the Financing
Documents constitute the entire agreement among the parties relating to the
transactions contemplated hereby and thereby.
(h) Publicity. Each party hereto agrees that it will not issue or release for
external publication any article or advertising or publicity matter relating to
the transaction contemplated hereby or any similar transaction and mentioning or
implying the identity of the Owner Participant without the prior written consent
of the Owner Participant; provided, however, that the Owner Participant agrees
that such written consent shall not be withheld if such disclosure is required
by Applicable Law.
-92-
6091.50.2831.27:2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each. caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the dates set forth below.
CHASE MANHATTAN REALTY LEASING
CORPORATION
By
--------------------------
Vice President
Date: July 31, 1966
FIRST PV FUNDING CORPORATION
By
--------------------------
Vice President
Date: July 31, 1986
PUBLIC SERVICE COMPANY OF NEW MEXICO
BY
--------------------------
Senior Vice President and
Chief Financial Officer
Date: July 31, 1986
-94-
6091.50.2831.27:1
<PAGE>
THE FIRST NATIONAL BANK OF
BOSTON, in its individual capacity and
as Owner Trustee
By:
--------------------------
Assistant Vice President
Date: July 31, 1986
CHEMICAL BANK, in its individual
capacity and as Indenture Trustee
By
--------------------------
Vice President
Date: July 31, 1986
-95-
6091.50.2831.27:1
<PAGE>
Schedule 1
PUBLIC SERVICE COMPANY OF NEW MEXICO
PALO VERDE NUCLEAR GENERATING
STATION UNIT 1
NOTICE OF CLOSING
CHA8E MANHATTAN REALTY LEASING CORPORATION
Pursuant to Section 5(a) of the Participation Agreement, dated
as of July 31, 1986 (the Participation Agreement) among Chase Manhattan Realty
Leasing Corporation, as Owner Participant (the Owner Participant), First PY
Funding Corporation, as Loan Participant, The First National Bank of Boston, as
Owner Trustee, Chemical Sank, as Indenture Trustee, and Public Service Company
of New Mexico (PNM), PNM hereby gives notice of a Closing to occur at 10:00 a.m.
on August 1, 1986 (the Closing Date). The Closing will be held at the offices of
Messrs. nudge Rose Guthrie Alexander & Ferdon, 180 Maiden Lane, New York, New
York 10038.
(i) Based upon information supplied to PNM, the current
estimate of Transaction Expenses is an aggregate of
$1,000,000. A list of such transaction expenses is attached
hereto.
(ii) Payment of the Purchase Price and the purchase price
for the Real Property Interest shall be made pursuant to the
Omnibus Transfer Instruction and Receipt dated August 1, 1986
(a copy of which is attached hereto).
Capitalized terms used herein and not otherwise specifically defined herein
shall have the meanings set forth in Appendix A to the Participation Agreement.
6091.50.2831.27:2
<PAGE>
IN WITNESS WHEREOF, Public Service Company of New Mexico has
executed this Notice of closing this 1st day of August, 1986.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------
Senior Vice President
and Chief Financial Officer
-2-
6091.50.2831.27:2
<PAGE>
Schedule 2
PRICING ASSUMPTIONS
Basic Rent, Casualty values, Special Casualty values and
Termination values, as set forth in the Facility Lease as originally executed,
have been computed on the basis of the following pricing assumptions:
l. Investment Percentage: 20%
2. Loan Percentage: 80%
3. Interest Rate on Initial
Series Note: 10.0% per annum.
4. Federal ACRS Deductions: 10-year public utility
property deductions on the basis
of 100% of Facility Cost.
$16,283,450 shall be subject to
Section 168(f) (10) as to which
the ACRI deduction for 1986 shall
be 6/12's of the deduction for the
second year of cost recovery,
1987, the full third year etc.
5. State and City Deductions: 16 Year 150% declining balance
switch to straight line at the
optimal point, using the half year
convention, on the basis of 100%
of Lessor's Cost.
6091.50.2831.27:2
<PAGE>
6. Owner Participant's Tax
Year - End: December 31, 1986.
7. Closing Date: July 31, 1986.
8. Transaction Expenses: 2.0% of Facility
Cost paid by the Owner Participant
in addition to its Investment
(amortized on a straight-line
basis during the Basic Lease
Term).
9. Real Estate Investment: $19,417.
1O.Basic Rent Payment Date: January 15 and
July 15 of each year
(rent payable in
arrears).
11. First Rent Payment
Date: July 15, 1987.
12. Last Basic Rent Payment
Date: January 15, 2015.
13. Interim Rent Payment Date January 15, 1987
14. Marginal Federal Tax Rate 46%
15. Marginal Combined New York State
and City Tax Rate: 8.6% deductible for Federal taxes
16. First Estimated Tax Payment
Date: September 15, 1986.
17. Tax Accounting Method: Accrual.
-2-
6091.50.2831.27:2
<PAGE>
18. Amortization of Initial
Series Note: See schedule attached thereto.
-3-
6091.50.2831.27:2
<PAGE>
Schedule 3
BILL OF SALE AND ASSIGNMENT
================================================================================
BILL OF SALE AND ASSIGNMENT
dated as of ___________, 19___
from
[CHASE MANHATTAN REALTY LEASING CORPORATION]
to
PUBLIC SERVICE COMPANY OF NEW PIEXICO
================================================================================
6091.50.2831.27:2
<PAGE>
BILL OF SALE AND ASSIGNMENT, dated as of _________,19_____ from
[CHASE MANHATTAN REALTY LEASING CORPORATION , a New York corporation (the Owner
Participant), to PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(PNM).
WI T N E S S E T H:
WHEREAS, pursuant to Section 7(b)(4) of the Participation
Agreement dated as of July 31, 1986 among the Owner Participant, First PV
Funding Corporation, as Loan Participant, The First National Bank of Boston, as
Owner Trustee, Chemical flank, as Indenture Trustee and PNM, as Lessee, (the
Participation Agreement), the Owner Participant desires to sell and PNM desire
to buy the Assigned Property (as hereinafter defined);
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:
ARTICLE I
DEFINITIONS
SECTION 1.01. For purposes hereof, capitalized terms used herein
shall have the meanings assigned to such terms in the Participation Agreement.
References in this Agreement to articles, sections and clauses are to articles,
sections and clauses in this Agreement unless otherwise indicated.
6091.50.2831.27:2
<PAGE>
ARTICLE II
ASSIGNMENT OF TRUST ESTATE
SECTION 2.01. Assignment. The Owner Participant does hereby grant,
bargain, convey, sell, assign, transfer and set over to PNM, without recourse,
representation or warranty, express and implied, of any nature whatsoever
(except as set forth in the next succeeding sentence), all of the Owner
Participant's right, title and interest in, to and under the Trust Estate except
the Owner Participant's right to receive Excepted Payments (the Assigned
Property) [subject to the Owner Participant's security interest in, and general
lien upon all of the right, title, and interest of PNM, as successor Owner
Participant in, to and under the Assigned Property*]. The Owner Participant
hereby represents and warrants to PNM that the Owner Participant has good and
valid title to Assigned Property free and clear of all Owner Participant's
Liens.
(Insert the following provision if the Owner Participant has not
received under Section 5.2 of the Indenture the payments provided for in Section
9(c), 9(d) or 16(e) of the Facility Lease, as the case may be:
SECTION 2.02. No Release of nut. Notwithstanding the transfer of
the Assigned Property to PNM pursuant to Section 2.01 hereof, the obligation of
PNM to make the payments as provided in Section (insert applicable section:
9(c), 9(d), 13(c) or 16] of the Facility Lease (together with interest thereon
in accordance with Section 3(b)(iii) of the Facility Lease) (or to make other
payment. in a like amount with respect to Basic Rent or Supplemental Rent paid
by application of such payments (and in which Owner Trustee has thereby
- ----------
*To be inserted if on the date of the transfer the Owner Participant has not
received under Section 5.2 of the Indenture the payments provided for in Section
9(c), 9(d), 13(c) or 16 of the Facility Lease, as the case may be.
-2-
6091.50.2831.27:2
<PAGE>
acquired an interest pursuant to Section 5.1 or 5.3 of the Indenture) shall not
be deemed to be cancelled or discharged but shall continue until all such
amounts are so received by PNM, as successor Owner Participant, or by the
transferring Owner Participant pursuant to the provisions of Section 7(b)(4) of
the Participation Agreement.]
(Insert following if the Owner Participant has received under Section
5.2 of the Indenture the payments provided for in Section 9(c), 9(d), 13(c) or
16 of the Facility Lease, as the case may be:
SECTION 2.03. Acknowledgment. The Owner Participant hereby
acknowledges receipt of $______representing payment in full of all amounts due
to the Owner Participant under Section [9(c), 9(d), 13(c) or 16] of the Facility
Lease.
ARTICLE III
EFFECTIVENESS OF TRANFER
SECTION 3.01. Effectiveness of Transfer. The transfer of the
Assigned Property shall become effective without further action upon the
execution and delivery by the Owner Participant to the Lessee of this Bill of
Sale and Assignment and the furnishing of a counterpart of this Bill of Sale and
Assignment to the Owner Trustee.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Successors and Assigns. This Bill of Sale and
Assignment shall be binding upon the Owner Participant and its successors and
shall inure to the benefit of PNM and its successors and assigns.
SECTION 4.02. Governing Law. This Bill of Sale and Assignment
shall be governed by and construed and enforced in accordance with the law of
the State of New York.
-3-
6091.50.2831.27:2
<PAGE>
SECTION 4.03. Headings. The division of this Bill of Sale and
Assignment into sections, and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Bill of Sale and Assignment.
IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale
and Assignment to be duly executed as of the day and year written above.
[CHASE MANHATTAN REALTY
LEASING CORPORATION]
By
---------------------------
Title:
-4-
6091.50.2831.27:2
<PAGE>
Schedule 4
Recordations and Filings
Part I. Recordations in Respect of the Sale of, and the Owner Trustee's
Title to, the Undivided Interest and the Real Property Interest.
A. County Recorder, Maricopa County, Arizona:
(i) Deed;
(ii) Bill of Sale
(iii) Assignment and Assumption;
(iv) Facility Lease;
(v) Indenture;
(vi) Indenture of Partial Release/Facility; and
(vii) Indenture of Partial Release/Real Property.
Part II. UCC-1 Financing Statements.
A. County Recorder, Maricopa County, Arizona:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-1 naming the Owner
Trustee, as debtor, and the Indenture Trustee, as secured party,
in respect of the Lease Indenture Estate; and
(iii) A financing statement amendment on form UCC-2 naming the
Loan Participant, as debtor, and the Collateral Trust Trustee, 45
secured party, with respect to the Term Note Supplemental
Indenture.
B. Secretary of State, Arizona:
(i) A financing statement on form UCC-1 naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;'
6091.50.2831.27:2
<PAGE>
(ii) A financing statement on form UCC-1 naming PNM, as lessee,
the Owner Trustee, as lessor and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease
[Filed as a public utility filing];
(iii) A naming the Indenture respect of financing statement on
Owner Trustee, as debt Trustee , as secured the Lease Indenture
form UCC-1 or, and the party, in Estate; and
(iv) A financing statement amendment on form UCC-2 naming the
Loan Participant, as debtor, and the Collateral Trust Trustee,
as secured party, in respect of the Pledged Property (as defined
in the Collateral Trust Indenture) with respect to the Term Note
supplemental Indenture.
C. Office of County Clerk, Bernalillo County, New Mexico:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-1 naming the Owner
Trustee, as debtor, and the Indenture Trustee, as secured party,
in respect of the Lease Indenture Estate; and
(iii) A UCC financing statement amendment naming the Loan
Participant, as debtor, and the Collateral Trust Trustee, as
secured party, with respect to the Term Note Supplemental
Indenture
-2-
6091.50.2831.27:2
<PAGE>
D. Secretary of State, New Mexico:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-l naming the
Owner Trustee, as debtor, and the Indenture Trustee, as secured
party, in respect of the Lease Indenture Estate; and
(iii) A UCC financing statement amendment naming the Loan
Participant, as debtor, and the Collateral Trust Trustee, as
secured party, with respect to the Term Note Supplemental
Indenture.
E. Secretary of State, Massachusetts:
(i) A financing statement on form UCC-l naming the
Owner Trustee, as debtor, and the Indenture Trustee, as secured
party, in respect of the Lease Indenture Estate.
Part III. Other Filings:
Filing of the Indenture with the Secretary of State of the State
of New Mexico pursuant to the New Mexico Public Utility Act.
-3-
6O9l.5O.283l.27:2
<PAGE>
Schedule 5
AFFIDAVIT OF TRUSTEE
THE FIRST NATIONAL BANK OF BOSTON,
as Owner Trustee under that certain
Trust Agreement dated as of July
31, 1986 with Chase Manhattan Realty
Leasing Corporation
The undersigned, being a duly authorized representative of The First
National Bank of Boston, a national banking association, a. Trustee under the
above-captioned Trust Agreement (the Trust Agreement), does hereby affirm and
acknowledge that The First National Bank of Boston, as Trustee, holds legal
title to certain real (and other) property on behalf of a certain beneficiary,
such property and beneficiary being more particularly described in that certain
Deed recorded August 1, 1986, as instrument No. 56 records of Maricopa County,
Arizona; being further described in that certain Deed and Bill of Sale recorded
August 1, 1986, as instrument No. 86-, records of Maricopa County, Arizona;
being further described in that certain Assignment, Assumption and Further
Agreement recorded August 1, 1986, as Instrument No. 86-, records of Maricopa
County, Arizona; and being further described in that certain Deed and Assignment
of Beneficial Interest dated July 31, 1986, and that certain related Third
Amended Affidavit of Trustee executed by Title USA Company of Arizona as Trustee
of its Trust No. 530 and recorded August 1, 1986, as instrument No. 86-, records
of Maricopa County, Arizona; the property descriptions and beneficiary
disclosures contained in or incorporated into each of said instruments being
incorporated herein by this reference as if fully set forth herein.
A certain change in ownership of the beneficial interest in the Trust
Agreement has occurred since the recordation of the above-described instruments.
As now reflected in the records of The First National Bank of Boston, the sole
beneficiary of the Trust Agreement is:
Public Service Company of New Mexico
Alvarado Square
P O Box 2267
Albuquerque, New Mexico 87103
6091.50.2898.57:1
<PAGE>
A copy of the Trust Agreement is available for inspection at the offices
of The First National flank of Boston, 100 Federal Street, Boston, Massachusetts
02110.
DATED THIS_____ day of THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement dated as of July
31, 1986, with Chase Manhattan Realty Leasing Corporation
By:
------------------------
Its Authorized Officer
STATE OF ____________)
) ss:
COUNTY of ___________)
The foregoing instrument was acknowledged before me this _____day of
__________, _________, by _________ an Authorized Officer of THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, under that certain Trust
Agreement dated as of July 31, 1986 with Chase Manhattan Realty Leasing
Corporation.
------------------------
Notary Public
-2-
6091.50.2898.57:1
<PAGE>
Appendix A
DEFINITION OF TERMS
The terms defined herein relate to the Participation Agreement
(as defined below) and certain Transaction Documents executed, or to be
executed, in connection with the Participation Agreement. Such terms include the
plural as well as the singular. Any agreement defined or referred to below shall
include each amendment, modification and supplement thereto and waiver thereof
as may become effective from time to time, except where otherwise indicated. Any
term defined below by reference to any agreement shall have such meaning whether
or not such document is in effect. The terms "hereof", "herein", "hereunder" and
comparable terms refer to the entire agreement with respect to which such terms
are used and not to any particular article, section or other subdivision
thereof.
If, and to the extent that, either the Participation
Agreement or any other Transaction Document which incorporates this Appendix
shall be amended from time to time pursuant to the respective terms thereof,
this Appendix shall be, or be deemed to have been, amended concurrently with the
execution and delivery of each such amendment in order to conform the
definitions herein to the new or amended definitions set forth in or required by
each such amendment.
Acceptable Change shall mean any change in or new interpretation by
Governmental Authority having jurisdiction of the Price-Anderson Act or the
Atomic Energy Act (or the regulations of the NRC relating thereto) if, after
giving effect to such change or new interpretation: (a) the "aggregate
liability" for a single "nuclear incident of "persons indemnified" shall not
exceed 86.563 billion (assuming 101. operating nuclear facilities participating
in the deferred premium or similar plan referred to in clause (d) below and
subject to adjustment (X) in an amount not exceeding $63 million for each
6091.50.2831.55:2
<PAGE>
increase or decrease in said number of operating nuclear facilities and (Y) in
an amount not exceeding the aggregate of all changes in the standard deferred
premium to reflect the effects of inflation contemplated pursuant to clause (d)
below); (b) the amount of primary insurance coverage available from commercial
insurance underwriters on terms substantially equivalent (in the reasonable
opinion of the Owner Participant) to the terms in effect on the Closing Date
under Applicable Law and required to be maintained by licensees with respect to
any single nuclear facility shall be at least equal to $160 million; (c) the
amount of primary financial protection (excluding the primary insurance coverage
referred to in clause (b) above required of each licensee with respect to any
single nuclear facility under Applicable Law shall not exceed $40 million; (d)
the amount payable by any licensee with respect to any single nuclear facility
under any deferred premium or similar plan required under Applicable Law shall
not exceed $63 million per "nuclear incident" (subject to an annual adjustment
upward for each calendar year after the enactment of a change in the
Price-Anderson Act (if such change increases the standard deferred premium) by
an amount equal to, if specified by such change or otherwise by Applicable law,
(X) the annual percentage change during the immediately prior calendar year in
the implicit price deflator for the Gross National Product published by the
United States Department of Commerce or (Y) the annual percentage change in the
consumer price index since the immediately prior calendar year; provided,
however, that (i) in the event that Applicable Law shall not specify an
inflation adjustment, then the inflation adjustment permitted by this
parenthetical shall be that & specified in the preceding sub-clause (x) and (ii)
in the event that Applicable Law shall specify a standard deferred premium below
$63 million, the inflation adjustment factor shall not be available to increase
the standard deferred premium permissible under this clause (d) beyond $63
million until such lower deferred premium (as so inflated) equals or exceeds $63
million) (C) the amount payable by any licensee in any one year with respect to
any one nuclear incident under any deferred premium or similar plan required
-2-
6091.50.2831.55:2
<PAGE>
under Applicable Law shall not exceed $10 million; (f) insurance or other
financial protection shall be in effect under which the providers of such
insurance or other financial protection shall agree to pay any amount payable by
any licensee under any deferred premium or similar plan upon a default in such
payment by such licensee up to a maximum aggregate amount for all such defaults
in payment of not less than $30 million; (g) the NRC is, under Applicable Law,
authorized to borrow from the united States Treasury and to make payments on
behalf of any licensees under any deferred premium or similar plan (and the
reimbursement obligation of such licensees in any calendar year shall not exceed
$10 million); (h) as a result of such change or new interpretation, there shall
be no claim, liability or expense excluded from the limitation of liability
established by the Price-Anderson Act (as in effect on the Closing Date)
(through modification of the definitions of "aggregate liability", "persons
indemnified", "nuclear incident" or otherwise) or excluded (or the funding or
payment thereof deferred) under commercially available insurance or other
financial protection provisions provided for by Applicable Law as in effect on
the Closing Date (other than an exclusion of the costs of investigating and
settling claims and defending suits for damages), except, for purposes of this
clause (h), to the extent and in the amount excluded or deferred pursuant to
Applicable Law as in effect on the Closing Date, and (I) neither the Owner
Trustee nor the Owner Participant shall be (in the opinion of independent
counsel to the Owner Participant) exposed to any other increase in its real or
potential liability with respect to a "nuclear incident", either during or
subsequent to the Lease Term. For purposes of this definition, "nuclear
facility" shall mean and refer to a facility designed for producing substantial
amounts of electricity and having a rated capacity of 100,000 electrical
kilowatts or more.
Additional Bonds shall mean Bonds in addition to the Initial
Series Bonds.
-3-
6091.50.2831 55:2
<PAGE>
Additional Equity Investment shall have the meaning specified in
Section 8(t) of the Facility Lease.
Additional Notes shall have the meaning set forth in the
recitations in the Indenture, which Additional Notes shall be issued, if at all,
pursuant to Section 3.5 of the Indenture.
Affiliate, with respect to any Person, shall mean any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition, the
term "control" (including the correlative meanings of the terms "controlled by"
and "under common control with), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
After-Tax-Basis shall mean, with respect to any payment
received or accrued or deemed to have been received or accrued by any Person,
the amount of such payment supplemented by a further payment to that Person so
that the sum of the two payments shall, after deduction of all taxes and other
charges (taking into account any credits or deductions arising therefrom and the
timing thereof and computed at the highest marginal statutory tax rate)
resulting from the receipt (actual or constructive) of such two payments imposed
under any Applicable Law or by any Governmental Authority, be equal to such
payment received or accrued or deemed to have been received or accrued.
Agent and Agency Period shall have the meanings specified in
Section 7.01 of the Assignment and Assumption.
-4-
6091.50.2831.55:2
<PAGE>
ANPP Administrative Committee shall mean the committee
established pursuant to Section 6.1.1 of the ANPP Participation Agreement (or
any comparable successor provision)
ANPP Operating Committee shall mean the committee established pursuant
to Section 6.1.2 of the ANPP Participation Agreement (or any comparable
successor provision)
ANPP Participants shall have the meaning assigned to the word
"Participant" under the ANPP Participation Agreement.
ANPP Participation Agreement shall mean the Arizona Nuclear
Power Project Participation Agreement, dated as of August 23, 1973, among API,
Salt River, Southern California, PNM, El Paso, LADWP and SCPPA, as heretofore
and hereafter amended pursuant to the terms thereof -
ANPP Project Agreements shall mean the ANPP Participation
Agreement and the other Project Agreements (as such term is defined in the ANPP
Participation Agreement)
ANPP Switchyard shall mean the ANPP High Voltage Switchyard
located at the PVNGS Site, the ownership, construction, operation and
maintenance of which are governed by the ANPP High Voltage Switchyard
Participation Agreement executed as of August 20, 1981 (APS Contract No.
2252-419,00), the parties to which are APS, PNM, Salt River, El Paso, Southern
California and LADWP.
ANPP Transferee shall have the meaning specified in Section
4.01 of the Assignment and Assumption.
-5-
6091.50.2831.55:2
<PAGE>
Applicable Law shall mean all applicable laws, statutes,
treaties, rules, codes, ordinances, regulations, permits, certificates, orders,
interpretations, licenses and permits of any Governmental Authority and
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other judicial or quasi judicial tribunal (including those
pertaining to health, safety, the environment or otherwise).
Appraisal Procedure shall mean a procedure whereby two
independent appraiser., one chosen by the Lessee and one by the Lessor, shall
mutually agree upon the value, period or amount then the subject of an
appraisal. If either the Lessor or the Lessee, as the case may be, shall
determine that a value, period or amount to be determined under the Facility
Lease or any other Transaction Document cannot promptly be established by mutual
agreement, such party shall appoint its appraiser and deliver a written notice
thereof to the other party. such other party shall appoint its appraiser within
15 days after receipt from the other party of the foregoing written notice. If
within 20 days after appointment of the two appraisers, as described above, the
two appraisers are unable to agree upon the value, period or amount in question,
a third independent appraiser shall be chosen within ten days thereafter by the
mutual consent of such first two appraisers or, if such first two appraisers
fail to agree upon the appointment of a third appraiser within such period, such
appointment shall be made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators having experience in
the business of operating a nuclear electric generating plant and a familiarity
with equipment used or operated in such business. The decision of the third
appraiser so appointed and chosen shall be given within ten days after the
selection of such third appraiser. If three appraisers shall be so appointed and
the determination of one appraiser is disparate from the middle determination by
more than twice the amount, period or value by which the third determination is
disparate from the middle determination, then the determination of such
appraiser shall be excluded, the remaining two determinations shall be averaged
and such average shall be binding and conclusive on the Lessor and the Lessee;
otherwise the average of all three determinations shall be binding and
-6-
6091.50.2831.55:2
<PAGE>
conclusive on the Lessor and the Lessee. The fees and expenses of appraisers
incurred in connection with any Appraisal Procedure relating to any transaction
contemplated by any provision of any Transaction Document shall be divided
equally between the Lessor and the Lessee (except pursuant to Section 16 o; the
Facility Lease, which shall be paid solely by the Lessee).
APS shall mean Arizona Public Service Company, an Arizona
corporation.
Appraiser shall mean Ebasco Business Consulting Company.
Arizona Public Utility Act Sha11 mean Chapter 2, Title 40,
Arizona Revised Statutes.
Assigned Payments shall have the meaning specified in Section
2.1(1) of the Indenture.
Assignment and Assumption shall mean the Assignment, Assumption
and Further Agreement, dated as of July 31, 1986, between PNM and the Owner
Trustee.
Assignment of Beneficial Interest shall mean the Deed and
Assignment of Beneficial Interest under Title USA Company of Arizona Trust No.
530, dated as of July 31, 1986, from PNM to the Owner Trustee.
Assumption Agreement sha11 mean the Assumption Agreement of
PNM substantially in the form of Exhibit B to the Indenture.
Assumptions shall mean the Pricing Assumptions and the Tax
Assumptions.
Atomic Energy Act shall mean the Atomic Energy Act of 1954, as
amended, and regulations from time to time issued, published or promulgated
pursuant thereto.
-7-
6091.50.2831.55:2
<PAGE>
Authorized Officer shall mean, with respect to the Indenture
Trustee, any officer of the Indenture Trustee who shall be duly authorized by
appropriate corporate action to authenticate a Note and shall mean, with respect
to the Owner Trustee, any officer of the Owner Trustee who shall be duly
authorized by appropriate corporate action to execute any Transaction Document -
Bank shall mean the bank party to the Term Loan Agreement.
Bank counsel shall mean Milbank, Tweed, Hadley & McCloy, 1
Chase Manhattan Plaza, New York, New York 10005.
Bankruptcy Code shall mean the Bankruptcy Reform Act of 197e,
as amended, and any law with respect to bankruptcy, insolvency or reorganization
successor thereto.
Basic Lease Tern shall mean the initial term of the Facility
Lease, which shall begin on the Closing Date and end on January 15, 2015, unless
earlier terminated as provided in the Facility Lease.
Basic Rent shall have the meaning set forth in Section 3(a) of
the Facility Lease.
Basic Rent Payment Dates shall mean and include July 15, 1987,
and January 15 and July 15 of each year thereafter, commencing January 15, 1988,
and ending January 15, 2015, and, if the Lessee shall elect the Renewal Term,
each January 15 and July l5.of each year during the Renewal Term, commencing
July 15, 2015 and ending on the last day of the Renewal Term.
Bill of sale shall mean the need and Bill of Sale, dated as of
July 31, 1986, between PNM and the Owner Trustee.
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Bonds shall mean all bonds, notes and other evidences of
indebtedness from time to time issued and outstanding under the Collateral Trust
Indenture, including, but without limitation, the Initial Series Bonds, the
Refunding Bonds and any other Additional Bonds.
Business day shall mean any day other than a Saturday or
Sunday or other day on which banks in Albuquerque, New Mexico, New York, New
York or Boston, Massachusetts are authorized or obligated to be closed.
Capital Improvement shall mean (a) the addition, betterment or
enlargement of any property constituting part of Unit 1 or the replacement of
any such property with other property, irrespective of whether (i) such
replacement property constitutes an enlargement or betterment of the property
which it replaces, (ii) the cost of which addition, betterment, enlargement or
replacement is or may be capitalized or charged to maintenance or repairs, in
accordance with the Uniform System of Accounts or, (iii) in the case of any
addition, betterment or enlargement, is not included or reflected in the plans
and specifications for Unit 1, as built, and (b) any alteration, modification,
addition or improvement to Unit 1, other than original, substitute or
replacement parts incorporated into unit 1; provided, however, that any Capital
Improvement with respect to any portion of Unit 1 constituting a Common Facility
shall mean only an undivided interest in and to one-third of such Capital
Improvement.
Casualty Value, as of any Basic Rent Payment Date during the
Basic Lease Term, shall mean the percentage of Facility Cost set forth opposite
such Basic Rent Payment Date in Schedule 1 to the Facility Lease. Anything
contained in the Participation Agreement or the Facility Lease to the contrary
notwithstanding, Casualty Value shall be, when added to all other amounts which
the Lessee is required to pay under Section 9(c) of the Facility Lease (taking
into account any assumption of the Notes by the Lessee), under any circumstances
and in any event, in an amount at least sufficient to pay in
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full, as of any Basic Rent Payment Date, the aggregate unpaid principal amount
of all Notes Outstanding at the close of business on such date, together with
accrued and unpaid interest on such Notes. Casualty Value as of any Basic Rent
Payment Date during the Renewal Term shall mean the unamortized portion as of
such Basic Rent Payment Date of the Fair Market Sales Value of the Undivided
Interest1 determined by the straight-line amortization of such Fair Market Sales
Value at the commencement of such Renewal Term over the period from such
commencement date through the remaining term of the License determined pursuant
to the Appraisal Procedure undertaken in accordance with the last sentence of
Section 13(a) of the Facility Lease.
Change in Tax Law shall mean any change in the State Tax Law
(as such term is defined in Section 1(a) of the Tax Indemnification Agreement),
Code or successor legislation enacted by the appropriate legislative bodies of
New York State or New York City no later than the date of adjournment of the One
Hundredth Congress, or enacted by either the Ninety-ninth or the One hundredth
Congress (without regard to the date of presidential signature), or if prior to
January 15, 1997 (i) there is enacted any technical correction to such enactment
or (ii) there is promulgated, issued or published any proposed, temporary,. or
final Regulations resulting from such enactment (regardless of the effective
date of such technical corrections or Regulations, but only if such technical
corrections or Regulations would affect Net Economic Return).
Chemical Bank shall mean Chemical Bank, a New York banking
corporation.
Chief Financial Officer shall mean the person designated by
the Board of Directors of PNM as the chief financial officer of PNM.
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Claims shall mean liabilities, obligations, losses, damages,
penalties, claims (including, without limitation, claims involving liability in
tort, strict or otherwise), actions, suits, judgments, costs, interest, expenses
and disbursements, whether or not any of the foregoing shall be founded or
unfounded (including, without limitation, legal fees and expenses and costs of
investigation) of any kind and nature whatsoever without any limitation as to
amount.
Closing shall mean the proceedings which occur on the Closing
Date, as contemplated by the Participation Agreement.
Closing Date shall mean August 1, 1986.
Code shall mean the Internal Revenue Code of 1954, as amended,
or any comparable successor law.
Collateral Trust Indenture shall mean the Collateral Trust
Indenture, dated as of December 16, 1985, among PNM, Funding Corp and the
Collateral Trust Trustee - Collateral Trust Indenture Supplement shall mean a
supplement to the Collateral Trust Indenture.
Collateral Trust Trustee shall mean Chemical Bank, not in its
individual capacity, but solely as Collateral Trust Trustee under the Collateral
Trust Indenture, and the successors or assigns of such Trustee.
Common Facilities shall mean all PVNGS common facilities as
set forth in Item B of Exhibit B to the Bill of Sale other than excluded common
facilities as set forth in said Stem B to such Exhibit B or common facilities
constituting Unit 1 Retained Assets.
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Coverage Ratio shall mean the fraction (i) the denominator of
which shall be the sum (calculated as of a date no earlier than 135 days prior
to the date of calculation) of (x) the interest that will be payable during the
twelve-month period following the date of the transaction with respect to which
a calculation is required to be made on the debt (both long-term and short-term)
of the Surviving Lessee, and (y) the interest portion of payments due during the
twelve-month period following the date of such transaction on lease obligations
of the Surviving Lessee with a term in excess of one year, and (ii) the
numerator of which shall be the sum of (x) the pro forma net earnings (before
taxes and excluding the allowance for funds used during construction) of the
Surviving Lessee for a twelve-month period ending no earlier than 135 days prior
to the date of such transaction, and (y) such denominator.
Cure Option shall have the meaning set forth in Section 16(e)
of the Facility Lease.
Decommissioning Fund shall mean with respect to Unit 1 Decommissioning
Costs, an external reserve fund which fund shall be segregated from the Lessee's
assets, but may be within the Lessee's administrative control, into which
deposits are made at least annually in an amount equal to the quotient of (i)
Unit 1 Decommissioning Costs (less the balance of the Decommissioning Fund and
reasonably projected earnings thereon through the date of expiry of the License)
divided by (ii) the number of years remaining until date of expiry of the
License, provided that the amount in the Decommissioning Fund, on the date of
expiry of the License, shall be at least equal to Unit 1 Decommissioning Costs,
Deed shall mean the Deed, dated as of July 31, 1986, from PNM to
the Owner Trustee.
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Deemed Loss Event shall mean any of the following events
(unless waived by the Owner Participant, which waiver shall be in writing and
may be either indefinite or for a specific period): (1) if at any time after the
Closing Date and before the Lease Termination Date, the Owner Trustee or the
Owner Participant, by reason of the ownership of the Undivided Interest or the
Real Property Interest or any part thereof by the Lessor (or any beneficial
interest therein by the Owner Participant) or the lease of the Undivided
Interest or the Real Property Interest to the Lessee or any of the other
transactions contemplated by the Transaction Documents (the tern Owner
Participant, as used in this definition, not including any Transferee who at the
time of transfer to such Transferee is a non-exempt entity of the type referred
to in this definition, whether by reason of such ownership, lease, transactions
or otherwise) shall be deemed by any Governmental Authority having jurisdiction
to be, or shall become subject to regulation (other than Non-Burdensome
Regulation) as, an "electric utility" or a "public utility" or a "public utility
holding company" under any Applicable Law or by reason of any Governmental
Action, and the effect thereof on the Lessor or the Owner Participant would be,
in the sole judgment of either such Person, acting on advice of counsel,
adverse, and the Owner Trustee and the Owner Participant have not waived
application of this definition; except that if the Lessee, at its sole cost and
expense, is contesting diligently and in good faith any action by any
Governmental Authority which would otherwise constitute a Deemed Loss Event
under this clause (1), such Deemed Loss Event shall be deemed not to have
occurred so long as (i) such contest does not involve any danger of the
foreclosure, sale, forfeiture or loss of, or the creation of any Lien on, the
Undivided Interest, the Real Property Interest or any part thereof or any
interest therein, (ii) such contest does not adversely affect the Undivided
Interest, the Real Property Interest or any part thereof or any other property,
assets or right. of the Lessor or the Owner Participant or the lien of the
Indenture thereon, (iii) the Lessee shall have furnished the Owner Trustee,
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the Owner Participant, and the Indenture Trustee with an opinion of independent
counsel satisfactory to each such Person to the effect that there exists a
reasonable basis for contesting such determination, (iv) such determination and
the effects thereof shall be effectively stayed or withdrawn during such contest
(and shall not be subject to retroactive application at the conclusion of such
contest) in a manner satisfactory to the Owner Trustee and the Owner
Participant, and the Owner Participant shall have determined that the Lessor's
continued ownership of the Undivided Interest and the Real Property Interest
during the pendency of such contest or such contest will not adversely affect
its or its Affiliate's business, and (v) the Lessee shall have indemnified the
Owner Trustee and the Owner Participant in a manner satisfactory to each such
Person for any liability or loss which either such Person may incur as a result
of the Lessee's contest; (2) any change in, or new interpretation by
Governmental Authority having jurisdiction of, Applicable Law, including without
limitation, the Price-Anderson Act, the Atomic Energy Act or the regulations of
the NRC, in each case as in effect on the Closing Date, as a result of which (in
the opinion of independent counsel to the Owner Participant) (i) the aggregate
liability for a single "nuclear incident" of "persons indemnified" (as each such
term is defined in the Price-Anderson Act as in effect on the closing Date) is
increased, unless the change is such that neither the Owner Trustee nor the
Owner Participant may be exposed, either during or subsequent to the Lease Term,
to any increased real or potential liability in respect of a "nuclear incident",
(ii) the "aggregate liability" for a single "nuclear incident" of "persons
indemnified" (as each term is defined in the Price Anderson Act as in effect on
the Closing Date) exceeds the amount of financial protection established by the
NRC as a condition to the License, unless the change is such that neither the
Owner Trustee nor the Owner Participant may be exposed, either during or
subsequent to the Lease Term, to any increased real or potential liability in
respect of a "nuclear incident", (iii) the amount of financial protection
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required, including but not limited to the limitation on the amount of deferred
premiums for such financial protection, is increased, unless the change is such
that neither the Owner Trustee nor the Owner Participant may be exposed, either
during or subsequent to the Lease Term, to any increased real or potential
liability in respect of a "nuclear incident", or (iv) either the Owner Trustee
or the Owner Participant may be exposed to any other increase in its real or
potential liability in respect of a "nuclear incident", either during or
subsequent to the Lease Term; provided, however, that no such change or new
interpretation shall constitute a Deemed Loss Event if such change or new
interpretation constitutes an Acceptable Change; (3) any change in, or new
interpretation by Governmental Authority having jurisdiction of, Applicable Law
as a result of which the Owner Trustee (but not the Trust Estate), or the Owner
Participant shall become liable in any capacity, in respect of any portion of
the Termination Obligation or, during the Lease Term, any other liability or
obligation imposed as of the date hereof on licensees of the NRC; (4) any change
in, or new interpretation by Governmental Authority having jurisdiction. of,
Applicable Law or any Governmental Action the effect of which is to make the
transactions contemplated by the Transaction Documents unauthorized, illegal or
otherwise contrary to Applicable Law; (5) any change in, or new interpretation
by Governmental Authority having jurisdiction of, the License and the NRC Order
(each as in effect on the Closing Date) constituting an assertion to the effect
that the exercise by the Owner Trustee or the Owner Participant of any right
(irrespective of the event giving rise to such right) under any Transaction
Document would constitute impermissable control over Unit 1 or the licensees of
Unit 1, other than an assertion that affects such rights in a manner consistent
with both Section 1a4 of the Atomic Energy Act and the NRC's regulations
thereunder (including, without limitation, 10 CFR 550.81, as now and hereafter
in effect); (6) any expiration, revocation, suspension, amendment or
interpretation by any Governmental Authority of the NRC Order, the License or
the licensing of the Lessee by the NRC or any other Governmental Action or
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<PAGE>
change in, or new interpretation by Governmental Authority having jurisdiction
of, Applicable Law as a result of which either the Owner Trustee or the Owner
Participant shall be required to become a licensee of the NRC prior to the Lease
Termination Date; (7) any policy of public liability insurance with respect to
PVNGS or unit 1 shall be suspended or terminated for any reason whatsoever or
shall be amended or supplemented in a manner which may expose the Owner Trustee
or the Owner Participant, either during or subsequent to the Lease Term, to any
increased real or potential liability in respect of a "nuclear incident" (as
defined in the Price-Anderson Act) and such policy of insurance shall not be
immediately replaced by insurance effective immediately upon such suspension,
termination, amendment or supplementation which, in the reasonable opinion of
the Owner Participant, is at least as protective of it (in all respects
reasonably deemed by it to be material) as the policy of insurance so
terminated, suspended, amended or supplemented, unless the "aggregate liability"
for a "nuclear incident" of "persons indemnified" (as each term is defined in
the Atomic Energy Act of 1954, as amended) is reduced by an amount equal to the
amount of liability insurance so terminated, suspended, amended or supplemented
and, in the reasonable opinion of the Owner Participant, it may not otherwise be
exposed, either during or subsequent to the Lease Term, to any increased real or
potential liability in respect of a "nuclear incident" as a consequence of such
suspension, termination, amendment or supplementation; (8) with respect to
PVNGS, the NRC shall have issued within a five year period three or more
Modification Orders provided that such Modification Orders are issued (x) in
connection with violations constituting "Severity Level I" or "Severity Level
II" violations within the activity area of "Reactor Operations", as such terms
are used in Supplement S to Appendix C to 10 C.F.R., Part 2 as in effect on the
date hereof (or, if such Supplement is amended or superseded to change such
categories of violations or areas, violations or areas falling within comparable
categories) or (y) in connection with wilfull or flagrant violations in any
"activity area", repeated poor performance in a particular "activity area" or
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serious breakdowns in management control; and (9) the cessation of operation of
Unit 1 or as a result of either (x) the occurrence of an Extraordinary Nuclear
Occurrence or an Incipient Extraordinary Nuclear Occurrence at PVNGS Unit 2 or
PVNGS Unit 3 or (y) a Nuclear Incident at PVNGS Unit 2 or PVNGS Unit 3 and the
continuation, in the case of this clause (y), of such cessation for the Minimum
Period.
Default shall mean an event or condition which, with the giving
of notice or lapse of time, or both, would constitute an Event of Default.
Directive shall mean an instrument in writing executed in
accordance with the terms and provisions of the Indenture by the Holders, or
their duly authorized agents or attorneys-in-fact, representing a Majority in
Interest of Holders of Notes, directing the Indenture Trustee to take or refrain
from taking the action specified in such instrument.
Early Termination Date shall have the meaning specified in
section 14(d) of the Facility Lease.
Early Termination Notice shall have the meaning specified in
Section 14(d) of the Facility Lease.
El Paso shall mean El Paso Electric Company, a Texas
corporation.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
Estimated Transaction Expenses shall have the meaning set
forth in Section 5(a) of the Participation Agreement.
Event of Default shall have the meaning set forth in Section
15 of the Facility Lease.
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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, or the inability of Unit 1 to produce electricity at a level
above, 630 megawatts electric for the minimum Period (for any reason other than
as a result of damage to or destruction of Unit 1, Governmental Action or an
event referred to in clause (iii)(x) or (iii)(y) of the definition of "Final
Shutdown").
Excepted Payments shall mean (i) all payments of Supplemental
Rent, other than payments by the Lessee (x) of Casualty Value, Termination Value
or Special Casualty Value or in connection with the exercise of the Cure Option
or the occurrence of the Special Purchase Event or (y) of indemnity payments to
which either the Loan Participant or any Indemnitee other than the Owner Trustee
or the Owner Participant, or any of their respective Affiliates, (or the
respective successors, assigns., agents, officers, directors or employees of the
Owner Trustee or the Owner Participant) is entitled; (ii) any amounts payable
under any Transaction Document to reimburse the Lessor or the Owner Participant,
or any of their respective Affiliates, (including the reasonable expenses of the
Lessor or the Owner Participant incurred in connection with any such payment)
for performing or complying with any of the obligations of the Lessee under and
as permitted by any Transaction Document, (iii) any amount payable to the Owner
Participant by any Transferee as the purchase price of the Owner Participant's
interest in the Trust Estate, (iv) so long as no Indenture Default or Indenture
Event of Default shall have occurred and be continuing, all payments of Basic
Rent in excess of amounts then due and owing in respect of the principal of and
premium, if any, and interest on all Notes Outstanding; (V) any insurance
proceeds with respect to an Event of Loss in excess of amounts then due and
owing in respect of the principal of and premium, if any, and interest on all
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Notes Outstanding, (vi) any insurance proceeds (or payments with respect to
risks self-insured) under liability policies and (vii) any payments in respect
of interest to the extent attributable to payments referred to in clauses (i)
through (vi) above.
Existing Mortgage shall mean the Indenture of Mortgage and
Deed of Trust dated as of June 1, 1947, between PNM and Irving Trust Company, as
heretofore supplemented by all Supplemental Indentures thereto.
Expenses shall mean liabilities, obligations, losses, damages,
taxes (other than taxes on income), claims, actions, suits, costs, interest,
expenses and disbursements (including legal fees and expenses) of any kind and
nature whatsoever.
Extension Letter shall mean the Extension Letter, to be dated
the Closing Date and addressed to the Collateral Trust Trustee by the parties to
the Participation Agreement.
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.
Facility Cast shall mean the Purchase Price plus the sum of (x)
all Supplemental Financing Amounts, and (y) all Additional Equity Investment
amounts.
Facility Lease shall mean the Facility Lease, dated as of July
31, 1986, between PNM, as Lessee, and the Owner Trustee, as Lessor.
Fair Market Rental Value or lair Market Sales value of any
property or service shall mean the value of such property or service for lease
or sale determined on the basis of an arm's-length transaction for cash between
an informed and willing lessee or purchaser (under no compulsion to lease or
purchase) and an informed and willing lessor or seller (under no compulsion to
lease or sell), and shall take into account the Lessor's rights and obligations
under the Assignment and Assumption and the Assignment of Beneficial Interest
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and rights under the need and the Bill of Sale,but shall be without regard to
any rights of the Lessee (including any renewal options) under the Lease. Except
pursuant to Section 16 of the Facility Lease (other than Section 16(a)(v)(D)
thereof) and Section 6.01 of the Assignment and Assumption, Fair Market Rental
Value and Fair Market Sales Value of the Undivided Interest and the Real
Property Interest shall be determined on the assumption that (i) Unit l has been
maintained in accordance with, and the Lessee has complied with, the
requirements of the Facility Lease, the other Transaction Documents and the ANPP
Participation Agreement, (ii) the Lessee shall not bear the obligation imposed
by Section l0(b)(3)(xi) of the Participation Agreement in respect of Transferees
(as defined in the ANPP Participation Agreement) of the Lessor, and (iii) the
Lessee or inn, as possessor of the Undivided Interest and the Real Property
Interest, is otherwise in compliance with the requirements of all Transaction
Documents. Fair Market Rental Value shall be determined on the assumption that
rent will be pay-able in equal semi-annual installments in arrears.
Federal Power Act shall mean the Federal Power Act, as
amended.
Federal Securities shall have the meaning set forth in Section
2.3(c) of the Indenture.
FERC shall mean the Federal Energy Regulatory Commission of
the United States of America or any successor agency.
FERC order shall mean the Order Disclaiming Jurisdiction
issued by FERC on December 5, 19S5 (Docket No. EL86-5-000.
Final Prospectus shall mean the Prospectus included in the
Registration Statement relating to the Refunding Bonds, including documents
incorporated into said Prospectus by reference and any applicable Prospectus
Supplement.
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Final Shutdown shall mean the earlier to occur of (i) the
expiration or revocation of the License, or any portion thereof such that the
operation of Unit 1 or the possession by the Lessee of the Undivided Interest
and the Real Property Interest are no longer permitted; (ii) 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 a least 630 megawatts
electric for the Minimum Period, (iii) 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, (iv) damage to Unit 1 and
the failure of the Lessee, or of the Lessee and one or more other ANPP
Participants, to agree within three years of the occurrence of such damage to
restore and reconstruct Unit 1, (v) 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
(vi) destruction of Unit 1. For purposes of this definition, Final Shutdown
pursuant to the foregoing clause (iv) will be deemed to have occurred upon the
earlier of (x) the written declaration of the Lessee of its intent not to agree
and (y) the expiration of the 3-year period referred to in said clause (iv)
without written agreement. Final Shutdown pursuant to the foregoing clause (ii),
(iii)(y) or (V) will be deemed to have occurred on the last day of the Minimum
Period.
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Financing Documents shall mean the Collateral Trust Indenture, the Term
Note Supplemental Indenture, the Underwriting Agreement, the Term Loan Agreement
and the Refunding Supplemental Indenture.
Fixed Rate Note shall mean the non-recourse promissory note,
to be issued by the Owner Trustee and authenticated by the Indenture Trustee on
the Refunding Date to refund the Initial Series Note.
FNB shall mean the Owner Trustee in its individual capacity, and its
successors and assigns.
Farm U-7D shall mean the. certificate to be filed pursuant to Rule 7(4)
of the Holding Company Act for the purpose of exempting the Owner Participant
and the Owner Trustee from registration under the Holding Company Act.
Funding Corp shall mean First PV Funding Corporation, a Delaware
corporation.
Generating Unit shall mean Unit 1 or any of the other
Generating Units (as such term is defined in the ANPP Participation Agreement)
constituting PVNGS.
Generation Entitlement Share shall have the meaning assigned
thereto in the ANPP Participation Agreement and (i) when used in reference to
Unit 1, shall mean the Generation Entitlement Share of PNM as the ANPP
Participant with respect to its interest in Unit 1, (ii) when used in reference
to the undivided Interest, shall mean that portion of the Generation Entitlement
Share attributable to the Undivided Interest and (iii) when used in Section 19
of the Facility Lease, shall refer to the Generation Entitlement Share of the
Lessee in all Generating Units at PVNGS.
Governmental Action shall mean all authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses, exemptions,
publications, filings, notices to and declarations of or with any Governmental
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<PAGE>
Authority (other than routine reporting requirements the failure to comply with
which will not affect the validity or enforceability of any of the Transaction
Documents or have a material adverse effect on the transactions contemplated by
any Transaction Document or any Financing Document) or any other action in
respect of any Governmental Authority and shall include, without limitation, all
siting, environmental and operating permits and licenses which are required for
the use and operation of Unit 19 including the Undivided Interest and the Real
Property Interest.
Governmental Authority sha11 mean any Federal, state, county,
municipal, foreign, international, regional or other governmental authority,
agency, board, body, instrumentality or court.
Holders shall mean the holders of the Notes.
Holding Company Act shall mean the Public utility Holding
Company Act of 1935, as amended.
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 Society) 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.
Indemnitee shall mean the Owner Participant, the Owner
Trustee, FNB, the Loan Participant, the stockholder of Funding Corp and its
officers and directors, Chemical Bank, the Indenture Trustee, each Holder of a
Note from time to time Outstanding, the Collateral Trust Trustee, the Trust, the
Trust Estate, the Lease Indenture Estate, the indenture estate under the
Collateral Trust Indenture, any Affiliate of any of the foregoing and the
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<PAGE>
respective successors, assigns, agents, officers, directors or employees of the
foregoing, excluding, however, any ANPP Participant other than the Owner Trustee
or the Owner Participant.
Indenture shall mean the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of July 31, 1986, between the Owner
Trustee and the Indenture Trustee.
Indenture Default shall mean an event or condition which, after
giving of notice or lapse of time, or both, would become an Indenture Event of
Default.
Indenture Event of Default shall mean any of the events
specified in Section 6.2 of the Indenture.
Indenture Trustee shall mean Chemical Bank, a New York banking
corporation, not in its individua1 capacity, but solely as Indenture Trustee
under the Indenture and each successor trustee and co-trustee thereunder
Indenture Trustee's counsel Sha11 mean Willikie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022.
Indenture Trustee's Liens shall mean Liens against the Lease
Indenture Estate which result from acts of, or any failure to act by, or as a
result of claims against, the Indenture Trustee, in its individual capacity,
unrelated to the transactions contemplated by the Transaction Documents.
Indenture Trustee's Office shall mean the office of the
Indenture Trustee located at 55 Water Street, New York, New York 10041, or such
other office as may be designated by the Indenture Trustee to the Owner Trustee
and each Molder of a Note Outstanding under the Indenture.
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Initial Series Bands sha11 mean the promissory notes of Funding
Corp evidencing the loan made to Funding Corp under the Term Loan Agreement,
issued, authenticated and delivered under the Term Loan Agreement and the
Collateral Trust Indenture, as supplemented by the Term Note Supplemental
Indenture.
Initial Serie5 Note shall mean the nonrecourse promissory
note, substantially in the form of Exhibit A to the Indenture, to be issued by
the Owner Trustee and authenticated by the Indenture Trustee on the Closing Date
to finance a portion of the Purchase Price.
Investment shall have the meaning set forth in Section 3 of the
Participation Agreement.
Investment Company Act shall mean the Investment Company Act
of 1940, as amended.
IRS shall mean the Internal Revenue Service of the United
States Department of the Treasury or any successor agency.
Kidder Peabody shall mean Kidder, Peabody & Co. Incorporated.
LADWP shall mean the Department of Water and Power of The City
of Los Angeles, a department organized and existing under the charter of the
City of Los Angeles, a municipal corporation of the State of California.
Lease Indenture Estate shall have the meaning set forth in
Section 2.1 of the Indenture.
Lease Tern shall mean the aggregate of the Basic Lease Term
and the Renewal Term, if any.
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Lease Termination Date shall mean the last day of the Lease Term
(whether occurring by reason of a termination or expiration of the Lease Term)
Lessee shall mean Public Service Company of New Mexico, a New
Mexico corporation, and its successors and assigns, as lessee under the Facility
Lease and as party to the other Transactions Documents and Financing Documents
to which it is a signatory.
Lessee's FERC Counsel shall mean Newman & Holtzanger, P.C.,
1615 L Street, Washington, D.C. 20036.
Lessee's General Counsel shall mean Keleher & McLeod, P.A.,
P.O. Drawer AA, Albuquerque, New Mexico 87103.
Lessee's Special Arizona Counsel shall mean Snell & Wilmer,
3100 Valley Bank Center, Phoenix, Arizona 85073.
Lessee's Special Counsel shall mean Mudge Rose Guthrie
Alexander & Ferdon, 180 Maiden Lane, New York, New York 10038.
Lessor shall mean the Owner Trustee, as lessor under the
Facility Lease, and its successors and assigns.
Lessor's Interest shall have the meaning set forth in Section
8(c) (3) of the Participation Agreement.
Lessor's Liens or Owner Trustee's Liens shall mean Liens
against the Trust Estate or the Lease Indenture Estate (other than Permitted
Liens) for which the Lessee is not responsible and which result from acts of, or
any failure to act by, or as a result of claims against, FNB or the Lessor,
unrelated to the ownership of the Undivided Interest or the Real Property
Interest, the administration of the Trust Estate or the transactions
contemplated by the Transaction Documents or the Financing Documents.
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<PAGE>
License shall mean NRC Facility Operating License No. NPF-41, as
the same may be amended, modified, extended, renewed or superseded from time to
time.
License Expiration Date shall mean the date of expiration of
the License.
Lien shall mean any mortgage, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction.
Loan shall have the meaning set forth in Section 2(a) of the
Participation Agreement.
Loan Participant shall mean Funding Corp.
Loan Participant's Counsel shall mean nudge Rose Guthrie
Alexander & Ferdon, 180 Maiden Lane, New York, New York 10038.
Majority in Interest of Holders of Notes shall mean Holders of
a majority in principal amount of all Notes Outstanding under the Indenture at
the time of any such determination.
Material Project Agreements sha11 mean (i) Nuclear Fuel
Contract between APS and Combustion Engineering, Inc. (CE), dated as of August
20, 1973, (ii)nuclear Steam Supply Contract between APS and CE, dated as of
August 20, 1973, (iii) Turbine Generator Contract between APS and General
Electric Company, dated as of March 21, 1974, (iv) Uranium Enrichment Services
Contract between the United States of America (USA) and APS, dated November 15,
1984, and the Associated Supplemental Agreement of Settlement between USA and
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APS, dated November 15, 1984, (V) Contract between APS and Westinghouse Electric
Corporation for fuel fabrication services for reload batches of nuclear fuel,
dated August 7, 1974, as amended, (vi) Agreement for the Sale and Purchase of
Waste Water Effluent between the City of Tolleson, APS and Salt River, dated
June 12, 1981, (vii) Agreement for Construction of Arizona Nuclear Power Project
between Bechtel Power Corporation (Bechtel) and API, dated January 15, 1973,
(viii) Agreement for Engineering and Procurement Services between APS and
Bechtel, dated January 15, 1973, and (ix) Option and Purchase of Effluent dated
April 23, 1973, among the Cities of Phoenix, Glendale, Mesa, Tempe and
Scottsdale, the Town of Youngtown, APS and Salt River.
Maximum Option Period shall mean the period, in no event
ending after January 15, 2023, determined as provided in section 13(a) of the
Facility Lease as of the date of expiration of the Basic Lease Term, (i) at the
end of which the residual value of the Undivided Interest (without regard to
inflation or deflation from the Closing Date and without regard to the
obligation of the Lessee to pay decommissioning costs pursuant to Section
10(b)(3)(xi) of the Participation Agreement, but taking into consideration the
existence and effect of the Assignment and Assumption, the ANPP Participation
Agreement and the License) shall be equal to at least 20% of Facility Cost, (ii)
which, when added to the Basic Lease Term, does not exceed 80% of the economic
useful life of the Undivided Interest from the Closing Date and (iii) at the end
of which, taking into consideration the existence and effect of the Assignment
and Assumption, the ANPP Participation Agreement and the License, the use of the
Undivided Interest by any User (in a transaction pursuant to which the Owner
Participant. could realize the amount referred to in clause (i) above) is
feasible from an engineering and economic point of view and is commercially
reasonable. Unless the period, as computed in accordance with the preceding
sentence, shall end on a January 15 or July 15, the final date of the Maximum
Option Period shall be the final January 15 or July 15 in the period, as so
computed. In no event shall the Maximum Option Period end after the License
Expiration Date.
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<PAGE>
Minimum Net worth means a Net worth equal to the greater of
(x) $700,000,000 and (y) (1) $950,000,000 less (2) with respect to each
Generating Unit as to which PNM shall have entered into one or more transactions
constituting sale and leaseback transactions under the ANPP Participation
Agreement (including, but without limitation, the transaction contemplated by
the Participation Agreement), (A) $50,000,000 (in the case of Unit 1) and
$100,000,000 (in the case of each other Generating Unit) times (B) the aggregate
percentage of the Lessee's undivided interest in such PVNGS unit subject to such
transactions.
Minimum Period shall mean the shorter of (a) 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 (b) a period beginning on the date of
determination through and including the penultimate day of the Lease Term. The
Benchmark Period shall be 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 clause (iii)(y) of the definition of "Final
Shutdown" or clause (9)(y) of the definition of "Deemed Loss Event". The period
specified in the foregoing clause (a)(l) 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 Society (or comparable or successor organization).
Modification Order shall mean: (i) an order modifying the
License or the NRC license for either PVNGS Unit 2 or PVNGS Unit 3 effective
immediately upon issuance thereof; (ii) an order modifying the License or the
NRC license for either PVNGI Unit 2 or PVNGS Unit 3 effective upon the
expiration of the time period for a demand for a hearing if such hearing is not
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demanded within such period or if the penultimate day of the Lease Term occurs
prior to such demand; or (iii) an order modifying the License or the NRC license
for either PVNGS Unit 2 or PVNGS Unit 3 effective following a hearing (and not
subject to further appeal) or subject to a hearing (or to further appeal) on the
penultimate day of the Lease Term.
Mortgage Relea5e shall mean the Indentures of Partial Release,
to be dated the Closing Date, under and with respect to the Existing Mortgage.
Net Economic Return shall mean the after-tax yield and
after-tax cash flows (after all Federal, state and local taxes) and the return
on investment originally expected by the Owner Participant with respect to the
Undivided Interest, utilizing the Pricing Assumptions and the initial
computation of Basic Rent, Casualty values, special Casualty values and
Termination values derived from such Pricing Assumptions.
Net Worth means the excess of assets over liabilities
determined by the Lessee's auditors on the basis of generally accepted
accounting principles.
New Mexico order shall mean the order issued by the NMPSC on
November 27, 1985, as amended by Order Adopting Errata Notice issued on November
30, 1985, in Case No. 1995, approving, among other things, the terms of the
Facility Lease and the execution and delivery of the Facility Lease by PNM.
New Mexico Public Utility Act shall mean the New Mexico Public
Utility Act, as amended.
NMPSC shall mean the New Mexico Public service Commission
established pursuant to Section 62-5-1 of New Mexico Statutes Annotated, 1978.
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Non-Burdensome Regulation sha11 mean (i) regulation to which
the Owner Participant or the Owner Trustee is otherwise subject by reason of its
lease financing or other activities unrelated to the transactions contemplated
by the Transaction Documents, (ii) ministerial regulatory requirements which do
not impose limitations or regulatory requirements on the business or activities
of the Owner Participant and which are deemed, in the reasonable discretion of
the Owner Participant, not to be burdensome, (iii) regulation resulting from any
possession of the Undivided Interest on or after the Lease Termination Date or
(iv) regulation of the Owner Trustee which would be terminated by the
appointment of a successor Owner Trustee or a co-Owner Trustee pursuant to the
terms of the Trust Agreement.
Nonseverable, when used with respect to any Capital
Improvement, shall mean any Capital Improvement which is not a Severable Capital
Improvement.
Noteholder shall mean any Holder from time to time of a Note
Outstanding under the Indenture.
Notes shall mean the (i) Initial Series Note and (ii) Fixed
Rate Note and any other Additional Notes
Notice of Closing shall have the meaning set forth in Section
5(a) of the Participation Agreement.
NRC shall mean the Nuclear Regulatory Commission of the United
States of America or any successor agency.
NRC Order shall mean the Order of the NRC in the matter of
Arizona Public Service Company, et al. (Palo Verde Nuclear Generating Station,
Unit 1); Application In Respect Of A Sale And Leaseback Financing Transaction By
Public Service Company Of New Mexico (Docket No. STN 50-528), December 12, 1985.
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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.
Officers' Certificate shall mean a certificate signed by the
President or any vice President and by the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Person with respect to which
such term is used.
Operating Agent shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Original of the Facility Lease shall mean the fully executed
counterpart of the Facility Lease, marked "This Counterpart is the Original
Counterpart", pursuant to Section 22(e) of the Facility Lease and containing the
receipt of the Indenture Trustee.
Outstanding, when used with respect to Notes, shall mean, as
of the date of determination, all such Notes theretofore issued, authenticated
and delivered under the Indenture, except (a) Notes theretofore cancelled by the
Indenture Trustee or delivered to the Indenture Trustee for cancellation, (b)
Notes or portions thereof for the payment of which the Indenture Trustee holds
(and has notified the holders thereof that it holds) in trust for that purpose
an amount sufficient to make full payment thereof when due, (C) Notes or
portions thereof which have been pledged as collateral for any obligations of
the obligor thereof to the extent that an amount sufficient to make full payment
of such obligations when due has been deposited with the pledgee of such Notes
for the purpose of holding such amount in trust for the payment of such
obligations in accordance with the indenture or agreement under which such
obligations are secured and (d) Notes in exchange for, or in lieu of, which
other Notes have been issued, authenticated and delivered pursuant to the
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Indenture; provided, however, that any Note owned by the Lessee or the Owner
Trustee or any Affiliate of either thereof shall be disregarded and deemed not
to be Outstanding for the purpose of any Directive.
Overdue Interest Rate shall mean the weighted average rate per
annum of interest payable with respect to overdue payments of principal on the
Notes Outstanding, computed as act forth in such Notes.
Owner Participant shall mean Chase Manhattan Realty Leasing
Corporation, a New York corporation, and the successors and assigns of such
Person in accordance with the Trust Agreement and the Participation Agreement.
Owner Participant's Liens shall mean Liens against the Trust
Estate or the Lease Indenture Estate (other than Permitted Liens) for which the
Lessee is not responsible and which result from acts of, or any failure to act
by, or as a result of claims against, the Owner Participant unrelated to the
transactions contemplated by the Transaction Documents or the Financing
Documents -
Owner Participant's Special Arizona Counsel shall mean Meyer,
Hendricks, Victor, Osborne & Maledon, 2700 North Third Street, Suite 4000,
Phoenix, Arizona 85004.
Owner Participant's Special NRC Counsel shall mean Shaw,
Pittman, Potts & Trowbridge, 1800 M Street, N.W., Washington, D.C. 20036.
Owner Participant's Special New Mexico Counsel shall mean
Rodey, Dickason, Sloan, Akin & Robb, P.A., 20 First Plaza, Suite 700,
Albuquerque, New Mexico 87103.
Owner Participant's Special Counsel shall mean Milbank, Tweed,
Hadley & McCloy, One Chase Manhattan Plaza, New York, New York, 10005.
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Owner Trustee shall mean The First National Bank of Boston, a
national banking association, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and each successor as trustee, separate
trustee and co-trustee thereunder.
Owner Trustee's Counsel shall mean Csaplar & Bok, 1 Winthrop
Square, Boston, Massachusetts 02110.
Participation Agreement Sha11 mean the Participation Agreement,
dated as of July 31, 1986, among the Owner Trustee, the Indenture Trustee,
Funding Corp, the Owner Participant and PNM.
Penalty Rate shall mean the greater of 2% per annum in excess of
the Prime Rate and 2% per annum in excess of the weighted average rate of
interest on the Bonds.
Permitted Liens shall mean (i) the respective rights and interests of
the Lessee, the Owner Participant, the Lessor, the Loan Participant and the
Indenture Trustee, as provided in the Transaction Documents; (ii.) the rights of
any sublessee or assignee under a sublease or an assignment permitted by the
terms of the Facility Lease; (iii) the Lien of the Existing Mortgage on the
leasehold estate under the Facility Lease; (iv) Liens for taxes either not yet
due or which are being contested in good faith and by appropriate proceedings
diligently conducted, so long as such proceedings shall not (x) involve any
danger of the sale, forfeiture or loss of the undivided Interest or the Real
Property Interest or any part thereof or interest therein of the Lessor or the
Owner Participant, (y) interfere with the use, possession or disposition of the
Undivided Interest or the Real Property Interest, or any part thereof or
interest therein, or (a) impair payment of Rent; (V) inchoate materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehouse-men's, or
other like Liens arising in the ordinary course of business for PVNGS, and not
delinquent; (vi) Lessor's Liens, Owner Participant's Liens and Indenture
Trustee's Liens; (vii) choate Liens that have
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been bonded for the full amount in dispute or as to which other satisfactory
security arrangements shall have been made and which are being contested
diligently by the appropriate party in good faith and by appropriate proceedings
so long as such proceedings shall not violate clause (x), (y) or (z) of clause
(iv) above; (viii) choate Liens of any of the types described in clause (v)
above that have been bonded for the full amount in dispute or as to which other
satisfactory security arrangements shall have been made and which arise out of
judgments or awards and with respect to which (A) an appeal or proceeding for
review is being prosecuted in good faith and for the payment of which adequate
reserves shall have been provided as required by generally accepted accounting
principles and (B) there shall have been secured a stay of execution pending
such appeal or proceeding for review, so long as such proceedings shall not
violate clause (x), (y) or (z) of clause (iv) above; (ix) the rights and
interests of the Lessee under the Assignment and Assumption; (x) the rights of
the NRC under the License; (xi) the rights of the ANPP Participants (other than
(i) the Lessee and (ii) any Person who shall become an ANPP Participant in
respect of the Undivided Interest and the Real. Property Interest) under the
ANPP Participation Agreement or any other AMP? Project Agreement; and (xii)
Liens on the undivided ownership interests in Unit 1 of the ANPP Participants
and other Persons (other than the Lessee).
Person shall mean any individual, partnership, corporation,
trust, unincorporated association or joint venture, a government or any
department or agency thereof, or any other entity.
PNM' shall mean Public Service Company of New Mexico, a New
Mexico corporation.
Price-Anderson Act shall mean the Price-Anderson Act, Pub. L.
No. 85-256, 71 Stat. 576 (1957), as amended to the Closing Date.
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Pricing Assumptions shall mean the pricing assumptions set
forth in Schedule 2 to the Participation Agreement.
Prime Rate shall mean the rate of interest per annum equal to
the prime commercial rate of The Chase Manhattan Bank (National Association), as
announced from time to time at its principal office in New York, New York, in
effect from time to time.
Project Insurance shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Project Manager shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Purchase Documents shall mean the Bill of Sale, the Deed and
the Assignment of Beneficial Interest and such other documents as the Owner
Participant, the Owner Trustee, the Indenture Trustee, the Loan Participant or
their respective counsel shall deem desirable to convey good and marketable
title to the Undivided Interest and the Real Property Interest to the Trust.
Purchase Price shall have the meaning set forth in section
4(a) of the Participation Agreement.
PVNGS shall mean the. Arizona Nuclear Power Project, as that
term is defined in the ANPP Participation Agreement.
PVNGS Site shall mean the interest in the Arizona land trust
and the real property described in Exhibit A to the Bill of Sale.
Real Estate Investment shall have the meaning set forth in
Section 3 of the Participation Agreement.
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Real Property Interest shall mean the right, title and
interest of the Owner Trustee acquired pursuant to the Deed and the Assignment
of Beneficial Interest
Reasonable Basis for a position shall exist if tax counsel may
properly advise reporting such position on a tax return in accordance with
Formal Opinion 85-352 issued by the Standing Committee on Ethics and
Professional Responsibility of the American Bar Association.
Refunding Bonds shall mean Funding Corp's Lease Obligation
Bonds series 19863, issued, authenticated and delivered under the Collateral
Trust Indenture, as supplemented by the Refunding supplemental Indenture, as
described in the Underwriting Agreement.
Refunding Date shall mean the date of issuance of the Refunding
Bonds.
Refunding Loan shall have the meaning set forth in section
2(c) of the Participation Agreement.
Refunding Supplemental Indenture shall mean the Refunding Bond
Supplemental Indenture, among PNM, Funding Corp and the Collateral Trust
Trustee, supplementing the Collateral Trust Indenture and providing, among other
things, for the issuance of the Refunding Bonds.
Registration Statement shall mean the registration statement
on Form 8-3 (rile No. 33-2031), as amended, and any other similar registration
statement, including all exhibits and all documents incorporated in the
Registration Statement by reference, filed with the SEC under the Securities Act
in connection with the offer, issue and sale of the Refunding Bonds.
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Regulations shall mean the income tax regulations issued,
published or promulgated under the Code.
Renewal Tern shall have the meaning set forth in section 12 of
the Facility Lease.
Rent shall mean Basic Rent and Supplemental Rent.
Rent Differential shall have the meaning set forth in section
3(h) of the Facility Lease.
Requisition of Title shall mean any circumstance or event in
consequence of which Unit 1 or the Undivided Interest shall be condemned or
seized or title thereto shall be requisitioned or taken by any Governmental
Authority under power of eminent domain or otherwise and all administrative or
judicial appeals opposing such condemnation, seizure or taking shall have been
exhausted or the period for such appeal shall have expired.
Requisition of Use shall mean any circumstance or event in
consequence of which the use of Unit 1 or the Undivided Interest shall be
requisitioned or taken by any Governmental Authority under power of eminent
domain or otherwise, other than a Requisition of Title.
Responsible Officer shall mean, with respect to the subject
matter of any covenant, agreement or obligation of any party contained in any
Transaction Document, the President, or any Vice President, Assistant Vice
President, Treasurer, Assistant Treasurer or other officer who in the normal
performance of his operational responsibility would have knowledge of such
matter and the requirements with respect thereto.
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Retained Assets shall mean (i) the Lessee's ownership interest
in PVNGS other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest1 (ii) Severable Capital Improvements title
to the undivided interest in which is retained by the Lessee in accordance with
Section 2(e) of the Facility Lease, and (iii) any additional interest in and to
PVNGS (other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest) to which the Lessee becomes entitled in
consequence of sections 16.2 or 23.5 of the ANPP Participation Agreement (except
as otherwise provided in Section 5(a) or 19 of the Facility Lease).
Sale Proceeds shall mean, with respect to any sale of the
Undivided Interest and the Real Property Interest by the Lessor to any Person
other than the Lessee, the gross proceeds of such sale payable in cash, less all
costs and expenses whatsoever incurred by the Lessor and the Owner Participant
in connection therewith.
Salt River shall mean Salt River Project Agricultural
Improvement and Power District, an Arizona agricultural improvement district.
SCPPA shall mean southern California Public Power Authority, a
California joint powers agency (doing business in Arizona as Southern California
Public Power Authority Association)
SEC shall mean the Securities and Exchange Commission of the
United States of America or any successor agency.
Section 6(c) Application shall mean Funding Corp's Application
for an Order under Section 6(c) of the Investment Company Act of 1940 Exempting
First PV Funding Corporation from All Provisions of such Act, as filed with the
SEC on September 20, 1985, as amended by an Amendment No. 1 thereto dated
November 8, 1985 and Amendment No. 2 thereto dated November 25, 1985.
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Securities Act shall mean the securities Act of 1933, as
amended.
Securities Exchange Act sha11 mean the Securities Exchange Act
of 1934, as amended.
Severable when used with respect to any Capital Improvement,
shall mean any Capital Improvement which can be removed from Unit 1 without
materially damaging Unit 1 or materially diminishing or impairing the value,
utility or condition which Unit 1 would have had if the applicable Capital
Improvement had not been made
Share shall mean a percentage equal to the percentage of
Undivided Interest in Unit 1 or the Common Facilities, as the context so
requires.
Southern California shall mean Southern California Edison
Company, a California corporation.
Special Casualty Value shall mean (i) during the Basic Lease
Term, the percentage of Facility Cost set forth opposite such date in Schedule 2
to the Facility Lease and (ii) during the Renewal Term, the amount determined by
amortizing ratably the Fair Market Sales Value of the Undivided Interest as of
the day following the last day of the Basic Term in monthly steps over the
remaining term of the License determined pursuant to Section 13(a) of the
Facility Lease. Anything contained in the Facility Lease to the contrary
notwithstanding, Special Casualty value shall be, when added to all other
amounts which the Lessee is required to pay under Section 9(d) of the Facility
Lease (taking into account any assumption of the Notes by the Lessee), under any
circumstances and in any event, in an amount at least sufficient to pay in full,
as of any date of payment, the aggregate unpaid principal amount of all Notes
Outstanding at the close of business on such date, together with accrued and
unpaid interest on such Notes.
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Special Purchase Event shall have the meaning specified in
Section 13(c) of the Facility Lease.
Substituted Lessee shall have the meaning specified in.
section 6.8(c) of the Indenture.
Supplemental Financing shall mean a financing of the
Supplemental Financing Amount of Capital improvements made pursuant to Section
8(f) of the Facility Lease.
Supplemental Financing Amount sha11 mean that portion of
1.133333% of the cost of a Capital Improvement to Unit 1 and .377777% of the
cost of a Capital Improvement to the Common Facilities that shall not exceed (i)
the amount of the increase, if any, in the Owner Participant's basis in the
Undivided Interest for purposes of section 1012 of the Code as a result of such
Capital Improvement less (ii) the amount of the related Additional Equity
Investment of the Lessor, if any.
Supplemental Rent shall have the meaning set forth in Section
3(b) of the Facility Lease.
Surviving Lessee shall have the meaning specified in Section
10(b)(3)(ii) of the Participation Agreement.
Tax shall mean any and all fees (including, without
limitation, documentation, recording, filing, license and registration fees),
taxes (including, without limitation, net income, franchise, value added,
advalorem, gross income, gross receipts, sales, use, property, personal and
real, tangible and intangible, excise, and stamp taxes), levies, imposts,
duties, charges, assessments, or withholdings of any nature whatsoever, general
or specific, ordinary or extraordinary, together with any and all penalties,
fines, additions to tax and interest thereon.
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Tax Assumptions shall mean the assumptions set forth in
Section 1(a) of the Tax Indemnification Agreement, with respect to the Federal
income tax consequences of the transactions included or reflected in the Pricing
Assumptions.
Tax Indemnification Agreement shall mean the Tax
Indemnification Agreement, dated as of July 31, 1986, between PNM and the Owner
Participant.
Term Loan Agreement shall mean the Term Loan Agreement dated
as of July 31, 1986 among Funding Corp, PNM and the bank named on the signature
page thereto.
Term Note Supplemental Indenture shall mean the Series 1986A
Term Note Supplemental Indenture dated as of July 31, 1986 among PNM, Funding
Corp and the Collateral Trust Trustee, supplementing the' Collateral Trust
Indenture and providing, among other things, for the issuance of the Initial
Series Bonds.
Termination Date shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination Event shall mean any early termination of the
Facility Lease in accordance with Section 14 thereof.
Termination Notice shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination Obligation shall have the meaning set forth in
Section 15.10.2 of the ANPP Participation Agreement (or any comparable successor
provision).
Termination Value, as of any Basic Rent Payment Date during
the Basic Lease Term, shall mean the percentage of Facility Cost set forth
opposite such Basic Rent Payment Date in Schedule 3 to the Facility Lease.
Anything contained in the Facility Lease to the contrary notwithstanding,
Termination value shall be, when added to all other amounts which the Lessee is
required to pay under Section 14 of the Facility Lease,
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under any circumstances and in any event, in an amount at least sufficient to
pay in full as of any Basic Rent Payment Date the aggregate unpaid principal
amount of all Motes Outstanding at the close of business on such date, together
with accrued and unpaid interest on such Notes'.
Transaction Documents shall mean the Participation Agreement,
the Facility Lease, the Trust Agreement, the Indenture, the Extension Letter,
the Tax Indemnification Agreement, the Mortgage Release, the Assignment and
Assumption, each Purchase Document and the Notes.
Transaction Expenses shall have the meaning set forth in
Section 14(a) of the Participation Agreement.
Transfer shall mean the transfer, by bill of sale or
otherwise, by the Lessor of all the Lessor's right, title and interest in and to
the Undivided Interest and the Real Property Interest and under the Assignment
and Assumption on an "as is, where is" basis, free and clear of all Lessor's
Liens and Owner Participant's Liens but otherwise without recourse,
representation or warranty (including an express disclaimer of representations
and warranties in a manner 'comparable to that set forth in the second. sentence
of Section 6(b) of the Facility Lease), to9ether with the due assumption by the
transferee of, and the due release of the Lessor from, all the Lessor's
obligations under the Assignment and Assumption and the Assignment of Beneficial
Interest by an instrument or instruments satisfactory in form and substance to
the Lessor and the Owner Participant.
Transferee shall have the meaning assigned thereto in Section 15
of the Participation Agreement.
Trust shall mean the trust created by the Trust Agreement.
-43-
6091.50.2831.55:2
<PAGE>
Trust Agreement shall mean the Trust Agreement, dated as of
July 31, 1986, between the Owner Participant and FNB.
Trust Estate shall have the meaning set forth in section 2.03 of
the Trust Agreement.
Trust Indenture Act shall mean the Trust Indenture Act of
1939, as amended.
Trustee's Expenses shall mean any and all liabilities,
obligations, costs, compensation, fees, expenses and disbursements (including,
without limitation, legal fees and expenses) of any kind and nature whatsoever
(other than such amounts as are included in Transaction Expenses) which may be
imposed on, incurred by or asserted against the Indenture Trustee or any of its
agents, servants or personal representatives, in any way relating to or arising
out of the Indenture, the Lease Indenture Estate, the Participation Agreement or
the Facility Lease, or any document contemplated thereby, or the performance or
enforcement of any of the terms thereof, or in any way relating to or arising
out of the administration of such Lease Indenture Estate or the action or
inaction of the Indenture Trustee under the Indenture; provided, however, that
such amounts shall not include any Taxes or any amount expressly excluded from
the Lessee's indemnity obligations pursuant to section 13(a) or 13(b) of the
Participation Agreement
UCC or Uniform Commercial code shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
Underwriting Agreement shall mean the agreement among Funding
Corp, PNM, Kidder Peabody, Goldman, Sachs & Co. and Drexel Burnham Lambert
Incorporated (both acting either as underwriters or representatives of the
underwriters named therein) relating to the purchase, sale and delivery of the
Refunding Bonds and any applicable pricing agreements.
-44-
6091.50.2831.55:2
<PAGE>
Underwriters' counsel shall mean Wilikie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022.
Undivided Interest shall mean a 1.133333% undivided interest
in Unit 1 and a .377777% undivided interest in Common Facilities; the owner of
the Undivided Interest shall be a tenant-in-common with the owner. (including
PNM, if it should be such an owner) of all other undivided interests in Unit 1
and the Common Facilities. Unless the context otherwise requires, Undivided
Interest includes an appropriate portion of Generation Entitlement Share.
Undivided Interest Indenture Supplement shall mean the
supplement to the Indenture substantially in the form of Exhibit C thereto
pursuant to which the Owner Trustee causes the Undivided Interest and the Real
Property Interest to be subjected to the Lien of the Indenture.
Undivided Interest Percentage shall mean the respective
percentages identified as such on Schedule 2 to the Participation Agreement;
provided, however, that in respect to the portion of Unit 1 constituting Common
Facilities, the Undivided Interest Percentage shall be a percentage equal to
one-third of the percentage identified on Schedule 2, to the Participation
Agreement with respect to Unit 1.
Uniform System of Accounts shall mean the Uniform System of
Accounts prescribed for Public Utilities and Licensees subject to the provisions
of the Federal Power Act (Class A and Class B), 18 CFR 101, as in effect on the
date of execution of the Participation Agreement, as amended or modified from
time to time after such date.
Unit 1 shall mean the 1,270 megawatt unit commonly known as
Unit 1 at the Palo Verde Nuclear Generating Station, all as more fully described
in Item A of Exhibit I to the Bill of Sale, together with all Capital
Improvements thereto, but excluding all common facilities.
-45-
6091.50.2831.55:2
<PAGE>
Unit 1 Decommissioning Costs Sha11 mean approximately
$23,000,000 (1986 dollars) (or such other amount as shall be determined by the
Lessee, in good faith, in accordance with prudent utility practice) adjusted
annually on the last day of each calendar year, for inflation using an inflation
rate twice that indicated by the change in the Consumer Price Index published by
the U. S. Department of Labor, Bureau of Labor Statistics for such calendar
year, such adjustment to take effect on the first day of the succeeding calendar
year.
Unit 1 Retained Assets shall mean (i) all resident fuel
assemblies, equipment and personal property constituting part of the Generating
Unit (as defined in the ANPP Participation Agreement) designated as Palo Verde
Nuclear Generating Station Unit 1 (other than common facilities) owned by the
Lessee but excluded from Unit 1 as set forth in Item A of Exhibit B to the Bill
of Sale and (ii) a one-third interest in all equipment and personal and real
property constituting PVNGS common facilities under the ANPP Participation
Agreement owned by the Lessee but excluded from the Common Facilities as set
forth in Item B of Exhibit B to the Bill of Sale.
User shall mean a Person unrelated to PNM (within the meaning
of Section 318 of the Code) possessing the Undivided Interest after the tease
Termination Date.
-46-
6091.50.2831.55:2
<PAGE>
================================================================================
AMENDMENT NO.1
Dated as of November 18, 1986
to
PARTICIPATION AGREEMENT Dated as to July 31, 1986
among
CHASE MANHATTAN REALTY LEASING CORPORATION,
as Owner Participant
FIRST PV FUNDING CORPORATION,
as Loan Participant
THE FIRST 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, as Owner Trustee
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, as Indenture Trustee
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
as Lessee
================================================================================
Sale and Leaseback of an Undivided Interest in
Palo Verde Nuclear Generating Station Unit 1
and Certain Related ommon Facilities
================================================================================
6091.CHASE.DEBT.181A.1
<PAGE>
AMENDMENT NO. 1, dated as of November 18, 1986, to the
Participation Agreement, dated as of July 31, 1986, among CHASE MANHATTAN REALTY
LEASING CORPORATION, a New York corporation (the Owner Participant), FIRST PV
FUNDING CORPORATION, a Delaware corporation (the Loan Participant THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, in its individual
capacity (FNB) and as Owner Trustee (the Owner Trustee) under a Trust Agreement,
dated as of July 31, 1986, with the Owner Participant, CHEMICAL BANK, a New York
banking corporation, in its individual capacity (Chemical Bank) and as Indenture
Trustee (the Indenture Trustee) under a Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of July 21, 1986, with the Owner
Trustee, 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 Owner Participant, the Loan Participant, the Owner
Trustee, the Indenture Trustee and the Lessee have previously entered into a
Participation Agreement dated as of July 31, 1986 (the Participation Agreement);
WHEREAS, the Initial Series Note was issued by the Owner Trustee
in connection with the acquisition of the Undivided interest;
WHEREAS, Section 2(c) of the Participation Agreement provides
for a refunding of the Initial Series Note upon the satisfaction of the
conditions set forth in Sections 2(c) and 11(c) of the Participation Agreement;
WHEREAS, the parties hereto wish to refund the Initial Series
Note;
WHEREAS, such refunding of the Initial Series Note necessitates
this Amendment No. 1 to the Participation Agreement (Amendment No. 1);
WHEREAS, Section l0.l(viii) of the Indenture provides, among
other things, that the Owner Trustee and Indenture Trustee may, without the
consent of the Holders of Notes Outstanding, execute a supplement to the
Indenture in order, among other things, to evidence the issuance of and to
provide the terms of Additional Notes;
6091.CHASE.DEBT.181A.1
<PAGE>
WHEREAS, the Owner Trustee and the Indenture Trustee intend to
execute Supplemental Indenture No. 1, dated as of November 18, 1986
(Supplemental Indenture No. 1), to the indenture, providing, among other things,
for the issuance under the Indenture of the Fixed Rate Notes (as defined in
Supplemental Indenture No. 1), to the Indenture, providing, among other things,
for the issuance under the Indenture of the Fixed Rate Notes (as defined in
Supplemental Indenture No. 1);
WHEREAS, Section 10.2(ii) of the Indenture provides, among other
things, that, upon receipt of a written instruction from the Lessee and the
Owner Trustee, the indenture Trustee shall consent to certain amendments to the
Facility Lease: and
WHEREAS, the Owner Trustee and the Lessee intend to execute
Amendment No. 1, dated as of November 18, 1986 (Lease Amendment No. 1), to the
Facility Lease, to amend Section 3(a) thereof and the schedules thereto;
NOW, THEREFORE in consideration of the premises and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Amendment.
(a) Definitions. Except as otherwise defined herein and in the
recitals, capitalized terms used herein shall have the respective meanings set
forth in Appendix A to the Participation Agreement.
(b) Amendment to Tax Indemnification Agreement. The fact that
an amendment to the Tax Indemnification Agreement is contained in this Amendment
No 1 to the Participation Agreement does not mean that the consent or agreement
of any party to this Amendment No. 1 to the Participation Agreement other than
the Lessee and the Owner Participant is required to amend the Tax
Indemnification Agreement at this time or at any time in the future. The Lessee
and the Owner Participant hereby amend Section 1(a) (11) of the Tax
Indemnification Agreement to read in its entirety as follows:
"(11) Without giving effect to any credits against tax, the Owner
Participant's (i) marginal federal rate of income tax is 46% in 1986,
39.950685% in 1997 and 34% in 1988 and (ii) New York State and New York
City rates of income tax are 9% and 9%, respectively."
-2-
6091.CHASE.DEBT. 181A:1
<PAGE>
SECTION 2. Implementation.
(a) Forms. The forms of Supplemental Indenture No. 1 and Lease
Amendment No. 1 are attached hereto as Exhibit. A and B, respectively. All
blanks in Supplemental Indenture No. 1 and Lease Amendment No. 1 shall be
appropriately filled in or completed, all in a manner consistent therewith and
with the Transaction Documents and the Financing Documents.
(b) Request by the Owner Participant. In accordance with Section
2.01 of the Trust Agreement, the Owner Participant hereby requests that the
Owner Trustee (i) execute and deliver this Amendment No. 1, Supplemental
Indenture No. 1 and Lease Amendment No. 1 (collectively, the Refunding
Amendments); (ii) execute the Fixed Rate Notes and. request the Indenture
Trustee to authenticate and deliver the Fixed Rate Notes pursuant to Section
3.5(2) of the Indenture; and (iii) execute and deliver all other agreements,
instruments and certificates contemplated by the Transaction Documents, the
Financing Documents and the Refunding Amendments.
(c) Instruction and Consent. The Lessee and the Owner Trustee
hereby instruct the Indenture Trustee (i) to consent to Lease Amendment No. 1,
and the Indenture Trustee so consents, and (ii) to execute Supplemental
Indenture No. 1, all in accordance with section 10.2 of the Indenture.
(d) Recordations and Filings. The Lessee agrees that it shall
cause to be made the recordations and filings set forth in Schedule 1 hereto and
represents that such filings and recordations are all the recordations and
filings that are necessary in order to preserve, protect and perfect the Owner
Trustee's rights and interests under the Facility Lease, as amended by Lease
Amendment No. 1, and the first and prior security interest of the Indenture
Trustee in the Lease Indenture Estate under the Indenture, as amended by
Supplemental Indenture No. 1.
-3-
6091.CHASE.DEBT.l81A:l
<PAGE>
(e) Refunding of Bonds. The Loan Participant agrees that, unless
it obtains the written consent of the Owner Participant, (1) it will refund its
Lease Obligation Bonds, series 19863 (the Bonds), issued pursuant to the Series
1986B Bond Supplemental Indenture, dated as of November 18, 1986 (the series
1986B Bond Supplemental Indenture), only in connection with the refunding of an
equal principal amount of the Pledged Lessor Notes identified in Schedule 2 to
the series 19863 Bond Supplemental Indenture (the Pledged Lessor Notes) , or, to
the extent that the Lessor Notes described in Schedule 3 to such Series 19863
Bond Supplemental Indenture (the Lessor Notes) are subjected to the lien of the
Collateral Trust Indenture, in connection with the refunding of an equal
principal amount of such Lessor Notes and (2) subsequent to any Lessor Notes
being subjected to the lien of the Collateral Trust Indenture, or, if the Lessor
Notes are not so subjected, a mandatory redemption of Bonds pursuant to Section
1.04 (a) of the Series 19863 Bond Supplemental Indenture, the principal amount
of Pledged Lessor Notes bearing interest at the rates per annum of 8.05%, 8.95%
and 10.15% respectively, and Lessor Notes, if any, bearing interest at the rates
per annum of 8.05%, 8.95% and 10.15%, respectively, shall not be less than the
principal amount of Bonds bearing interest at the rates per annum of 8.05%,
8.95% and 10.15% respectively.
(f) Reoptimization of the Notes. If the Lessee, in a timely
manner, provides the Owner Trustee and the Owner Participant with information
sufficient for the Owner Trustee to direct the adjustments described in Section
2(b) of Supplemental Indenture No. 1, together with a certificate (in form and
substance reasonably satisfactory to the Owner Participant) to the effect that
such adjustments minimize the aggregate increase in Basic Rent occurring as a
result of the operation section 3(d) of the Facility Lease, the Owner Trustee
shall deliver to the Indenture Trustee a certificate pursuant to such Section
2(b). Notwithstanding the foregoing, the Owner Participant, the Indenture
Trustee and the Owner Trustee may rely on such certificate and shall have no
obligation to verify the same.
(g) Payment of Transaction Expenses. The Owner Participant
shall pay to the Owner Trustee on the Refunding Date the sum of $100,000 to be
disbursed by the Owner Trustee on account of Transaction Expenses as
contemplated by section 14 of the Participation Agreement.
-4-
609l.CHASE.DEBT. 18lA: 1
<PAGE>
SECTION 3. Miscellaneous.
(a) Execution. This Amendment No. 1 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Although this Amendment No. 1 is dated as of the date first
above written for convenience, the actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
and this Amendment No. 1 shall be effective on the latest of such dates.
(b) 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.
(c) Responsibility Far Recitals. The recitals contained herein
shall be taken as the statements of the Lessee, and the other parties hereto
assume no responsibility for the correctness of the same.
-5-
6O91.CHASE.DEBT. 18lA: 1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment No. 1 to the Participation Agreement to be duly executed by their
respective officers thereunto duly authorized as of the dates set forth below.
CHASE MANHATTAN REALTY
LEASING CORPORATION
By
---------------------------
Vice President
Date: November 25, 1986
FIRST PV FUNDING CORPORATION
By
--------------------------
President
Date: November 25, 1985
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:
-------------------------
Vice President and
Corporate Controller
Date: November 25, 1986
-6-
6091.CHASE.DEBT.181A:l
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON;
in itsindividual capacity and
as Owner Trustee
By:
---------------------------
Assistant Vice President
Date: November 25, 1986
CHEMICAL BANK, in its individual
capacity and as Indenture Trustee
By:
--------------------------
Authorized Officer
Date: November 25, 1986
-7-
6O91.CHASE.DEBT.181A:l
<PAGE>
Schedule 1
to
Amendment No.1
to
Participation Agreement
RECORDATONS AND FILINGS
Part I. Recordations.
County Recorder, Maricopa County, Arizona:
(i) Amendment No. 1 to the Facility Lease; and
(ii) Supplemental Indenture No. 1 to the Indenture.
Part II. Filings.
(a) Separate financing statement amendments naming PNM as
"Lessee" and the Owner Participant's Owner Trustee as "Lessor", and the
Indenture Trustee, as Assignee of the Owner Trustee, with respect to the
Facility Lease, as amended by Lease Amendment No. 1, to be filed in the records
of:
(1) the Secretary of State of the State of Arizona
(regular and public utility filings);
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the Clerk of Bernalillo County, New Mexico.
(b) Separate financing statement amendments naming the Owner
Trustee as "Debtor" and the Indenture Trustee as "Secured Party", with respect
to the Indenture, as amended by Supplemental Indenture No. 1, to be filed in the
records of:
(1) the Secretary of State of the State of Arizona;
6O9l.CHASE.DEBT. 181A: 1
<PAGE>
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico
and
(4) the Clerk of Bernalillo County, New Mexico.
(c) A financing statement amendment naming the Owner Trustee
as "Debtor" and the Indenture Trustee as "Secured Party" with respect to the
Indenture, as amended by Supplemental Indenture No. 1, to be filed with the
Secretary of State of the Commonwealth of Massachusetts.
(d) Separate financing statement amendments naming Funding
Corp. as "Debtor" and the Collateral Trust Trustee as "Secured Party", and
listing, as collateral covered thereby, the "Pledged Property" under the
Collateral Trust Indenture, as amended and supplemented, to be filed in the
records of:
(1) the Secretary of State of the State of Arizona;
(2) the County Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the County Clerk of Bernalillo County, New Mexico.
(e) Supplemental Indenture No. 1 to the Indenture, to be filed
with the Secretary of State of the State of New Mexico, under the Public Utility
Act.
-2-
6O9l.CHASE.DEBT. l8lA:l
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
Alvarado Square
Albuquerque, New Mexico 87158
November 25, 1986
Chase Manhattan Realty Leasing Corporation
One Chase Manhattan Plaza
New York, New York 10005
Current Pricing Assumptions
Participation Agreement dated as of July 31, 1986,
as amended
Dear Sirs:
Attached hereto as Schedule 1 is a list of the Current Pricing Assumptions used
in connection with the adjustment to Basic Rent, Casualty Values, Special
Casualty Values and Termination Values agreed to in connection with the
transactions consummated on November 25, 1926, with respect to the
above-captioned Participation Agreement and the Facility Lease, as amended, and
the Indenture, as amended, referred to therein.
We understand that the Current Pricing Assumptions reflected on Schedule 1
hereto may not be amended without your prior written consent.
Sincerely,
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ B. D. Lackey
-------------------------------
Vice President and
Corporate Controller
6091.CHASE.DEBT.l81P:l
<PAGE>
SCHEDULE 1
CURRENT PRICING ASSUMPTIONS
Basic Rent, Casualty Values, Special Casualty Values and
Termination Values, as set forth in the Facility Lease, as amended by Amendment
No. 1 thereto, have been computed on the basis of the following pricing
assumptions:
1. Investment Percentage: 20%
2. Loan Percentage: 80%
3. Interest Rate on:
(a) Fixed Rate Note due
January 15, 1992
($1,501,000) 8.05%
(b) Fixed Rate Note due
January 15, 1997
($5,625,000) 8.95%
(c) Fixed Rate Note due
January 15, 2015
($32,873,000) 10.15%
(d) Assumed Interest Rate
for interim period 9.9024175%
4. Federal ACRS Deductions: 10-year public util-
ity property deduc-
tions on the basis
of 100% of Facility
Cost.
5. State and City Deductions: 16 Year 150% declin-
ing balance switch-
ing to straight line
at the optimal
point, using the
half year conven-
tion, on the basis
of 100% of Lessor's
Cost.
-2-
6091.CHASE. DEBT. 181P: 1
<PAGE>
6. Owner Participant's Tax
Year-End: December 31, 1996
7. Closing Date: August 1, 1986
8. Transaction Expenses: 2.0% of Facility Cost
paid by the Owner
Participant on the
Closing Date and .2%
of Facility Cost paid
on November 25, 1986
in addition to its
Investment Amortized
on a straight-line
basis from the date
of payment through
the end of the Basic
Lease Term)
9. Real Estate Investment: $19,417
10. Basic Rent Payment Date: January 15 and
July 15 of each year
(rent payable in
arrears)
11. First Basic Rent Payment
Date: July 15, 1997
12. Last Basic Rent Payment
Date: January 15, 2015
13. Interim Rent Payment Date: January 15, 1987
14. Marginal Federal Tax Rate: 46% for 1986,
39.950685% for 1987
and 34% thereafter
15. Marginal Combined New York
State and City Tax Rate: 8.6% deductible for
Federal taxes
16. First Estimated Tax Payment
Date: September 15, 1986
17. Tax Accounting Method: Accrual
18. Amortization of Fixed Rate
Notes: As set forth in
schedules attached
thereto
Accepted and Agreed:
CHASE MANHATTAN REALTY LEASING CORPORATION
By
------------------------------
Title: Vice President
-3-
6091.CHASE.DEBT.181P:l
When recorded, return to:
Greg R. Nielsen
Snell a Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of July 31, 1986
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of July 31,
1986, with chase Manhattan
Realty Leasing Corporation
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Sale and Leaseback of a 1.133333% Undivided Interest in Palo Verde Nuclear
Generating Station Unit 1 and a
.377777% Undivided Interest in Certain Common
Facilities
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
CONSTRUCTION, GOVERNING LAW, INTERPRETATION
AND DEFINITIONS
SECTION 1.1 Governing Law ........................................... 2
SECTION 1.2 Headings and Table of Contents .......................... 2
SECTION 1.3 Definitions; Construction of
References; Schedules ................................... 3
SECTION 1.4 Disclosure of Beneficiaries ............................. 3
ARTICLE II
SECURITY
SECTION 2.1 Grant of Security Interest; Mortgage .................... 4
SECTION 2.2 Payments Under the Facility Lease ....................... 7
SECTION 2.3 Release of Lien on Lease Indenture Estate ............... 7
SECTION 2.4 Power of Attorney ....................................... 10
-i-
<PAGE>
TABLE OF CONTENTS (Continued)
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION, FORM AND
REGISTRATION OF NOTES
Page
----
SECTION 3.1 Limitation on Notes .................................... 11
SECTION 3.2 Execution of Notes ..................................... 11
SECTION 3.3 Effect of Certificate of
Authentication ......................................... 12
SECTION 3.4 Creation of the Initial Series
Note; Aggregate Principal Amount,
Dating and Terms; Prerequisites to
Authentication and Delivery of the Initial
Series Note; Application of Proceeds ................... 12
SECTION 3.5 Additional Notes ....................................... 13
SECTION 3.6 Security for and Parity of Notes ....................... 16
SECTION 3.7 Source of Payments Limited ............................. 17
SECTION 3.8 Place and Medium of Payment ............................ 18
SECTION 3.9 Prepayment of Notes; Assumption by
Lessee; Notice of Assumption or Prepayment ............. 18
SECTION 3.10 Muti1ated, Destroyed, Lost or Stolen Notes ............. 21
-ii-
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 3.11 Allocation of Principal and Interest .................. 22
ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF NOTES
SECTION 4.1 Register of Notes ..................................... 22
SECTION 4.2 Registration of Transfer or
Exchange of Notes ..................................... 22
SECTION 4.3 Cancellation of Notes ................................. 23
SECTION 4.4 Limitation on Timing of Registration of Notes ......... 24
SECTION 4.5 Restrictions on Transfer Resulting
from Federal Securities Laws;
Legend ................................................ 24
SECTION 4.6 Charges upon Transfer or Exchange
of Notes .............................................. 25
SECTION 4.7 Inspection of Register of Notes ....................... 25
SECTION 4.8 Ownership of Notes .................................... 25
iii
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE LEASE INDENTURE
ESTATE
SECTION 5.1 Basic Rent, Interest on Overdue
Installments of Basic Rent and
Prepayments of Interest ................................ 26
SECTION 5.2 Amounts Received as Result of
Event of Loss, Deemed Loss Event,
Exercise of Option to Terminate,
Exercise of Cure Option or
Occurrence of Special Purchase
Event .................................................. 28
SECTION 5.3 Amounts Received After, or Held
at Time of, Indenture Event of
Default under Section 6.2 .............................. 28
SECTION 5.4 Amounts Received for Which
Provision Is Made in a Transaction
Document ............................................... 30
SECTION 5.5 Amounts Received for Which No
provision Is Made ...................................... 30
SECTION 5.5 Payments to Owner Trustee .............................. 31
SECTION 5.7 Excepted Payments ...................................... 31
-iv-
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VI
REPRESENTATIONS, WARANTIES AND COVENANTS OF
OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES
OF THE INDENTURE TRUSTEE
SECTION 6.1 Representations, Warranties and
Covenants of Owner Trustee ............................. 32
SECTION 6.2 Indenture Events of Default ............................ 33
SECTION 6.3 Enforcement of Remedies ................................ 34
SECTION 6.4 Specific Remedies; Enforcement of
Claims without possession of Notes ..................... 35
SECTION 6.5 Rights and Remedies Cumulative ......................... 37
SECTION 6.6 Restoration of Rights and
Remedies ............................................... 37
SECTION 6.7 Waiver of Past Defaults ................................ 38
SECTION 6.8 Right of Owner Trustee to Pay
Rent; Note Purchase; Substitute
Lessee ................................................. 38
SECTION 6.9 Further Assurances ..................................... 40
SECTION 6.10 Right of Indenture Trustee To
Perform Covenants, etc. ................................ 41
-v-
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 6.11 Certain Other Rights of the Owner
Trustee ................................................ 41
ARTICLE VII
CERTAIN DUTIES OF THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 7.1 Duties in Respect of Events of
Default, Deemed Loss Events and
Events of Loss; Acceleration of
Maturity ............................................... 42
SECTION 7.2 Duties in Respect of Matters
Specified in Directive ................................. 44
SECTION 7.3 Indemnification ........................................ 44
SECTION 7.4 Limitations on Duties; Discharge
of Certain Liens Resulting from
Claims Against Indenture Trustee ....................... 44
SECTION 7.5 Restrictions on Dealing with Lease
Indenture Estate ....................................... 45
SECTION 7.6 Filing of Financing Statements and
Continuation Statements ................................ 45
-vi-
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 8.1 Acceptance of Trusts; Standard of
Care .................................................... 47
SECTION 8.2 No Duties of Maintenance, Etc ........................... 48
SECTION 8.3 Representations and Warranties of
Indenture Trustee and the Owner Trustee ................. 48
SECTION 8.4 Moneys Held in Trust;
Non-Segregation of Moneys ............................... 48
SECTION 8.5 Reliance on Writings, Use of
Agents, Etc.. ........................................... 49
SECTION 8.6 Indenture Trustee to Act Solely as
Trustee ................................................. 50
SECTION 8.7 Limitation on Rights Against
Registered Holders, the Owner
Trustee or Lease Indenture Estate ....................... 51
SECTION 8.8 Investment of Certain Payments
Held by the Indenture Trustee ............................ 51
SECTION 8.9 No Responsibility for Recitals,
etc. ..................................................... 52
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TABLE OF CONTENTS (Continued)
Page
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SECTION 8.10 Indenture Trustee May Engage in
Certain Transactions .................................... 52
SECTION 8.11 Construction of Ambiguous
Provisions .............................................. 52
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1 Resignation and Removal of
Indenture Trustee; Appointment of
Successor ............................................... 53
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
AND OTHER DOCUNENTS
SECTION 10.1 Supplements, Amendments and
Modifications to This Indenture
Without Consent of Holders of
Notes ................................................... 55
SECTION 10.2 Supplements and Amendments to this
Indenture and the Facility Lease
With Consent of Holders of Notes ........................ 56
SECTION 10.3 Certain Limitations on Supplements
and Amendments. ......................................... 57
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TABLE OF CONTENTS (Continued)
Page
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SECTION 10.4 Directive Need Not Specify
Particular Form of Supplement or
Amendment .............................................. 58
SECTION 10.5 Trustee to Furnish Copies of
Supplement or Amendment ................................ 58
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Moneys for Payments in Respect of
Notes to be Held in Trust .............................. 59
SECTION 11.2 Disposition of Moneys Held for
Payments of Notes ...................................... 59
SECTION 11.3 Transfers Not to Affect Indenture
or Trusts .............................................. 60
SECTION 11.4 Binding Effect of Sale of Lease
Indenture Estate ....................................... 60
SECTION 11.5 Limitation as to Enforcement of
Rights, Remedies and Claims ............................ 60
SECTION 11.6 Notices ................................................ 61
SECTION 11.7 Separability of Provisions ............................. 61
SECTION 11.8 Benefit of Parties, Successors and
Assigns ................................................ 61
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TABLE OF CONTENTS (Continued)
Page
SECTION 11.9 Survival of Representations and Warranties ............. 62
SECTION 11.10 Bankruptcy of the Owner Trustee ........................ 62
SECTION 11.11 Bankruptcy of the Owner Participant .................... 63
SECTION 11.12 Counterpart Execution .................................. 63
SECTION 11.13 Dating of Indenture .................................... 63
Schedule 1 Undivided Interest Description
Schedule 2 Real Estate Interest Description
Exhibit A Form of Initial Series Note
Exhibit B Form of Assumption Agreement
Exhibit C Form of Undivided Interest Indenture Supplement
Appendix A Definitions
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TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
dated as of July 31, 1986, between THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (FNB), not in its individual capacity, but solely as trustee
(the Owner Trustee) under a Trust Agreement dated as of July 31, 1986 between
FNB, whose address is 100 Federal Street, Boston, Massachusetts 02110, with
Chase Manhattan Realty Leasing Corporation, and CHEMICAL BANK, a New York
banking corporation (the Indenture Trustee), whole address is 55 Water Street,
New York, New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee has entered into a participation Agreement,
dated as of July 31, 1986 among the Owner Participant, First PV Funding
Corporation, a Delaware corporation, Public Service Company of New Mexico, a New
Mexico corporation, and the Indenture Trustee;
WHEREAS, the Owner Trustee, acting on behalf of the Owner Participant1
pursuant to the Trust Agreement and the Participation Agreement, intend. to
purchase the Undivided Interest and the Real Property Interest from Public
Service Company of New Mexico and lease the Undivided Interest and the Real
Property Interest to Public Service Company of New Mexico pursuant to the
Facility Lease;
WHEREAS, in order to finance a portion of the Purchase Price of the
Undivided Interest, the Owner Trustee desires to issue its promissory note
hereunder with such promissory note to be substantially in the form of Exhibit A
hereto;
WHEREAS, in order to finance all or a portion of the Supplemental
Financing Amount of Capital Improvements and to refund Notes of any series
previously issued, the Owner Trustee may desire to issue additional promissory
notes hereunder (the Additional Notes) secured on a pari passu basis with other
Notes Outstanding from time to time;
6091.50.2831.57:1
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WHEREAS, in order to secure the obligations referred to herein, the
Owner Trustee desires to grant to the Indenture Trustee the security interest
herein provided and the parties hereto desire that this Indenture be regarded as
a "security agreement" and as a "financing statement" for such security
agreement under the uniform commercial code;
NOW, INEREFORE, in consideration of the premises, of the acceptance by
the Indenture Trustee of the trusts hereby created and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged the parties hereto agree as follows:
ARTICLE I
CONSTRUCTION, GOVERNING LAW,
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Governing Law.
This Indenture (i) is being executed and delivered in the State
of flew York, (ii) shall be deemed to be a contract made in such State and (iii)
for all purposes shall be construed in accordance with and governed by the laws
of the State of New York, except to the extent that the laws of the State of
Arizona are mandatorily applicable hereto.
SECTION 1.2. Headings and Table of Contents.
The division of this Indenture into articles and sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
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SECTION 1.3. Definitions; Construction of References; Schedules.
In this Indenture, unless the context otherwise requires:
(a) the term this Indenture means this instrument, together
with all exhibits, appendices and schedules hereto, as originally executed and
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto pursuant to the provisions hereof;
(b) all references in this instrument to designated Articles,
Sections and other subdivisions are to designated Articles, Sections and other
subdivisions of this instrument unless otherwise indicated;
(a) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in Appendix A hereto, and the
rules of construction set forth in Appendix A hereto shall be applicable hereto.
(e) Attached as Schedule 1 hereto is a description of the
Undivided Interest and attached as schedule 2 hereto is a description of the
Real Property Interest.
SECTION 1.4. Disclosure of Beneficiaries.
Pursuant to Arizona Revised Statutes Section 33-401, (i) the
beneficiary of the Trust Agreement is chase Manhattan Realty Leasing
Corporation, a New York corporation, whose address is One Chase Manhattan Plaza
(20th Floor), New York, New York 10081, Attention of Leasing Administrator and
(ii) the beneficiary of this Indenture is the Holder of the Notes, First PV
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6091.50.2831.57:1
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Funding corporation, whose address isCorporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19601 and, by pledge and assignment, Chemical Bank,
as trustee under the Collateral Trust Indenture, whose address is 55 Water
Street, New York, New York 10041: Attention of Corporate Trustee Administration.
Copies of the Trust Agreement and this Indenture are available for inspection at
the Indenture Trustee's office.
ARTICLE II
SECURITY
SECTION 2.1. Grant of Security Interests Mortgage.
As security for the due and punctual payment of the principal of
and premium, if any, and interest on the Notes according to their respective
terms and effect and the performance and observance by the Owner Trustee of all
the covenants and agreements made by it or on its behalf in the Notes, the
Participation Agreement and this Indenture, the Owner Trustee does by its
execution and delivery hereof hereby grant a security interest in and grant,
bargain, convey, warrant, assign, transfer, mortgage, pledge and set over unto
the Indenture Trustee, and to its successors and assigns in trust, the following
(the Lease Indenture Estate):
(1) all right, title and interest of the Owner Trustee in, to
and under the Facility Lease recorded on August 1, 1986 as
Instrument No. 86- ___________ , records of Maricopa County,
Arizona, to the extent, and only to the extent, constituting
Rent (including, but without limitation, Basic Rent, payments of
Casualty Value, Termination value and Special Casualty value,
and payments under and pursuant to Sections 13(c) and 16 of the
6091.50.2831.57:1
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Facility Lease, excluding all Excepted Payments) (the Assigned
Payments), together with all rights, powers and remedies on the
part of the Owner Trustee arising under the Facility Lease to
demand, collect or receive the Assigned Payments;
(2) all moneys and securities deposited or required to be
deposited with the Indenture Trustee pursuant to any term of
this Indenture and held or required to be held by the Indenture
Trustee hereunder;
(3) all profits, revenues and other income of all property from
time to time subjected to the lien of this Indenture, and all
right, title and interest of every nature whatsoever of the
Owner Trustee in and to the same and every part thereof;
(4) all right, title and interest of the Owner Trustee in and
to any right to restitution from the Lessee in respect of any
determination of invalidity of the Facility Lease; and
(5) all proceeds of the foregoing;
but excluding, however, from the Lease Indenture Estate any and all Excepted
Payments; and subject, however, to (i) the terms and provisions of this
Indenture and (ii) the rights of the Lessee under the Facility Lease.
To the extent that any portion of the Lease Indenture Estate
constitutes fixtures or real property, this Indenture constitutes a realty
mortgage and an assignment of rents with respect to all such items of real
property and in addition to all other rights or remedies set forth in this
Indenture, or otherwise available under Applicable Law, the Indenture Trustee
shall have all of the rights, remedies and benefits of a mortgagee of real
property under Applicable Law, including, without limitation, the rights and
remedies pursuant to Arizona Revised Statutes 5 33-702.3, and the Owner Trustee
shall be deemed a mortgagor with respect to such items.
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TO HAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in this
Indenture.
UPON CONDITION that, unless and until an indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing;, the Owner Trustee may exercise all of its rights
under the Facility Lease to the same extent as if its right, title and interest
therein had not been assigned to the Indenture Trustee to the extent set forth
above, except that the Indenture Trustee shall receive all payments of Assigned
Payments and all moneys and securities required to be held by or deposited with
the Indenture Trustee hereunder.
It is expressly agreed that, anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain obligated to the Lessee
under the Facility Lease to perform all of the Owner Trustee's obligations
thereunder in accordance with and pursuant to the terms and provisions thereof,
and the Indenture Trustee shall not be required or obligated in any manner,
except as expressly provided herein, to perform or fulfill any obligations of
the Owner Trustee under the Facility Lease or to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee hereby warrants and represents that it has not
assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
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SECTION 2.2. Payments Under the Facility Lease.
The Facility Lease provides that (i) all payments constituting
Assigned Payments shall be made to the Indenture Trustee at the Indenture
Trustee's Office, (ii) all other payment. other than Excepted Payments shall be
made to the Lessor at such address as the Lessor may direct by notice in writing
to the Lessee, and (iii) all Excepted Payments shall be made to the Person
entitled to receive such payments. The Owner Trustee agrees that, so long as any
Notes shall be outstanding hereunder, all payments described in clause (i) above
shall be directed to be made to the Indenture Trustee or in accordance with the
Indenture Trustee's instruction and that if it should receive any such payments
or any proceeds for or with respect to the Lease Indenture Estate or otherwise
constituting part of the Lease Indenture Estate, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Lessee, the Owner Trustee or otherwise) with respect to
the Lease Indenture Estate in the manner provided in section 3.11 and Article V
hereof.
SECTION 2.3. Release of Lien an Lease Indenture Estate.
(a) Upon receiving evidence satisfactory to the Indenture
Trustee that (i) it has received, or provision has been made in accordance with
paragraph (C) hereof for, full payment of all principal of and premium, if any,
and interest on the Notes and any other sums payable to the Indenture Trustee
and the Holders of the Notes under this Indenture or the Facility Lease, and
(ii) all Trustee's Expenses shall have been paid in full or provision
satisfactory to the Indenture Trustee shall have been made for such payment,
(A) the security interest and all other estate and rights
granted by this Indenture shall cease and become null and void and all
of the property, rights and interests included in the Lease Indenture
Estate shall revert to and revest in the owner Trustee without any
other act or formality whatsoever, and
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(B) the Indenture Trustee shall, at the request of the Owner
Trustee, execute and deliver to the Owner Trustee such termination
statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be
requisite to evidence the satisfaction and discharge of this Indenture
and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the Owner Trustee or as directed by the Owner
Trustee all the Lease Indenture Estate, freed and discharged from the
provisions herein contained with respect thereto, and to release the
Owner Trustee from its covenants herein contained.
(b) upon receipt by the Indenture Trustee of the Assumption
Agreement and other documents and opinions described in Section 3.9(b) hereof,
(i) the security interest and all other estate and rights granted by this
Indenture by or on behalf of the Owner Trustee shall cease and become null and
void and all of the property, rights and interests included in the Lease
Indenture Estate shall revert to and revest in the Owner Trustee without any
other act or formality whatsoever and (ii) the Indenture Trustee shall, at the
request of the Owner Trustee, execute and deliver to the Owner Trustee such
termination statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be requisite to
evidence the satisfaction and discharge of this Indenture as to the Owner
Trustee and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the Owner Trustee or as directed by the Owner Trustee
all the Lease Indenture Estate, freed and discharged from the provisions herein
contained with respect thereto, and to release the Owner Trustee from its
covenants herein contained.
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(c) Any Note shall, prior to the maturity or redemption date
thereof, be deemed to have been paid within the meaning and with the effect
expressed in this Section 2.3 if (i) there shall have been deposited with the
Indenture Trustee either moneys in an amount which shall be sufficient, or
direct obligations of or obligations the principal of and interest on which are
unconditionally guaranteed by the united States of America or certificates of an
ownership interest in the principal of or interest on obligations of or
guaranteed as to principal and interest by the united States of America (Federal
Securities), in each case which shall not contain provisions permitting the
redemption thereof at the option of the issuer, the principal of and the
interest on which when due, and without any reinvestment thereof, will provide
moneys in an amount which shall be sufficient, together with the moneys, if any,
deposited with or held by the Indenture Trustee at the same time (such
sufficiency to be established by the delivery to the Indenture Trustee of a
certificate of an independent public accountant), to pay when due the principal
of and premium, if any, and interest due and to become due on said Note on and
prior to the redemption date or maturity date thereof, as the case may be, and
(ii) in the event said Note does not mature or is not to be redeemed within the
next 45 days, the Indenture Trustee shall have been given irrevocable
instructions to give, as soon as practicable, a notice to the registered Holder
of such Note that the deposit required by sub clause (i) above has been made
with the Indenture Trustee and that said Note is deemed to have been paid in
accordance with this section 2.3 and stating such maturity or redemption date
upon which moneys are to be available for the payment of the principal of and
premium, if any, and interest on said Note. Neither the Federal Securities nor
moneys deposited with the Indenture Trustee pursuant to this Section 2.3 or
principal or interest payments on any such Federal Securities shall be withdrawn
or used for any purpose other than, and shall be held in trust for, the payment
of the principal of and premium, if any, and interest on said Note; provided,
however, that any cash received from such principal or interest payments on such
Federal Securities deposited with the Indenture Trustee, shall be reinvested
pursuant to Section 8.8 hereof in Federal Securities. At such time as any Note
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shall be deemed paid as aforesaid, it shall no longer be secured by or entitled
to the benefits of the Lease Indenture Estate or this Indenture, except that
such Note shall be entitled to the benefits of the portions of the Lease
Indenture Estate described in Granting clauses (2), (3) and (5) , to the extent
such portions relate to such moneys or Federal securities deposited with the
Indenture Trustee.
(d) So long as any Note as to which this Indenture has been
discharged remains unpaid, this Indenture shall continue in effect with respect
to such Note solely with respect to rights of registration of transfer, exchange
or replacement of such Note, rights to receive payment of the principal thereof
and premium, if any, and interest thereon in accordance with the terms of this
Indenture from such deposited funds or the proceeds of or interest on such
Federal securities and the correlative rights and responsibilities of the
Indenture Trustee; provided, however, that, following such discharge, no claim
for payment of principal of or premium, if any, or interest on such Note shall
be made against the Owner Trustee or the Lease Indenture Estate other than as
provided in this Section; provided, further, that the Owner Trustee, following
such discharge, shall be released from any further duties or obligations under
this Indenture and, except as expressly provided therein, any other Transaction
Document.
SECTION 2.4. Power of Attorney.
Subject to the other terms of this Indenture, the Owner Trustee
hereby appoints the Indenture Trustee the Owner Trustee's attorney in-fact,
irrevocably, with full power of substitution, to collect, ask, require, demand,
receive and give acquittance for any and all moneys and claims for moneys due
and to become due to the Owner Trustee under or arising out of the Lease
Indenture Estate, to endorse any checks or other instruments or orders in
connection therewith, and to take any action (including the filing of financing
statements or other documents) or institute any proceedings which the Indenture
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Trustee may deem to be necessary or appropriate to protect and preserve the
interest of the Indenture Trustee in the Lease Indenture Estate. Prior to any
exercise by it (acting as attorney-in-fact for the Owner Trustee) of the powers,
authority or rights granted by this section 2.4, the Indenture Trustee will give
three Business Day's prior written notice to the Owner Trustee and the Owner
Participant.
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION,
FORM AND REGISTRATION OF NOTES
SECTION 3.1. Limitation on Notes,
No Notes may be issued under the provisions of1 or become
secured by, this Indenture except in accordance with the provisions of this
Article III. No Note shall be issued in an original principal amount of less
than $5,000.
SECTION 3.2. Execution of Notes.
All Notes shall be manually executed on behalf of the Owner
Trustee by one of its Responsible Officers. In case any Responsible Officer of
the Owner Trustee who shall have executed any of the Notes shall cease to be
such a Responsible Officer before such Notes so executed shall have been
authenticated by the Indenture Trustee and delivered or disposed of by the Owner
Trustee, such Notes nevertheless may be authenticated and delivered or disposed
of as though the person who executed such Notes had not ceased to be such a
Responsible Officer of the Owner Trustee; and any Note may be executed on behalf
of the Owner Trustee by such person as, at the actual time of execution of such
Note, shall be a Responsible Officer of the Owner Trustee, although at the date
of such Note any such person was not such a Responsible Officer.
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SECTION 3.3. Effect of certificate of Authentication
Only such Notes as shall bear thereon a certificate of
authentication substantially in the following form manually executed by the
Indenture Trustee shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate of authentication of the
Indenture Trustee upon any Note executed by the Owner Trustee shall be
conclusive evidence that the Note so authenticated was duly issued,
authenticated and delivered under this Indenture:
This Note is one of the series of Notes referred to therein
and in the within mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
---------------------------
Authorized Officer
SECTION 3.4. Creation of the Initial Series Note; Aggregate
Principal Amount, Dating and Terms; prerequisites to Authentication and Delivery
of the Initial Series Note; Application of Proceeds.
(a) There is hereby created and established a separate series
of Notes of the Owner Trustee designated: "Nonrecourse Promissory Note, Initial
Series", which will be substantially in the form of Exhibit A hereto, and is
herein referred to as the Initial Series Note.
(b) Subject to the provisions of Section 3.10 hereof, the
aggregate principal amount of the Initial Series Note issued by the Owner
Trustee and authenticated and delivered by the Indenture Trustee hereunder shall
not exceed $40,000,000
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(c) The Initial Series Note, subject to paragraph (e) of this
section 3.4, shall be executed and issued by the Owner Trustee and authenticated
and delivered by the Indenture Trustee on the date and to the Person specified
by the Owner Trustee in its request and authorization for issuance, shall be
dated the date specified by the Owner Trustee in its request and authorization
for issuance, and shall be in the form of a registered Note payable to the
Person designated in the Owner Trustee's request and authorization for issuance
or its registered assigns.
(d) The Initial series Note shall bear interest on the
principal amount thereof from time to time outstanding from the date thereof
until paid at the rate or the rates of interest set forth in the form of the
Initial Series Note. The principal amount of the Initial Series Note shall be
payable as set forth in the schedule of principal payments attached thereto.
Installments of interest on and principal of the Initial Series Note shall be
due and payable on the dates specified in the form of Initial Series Note.
(e) The Indenture Trustee shall authenticate the Initial
series Note and deliver the Initial Series Note to the Person designated by the
Owner Trustee in the request and authorization for issuance in respect of the
Initial series Note in accordance with the provisions of this section 3.4.
(f) Upon receipt of the proceeds of the Initial series Note,
the Indenture Trustee shall immediately transfer the same to, or pursuant to the
direction of, the Owner Trustee, all as set forth in the request and
authorization for issuance submitted by the Owner Trustee to the Indenture
Trustee.
SICTION 3.5. Additional Notes.
(1) Subject to section 3.6 hereof1 Additional Notes of the
Owner Trustee may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Series Note and subject to the
conditions hereinafter provided in this Section, for cash in the amount of the
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original principal amount of such Additional Notes, for the purpose of (i)
refunding any previously issued series of Notes, in whole or in part and/or (ii)
providing funds for the payment of all or any portion of the Supplemental
Financing Amount relating to Capital Improvements made or installed from time to
time pursuant to the Facility Lease; provided, however, that (x} in the case of
Notes issued for the purposes set forth in clause (ii) of this section 3.5, no
Note shall be issued by the Owner Trustee pursuant to this Section 3.5 unless
such Notes may be pledged in accordance with Section 2.15(b) of the collateral
Trust Indenture and serve as the basis for Additional Bonds and (y) in the case
of Notes issued for the purposes set forth in clause (i) of this. section 3.5,
no Note shall be issued by the Owner Trustee pursuant to this section 3.5 unless
section 2(c) of the participation Agreement (if applicable) shall have been
complied with.
(2) Before any Additional Notes shall be issued under the
provisions of this Section 3.5, the owner Trustee shall have received from the
Owner participant, and delivered to the Indenture Trustee not less than 2
Business Days nor more than 30 Business Days prior to the proposed date of
issuance of such Additional Notes as set forth in the below mentioned request
and authorization, a request and authorization to issue Additional Notes, which
request and authorization shall include the amount of such Additional Notes, the
date of issuance of such Additional Notes and details with respect thereto which
are not inconsistent with this section. Additional Notes shall have a
designation so as to distinguish such Additional Notes from the Initial series
Note but otherwise shall be substantially similar in terms to the Initial Series
Note, shall specify maturity dates, rank pari passu with all Notes then
Outstanding, be dated their respective dates of authentication, bear interest at
such rates (which may be fixed or floating) as shall be indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the last day of the Basic Lease Term.
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(3) Except as to any differences in the maturity dates and
amortization schedules of the Additional Notes or the rate or rates of interest
thereon and the date or dates such interest is payable or the provisions for
redemption with respect thereto, if any, such Additional Notes shall be on a
parity with, and shall be entitled to the same benefits and security of this
Indenture as, other Notes issued pursuant to the terms hereof.
(4) The terms, conditions and designations of such Additional
Notes (which shall be consistent with this Indenture) shall be set forth in an
indenture supplemental to this Indenture executed by the Owner Trustee and the
Indenture Trustee. Such Additional Notes shall be executed as provided in
section 3.2 and deposited with the Indenture Trustee for authentication, but
before such Additional Notes shall be authenticated and delivered by the
Indenture Trustee there shall be filed with the Indenture Trustee, in addition
to the other documents and certificates required by this section 3.5, the
following, all of which shall be dated as of the date of the supplemental
indenture:
(a) a copy of such supplemental indenture (which shall include
the form of such series of Notes in respect thereof);
(b) a certificate of a Responsible Officer of the Owner
Trustee (i) stating that to the best of his knowledge no Default or Event of
Default or Indenture Event of Default has occurred and is continuing, (ii)
stating that the conditions in respect of the issuance of such additional series
of Notes contained in this Section 3.5 have been satisfied, (iii) stating that
payments pursuant to the Facility Lease of Basic Rent, Casualty value, Special
Casualty value and Termination value and of amounts in respect of the exercise
of the Cure Option and the occurrence of special Purchase Event are sufficient
to pay all the Outstanding Notes, after taking into account the issuance of such
Additional Notes and any related redemption, and (iv)1 in the case of Notes
issued for the purpose set forth in clause (ii) of Section 3.5(1), stating that
all conditions to the related supplemental Financing as set forth in Section
8(f) of the Facility Lease have been satisfied or waived in accordance with such
Section 8(f);
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(c) such additional documents, certificates and opinions as
shall be reasonably requested by, and acceptable to, the Owner Trustee and the
Indenture Trustee.
(d) a request and authorization to the Indenture Trustee by or
on behalf of the Owner Trustee to authenticate and deliver such Additional Notes
to or upon the order of the Person or Persons noted in such request at the
address set forth therein, and in such principal amounts as are stated therein,
upon payment to the Indenture Trustee, but for the account of the Owner Trustee,
of the sum or sums specified in such request and authorization; and
(e) an opinion of counsel to the effect that the conditions
precedent required under this Indenture for the issuance of such Additional
Notes have been complied with.
When the documents referred to in the foregoing clauses (a)
through (e) above shall have been filed with the Indenture Trustee and when the
Additional Notes described in the above-mentioned order and authorization shall
have been executed and authenticated as required by this Indenture, the
Indenture Trustee shall deliver such Additional Notes in the manner described in
clause (d) above, but only upon payment to the Indenture Trustee of the sum or
sums specified in such request and authorization.
SECTION 3.6. Security for and Parity of Notes.
All Notes issued and outstanding hereunder shall rank on a
parity with each other and shall as to each other be secured equally and ratably
by this Indenture, without preference, priority or distinction of any thereof
over any other by reason of difference in time of issuance or otherwise. The
maximum principal amount of Notes outstanding and secured by this Indenture
shall be $100,000,000.
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SECTION 3.7. Source of Payments Limited.
All payments to be made by the Owner Trustee under this
Indenture or on the Notes shall be made only from the Lease Indenture Estate and
the Trust Estate. Each Holder of a Note, by its acceptance of such Note, and the
Indenture Trustee agree that they will look solely to the Trust Estate and the
income and proceeds from the Lease Indenture Estate to the extant available for
distribution to such Holder or the Indenture Trustee as herein provided and that
neither the Owner Participant nor, except as expressly provided in this
Indenture, the Owner Trustee nor the Indenture Trustee, shall be personally
liable to such Holder of a Mote or the Indenture Trustee, as the case may be,
for any amounts payable hereunder or under such Note; provided, however, that in
the event that the Lessee shall assume all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes pursuant to section 3.9(b), then
all payments to be made under this Indenture and the Notes shall be mad. only
from payments made by the Lessee under the Notes in accordance with the
Assumption Agreement referred to in section 3.9(b) and each Holder of a Note and
the Indenture Trustee agree that in such event they will look solely to the
Lessee for such payment. Nothing herein contained shall be interpreted as
affecting the duties and obligations of the Indenture Trustee set forth in
section 7.4 hereof.
In furtherance of the foregoing, to the fullest extent
permitted by law, each Holder of a Note (and each assignee of such Person), by
its acceptance thereof, and the Indenture Trustee agree, as a condition to the
Notes being secured under this Indenture, that neither such Holder nor the
Indenture Trustee will exercise any statutory right to negate the agreements set
forth in this Section 3.7.
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SECTION 3.8. Place and Medium of Payment.
The principal of and premium, if any, and interest on each
Note shall be payable at the Indenture Trustee's Office in immediately available
funds in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts.
Notwithstanding the foregoing or any provision in any Note to the contrary, if
so requested by the Holder of any Note, by written notice to the Indenture
Trustee, all amounts (other than the final payment) payable with respect to such
obligation shall be paid by crediting the amount to be distributed to such
Holder to an account maintained by such Holder with the Indenture Trustee or by
the Indenture Trustee's transferring such amount by wire, with such wire
transfer to be initiated by such time as to permit, to the extent practicable,
oral confirmation thereof (specifying the wire number) to be given no later than
12:00 noon New York City time on the date scheduled for payment, but only to the
extent of funds available for such wire transfer, to such other bank in the
United States having wire transfer facilities, including a Federal Reserve lank,
as shall have been specified in such notice, for credit to the account of such
Holder maintained at such bank, any such credit or transfer pursuant to this
Section 3.8 to be in immediately available funds, without any presentment or
surrender of such Note. Final payment of any such Note shall be made only
against surrender of such Note at the Indenture Trustee's Office.
SECTION 3.9. Prepayment of Notes; Assumption by Lessee; Notice
of Assumption or Prepayment.
(a) Notes shall be subject to prepayment (other than through
application of the installment payments on such Notes) from time to time only as
provided in this Indenture and as otherwise specifically provided, with respect
to Notes of a particular series, in such Notes.
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(b) In the event of the occurrence of a Deemed Loss Event or
Event of Loss or exercise of the Cure Option, and upon receipt by the Indenture
Trustee of the documents listed below, all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes shall be assumed by the Lessee
and the Owner Trustee shall be released and discharged without further act or
formality whatsoever from all obligations and liabilities hereunder and under
the Notes:
(1) A duly executed Assumption Agreement substantially in the
form of Exhibit a to this Indenture;
(2) an opinion of counsel to the Lessee, addressed to the
Indenture Trustee and the Holders of the outstanding Notes, to
the effect that the conditions precedent required by this
Indenture for such assumption have been complied with, that the
Assumption Agreement has been duly authorized, executed and
delivered on behalf of the Lessee, that no Governmental Action
is necessary or required in connection therewith (or if any
such governmental Action is necessary or required, that the
same has been duly obtained and is in full force and effect),
and that the Assumption Agreement is a legal, valid and binding
agreement and obligation of the Lessee, enforceable in
accordance with its terms (except as limited by bankruptcy,
insolvency or similar law. of general application affecting the
enforcement of creditors' rights generally and equitable
principles);
(3) copies of all governmental Actions referred to in such
opinion;
(4) an indenture supplemental to this Indenture which shall,
among other things, confirm the release of the Owner Trustee
and the Lease Indenture Estate thereby effected and contain
provisions appropriately amending references to the Facility
Lease in this Indenture;
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(5) a certificate of a Responsible officer of the Lessee
stating that, to the best of his knowledge, ( i ) the
conditions precedent required by this Indenture for such
assumption have been complied with, (ii) no Indenture Event of
Default has occurred and is continuing, (iii) such assumption
is permitted by the provisions of the Lessee's Articles of
Incorporation and By-Laws and (iv) the Lessee is not insolvent
within the meaning of any applicable preferential transfer,
fraudulent conveyance or bankruptcy law; and
(6) a certificate of a Responsible Officer of the Owner Trustee
stating that, to the best of his knowledge, no Indenture Event
of Default has occurred and is continuing.
(C) Notice of any assumption or prepayment of Notes shall be
given to the registered Holders of the Notes which have been assumed or are to
be prepaid (and any assignee of a registered Holder which has given the
Indenture Trustee written notice of such assignment) as promptly as practicable
after the Indenture Trustee is notified thereof, and, in the case of prepayment,
in no event later than (i) 30 days before the date fixed for prepayment
(provided the Indenture Trustee receives such notification at least three
Business flays before such 30th day) in the event of the exercise by the Owner
Trustee of its option to terminate the Facility Lease pursuant to section 14
thereof or (ii) one day before the date fixed for prepayment in the event of the
exercise by the Lessee of the special Purchase Event pursuant to Section 13(c)
of the Facility Lease.
(d) If the assumption described in paragraph (b) above has not
occurred, then, as required by Section 9(j) of the Facility Lease, not less than
2 Business flays prior to the date on which the Lessee is required to make the
payments specified in Section 9(c) or 9(d) of the Facility Lease, the Owner
Trustee will cause the undivided Interest and the Real Property Interest to be
subjected to the lien of this Indenture by executing and delivering to the
Indenture Trustee an undivided Interest Indenture supplement substantially in
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the form of Exhibit C to this Indenture. Subject to Section 10.3 hereof, the
Indenture Trustee shall execute and accept delivery from the Owner Trustee of
the undivided Interest Indenture supplement.
SECTION 3.10. Mutilated, Destroyed, Lost or Stolen Notes.
If any Note shall become mutilated or shall be destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the Holder of
such Note, execute, and the Indenture Trustee shall authenticate and deliver in
replacement thereof, a new Note, payable in the same original principal amount
and dated the same date and of the same series as the Note so mutilated,
destroyed, lost or stolen. The Indenture Trustee shall make a notation on each
new Note of the amount of all payments of principal theretofore made on the Note
so mutilated, destroyed, lost or stolen and the date to which interest on such
old Note has been paid. If the Note being replaced has been mutilated, such Note
shall be delivered to the Indenture Trustee who shall then deliver a certificate
of destruction of the type required by section 4.3 hereof. If the Note being
replaced has been destroyed, lost or stolen, the Holder of such Note shall
furnish to the Lessee, the Owner Trustee and the Indenture Trustee a bond or
surety agreement of such Holder as shall be satisfactory to them to save the
Lessee, the Owner Trustee, the Indenture Trustee, the Trust Estate and the Lease
Indenture Estate harmless from any loss, however remote, including claims for
principal of, and premium, if any, and interest on the purportedly destroyed,
lost or stolen Note, together with evidence satisfactory to the Lessee, the
Owner Trustee and the Indenture Trustee of the destruction, loss or theft of
such Note and of the ownership thereof, provided, however, that if the Holder of
such Note is the Collateral Trust Trustee, the unsecured written undertaking of
the Collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section.
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SECTION 3.11. Allocation of Principal and Interest.
in the case of each Note, each payment of principal thereof
and interest thereon shall be applied, first, to the payment of accrued but
unpaid interest on such Note (as well as any interest on overdue principal or,
to the extent permitted by law, interest) to the date of such payment, second,
to the payment of the principal amount of, and premium, if any, on such Note
then due (including any overdue installment of principal) thereunder and third,
the balance, if any, remaining thereafter, to the balance of the payment of the
principal amount of, and premium, if any, on such Note.
ARTICLE IV
REGISTRATION, TRANSFER. EXCHANGE,
CANCELLATION AND OWNERSHIP OF
NOTES
SECTION 4.1. Register of Notes.
The Indenture Trustee on behalf of the Owner Trustee shall
maintain at the Indenture Trustee's Office a register for the purpose of
registration, and registration of transfer and exchange, of the Notes by series
and in which shall be entered the names and addresses of the owners of such
Notes and the principal amounts of the Notes owned by them, respectively. For
these purposes, the Indenture Trustee is hereby appointed transfer agent and
registrar for the Notes.
SECTION 4.2. Registration of Transfer or Exchange of Notes.
A Holder of a Note intending to register the transfer of any
outstanding Note held by such Holder (including any transfer in the form of a
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pledge or assignment) or to exchange any outstanding Note held by such Holder
for a new Note or Notes of the same series may surrender such Outstanding Note
at the Indenture Trustee's Office, together with the written request of such
Holder, or of its attorney duly authorized in writing, in each case with
signatures guaranteed, for the registration of such Note in the name of any
pledgee or assignee (in the case of a transfer in the form of a pledge or
assignment) or for the issuance of a new Note or Notes of the same series,
specifying the authorized denomination or denominations of any new Note or Notes
to be issued and the name and address of the Person or Persons in whose name or
names the Note or Notes are to be registered (either as pledgee or assignee or
as owner). Promptly upon receipt by the Indenture Trustee of the foregoing and
satisfaction of the requirements of sections 4.5 and 4.6 hereof, the Indenture
Trustee shall register such Note or Notes in the name or names of the Person or
Persons as shall be specified in the written request and, in the case in which a
new Note or Notes are to be issued, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver such new Note or Notes of the
same series, in the same aggregate principal amount and dated the same date as
the Outstanding Note surrendered, in such authorized denomination or
denominations as shall be specified in the written request. The Indenture
Trustee shall make a notation on each new Note of the amount of all payments of
principal theretofore made on the old Note or Notes in exchange or transfer for
which any new Note has been issued and the date to which interest on such old
Note or Notes has been paid.
SECTION 4.3. Cancellation of Notes.
All Notes surrendered to the Indenture Trustee for payment in
full, prepayment in full or registration of transfer or exchange shall be
cancelled by it; and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Notes held by it in a manner satisfactory to the
Owner Trustee and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Notes, such acquisition shall not
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operate as a redemption of or the satisfaction of the indebtedness represented
by such Notes unless and until the same shall be delivered to the Indenture
Trustee for cancellation.
SECTION 4.4. Limitation on Timing of Registration of Notes.
The Indenture Trustee shall not be required to register
transfers or exchanges of Notes on any date fixed for the payment or prepayment
of principal of or interest on the Notes or during the fifteen days preceding
any such date.
SECTION 4.5. Restrictions on Transfer Resulting from Federal
Securities Laws; Legend.
If not prohibited by the Securities Act, each Note shall be
delivered to the initial Holder thereof without registration of such Note under
the securities Act and without qualification of this Indenture under the Trust
Indenture Act. Prior to any transfer of any Note, in whole or in part, to any
Person other than the collateral Trust Trustee, the Holder thereof shall furnish
to the Lessee, the Indenture Trustee and the Owner Trustee an opinion of
counsel, which opinion and which counsel shall be reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Lessee, to the effect that such
transfer will not violate the registration provisions of the Securities Act or
require qualification of this Indenture under the Trust Indenture Act, and all
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:
This Note has not been registered under the securities Act of
1933 and may not be transferred, sold or offered for sale in
violation of such Act.
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SECTION 4.6. Charges upon Transfer or Exchange of Notes.
As a further condition to registration of transfer or exchange
of any Note, the Indenture Trustee and the Owner Trustee may charge the Holder
thereof for any stamp taxes or governmental charges required to be paid with
respect to such registration of transfer or exchange.
SECTION 4.7. Inspection of Register of Notes.
The register of the Holders of the Notes referred to in
section 4.1 shall at all reasonable times be open for inspection by any Holder
of a Note. upon request by any Holder of a Note, or the Owner Trustee or the
Lessee, the Indenture Trustee shall furnish such Person, at the expense of such
Person, with a list of the names and addresses of all Holders of Notes entered
on the register kept by the Indenture Trustee indicating the series, principal
amount and number of each Note held by each such Holder.
SECTION 4.8. Ownership of Notes.
(a) Prior to due presentment for registration of transfer of any
Note, the Owner Trustee and the Indenture Trustee may deem and treat the Holder
of record of such Note as the absolute owner of such Mote for the purpose of
receiving payment of all amounts payable with respect to such Note and for all
other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary.
(b) The Owner Trustee and the Indenture Trustee may, in their
discretion, treat the Holder of record of any Note as the owner thereof without
actual production of such Note for any purpose hereunder, except as provided in
the last sentence of section 3.8 hereof.
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(c) Neither the Owner Trustee nor the Indenture Trustee shall
be bound to take notice of or carry out the execution of any trust in respect of
any Note, and may register the transfer of the same on the direction of the
Holder of record thereof, whether named as trustee or otherwise, as though such
Holder were the beneficial owner thereof.
(d) The receipt by the Holder of record of any Note of any
payment of principal, premium or interest shall be a good discharge to the Owner
Trustee and the Indenture Trustee for the same and neither the Owner Trustee nor
the Indenture Trustee shall be bound to inquire into the title of any such
Holder.
ARTICLE V
RECEIPT, DISTRISUTION AND
APPLICATION OF INCOME AND PROCEEDS FROM
THE LEASE INDENTURE ESTATE
SECTION 5.1. Basic Rent Interest on Overdue Installments of
Basic Rent and prepayments of Interest.
Except as otherwise provided in Section 5.3 or 5.7 hereof,
each payment of Basic Rent, as well as any payment of supplemental Rent
representing interest on overdue installments of Basic Rent, received by the
Indenture Trustee at any time, shall be distributed by the Indenture Trustee in
the following order of priority: first, so much of such payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and/or interest (as well as any interest on overdue principal or, to
the extent permitted by law, interest) then due and unpaid on all Notes shall be
distributed to the Holders of the Notes ratably, without priority of one over
the other, in the proportion that the aggregate amount of such payment or
payments then due and unpaid on all Notes held by each such Holder on such date
bears to the aggregate amount of such payment or payments then due and unpaid on
all Notes outstanding on such date, without priority of interest over principal
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or principal over interest; and second, the balance, if any, of such payment
remaining thereafter shall be distributed, concurrently with any distribution
pursuant to clause first hereof, to the Owner Trustee or as the Owner Trustee
may direct. If there shall not otherwise have been distributed on any date (or
within any applicable period of grace), pursuant to this Section 5.1, the full
amount then distributable pursuant to clause first of this Section 5.1, the
Indenture Trustee shall distribute other payments referred to in sections 5.4
and 5.5 then held by it or thereafter received by it, except as otherwise
provided in section 5.3, to the Holders of all Notes to the extent necessary to
enable it to make all the distributions then due pursuant to such clause first;
provided that to the extent any distribution is made from amounts held pursuant
to section 5.4 hereof and the Lessee subsequently makes the payment of Basic
Rent or supplemental Rent in respect of which such distribution was made, such
payment of Basic Rent or supplemental Rent shall, unless an Indenture Default or
an Indenture Event of Default shall have occurred and be continuing, be applied
to the purpose for which such amount held pursuant to section 5.4 had been held,
subject, in all cases, to the terms of section 5.4. The portion of each such
payment made to the Indenture Trustee which is to be distributed by the
Indenture Trustee in payment of Notes shall be applied in accordance with
Section 3.11. Any payment received by the Indenture Trustee pursuant to section
6.8 shall be distributed to the Holders of the Notes, ratably, without priority
of one over the other, in the proportion that the amount of such payment or
payments then due and unpaid on all Notes held by each such Holder bears to the
aggregate amount of the payments then due and unpaid on all Notes Outstanding.
Amounts distributed by the Indenture Trustee pursuant to this section 5.1 shall
be distributed as promptly as practicable after such amounts are actually
received by the Indenture Trustee; provided, however, that in the event the
Indenture Trustee shall be directed to make payments to the Holder of any Note
by wire transfer in accordance with Section 3.8 hereof, any amounts received by
the Indenture Trustee after 11:00 A.M., New York City time, may be distributed
on the following Business Day.
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SECTION 5.2. Amounts Received as Result of Event of Lass, Deemed
Loss Event, Exercise of Option to Terminate, Exercise of Cure Option or
Occurrence of Special Purchase Event.
If an Event of toss or Deemed Loss Event shall occur or the
Lessee shall exercise the Cure Option, and if either the Assumption Agreement or
the undivided Interest Indenture Supplement shall have been executed and
delivered, any amounts of Casualty value, special casualty Value or Fair Market
Sales value received or held by the Indenture Trustee in respect of such Event
of Loss or Deemed Loss Event or exercise of the Cure Option shall, except as
otherwise provided in Section 5.3, be distributed forthwith to the Owner
Participant. If the Lessee or the Owner Trustee, as the case may be, shall
exercise its option to terminate the Facility Lease pursuant to Section 14
thereof, or the special Purchase Event shall have occurred, then there shall be
prepaid, on the date payments of proceeds with respect thereto are received by
the Indenture Trustee (or as soon thereafter as practicable) under section 13(c)
or 14 of the Facility Lease as the case may be, the unpaid principal amount of
all Notes, together with the premium, if any, and all accrued but unpaid
interest thereon to the date of such prepayment. Notice of such prepayment shall
be given as provided in Section 3.9(c) and may provide that it is subject to
receipt of funds for such prepayment. Except as. otherwise provided in section
5.3 or 5.7, any payments received and amounts realized by the Indenture Trustee
upon exercise of the Lessee's or the Owner Trustee's option to terminate the
Facility Lease under section 14 thereof or upon occurrence of the Special
Purchase Event shall in each case be distributed on the date of prepayment as
provided in clauses first, second and fifth of Section 5.3.
SECTION 5.3. Amounts Received After, or Held at rime of
Indenture Event of Default under Section 6.2.
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Except as otherwise provided in Section 5.7, all payments
received and amounts realized by the Indenture Trustee in respect of the Lease
Indenture Estate (including any amounts realized by the Indenture Trustee from
the exercise of any remedies pursuant to the Facility Lease or Article VI of
this Indenture) after an Indenture Event of Default referred to in section 6.2
shall have occurred and be continuing and the Notes have been accelerated
pursuant to Section 7.1, as well as all payments thereafter received or amounts
then held by the Indenture Trustee as part of the Lease Indenture Estate, shall
be distributed by the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for any Trustee's Expenses
(to the extent not previously reimbursed) and to pay the reasonable
remuneration of the Indenture Trustee, shall be applied by the Indenture
Trustee to such reimbursement and payment;
second, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of all
Notes, together with premium, if any, plus accrued but unpaid interest
(as well as interest on overdue principal and, to the extent permitted
by law, on overdue interest) thereon to the date of distribution, shall
be distributed to the Holders of such Notes and in case the aggregate
amount so to be distributed shall be insufficient to pay all such Notes
in full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all such Notes held by each such Holder, together with premium, if any,
plus accrued but unpaid interest thereon to the date of distribution
bears to the aggregate unpaid principal amount of all Notes, together
with premium, if any, plus accrued but unpaid interest thereon to the
date of distribution;
third, so much of such payments or amounts remaining as shall
be required to pay the present or former Holders of the Notes the
amounts payable to them as Indemnitees (to the extent not previously
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reimbursed) shall be distributed to such Holders; and in case the
aggregate amount so to be paid to all such Holders in accordance with
this clause third shall be insufficient to pay all such amounts as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the amount of such indemnity or other payments to which
such Person is entitled bears to the aggregate amount of such indemnity
or other payments to which all such Persons are entitled;
fourth, the balance, if any, of such payments or amounts
remaining shall be applied to the payment of any other indebtedness at
the time due and owing to the Indenture Trustee or the Holders of the
Notes which this Indenture by its terms secures; and
fifth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to or upon the direction of
the Owner Trustee.
SECTION 5.4. Amounts Received for which provision Is Made in a
Transaction Document.
Except as otherwise provided in section 5.1, 5.3 or 5.7 hereof,
any payments received by the Indenture Trustee in respect of the Lease Indenture
Estate for which provision as to the application thereof is made in a
Transaction Document shall be applied to the purpose for which such payment was
made in accordance with the terms of such Transaction Document, as determined,
in the first instance, from instructions or other information accompanying such
payment, or, otherwise, in accordance with instructions from the payor of such
payments.
SECTION 5.5. Amounts Received for Which No Provision Is Made.
Except as otherwise provided in section 5.1, 5.2, 5.3 or 5.7,
any payments received and any amounts realized by the Indenture Trustee in
respect of the Lease Indenture Estate
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(a) for which no provision as to the application thereof is made in a
Transaction Document or elsewhere in this Article V shall be held by the
Indenture Trustee as part of the Lease Indenture Estate, and
(b) to the extent received or realized at any time after payment in full
of the principal of and premium, if any, and interest on all the Notes,
as well as any other amounts remaining as part of the Lease Indenture
Estate after payment in full of the principal of and premium, if any,
and interest on all the Notes, shall be distributed by the Indenture
Trustee in the order of priority set forth in Section 5.3 (omitting
clause second thereof).
SECTION 5.6. Payments to Owner Trustee.
Unless otherwise directed by the Owner Trustee, all payments to
be made to the Owner Trustee hereunder shall be made to the Owner Participant by
wire transfer of immediately available funds as soon as practicable but in any
event no later than the close of business on the date of receipt (assuming the
Indenture Trustee has received such funds prior to 11:00 a.m. New York City time
on the same day), to such account at such bank or trust company as the Owner
Participant shall from time to time designate in writing to the Indenture
Trustee.
SECTION 5.7. Excepted Payments.
Anything in this Article V or elsewhere in this Indenture to the
contrary notwithstanding, any Excepted Payment received at any time by the
Indenture Trustee shall be distributed as promptly as practicable to the Person
entitled to receive such Payment (such entitlement to be conclusively determined
by reference to payment instructions from such Person).
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ARTICLE VI
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF OWNER TRUSTEE; EVENTS
OF DEFAULT; REMEDIES OF THE
INDENTURE TRUSTEE
SECTION 6.1. Representations, Warranties and Covenants of Owner
Trustee
The Owner Trustee hereby covenants and agrees that (i) it will
duly and punctually pay the principal of, and premium. if any, and interest on,
the Notes in accordance with the terms thereof and this Indenture, (ii) it will
not pledge, create a security interest in or mortgage, so long as this Indenture
shall remain in effect, any of its estate, right, title or interest in and to
the Lease Indenture Estate or otherwise constituting part of the Trust Estate,
to anyone other than the Indenture Trustee, (iii) so long as this Indenture
shall remain in effect, it will not purchase or agree to purchase any property
or asset other than the Undivided Interest and the Real Property Interest and
other than as contemplated by the Transaction Documents, (iv) it will not,
except with the prior written concurrence of the Indenture Trustee or as
expressly provided in or permitted by this Indenture or with respect to the
Trust Agreement or any property not constituting part of the Lease Indenture
Estate, take any action which would result in an impairment of any Note or the
obligation of the Lessee to pay any amount under the Facility Lease which is
part of the Lease Indenture Estate (not in any event including in respect of
Excepted Payments) or any of the other rights or security created or effected
thereby, or (v) issue, or incur any obligation in respect of, indebtedness for
borrowed money except for its obligations in respect of Notes.
A signed copy of any amendment or supplement to the Trust
Agreement shall be delivered by the Owner Trustee to the Indenture Trustee and
the Lessee. This Indenture and the Lease Indenture Estate shall not be affected
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by any action taken under or in respect of the Trust Agreement except as
otherwise provided in or permitted by this Indenture. The Trust Agreement may
not in any event be terminated by the Owner Participant or the Owner Trustee or
revoked by the Owner Participant so long as any of the Notes or any unpaid
obligations under this Indenture remain Outstanding. The Owner Trustee may
resign as Owner Trustee, appoint a successor Owner Trustee and take all
necessary and proper action to constitute one or more Persons as co-trustee(s)
jointly with the Owner Trustee or as separate trustee(s), all in accordance with
the terms and conditions of Article IX of the Trust Agreement.
SECTION 6.2. Indenture Events of Default.
The term Indenture Event of Default, wherever used herein, shall
mean any of the following events (whatever the reason for such Indenture Event
of Default and whether it shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) any of the Events of Default specified in the following
clauses of section 15 of the Facility Lease: (1) clause (i)(y), except a failure
of the Lessee to pay any amount which shall constitute an Excepted Payment; (2)
clause (i)(x), except a failure of the Lessee to pay any amount which shall
constitute an Excepted Payment or except where the Owner Trustee shall not have
rescinded or terminated the Facility Lease pursuant to section l6(a)(i) of the
Facility Lease; or (3) clause (vii); or
(b) the rescission, or termination of, or the taking of action
by the Owner Trustee or the Owner Participant the effect of which would be to
rescind or terminate, the Facility Lease, whether pursuant to section l6(a)(i)
of the Facility Lease or otherwise; or
(c) any failure by the Lessee to perform and observe Section
10(b) (3)(iii) of the Participation Agreement; or
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(d) the Owner Trustee shall fail to make any payment in
respect of the principal of, or premium, if any, or interest on, the Notes
within ten (10) Business Days after the same shall have become due (other than
by virtue of any failure by the Lessee to make any payment of Rent therefor); or
(e) the Owner Trustee shall fail to perform or observe any
covenant or agreement to be performed or observed by it under section 6.1 of
this Indenture, or the Owner Participant shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 7(b)(l) of
the Participation Agreement and, in any such case, such failure shall continue
for a period of 30 days after notice thereof shall have been given to the Owner
Trustee, the Owner Participant and the Lessee by the Indenture Trustee,
specifying such failure and requiring it to be remedied.
SECTION 5.3. Enforcement of Remedies
(a) In the event that an Indenture Event of Default shall have
occurred and be continuing, then and in every such case the Indenture Trustee,
subject to paragraph (b) of this section 6.3 and section 6.11, may, and when
required pursuant to the provisions of Article VIZ hereof shall, exercise any or
all of the rights and powers and pursue, subject to the rights of the Lessee
under the Facility Lease, (x) in the event such Indenture Event of Default is
referred to in paragraph (d) or (e) of Section 6.2, any or all of the remedies
then available pursuant to this Article V! and Article VII, or (y) in the event
such Indenture Event of Default is referred to in paragraph (a), (b) or (c) of
Section 6.2, any or all of such remedies concurrently with the exercise and
pursuit by the Owner Trustee of any or all of the remedies then available to the
Owner Trustee under the Facility Lease.
(b) Any provisions of the Facility Lease or this Indenture to
the contrary notwithstanding, if the Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
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the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment.
SECTION 5.4. Specific Remedies; Enforcement of claims without
Possession of Notes.
Subject to sections 6.2, 6.3 and 6.11 hereof and the terms of
the documents constituting a part of the Lease Indenture Estate, upon the
occurrence and during the continuance of an Indenture Event of Default:
(a) The Indenture Trustee may, in order to enforce the rights
of the Indenture Trustee and of the Holders of the Notes, direct payment to it
of all moneys and enforce any agreement or undertaking constituting a part of
the Lease Indenture Estate by any action, suit, remedy or proceeding authorized
or permitted by this Indenture or by law or by equity, and whether for the
specific performance of any agreement contained herein, or for an injunction
against the violation of any of the terms hereof, or in aid of the exercise of
any power granted hereby or by Applicable Law, and in addition may sell, assign,
transfer and deliver, from time to time to the extent permitted by Applicable
Law, all or any part of the Lease Indenture Estate or any Interest therein, at
any private sale or public auction with or without demand, advertisement or
notice (except as herein required or as may be required by Applicable Law) of
the date, time and place of sale and any adjournment thereof, for cash or credit
or other property, for immediate or future delivery and for such price or prices
and on such terms as the Indenture Trustee, in its uncontrolled discretion, may
determine, or as may be required by Applicable Law, so long as the Owner
Participant and the Owner Trustee are afforded a commercially reasonable
opportunity to bid for all or such part of the Lease Indenture Estate in
connection therewith. It is agreed that 90 days' notice to the Owner
Participant, the Owner Trustee and the Lessee of the date, time and place of any
proposed sale by the Indenture Trustee of all or any part of the Lease Indenture
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Estate or interest therein is reasonable. The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the }Holders of the
Notes asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.
(b) Without limiting the foregoing, the Indenture Trustee, its
assigns and its legal representatives, subject to the rights of the Lessee under
the Facility Lease, shall have as to such of the Lease Indenture Estate as is
subject to the uniform commercial Code or similar law in each relevant
jurisdiction all the remedies of a secured party under the uniform commercial
Code or similar law in such jurisdiction and such further remedies as from time
to time may hereafter be provided in such jurisdiction for a secured party.
(c) All rights of action and rights to assert claims under
this Indenture or under any of the Notes may be enforced by the Indenture
Trustee without the possession of the Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Holders of the
Notes as herein provided. In any proceedings brought by the Indenture Trustee
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any such Holders parties to such proceedings.
(d) The Indenture Trustee may exercise any other right or
remedy that may be available to it under Applicable Law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof.
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SECTION 6.5. Rights and Remedies Cumulative.
Subject to Sections 6.2, 6.3 and 6.11 hereof, (a) each and
every right, power and remedy herein specifically given to the Indenture Trustee
under this Indenture shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing
at law, in equity or by statute, and each and every right, power and remedy
whether herein given or otherwise existing may be exercised from time to time
and as often and in such order as may be deemed expedient by the Indenture
Trustee and the exercise or the beginning of the exercise of any right, power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy, and (b) no delay or
omission by the Indenture Trustee in the exercise of any right, power or remedy
or in the pursuance of any remedy shall impair any such right, power or remedy
or be construed to be a waiver of any default on the part of the Owner
Participant, the Owner Trustee or the Lessee or to be an acquiescence therein.
SECTION 6.5. Restoration of Rights and Remedies.
In case the Indenture Trustee shall have proceeded to enforce
any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee,
then and in every such case the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Lessee shall be restored to their former positions and
rights hereunder with respect to the Lease Indenture Estate, and all rights,
powers and remedies of the Indenture Trustee shall continue as if no such
proceedings had been taken.
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SECTION 6.7. Waiver of Past Defaults.
Any past Indenture Default or Indenture Event of Default and
its consequences may be waived by the Indenture Trustee, except an Indenture
Default or an Indenture Event of Default (i) in the payment of the principal of
or interest on any Note, subject to the provisions of Section 7.1 hereof, or
(ii) in respect of a covenant or provision hereof which, under Section 10.2
hereof, cannot be modified or amended without the con-sent of each Holder of a
Note then outstanding. Upon any such waiver, such Indenture Default or Indenture
Event of Default shall cease to exist, and any other Indenture Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
SECTION 6.8. Right of Owner Trustee to Pay Rent; Note Purchase;
Substitute Lessee.
Anything in this Article VI or Article VII to the contrary
notwithstanding:
(a) an Indenture Event of Default shall be deemed cured if
such Indenture Event of Default results from non-payment of Basic Rent or
supplemental Rent under the Facility Lease, and the Owner Trustee or the Owner
Participant shall have paid all principal of and interest on the Notes due
(other than by acceleration) on the date such Basic Rent was payable (plus
interest on such amount as required hereby) within 20 days after the receipt by
the Owner Trustee of notice of such non-payment, such receipt to be evidenced
by, among other things, any notice thereof given to the Owner Trustee in
accordance with the notice provisions of the Participation Agreement. The owner
Trustee or the Owner Participant, upon exercising cure rights under this
paragraph (a), shall not obtain any Lien on any part of the Lease Indenture
Estate on account of such payment for' the costs and expenses incurred in
connection therewith nor, except as expressly provided in the succeeding
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sentence, shall any claims of the Owner Trustee or the Owner Participant against
the Lessee or any other Person for the repayment thereof impair the prior right
and security interest of the Indenture Trustee in and to the Lease Indenture
Estate. Upon any payment by the Owner Trustee or the Owner Participant pursuant
to this Section 6.6, the Owner Trustee or the Owner Participant, as the case may
be, shall (to the extent of such payment made by it) be subrogated to the rights
of the Indenture Trustee and the Holders of the Notes to receive the payment of
Rent with respect to which the Owner Trustee or the Owner Participant made such
payment and interest on account of such Rent payment being overdue in the manner
set forth in the next sentence. If the Indenture Trustee shall thereafter
receive such payment of Rent or such interest, the Indenture Trustee shall,
notwithstanding the requirements of section 5.10 on the date such payment is
received by the Indenture Trustee, remit such payment of Rent (to the extent of
the payment made by the Owner Trustee or the Owner Participant pursuant to this
section 6.6) and such interest to the Owner Trustee or the Owner Participant, as
the case may be, in reimbursement for the funds so advanced by it.
(b) Each Holder of a Note agrees, by acceptance thereof, that
if the Notes have been accelerated pursuant to section 7.1, and the Owner
Trustee, within 30 days after receiving notice from the Indenture Trustee
pursuant to Section 7.1 hereof, shall give written notice to the Indenture
Trustee of the Owner Trustee's intention to purchase all of the Notes in
accordance with this paragraph, accompanied by assurances of the Owner Trustee
to purchase the Notes, then, upon receipt within 10 Business Days after such
notice from the Owner Trustee of an amount equal to the aggregate unpaid
principal amount of and any premium with respect to any unpaid Notes then held
by such Holder, together with accrued but unpaid interest thereon to the date of
such receipt (as well as any interest on overdue principal and, to the extent
permitted by law, interest), such Holder will forthwith sell, assign, transfer
and convey to the Owner Trustee (without recourse or warranty of any kind other
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than of title to the Notes so conveyed) all of the right, title and interest of
such Holder in and to the Lease. Indenture Estate, this Indenture and all Notes
held by such Holder; provided, that no such Holder shall be required so to
convey unless (1) the Owner Trustee shall have simultaneously tendered payment
for all other Notes issued by the Owner Trustee at the time Outstanding pursuant
to this paragraph and (2) such conveyance is not in violation of any Applicable
Law.
(c) Each Holder of a Note further agrees by its acceptance
thereof that the Owner Trustee shall have the right, pursuant to Section 16 of
the Facility Lease, to terminate the Facility Lease and, in connection
therewith, to arrange for the substitution of another Person as lessee under a
new lease substantially similar to the Facility Lease (hereinafter the
Substituted Lessee) and, subject to: (i) any Indenture Event of Default under
paragraphs (d) and (e) of Section 6.2 having been cured by the Owner Trustee,
(ii) the Substituted Lessee's assuming all of the obligations of the Lessee
under the Facility Lease and (iii) the Substituted Lessee's having an assigned
credit rating by Standard & Poor's Corporation and Moody's Investors Service,
Inc. (or, if either of such organizations shall not rate securities issued by
such Substituted Lessee, by any other nationally recognized rating organization
in the United States of America) with respect to at least one series of its debt
obligations or preferred stock equal to or better than the ratings assigned,
immediately prior to such substitution, by such organizations to comparable
securities of the Lessee immediately prior to such substitution but in no event
less than "investment grade", then the Facility Lease between the Owner Trustee
and such Substituted Lessee shall, for all purposes of this Indenture, be deemed
to be the Facility Lease subject to the lien of this Indenture.
SECTION 6.9. Further Assurances.
Subject to section 7.6 hereof, the Owner Trustee covenants and
agrees from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.
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SECTION 6.10. Right of Indenture Trustee To Perform Covenants,
etc.
If the Owner Trustee shall fail to make any payment or perform
any act required to be made or performed by it hereunder or under the Facility
Lease or if the Owner Trustee shall fail to release any Lien affecting the Lease
Indenture Estate which it is required to release by the terms of this Indenture,
the Indenture Trustee, without notice to or demand upon the Owner Trustee and
without waiving or releasing any obligation or default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Lease Indenture Estate. All sums so
paid by the Indenture Trustee and all costs and expenses (including without
limitation reasonable fees and expenses of legal counsel and other
professionals) so incurred, together with interest thereon from the date of
payment or occurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Lease Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 6.11. Certain Other Rights of the Owner Trustee.
Notwithstanding any provision to the contrary in this Indenture,
the Owner Trustee shall at all times retain, to the exclusion of the Indenture
Trustee, all rights of the Owner Trustee to exercise any election or option or
to make any decision or determination or to give or receive any notice, consent,
waiver or approval or to take any other action under or in respect of the
Facility Lease, as well as all rights, powers and remedies on the part of the
Owner Trustee, whether arising under the Facility Lease or by statute or at law
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or in equity or otherwise, arising out of any Default or Event of Default
subject, however, to Section 10.2. Without the prior written consent of the
indenture Trustee, the exercise of any of the aforesaid rights so retained by
the Owner Trustee shall not be exercised in such a manner as to (i) reduce the
amounts payable by the Lessee under the Facility Lease below the amounts
necessary to provide the owner Trustee with sufficient monies to make timely
payments in full of amounts due with respect to the principal of and premium, if
any, and interest on all Notes or (ii) rescind or terminate the Facility Lease
pursuant to section 16 thereof. Nor shall the Owner Trustee exercise any other
right or remedy under the Facility Lease the effect of which would be to effect
such rescission or termination.
ARTICLE VII
CERTAIN DUTIES OF THU ON
TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 7.1. Duties in Respect of Events of Default, Deemed
Loss Events and Events of Loss; Acceleration of Maturity.
In the event the Owner Trustee shall have actual knowledge of an
Indenture Event of Default, an Event of Default, a Deemed Loss Event or an Event
of Loss, the Owner Trustee shall give prompt written notice thereof to the Owner
Participant, the Lessee and the Indenture Trustee. In the event the Indenture
Trustee shall have actual knowledge of an Event of Default, an Indenture Event
of Default, a Deemed Loss Event or an Event of Loss, the Indenture Trustee shall
give prompt written notice thereof to the Owner Participant, the Owner Trustee,
the Lessee and each Holder of a Mote. Subject to the terms of sections 6.2, 6.3,
6.4, 6.8, 6.11 and 7.3 hereof, (a) the Indenture Trustee shall take such action
(including the waiver of past Defaults in accordance with section 6.7 hereof),
or refrain from taking such action, with respect to any such Indenture Event of
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Default, Event of Default, Deemed Loss Event or Event of Loss as the Indenture
Trustee shall be instructed by a Directive, (b) if the Indenture Trustee shall
not have received instructions as above provided within 20 days after mailing by
the Indenture Trustee of notice of such Indenture Event of Default, Event of
Default, Deemed Loss Event or Event of Loss to the Persons referred to above,
the Indenture Trustee may1 subject to instructions thereafter received pursuant
to the preceding sentence, take such action, or refrain from taking such action,
but shall be under no duty to take or refrain from taking any action, with
respect to such Indenture Event of Default, Event of Default, Deemed Loss Event
or Event of Loss as it shall determine advisable in the best interests of the
Holders of the Notes of all series and (c) in the event that an Indenture Event
of Default shall have occurred and be continuing, the Indenture Trustee in its
discretion may, or upon receipt of a Directive shall, by written notice to the
Owner Trustee, declare the unpaid principal amount of all Notes with accrued
interest thereon to be immediately due and payable, upon which declaration such
principal amount and much accrued interest shall immediately become due and
payable without further act or notice of any kind. For all purposes of this
Indenture, in the absence of actual knowledge, neither the Owner Trustee nor the
Indenture Trustee shall be deemed to have knowledge of an Indenture Event of
Default or Event of Default except that the Indenture Trustee shall be deemed to
have knowledge of the failure of the Lessee to pay any installment of Basic Rent
within 10 Business nays after the same shall become due. For purposes of this
section 7.1, neither the Owner Trustee nor the Indenture Trustee shall be deemed
to have actual knowledge of any Indenture Event of Default, Event of Default,
Deemed Loss Event or Event of Loss unless it shall have received notice thereof
pursuant to section 11.6 hereof or such Indenture Event of Default or Event of
Default shall actually be known by an officer in the corporate trust department
of the Owner Trustee or by an officer in the corporate Trustee Administration
Department of the Indenture Trustee, as the case may be.
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SECTION 7.2. Duties in Respect of Matters Specified in
Directive.
Subject to the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11, 7.1
and 7.3 hereof, upon receipt of a Directive, the Indenture Trustee shall take
such of the following actions as may be specified in such Directive: (i) give
such notice or direction or exercise such right, remedy or power permitted
hereunder or permitted with respect to the Facility Lease or in respect of any
part or all of the Lease Indenture Estate as shall be specified in such
Directive; and (ii) take such action to preserve or protect the Lease Indenture
Estate as shall be specified in such Directive, it being agreed that without
such a Directive, the Indenture Trustee shall not waive, consent to or approve
any such matter as satisfactory to it.
SECTION 7.3. Indemnification.
The Indenture Trustee shall not be required to take or refrain
from taking any action under section 7.1 or 7.2 or Article VI hereof which shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability unless the Indenture Trustee shall have been indemnified
by the Holders of the Notes against liability, cost or expense (including
counsel fees) which may be incurred in connection therewith, or unless, in the
reasonable judgment of the Indenture Trustee, the indemnities of the Lessee
shall be adequate for such purpose; provided, however, that if the Holder of
such Notes is the Collateral Trust Trustee, the unsecured written undertaking of
the collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section. The Indenture Trustee shall not be
required to take any action under Section 7.1 or 7.2 or Article VI hereof nor
shall any other provision of this Indenture be deemed to impose a duty on the
Indenture Trustee to take any action, if the Indenture Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is likely to
result in personal liability or is contrary to the terms hereof or of the
Facility Lease or is otherwise contrary to law.
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SECTION 7.4. Limitations on Duties; Discharge of Certain Liens
Resulting from Claims Against Indenture Trustee.
The Indenture Trustee shall have no duty or obligation to take
or refrain from taking any action under, or in connection with, this Indenture
or the Facility Lease, except as expressly provided by the terms of this
Indenture. The Indenture Trustee nevertheless agrees that it will, in its
individual capacity and at its own cost and expense, promptly take such action
as may be necessary duly to discharge all Liens on any part of the Lease
Indenture Estate which result from acts by or claims against it arising out of
events or conditions not related to its rights in the Lease Indenture Estate or
the administration of the Lease Indenture Estate or the transactions
contemplated hereby.
SECTION 7.5. Restrictions on Dealing with Lease Indenture
Estate.
Except as provided in the Transaction Documents, the Owner
Trustee shall not use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with any part of the Lease Indenture Estate.
SECTION 7.6. Filing of Financing Statements and Continuation
Statements.
Pursuant to Section l0(b)(2) of the participation Agreement, the
Lessee has covenanted to maintain the priority of the lien of this Indenture on
the Lease Indenture Estate. The Indenture Trustee shall, at the request and
expense of the Lessee as provided in the participation Agreement, execute and
deliver to the Lessee and the Lessee will file, if not already filed, such
financing statements or other documents and such continuation statements or
other documents with respect to financing statements or other documents
previously filed relating to the lien created under this Indenture in the Lease
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Indenture Estate as may be necessary to protect, perfect and preserve the lien
created under this Indenture. At any time and from time to time, upon the
request of the Lessee or the Indenture Trustee, at the expense of the Lessee as
provided in the Participation Agreement (and upon receipt of the form of
document so to be executed) , the Owner Trustee shall promptly and duly execute
and deliver any and all such further instruments and documents as the Lessee or
the Indenture Trustee may reasonably request in order for the Indenture Trustee
to obtain the full benefits of the security interest, assignment and mortgage
created or intended to be created hereby and of the rights and powers herein
granted. Upon the reasonable instructions (which instructions shall be
accompanied by the form of document to be filed) at any time and from time to
time of the Lessee or the Indenture Trustee, the Owner Trustee shall execute and
file any financing statement (and any continuation statement with respect to any
such financing statement), any certificate of title or any other document, in
each case relating to the security interest, assignment and mortgage created by
this Indenture, as may be specified in such instructions. In addition, the
Indenture Trustee and the Owner Trustee will execute such continuation
statements with respect to financing statements and other documents relating to
the lien created under this Indenture in the Lease Indenture Estate as may be
reasonably specified from time to time in written instructions of any Holder of
a Note (which instructions may, by their terms, be operative only at a future
date and which shall be accompanied by the form of such continuation statement
or other document so to be filed).
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ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND
THE INDENTURE TRUSTEE
SECTION 8.1. Acceptance of Trusts; Standard of Care.
The Indenture Trustee accepts the trusts hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Indenture and the Participation Agreement and agrees to receive and disburse all
moneys constituting part of the Lease Indenture Estate in accordance with the
provisions hereof, provided that no implied duties or obligations shall be read
into this Indenture or the Participation Agreement against the Indenture
Trustee. The Indenture Trustee shall enter into and perform its obligations
under the Participation Agreement, and, at the request of the Owner Trustee, any
other agreement relating to any transfer of the Undivided Interest or the Real
Property Interest or the assignment of rights under the Assignment and
Assumption or, at the request of the Owner Trustee, the purchase by any Person
of Notes or Additional Notes issued hereunder, all as contemplated hereby. The
Indenture Trustee shall not be liable under any circumstances, except for its
own willful misconduct or gross negligence. If any Indenture Event of Default
shall have occurred and be continuing, the Indenture Trustee shall exercise such
of the rights and remedies vested in it by this Indenture, subject to the
provisions hereof, and shall use the same degree of care in their exercise as a
prudent man would exercise or use in the circumstances in the conduct of his own
affairs; provided that it in the opinion of the Indenture Trustee such action
may tend to involve expense or liability, it shall not be obligated to take such
action unless it is furnished with indemnity satisfactory to it.
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SECTION 8.2. No Duties of Maintenance, Etc.
Except pursuant to Section 7.2 hereof and except as provided in,
and without limiting the generality of, sections 7.1 and 7.4 hereof, the
Indenture Trustee shall have no duty (i) to see to any recording or filing of
any Transaction Document, or to see to the maintenance of any such recording or
filing, or (ii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, or assessed or levied against, any part of the Lease Indenture
Estate (except such as are required to be paid or discharged by it pursuant to
this Indenture or any 0(pound) the other Transaction Documents) or to make or
file any reports or returns related thereto.
SECTION 8.3. Representations and warranties of Indenture
Trustee and the Owner Trustee.
NEITHER THE OWNER TRUSTEE NOR THE INDENTURE TRUSTEE MAKES Any
REPRESENTATION OR WARRANTY AS TO THE VALUE, CONDITION, MERCHANTABILITY OR
FITNESS FOR USE OF UNIT 1, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE OR AS TO ITS INTEREST THEREIN, OR ANY OTHER REPRESENTATION OR
WARRANTY WITH RESPECT TO UNIT 1, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE WHATSOEVER. The Owner Trustee and the Indenture Trustee each
represents and warrants, in its individual capacity, as to itself that this
Indenture has been executed and delivered by one or more of its officers who are
duly authorized to execute and deliver this Indenture on its behalf.
SECTION 8.4. Moneys Held in Trust; Non-Segregation of Moneys.
All moneys and securities deposited with and held by the
Indenture Trustee under this Indenture for the purpose of paying, or securing
the payment of, the principal of or premium or interest on the Notes shall be
held in trust. Except as provided in Sections 2.3(c), 8.8 and 11.1 hereof,
moneys received by the Indenture Trustee under this Indenture need not be
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segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law; provided,
however, that any payments received or applied hereunder by the Indenture
Trustee shall be accounted for by the Indenture Trustee so that any portion
thereof paid or applied pursuant hereto shall be identifiable as to the source
thereof. Except as otherwise expressly provided herein, the Indenture Trustee
shall not be liable for any interest on any money held pursuant to this
Indenture.
SECTION 8.5. Reliance on Writings, Use of Agents, Etc.
The Indenture Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
telegram, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. In the case of the Lessee, the Indenture Trustee may accept a copy
of a resolution of the Board of Directors or any duly constituted and authorized
committee of the Board of Directors of the Lessee, certified by the Secretary or
an Assistant Secretary of the Lessee as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly adopted by
such Board or Committee and that the same is in full force and effect. As to the
aggregate unpaid principal amount of the Notes outstanding as of any date, the
Owner Trustee may for all purposes hereof rely on a certificate signed by any
Authorized Officer of the Indenture Trustee. As to any fact or matter the manner
of ascertainment of which is not specifically described herein, the Indenture
Trustee may for all purposes hereof rely on a certificate, signed by the
Chairman of the Board, the President, any Vice president and the Treasurer or
the secretary or any Assistant Treasurer or Assistant Secretary of the Lessee ,
or a Holder of a Note or any Responsible Officer of the Owner Trustee, as the
case may be, as to such fact or matter, and such certificate shall constitute
full protection to the Indenture Trustee for any action taken or omitted to be
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taken by it in good faith in reliance thereon. The Indenture Trustee shall
furnish to the Owner Trustee upon request such information and copies of such
documents as the Indenture Trustee may have and as are necessary for the Owner
Trustee to perform its duties under Article III hereof. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys selected by it in good faith and with reasonable care, and,
with respect to matters relating to the Notes, the Lease Indenture Estate and
its rights and duties under this Indenture and the other Transaction Documents,
may, at the expense of the Lessee, or, if the Lessee shall have failed to pay or
provide for the payment thereof, at the expense of the Lease Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
employed by it in good faith and with reasonable care, and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by it
in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons so selected. unless otherwise specified herein or in any
other Transaction Document, any opinion of counsel referred to in this Indenture
or in such other Transaction Document may be relied on by the Indenture Trustee
to the extent it is rendered by an attorney or firm of attorneys satisfactory to
the Indenture Trustee (which may be counsel to the Owner Participant, the Owner
Trustee, the Lessee or any party to any Transaction Document)
SECTION 8.6. Indenture Trustee to Act solely as Trustee.
The Indenture Trustee acts hereunder solely as trustee as herein
provided and not in any individual capacity, except as otherwise expressly
provided herein; and except as provided in Sections 9(a) and 9(b) of the
Participation Agreement or section 7.4 or 6.1 hereof, all Persons having any
claim against the Indenture Trustee arising from matters relating to the Notes
by reason of the transactions contemplated hereby shall, subject to the lien and
priorities of payment as herein provided and to Sections 3.6 and 5.7, look only
to the Lease Indenture Estate for payment or satisfaction thereof.
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SECTION 8.7. Limitation on Rights Against Registered Holders,
the Owner Trustee or Lease Indenture Estate.
The Indenture Trustee shall be entitled to be paid or reimbursed
for Trustee's Expenses as provided herein and in the other Transaction
Documents. Nonetheless, the Indenture Trustee agrees that it shall have no right
against the Holders of the Notes, the Owner Trustee (except to the extent
included in Transaction Expenses payable by the Owner Participant) or, except as
provided in Article V and section 6.4 or this Article VIII, the Lease Indenture
Estate for any fee as compensation for its services hereunder.
SECTION 8.8. Investment of Certain Payments Held by the
Indenture Trustee.
Any amounts held by the Indenture Trustee hereunder other than
pursuant to section 2.3(c) or 11.1 hereof shall be invested by the Indenture
Trustee from time to time as directed in writing by the Owner Participant and at
the expense and risk of the Owner Participant in (i) obligations of, or
guaranteed as to interest and. principal by, the United States Government
maturing not more than 90 days after such investment, (ii) open market
commercial paper of any corporation incorporated under the laws of the United
states of America or any state thereof rated "prime-1" or its equivalent by
Moody's Investors Service, Inc. or "A-1" or its equivalent by Standard & Poor's
corporation or (iii) certificates of deposit maturing within 90 days after such
investment issued by commercial banks organized under the laws of the United
States of America or of any political subdivision thereof having a combined
capital and surplus in excess of $500,000,000; provided, however, that the
aggregate amount at any one time so invested (a) in open market commercial paper
of any corporation shall not exceed $2,000,000 and (b) in certificates of
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deposit issued by any one bank shall not exceed $10,000,000. Any income or gain
realized as a result of any such investment shall be applied to make up any
losses resulting from any such investment to the extent such losses shall not
have been paid by the Owner Trustee or the Owner Participant pursuant to this
Section 8.8. Any further income or gain so realized shall be promptly
distributed (in no event later than the next Business Day) to the Owner Trustee
or the Owner Participant, except after the occurrence and during the continuance
of an Indenture Event of Default. The Indenture Trustee shall have no liability
for any loss resulting from any investment made in accordance with this section.
Any such investment may be sold (without regard to maturity date) by the
Indenture Trustee when-ever necessary to make any distribution required by
Article V hereof.
SECTION 8.9. No Responsibility for Recitals etc.
The Indenture Trustee makes no representation or warranty as to
the correctness of any statement, recital or representation made by any Person
other than the Indenture Trustee in this Indenture, any other Transaction
Document or the Notes.
SECTION 8.10. Indenture Trustee May Engage in Certain
Transactions.
The Indenture Trustee may engage in or be interested in any
financial or other transaction with the Lessee, the Owner Participant, the Owner
Trustee and any other party to a Transaction Document, provided that if the
Indenture Trustee determines that any such relation is in conflict with its
duties under this Indenture, it shall eliminate the conflict or resign as
Indenture Trustee.
SECTION 8.11. Construction of Ambiguous Provisions.
Construction of Ambiguous
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The Indenture Trustee, subject to Section 6.1 hereof, may
construe any ambiguous or inconsistent provisions of this Indenture, and any
such construction by the Indenture Trustee shall be binding upon the
Noteholders. In construing any such provision, the Indenture Trustee will be
entitled to rely upon opinions of counsel and will not be responsible for any
loss or damage resulting from reliance in good faith thereon, except for its own
gross negligence or willful misconduct.
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1. resignation and removal of Indenture trustee;
Appointment of Successor.
(a) The Indenture Trustee may resign at any time without cause
by giving at least 30 days' prior written notice to the Owner Participant, the
Owner Trustee, the Lessee and to each Holder of a Note, such resignation to be
effective upon the acceptance of such trusteeship by a successor. In addition,
the Indenture Trustee may be removed without cause by a Directive delivered to
the Owner Participant, the Owner Trustee, the Lessee and the Indenture Trustee,
and the Indenture Trustee shall promptly give notice thereof in writing to each
Holder of a Note. In the case of the resignation or removal of the Indenture
Trustee, a successor trustee may be appointed by such a Directive. If a
successor trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee or any
Holder of a Note may apply to any court of competent jurisdiction to appoint a
successor to act until such time, if any, as a successor shall have been
appointed as above provided. The successor so appointed by such court shall
immediately and without further act be superseded by any successor appointed as
above provided within one year from the date of the appointment by such court.
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(b) Any successor trustee, however appointed, shall execute and
deliver to its predecessor and to the Owner Trustee an instrument accepting such
appointment, and thereupon such successor, without further act, shall become
vested with all the estates, properties, rights, powers and duties of its
predecessor hereunder in the trusts under this Indenture applicable to it with
like effect as if originally named the Indenture Trustee; but, nevertheless,
upon the written request of such successor trustee or receipt of a Directive,
its predecessor shall execute and deliver an instrument transferring to such
successor trustee, upon the trusts herein expressly applicable to it, all the
estates, properties, rights and powers of such predecessor under this Indenture,
and such predecessor shall duly assign, transfer, deliver and pay over to such
successor trustee all moneys or other property then held by such predecessor
under this Indenture.
(c) Any successor trustee, however appointed, shall be a bank
or trust company organized under the laws of the United States or any
jurisdiction thereof having a combined capital and surplus of at least
$100,000,000, if there be such en institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 9.1, be the Indenture
Trustee under this Indenture with-out further act.
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ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 10.1. Supplements, Amendments and Modifications to This
Indenture without Consent of Holders of Notes.
The Indenture Trustee may, with the written consent of the
Owner Trustee, from time to time and at any time execute a supplement to this
Indenture without the consent of the Holders of Notes outstanding in order to
(i) cure any defect, omission or ambiguity in this Indenture or for any other
purpose if such action does not adversely affect the interests of such Holders,
(ii) grant or confer upon the Indenture Trustee for the benefit of such Holders
any additional rights, remedies, powers, authority or security which may be
lawfully granted or conferred and which are not contrary to or inconsistent with
this Indenture, (iii) add to. the covenants or agreements to be observed by the
Owner Trustee and which are not contrary to this Indenture or surrender any
right or power of the Owner Trustee, (iv) confirm or amplify, as further
assurance, any pledge under, and the subjection to any lien or pledge created or
to be created by, this Indenture, of the properties covered hereby, or subject
to the lien or pledge of this Indenture additional revenues, properties or other
collateral, including pursuant to an undivided Interest Indenture Supplement,
(v) qualify this Indenture under the provisions of the Trust Indenture Act, (vi)
evidence the appointment of any successor Indenture Trustee pursuant to the
terms hereof, (vii) evidence the assumption and release affected by the
Assumption Agreement, or (viii) execute supplemental indentures to evidence the
issuance of and to provide the terms of, Additional Notes to be issued hereunder
in accordance with the terms hereof.
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SECTION 10.2. Supplements and Amendments to this Indenture and
the Facility Lease With Consent of Holders of Notes.
Except as provided in Section 10.1 hereof, at any time and
from time to time, (i) upon receipt of a Directive, the Indenture Trustee shall
execute a supplement to this Indenture (to which the Owner Trustee has agreed in
writing) for the purpose of adding provisions to, or changing or eliminating
provisions of, this Indenture, but only as specified in such Directive and, (ii)
upon receipt of a written instruction from the Lessee and the Owner Trustee, the
Indenture Trustee shall consent to any amendment of or supplement to the
Facility Lease or execute and deliver such written waiver or modification of the
terms of the Facility Lease to which the Owner Trustee may agree; provided,
however, that, without the consent of the Holders of all the Notes then
Outstanding no such supplement or amendment to this Indenture or the Facility
Lease, or waiver or modification of the terms of either thereof, shall (x)
modify any of the provisions of this section or of section 7.1 or 7.2 hereof or
Section 4 of the Facility Lease or of the definition of Directive contained in
Appendix A hereto or the definition of Indenture Event of Default herein, reduce
the amount of the Basic Runt, Casualty Value, Special Casualty Value,
Termination value or any payment under or pursuant to section 16 of the Facility
Lease as set forth in the Facility Lease below such amount as is required to pay
the full principal of, and premium, if any, and interest on, the Notes when due,
or extend the time of payment thereof, (y) except as permitted by clause (x)
above, modify, amend or supplement the Facility Lease or consent to the
termination or any assignment thereof, in any case reducing the Lessee's
obligations in respect of the payment of the Basic Rent, Casualty Value, special
Casualty Value, Termination Value or any payment under or pursuant to section 16
of the Facility Lease below the amount referred to in clause (x) above, or (z)
deprive the Holders of any Notes of the lien of this Indenture on the Lease
Indenture Estate (except as contemplated by Section 3.9(b)) or materially
adversely affect the rights and remedies for the benefit of such Holders
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provided in Article VI of this Indenture; and, provided, further, that, without
the consent of the Holders of all the Notes then outstanding and affected
thereby no such supplement or amendment to this Indenture or the Facility Lease,
or waiver or modification of the terms of either thereof, shall reduce the
amount or extend the time of payment of any amount payable under any Note,
reduce or modify the provisions for the computation of the rate of interest
owing or payable thereon, adversely alter or modify the provisions of Article V
with respect to the order of priorities in which distributions thereunder with
respect to the Notes shall be made, or reduce, modify or amend any indemnities
in favor of the Holders of the Notes. Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of the Holders of Notes or
the Indenture Trustee, (a) any indemnities in favor of the Owner Trustee or the
Owner Participant may be modified, amended or changed and (b) the Owner Trustee
may enter into any agreement with respect to the Lease Indenture Estate which by
its terms does not become effective prior to the satisfaction and discharge of
this Indenture, provided however, that any agreement entered into by the Owner
Trustee pursuant to this clause (b) shall not materially adversely affect the
Indenture Trustee or the Holder of any Note. Notwithstanding the foregoing, the
Indenture Trustee shall, upon receipt or a written instruction from the Lessee
and the Owner Trustee, consent to an amendment of the definitions of "Deemed
Loss Event, "Event of Loss" and "Final shutdown" contained in or appended to the
Facility Lease or this Indenture. The Owner Trustee shall deliver to the
Indenture Trustee a copy of each amendment to the Facility Lease whether or not
the Indenture Trustee is required to consent or otherwise act with respect
thereto.
SECTION 10.3. certain Limitations on Supplements and Amendments.
If in the opinion of the Owner Trustee or the Indenture Trustee,
each of which shall be entitled to rely on counsel for purposes of this Section
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10.3, any document required to be executed by either of them pursuant to the
terms of Section 10.1 or 10.2 does not comply with. the provisions of this
Indenture or adversely affects any right, immunity or indemnity in favor of, or
increases any duty of, the Owner Trustee or the Indenture Trustee under this
Indenture, the Facility Lease or the Participation Agreement, the owner Trustee
or the Indenture Trustee, as the case may be, may in its discretion decline to
execute such document.
SECTION 10.4. Directive Need Not specify particular Form of
Supplement or Amendment.
It shall not be necessary for any Directive furnished pursuant
to Section 10.2 hereof to specify the particular form of the proposed documents
to be executed pursuant to such section, but it shall be sufficient if such
request shall indicate the substance thereof.
SECTION 10.5. Trustee to Furnish Copies of Supplement or
Amendment.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to section 10.2, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a conformed
copy thereof to each Holder of an outstanding Note at the address of such Person
set forth in the register kept pursuant to Section 4.1 but the failure of the
Indenture Trustee to mail such conformed copies shall not impair or affect the
validity of such document.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Moneys for Payments in Respect of Notes to be
Held in Trust.
In case the Holder of any Note shall fail to present the same
for payment on any date on which the principal thereof or interest thereon
becomes payable, the Indenture Trustee may set aside in trust the moneys then
due thereon uninvested and shall pay such moneys to the Holder of such Note or
such Person upon due presentation or surrender thereof in accordance with the
provisions of this Indenture, subject always however, to the provisions of
Sections 3.8 and 11.2.
SECTION 11.2. Disposition of Moneys Held for Payments of Notes.
Any moneys set aside under section 11.1 and not paid to Holders
of Notes as provided in Section 11.1 shall be held by the Indenture Trustee in
trust until the latest of (i) the date three years after the date of such
setting aside, (ii) the date all other Holders of the Notes shall have received
full payment of all principal of and interest and other sums payable to them on
such Notes or the Indenture Trustee shall hold (and shall have notified such
Persons that it holds) in trust for that purpose an amount sufficient to make
full payment thereof when due and (iii) the date the Owner Trustee shall have
fully performed and observed all its covenants and obligations contained in this
Indenture with respect to the Notes; and thereafter shall be paid to the Owner
Trustee by the Indenture Trustee on demand; and thereupon the Indenture Trustee
shall be released from all further liability with respect to such moneys; and
thereafter the Holder. of the Notes in respect of which such moneys were so paid
to the Owner Trustee shall have no rights in respect thereof except to obtain
payment of such moneys from the Owner Trustee. upon the setting aside of such
moneys, interest shall cease to accrue on the Notes.
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SECTION 11.3. Transfers Not to Affect Indenture or Trusts.
No Holder of a Note shall have legal title to any part of the
Lease Indenture Estate. No transfer, by operation of law or otherwise, of any
Note or other right, title and interest of any Holder of a Note in and to the
Lease Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts hereunder with respect to such Note or entitle any successor or
transferee of such Holder to an accounting or to the transfer to it of legal
title to any part of the Lease Indenture Estate.
SECTION 11.4. Binding Effect of Sale of Lease Indenture Estate.
Any sale or other conveyance of the Lease Indenture Estate or
any part thereof by the Indenture Trustee made pursuant to the terms of this
Indenture or the Facility Lease shall bind the Holders of the Notes and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee and such Holders in and to the same. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee.
SECTION 11.5. Limitation as to Enforcement of Rights, Remedies
and Claims.
Nothing in this Indenture, whether express or implied, shall
be construed to give to any person, other than the Owner Trustee, the Owner
Participant, the Lessee (to the extent the Lessee's consent or other action by
the Lessee is expressly provided for), the Indenture Trustee and the Holders of
the Notes, any legal or equitable right, remedy or claim under or in respect of
this Indenture or any Note.
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SECTION 11.6. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices given hereunder to the Lessee, the Owner
Trustee, the Owner Participant or the Indenture Trustee shall be given in the
manner provided in Section 16 of the Participation Agreement. Notices by the
Indenture Trustee to any Holder of a Note shall be in writing and shall be given
in person or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified mail,
addressed to such Holder at the address set forth in the register kept pursuant
to Section 4.1. Whenever any notice in writing is required to be given by the
Indenture Trustee to any Holder of a Note such notice shall be effective (x) if
sent by telex, telecopy or other wire transmission, on the date of transmission
thereof, or (y) if sent by mail, three Business flays after being mailed.
SECTION 11.7. Separability of Provisions
In case any one or more of the provisions of this Indenture or
any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
hereof and any other application hereof shall not in any way be affected or
impaired.
SECTION 11.8. Benefit of Parties, Successors and Assigns.
All representations, warranties, covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee, the Indenture Trustee and their respective successors and assigns and
each Holder of a Note, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Holder of a Note shall bind
the successors and assigns of such Holder and any Holder of a Note issued in
transfer or exchange of such Note.
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SECTION 11.9. Survival of Representations and Warranties.
All representations and warranties made with respect to the
Notes shall survive the execution and delivery of this Indenture and the issue,
sale and delivery of any Notes and shall continue in effect so long as any Note
issued hereunder is outstanding and unpaid.
SECTION 11.10. Bankruptcy of the Owner Trustee.
If (a) the Owner Trustee becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, or any successor provision,
(b) pursuant to such reorganization provisions the owner Trustee is required, by
reason of the Owner Trustee being held to have recourse liability directly or
indirectly to the Holder of any Note or the Indenture Trustee, to make payment
on account of any amount payable as principal or interest on such Note and (a)
such Holder or the Indenture Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee on account
of clause (b) of this section1 then such Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Owner Trustee such Excess Amount,
"Excess Amount" means the amount by which such payment exceeds the amount which
would have been received on or prior to the date of such payment by such Holder
or the Indenture Trustee if the Owner Trustee had not become subject to the
recourse liability referred to in clause (b) of this Section. Nothing contained
in this Section shall prevent such Holder or the Indenture Trustee from
enforcing any recourse obligation (and retaining the proceeds thereof) of the
Owner Trustee expressly provided for under this Indenture or in the Notes.
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SECTION 11.11. Bankruptcy of the Owner Participant.
The Indenture Trustee and the Holders of the Notes shall be
bound by the provisions of Section 19(f) of the Participation Agreement.
SECTION 11.12. Counterpart Execution.
This Indenture and any amendment or supplement to this Indenture
may be executed in any number of counterparts and by the different parties
hereto and thereto on separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.13. Dating of Indenture.
Although this Indenture is dated for convenience and for the
purpose of reference as of the date mentioned, the actual date or dates of
execution by the Owner Trustee and the Indenture Trustee are as indicated by
their respective acknowledgments hereto annexed.
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IN WITNESS WHEREOF, the Owner Trustee and the Indenture Trustee have
each caused this Indenture to be duly executed by their respective officers
thereunto duly authorized, all as of the date first set forth above.
THE FIRST' NATIONAL BANK OF
BOSTON, not in its individual
capacity, but solely as Owner Trustee
under the Trust Agreement dated as of
July 31, 1986 with Chase Manhattan
Realty Leasing Corporation
By /s/ M P. Henry
------------------------------
Assistant Vice President
CHEMICAL BANK
By /s/ T. J. Foley
-----------------------------
Vice President
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STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On ,the 30th day of July, 1986, before me personally came M.
P. Henry, to me known, who, being by me duly sworn, did acknowledge, depose and
say that he resides at Boston, Massachusetts; that he is an Assistant Vice
President of THE FIRST NATIONAL BANK 0F BOSTON, a national banking association,
described in and which executed the foregoing instrument; that he knows the seal
of said association; that the seal affixed to said instrument is such seal; that
it was so affixed by authority of the by-laws of said association; and that he
signed his name thereto on behalf of said association by like order.
/s/ Delia T. Santiago
------------------------------
Notary Public
[NOTARIAL SEAL] Term Expires:
Delia T. Santiago
Notary Public, State of New York
No. 41-341160
Qualified in Queens County
Commission Expires: March 30, 1987
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STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 30th day of July, 1986, before me personally came T.J.
FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Bethpage, New York; that he is a Vice president of CHEMICAL
BANK, a New York banking corporation, described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such seal; that it was so affixed by authority of
the board of directors of said corporation; and that he signed his name thereto
on behalf of said corporation by like order.
/s/ Delia T. Santiago
------------------------------
Notary Public
[NOTARIAL SEAL] Term Expires.:
Delia T. Santiago
Notary Public, State of New York
No. 41-341160
Qualified in Queens County
Commission Expires: March 30, 1987
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EXHIBIT A
TO
INDENTURE
FORM OF INITIAL SERIES NOTE
The Initial Series Note shall be substantially in the following form, with such
omissions, insertions and variations as the Owner Trustee may determine with the
approval of the Indenture Trustee and are not inconsistent with the provisions
of the Indenture or as may be provided for in the Indenture:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED
FOR SALE IN VIOLATION OF SUCH ACT
NONRECQURSE PROMISSORY NOTED, INITIAL SERIES
Issued at: New York, New York
Issue Date: August 1, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of July 31, 1986 with Chase Manhattan Realty Leasing Corporation (the
Owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of Forty Million Dollars ($40,000,000) (to
the extent remaining unpaid on such date) on January 15, 2015, and to pay
interest on the remaining unpaid principal amount hereof from the date hereof,
or from the most recent interest payment date to which interest has been paid or
duly provided for, quarterly on January 15, April 15, July 15 and October 15 in
each year, commencing October 15, 1986, at the rate equal to the Variable Rate
(as defined below) per annum, until the principal hereof is paid in full or Made
available for payment.
A-1
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Said principal shall be payable in installments consisting of 54 installments of
principal commencing on July 15, 1988, and on each January 15 and July 15
thereafter, to and including January 15, 2015, each such principal installment
to be equal to the percentage of the original principal amount hereof set forth
in Schedule X hereto for the date such installment is due.
The "Variable Rate" shall mean the Applicable Percentage (as defined
below) of the rate of interest per annum equal to the prime commercial lending
rate of The Chase Manhattan Bank, N.A., as announced from time to time at its
principal office in New York, New York. The "Applicable Percentage" shall equal
(1) 100% for the period from August 1, 1986 through January 30, 1987, (ii) 125%
for the period from January 31, 1987 through April 30, 1987, (iii) 150% for the
period from May 1, 1987 through July 30, 1987, and (iv) 200% thereafter. All
payments of interest shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.
Capitalized terms used in this Initial Series Note which are
not otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
In the event any date on which a payment is due under this
Initial Series Note is not a Business Day, then payment thereof may be made on
the next succeeding Business Day with the same force and effect as if made on
the date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time hereafter amended or supplemented in accordance with the provisions thereof
A-2
<PAGE>
(the Indenture), between the Owner Trustee and Chemical Bank, as Trustee (the
Indenture Trustee), shall be made only from the Lease Indenture Estate and the
Trust Estate and the Indenture Trustee shall have no obligation for the payment
thereof except to the extent that the Indenture Trustee shall have sufficient
income or proceeds from the Lease :Indenture Estate to make such payments in
accordance with the terms of Article V of the Indenture. The Holder hereof, by
its acceptance of this Initial Series Note, agrees that such Holder will look
solely to the income and proceeds from the Lease Indenture Estate to the extent
available for distribution to the Holder hereof as above provided, and that
neither the Owner Participant, nor, except as expressly provided in the
Indenture, the Owner Trustee nor the Indenture Trustee is or shall be personally
liable to the Holder hereof for any amounts payable under this Initial Series
Note or for any performance to be rendered under the Indenture or any other
Transaction Document or for any liability thereunder provided, however, that in
the event the Lessee shall assume all the obligations of the Owner Trustee
hereunder and under the Indenture pursuant to section 3.9(b) of the Indenture,
then all the payments to be made under this Note shall be made only from
payments made by the Lessee in accordance with the Assumption Agreement referred
to in said section 3.9(b) and the Holder of this Note agrees that in such event
it will look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Initial Series Note
at the Indenture Trustee Office, or as otherwise provided in the Indenture.
The Holder hereof, by its acceptance of this Initial Series
Note, agrees that each payment received by it hereunder shall be applied in the
manner set forth in Section 3.11 of the Indenture. The solder of this Initial
Series Note agrees, by its acceptance hereof, that it will duly note by
appropriate means all payments of principal or interest made hereon and that it
will not in any event transfer or otherwise dispose of this Initial Series Note
unless and until all such notations have been duly made.
A-3
<PAGE>
This Initial Series Note is the Initial Series Note referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Least Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Initial
series Note and all other Notes issued and outstanding from time to time under
the Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Initial Series Note and of the rights of, and the nature and extent of the
security for, the Holders of the other Notes and of certain rights of the Owner
Trustee, as well as for a statement of the terms and conditions of the trust
created by the Indenture, to all of which terms and conditions the Holder hereof
agrees by its acceptance of the Initial series Note.
This Initial Series Note is subject to mandatory prepayment in
full as provided in section 5.2 of the Indenture, such prepayment being without
premium but including accrued interest to the date of prepayment. In addition
this Initial Series note is subject to special prepayment, in whole only, on the
date on which the Fixed Rate Note is issued in accordance with section 3.5 of
the Indenture, by giving written notice to the Indenture Trustee and the Holder
of this Initial Series Note at least one Business Day prior to such date, such
prepayment being without premium, together with accrued interest to the date of
prepayment.
A-4
<PAGE>
In case an Indenture Event of Default shall occur and be continuing the
unpaid balance of the principal of this Initial Series Note and any other Notes
together with all accrued but unpaid interest thereon may, subject to certain
rights of the Owner Trustee or the Owner Participant contained or referred to in
the Indenture, be declared or may become due and payable in the manner and with
the effect provided in the Indenture. Upon such declaration there shall also be
due and payable as a special premium on this Initial Series Note an amount equal
to a ratable portion of the fees and expenses then payable to the Collateral
Trust Trustee, as certified to the Indenture Trustee by the collateral Trust
Trustee.
The lien upon the Lease Indenture Estate is subject to being legally
discharged prior to the maturity of this Initial Series Note upon the deposit
with the Indenture Trustee of cash or certain securities sufficient to pay this
Initial Series Note when due or an assumption of the obligation of the Owner
Trustee under this Initial Series Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's office a register
for the purpose of registering transfers and exchanges of Notes in the manner
provided in the Indenture. The transfer of this Initial Series Note is
registrable, as provided in the Indenture, upon surrender of this Initial Series
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Initial Series Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Initial Series Note is
registered as the owner hereof for the purpose of receiving payments of
principal of, and premium if any, and interest on this Initial Series Note and
for all other purposes whatsoever, whether or not this Initial Series Note be
overdue, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by notice to the contrary.
A-5
<PAGE>
This Initial Series Note shall be governed by the laws of the State of
New York.
IN WITNESS WHEREOF, the Owner Trustee has caused this Initial Series
Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of July 31, 1986
with Chase Manhattan Realty Leasing
Corporation
By
--------------------------------
Assistant Vice President
This Note is one of the Series of Notes referred to therein and in the
within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
--------------------------------
Authorized Officer
A-6
<PAGE>
ASSIGNMENT
Date: August 1, 1986
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented, among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the Initial Series Note to which this Assignment is annexed and all
rights thereunder.
FIRST PV FUNDING CORPORATION
By
-------------------------
Vice President
A-7
<PAGE>
SCHEDULE X
to
INITIAL SERIES
NOTE
Date Principal Amount
- ---- ----------------
July 15, 1989 0.5972134%
January 15, 1989 0.8241794
July 15, 1989 0.8653883
January 15, 1990 0.9086578
July 15, 1990 0.9540906
January 15, 1991 1.0017952
July 15, 1991 1.0518849
January 15, 1992 1.1044792
July 15, 1992 1.1597031
January 15, 1993 1.2176883
July 15, 1993 1.2785727
January 15, 1994 1.3425013
July 15, 1994 1.4096264
January 15, 1995 1.4801077
July 15, 1995 1.5541131
January 15, 1996 1.6318188
July 15, 1996 1.7134097
January 15, 1997 1.7990802
July 15, 1997 1.8890342
January 15, 1998 1.9834859
July 15, 1998 2.0826602
January 15, 1999 2.1867932
July 15, 1999 2.2961329
January 15, 2000 2.4109395
July 15, 2000 2.5314865
January 15, 2001 2.6580608
July 15, 2001 2.7909639
January 15, 2002 2.3233915
A-8
<PAGE>
July 15, 2002 1.7247869%
January15, 2003 1.4465925
July 15, 2003 1.7366326
January 15, 2004 1.4625916
July 15, 2004 1.8222554
January 15, 2005 1.5343060
July 15, 2005 1.9121376
January 15, 2006 1.6095839
July 15, 2006 2.0064425
January 15, 2007 1.6885660
July 15, 2007 2.1053877
January 15, 2008 1.7714343
July 15, 2008 2.2092016
January 15, 2Q09 1.8583802
July 15, 2009 2.3181236
January 15, 2010 1.9496043
July 15, 2010 2.4324051
January 15, 2011 2.0453171
July 15, 2011 2.5523099
January 15, 2012 2.1457395
July 15 2012 2.6781146
January 15, 2013 2.2511032
July 15 2013 2.8101095
January 15, 2014 2.3616513
July 15, 2014 2.9485993
January 15, 2015 3.5713649
A-9
<PAGE>
EXHIBIT B
ASSUMPTION AGREEMENT
TO: The Holders (as defined below) from time to time at the Notes (as
defined below) of The First national flank of Boston, not in its
individual capacity, but solely as owner trustee under a Trust
Agreement dated as a! July 31, 1986 with chase Manhattan Leasing
Realty corporation (in such capacity, the "Issuer") under the Trust
Indenture, Mortgage, Security Agreement, and Assignment of Rents
(the Indenture) dated as of July 31, 1986 among the Issuer and
Chemical Bank (the "Trustee").
The undersigned, PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation (the "Obligor"), for the purpose of satisfying in part its
obligation to make certain payments under that certain Facility Lease dated as
of July 31, 1986 between the Issuer and the Obligor (the "Facility Lease"), does
hereby covenant and agree with the Holders (as defined in the Indenture) from
time to time of the Notes (as defined in the Indenture) as follows:
SECTION 1. The Obligor does hereby agree to, and does hereby,
assume unconditionally the payment of the principal of the Notes and of the
interest and premium (if any) thereon, at the rates provided in the Notes, when
and as the same shall become due and payable, whether at maturity or upon
mandatory prepayment or upon declaration or otherwise, according to the terms of
the Notes and of the Indenture.
B-1
<PAGE>
SECTION 2. The assumption herein contained shall be binding
upon the obligor, its successors and assigns and shall remain in full force and
effect irrespective of the power or authority of the :Issuer to issue the Notes
or to execute, acknowledge and deliver the Indenture or the validity of the
Notes, or the Indenture, or of any defense whatsoever that the Issuer may or
might have to the payment of the Notes (principal, interest or premium), or to
the performance or observance of any of the provisions or conditions of the
Indenture or any Note, or of the existence or continuance of the Issuer as a
legal entity; nor shall said assumption be affected by the merger,
consolidation, or other dissolution of the Issuer or the sale or other transfer
of the property of the Issuer or by the Issuer as an entirety, or substantially
so, to any other person; nor shall the assumption be discharged or impaired by
any act, failure or omission whatsoever on the part of any Holder of any Notes
or the Trustee, including, among other such acts, failures and omissions, the
following:
(a) any failure to present any Note for payment or to demand
payment thereof, or to give to the obligor notice of dishonor and
non-payment of any Note when and as the same may become due and payable,
or notice of any failure on the part of the Issuer to do any act or
thing or to perform or keep any covenant or agreement by it to be done,
kept or performed under the terms of Notes or the Indenture;
(b) any extension of the obligation of any Note, either
indefinitely or for any period of time, or any other modification in the
obligations under any Note or the Indenture or of the Issuer thereon or
in connection therewith;
(c) any act or failure to act with regard to any Note or the
Indenture or anything which might vary the risk of the obligor; and
B-2
<PAGE>
(d) any action taken under the Indenture and the Notes in the
exercise of any right or power thereby conferred or any failure or
omission on the part of the Trustee or the Holder of any Note to enforce
any right or security given under the Indenture or any Note, or any
waiver of any right or any failure or omission on the part of the
Trustee or any Holder of any Note to enforce any right of any Holder of
any Note against the Issuer;
provided, always, that the specific enumeration of the above mentioned acts,
failures, waivers or omissions shall not be deemed to exclude any other acts,
failures, waivers or omissions though not specifically mentioned herein, it
being the purpose and intent of this Assumption Agreement that the obligation of
the obligor shall be absolute and unconditional to the extent herein specified
and shall not be discharged, impaired or varied except by the payment of the
principal of and interest on any Note and any premium thereon in case of
prepayment1 and then only to the extent of such payments.
SECTION 3. (a) Subject to the requirements of sections 10(b) (3) (iii)
and (b) (3) (iv) of the participation Agreement and to the provisions of
paragraph (b) of this section, nothing contained in this Assumption Agreement
shall prevent any consolidation or merger of the obligor with or into any other
corporation or corporations (whether or not affiliated with the obligor), or
successive consolidations or mergers in which the obligor or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease of all or substantially all the property of the obligor, to any other
corporation authorized to acquire and operate the same; provided, however, and
the obligor hereby covenants and agrees, that upon any such consolidation,
merger, sale, conveyance or lease, all obligations of the Obligor under this
Assumption Agreement on or in respect of any Note, and the due and punctual
performance and observance of all of the covenants and conditions of this
Assumption Agreement to be performed by the Obligor, shall be expressly and duly
assumed, by an agreement reasonably satisfactory in form and substance to the
Trustee, executed and delivered by the corporation (if other than the obligor)
formed by such consolidation, or into which the obligor shall have been merged,
or by the corporation which shall have acquired such property.
B-3
<PAGE>
(b) The Indenture Trustee (as defined in the Indenture), subject to
applicable provisions of the Indenture, may rely upon an opinion of counsel to
the Obligor as conclusive evidence that any such merger, consolidation, sale or
conveyance complies with the provisions of this Section.
SECTION 4. The Obligor does hereby consent to all of the terms and
conditions of each Note Series and of the Indenture, and hereby waives any and
all rights of notice of any fact or facts or circumstance or circumstances
whatsoever and consents to any extension or extensions of time of any payment or
payments, or of any other act or thing which any Bolder or Holders of any Note
or the Issuer may agree to consent to, either expressly, by acquiescence or
otherwise, and hereby agrees not to claim or enforce any rights of subrogation
or any other right or privilege which might otherwise arise on account of any
payment made by it or act or thing done by it on account of or in accordance
with its assumption herein contained, unless and until all of the Notes have
been fully paid and discharged.
SECTION 5. The assumption herein expressed may be transferred or
assigned at any time or from time to time and shall be considered to be
transferred and assigned upon the transfer of any Note, whether with or without
the consent of or notice to the obligor or the Issuer. The Obligor hereby agrees
to execute and deliver such instruments and to do such acts and things requested
by the Trustee as shall be reasonably necessary to carry out and effectuate the
purposes and intents of this Assumption Agreement. This Assumption Agreement may
not be amended or modified in any respect without the prior written consent
(evidenced as provided in the Indenture) of the Holders of not less than a
majority in principal amount of the Notes outstanding (as defined in the
Indenture); provided, however, that without the written consent of the Holders
of all of the Notes outstanding, no such amendment or modification shall be
effective which will change any of the provisions of sections 1, 2, 4 or S of
this Assumption Agreement. The Obligor agrees to file with the Indenture Trustee
a duplicate original of each such consent.
B-4
6091.50.2831.57:1
<PAGE>
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By
-----------------------------
Title:
ATTEST:
- -----------------------
Title:
B-5
<PAGE>
EXHIBIT C
UNDIVIDED INTEREST SUPPLEMENTAL INDENTURE
SUPPLEPIENTAL INDENTURE NO. dated as of _________ to the TRUST
INDENTURE, MORTOAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS (hereinafter,
together with supplements thereto, the Indenture) dated as of July 31, 1986,
between THE FIRST NATIONAL BANK OF BOSTON (FNB), not in its individual capacity,
but solely as trustee (the Owner Trustee) under a Trust Agreement, dated as of
July 31, 1986, between FNB, whose address is 100 Federal Street, Boston,
Massachusetts 02110, and Chase Manhattan Realty Leasing Corporation, and
CHEMICAL BANK, a New York banking corporation (the Indenture Trustee), whose
address is 55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, in accordance with Section 9(j) of the Facility Lease, the
Owner Trustee is obligated, in certain cases, to cause the Undivided Interest
and the Real Property Interest to be subjected to the Lien of the Indenture; and
WHEREAS, in order to further secure the obligations referred to in the
Indenture, the Owner Trustee desires to grant to the Indenture Trustee the
security interest and realty mortgage herein provided and the parties hereto
desire that the Indenture be regarded (i) to the extent that the Undivided
Interest constitutes personal property, as a "security agreement" and as a
"financing statement" under the Uniform Commercial Code and (ii) to the extent
that the Undivided Interest and the Real Property Interest constitute fixtures
or real property, as a realty mortgage;
C-1
<PAGE>
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.1. The Indenture. This supplemental Indenture No.______ shall
be construed as supplemental to and amendatory of the Indenture and shall form a
part thereof, and the Indenture is hereby incorporated by reference herein and
is hereby ratified, approved and confirmed.
SECTION 1.2. Definitions. Capitalized terms used herein, but which are
not otherwise defined herein shall have the meanings set forth in Appendix A to
the Indenture.
SECTION 1.3. Recording. Information. The Indenture was recorded on
___________ , in Maricopa County, Arizona [describe] (specify other recorded
documents) [specify other places of recordation).
SECTION 1.4. Governing Law. This supplemental Indenture No. and the
Indenture shall, for all purposes,. be construed in accordance with and governed
by the laws of the State of New York except to the extent that the laws of the
State of Arizona shall be mandatorily applicable thereto.
SECTION 1.5. Security Interest and Realty Mortgage. As further security
for the due and punctual payment of the principal of and premium, if any, and
interest on the Notes according to their respective terms and effect and the
performance and observance by the Owner Trustee of all the covenants and
agreements made by it or on its behalf in the Notes, the Participation Agreement
and the Indenture, the Owner Trustee does, by its execution and delivery hereof,
hereby grant a security interest in, bargain, convey, warrant, assign, transfer,
mortgage, pledge and set over unto the Indenture Trustee, and to its successors
and assigns in trust, the following (which shall be a part of the Lease
Indenture Estate for all purposes of the Indenture and the other Transaction
Documents):
C-2
<PAGE>
(l) the Undivided Interest and the Real Property Interest,
including, but without limitation, the Owner Trustee's share of all
Capital Improvements (including any which constitute fixtures under
Applicable Law) now existing or which hereafter may become part of the
Undivided Interest;
(2) all right, title and interest of the Owner Trustee in, to
and under (a) the Bill of Sale, (b) the ANPP Participation Agreement,
(a) the need and (C) the Assignment of Beneficial Interest, including,
but without limitation, all amounts of Rent, insurance proceeds and
condemnation, requisition and other awards and payments of any kind for
or with respect to any part of the Lease Indenture Estate as
contemplated in such documents;
(3) all other property of every kind and description, real,
personal and mixed, and interests therein now held or hereafter acquired
by the Owner Trustee pursuant to any term of any Transaction Document,
whether or not subjected to the Lien of the Indenture by an indenture
supplemental hereto; and
(4) all proceeds of the foregoing;
but excluding, however, (i) such of the foregoing as, in accordance with the
terms of the Indenture, shall have been released from the lien of the Indenture
and distributed to the Owner Trustee or the Owner Participant, as the case may
be, and (ii) any and all Excepted Payments; and subject, however, to (x) the
terms and provisions of the Indenture and (y) the rights of the Lessee under the
Facility Lease.
TO HAVE AND TO HOLD all the aforesaid proper ties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in the
Indenture.
C-3
<PAGE>
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing; the Owner Trustee may exercise all of its rights
under the documents specified in clause (2) above to the same extent as if its
right, title and interest therein had not been assigned to the Indenture Trustee
to the extent set forth above, except that the Indenture Trustee shall receive
all payments of Assigned Payments and all moneys and securities required to be
held by or deposited with the Indenture Trustee hereunder.
The Owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
SECTION 1.6. Real Estate Remedies. In addition to the remedies
specified in the Indenture (including but without limitation Section 6.4
thereof) or otherwise available pursuant to Applicable Law, to the extent that
any portion of the Lease Indenture Estate constitutes fixtures or real property,
the Indenture and this Supplemental Indenture No. shall be, and shall be deemed
to be, a realty mortgage and assignment of rents with respect to all items of
real property and fixtures and the Indenture Trustee shall have all the rights,
remedies and benefits of a mortgage of real property under Applicable Law
(including, but without limitation, rights and remedies pursuant to Arizona
Revised Statutes Section 33-702.8, or any comparable successor provision) and
the Owner Trustee shall be and be deemed to be, a mortgagor with respect to such
fixtures and real property.
C-4
6091.50.2831.57:1
<PAGE>
SECTION 1.7. Certain Releases. In case a release from the
security and other interests created by Section 1.5 hereof by the Indenture
Trustee of a portion of the undivided Interest shall be necessary in order to
enable the Owner Trustee or the Lessee to perform its covenants and agreements
set forth in the Transaction Documents or in the ANPP Participation Agreement or
the Owner Trustee or the Lessee to carry out any action required by Section 8 of
the Facility Lease, the Indenture Trustee shall execute and deliver to, or as
directed by, the Owner Trustee or the Lessee an appropriate instrument or
instruments provided to the Indenture Trustee by the Owner Trustee or the Lessee
(in due form for filing or recording), so releasing a portion of the Undivided
Interest, provided, however, that the Indenture Trustee shall have first
received an Officer's Certificate in form and substance reasonably satisfactory
to the Indenture Trustee, executed by the Lessee, accompanied by an opinion of
counsel reasonably satisfactory to the Indenture Trustee, each of which shall be
to the effect that all necessary actions have been or are being taken
simultaneously with such release in connection with the proposed action to
comply with the terms of this Indenture and Section 8 of the Facility Lease.
SECTION 1.8. Severance. The parties hereto understand and
agree that Unit 1 and the Common Facilities (including the Undivided Interest),
each Capital Improvement and each part thereof is or shall be severed, and shall
be and remain severed, from the real estate constituting the PVNGS Site and even
if physically attached thereto, shall retain the character of personal property,
shall be treated as personal property with respect to the rights of all persons
whomsoever, shall not be or become fixtures or otherwise part of the real estate
constituting the PVNGS Site, and, by virtue of its nature as personal property,
shall not be affected in any way by any instrument dealing with the real estate
constituting the PVNCS Site.
C-5
6091.50.2831.57:1
<PAGE>
SECTION 1.9. ANPP Participation Agreement. The provision by
the Owner Trustee to the Indenture Trustee of the realty mortgage and the
security interest contemplated by this Supplemental Indenture No. __ is in
compliance with the provisions of the ANPP Participation Agreement, including,
but without limitation, Section 15.6.3.2 thereof.
SECTION 1.10. Appointment of Co-Trustees or Separate Trustees.
(a) At any time or times, when necessary or prudent or for the
purpose of meeting the legal requirements of any jurisdiction in which any part
of the Lease Indenture Estate may, at any time, be located, the Indenture
Trustee, except as set forth in subsection (b)(6) of this section 1.10, may, and
upon receipt of a Directive shall, appoint one or more Persons to act as
co-trustee of all or any such part of the Lease Indenture Estate or to act as
separate trustee of any property constituting part thereof, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons any property, title, right or power deemed necessary or
desirable, subject to the remaining provisions of this Section 1.10. Except as
set forth in subsection (b)(6) of this Section 1.10 the Owner Trustee shall join
in any such appointment upon the request of the Indenture Trustee, but such
joining will not be necessary for the effectiveness of such appointment.
(b) Every separate trustee or co-trustee shall be appointed
subject to the following terms:
(1) The rights, power., duties and obligations conferred or
imposed upon any such separate trustee or co-trustee shall not be
greater than those conferred or imposed upon the Indenture Trustee, and
such rights and powers shall be exercisable only jointly with the
Indenture Trustee, except to the extent that, under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event, except as set forth in subsection (b)
(6) of this Section 1.10, such rights and powers shall be exercised by
such separate trustee or co-trustee subject to the provisions of
subsection (b) (4) of this Section 1.10.
C-6
<PAGE>
(2) The Indenture Trustee may at any time, by an instrument in
writing executed by it, accept the resignation of, and may (and upon the
receipt of a Directive, shall) remove any separate trustee or co-trustee
appointed under this section 1.10.
(3) No trustee under the Indenture and this Supplemental
Indenture No.____ shall be liable by reason of any act or omission of
any other trustee or co-trustee under this Indenture.
(4) Except as set forth in subsection (b) (6) of this Section
1.10, no power given to such separate trustee or co-trustee shall be
separately exercised hereunder by such separate trustee or co-trustee
except with the consent in writing of the Indenture Trustee.
(5) The Indenture Trustee shall maintain custody of all money
and securities.
(6) Notwithstanding anything contained to the contrary in this
Section 1.10, to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone,
jointly or through a separate trustee under the direction and control
of the Indenture Trustee, the Owner Trustee, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such
jurisdiction, which separate trustee shall have full power and
authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but subject
to the same limitations in any exercise of his power and authority as
those to which the Indenture Trustee is subject.
C-7
<PAGE>
(c) Upon the acceptance in writing of such appointment by any such
separate trustee or co-trustee, it shall be vested with the estates or property
to which its appointment relates as specified in the instrument of appointment,
subject to all the terms of the Indenture and this Supplemental Indenture No.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Indenture Trustee, its agent or attorney-in-fact, with full power and authority,
to the extent not prohibited by Law, to do any lawful act under or in respect of
the Indenture and this Supplemental Indenture No.______ on its behalf and in its
name. If a separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
SECTION 1.11. Separability of Provisions. In case any one or more of
the provision. of this Supplemental Indenture No. __ or any application thereof
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions hereof and the Indenture
and any other application hereof and thereof shall not in any way be affected or
impaired.
SECTION 1.12. Counterpart Execution. This Supplemental Indenture No. __
may be executed in any number of counterparts and by the different parties
hereto and thereto on separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
C-8
<PAGE>
IN WITNESS WHEREOF, the owner Trustee and the Indenture Trustee have
each caused this Indenture to be duly executed by their respective officers
thereunto duly authorized, all as of the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON not
in its individual capacity, but
solely as Owner Trustee under the
Trust Agreement dated as of July 31,
1986, with Chase Manhattan Realty
Corporation
By
--------------------------------
Assistant Vice President
CHEMICAL BANK
By
---------------------------------
Vice President
C-9
<PAGE>
SCHEDULE 1
to
INDENTURE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) 1.133333% undivided interest
in and to the property described under A below and (ii) a .377777% individed
interest in and to the property described in B below.
A. Unit 1 of the Palo Verde Nuclear Generating station
(PVNGS)1 located in Maricopa County, Arizona, approximately 55 miles west of the
City of phoenix, Arizona, and approximately 16 miles west of the City of
Buckeye, Arizona, consisting of:
I. Unit 1 Combustion Engineering "System 80" pressurized water
reactor nuclear steam supply system (the NSSS). The N858 is
comprised Of a reactor vessel containing 241 fuel assemblies
with approximately 100 tons of enriched uranium (fuel
assemblies, however, are not part of Unit 1 and are not
included in the Undivided Interest being sold), two steam
generators, tour reactor coolant pumps and various additional
systems and subsystems. The licensed thermal rating of the
NSSS is 3800 MW.
II. Unit 1 GE TC6F-43, 1800 RPM tandem-compound, six flow, reheat
turbine-generator including turbine, generator, moisture
separator-reheater exciter, controls, and auxiliary
subsystems. The turbine-generator is conductor cooled and
rated at 1,554 MVA at 24,000 V, 3 phase, 60 Hz, 1.5 in Kg ABS
back pressure, and approximately 1,363 Mw maximum gross
electric output.
<PAGE>
III. Unit 1 146 ft. inside diameter, steel-lined, prestressed
concrete cylindrical containment building with a hemispherical
dome designed for 60 psig;. The containment building houses
the reactor system.
IV. Unit 1 auxiliary Systems and equipment including engineered
safeguards systems, reactor auxiliary systems and
turbine-generator auxiliary systems associated with items I,
II, and III above, extending to and including the Unit 1
start-up transformer.
V. Unit 1 cooling tower system consisting of three (3) mechanical
draft cooling towers, including a closed cycle circulating
water system, make-up water systems and essential spray ponds.
VI. Unit 1 radioactive waste treatment system, including liquid,
gaseous, and solid waste subsystems, controls,
instrumentation, storage, handling and shipment facilities.
VII. Unit 1 emergency diesel-generator system, including a
diesel-generator building which contains two diesel
generators, fuel oil systems, storage tanks, control and
instrumentation systems and other equipment.
VIII. Unit 1 internal communication systems, including associated
interconnections and computer data links.
-2-
<PAGE>
BUT EXCLUDING:
I. Nuclear fuel for Unit 1, including spare fuel assemblies.
II. Spare Parts (Unit 1).
III. Transmission facilities (including any and all facilities and
equipment providing interconnection between the Unit 1 turbine
generator and the ANPP nigh Voltage Switchyard, including
step-up transformers and standby equipment and Systems).
IV. Oil and diesel fuel inventories (Unit1)
B. All PVNGS common facilities, INCLUDING LIMITED TO:
BUT NOT LIMITED TO:
I. Surveillance systems, including associated radioactive
monitoring systems and equipment.
II. Water treatment facilities and transport systems for supply of
waste water effluent.
III. Warehouses and related storage facilities and equipment.
BUT EXCLUDING:
I. Nuclear fuel, including spare fuel assemblies.
II. All transmission and ANPP High Voltage Switchyard facilities.
III. Administration Building.
-3-
<PAGE>
IV. Administration Annex Building.
V. Technical Support Center.
VI. Visitor Center.
VII. External communication Systems and equipment, including
associated interconnections and computer data links.
VIII. Parking lot improvements, road improvements, fencing and
dikes.
IX. Spare parts (common facilities).
X. Simulator.
XI. Oil and diesel fuel inventories.
XII. Real property, beneficial interest in Title USA Company of
Arizona Trust No. 530, and Project Agreement interests
described in Exhibit A.
-4-
<PAGE>
SCHEDULE 2
to
INDENTURE
REAL ESTATE INTEREST DESCRIPTION
The Real Estate Interest is a (i) .333333% undivided interest
in the land described in I below, a (ii) .377777% undivided interest in the
rights and interests described in I! below, and (iii) a .377777% undivided
interest in the right and interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Qua and Salt River Base and Meridian, Maricopa
County; Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1)South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 3: The East half of Section Four (4), Township One (1) South, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL MC. 4: The West half of Section Twenty-six (26), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of Section 27.
<PAGE>
PARCEL NO. 6: The Southeast quarter of Section Twenty-eight (28), Township One
(1) North, Range Six (6) West of the Gila and salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
PARCEL NO. 7: The East half of Section Thirty-three (33), Township One (1)
North, Range Six (6) West of the Qua and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO, 8: All of Section Thirty-four (34), Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range Six (S) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township One (1) North, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGINNING at the Southeast corner of the said East half of the
Southwest quarter of Section 23; thence West, an assumed bearing along
the South line of the said East half of the Southwest quarter of Section
23, for a distance of 762.04 feet; thence
-2-
<PAGE>
North 0 degrees 03 minutes 39 seconds West; parallel to the East line of
the said East half of the Southwest quarter of Section 23, for a
distance of 1946.46 feet to a point on the South right-of-way line of
the 200 foot wide HASSAYAMPA-SALOME HIGHWAY, as recorded in nook 12 of
Road Maps, page 62, Maricopa County Recorder, Maricopa county1 Arizona;
thence continuing North 0 degrees 03 minutes 39 seconds West for a
distance of 234.15 feet to a point on the North right-of-way line of
said highway; thence south 56 degrees 43 minutes 35 seconds East, along
said North right-of-way line for a distance of 892.17 feet to a point on
the said East line of the East half of the Southwest quarter of Section
23; thence South 0 degrees 03 minutes 39 seconds East, along said East
line for a distance of 234.15 feet to a point on the said South
right-of-way line; thence continuing South 0 degrees 03 minutes 39
seconds East for a distance of 1483.31 feet to the true point of
beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 52, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (1) south, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMP PUMPING STATION AND EFFLUENT PIPELINE
All real property, leases, licenses, easements, rights-of-way
and other property held by Title USA Company of Arizona Trust No. 530
established by that certain Trust Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.
-3-
<PAGE>
III. MISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the nuclear Plant Site (as
defined in the ANPP Participation Agreement).
-4-
<PAGE>
When Recorded, Return to: Greg R. Nielsen
SNELL & WILMER
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
SUPPLEMENTAL INDENTURE NO.1
Dated as of November 18, 1986
To
TRUST INDENTURE MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of July 31, 1986
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of July 31,
1986 with Chase Manhattan
Realty Leasing Corporation
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Original Indenture Recorded August 1, 1986, as
Instrument No. 86-404572 in Maricopa County, Arizona
Recorder's Office.
================================================================================
<PAGE>
SUPPLEMENTAL INDENTURE No. 1 dated as of November 18, 1986 to
Trust Indenture, Mortgage, Security Agreement and Assignment Of Rents dated as
of July 31, 1986, between THE FIRST NATIONAL BANK OF BOSTON, a national banking
association (FNB), not in its individual capacity, but solely as Owner Trustee
(the Owner Trustee) under a Trust Agreement dated as of July 31, 1986, between
FNB, whose address is 100 Federal Street, Boston, Massachusetts 02110, with
Chase Manhattan Realty Leasing Corporation, a New York corporation, and CHEMICAL
BANK, a New York banking corporation (the Indenture Trustee), whose address is
55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee and the Indenture Trustee have
entered into a Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of July 31, 1986 (the Indenture) pursuant to which the Owner
Trustee has issued the Initial Series Note;
WHEREAS, Section 3.5(1) of the Indenture provides, among other
things, that the Initial Series Note may be refunded with Additional Notes;
WHEREAS, Section 3.5(4) of the Indenture provides, among other
things, that the Owner Trustee and the Indenture Trustee may enter into
indentures supplemental to the Indenture for, among other things, the purpose of
establishing the terms, conditions and designations of Additional Notes;
WHEREAS, the Owner Trustee desires to issue Additional Notes
to effect a refunding of the Initial Series Note and to enter into this
Supplemental Indenture No. 1 to establish the terms, conditions and designations
of such Additional Notes; and
WHEREAS, Section 10.l(viii) of the Indenture provides that,
without the consent of Holders of the Notes Outstanding, the Indenture Trustee
may, with the written consent of the Owner Trustee, from time to time and at any
time execute a supplement to the Indenture in order to evidence the issuance of
and to provide the terms of Additional Notes;
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:
<PAGE>
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A to the Indenture.
SECTION 2. Terms, Conditions and Designations of the Additional Notes.
(a) The Fixed Rate Notes.
There is hereby created and established a separate series of
Notes of the Owner Trustee designated "Nonrecourse Promissory Notes, Fixed Rate
Series" herein referred to as the Fixed Rate Notes. The Fixed Rate Notes shall
be payable as to principal and bear interest on the principal amount thereof as
follows:
Fixed Rate Note Interest Principal
Due Rate Amount
--------------- -------- ---------
January 15, 1992 8.05% $l,501,000
January 15, 1997 8.95% $5,626,000
January 15, 2015 10.15% $32,873,000
------------
$40,000,000
============
Each Fixed Rate Note shall bear interest on the principal amount thereof from
time to time Outstanding from the date thereof until paid at the rate of
interest set forth therein. The principal amount of each Fixed Rate Note shall
be payable as set forth in Schedule 1 attached thereto, as such Schedule may be
adjusted, in the case of the Fixed Rate Note due January 15, 2015, from time to
time in accordance with the terms of the Indenture, this Supplemental Indenture
No. 1 and such Fixed Rate Note. Installments of interest on and principal of
(and premium, if any, on) each Fixed Rate Note shall be due and payable at the
rates of interest and on the dates specified in such Fixed Rate Note. The Fixed
Rate Note due January 15, 1992 shall be substantially in the form of Exhibit A-l
to this Supplemental Indenture No. 1. The Fixed Rate Note due January 15, 1997
shall be substantially in the form of Exhibit A-2 to this Supplemental Indenture
No. 1. The Fixed Rate Note due January 15, 2015 shall be substantially in the
form of Exhibit A-3 to this Supplemental Indenture No. 1.
-2-
<PAGE>
(b) Certain Adjustments to Amortization Schedules.
The schedule of principal amortization attached to the Fixed
Rate Note due January 15, 2015 may be adjusted at the discretion of the Owner
Trustee at one time prior to July 15, 1997; provided, however, that no such
adjustment shall be made by the Owner Trustee which will increase or reduce the
average life of such Fixed Rate Note (calculated in accordance with generally
accepted financial practice from the date of initial issuance) by more than two
years; provided, however, such adjustment may be made only in connection with an
adjustment to Basic Rent pursuant to Section 3(d) of the Facility Lease. If the
Owner Trustee shall elect to make the foregoing adjustment, the Owner Trustee
shall deliver to the Indenture Trustee and to the Lessee at least 60 days prior
to the first payment date (specified on the schedule to such Fixed Rate Note)
proposed to be affected by such adjustment, a certificate of the Owner Trustee
(x) stating that the Owner Trustee has elected to make such adjustment, (y)
setting forth the revised schedule of principal amortization for such Fixed Rate
Note and (2) attaching calculations showing that the average life of such Fixed
Rate Note will not be reduced or increased except as permitted by this paragraph
(b). The Indenture Trustee may rely on such Owner Trustee certificate and shall
have no duty with respect to the calculations referred to in the foregoing
clause (z).
SECTION 3. Miscellaneous.
(a) Effective Date of Supplemental Indenture.
This Supplemental Indenture No. 1 shall be and become effective
upon the execution hereof by the parties hereto.
(b) Counterpart Execution.
This Supplemental Indenture No. 1 may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
(c) Execution as Supplemental Indenture.
-3-
<PAGE>
This Supplemental Indenture No. 1 is executed and shall be
construed as an indenture supplemental to the Indenture and, as provided in the
Indenture, this Supplemental Indenture No. 1 forms a part thereof.
(d) Disclosure.
Pursuant to Arizona Revised Statutes Section 33-401, the
beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One chase
Manhattan Plaza, New York, New York 10005. A copy of the Trust Agreement is
available for inspection at the offices of the Owner Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
IN WITNESS WHEREOF, the Owner Trustee and the Indenture Trustee
have each caused this Supplemental Indenture No. 1 to be duly executed by their
respective officers thereunto duly authorized, all as of the date first set
forth above.
THE FIRST NATIONAL BANK OF
BOSTON, not in its individual capacity,
but solely as
Owner Trustee under the
Trust Agreement dated as of
July 31, 1986, with Chase
Manhattan Realty Leasing
Corporation
By /s/ Martin P. Henry
----------------------------
Assistant Vice President
CHEMICAL BANK,
By /s/ T. J. Foley
--------------------------
Authorized Officer
-4-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of November, 1986, before me personally came
MARTIN P. HENRY, to me known, who, being by me duly sworn, did acknowledge,
depose and say that he resides at Boston, Massachusetts; that he is an Assistant
Vice President of THE FIRST NATIONAL BANK OF BOSTON, a national banking
association, described in and which executed the foregoing instrument; and that
he signed his name thereto on behalf of said association by authority of the
Board of Directors of such association.
/s/ David A. Spivak
----------------------------
Notary Public
DAVID A. SPIVAK
(NOTARIAL SEAL) Term Expires: Notary Public, State of New York
No. 31-4688468
Qualified in New York County
Commission Expires March 30, 1987
-5-
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 24th day of November, 1986, before me personally came
T.J. Foley, to me known, who, being by me duly sworn, did acknowledge, depose
and say that he resides at Bethpage, New York; that he is a Vice President of
CHEMICAL RANK, a New York banking corporation, described in and which executed
the foregoing instrument; and that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such corporation.
/s/ Delia T. Santiago
--------------------------
Notary Public
[NOTARIAL SEAL} Term Expires:
Delia T. Santiago
Notary Public, State of New York
No. 41-3151160
Qualified in Queens County
Commission Expires, March 30, 1987
-6-
<PAGE>
EXHIBIT A-l
TO SUPPLEMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 1992)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR
OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1992)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK or , not in its individual capacity, but
solely as Owner Trustee (Owner Trustee) under a Trust Agreement dated as of July
31, 1986 with Chase Manhattan Realty Leasing Corporation (the Owner
Participant), hereby promises to pay to First PV FUNDING CORPORATION, or
registered assigns, the principal sum of $1,501,000 (One Million Five Hundred
One Thousand Dollars) on January 15, 1992 together with interest (computed on
the basis of a 360-day year of twelve 30-day months) on the aggregate amount of
such principal sum remaining unpaid from time to time from the date of this
Fixed Rate Note until due and payable, in arrears, at the rate of 8.05% per
annum. Payments of principal installments of this Fixed Rate Note shall be made
in the "principal amount payable" and on the "payment dates" specified in
Schedule 1 hereto. Payments of accrued interest on this Fixed Rate Note shall be
made on January 15 and July 15 in each year commencing January 15, 1987 to and
including the last "payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.05% (computed
on the basis of a.360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
<PAGE>
In the event any date on which a payment is due under this Fixed
Rate Note is not a Business Day, then payment thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Molder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document on for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
-2-
<PAGE>
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note i5 one of the Fixed Rate Notes referred to
in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note is not subject to prepayment in whole or in
part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee of the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
-3-
<PAGE>
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
-4-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed Rate
Note to be duly executed as of the date hereof
THE FIRST NATIONAL BANK OF
BOSTON, not in its individual
capacity, but solely as Owner
Trustee under a Trust Agreement
dated as of July 31, 1986 with
Chase Manhattan Realty Leasing
Corporation
By
-----------------------------
Assistant Vice President
This Note is one or the series of Notes referred to therein and in the
within-mentioned Indenture
CHEMICAL BANK,
as Indenture Trustee
By
-----------------------------
Vice President
-5-
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1992)
Schedule of Principal Amortization
$1,501,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
- ---------------- -------------- -----------
July 15, 1990 $229,000
January 15, 1991 407,000
July 15, 1991 424,000
January 15, 1992 441,000
----------
Principal Amount $1,501,000
==========
Page 1 of 1
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK as Collateral Trust Trustee
pursuant to the Collateral Trust Indenture dated as of December 16, 1985, as
heretofore amended and supplemented, among First PV, Public Service Company of
New Mexico and said Collateral Trust Trustee, without recourse, the Fixed Rate
Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
-------------------------
President
<PAGE>
EXHIBIT A-2
TO SUPPLEMENT
NO.1
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, l997)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1997)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of July 31, 1986 with Chase Manhattan Realty Leasing Corporation (the
Owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of $5,626,000 (Five Million Six Hundred
Twenty Six Thousand Dollars) on January 15, 1997 together with interest
(computed on the basis of a 360-day year of twelve 30-day months) on the
aggregate amount of such principal sun remaining unpaid from time to time from
the date of this Fixed Rate Note until due and payable, in arrears, at the rate
of 8.95% per annum. Payments of principal installments of this Fixed Rate Note
shall be made in the "principal amount payable" and on the "payment dates"
specified in Schedule 1 hereto. Payments of accrued interest on this Fixed Rate
Note shall be made on January 15 and July 15 in each year commencing January 15,
1987 to and including the last "payment data" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.95% (computed
on the basis of a 360-day year of twelve 30- day months) for the period during
which any such principal, premium or interest shall be overdue.
<PAGE>
In the event any date on which a payment is due under this Fixed
Rate Note is not a Business Day, then payment thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture, The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder:
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's office, or as otherwise provided in the Indenture.
-2-
<PAGE>
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred to
in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
-3-
<PAGE>
This Fixed Rate Note may be prepaid in whole or in part at any
time on or after January 15, 1992 by the Owner Trustee upon the giving of not
less than 30 days' notice (as provided in the Indenture) and at the following
prepayment prices (expressed as a percentage of the unpaid principal amount
hereof), together with interest accrued to the date fixed for prepayment:
Twelve Month Redemption
Period Beginning Price
---------------- ----------
January 15, 199 102.557%
January 15, 199 101.279
and thereafter at the principal amount thereof, together with interest accrued
to the date fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may1 subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
-4-
<PAGE>
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
-5-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed Rate
Note to be duly executed as of the date hereof
THE FIRST NATIONAL RANK OF
BOSTON, not in its individual
capacity, but solely as Owner
Trustee under a Trust Agreement
dated as of July 31, 1986 with
Chase Manhattan Realty Leasing
Corporation
By
-----------------------------
Assistant Vice President
This Note is one of the series of Notes referred to therein and
in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
-----------------------------
Vice President
-6-
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1997)
Schedule of Principal Amortization
$5,626,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
July 15, 1992 $ 458,000 $
January 15, 1993 479,000
July 15, 1993 500,000
January 15, 1994 523,000
July 15, 1994 546,000
January 15, 1995 570,000
July 15, 1995 596,000
January 15, 1996 623,000
July 15, 1996 651,000
January 15, 1997 680,000
----------
Principal Amount $5,626,000
==========
Page 1 of 1
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
------------------------
President
<PAGE>
EXHIBIT A-3
TO SUPPLEMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 2015)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 2015)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL RANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of July 31, 1986 with Chase Manhattan Realty Leasing Corporation (the
Owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of $32,873,000 (Thirty Two Million Eight
Hundred Seventy Three Thousand Dollars) on January 15, 2015 together with
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the aggregate amount of such principal sum remaining unpaid from time to time
from the date of this Fixed Rate Note until due and payable, in arrears, at the
rate of 10.15% per annum. Payments of principal installments of this Fixed Rate
Note shall be made in the "principal amount payable" and on the "payment dates"
specified in Schedule 1 hereto, as such Schedule may be revised from time to
time in accordance with the Indenture, Supplemental Indenture No. 1 thereto and
the terms contained herein. Payments of accrued interest on this Fixed Rate Note
shall be made on January 15 and July 15 in each year, commencing January 15,
1987 to and including the last "payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
<PAGE>
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 11.15%
(computed on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this Fixed
Rate Note is not a Business Day, then payment thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
look solely to the Lessee for such payment.
-2-
<PAGE>
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture1 on presentment of this Fixed Rate Note at
the Indenture Trustee's office, or as otherwise provided in the Indenture.
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1997, in connection with an adjustment to Basic Rent under
Section 3 (d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred to
in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series nay
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Molders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
-3-
<PAGE>
This Fixed Rate Note is subject to prepayment in whole as
contemplated by Section 5.2 of the Indenture and in the circumstances therein
described. In addition, this Fixed Rate Note may be prepaid in whole or in part
at any time on or after January is, 1992 by the Owner Trustee upon the giving of
not less than 30 days' notice (as provided in the Indenture) and at the
following prepayment prices (expressed as a percentage of the unpaid principal
amount hereof), together with interest accrued to the date fixed for prepayment:
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 105.272
January 15, 2000 104.872
January 15, 2001 104.466
January 15, 2002 104.060
January 15, 2003 103.654
January 15, 2004. 103.248
January 15, 2005 102.842
January 15, 2006 102.436
January 15, 2007 102.030
January 15, 2008 101.624
January 15, 2009 101.218
January 15, 2010 100.812
January 15, 2011 100.406
and thereafter at the principal amount thereof, together with interest accrued
to the date fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
-4-
<PAGE>
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
-5-
<PAGE>
IN WITNESS WHEREOF, the owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF
BOSTON, not in its individual
capacity, but solely as Owner
Trustee under a Trust Agreement
dated as of July 31, 1986 with
chase Manhattan Realty Leasing
Corporation
By
-----------------------------
Assistant Vice President
This Note is one of the series of Notes referred to therein and
in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
----------------------------
Vice President
-6-
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2015)
Schedule of Principal Amortization
$32,873,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
July 15, 1997 $ 710,000 $
January 15, 1998 746,000
July 15, 1998 784,000
January 15, 1999 824,000
July 15, 1999 866,000
January 15, 2000 604,000
July 15, 2000 675,000
January 15, 2001 639,000
July 15, 2001 718,000
January 15, 2002 660,000
July 15, 2002 727,000
January 15, 2003 656,000
July 15, 2003 736,000
January 15, 2004 669,000
July 15, 2004 781,000
January 15, 2005 711,000
July 15, 2005 829,000
January 15, 2006 754,000
July 15, 2006 880,000
January 15, 2007 800,000
July 15, 2007 934,000
January 15,2008 850,000
July 15, 2008 992,000
January 15, 2009 902,000
July 15, 2009 1,053,000
January 15, 2010 957,000
July 15, 2010 1,118,000
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2015)
Schedule of Principal Amortization
(Continued)
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
January 15, 1998 1,016,000
July 15, 1998 1,187,000
January 15, 1999 1,078,000
July 15, 1999 1,260,000
January 15, 2000 1,145,000
July 15, 2000 1,337,000
January 15, 2001 1,214,000
July 15, 2001 1,419,000
January 15, 2002 1,642,000
-----------
Principal Amount $32,873,000
===========
-2-
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
------------------------
President
When recorded, return to: Greg A. Nielsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona
===============================================================================
ASSIGNMENT, ASSUMPTION
AND
FURTHER AGREEMENT
dated as of July 31, 1986
between
PUBLIC SERVICE COMPANY OF NEW MEXICO,
and
THE FIRST NATIONAL BANK OF DBOSTON,
not in its individual capacity, but solely as Owner Trustee under
a Trust Agreement, dated as of July 31, 1986, with Chase
Manhattan Realty Leasing Corporation
================================================================================
Sale and Leaseback of a 1.133333% Undivided Interest
in Palo Verde Nuclear Generating Station Unit 1
and a .377777% Undivided Interest in Certain Common
Facilities
================================================================================
6091.5O.2831.56:l
<PAGE>
ASSIGNMENT, ASSUMPTION AND FURTHER AGREEMENT, dated as of July
31, 1986, between PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(PNM), and TEE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity,
but solely as Owner Trustee (the Owner Trustee), under a Trust Agreement, dated
as of July 31, 1986, with Chase Manhattan Realty Leasing Corporation.
W I T N E S S E T H:
WHEREAS, PNM and the other ANPP Participants are parties to the
ANPP Participation Agreement (such terms and all other terms used in these
recitals without definition having the respective definitions to which reference
is made in Article I below); and
WHEREAS, PNM has sold, and the Owner Trustee has purchased, the
Undivided Interest and the Real Property Interest for and in consideration of
the payment to PNM by the Owner Trustee of the Purchase Price, the purchase
price of the Real Property Interest and the assignments and assumptions herein
set forth;
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:
ARTICLE I
DEFINITIONS
For purposes hereof, capitalized terms used herein which are not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A hereto. References in this Agreement to articles, sections and
clauses are to articles, sections and clauses in this Agreement unless otherwise
indicated.
609l.50.2831.56:1
<PAGE>
ARTICLE II
NONPARTITIONMENT
SECTION 2.01. Nonpartitionment. The Owner Trustee hereby waives
any rights it may have to partition Unit 1 or the Common Facilities1 whether by
partitionment in kind or by sale and division of proceeds, and further agrees
that it will not resort to any action at law or in equity to partition Unit 1 or
the Common Facilities, and it waives the benefits of all laws that may now or
hereafter authorize such partition for a term (i) which shall be coterminous
with the term of the ANPP Participation Agreement or (ii) which shall be for
such lesser period as may be required under Applicable Law.
ARTICLE III
ASSIGNMENTS; EXERCISE OF RIGHTS
SECTION 3.01. Assignment of Warranties. PNM hereby ASSIGNS to
the Owner Trustee an undivided interest, equal to the applicable Share, in, to
and under any and all warranties of and other claims against dealers,
manufacturers, vendors, contractors and subcontractors relating to Unit 1 and
the Common Facilities.
SECTION 3.02. Assignment of the ANPP Participation Agreement.
(a) PNM hereby ASSIGNS to the Owner Trustee an undivided interest, in, to and
under all of PNM's rights under the ANPP Participation Agreement, equal to
1.133333% to the extent that such rights relate to Unit 1 (including, but
without limitation, a percentage entitlement equal to 1.133333%, of the Net
Energy Generation and Available Generating Capability (as each such term is
defined in the ANPP Participation Agreement) of Unit 1) and equal to .377777% to
the extent such rights relate to the Common Facilities.
(b) The Owner Trustee hereby ASSIGNS to PNM the rights assigned
under paragraph (a) until the Lease Termination Date.
-2-
6091.50.2831.56:1
<PAGE>
SECTION 3.03. Exercise of Rights as Participant under the ANPP
Participation Agreement.(a) Except as provided in Sections 15.2.2, 15.6.4 and
Section 15.10 of the ANPP Participation Agreement (or any comparable successor
provision) PNM shall be and remain the sole "Participant" for all purposes of
the ANPP Participation Agreement and the sole representative (with power to
bind) in all dealings with the other ANPP Participants in relation to the
Undivided Interest, the Real Property Interest and the rights assigned to the
Owner Trustee pursuant to this Agreement; provided, however, that the foregoing
shall not limit in any way the effect of Sections 15 or 16 of the Facility Lease
or any liability or obligation that PNM may incur to the Owner Trustee or the
Owner Participant under any Transaction Document as a result thereof (including,
but without limitation, any liability that PNM may incur under Section 16 of the
Facility Lease as the result of an Event of Default).
(b) Unless the ANPP Participation Agreement shall otherwise
permit, any right conferred on the Owner Trustee by section 15.2.2 of the ANPP
Participation Agreement shall be exercised as required by Section 15.6.3.3 of
said Agreement.
(c) The provisions of this Section 3.03 shall remain in full
force and effect until such time as the ANPP Administrative Committee or the
ANPP Participants shall otherwise consent.
ARTICLE IV
ASSUMPTION; RELEASE
SUCTION 4.01. Assumption by Owner Trustee. Except as
contemplated by Section 5(a) of the Facility Lease, the Owner Trustee agrees
that, effective on and as of the Lease Termination Date (unless a transferee of
the Undivided Interest and the Real Property Interest (an ANPP transferee) shall
have qualified under Section 15.10 of the ANPP Participation Agreement or any
comparable successor provision), unless (i) a Default or Event of Default shall
-3-
6091.50.2831.56:1
<PAGE>
have occurred and be continuing or an Event of Loss or Deemed Lass Event shall
have occurred or (ii) such Lease Termination Date shall have occurred by reason
of a termination of the Facility Lease pursuant to Section 16 thereof, the Owner
Trustee shall assume and agree to pay, perform and discharge the Owner Trustee's
share of all liabilities and obligations of PNM under, or with respect to, the
ANPP Project Agreements, attributable to Unit 1 and the Common Facilities, other
than any and all costs relating to, allocable to, or incurred in connection
with, the decommissioning and retirement of Unit 1 from commercial service,
including, but without limitation, (x) the cost of removal, decontamination and
disposition of equipment and fixtures, the cost of safe storage for later
remova1,.decontamination and disposal and the cost of entombment of equipment
and fixtures, and (y) the cost of (i) the razing of Unit 1, (ii) the removal and
disposition of debris from the PVNGS Site, and (iii) the restoration of relevant
portions of the PVNGS Site.
SECTION 4.02. Release. Upon the assumption and agreement by an
ANPP Transferee pursuant to Section 4.01 (whether at the Lease Termination Date
or thereafter), the Owner Trustee shall therewith and thereupon be released and
discharged from its obligations under Section 4.01 arising on or after such
assumption and agreement.
ARTICLE V
NO RELEASE OF PNM; REIMBURSEMENT
SECITON 5.01. No Release of PNM. Notwithstanding the provisions
of Article IV or any other provision hereof or of any other Transaction
Document, and except to the extent provided in Section 15.10 of the ANPP
Participation Agreement (or any comparable successor provision), PNM shall not
be released from any liability or obligation under the ANPP Project Agreements,
or otherwise, with respect to PVNGS, and PNM shall remain liable for the payment
and performance of all such liabilities and obligations, including, but without
limitation, any and all liabilities and obligations not assumed by the Owner
Trustee or an ANPP Transferee pursuant to Section 4.01.
-4-
6091.50.2831.56:1
<PAGE>
SECTION 5.02. Reimbursement. 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, from and after the Lease Termination Date (except a
Lease Termination occurring by reason of a termination of the Facility Lease
pursuant to Section 16 thereof), upon the payment or performance by PNM of any
liability or obligation in respect of which the Owner Trustee shall also have
become obligated in consequence of Article XV or the ANPP Participation
Agreement, and for so long as the Owner Trustee shall be so liable, PNM shall be
entitled to prompt reimbursement by the Owner Trustee from the Trust Estate for
all amounts expended in connection with such payment or performance.
ARTICLE VI
FURTHER AGREEMENTS OF PNM AND THE
OWNER TRUSTEE
SECTION 8.01. Agreement to Sell or Lease Unit 1 Retained Assets.
Upon a transfer to an ANPP Transferee, PMM agrees in respect of the Undivided
Interest and the Real Property Interest, (i) if such ANPP Transferee is a
purchaser of the Undivided Interest and the Real Property Interest, to sell to
such ANPP Transferee, at a price equal to the then Fair Market sales value
(determined on the basis of the then actual condition of the Unit 1 Retained
Assets) thereof, an undivided interest, equal to 1.133333%, to the extent
related to Unit 1 and .377777%, to the extent related to the PVNGS common
facilities, in and to the Unit 1 Retained Assets, or (ii) if such ANPP
Transferee is a lessee of the Undivided interest and the Real Property Interest,
to lease or otherwise make available to such ANPP Transferee, at a rent equal to
-5-
6091.50.2831.56:1
<PAGE>
the then Fair Market Rental Value thereof, an undivided interest, equal to
1.133333%, to the extent related to Unit 1 and .377777% to the extent related to
the PVNGS common facilities, in and to the Unit 1 Retained Assets. Any such sale
or lease by PNM shall be accomplished by an appropriate bill of sale or lease.
SECTION 6.02. Agreement to Assign or Make Available ANPP Project
Agreements. Upon a transfer to an ANPP Transferee, PNM agrees in respect of the
Undivided Interest and the Real Property Interest, (i) if such ANPP Transferee
is a purchaser of the Undivided interest and the Real Property Interest, to
assign to such ANPP Transferee an undivided interest, equal to 1.133333%, to the
extent related to Unit 1, and .377777%, to the extent related to the PVNGS
common facilities, of the Project Agreements (other than the ANPP Participation
Agreement) and (ii) if such ANPP Transferee is a lessee of the Undivided
Interest and the Real Property Interest, to assign for the term of such lease to
such ANPP Transferee an undivided interest, equal to 1.133333%, to the extent
related to Unit 1, and .37777777% to the extent related to the PVNGS common
facilities, of the Project Agreements (other than the ANPP Participation
Agreement). Any assignment pursuant to this Section 6.02 shall be accomplished
by an appropriate instrument of assignment.
SECTION 6.03. Agreements to Seek Amendments to the ANPP
Participation Agreement and the License. PNM agrees to use its best efforts to
obtain any required amendments to the ANPP Participation Agreement and the
License to permit Inn to act as Agent of the Owner Trustee in the manner
contemplated by Section 7.01 hereof, if (a) (i) PNM shall not have elected to
purchase the Undivided Interest and the Real Property Interest as provided in
Section 13(b) of the Facility Lease and (ii) there shall not be an ANPP
Transferee in respect of the Undivided Interest and the Real Property Interest
or (b) PNM,. shall be obligated to surrender possession of the Undivided
Interest and the Real Property Interest pursuant to Section 5(a) of the Facility
Lease. PNM acknowledges and agrees that neither the Owner Trustee nor the Owner
Participant shall have any obligation whatsoever to assist PNM in obtaining any
such amendments.
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609l.50.2831.56:l
<PAGE>
SECTION 6.04. Owner Trustee's Agreement. If PNM becomes
obligated to sell, lease, otherwise make available or assign in accordance with
Sections 6.01 and 6.02 hereof, the Owner Trustee shall (at the direction of the
Owner Participant) require or cause the AMP? Transferee to purchase, lease,
accept or assume, as the case may be, the property or rights being sold, leased,
made available or assigned by PNM.
ARTICLE VII
INTERIM AGENCY ARRANGEMENTS
SECTION 7.01. Designation of Agent. From and after surrender of
possession to the Owner Trustee (or its assigns) of the Undivided Interest and
the Real Property Interest pursuant to Section 5(a) of the Facility Lease (or
during such period on or after the Lease Termination Date that the Owner Trustee
shall have waived any Default or Event of Default with respect to the inability
of PNM to effectively surrender possession as required by such Section 5(a)) and
until a transfer to an ANPP Transferee in respect of the Undivided Interest and
the Real Property Interest (such period being referred to as the Agency Period),
PNM shall be, and the Owner Trustee hereby designates PNM, the initial agent
(the Agent) of the Owner Trustee in the exercise of all rights assigned to the
Owner Trustee hereunder.
SECTION 7.02. Operation of Unit 1. During the Agency Period, the
Agent shall administer the operation of the Undivided Interest and the Real
Property Interest in. accordance with this Agreement and all instructions. of
the Owner Trustee in accordance with Applicable Law. If, however, the Owner
Trustee and any User shall, prior to, or at any time during, the Agency Period,
enter into any joint ownership and operating agreement with other Persons having
-7-
6091.50.2831.56:1
<PAGE>
a legal right to, or right to use, any other undivided interest in Unit 1, the
Agent agrees to join in, and be bound by, the terms of such agreement if the
Agent's performance thereunder shall not violate, or result in a violation of,
any Applicable Law or the License. The Owner Trustee agrees to give the Agent
reasonable prior written notice of the commencement of the negotiation of any
such agreement.
SECTION 7.03. ANPP Participation Agreement. PNM agrees that, at
all times during the Agency Period, it will perform all obligations and
discharge all liabilities for which it is responsible as a "participant" under
the ANPP Participation Agreement in respect of the Undivided Interest and the
Real Property Interest. In the performance of the foregoing agreement, PNM shall
not exercise its rights as an ANPP Participant to cause Capital Improvements to
be made to Unit 1 and the Common Facilities unless the Owner Trustee shall have
agreed to provide funds for the payment of the Owner Trustee's Share of the cost
of such Capital Improvements to PNM prior to the date on which such amounts
shall be due with respect thereto under the ANPP Participation Agreement.
SECTION 7.04. Support. Except with respect to the Unit 1
Retained Assets for which provision is made in Section 7.06, PNM covenants and
agrees that, at all times during the Agency Period, it will provide, or make
available, to the Owner Trustee all PNM's rights in and to other assets owned by
PNM and the ANPP Project Agreements to the extent relating to the Undivided
interest and the Real Property Interest.
SECTION 7.05. Compensation. As compensation for its obligations
under Sections 7.02, 7.03 and 7.04, if no Event of Default based upon PNM's
failure to perform obligations under Section 5(a) of the Facility Lease has
occurred and is continuing, PNM shall be entitled to receive, and the Owner
Trustee hereby agrees to pay, an amount equal to the Owner Trustee's Share of
the aggregate of (i) amounts paid by PNM as provided in Section 7.03 to the
extent reasonably allocable to the Undivided Interest and the Real Property
-8-
6091.50.2831.56:l
<PAGE>
Interest and (ii) reasonable compensation for the Unit 1 Retained Assets and
(iii) out-of-pocket expenses incurred by PNN or the Agent, as the case may be,
in connection with the performance of its agreements in this Article III.
Compensation under this Section 7.05 shall be paid promptly in cash upon receipt
of an invoice from PNM.
SECTION 7.06. Transmission; Transmission Agreement. (a) ?PNM
covenants and agrees that, at all times during the Agency Period, the Owner
Trustee shall have the right to wheel, under normal transmission operating
conditions, the Owner Trustee's Share of the then rated capacity of Unit 1,
under normal transmission operating conditions, over transmission equipment in
which PNM now owns or may hereafter acquire an ownership interest, between Unit
1 and the ANPP Switchyard.
(b) Based upon the respective rights, duties and obligations of
the Owner Trustee and PNM set forth in Section 7.06(a), if PNM shall fail or
decline to give the notice of renewal of the facility Lease or purchase of the
Undivided Interest, in each case as provided in Section 13(a) of the Facility
Lease, PNM and the Owner Trustee shall forthwith commence the negotiation in
good faith of a definitive transmission agreement, not inconsistent with the
terms and provisions of Section 7.06(a), but containing sufficient detail for
the proper wheeling of power and energy, under normal transmission operating
conditions, over the equipment of PNM referred to in such Section 7.06(a) under
then existing circumstances, for the exercise or stipulation, as the case may
be, of the respective rights, duties and obligations of the Owner Trustee and
PNM set forth in Section 7.06(a). PNM and the Owner Trustee shall complete such
negotiations and execute such definitive transmission agreement prior to the
Lease Termination Date and such definitive transmission agreement shall provide
for compensation to PNM for the transmission services so provided at the Fair
Market Sales Value thereof.
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6091.50.2831.56:1
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of each of PNM and the Owner Trustee.
SECTION 8.02. Governing Law. The interpretation of this
Agreement and the rights and obligations of the parties hereto shall be governed
by and construed and enforced in accordance with the law of the State of New
York.
SECTION 8.03. Counterpart Execution. This Agreement may be
executed in any number of counterparts and by each of the parties hereto on
separate counterparts1 all such counterparts together constituting but one and
the same instrument.
SECTION 8.04. Amendments. The terms of this Agreement shall
not be waived, altered, modified, amended, supplemented or terminated in any
manner whatsoever, except by written instrument signed by Inn and the Owner
Trustee.
SECTION 8.05. Survival. All agreements and covenants contained
in this Agreement or any agreement, document or certificate delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement.
SECTION 8.06. Severability of Provisions. Any provision of
this Agreement 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 unenforceability without
invalidating the remaining provisions hereof, and no such prohibition or
unenforceability in any jurisdiction shall invalidate or render unenforceable
such provisions in any other jurisdiction. To the extent permitted by Applicable
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6091.50.2831.56:1
<PAGE>
Law, PNM hereby waives any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
SECTION 8.07. Headings. The division of this Agreement 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 Agreement.
SECTION 8.08. Disclosure of Beneficiary. Pursuant to Arizona
Revised Statutes S33-40l, the beneficiary of the Trust Agreement is Chase
Manhattan Realty Leasing Corporation, a New York corporation, whose address is
One Chase Manhattan Plaza (20th Floor) New York, New York 10081, Attention of
Leasing Administrator. 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.
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6091.50.2831.55:1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed in New York, New York by their respective officers
thereunto duly authorized.
PUBLIC SERVICE COMPAMY OF NEW MEXICO
By
--------------------------------
Senior Vice President and
Chief Financial Officer
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement,
dated as of July 31, 1986, with Chase.
Manhattan Realty Leasing Corporation
By:
-------------------------------
Assistant Vice President
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6091.50.2831.56:1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 30th
day of July, 1986, by A.J. Robison, Senior Vice President and Chief Financial
Officer of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on
behalf of the corporation.
/s/ Delia T. Santiago
----------------------
Notary Public
DELIA T SANTIAGO
Notary Public, State of New York
No. 41-3451l60
Qualified In Queens County
Commission Expire, March 30,1987
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 30th
day of July, 1986, by __________ M P. HENRY, , an Assistant Vice President of
THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of
the banking association under that certain Trust Agreement dated as of July 31,
1986 with Chase Manhattan Realty Leasing Corporation.
/s/ David A. Spivak
----------------------
Notary Public
Notary Public, State of New York
No.31-4693488
Qualified in New York County
Commission Expires March 30. 1987
-13-
6091.50.2831.56:1
When recorded, return to:
Greg R. Nielsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of August 12, 1986
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of August 12,
1986, with BURNHAM LEASING
CORPORATION
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Sale and Leaseback of an Undivided Interest
in Palo Verde Nuclear
Generating Station Unit 2
and an undivided interest in
Certain Common Facilities
================================================================================
BURNHAM LEASING CORPORATION
6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
CONSTRUCTION, GOVERNING LAW, INTERPRETATION
AND DEFINITIONS
SECTION 1.1 Governing Law ........................................... 2
SECTION 1.2 Headings and Table of Contents .......................... 2
SECTION 1.3 Definitions; Construction of
References; Schedules ................................... 3
SECTION 1.4 Disclosure of Beneficiaries ............................. 3
ARTICLE II
SECURITY
SECTION 2.1 Grant of Security Interest; Mortgage .................... 4
SECTION 2.2 Payments Under the Facility Lease ....................... 6
SECTION 2.3 Release of Lien on Lease Indenture Estate ............... 7
SECTION 2.4 Power of Attorney ....................................... 9
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION, FORM AND
REGISTRATION OF NOTES
Page
----
SECTION 3.1 Limitation on Notes .................................... 10
SECTION 3.2 Execution of Notes ..................................... 10
SECTION 3.3 Effect of Certificate of
Authentication ......................................... 10
SECTION 3.4 Creation of the Initial Series
Note; Aggregate Principal Amount,
Dating and Terms; Prerequisites to
Authentication and Delivery of the Initial
Series Note; Application of Proceeds ................... 11
SECTION 3.5 Additional Notes ....................................... 12
SECTION 3.6 Security for and Parity of Notes ....................... 15
SECTION 3.7 Source of Payments Limited ............................. 15
SECTION 3.8 Place and Medium of Payment ............................ 16
SECTION 3.9 Prepayment of notes; Assumption by
Lessee; Notice of Assumption or Prepayment ............. 16
SECTION 3.10 Muti1ated, Destroyed, Lost or Stolen Notes ............. 18
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 3.11 Allocation of Principal and Interest .................. 19
SECTION 3.12 Certain Adjustments to
Amortization Schedules of Fixed
Rate Notes ............................................ 19
ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF NOTES
SECTION 4.1 Register of Notes ..................................... 20
SECTION 4.2 Registration of Transfer or
Exchange of Notes ..................................... 20
SECTION 4.3 Cancellation of Notes ................................. 21
SECTION 4.4 Limitation on Timing of Registration of Notes ......... 22
SECTION 4.5 Restrictions on Transfer Resulting
from Federal Securities Laws;
Legend ................................................ 22
SECTION 4.6 Charges upon Transfer or Exchange
of Notes .............................................. 22
SECTION 4.7 Inspection of Register of Notes ....................... 23
SECTION 4.8 Ownership of Notes .................................... 23
iii
6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE LEASE INDENTURE
ESTATE
SECTION 5.1 Basic Rent, Interest on Overdue
Installments of Basic Rent and
Prepayments of Interest ................................ 24
SECTION 5.2 Amounts Received as Result of
Event of Loss, Deemed Loss Event,
Exercise of Option to Terminate,
Exercise of Cure Option or
Occurrence of Special Purchase
Event .................................................. 25
SECTION 5.3 Amounts Received After, or Held
at Time of, Indenture Event of
Default under Section 6.2 .............................. 26
SECTION 5.4 Amounts Received for Which
Provision Is Made in a Transaction
Document ............................................... 27
SECTION 5.5 Amounts Received for Which No
provision Is Made ...................................... 28
SECTION 5.5 Payments to Owner Trustee .............................. 28
SECTION 5.7 Excepted Payments ...................................... 28
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VI
REPRESENTATIONS, WARANTIES AND COVENANTS OF
OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES
OF THE INDENTURE TRUSTEE
SECTION 6.1 Representations, Warranties and
Covenants of Owner Trustee ............................. 29
SECTION 6.2 Indenture Events of Default ............................ 30
SECTION 6.3 Enforcement of Remedies ................................ 31
SECTION 6.4 Specific Remedies; Enforcement of
Claims without possession of Notes ..................... 31
SECTION 6.5 Rights and Remedies Cumulative ......................... 33
SECTION 6.6 Restoration of Rights and
Remedies ............................................... 33
SECTION 6.7 Waiver of Past Defaults ................................ 34
SECTION 6.8 Right of Owner Trustee to Pay
Rent; Note Purchase; Substitute
Lessee ................................................. 34
SECTION 6.9 Further Assurances ..................................... 36
SECTION 6.10 Right of Indenture Trustee To
Perform Covenants, etc. ................................ 36
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 6.11 Certain Other Rights of the Owner
Trustee ................................................ 37
ARTICLE VII
CERTAIN DUTIES OF THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 7.1 Duties in Respect of Events of
Default, Deemed Loss Events and
Events of Loss; Acceleration of
Maturity ............................................... 38
SECTION 7.2 Duties in Respect of Matters
Specified in Directive ................................. 39
SECTION 7.3 Indemnification ........................................ 39
SECTION 7.4 Limitations on Duties; Discharge
of Certain Liens Resulting from
Claims Against Indenture Trustee ....................... 40
SECTION 7.5 Restrictions on Dealing with Lease
Indenture Estate ....................................... 40
SECTION 7.6 Filing of Financing Statements and
Continuation Statements ................................ 40
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 8.1 Acceptance of Trusts; standard of
Care .................................................... 42
SECTION 8.2 No Duties of Maintenance, Etc ........................... 42
SECTION 8.3 Representations and warranties of
Indenture Trustee and the Owner Trustee ................. 43
SECTION 8.4 Moneys Held in Trust;
Non-Segregation of Moneys ............................... 43
SECTION 8.5 Reliance on Writings, Use of
Agents, Etc.. ........................................... 44
SECTION 8.6 Indenture Trustee to Act Solely as
Trustee ................................................. 45
SECTION 8.7 Limitation on Rights Against
Registered Holders, the Owner
Trustee or Lease Indenture Estate ....................... 45
SECTION 8.8 Investment of Certain Payments
Held by the Indenture Trustee ............................ 46
SECTION 8.9 No Responsibility for Recitals,
etc. ..................................................... 46
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 8.10 Indenture Trustee May Engage in
Certain Transactions .................................... 47
SECTION 8.11 Construction of Ambiguous
Provisions .............................................. 47
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1 Resignation and Removal of
Indenture Trustee; Appointment of
Successor ............................................... 47
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
AND OTHER DOCUNENTS
SECTION 10.1 Supplements, Amendments and
Modifications to This Indenture
Without Consent of Holders of
Notes ................................................... 49
SECTION 10.2 Supplements and Amendments to this
Indenture and the Facility Lease
With Consent of Holders of Notes ........................ 49
SECTION 10.3 Certain Limitations on Supplements
and Amendments. ......................................... 51
-viii-
6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 10.4 Directive Need Not Specify
Particular Form of Supplement or
Amendment .............................................. 51
SECTION 10.5 Trustee to Furnish Copies of
Supplement or Amendment ................................ 52
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Moneys for Payments in Respect of
Notes to be Held in Trust .............................. 52
SECTION 11.2 Disposition of Moneys Held for
Payments of Notes ...................................... 52
SECTION 11.3 Transfers Not to Affect Indenture
or Trusts .............................................. 53
SECTION 11.4 Binding Effect of Sale of Lease
Indenture Estate ....................................... 53
SECTION 11.5 Limitation as to Enforcement of
Rights, Remedies and Claims ............................ 53
SECTION 11.6 Notices ................................................ 54
SECTION 11.7 Separability of Provisions ............................. 54
SECTION 11.8 Benefit of Parties, Successors and
Assigns ................................................ 54
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6091.BURNHAM.1106.51:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
SECTION 11.9 Survival of Representations and Warranties ............. 55
SECTION 11.10 Bankruptcy of the Owner Trustee ........................ 55
SECTION 11.11 Bankruptcy of the Owner Participant .................... 55
SECTION 11.12 Counterpart Execution .................................. 56
SECTION 11.13 Dating of Indenture .................................... 56
Exhibit A Form of Initial Series Note
Exhibit B Form of Assumption Agreement
Exhibit C Form of undivided Interest Indenture Supplement
Schedule 1 Description of Undivided Interest
Schedule 2 Description of Real Property Interest
Appendix A Definitions
-x-
6091.BURNHAM.1106.51:1
<PAGE>
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNEMENT
OF RENTS, dated as of August 12, 1986, between THE FIRST NATIONAL OF BOSTON, a
national banking association (FNB), not in it. individual capacity, but solely
as trustee (the Owner Trustee) under a Trust Agreement dated as of August 12,
1996 between FNB, whose address is 100 Federal Street, Boston, Massachusetts
02110, with Burnham Leasing Corporation, and CHEMICAL BANK, a New York banking
corporation (the Indenture Trustee), whose address is 55 Water Street, New York,
New York 10041.
W I T N E S S E T H:
WHEREAS,the Owner Trustee has entered into a Participation
Agreement, dated as of August 12, 1986, among the owner Participant, First PV
Funding Corporation, a Delaware corporation, Public Service Company of New
Mexico, a New Mexico corporation, and the Indenture Trustee;
WHEREAS, the Owner Trustee, acting on behalf of the Owner
Participant, pursuant to the Trust Agreement and the Participation Agreement,
intends to purchase the Undivided Interest and the Real Property Interest from
Public Service Company of New Mexico and lease the Undivided Interest and the
Real Property Interest to Public Service Corporation of New Mexico pursuant to
the Facility Lease;
WHEREAS, in order to finance a portion of the Purchase Price
of the Undivided Interest, the Owner Trustee desires to issue its promissory
note hereunder with such promissory note to be substantially in the form of
Exhibit A hereto;
WHEREAS, in the circumstances contemplated by Sections 2(c)
and 2(4) of the Participation Agreement, the Owner Trustee may desire to finance
a greater portion of the Purchase Price of the Undivided Interest than the
portion financed from the proceeds of the Initial series Note (but in no event
in an amount in excess of 20% of said Purchase Price) and in connection with
such releveraging to issue its promissory note (in connection with Section 2(c)
of the Participation Agreement) or to increase the principal amount of the Fixed
Rate Mote otherwise issuable in connection with a refunding of the Initial
Series Note (and the Releveraging Note or Notes if theretofore issued);
6O91.BURMHAM.1106.5l:l
<PAGE>
WHEREAS, in order to finance all or a portion of the
supplemental Financing Amount of Capital Improvements and to refund Notes of any
series previously issued, the owner Trustee may desire to issue additional
promissory notes hereunder (the Additional Notes) secured on a part pari passu
basis with other Notes Outstanding from time to time;
WHEREAS, in order to secure the obligations referred to
herein, the Owner Trustee desires to grant to the Indenture Trustee the security
interest herein provided and the parties hereto desire that this Indenture be
regarded as a security agreement" and as a "financing statement" for such
security agreement under the Uniform Commercial Code;
Now, THEREFORE, in consideration of the premises, of the
acceptance by the Indenture Trustee of the trusts hereby created and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CONSTRUCTION, GOVERNING LAW,
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Governing Law.
This Indenture (i) is being executed and delivered in the
State of New York, (ii) shall be deemed to be a contract made in such State and
(iii) for all purposes shall be construed in accordance with and governed by the
laws of the State of New York, except to the extent that the laws of the State
of Arizona are mandatorily applicable hereto.
SECTION 1.2. Headings and Table of Contents.
The division of this Indenture into articles and sections, the
provision of a table of contents and the insertion of heading. are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
-2-
6091.BURNHAM.1106.51:l
<PAGE>
SECTION 1.3. Definitions; construction of References;
Schedules.
In this Indenture, unless the context otherwise requires:
a) the term this Indenture means this instrument together with
all exhibits, appendices and schedules hereto as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto pursuant to the provisions hereof;
(b) all references in this instrument to designated Articles,
Sections and other subdivisions are to designated Articles, Sections and other
subdivisions of this instrument unless otherwise indicated;
(c) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in Appendix A hereto, and the
rules of construction set forth in Appendix A hereto shall be applicable hereto.
(e) Attached as schedule 1 hereto is a description of the
Undivided Interest and attached as schedule 2 hereto is a description of the
Real Property Interest.
SECTION 1.4. Disclosure of Beneficiaries.
Pursuant to Arizona Revised Statutes Section 33-401, (i) the
beneficiary of the Trust Agreement is Burnham Leasing corporation, a New York
corporation, whose address is 60 Broad Street, New York, New York 10004,
Attention: Assistant Treasurer and (ii) the beneficiary of this Indenture is the
Holder of the Notes, First PV Funding Corporation whose address is Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19S01 and, by pledge and
assignment, Chemical Bank, as trustee under the collateral Trust Indenture,
whose address is 55 Water Street, New York, New York 10041: Attention of
Corporate Trustee Administration. Copies of the Trust Agreement and this
Indenture are available for inspection at the Indenture Trustees Office.
6091.BURNHAM.1106.51:1
-3-
<PAGE>
ARTICLE II
SECURITY
SECTION 2.1. Grant of security Interest; Mortgage
As security for the due and punctual payment of the principal of and
premium, if any, and interest on the Notes according to their respective terms
and effect and the performance and observance by the Owner Trustee of all the
covenants and agreements made by it or on its behalf in the Notes, the
Participation Agreement and this Indenture, the Owner Trustee does by its
execution and delivery hereof hereby grant a security interest in and grant,
bargain, convey, warrant, assign, transfer, mortgage, pledge and set over unto
the Indenture Trustee, and to its successors and assigns in trust, the following
(the Lease Indenture Estate):
(1) all right, title and interest of the Owner Trustee in, to
and under the Facility Lease to the extent, and only to the
extent, constituting Rent (including, but without limitation,
Basic Rent, payments of casualty Value, Termination Value and
special casualty Value, and payments under and pursuant to
Sections 13(c) and 16 of the Facility Lease, excluding all
Excepted Payments) (the Assigned Payments), together with all
rights, powers and remedies on the part of the owner Trustee
arising under the Facility Lease to demand, collect or receive
the Assigned Payments;
(2) all moneys and securities deposited or required to be
deposited with the Indenture Trustee pursuant to any term of
this Indenture and held or required to be held by the
Indenture Trustee hereunder;
(3) all profits, revenues and other income of all property
from time to time subjected to the lien of this Indenture, and
all right, title and interest of every nature whatsoever of
the owner Trustee in and to the same and every part thereof;
6O9l.BURNHAM.ll06.51:l
-4-
<PAGE>
(4) all right, title and interest of the Owner Trustee in and
to any right to restitution from the Lessee in respect of any
determination of invalidity of the Facility Lease; and
(5) all proceeds of the foregoing;
but excluding, however, from the Lease Indenture Estate any and all Excepted
Payments; and subject, however, to (i) the terms and provisions of this
Indenture and (ii) the right. of the Lessee under the Facility Lease.
To the extent that any portion of the Lease Indenture Estate
constitutes fixtures or real property, this Indenture constitutes a realty
mortgage and an assignment of rents with respect to all such items of real
property and in addition to all other rights or remedies set forth in this
Indenture, or otherwise available under Applicable Law, the Indenture Trustee
shall have all of the rights, remedies and benefits of a mortgagee of real
property under Applicable Law, including;, without limitation, the rights and
remedies pursuant to Arizona Revised Statutes 33-702.3, and the Owner Trustee
shall be deemed a mortgagor with respect to such items.
TO HAVE AND TO HOW all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in this
Indenture.
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the Owner Trustee may exercise all of its rights
under the Facility Lease to the same extent as if its right, title and interest
therein had not been assigned to the Indenture Trustee to the extent set forth
above, except that the Indenture Trustee shall receive all payments of Assigned
Payments and all moneys and securities required to be held by or deposited with
the Indenture Trustee hereunder.
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It is expressly agreed that, anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain obligated to the Lessee
under the Facility Lease to perform all of the Owner Trustee's obligations
thereunder in accordance with and pursuant to the terms and provisions thereof,
and the Indenture Trustee shall not be required or obligated in any manner,
except as expressly provided herein, to perform or fulfill any obligations of
the Owner Trustee under the Facility Lease or to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
SECTION 2.2. Payments Under the Facility Lease.
The Facility Lease provides that (i) all payments constituting
Assigned Payments shall be made to the Indenture Trustee at the Indenture
Trustee's Office, (ii) all other payments other than Excepted Payments shall be
made to the Lessor at such address as the Lessor may direct by notice in writing
to the Lessee, and (iii) all Excepted Payments shall be made to the Person
entitled to receive such payments. The Owner Trustee agrees that, so long as any
Notes shall be Outstanding hereunder, all payments described in clause (i) above
shall be directed to be made to the Indenture Trustee or in accordance with the
Indenture Trustee's instruction and that if it should receive any such payments
or any proceeds for or with respect to the Lease Indenture Estate or otherwise
constituting part of the Lease Indenture Estate, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Lessee, the Owner Trustee or otherwise) with respect to
the Lease Indenture Estate in the manner provided in section 3.11 and Article V
hereof.
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SECTION 2.3. Release of Lien on Lease Indenture Estate.
(a) Upon receiving evidence satisfactory to the Indenture
Trustee that (i) it has received, or provision has been made in accordance with
paragraph (c) hereof for, full payment of all principal of and premium, if any,
and interest on the Notes and any other sums payable to the Indenture Trustee
and the Holders of the Notes under this Indenture or the Facility Lease, and
(ii) all Trustee's Expenses shall have been paid in full or provision
satisfactory to the Indenture Trustee shall have been made for such payment,
(A) the security interest and all otter estate and rights
granted by this Indenture shall cease and become null and void and all
of the property, rights and interests included in the Lease Indenture
Estate shall revert to and revert in the Owner Trustee without any other
act or formality whatsoever, and
(B) the Indenture Trustee shall, at the request of the Owner
Trustee, execute and deliver to the owner Trustee such termination
statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be
requisite to evidence the satisfaction and discharge of this Indenture
and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the Owner Trustee or as directed by the Owner
Trustee all the Lease Indenture Estate, freed and discharged from the
provisions herein contained with respect thereto, and to release the
Owner Trustee from its covenants herein contained.
(b) Upon receipt by the Indenture Trustee of the Assumption
Agreement and other documents and opinions described in section 3.9(b) hereof,
(i) the security interest and all other estate and rights granted by this
Indenture by or on behalf of the Owner Trustee shall cease and become null and
void and all of the property, rights and interests included in the Lease
Indenture Estate shall revert to and revest in the Owner Trustee without any
other act or formality whatsoever and (ii) the Indenture Trustee shall, at the
request of the Owner Trustee, execute and deliver to the Owner Trustee such
termination statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be requisite
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to evidence the satisfaction and discharge of this Indenture as to the Owner
Trustee and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the owner Trustee or as directed by the Owner Trustee
all the Lease Indenture Estate, freed and discharged from the provisions herein
contained with respect thereto, and to release the Owner Trustee from its
covenants herein contained.
(c) Any Note shall, prior to the maturity or redemption date
thereof, be deemed to have been paid within the meaning and with the effect
expressed in this Section 2.3 if (i) there shall have been deposited with the
Indenture Trustee either moneys in an amount which shall be sufficient, or
direct obligations of or obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America or certificates of an
ownership interest in the principal of or interest on obligations of or
guaranteed as to principal and interest by the United States of America Federal
Securities), in each case which shall not contain provisions permitting the
redemption thereof at the option of the issuer, the principal of and the
interest on which when due, and without any reinvestment thereof, will provide
moneys in an amount which shall be sufficient, together with the moneys, if any,
deposited with or held by the Indenture Trustee at the same time (such
sufficiency to be established by the delivery to the Indenture Trustee of a
certificate of an independent public accountant), to pay when due the principal
of and premium, if any, and interest due and to become due on said Note on and
prior to the redemption date or maturity date thereof, as the case may be, and
(ii) in the event said Note does not mature or is not to be redeemed within the
next 45 days, the Indenture Trustee shall have been given irrevocable
instructions to give, as soon as practicable, a notice to the registered Holder
of such Note that the deposit required by subclause (i) above has been made with
the Indenture Trustee and that said Note is deemed to have been paid in
accordance with this section 2.3 and stating such maturity or redemption date
upon which moneys are to be available for the payment of the principal of and
premium, if any, and interest on said Note. Neither the Federal securities nor
moneys deposited with the Indenture Trustee pursuant to this Section 2.3 or
principal or interest payments on any such Federal Securities shall be withdrawn
or used for any purpose other than, and shall be held in trust for, the payment
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of the principal of and premium, if any, and interest on said Note; provided,
however, that any cash received from such principal or interest payments on such
Federal securities deposited with the Indenture Trustee shall be reinvested
pursuant to Section 8.8 hereof in Federal securities. At such time as any Note
shall be deemed paid as aforesaid, it shall no longer be secured by or entitled
to the benefits of the Lease Indenture Estate or this Indenture, except that
such Note shall be entitled to the benefits of the portions of the Lease
Indenture Estate described in Granting Clauses (2), (3) and (5), to the extent
such portions relate to such moneys or Federal securities deposited with the
Indenture Trustee.
(d) So long as any Note as to which this Indenture has been
discharged remains unpaid, this Indenture shall continue in effect with respect
to such Note solely with respect to rights of registration of transfer, exchange
or replacement of such Note, rights to receive payment of the principal thereof
and premium, if any, and interest thereon in accordance with the terms of this
Indenture from such deposited funds or the proceeds of or interest on such
Federal securities and the correlative rights and responsibilities of the
Indenture Trustee; provided, however, that, following such discharge, no claim
for payment of principal of or premium, if any, or interest on such Note shall
be made against the Owner Trustee or the Lease Indenture Estate other than as
provided in this Section; provided, further, that the owner Trustee, following
such discharge, shall be released from any further duties or obligations under
this Indenture and, except as expressly provided therein, any other Transaction
Document.
SECTION 2.4. Power of Attorney
Subject to the other terms of this Indenture, the Owner
Trustee hereby appoints the Indenture Trustee the Owner Trustee's
attorney-in-fact, irrevocably, with full power of substitution, to collect, ask,
require, demand, receive and give acquittance for any and all moneys and claims
for moneys due and to become due to the Owner Trustee under or arising out of
the Lease Indenture Estate, to endorse any checks or other instruments or orders
in connection therewith, and to take any action (including the tiling of
financing statements or other documents) or institute any proceedings which the
Indenture Trustee may deem to be necessary or appropriate to protect and
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preserve the interest of the Indenture Trustee in the Lease Indenture Estate.
Prior to any exercise by it (acting as attorney-in-fact for the owner Trustee)
of the powers, authority or rights granted by this Section 2.4, the Indenture
Trustee will give three Business Day's prior written notice to the Owner Trustee
and the Owner Participant.
ARTICLE III
ISSUE,EXECUTION, AUTHENTICATION, FORM AND REGISTRATION OF NOTES
SECTION 3.1. Limitation on Notes.
No Notes may be issued under the provisions of, or become
secured by, this Indenture except in accordance with the provisions of this
Article III. No Note shall be issued in an original principal amount of less
than $1.00.
SECTION 3.2. Execution of Notes.
All Notes shall be manually executed on behalf of the Owner
Trustee by one of its Responsible Officers. In case any Responsible Officer of
the Owner Trustee who shall have executed any of the Notes shall cease to be
such a Responsible Officer before such Notes so executed shall have been
authenticated by the Indenture Trustee and delivered or disposed of by the owner
Trustee, such Notes nevertheless may be authenticated and delivered or disposed
of as though the person who executed such Notes had not ceased to be such a
Responsible officer of the Owner Trustee; and any Note may be executed on behalf
of the Owner Trustee by such person as, at the actual time of execution of such
Note, shall be a Responsible Officer of the Owner Trustee, although at the date
of such Note any such person was not such a Responsible Officer.
SECTION 3.3. Effect of Certificate of Authentication.
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Only such Notes as shall bear thereon a certificate of
authentication substantially in the following form manually executed by the
Indenture Trustee shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate of authentication of the
Indenture Trustee upon any Note executed by the owner Trustee shall be
conclusive evidence that the Note so authenticated was duly issued,
authenticated and delivered under this Indenture:
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee,
By
-------------------
Authorized Officer
SECTION 3.4. creation of the Initial series Notes Aggregate
principal Amount, Dating and Terms; prerequisites to authentication and delivery
of the Initial Series Note: Application of Proceeds.
(a) There is hereby created and established a separate series
of Notes of the Owner Trustee designated: "Nonrecourse Promissory Note, Initial
Series", which will be substantially in the form of Exhibit A hereto, and is
herein referred to as the Initial Series Note.
(b) subject to the provisions of section 3.10 hereof, the
aggregate principal amount of the Initial Series Note issued by the owner
Trustee and authenticated and delivered by the Indenture Trustee hereunder shall
not exceed $73,960,123.15.
(c) The Initial series Note, subject to paragraph (a) of this
section 3.4, shall be executed and issued by the Owner Trustee and authenticated
and delivered by the Indenture Trustee on the date and to the Person specified
by the owner Trustee in its request and authorization for issuance, shall be
dated the date specified by the owner Trustee in its request and authorization
for issuance, and shall be in the form of a registered Note payable to the
person designated in the owner Trustee's request and authorization for issuance
or its registered assigns.
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(d) The Initial Series Note shall bear interest on the
principal amount thereof from time to time Outstanding from the date thereof
until paid at the rates of interest set forth in the form of the Initial Series
Note. The principal amount of the Initial Series Note shall be payable as set
forth in the schedule. of Principal Payments attached thereto. Installments of
interest on and principal of the Initial Series Note shall be due and payable on
the dates specified in the form of Initial Series Note.
(e) The Indenture Trustee shall authenticate the Initial
Series Note and deliver the Initial Series Note to the Person designated by the
Owner Trustee in the request and authorization for issuance in respect of the
Initial Series Note in accordance with the provisions of this Section 3.4.
(f) Upon receipt of the proceeds of the Initial Series Note,
the Indenture Trustee shall immediately transfer the same to, or pursuant to the
direction Of S the Owner Trustee, all as set forth in the request and
authorization for issuance submitted by the Owner Trustee to the Indenture
Trustee.
SECTION 3.5. Additional Notes.
(1) Subject to Section 3.E hereof, Additional Notes of the
Owner Trustee may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Series Note and subject to the
conditions hereinafter provided in this Section, for cash in the amount of the
original principal amount of such Additional Notes, for the purpose of (i)
refunding any previously issued series of Notes, in whole or in part and/or (ii)
providing funds for the payment of all or any portion of the Supplemental
Financing Amount relating to capital Improvements made or installed from time to
time pursuant to the Facility Lease and/or (iii) providing funds to be paid to
the Owner Trustee in the event of a partial return of the Investment to the
Owner Trustee as contemplated by sections 2(c) and 2(d) of the Participation
Agreement: provided, however, that (x) in the case of Notes issued for the
purposes set forth in clause (ii) or (iii) of this Section 3.5, no Note shall be
issued by the Owner Trustee pursuant to this Section 3.5 unless such Notes may
be pledged in accordance with section 2.15(b) of the Collateral Trust Indenture
and serve as the basis for Additional Bonds and (y) in the case of Notes issued
for the purposes set forth in clause (i) or (iii) of this Section 3.5, no Note
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shall be issued by the Owner Trustee pursuant to this Section 3.5 unless Section
2(c) and/or Section 2(d) of the Participation Agreement (if applicable) shall
have been complied with.
(2) Before any Additional Notes shall be issued under the
provisions of this Section 3.5, the Owner Trustee shall have received from the
Owner Participant, and delivered to the Indenture Trustee not less than 10 nor
more than 30 days prior to the proposed date of issuance of such Additional
Notes as set forth in the below mentioned request and authorization, a request
and authorization to issue Additional Notes, which request and authorization
shall include the amount of such Additional Notes, the date of issuance of such
Additional Notes and details with respect thereto which are not inconsistent
with this section. Additional Notes shall have a designation so as to
distinguish such Additional Notes from the Initial Series Note but other-wise
shall be substantially similar in terms to the Initial Series Note, shall
specify maturity dates, rank pari passu with all Notes then Outstanding, be
dated their respective dates of authentication, bear interest at such rates
which may be fixed or floating) as shall be indicated in the aforementioned
request and authorization, and shall be stated to be payable by their terms not
later than the last day of the Basic Lease Term.
(3) Except as to any differences in the maturity dates and
amortization schedules of the Additional Notes or the rate or rates of interest
thereon and the date or dates such interest is payable or the provisions for
redemption with respect thereto, if any, such Additional Notes shall be on a
parity with, and shall be entitled to the same benefits and security of this
Indenture as, other Notes issued pursuant to the terms hereof.
(4) The terms, conditions and designations of such Additional
Notes (which shall be consistent with this Indenture) shall be set forth in an
indenture supplemental to this Indenture executed by the Owner Trustee and the
Indenture Trustee. Such Additional Notes shall be executed as provided in
section 3.2 and deposited with the Indenture Trustee for authentication, but
before such Additional Notes shall be authenticated and delivered by the
Indenture Trustee there shall be filed with the Indenture Trustee, in addition
to the other documents and certificates required by this Section 3.5, the
following, all of which shall be dated as of the date of the supplemental
indenture:
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(a) a copy of such supplemental indenture (which shall include
the form of such series of Notes in respect thereof);
(b) a certificate of a Responsible Officer of the Owner
Trustee (i) stating that to the best of his knowledge, no Default or Event of
Default or Indenture Event of Default has occurred and is continuing, (ii)
stating that the conditions in respect of the issuance of such additional Series
of Notes contained in this Section 3.5 have been satisfied, (iii) stating that
payments pursuant to the Facility Lease of Basic Rent, Casualty Value, special
Casualty Value and Termination Value and of amounts in respect of the exercise
of the Cure Option or the occurrence of the Special Purchase Event are
sufficient to pay all the Outstanding Notes, after taking into account the
issuance of such Additional Notes and any related redemption, and (iv), in the
case of Notes issued for the purpose set forth in clause (ii) of Section 3.5(1),
stating that all conditions to the related Supplemental Financing as set forth
in Section 8(f) of the Facility Lease have been satisfied or waived in
accordance with such section 8(f);
(c) such additional documents, certificates and opinions as
shall be reasonably requested by, and acceptable to, the Owner Trustee and the
Indenture Trustee.
(d) a request and authorization to the Indenture Trustee by or
on behalf of the owner Trustee to authenticate and deliver such Additional Notes
to or upon the order of the Person or Persons noted in such request at the
address set forth therein, and in such principal amounts as are stated therein,
upon payment to the Indenture Trustee, but for the account of the Owner Trustee,
of the sum or sums specified in such request and authorization; and
(e) an opinion of counsel to the effect that the conditions
precedent required under this Indenture for the issuance of such Additional
Notes have been complied with.
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When the documents referred to in the foregoing; clauses (a)
through (e) above shall have been filed with the Indenture Trustee and when the
Additional Notes described in the above-mentioned order and authorization shall
have been executed and authenticated as required by this Indenture, the
Indenture Trustee shall deliver such Additional Notes in the manner described in
clause (d) above, but only upon payment to the Indenture Trustee of the sum or
sums specified in such request and authorization.
SECTION 3.6. Security for and Parity of Notes
All Notes issued and Outstanding hereunder shall rank on a
parity with each other and shall as to each other be secured equally and ratably
by this Indenture, without preference, priority or distinction of any thereof
over any other by reason of difference in time of issuance or otherwise. The
maximum principal amount of Notes Outstanding and secured by this Indenture
shall be $147,920,246.30.
SECTION 3.7. Source of Payments Limited.
All payments to be made by the Owner Trustee under this
Indenture or on the Notes shall be made only from the Lease Indenture Estate and
the Trust Estate. Each Holder of a Note, by its acceptance of such Note, and the
Indenture Trustee agree that they will look solely to the Trust Estate and the
income and proceeds from the Lease Indenture Estate to the extent available for
distribution to such Molder or the Indenture Trustee as herein provided and that
neither the Owner Participant nor, except as expressly provided in this
Indenture, the Owner Trustee nor the Indenture Trustee, shall be personally
liable to such Holder of a Note or the Indenture Trustee, as the case may be,
for any amounts payable hereunder or under such Note; provided, however, that in
the event that the Lessee shall assume all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes pursuant to Section 3.9(b), then
all payments to be made under this Indenture and the Notes shall be made only
from payments made by the Lessee under the Notes in accordance with the
Assumption Agreement referred to in Section 3.9(b) and each Holder of a Note and
the Indenture Trustee agree that in such event they will look solely to the
Lessee for such payment. Nothing herein contained shall be interpreted as
affecting the duties and obligations of the Indenture Trustee set forth in
Section 7.4 hereof.
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In furtherance of the foregoing, to the fullest extent
permitted by law, each Holder of a Note (and each assignee of such Person), by
its acceptance thereof, and the Indenture Trustee agree, as a condition to the
Notes being secured under this Indenture, that neither such Holder nor the
Indenture Trustee will exercise any statutory right to negate the agreements set
forth in this Section 3.7.
SECTION 3.8. Place and medium of Payment.
The principal of and premium, if any, and interest on each
Note shall be payable at the Indenture Trustee's Office in immediately available
funds in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debt..
Notwithstanding the foregoing or any provision in any Note to the contrary, if
so requested by the Holder of any Note, by written notice to the Indenture
Trustee, all amounts (other than the final payment) payable with respect to such
obligation shall be paid by crediting the amount to be distributed to such
Holder to an account maintained by such Holder with the Indenture Trustee or by
the Indenture Trustee's transferring such amount by wire, with much wire
transfer to be initiated by such time as to permit, to the extent practicable,
oral confirmation thereof (specifying the wire number) to be given no later than
12:00 noon New York City time on the date scheduled for payment, but only to the
extent of funds available for such wire transfer, to such other bank in the
united States having wire transfer facilities, including a Federal Reserve
flank, as shall have been specified in such notice, for credit to the account of
such Holder maintained at such bank, any such credit or transfer pursuant to
this section 3.8 to be in immediately available funds, without any presentment
or surrender of such Note. Final payment of any such Note shall be made only
against surrender of such Note at the Indenture Trustee's Office.
SECTION 3.9. Prepayment of Notes; Assumption by Lessee: Notice
of Assumption or Prepayment.
(a) Notes shall be subject to prepayment (other than through
application of the installment payments on such Notes) from time to time only as
provided in this Indenture and as otherwise specifically provided, with respect
to Notes of a particular series, in such Notes.
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(b) In the event of the occurrence of a Deemed Loss Event,
Event of Loss or the exercise of the Cure Option, and upon receipt by the
Indenture Trustee of the documents listed below, all the obligations and
liabilities of the Owner Trustee hereunder and under the Notes shall be assumed
by the Lessee and the owner Trustee shall be released and discharged without
further act or formality whatsoever from all obligations and liabilities
hereunder and under the Notes:
(1) a duly executed Assumption agreement substantially in the
form of Exhibit S to this Indenture;
(2) an opinion of counsel to the Lessee, addressed to the
Indenture Trustee and the Holders of the Outstanding Notes, to
the effect that the conditions precedent required by this
Indenture for such assumption have been complied with, that the
Assumption Agreement has been duly authorized, executed and
delivered on behalf of the Lessee, that no Governmental Action
is necessary or required in connection therewith (or if any
such Governmental Action is necessary or required, that the
same has been duly obtained and is in full force and effect) ,
and that the Assumption Agreement is a legal, valid and binding
agreement and obligation of the Lessee, enforceable in
accordance with its terms (except as limited by bankruptcy,
insolvency or similar laws of general application affecting the
enforcement of creditors' rights generally and equitable
principles);
(3) copies of all Governmental Actions referred to in such
opinion;
(4) an indenture supplemental to this Indenture which shall,
among other things, confirm the release of the Owner Trustee
and the Lease Indenture Estate thereby effected and contain
provisions appropriately amending references to the Facility
Lease in this Indenture;
(5) a certificate of a Responsible Officer of the Lessee
stating that, to the best of his knowledge, (i) the conditions
precedent required by this Indenture for such assumption have
been complied with, (ii) no Indenture Event of Default has
occurred and is continuing, (iii) such assumption is permitted
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by the provisions of the Lessee's Articles of Incorporation and
By-Laws and (iv) the Lessee is not insolvent within the meaning
of any applicable preferential transfer, fraudulent conveyance
or bankruptcy law; and
(6) a certificate of a Responsible Officer of the Owner Trustee
stating that, to the best of his knowledge, no Indenture Event
of Default has occurred and is continuing.
(c) Notice of any assumption or prepayment of Notes shall be
given to the registered Holders of the Notes which have been assumed or are to
be prepaid (and any assignee of a registered Holder which has given the
Indenture Trustee written notice of such assignment) as promptly as practicable
after the Indenture Trustee is notified thereof, and, in the case of prepayment,
in no event less than (i) 30 days before the date fixed for prepayment (provided
the Indenture Trustee receives such notification at least three Business Days
before such 30th day) in the event of the exercise by the Owner Trustee or the
Lessee of its option to terminate the Facility Lease pursuant to Section 14
thereof or (ii) one day before the date fixed for prepayment in the event of the
occurrence of the Special Purchase Event under Section 13(c) of the Facility
Lease.
(d) If the assumption described in paragraph (b) above has not
occurred, then, as required by Section 9(j) of the Facility Lease, not less than
2 Business Day. prior to the date on which the Lessee is required to make the
payments specified in Section 9(c), 9(d) or 15(e) of the Facility Lease, the
Owner Trustee will cause the Undivided Interest and the Real Property Interest
to be subjected to the lien of this Indenture by executing and delivering to the
Indenture Trustee an Undivided Interest Indenture Supplement substantially in
the form of Exhibit C to this Indenture. Subject to section 10.3 hereof, the
Indenture Trustee shall execute and accept delivery from the Owner Trustee of
the undivided Interest Indenture Supplement.
SECTION 3.10. Mutilated, Destroyed, Lost or stolen Notes.
If any Note shall become mutilated or shall be destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the Holder of
such Note, execute, and the Indenture Trustee shall authenticate and deliver in
replacement thereof, a new Note, payable in the same original principal amount
and dated the same date and of the same series as the Note so mutilated,
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destroyed, lost or stolen. The Indenture Trustee shall make a notation on each
new Note of the amount of all payments of principal theretofore made on the Note
so mutilated, destroyed, lost or stolen and the date to which interest on such
old Note has been paid. If the Note being replaced has been mutilated, such Note
shall be delivered to the Indenture Trustee who shall then deliver a certificate
of destruction of the type required by section 4.3 hereof. If the Note being
replaced has been destroyed, lost or stolen, the Holder of such Note shall
furnish to the Lessee, the Owner Trustee and the Indenture Trustee a bond or
surety agreement of such Holder as shall be satisfactory to them to save the
Lessee, the owner Trustee, the Indenture Trustee, the Trust Estate and the Lease
Indenture Estate harmless from any loss, however remote, including claims for
principal of, and premium, if any, and interest on the purportedly destroyed,
lost or stolen Note, together with evidence satisfactory to the Lessee, the
Owner Trustee and the Indenture Trustee of the destruction, loss or theft of
such Note and of the ownership thereof: provided, however, that if the Holder of
such Note is the Collateral Trust Trustee, the unsecured written undertaking of
the collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section.
SECTION 3.11. Allocation of Principal and Interest.
In the case of each Note, each payment of principal thereof
and interest thereon shall be applied, first, to the payment of accrued but
unpaid interest on such Note (as well as any interest on overdue principal or,
to the extent permitted by law, interest) to the date of such payment, second,
to the payment of the principal amount of, and premium, if any, on such Note
then due (including any overdue installment of principal) thereunder and third,
the balance, if any, remaining thereafter, to the balance of the payment of the
principal amount of, and premium, if any, on such Note.
SECTION 3.12. Certain Adjustments to Amortization Schedules of
Fixed Rate Notes.
The schedule of principal amortization attached to each Fixed
Rate Note may be adjusted at the discretion of the owner Trustee at one time
prior to a date to be specified in the Refunding supplemental Indenture (which
date shall not be sooner than March 1, 1989)7 provided, however, that no such
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adjustment shall be made by the owner Trustee which will increase or reduce the
average life of such Fixed Rate Note (calculated in accordance with generally
accepted financial practice from the date of initial issuance) by more than six
months; provided further, however, such adjustment may be made only in
connection with an adjustment to Basic Rent pursuant to section 3(d) of the
Facility Lease. If the Owner Trustee shall elect to make the foregoing
adjustment, the Owner Trustee shall deliver to the Trustee and to the Lessee at
least 60 day. prior to the first payment date (specified on the schedule to such
Fixed Rate Note) proposed to be affected by such adjustment, a certificate of
the Owner Trustee (x) stating that the Owner Trustee has elected to make such
adjustment, (y) setting forth the revised schedule of principal amortization for
such Fixed Rate Note and (z) attaching calculations showing that the average
life of such Fixed Rate Note will not be reduced or increased except as
permitted by this Section 3.12. The Trustee may rely on such owner Trustee
certificate and shall have no duty with respect to the calculations referred to
in the foregoing clause (z).
ARTICLE IV
REGISTRATION, TRANSPER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF
NOTES
SECTION 4.1. Register of Notes.
The Indenture Trustee on behalf of the Owner Trustee shall
maintain at the Indenture Trustee's Office a register for the purpose 6f
registration, and registration of transfer and exchange, of the Notes by series
and in which shall be entered the names and addresses of the owners of such
Notes and the principal amounts of the Notes owned by them, respectively. For
these purposes, the Indenture Trustee is hereby appointed transfer agent and
registrar for the Notes.
SECTION 4.2. Registration of Transfer or Exchange of Notes.
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A Holder of a Note intending to register the transfer of any
Outstanding Note held by such Holder (including any transfer in the form of a
pledge or assignment) or to exchange any Outstanding Note held by such Holder
for a new Note or Notes of the same series may surrender such Outstanding Note
at the Indenture Trustee's Office, together with the written request of such
Holder, or of its attorney duly authorized in writing, in each case with
signatures guaranteed, for the registration of such Note in the name of any
pledgee or assignee (in the case of a transfer in the form of a pledge or
assignment) or for the issuance of a new Note or Notes of the same series,
specifying the authorized denomination or denominations of any new Note or Notes
to be issued and the name and address of the Person or Persons in whose name or
names the Note or Notes are to be registered (either as pledgee or assignee or
as owner). Promptly upon receipt by the Indenture Trustee of the foregoing and
satisfaction of the requirements of sections 4.5 and 4.6 hereof, the Indenture
Trustee shall register such Note or Notes in the name or names of the Person or
Persons as shall be specified in the written request and, in the case in which a
new Note or Notes are to be issued, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver such new Note or Notes of the
same series, in the same aggregate principal amount and dated the same date as
the Outstanding Note surrendered, in such authorized denomination or
denominations as shall be specified in the written request. The Indenture
Trustee shall make a notation on each new Note of the amount of all payments of
principal theretofore made on the old Note or Notes in exchange or transfer for
which any new Note has been issued and the date to which interest on such old
Note or Notes has been paid.
SECTION 4.3. Cancellation of Notes.
All Notes surrendered to the Indenture Trustee for payment in
full, prepayment in full or registration of transfer or exchange shall be
cancelled by it; and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Notes held by it in a manner satisfactory to the
Owner Trustee and deliver a certificate of destruction to the Owner Trustee. If
the owner Trustee shall acquire any of the Notes, such acquisition shall not
operate as a redemption of or the satisfaction of the indebtedness represented
by such Notes unless and until the same shall be delivered to the Indenture
Trustee for cancellation.
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SECTION 4.4. Limitation on Timing of Registration of Notes.
The Indenture Trustee shall not be required to register
transfers or exchanges of Notes on any date fixed for the payment or prepayment
of principal of or interest on the Notes or during the fifteen days preceding
any such date.
SECTION 4.5. Restrictions on Transfer Resulting from Federal
Securities Laws; Legend.
If not prohibited by the securities Act, each Note shall be
delivered to the initial Holder thereof without registration of such Note under
the Securities Act and without qualification of this Indenture under the Trust
Indenture Act. Prior to any transfer of any Note, in whole or in part, to any
Person other than the Collateral Trust Trustee, the Holder thereof shall furnish
to the Lessee, the Indenture Trustee and the Owner Trustee an opinion of
counsel, which opinion and which counsel shall be reasonably satisfactory to the
Indenture Trustee, the owner Trustee and the Lessee, to the effect that such
transfer will not violate the registration provisions of the Securities Act or
require qualification of this Indenture under the Trust Indenture Act, and all
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:
This Note has not been registered under
the Securities Act of 1933 and may not be
transferred, sold or offered for sale in
violation of such Act.
SECTION 4.6. Charges upon Transfer or Exchange of Notes.
As a further condition to registration of transfer or exchange
of any Note, the Indenture Trustee and the Owner Trustee may charge the Holder
thereof for any stamp taxes or governmental charges required to be paid with
respect to such registration of transfer or exchange.
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SECTION 4.7. Inspection of Register of Notes.
The register of the Holders of the Notes referred to in
Section 4.1 shall at all reasonable times be open for inspection by any Holder
of a Note. Upon request by any Holder of a Note, or the Owner Trustee or the
Lessee, the Indenture Trustee shall furnish such Person, at the expense of much
Person, with a list of the names and addresses of all Holders of Notes entered
on the register kept by the Indenture Trustee indicating the series, principal
amount and number of each Note held by each such Holder.
SECTION 4.8. Ownership of Notes.
(a) Prior to due presentment for registration of transfer of
any Note, the owner Trustee and the Indenture Trustee may deem and treat the
Holder of record of much Note as the absolute owner of such Note for the purpose
of receiving payment of all amounts payable with respect to such Note and for
all other purposes, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary.
(b) The owner Trustee and the Indenture Trustee may, in their
discretion, treat the Holder of record of any Note as the owner thereof without
actual production of such Note for any purpose hereunder, except as provided in
the last sentence of section 3.8 hereof.
(c) Neither the Owner Trustee nor the Indenture Trustee shall
be bound to take notice of or carry out the execution of any trust in respect of
any Note, and may register the transfer of the same on the direction of the
Holder of record thereof, whether named as trustee or otherwise, as though such
Holder were the beneficial owner thereof.
(d) The receipt by the Holder of record of any Note of any
payment of principal, premium or interest shall be a good discharge to the Owner
Trustee and the Indenture Trustee for the same and neither the. Owner Trustee
nor the Indenture Trustee shall be bound to inquire into the title of any such
Holder.
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ARTICLE V
RECEIPT, DISTRIBUTION AND
APPLICATION OF INCOME AND PROCEEDS
FROM THE LEASE INDENTURE ESTATE
SECTION 5.1. Basic Rent, Interest an overdue Installments of
Basic Rent ant Prepayments of Interest.
Except as otherwise provided in section 5.3 or 5.7 hereof,
each payment of Basic Rent, as well as any payment of Supplemental Rent
representing interest on overdue installments of Basic Rent, received by the
Indenture Trustee at any time, shall be distributed by the Indenture Trustee in
the following order of priority: First, so much of such payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and/or interest (an well as any interest on overdue principal or, to
the extent permitted by law, interest) then due and unpaid on all Notes shall be
distributed to the Holders of the Notes ratably, without priority of one over
the otter, in the proportion that the aggregate amount of such payment or
payments then due and unpaid on all Notes held by each such Holder on such date
bears to the aggregate amount of such payment or payments then due and unpaid on
all Notes Outstanding on such date, without priority of interest over principal
or principal over interest; and second, the balance, if any, of such payment
remaining thereafter shall be distributed, concurrently with any distribution
pursuant to clause first hereof, to the owner Trustee or as the Owner Trustee
may direct. If there shall not otherwise have been distributed on any date on
within any applicable period of grace), pursuant to this Section 5.1, the full
amount then distribution pursuant to clause first of this section 5.1, the
Indenture Trustee shall distribute other payments of the character referred to
in Sections 5.4 and 5.5 then held by it or thereafter received by it, except as
otherwise provided in section 5.3, to the Holders of all Notes to the extent
necessary to enable it to make all the distributions then due pursuant to such
clause first; provided that to the extent any distribution is made from amounts
held pursuant to Section 5.4 hereof and the Lessee subsequently makes the
payment of Basic Rent or supplemental Rent in respect of which such distribution
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was made, such payment of Basic Rent or supplemental Rent shall, unless an
Indenture Default or an Indenture Event of Default shall have occurred and be
continuing, be applied to the purpose for which such amount held pursuant to
Section 5.4 had been held, subject, in all cases, to the terms of section 5.4.
The portion of each such payment made to the Indenture Trustee which is to be
distributed by the Indenture Trustee in payment of Notes shall be applied in
accordance with Section 3.11. Any payment received by the Indenture Trustee
pursuant to Section 6.8 shall be distributed to the Holders of the Notes,
ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due and unpaid on all Notes held by each
such Holder bears to the aggregate amount of the payments then due and unpaid on
all Notes Outstanding. Amounts distributed by the Indenture Trustee pursuant to
this section 5.1 shall be distributed as promptly as practicable after such
amounts are actually received by the Indenture Trustee provided, however, that
in the event the Indenture Trustee shall be directed to make payments to the
Holder of any Note by wire transfer in accordance with Section 3.8 hereof, any
amounts received by the Indenture Trustee after 11:00 A.M., New York city time,
may be distributed on the following Business Day.
SECTION 5.2. Amounts Received as Result of Event of Loss,
Deemed Loss Event, Exercise of Option to Terminate, Exercise of Cure Option or
Occurrence of the Special Purchase Event.
If an Event of Loss or Deemed Loss Event shall occur or the
Lessee shall exercise the Cure Option, and if either the Assumption Agreement or
the Undivided Interest Indenture Supplement shall have been executed and
delivered, any amounts of Casualty Value, special casualty Value or Fair Market
Sales Value received or held by the Indenture Trustee in respect of such Event
of Loss or Deemed Loss Event or exercise of the Cure Option shall, except as
otherwise provided in section 5.3, be distributed forthwith to the Owner
Participant. If the Lessee or Owner Trustee, as the case may be, shall exercise
its option to terminate the Facility Lease pursuant to section 14 thereof, or
the special Purchase Event shall have occurred, then there shall be prepaid, on
the date payments or proceeds with respect thereto are received by the Indenture
Trustee (or as soon thereafter as practicable) under section 13(c) or 14 of the
Facility Lease, as the case may be, the unpaid principal amount of all Notes,
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together with the premium, if any, and all accrued but unpaid interest thereon
to the date of such prepayment. Notice of such prepayment shall be given as
provided in section 3.9(0) and may provide that it is subject to receipt of
funds for such prepayment. Except as other-wise provided in section 5.3 or 5.7,
any payments received and amounts realized by the Indenture Trustee upon
exercise of the Lessee's or the owner Trustee's option to terminate the Facility
Lease under Section 14 thereof or upon the occurrence of the special Purchase
Event shall in each case be distributed on the date of prepayment as provided in
clause. first, second and fifth of Section 5.3
SECTION 5.3. Amounts Received After, or Held at Tine of
Indenture Event of Default under Section 6.2.
Except as otherwise provided in section 5.7, all payments
received and amounts realized by the Indenture Trustee in respect of the Lease
Indenture Estate (including any amounts realized by the Indenture Trustee from
the exercise of any remedies pursuant to the Facility Lease or Article VI of
this Indenture) after an Indenture Event of Default referred to in Section 6.3
shall have occurred and be continuing and the Notes have been accelerated
pursuant to Section 7.1, as well as all payments thereafter received or amounts
then held by the Indenture Trustee as part of the Lease Indenture Estate, shall
be distributed by the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for any Trustee's Expenses
(to the extent not previously reimbursed) and to pay the reasonable
remuneration of the Indenture Trustee, shall be applied by the Indenture
Trustee to such reimbursement and payment;
second, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of all
Notes, together with premium1 if any, plus accrued but unpaid interest
(as well as interest on overdue principal and, to the extent permitted
by law, on overdue interest) thereon to the date of distribution, shall
be distributed to the Holders of such Notes and in case the aggregate
amount so to be distributed shall be insufficient to pay all such
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Notes in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid principal amount
of all such Notes held by each such Holder, together with premium, if
any, plus accrued but unpaid interest thereon to the date of
distribution bears to the aggregate unpaid principal amount of all
Notes, together with premium, if any, plus accrued but unpaid interest
thereon to the date of distribution:
third, so much of such payments or amounts remaining as shall
be required to pay the present or former Holders of the Notes the
amounts payable to them as Indemnitees (to the extent not previously
reimbursed) shall be distributed to such Holders; and in case the
aggregate amount so to be paid to all such Holders in accordance with
this clause third shall be insufficient to pay all such amounts as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the amount of such indemnity or other payments to which
such Person is entitled bears to the aggregate amount of such indemnity
or other payments to which all such Persons are entitled:
fourth, the balance, if any, of such payments or amounts
remaining shall be applied to the payment of any other indebtedness at
the time due and owing to the Indenture Trustee or the Holders of the
Notes which this Indenture by its terms secures: and
fifth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to or upon the direction of
the owner Trustee.
SECTION 5.4. Amounts Received for Which Provision Is made in
a Transaction Document.
Except as otherwise provided in section 5.1, 5.3 or 5.7
hereof, any payments received by the Indenture Trustee in respect of the Lease
Indenture Estate far which provision as to the application thereof is made in a
Transaction Document shall be applied to the purpose for which such payment was
made in accordance with the terms of such Transaction Document, as determined,
in the first instance from instructions or other information accompanying such
payment, or, otherwise, in accordance with instructions from the payor of such
payments.
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SECTION 5.5. Amounts Received for Which No Provision Is Made.
Except as otherwise provided in Section 5.1, 5.3 or 5.7, any
payments received and any amounts realized by the Indenture Trustee in respect
of the Lease Indenture Estate
(a) for which no provision as to the application thereof is made in a
Transaction Document or elsewhere in this Article V shall be held by the
Indenture Trustee as part of the Lease Indenture Estate, and
(b) to the extent received or realized at any time after payment in full
of the principal of and premium, if any, and interest on all the Notes,
as well as any other amounts remaining as part of the Lease Indenture
Estate after payment in full of the principal of and premium, if any,
and interest on all the Notes, shall be distributed by the Indenture
Trustee in the order of priority set forth in Section 5.3 (omitting
clause second thereof).
SECTION 5.6. Payments to Owner Trustee.
Unless otherwise directed by the Owner Trustee, all payments
to be made to the Owner Trustee hereunder shall be made to the Owner Participant
by wire transfer of immediately available funds as soon as practicable but in
any event no later than the close of business on the date of receipt (assuming
the Indenture Trustee has received such funds prior to 11:00 a.m. New York City
time on the same day), to such account at such bank or trust company as the
Owner Participant shall from time to time designate in writing to the Indenture
Trustee.
SECTION 5.7. Excepted Payments.
Anything in this Article V or elsewhere in this Indenture to
the contrary notwithstanding, any Excepted Payment received at any time by the
Indenture Trustee shall be distributed as promptly as practicable to the Person
entitled to receive such Payment (such entitlement to be conclusively determined
by reference to payment instructions from such Person).
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ARTICLE VI
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF OWENR TRUSTEE; EVENTS
OF DEFAULT; REMEDIES OF THE
INDENTURE TRUSTEE
SECTION 5.1. Representations, Warranties and Covenants of
Owner Trustee.
The owner Trustee hereby covenants and agrees that (i) it will
duly and punctually pay the principal of, and premium, if any, and interest on,
the Notes in accordance with the terms thereof and this Indenture, (ii) it will
not pledge, create a security interest in or mortgage, so long as this Indenture
shall remain in effect, any of its estate, right, title or interest in and to
the Lease Indenture Estate or otherwise constituting part of the Trust Estate,
to anyone other than the Indenture Trustee, (iii) so long as this Indenture
shall remain in effect, it will not purchase or agree to purchase any property
or asset other than the Undivided Interest and the Real Property Interest and
other than as contemplated by the Transaction Documents, (iv) it will not,
except with the prior written concurrence of the Indenture Trustee or as
expressly provided in or permitted by this Indenture or with respect to the
Trust Agreement or any property not constituting part of the Lease Indenture
Estate, take any action which would result in an impairment of any Note or the
obligation of the Lessee to pay any amount under the Facility Lease which is
part of the Lease Indenture Estate (not in any event including in respect of
Excepted Payments) or any of the other rights or security created or effected
thereby, or (V) issue, or incur any obligation in respect of, indebtedness for
borrowed money except for its obligations in respect of Notes.
A signed copy of any amendment or supplement to the Trust
Agreement shall be delivered by the Owner Trustee to the Indenture Trustee and
the Lessee. This Indenture and the Lease Indenture Estate shall not be affected
by any action taken under or in respect of the Trust Agreement except as
otherwise provided in or permitted by this Indenture. The Trust Agreement may
not in any event be terminated by the owner Participant or the Owner Trustee or
revoked by the Owner Participant so long as any of the Notes or any unpaid
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obligations under this Indenture remain outstanding. The Owner Trustee may
resign as owner Trustee, appoint a successor Owner Trustee and take all
necessary and proper action to constitute one or more Persons as co-trustee(s)
jointly with the Owner Trustee or as separate trustee(s), all in accordance with
the terms and conditions of Article IX of the Trust Agreement.
Section 6.2. Indenture Events of Default.
The term Indenture Event of Default, wherever used herein,
shall mean any of the following events (whatever the reason for such Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) any of the Events of Default specified in the following
clauses of section 15 of the Facility Lease: (1) clause (i) (y), except a
failure of the Lessee to pay any amount which shall constitute an Excepted
Payment; (2) clause (i) (x), except a failure of the Lessee to pay any amount
which shall constitute an Excepted Payment or except where the Owner Trustee
shall not have rescinded or terminated the Facility Lease pursuant to Section
16(a) (i) of the Facility Lease; or (3) clause (viii); or
(b) the rescission or termination of, or the taking of action
by the Owner Trustee or the Owner Participant the effect of which would be to
rescind or terminate, the Facility Lease, whether pursuant to Section 16(a) (i)
of the Facility Lease or otherwise; or
(c) any failure by the Lessee to perform and observe Section
10(b) (3) (iii) of the Participation Agreement; or
(d) the Owner Trustee shall fail to make any payment in
respect of the principal of, or premium, if any, or interest on, the Notes
within ten (10) Busine55 Days after the same shall have become due (other than
by virtue of any failure by the Lessee to make any payment of Rent therefor); or
(e) the Owner Trustee shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 6.1 of
this Indenture, or the Owner Participant shall fail to perform or observe
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any covenant or agreement to be performed or observed by it under Section
7(b)(L) of the Participation Agreement and, in any such case, such failure shall
continue for a period of 30 days after notice thereof shall have been given to
the Owner Trustee and the Owner Participant and the Lessee by the Indenture
Trustee, specifying such failure and requiring it to be remedied.
SECTION 6.3. Enforcement of Remedies.
(a) In the event that an Indenture Event of Default shall have
occurred and be continuing, then and in every such case the Indenture Trustee,
subject to paragraph (b) of this section 6.3 and section 6.11, may, and when
required pursuant to the provisions of Article VII hereof shall, exercise any or
all of the rights and powers and pursue, subject to the rights of the Lessee
under the Facility Lease, (x) in the event such Indenture Event of Default is
referred to in paragraph (d) or (e) of section 6.2, any or all of the remedies
then available pursuant to this Article VI and Article VII, or (y) in the event
such Indenture Event of Default is referred to in paragraph (a), (b) or (a) of
Section 6.2, any or all of such remedies concurrently with the exercise and
pursuit by the Owner Trustee of any or all of the remedies then available to the
Owner Trustee under the Facility Lease.
(b) Any provisions of the Facility Lease or this Indenture to
the contrary notwithstanding, if the Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment.
SECTION 6.4. Specific Remedies; Enforcement of claims without
Possession of Notes.
Subject to sections 6.2, 6.3 and 6.11 hereof and the terms of
the documents constituting a part of the Lease Indenture Estate, upon the
occurrence and during the continuance of an Indenture Event of Default:
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(a) The Indenture Trustee may, in order to enforce the rights
of the Indenture Trustee and of the Holders of the Notes, direct payment to it
of all moneys and enforce any agreement or undertaking constituting a part of
the Lease Indenture Estate by any action, Suit, remedy or proceeding authorized
or permitted by this Indenture or by law or by equity, and whether for the
specific performance of any agreement contained herein, or for an injunction
against the violation of any of the terms hereof, or in aid of the exercise of
any power granted hereby or by Applicable Law, and in addition may sell, assign,
transfer and deliver, from time to time to the extent permitted by Applicable
Law, all or any part of the Lease Indenture Estate or any interest therein, at
any private sale or public auction with or without demand, advertisement or
notice (except as herein required. or as may be required by Applicable Law) of
the date, time and place of sale and any adjournment thereof, for cash or credit
or other property, for immediate or future delivery and for such price or prices
and on such terms as the Indenture Trustee, in its uncontrolled discretion, may
determine, or as may be required by Applicable Law, so long as the Owner
participant and the Owner Trustee are afforded a commercially reasonable
opportunity to bid for all or such part of the Lease Indenture Estate in
connection therewith. It is agreed that 90 days' notice to the Owner
participant, the owner Trustee and the Lessee of the date, time and place of any
proposed sale by the Indenture Trustee of all or any part of the Lease Indenture
Estate or interest therein is reasonable. The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the Holders of the
Notes asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.
(b) without limiting the foregoing, the Indenture Trustee, its
assigns and its legal representatives, subject to the rights of the Lessee under
the Facility Lease, shall have as to such of the Lease Indenture Estate as is
subject to the Uniform commercial code or similar law in each relevant
jurisdiction all the remedies of a secured party under the Uniform commercial
Code or similar law in such jurisdiction and such further remedies as from time
to time may hereafter be provided in such jurisdiction for a secured party.
(c) All rights of action and rights to assert claims under
this Indenture or under any of the Notes may be enforced by the Indenture
Trustee without the possession of the Notes at any trial or other proceedings
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instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Holders of the
Notes as herein provided. In any proceeding. brought by the Indenture Trustee
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any such Holders parties to such proceedings.
(d) The Indenture Trustee may exercise any other right or
remedy that may be available to it under Applicable Law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof.
Section 6.5. Rights and Remedies Cumulative.
Subject to sections 1.2, 1.3 and 6.11 hereof, (a)each and
every right, power and remedy herein specifically given to the Indenture Trustee
under this Indenture shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing
at law, in equity or by statute, and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient by the
Indenture Trustee and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy, and
(b) no delay or omission by the Indenture Trustee in the exercise of any right,
power or remedy or in the pursuance of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Owner Participant, the Owner Trustee or the Lessee or to be an acquiescence
therein.
SECTION 6.6. Restoration of Rights and Remedies.
In case the Indenture Trustee shall have proceeded to enforce
any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
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any reason or shall have been determined adversely to the Indenture Trustee,
then and in every such case the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Lessee shall be restored to their former positions and
rights hereunder with respect to the Lease Indenture Estate, and all rights,
powers and remedies of the Indenture Trustee shall continue as if no such
proceedings had been taken.
SECTION 6.7. Waiver of Past Defaults.
Any past Indenture Default or Indenture Event of Default and
its consequences may be waived by the Indenture Trustee, except an Indenture
Default or an Indenture Event of Default (i) in the payment of the principal of
or interest on any Note, subject to the provisions of Section 7.1 hereof, or
(ii) in respect of a covenant or provision hereof which, under Section 10.2
hereof, cannot be modified or amended without the consent of each Holder of a
Note then Outstanding. Upon any such waiver, such Indenture Default or Indenture
Event of Default shall cease to exist, and any other Indenture Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
SECTION 6.8. Right of Owner Trustee to Pay Rent; Note
Purchase; Substitute Lessee.
Anything in this Article VT or Article VII to the contrary
notwithstanding:
(a) an Indenture Event of Default shall be deemed cured if
such Indenture Event of Default results from non-payment of Basic Rent or
Supplemental Rent under the Facility Lease, and the Owner Trustee or the Owner
Participant shall have paid all principal of and interest on the Notes due
(other than by acceleration) on the date such Basic Rent was payable (plus
interest on such amount as required hereby) within 15 days after the receipt by
the Owner Trustee of notice of such non-payment, such receipt to be evidenced
by, among other things, any notice thereof given to the Owner Trustee in
accordance with the notice provisions of the Participation Agreement. The Owner
Trustee or the Owner Participant, upon exercising cure rights under this
paragraph (a), shall not obtain any Lien on any part of the Lease Indenture
Estate on account of such payment for the costs and expenses incurred in
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connection therewith nor, except as expressly provided in the succeeding
sentence, shall any claims of the Owner Trustee or the Owner Participant against
the Lessee or any other Person for the repayment thereof impair the prior right
and security interest of the Indenture Trustee in and to the Lease Indenture
Estate. Upon any payment by the Owner Trustee or the Owner Participant pursuant
to this Section 6.8, the Owner Trustee or the Owner Participant, as the case may
be, shall (to the extent of such payment made by it) be subrogated to the rights
of the Indenture Trustee and the holder of the Notes to receive the payment of
Rent with respect to which the Owner Trustee or the Owner Participant made such
payment and interest on account of such Rent payment being overdue in the manner
set forth in the next sentence. If the Indenture Trustee shall thereafter
receive such payment of Rent or such interest, the Indenture Trustee shall,
notwithstanding the requirements of section 5.1, on the date such payment is
received by the Indenture Trustee, remit such payment of Rent (to the extent of
the payment made by the Owner Trustee or the Owner Participant pursuant to this
section 6.8) and such interest to the Owner Trustee or the Owner Participant, as
the case may be, in reimbursement for the funds so advanced by it.
(b) Each Holder of a Note agrees, by acceptance thereof, that
if the Notes have been accelerated pursuant to Section 7.1, and the Owner
Trustee, within 30 days after receiving notice from the Indenture Trustee
pursuant to section 7 a 1 hereof, shall give written notice to the Indenture
Trustee of the Owner Trustee's intention to purchase all of the Notes in
accordance with this paragraph, accompanied by assurances of the Owner Trustee
to purchase the Notes, then, upon receipt within 10 Business Days after such
notice from the Owner Trustee of an amount equal to the aggregate unpaid
principal amount of and any premium with respect to any unpaid Notes then held
by such Holder, together with accrued but unpaid interest thereon to the date of
such receipt (as well as any interest on overdue principal and, to the extent
permitted by law, interest), such Holder will forthwith sell, assign, transfer
and convey to the Owner Trustee (without recourse or warranty of any kind other
than of title to the Notes so conveyed) all of the right, title and interest of
such Holder in and to the Lease Indenture Estate, this Indenture and all Notes
held by such Holder; provided, that no such Holder shall be required so to
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convey unless (1) the Owner Trustee shall have simultaneously tendered payment
for all other Notes issued by the Owner Trustee at the time outstanding pursuant
to this paragraph and (2) such conveyance is not in violation of any Applicable
Law.
(c) Each Holder of a Note further agrees by its acceptance
thereof that the Owner Trustee shall have the right, pursuant to section 16 of
the Facility Lease, to terminate the Facility Lease and, in connection
therewith, to arrange for the substitution of another Person as lessee under a
new lease substantially similar to the Facility Lease (hereinafter the
Substituted Lessee) and, subject to: (i) any Indenture Event of Default under
paragraphs (d) and (e) of Section 6.2 having been cured by the Owner Trustee,
(ii) the Substituted Lessee's assuming all of the obligations of the Lessee
under the Facility Lease and (iii) the Substituted Lessee's having an assigned
credit rating by standard & Poor's Corporation and Moody's Investors service,
Inc. (or, if either of such organizations shall not rate securities issued by
such Substituted Lessee, by any other nationally recognized rating organization
in the United States of America) with respect to at least one series of its debt
obligations or preferred stock equal to or better than the ratings assigned,
immediately prior to such substitution, by such organizations to comparable
securities of the Lessee immediately prior to such substitution but in no event
less than "investment grade", then the Facility Lease between the Owner Trustee
and such Substituted Lessee shall, for all purposes of this Indenture, be deemed
to be the Facility Lease subject to the lien of this Indenture.
SECTION 6.9. Further Assurances.
Subject to Section 7.6 hereof, the Owner Trustee covenants and
agrees from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.
SECTION 6.10. Right of Indenture Trust.. To Perform Covenants,
etc.
If the Owner Trustee shall fail to make any payment or perform
any act required to be made or performed by it hereunder or under the Facility
Lease or if the owner Trustee shall fail to release any Lien affecting the Lease
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Indenture Estate which it is required to release by the tents of this Indenture,
the Indenture Trustee, without notice to or demand upon the Owner Trustee and
without waiving or releasing any obligation or default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Lease Indenture Estate. All sums so
paid by the Indenture Trustee and all costs and expenses (including without
limitation reasonable fees and expenses of legal counsel and other
professionals) so incurred, together with interest thereon from the date of
payment or occurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Lease Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 6.11. Certain Other Rights of the Owner Trustee.
Notwithstanding any provision to the contrary in this
Indenture, the Owner Trustee shall at all times retain, to the exclusion of the
Indenture Trustee, all rights of the owner Trustee to exercise any election or
option or to make any decision or determination or to give or receive any
notice, consent, waiver or approval or to take any other action under or in
respect of the Facility Lease, as well as all rights, powers and remedies on the
part of the owner Trustee, whether arising under the Facility Lease or by
statute or at law or in equity or otherwise, arising out of any Default or Event
of Default subject, however, to section 10.2. without the prior written consent
of the Indenture Trustee, the exerci5e of any of the aforesaid rights so
retained by the owner Trustee shall not be exercised in such a manner as to (i)
reduce the amounts payable by the Lessee under the Facility Lease below the
amounts necessary to provide the owner Trustee with sufficient monies to make
timely payments in full of amounts due with respect to the principal of and
premium, if any, and interest on all Notes or (ii) rescind or terminate the
Facility Lease pursuant to section 16 thereof. Nor shall the owner Trustee
exercise any other right or remedy under the Facility Lease the effect of which
would be to effect such rescission or termination.
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ARTICLE VII
THE CERTAIN DUTIES OF THE OWNER
TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 7.1. Duties in Respect of Events at Default, Deemed
Loss Events and Events of Loss; Acceleration of Maturity.
In the event the Owner Trustee shall have actual knowledge of
an Indenture Event of Default, an Event of Default, a Deemed Loss Event or an
Event of Loss, the owner Trustee shall give prompt written notice thereof to the
Owner Participant, the Lessee and the Indenture Trustee. In the event the
Indenture Trustee shall have actual knowledge of an Event of Default, an
Indenture Event of Default, a Deemed Loss Event or an Event of Loss, the
Indenture Trustee shall give prompt written notice thereof to the owner
Participant, the Owner Trustee, the Lessee and each Holder of a Note. Subject to
the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11 and 7.3 hereof, Ca) the Indenture
Trustee shall take such action (including the waiver of past Defaults in
accordance with Section 6.7 hereof), or refrain from taking such action, with
respect to any such Indenture Event of Default, Event of Default, Deemed Loss
Event or Event of Loss as the Indenture Trustee shall be instructed by a
Directive, (b) if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing by the Indenture Trustee of notice
of such Indenture Event of Default, Event of Default, Deemed Loss Event or Event
of Loss to the Persons referred to above, the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding sentence, take such
action, or refrain from taking such action, but shall be under no duty to take
or refrain from taking any action, with respect to such Indenture Event of
Default, Event of Default, Deemed Loss Event or Event of Loss as it shall
determine advisable in the best interests of the Holders of the Notes of all
series and (c) in the event that an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of a Directive shall, by written notice to the Owner Trustee, declare
the unpaid principal amount of all Notes with accrued interest thereon to be
immediately due and payable, upon which de6laration such principal amount and
such accrued interest shall immediately become due and payable without further
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act or notice of any kind. For all purposes of this Indenture, in the absence of
actual knowledge, neither the owner Trustee nor the Indenture Trustee shall be
deemed to have knowledge of an Indenture Event of Default or Event of Default
except that the Indenture Trustee shall be deemed to have knowledge of the
failure of the Lessee to pay any installment of Basic Rent within 10 Business
Days after the same shall become due. For purposes of this section 7.1, neither
the owner Trustee nor the Indenture Trustee shall be deemed to have actual
knowledge of any Indenture Event of Default, Event of Default, Deemed Loss Event
or Event of Loss unless it shall have received notice thereof pursuant to
section 11.6 hereof or such Indenture Event of Default or Event of Default shall
actually be known by an officer in the corporate trust department of the Owner
Trustee or by an officer in the Corporate Trustee Administration Department of
the Indenture Trustee, as the. case may be.
SECTION 7.2. Duties in Respect of Matters Specified in
Directive.
Subject to the terms of sections 6.2, 6.3, 6.4, 6.8, 6.11, 7.1
and 7.3 hereof, upon receipt of a Directive, the Indenture Trustee shall take
such of the following actions as may be specified in such Directive: (i) give
such notice or direction or exercise such right, remedy or power permitted
hereunder or permitted with respect to the vacuity Lease or in respect of any
part or all of the Lease Indenture Estate as shall be specified in such
Directive; and (ii) take such action to preserve or protect the Lease Indenture
Estate as shall be specified in such Directive, it being agreed that without
such a Directive, the Indenture Trustee shall not waive, consent to or approve
any such matter as satisfactory to it.
SECTION 7.3. Indemnification.
The Indenture Trustee shall not be required to take or refrain
from taking any action under section 7.1 or 7.2 or Article VI hereof which shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability unless the Indenture Trustee shall have been indemnified
by the Holders of the Hates against liability, cost or expense (including
counsel fees) which may be incurred in connection therewith, or unless, in the
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reasonable judgment of the Indenture Trustee, the indemnities of the Lessee
shall be adequate for such purpose; provided, however, that if the Holder of
such Notes is the collateral Trust Trustee. the unsecured written under-taking
of the collateral Trust Trustee. in its individual capacity, shall be sufficient
indemnity for purposes of this section. The Indenture Trustee shall not be
required to take any action under section 7.1 or 7.2 or Article VI hereof nor
shall any other provision of this Indenture be deemed to impose a duty on the
Indenture Trustee to take any action, if the Indenture Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is likely to
result in personal liability or is contrary to the terms hereof or of the
Facility Lease or is otherwise contrary to law.
SECTION 7.4. Limitations on Duties; Discharge of Certain Liens
Resulting from Claims Against Indenture Trustee.
The Indenture Trustee shall have no duty or obligation to take
or refrain from taking any action under, or in connection with, this Indenture
or the Facility Lease, except as expressly provided by the terms of this
Indenture. The Indenture Trustee nevertheless agrees that it will, in its
individual capacity and at its own cost and expense, promptly take such action
as may be necessary duly to discharge all Liens on any part of the Lease
Indenture Estate which result from acts by or claims against it arising out of
events or conditions not related to its rights in the Lease Indenture Estate or
the administration of the Lease Indenture Estate or the transactions
contemplated hereby.
SECTION 7.5. Restrictions on Dealing with Lease Indenture
Estates.
Except as provided in the Transaction Documents, the owner
Trustee shall not use, operate. store, lease, control, manage, sell, dispose of
or otherwise deal with any part of the Lease Indenture Estate.
SECTION 7.6. Filing of Financing Statements and Continuation
Statements.
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Pursuant to Section 10(b) (2) of the Participation Agreement,
the Lessee has covenanted to maintain the priority of the lien of this Indenture
on the Lease Indenture Estate. The Indenture Trustee shall, at the request and
expense of the Lessee as provided in the participation Agreement, execute and
deliver to the Lessee and the Lessee will file, if not already filed, such
financing statements or other documents and such continuation statements or
other documents with respect to financing statements or other documents
previously filed relating to the lien created under this Indenture in the Lease
Indenture Estate as may be necessary to protect, perfect and preserve the lien
created under this Indenture. At any time and from time to time, upon the
request of the Lessee or the Indenture Trustee, at the expense of the Lessee as
provided in the participation Agreement (and upon receipt of the form of
document so to be executed), the owner Trustee shall promptly and duly execute
and deliver any and all such further instruments and documents as the Lessee or
the Indenture Trustee may request in order for the Indenture Trustee to obtain
the full benefits of the security interest, assignment and mortgage created or
intended to be created hereby and of the rights and powers herein granted. Upon
the reasonable instructions (which instructions shall be accompanied by the form
of document to be filed) at any time and from time to time of the Lessee or the
Indenture Trustee, the owner Trustee shall execute and file any financing
statement (and any continuation statement with respect to any such financing
statement), any certificate of title or any other document, in each case
relating to the security interest, assignment and mortgage created by this
Indenture, as may be specified in such instructions. In addition, the Indenture
Trustee and the owner Trustee will execute such continuation statements with
respect to financing statements and other documents relating to the lien created
under this Indenture in the Lease Indenture Estate as may be reasonably
specified from time to time in written instructions of any Holder of a Note
(which instructions may, by their terms, be operative only at a future date and
which shall be accompanied by the form of such continuation statement or other
document so to be filed).
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ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND
THE INDENTURE TRUSTEE
SECTION 8.1. Acceptance of Trusts; Standard of Care.
The Indenture Trustee accepts the trusts hereby created and
applicable to it and agrees to perform the same but only upon the term of this
Indenture and the Participation Agreement and agrees to receive and disburse all
moneys constituting part of the Lease Indenture Estate in accordance with the
provisions hereof, provided that no implied duties or obligations shall be read
into this Indenture or the Participation Agreement against the Indenture
Trustee. The Indenture Trustee shall enter into and perform its obligations
under the Participation Agreement, and, at the request of the Owner Trustee, any
other agreement relating to any transfer of the Undivided Interest or the Real
Property Interest or the assignment of rights under the Assignment and
Assumption or, at the request of the Owner Trustee, the purchase by any Person
of Notes or Additional Notes issued hereunder, all as contemplated hereby. The
Indenture Trustee snail not be liable under any circumstances, except for its
own willful misconduct or gross negligence. If any Indenture Event of Default
shall have occurred and be continuing, the Indenture Trustee shall exercise such
of the rights and remedies vested in it by this Indenture, subject to the
provisions hereof, and shall use the same degree of care in their exercise as a
prudent man would exercise or use in the circumstances in the conduct of his own
affairs; pravi4ed that if in the opinion of the Indenture Trustee such action
may tend to involve expense or liability, it shall not be obligated to take such
action unless it is furnished with indemnity satisfactory to it.
SECTION 8.2. No Duties of Maintenance, Etc.
Except pursuant to section 7.2 hereof and except as provided
in, and without limiting the generality of, sections 7.1 and 7.4 hereof, the
Indenture Trustee shall have no duty (i) to see to any recording or filing of
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any Transaction Document, or to see to the maintenance of any such recording or
filing, or (ii) to see to the payment or discharge of any tax, asses-tent or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, or assessed or levied against, any part of the Lease Indenture
Estate (except much as are required to be paid or discharged by it pursuant to
this Indenture or any of the other Transaction Documents) or to make or file any
reports or returns related thereto.
SECTION 8.3. Representations and Warranties of Indenture
Trustee and the Owner Trustee.
NEITHER THE OWNER TRUSTEE NOR THE INDENTURE TRUSTEE MAKES ANY
REPRESENTATION OR WARRNRY AS TO THE VALUE, CONDITION, MERCHANTABILITY OR FITNESS
FOR USE OF UNIT 2, THE UNDIVIDED INTEREST OF Any PART OF THE LEASE INDENTURE
ESTATE~OR AS TO ITS INTEREST THEREIN, OR ANY OTHER REPRESENTATION OR WARRANTY
WITH RESPECT TO UNIT 2, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE WHATSOEVER. The OWNER Trustee and the Indenture Trustee each
represents and warrants, in its individual capacity, as to itself that this
Indenture has been executed and delivered by one or mare of its officer. who are
duly authorized to execute and deliver this Indenture on its behalf.
SECTION 8.4. Moneys Held in Trust; Non-Segregation of MONEYS.
All moneys and securities deposited with and held by the
Indenture Trustee under this Indenture for the purpose of paying, or securing
the payment of, the principal of or premium or interest on the Notes shall be
held in trust. Except as provided in Sections 2.3(c), 8.8 and 11.1 hereof,
moneys received by the Indenture Trustee under this Indenture need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law; provided,
however, that any payments received or applied hereunder by the Indenture
Trustee shall be accounted for by the Indenture Trustee so that any portion
thereof paid or applied pursuant hereto shall be identifiable as to the source
thereof. Except as otherwise expressly provided herein, the Indenture Trustee
shall not be liable for any interest on any money held pursuant to this
Indenture.
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SECTION 8.5. Reliance on Writings, Use of Agents, Etc.
The Indenture Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
telegram, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. In the case of the Lessee, the Indenture Trustee may accept a copy
of a resolution of the Board of Directors or any duly constituted and authorized
committee of the Board of Directors of the Lessee, certified by the Secretary or
an Assistant Secretary of the Lessee as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly adopted by
such Board or committee and that the same is in full force and effect. As to the
aggregate unpaid principal amount of the Notes outstanding as of any date, the
owner Trustee may for all purposes hereof rely on a certificate signed by any
Authorized Officer of the Indenture Trustee. As to any fact or matter the manner
of ascertainment of which is not specifically described herein, the Indenture
Trustee may for all purposes hereof rely on a certificate, signed by the
Chairman of the Board, the President, any vice President and the Treasurer or
the secretary or any Assistant Treasurer or Assistant secretary of the Lessee ,
or a Holder of a Note or any Responsible Officer of the owner Trustee, as the
case may be, as to such fact or matter, and such certificate shall constitute
full protection to the Indenture Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
furnish to the Owner Trustee upon request such information and copies of such
documents as the Indenture Trustee may have and as are necessary for the Owner
Trustee to perform its duties under Article III hereof. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys selected by it in good faith and with reasonable care, and,
with respect to matters relating to the Notes, the Lease Indenture Estate and
its rights and duties under this Indenture and the other Transaction Documents,
may, at the expense of the Lessee, or, if the Lessee shall have failed to pay or
provide for the payment thereof, at the expense of the Lease Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
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employed by it in good faith and with reasonable care, and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by it
in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons so selected. Unless otherwise specified herein or in any
other Transaction Document, any opinion of counsel referred to in this Indenture
or in such other Transaction Document may be relied on by the Indenture Trustee
to the extent it is rendered by an attorney or firm of attorneys satisfactory to
the Indenture Trustee (which may be counsel to the Owner Participant, the Owner
Trustee, the Lessee or any party to any Transaction Document).
SECTION 8.6. Indenture Trustee. to Act Solely as Trustee.
The Indenture Trustee acts hereunder solely as trustee as
herein provided and not in any individual capacity, except as otherwise
expressly provided herein; and except as provided in sections 9(a) and 9(b) of
the Participation Agreement or Section 7.4 or 8.1 hereof, all Persons having any
claim against the Indenture Trustee arising from matters relating to the Notes
by reason of the transactions contemplated hereby shall, subject to the lien and
priorities of payment as herein provided and to Sections 3.6 and 5.7, look only
to the Lease Indenture Estate for payment or satisfaction thereof.
SECTION 8.7. Limitation on Rights Against Registered
Holders, the Owner Trustee or Lease Indenture Estate.
The Indenture Trustee shall be entitled to be paid or
reimbursed for Trustee's Expenses as provided herein and in the other
Transaction Documents. Nonetheless, the Indenture Trustee agrees that it shall
have no right against the Holders of the Notes, the Owner Trustee (except to the
extent included in Transaction Expenses payable by the Owner Participant) or,
except as provided in Article V and section 6.4 or this Article VIII, the Lease
Indenture Estate for any fee as compensation for its services hereunder.
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SECTION 8.8. Investment of certain Payments Held by the
Indenture Trustee
Any amounts held by the Indenture Trustee hereunder other than
pursuant to section 2.3(c) or 11.1 hereof shall be invested by the Indenture
Trustee from time to time as directed in writing by the owner participant at the
expense and risk of the owner participant in (i) obligations of, or guaranteed
as to interest and principal by, the United states Government maturing not more
than 90 days after such investment, open market commercial paper of any
corporation incorporated under the laws of the United states of America or any
state thereof rated "prime-l" or its equivalent by Moody's Investors service,
Inc. or "A-1" or its equivalent by standard & Poor's corporation or (iii)
certificates of deposit maturing within 90 days after such investment issued by
commercial banks organized under the laws of the United states of America or of
any political subdivision thereof having a combined capital and surplus in
excess of $500,QOO,00O; provided, however, that the aggregate amount at any one
time so invested (a) in open market commercial paper of any corporation shall
not exceed $2,000,000 and (b) in certificates of deposit issued by any one bank
shall not exceed $lo,00O,000. Any income or gain realized as a result of any
such investment shall be applied to make up any losses resulting from any such
investment to the extent such losses shall not have been paid by the owner
Trustee or the owner participant pursuant to this section 8.8. Any further
income or gain so realized shall be promptly distributed (in no event later than
the next Business Day) to the owner Trustee or the owner participant, except
after the occurrence and during the continuance of an Indenture Event of
Default. The Indenture Trustee shall have no liability for any loss resulting
from any investment made in accordance with this section. Any such investment
may be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any distribution required by Article V hereof.
Section 8.9. No Responsibility for Recitals, etc.
The Indenture Trustee makes no representation or warranty as
to the correctness of any statement, recital or representation made by any
Person other than the Indenture Trustee in this Indenture, any other Transaction
Document or the Notes.
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SECTION 8.10. Indenture Trustee May Engage in Certain
Transactions.
The Indenture Trustee may engage in or be interested in any
financial or other transaction with the Lessee, the owner Participant, the owner
Trustee and any other party to a Transaction Document, provided that if the
Indenture Trustee determines that any such relation is in conflict with its
duties under this Indenture, it shall eliminate the conflict or resign as
Indenture Trustee.
SECTION 8.11. Construction of Ambiguous Provisions.
The Indenture Trustee, subject to section 8.1 hereof, may
construe any ambiguous or inconsistent provisions of this Indenture, and any
such construction by the Indenture Trustee shall be binding upon the
Noteholders. In construing any such provision, the Indenture Trustee will be
entitled to rely upon opinions of counsel and will not be responsible for any
loss or damage resulting from reliance in good faith thereon, except for its own
gross negligence or willful misconduct.
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1. Resignation and Removal of Indenture Trustee
Appointment of Successor.
(a) The Indenture Trustee may resign at any time without cause
by giving at least 30 days' prior written notice to the Owner Participant, the
Owner Trustee, the Lessee and to each Holder of a Note, such resignation to be
effective upon the acceptance of such trusteeship by a successor. In addition,
the Indenture Trustee may be removed without cause by a Directive delivered to
the Owner Participant, the owner Trustee, the Lessee and the Indenture Trustee,
and the Indenture Trustee shall promptly give notice thereof in writing to each
Molder of a Note. In the case of the resignation or removal of the Indenture
Trustee, a successor trustee may be appointed by such a Directive. If a
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successor trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee or any
Holder of a Note may apply to any court of competent jurisdiction to appoint a
successor to act until such time, if any, as a successor shall have been
appointed as above provided. The successor so appointed by such court shall
immediately and without further act be superseded by any successor appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor trustee, however appointed, shall execute
and deliver to its predecessor and to the owner Trustee an instrument accepting
such appointment, and thereupon such successor, without further act, shall
become vested with all the estates, properties, rights, powers and duties of its
predecessor hereunder in the trusts under this Indenture applicable to it with
like effect as if originally named the Indenture Trustee; but, nevertheless,
upon the written request of such successor trustee or receipt of a Directive,
its predecessor shall execute and deliver an instrument transferring to such
successor trustee, upon the trusts herein expressly applicable to it, all the
estates, properties, rights and powers of such predecessor under this Indenture,
and such predecessor shall duly assign, transfer, deliver and pay over to such
successor trustee all moneys or other property then held by such predecessor
under this Indenture.
(c) Any successor trustee, however appointed, shall be a bank
or trust company organized under the laws of the United States or any
jurisdiction thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 9.1, be the Indenture
Trustee under this Indenture without further act.
6091.BURNHAM.1106.51:1
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<PAGE>
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 10.1. Supplements, Amendments and Modifications to
This Indenture without Consent of Holders of Notes.
The Indenture Trustee may, with the written consent of the
owner Trustee, from time to time and at any time execute a supplement to this
Indenture without the consent of the Holders of Notes outstanding in order to
(i) cure any defect, omission or ambiguity in this Indenture or for any other
purpose if such action does not adversely affect the interests of such Holder.,
(ii) grant or confer upon the Indenture Trustee for the benefit of such Holders
any additional rights, remedies, powers, authority or security which may be
lawfully granted or conferred and which are not contrary to or inconsistent with
this Indenture, (iii) add to the covenants or agreements to be observed by the
Owner Trustee and which are not contrary to this Indenture or surrender any
right or power of the Owner Trustee, (iv) confirm or amplify, as further
assurance, any pledge under, and the subjection to any lien or pledge created or
to be created by, this Indenture, of the properties covered hereby, or subject
to the lien or pledge of this Indenture additional revenues, properties or other
collateral, including pursuant to an undivided Interest Indenture supplement,
(v) qualify this Indenture under the provisions of the Trust Indenture Act, (vi)
evidence the appointment of any successor Indenture Trustee pursuant to the
terms hereof, (vii) evidence the assumption and release affected by the
Assumption Agreement, or (viii) execute supplemental indentures to evidence the
issuance of and to provide the terms of, Additional Notes to be issued hereunder
in accordance with the terms hereof.
SECTION 10.2. Supplements and Amendments to this Indenture and
the Facility Lease with Consent of Holders of Notes.
Except as provided in section 10.1 hereof, at any time and
from time to time, (i) upon receipt of a Directive, the Indenture Trustee shall
execute a supplement to this Indenture (to which the owner Trustee has agreed in
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<PAGE>
writing) for the purpose of adding provisions to, or changing or eliminating
provisions of, this Indenture, but only as specified in such Directive and, (ii)
upon receipt of a written instruction from the Lessee and the Owner Trustee, the
Indenture Trustee shall consent to any amendment of or supplement to the
Facility Lease or execute and deliver such written waiver or modification of the
terms of the Facility Lease to which the Owner Trustee may agree; provided,
however, that, without the consent of the Holders of all the Notes then
Outstanding no such supplement or amendment to this Indenture or the Facility
Lease, or waiver or modification of the terms of either thereof, shall (x)
modify any of the provisions of this Section or of section 7.1 or 7.2 hereof or
Section 4 of the Facility Lease or of the definition of Directive contained in
Appendix A hereto or the definition of Indenture Event of Default herein, reduce
the amount of the Basic Rent, Casualty Value, Termination Value, Special
Casualty Value or any payment under or pursuant to Section 13(c) or 16 of the
Facility Lease as set forth in the Facility Lease below such amount as is
required to pay the full principal of, and premium, if any, and interest on, the
Notes when due, or extend the time of payment thereof, (y) except as permitted
by clause (x) above, modify, amend or supplement the Facility Lease or consent
to the termination or any assignment thereof, in any case reducing the Lessee's
obligations in respect of the payment of the Basic Rent, Casualty Value,
Termination Value, Special casualty Value or any payment under or pursuant to
Section 13(c) or 16 of the Facility Lease below the amount referred to in clause
(x) above, or (z) deprive the Holders of any Note, of the lien of this Indenture
on the Lease Indenture State (except as contemplated by section 3.9(b)) or
materially adversely affect the rights and remedies for the benefit of such
Holders provided in Article VI of this Indenture; and, provided, further, that,
without the consent of the Holders of all the Notes then Outstanding and
affected thereby no such supplement or amendment to this Indenture or the
Facility Lease, or waiver or modification of the terms of either thereof, shall
reduce the amount or extend the time of payment of any amount payable under any
Note, reduce or modify the provisions for the computation of the rate of
interest owing or payable thereon, adversely alter or modify the provisions of
Article V with respect to the order at priorities in which distributions
thereunder with respect to the Notes shall be made, or reduce, modify or amend
any indemnities in favor of the Holders of the Notes. Anything to the contrary
609l.BURNHAM.ll06.5l:l
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<PAGE>
contained herein notwithstanding, without the necessity of the consent of the
Holders of Notes or the Indenture Trustee, (a) any indemnities in favor of the
Owner Trustee or the Owner Participant may be modified, amended or changed and
(b) the Owner Trustee may enter into any agreement with respect to the Lease
Indenture Estate which by its terms does not become effective prior to the
satisfaction and discharge of this Indenture, provided. however, that any
agreement entered into by the owner Trustee pursuant to this clause (b) shall
not materially adversely affect the Indenture Trustee or the Holder of any Note.
notwithstanding the foregoing, the Indenture Trustee shall, upon receipt of a
written instruction from the Lessee and the Owner Trustee, consent to an
amendment of the definitions of "Deemed Loss Event", "Event of Loss" and "Final
Shutdown" contained in or appended to the Facility Lease, this Indenture or any
other Transaction Document. The Owner Trustee shall deliver to the Indenture
Trustee a copy of each amendment to the Facility Lease whether or not the
Indenture Trustee is required to consent or otherwise act with respect thereto.
SECTION 10.3. Certain Limitations on Supplements and
Amendments.
If in the opinion of the Owner Trustee or the Indenture
Trustee, each of which shall be entitled to rely on counsel for purposes of this
section 10.3, any document required to be executed by either of them pursuant to
the terms of section 10.1 or 10.2 does not comply with the provisions of this
Indenture or adversely affects any right, immunity or indemnity in favor of, or
increases any duty of, the owner Trustee or the Indenture Trustee under this
Indenture, the Facility Lease or the Participation Agreement, the owner Trustee
or the Indenture Trustee, as the case may be, may in its discretion decline to
execute such document.
SECTION 10.4. Directive Need Not Specify Particular Form of
Supplement or Amendment.
It shall not be necessary for any Directive furnished pursuant
to section 10.2 hereof to specify the particular form of the proposed documents
to be executed pursuant to such Section, but it shall be sufficient if such
request shall indicate the substance thereof.
6091.BURNHAM.1106.51:1
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<PAGE>
SECTION 10.5. Trustee to Furnish Copies of Supplement or
Amendment.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 10.2, the
Indenture Trustee shall mail, by first-class mail, postage prepaid, a conformed
copy thereof to each Holder of an Outstanding Note at the address of such Person
set forth in the register kept pursuant to Section 4.1 but the failure of the
Indenture Trustee to mail such conformed copies shall not impair or affect the
validity of such document.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Moneys for Payments in Respect of Notes to be
Held in Trust.
In case the Holder of any Note shall fail to present the same
for payment on any date on which the principal thereof or interest thereon
becomes payable, the Indenture Trustee may set aside in trust the money. then
due thereon uninvested and shall pay such moneys to the Holder of such Note or
such Person upon due presentation or surrender thereof in accordance with the
provisions of this Indenture, subject always, however, to the provisions of
Sections 3.8 and 11.2.
SECTION 11.2. Disposition of Moneys Held for Payments of
Notes.
Any moneys set aside under section 11.1 and not paid to
Holders of Notes as provided in Section 11.1 shall be held by the Indenture
Trustee in trust until the latest of (i) the date three years after the date of
such setting aside, (ii) the date all other Holders of the Notes shall have
received full payment of all principal of and interest and other sums payable to
them on such Notes or the Indenture Trustee shall hold (and shall have notified
such Persons that it holds) in trust for that purpose an amount sufficient to
make full payment thereof when due and (iii) the date the Owner Trustee shall
have fully performed and observed all its covenants and obligations contained in
6091.BURNHAM.1106.51:1
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<PAGE>
this Indenture with respect to the Notes; and thereafter shall be paid to the
Owner Trustee by the Indenture Trustee on demand and thereupon the Indenture
Trustee shall be released from all further liability with respect to such
moneys; and thereafter the Holders of the Notes in respect of which such moneys
were so paid to the Owner Trustee shall have no rights in respect thereof except
to obtain payment of such moneys from the Owner Trustee. upon. the setting aside
of such moneys, interest shall cease to accrue on the Notes.
SECTION 11.3. Transfers Not to Affect Indenture or Trusts.
No Holder of a Note shall have legal title to any part of the
Lease Indenture Estate. No transfer, by operation of law or otherwise, of any
Note or other right, title and interest of any Holder of a Note in and to the
Lease Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts hereunder with respect to such Note or entitle any successor or
transferee of such Holder to an accounting or to the transfer to it of legal
title to any part of the Lease Indenture Estate.
SECTION 11.4. Binding Effect of Sale of Lease Indenture
Estate.
Any sale or other conveyance of the Lease Indenture Estate or
any part thereof by the Indenture Trustee made pursuant to the terms of this
Indenture or the Facility Lease shall bind the Holders of the Notes and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee and such Holders in and to the same. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee.
SECTION 11.5. Limitation as to Enforcement of Rights, Remedies
and Claims.
Nothing in this Indenture, whether express or implied, shall
be construed to give to any Person, other than the Owner Trustee, the Owner
Participant, the Lessee (to the extent the Lessee's consent or other action by
the Lessee is expressly provided for), the Indenture Trustee and the Holders of
6O91.BURNHAM.ll06.51:1
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<PAGE>
the Notes, any legal or equitable right, remedy or claim under or in respect of
this Indenture or any Note.
SECTION 11.6. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices given hereunder to the Lessee, the owner
Trustee, the owner participant or the Indenture Trustee shall be given in the
manner provided in section 19 of the participation Agreement. Notices by the
Indenture Trustee to any Holder of a Note shall be in writing and shall be given
in person or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified mail,
addressed to such Holder at the address met forth in the register kept pursuant
to section 4.1. whenever any notice in writing is required to be given by the
Indenture Trustee to any Holder of a Note such notice shall be effective (x) if
sent by telex, telecopy or other wire transmission, on the date of transmission
thereof, or (y) if sent by mail, three Business Days after being mailed.
SECTION 11.7. Separability of Provisions
In case any one or more of the provisions of this Indenture or
any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
hereof and any other application hereof shall not in any way be affected or
impaired.
SECTION 11.8. Benefit of Parties, Successors and & Assigns.
All representations, warranties, covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the owner
Trustee, the Indenture Trustee and their respective successors and assigns and
each Holder of a Note, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Holder of a Note shall bind
the successors and assigns of such Holder and any Holder of a Note issued in
transfer or exchange of such Note.
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6091.BURNHAM.1l05.5l:1
<PAGE>
SECTION 11.9. Survival of Representations and Warranties.
All representations and warranties made with respect to the
Notes shall survive the execution and delivery of this Indenture and the issue,
sale and delivery of any Notes and shall continue in effect so long as any Note
issued hereunder is Outstanding and unpaid.
SECTION 11.10. Bankruptcy of the Owner Trustee.
If (a) the Owner Trustee becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, or any successor provision,
(b) pursuant to such reorganization provisions the Owner Trustee is required, by
reason of the Owner Trustee being held to have recourse liability directly or
indirectly to the Holder of any Note or the Indenture Trustee, to make payment
on account of any amount payable as principal or interest on such Note and (c)
such Holder or the Indenture Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee on account
of clause (b) of this Section, then such Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Owner Trustee such Excess Amount. For
purposes of this Section, "Excess Amount" means the amount by which such payment
exceeds the amount which would have been received on or prior to the date of
such payment by such Holder or the Indenture Trustee if the Owner Trustee had
not become subject to the recourse liability referred to in clause (b) of this
Section. Nothing contained in this Section shall prevent such Holder or the
Indenture Trustee from enforcing any recourse obligation (and retaining the
proceeds thereof) of the Owner Trustee expressly provided for under this
Indenture or in the Notes.
SECTION 11.11. Bankruptcy of the Owner Participant.
The Indenture Trustee and the Holders of the Notes shall be
bound by the provisions of Section 19(f) of the Participation Agreement.
6O91.BURNHAM.11O6.51:1
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<PAGE>
SECTION 11.12. Counterpart Execution.
This Indenture and any amendment or supplement to this
Indenture may be executed in any number of counterparts and by the different
parties hereto and thereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.13. Dating of Indenture.
Although this Indenture is dated for convenience and for the
purpose of reference as of the date mentioned, the actual date or dates of
execution by the owner Trustee and the Indenture Trustee are as indicated by
their respective acknowledgments hereto annexed.
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6091.BURNHAM.1106.51:l
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Indenture to be duly executed by their respective
officers thereunto duly authorized, all as of the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under the Trust
Agreement, dated as of August 12, 1986,
with Burnham Leasing Corporation
By
----------------------------------
Authorized Officer
CHEMICAL BANK
By
----------------------------------
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6091.BURNHAM.1106.51:1
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 17th day of August, 1986, before me personally came
Kathleen D. Woods, , to me known, who, being by me duly sworn, did acknowledge,
depose and say that she resides at Boston, Massachusetts; that she is of THE
FIRST NATIONAL BANK of BOSTON, a national banking association, described in and
which executed the foregoing instrument; and that she signed her name thereto on
behalf of said association by authority of the by-laws of said association.
/s/ David A. Spivak
--------------------------
Notary Public
(NOTARIAL SEAL]
Term Expires:
DAVID A. SPIVAK
Notary Public, State of New York
No. 31-469468
Qualified in New York County
Commission Expires March 30, 1987
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6091.BURNHAM.1106.51:1
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 17th day of August, 1986, before me personally came
T.J. FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose
and say that he resides at Bethpage, New York; that he is Vice President of
CHEMICAL BANK, a New York banking corporation, described in and which executed
the foregoing instrument; an that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such corporation.
/s/ Delia T. Santiago
------------------------
Notary Public
[NOTARIAL SEAL]
Term Expires:
Delia T. Santiago
Notary Public, State of New York
No.41-643160
Qualified in Queens County
Commission Expires, March 30, 1987
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6091.BURNHAM.1106.51:1
<PAGE>
EXHIBIT A
FORM OF INITIAL SERIES NOTE
The initial Series Note shall be substantially in the following
form, with such omissions, insertions and variations as the owner Trustee may
determine with the approval of the indenture Trustee and are not inconsistent
with the provisions of the Indenture or as may be provided for in the Indenture:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, INITIAL SERIES
Issued at: New York, New York
Issue Date: August 18, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of August 12, 1986 with Burnham Leasing corporation (the owner
participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of Seventy-Three Million Nine Hundred
Sixty Thousand One Hundred Twenty Three Dollars Fifteen Cents ($73,960,123.15)
(to the extent remaining unpaid on such date) on January 15, 2016, and to pay
interest on the remaining unpaid principal amount hereof from the date hereof,
or from the most recent interest payment date to which interest has been paid or
duly provided for, semi-annually on January 15 and July 15 in each year,
commencing January 15, 1987, at the rate equal to the Variable Rate (as defined
below) per annum, until the principal hereof is paid in full or made available
for payment
Said principal shall be payable in installments consisting of
58 installments of principal commencing on January 15, 1987, and on each January
15 and July 15 thereafter, to and including January 15, 2016, each such
6091.BURNHAM.1106.5l:1
<PAGE>
principal installment to be equal to the percentage of principal amount set
forth in Schedule X hereto for the date such installment is due.
The "Variable Rate" shall mean the Applicable Percentage (as
defined below) of the rate publicly announced by Chemical Bank at its principal
office in New York city as its prime or base lending rate (any change in the
variable Rate being effective on the date such change in the variable Rate is
announced). The "Applicable Percentage" shall equal (i) 100% for the period from
August 18, 1985 through February 18, 1987, (ii) 125% for the period from
February 19, 1987 through nay 18, 1987, (iii) 150% for the period from flay 19,
1987 through August 18, 1987, and (iv) 200% thereafter. All payments of interest
shall be computed on the basis of the actual number of days elapsed in a year of
365 or 365 days, as the case may be.
Capitalized terms used in this initial Series Note which are
not otherwise defined herein shall have the meanings ascribed thereto in the
indenture (as here matter defined).
In the event any date on which a payment is due under this
initial Series Note is not a Business Day, then payment thereof may be made on
the next succeeding Business Day with the same force and effect as if made on
the date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986, as at
any time hereafter amended or supplemented in accordance with the provisions
thereof (the indenture), between the Owner Trustee and Chemical Bank, as Trustee
(the Indenture Trustee), shall be made only from the Lease indenture Estate and
the Trust Estate and the Indenture Trustee shall have no obligation for the
payment thereof except to the extent that the indenture Trustee shall have
sufficient income or proceeds from the Lease indenture Estate to make such
payments in accordance with the terms of Article V of the indenture. The Holder
hereof, by its acceptance of this Initial Series Mote, agrees that such Holder
will look solely to the income and proceeds from the Lease Indenture Estate to
the extent available for distribution to the Holder hereof as above provided,
and that neither the Owner Participant, nor, except as expressly provided in the
6091.BURNHAM.1106.51:1
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<PAGE>
indenture, the owner Trustee nor the indenture Trustee is or shall be personally
liable to the Holder hereof for any amounts payable under this initial Series
Note or for any performance to be rendered under the indenture or any other
Transaction Document or for any liability thereunder provided, however, that in
the event the Lessee shall assume all the obligations of the Owner Trustee
hereunder and under the indenture pursuant to Section 3.9cb) of the Indenture,
then all the payments to be made under this Note shall be made only from
payments made by the Lessee in accordance with the Assumption Agreement referred
to in said Section 3.9(b) and the Holder of this Note agrees that in such event
it will look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the indenture, on presentment of this initial Series Note
at the indenture Trustee's Office, or as otherwise provided in the indenture.
The Holder hereof, by its acceptance of this initial series
Note, agrees that each payment received by it hereunder shall be applied in the
manner set forth in Section 3.11 of the indenture. The Holder of this initial
Series Note agrees, by its acceptance hereof, that it will duly note by
appropriate means all payments of principal or interest made hereon and that it
will not in any event transfer or otherwise dispose of this initial Series Note
unless and until all such notations have been duly made.
This initial Series Note is the initial Series Note referred
to in the indenture. The indenture permits the issuance of additional Series of
Notes, as provided in Section 3.5 of the indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease indenture Estate are pledged to the
Indenture Trustee to the extent provided in the indenture as security for the
payment of the principal of and premium, if any, and interest on this Initial
series Note and all other Notes issued and outstanding from time to time under
the indenture. Reference is hereby made to the indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
initial Series Note and of the rights of, and the nature and extent of the
6091.BURNHAM.ll06.51:l
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<PAGE>
security for, the Holders of the other Notes and of certain rights of the Owner
Trustee, as well as for a statement of the terms and conditions of the trust
created by the Indenture, to all of which terms and conditions the Holder hereof
agrees by its acceptance of the initial Series Note.
This initial Series Note is subject to mandatory prepayment in
full as provided in Section 5.2 of the indenture, such prepayment being without
premium but including accrued interest to the date of prepayment. In addition
this initial Series Note is subject to special prepayment, in whole only, on the
date on which the Fixed Rate Note is issued in accordance with Section 3.5 of
the Indenture, by giving written notice to the Indenture Trustee and the Holder
of this initial Series Note at least one Business nay prior to such date, such
prepayment being without premium, together with accrued interest to the date of
prepayment.
In case an indenture Event of Default shall occur and be
continuing the unpaid balance of the principal of this Initial series Note and
any other Notes together with all accrued but unpaid interest thereon may,
subject to certain rights of the owner Trustee or the Owner Participant
contained or referred to in the indenture, be declared or may become due and
payable in the manner and with the effect provided in the indenture. Upon such
declaration there shall also be due and payable as a special premium on this
initial Series Note an amount equal to a ratable portion of the fees and.
expenses then payable to the collateral Trust Trustee, as certified to the
indenture Trustee by the collateral Trust Trustee.
The lien upon the Lease indenture Estate is subject to being
legally discharged prior to the maturity of this Initial Series Note upon the
deposit with the indenture Trustee of cash or certain securities sufficient to
pay this initial Series Note when due or an assumption of the obligation of the
owner Trustee under this initial Series Note and the Indenture, in each case in
accordance with the terms of the indenture.
There shall be maintained at the indenture Trustee's office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the indenture. The transfer of this Initial Series Note is
registrable, as provided in the Indenture, upon surrender of this Initial Series
6091.BURNHAM.1106.51:1
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<PAGE>
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Initial Series Note, the owner Trustee and the
Indenture Trustee may treat the person in whose name this Initial Series Note is
registered as the owner hereof for the purpose of receiving payments of
principal of, and premium if any, and interest on this initial series Note and
for all other purposes whatsoever, whether or not this Initial Series Note be
overdue, and neither the owner Trustee nor the Indenture Trustee shall be
affected by notice to the contrary.
This Initial Series Note shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the owner Trustee has caused this initial
series Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
owner Trustee under a Trust Agreement
referred to in the text of this Initial
Series Note
By
This Note is one of the series of Notes referred to therein
and in the within mentioned indenture.
CHEMICAL BANK,
as Indenture Trustee
By
--------------------------
Authorized officer
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6091.BURNHAM.1106.5l:l
<PAGE>
Schedule X to
Initial Series
Note
Percentage of Original
Date Principal Amount
---- ----------------------
1/15/1987 0.0000000
7/15/1987 0.7016396
1/15/1988 0.7384757
7/15/1988 0.7772457
1/15/1989 0.8180511
7/15/1989 0.8609988
1/15/1990 0.9062012
7/15/1990 0.9537768
1/15/1991 1.0038500
7/15/1991 1.0565522
1/15/1992 1.1120212
7/15/1992 1.1704023
1/15/1993 1.2318484
7/15/1993 1.2965204
1/15/1994 1.3645878
7/15/1994 1.4362286
1/15/1995 1.5116304
7/15/1995 1.5909912
1/15/1996 1.6745183
7/15/1996 1.7624305
1/15/1997 1.8549581
7/15/1997 1.9523434
1/15/1998 2.0548414
7/15/1998 2.1627206
1/15/1999 2.2762634
7/15/1999 2.3957672
1/15/2000 2.5215450
7/15/2000 2.6539261
1/15/2001 2.5453508
7/15/2001 1.0774839
1/15/2002 2.0906588
7/15/2002 1.1370145
1/15/2003 2.2089704
7/15/2003 1.2009288
1/15/2004 2.3340767
7/15/2004 1.2684540
1/15/2005 2.4662505
7/15/2005 2.1039441
1/15/2006 2.1540938
7/15/2006 1.8716079
1/15/2007 2.2740681
7/15/2007 1.9751458
1/15/2008 2.6349983
7/15/2008 4.3337672
1/15/2009 4.5612900
7/15/2009 4.8007577
Page 1 of 2
6091.BURNHAM.1106.51A:1
1/15/2010 5.0527975
7/15/2010 5.3180693
1/15/2011 5.5972680
7/15/2011 1.1526685
1/15/2012 0.0000000
7/15/2012 0.0000000
1/15/2013 0.0000000
7/15/2013 0.0000000
1/15/2014 0.0000000
7/15/2014 0.0000000
1/15/2015 0.0000000
7/15/2015 0.0000000
1/15/2016 0.0000000
-----------
TOTALS 100.0000000
===========
Page 2 of 2
6091.BURNHAM.1106.51A:1
<PAGE>
ASSIGNMENT
Date: August 18, 1986
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented, among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the Initial Series Note to which this Assignment is annexed and all
rights thereunder.
FIRST PV FUNDING CORPORATION
By
-------------------------
Vice President
6O91.BURNHAM.1106.5l:l
<PAGE>
EXHIBIT B
FORM OF ASSUMPTION AGREEMENT
To: The Holders (as defined below) from time to tile of the Notes
(as defined below) of The First National Bank of Boston, not in
its individual capacity, but solely as owner trustee under a
Trust Agreement dated as of August 12, 1986 with Burnham Leasing
corporation (in such capacity, the "Issuer") under the Than
Indenture, Mortgage, security Agreement, and assignment of Rents
(the "Indenture") dated as of August 12, 1986 among the Issuer
and Chemical Bank, as trustee (the "Trustee").
The undersigned, PUBLIC SERVICE COMPANY OF NEW MEXICO, a New
Mexico corporation (the "obligor"), for the purpose of satisfying in part its
obligation to make certain payments under that certain Facility Lease dated as
of August 12, 1984 between the Issuer and the Obligor (the "Facility Lease"'),
does hereby covenant and agree with the Holders (as defined in the indenture)
from time to time of the Notes (as defined in the indenture) as follows:
SECTION 1. The Obligor does hereby agree to, and does hereby,
assume unconditionally the payment of the principal of the Notes and of the
interest and premium (if any) thereon, at the rates provided in the Notes, when
and as the same shall become due and payable, whether at maturity or upon
mandatory prepayment or upon declaration or otherwise, according to the terms of
the Notes and of the Indenture.
SECTION 2. The assumption herein contained shall be binding
upon the Obligor, its successors and assigns and shall remain in full force and
effect irrespective of the power or authority of the Issuer to issue the Notes
or to execute, acknowledge and deliver the indenture or the validity of the
Notes, or the indenture, or of any defense whatsoever that the issuer may or
might have to the payment of the Notes (principal, interest or premium), or to
6091.BURNHAM.ll06.51:
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<PAGE>
the performance or observance of any of the provisions or conditions of the
Indenture or any Note, or of the existence or continuance of the issuer as a
legal entity; nor shall said assumption be affected by the merger,
consolidation, or other dissolution of the issuer or the sale or other transfer
of the property of the Issuer or by the issuer as an entirety, or substantially
so, to any other person: nor shall the assumption be discharged or impaired by
any act, failure or omission whatsoever on the part of any Holder of any Notes
or the Trustee, including, among other such acts, failures and omissions, the
following:
(a) any failure to present any Note for payment or to demand
payment thereof, or to give to the Obligor notice of dishonor and
non-payment of any Note when and as the same may become due and payable,
or notice of any failure on the part of the issuer to do any act or
thing or to perform or keep any covenant or agreement by it to be done,
kept or performed under the terms of Notes or the Indenture:
(b) any extension of the obligation of any Note, either
indefinitely or for any period of time, or any other modification in the
obligations under any Note or the indenture or of the Issuer thereon or
in connection therewith;
(c) any act or failure to act with regard to any Note or the
indenture or anything which might vary the risk of the Obligor; and
(d) any action taken under the indenture and the Notes in the
exercise of any right or power thereby conferred or any failure or
omission on the part of the Trustee or the Holder of any Note to enforce
any right or security given under the Indenture or any Note, or any
waiver of any right or any failure or omission on the part of the
Trustee or any Holder of any Note to enforce any right of any Holder of
any Note against the issuer;
provided, always, that the specific enumeration of the above mentioned acts,
failures, waivers or omissions shall not be deemed to exclude any other acts,
failures, waivers or omissions though not specifically mentioned herein, it
being the purpose and intent of this Assumption Agreement that the obligation of
the obligor shall be absolute and unconditional to the extent herein specified
and shall not be discharged, impaired or
6091.BURNHAM.1106.51:1
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<PAGE>
and shall not be discharged, impaired or varied except by the
payment of the principal of and interest on any Note and any premium
thereon in case of prepayment, and then only to the extent of such
payments.
SECTION 3. (a) Subject to the requirements of Sections 10(b)
(3) (iii) and (b) (3) (iv) of the Participation Agreement and to the provisions
of paragraph (b) of this Section, nothing contained in this Assumption Agreement
shall prevent any consolidation or merger of the Obligor with or into any other
corporation or corporations (whether or not affiliated with the Obligor), or
successive consolidations or mergers in which the Obligor or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease of all or substantially all the property of the Obligor, to any other
corporation or other entity authorized to acquire and operate the same provided,
however, and the Obligor hereby covenants and agrees, that upon any such
consolidation, merger, sale, conveyance or lease, all obligations of the Obligor
under this Assumption Agreement on or in respect of any Note, and the due and
punctual performance and observance of all of the covenants and conditions of
this Assumption Agreement to be performed by the Obligor, shall be expressly and
duly assumed, by an agreement reasonably satisfactory in form and substance to
the Trustee, executed and delivered by the corporation (if other than the
Obligor) formed by such consolidation, or into which the Obligor shall have been
merged, or by the corporation which shall have acquired such property.
(b) The Indenture Trustee (as defined in the Indenture),
subject to applicable provisions of the Indenture, may rely upon an opinion of
counsel to the Obligor as conclusive evidence that any such merger,
consolidation, sale or conveyance complies with the provisions of this Section.
SECTION 4. The Obligor does hereby consent to all of the terms
and conditions of each Note and of the Indenture, and hereby waives any and all
rights of notice of any fact or facts or circumstance or circumstances
whatsoever and consents to any extension or extensions of time of any Payment or
payments, or of any other act or thing which any Holder or Holders of any Note
or the Issuer may agree to consent to, either expressly, by acquiescene or
otherwise, and hereby agrees not to claim or enforce any rights of subrogation
6091.BURNHAM.ll06.51:1
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<PAGE>
or any other right or privilege which might otherwise arise on account of any
payment made by it or act or thing done by it on account of or in accordance
with its assumption herein contained, unless and until. all of the Notes have
been fully paid and discharged.
SECTION 5. The assumption herein expressed may be transferred
or assigned at any time or from time to time and shall be considered to be
transferred and assigned upon the transfer of any Note, whether with or without
the consent of or notice to the obligor or the Issuer. The obligor hereby agrees
to execute and deliver such instruments and to do such acts and things requested
by the Trustee as shall be reasonably necessary to carry out and effectuate the
purposes and intents of this Assumption Agreement. This Assumption Agreement may
not be amended or modified in any respect without the prior written consent
(evidenced as provided in the Indenture) of the Holders of not less than a
majority in principal amount of the Notes Outstanding (as defined in the
Indenture) I provided, however, that without the written consent of the Holders
of all of the Notes outstanding, no such amendment or modification shall be
effective which will change any of the provisions of Sections 1, 2, 4 or S of
this Assumption Agreement. The Obligor agrees to file with the Indenture Trustee
a duplicate original of each such consent.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By
-----------------------
Title:
ATTEST:
- ---------------
Title:
B-4
6091.BURNHAM.ll06.51:l
<PAGE>
EXHIBIT C
FORM OF UNDIVIDED INEREST SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE NO. dated as of _________ ________,
_________,to the TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS (hereinafter, together with supplements thereto, the Indenture) dated as
of August 12, 1986, between THE FIRST NATIONAL BANK OF BOSTON (FNB), not in its
individual capacity, but solely as trustee (the Owner Trustee) under a Trust
Agreement, dated as of August 12, 1986, between FNB, whose address is 100
Federal Street, Boston, Massachusetts 02110, and BURNHAM LEASING CORPORATION,
AND CHEMICAL BANK, a New York banking corporation (the Indenture Trustee), whose
address is 55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, in accordance with Section 9(j) of the Facility
Lease, the Owner Trustee is obligated, in certain cases, to cause the Undivided
Interest and the Real Property Interest to be subjected to the Lien of the
Indenture and
WHEREAS, in order to further secure the obligations referred
to in the Indenture, the Owner Trustee desires to grant to the Indenture Trustee
the security interest and realty mortgage herein provided and the parties hereto
desire that the Indenture be regarded (i) to the extent that the Undivided
Interest constitutes personal property, as a "security agreement" and as a
"financing statement" under the Uniform Commercial Code and (ii) to the extent
that the Undivided Interest and the Real Property Interest constitute fixtures
or real property, as a realty mortgage;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.1. The Indenture. This Supplemental Indenture
No.______ shall be construed as supplemental to and amendatory of the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
6O91.BURNHAM.1lO6.51.1
C-1
<PAGE>
reference herein and is hereby ratified, approved and confirmed.
SECTION 1.2. Definition. capitalized terms used herein, but
which are not otherwise defined herein shall have the meaning. set forth in
Appendix A to the Indenture.
SECTION 1.3. Recording Information. The Indenture was recorded
on August 18, 1984, in Maricopa County, Arizona [describe] [specify
other recorded documents] (specify other places of recordation].
SECTION 1.4. Governing Law. This Supplemental Indenture No. __
and the Indenture shall, for all purposes, be construed in accordance with and
governed by the laws of the State of New York except to the extent that the laws
of the State of Arizona 8hall be mandatorily applicable thereto.
SECTION 1.5. Security Interest and Realty Mortgage. As further
security for the due and punctual payment of the principal of and premium, if
any, and interest on the Notes according to their respective terms and effect
and the performance and observance by the Owner Trustee of all the covenants and
agreements made by it or on its behalf in the Notes, the Participation Agreement
and the Indenture, the Owner Trustee does, by its execution and delivery hereof,
hereby grant a security interest in, bargain, convey, warrant, assign, transfer,
mortgage, pledge and set over unto the Indenture Trustee, and to its successors
and assigns in trust, the following (which shall be a part of the Lease
Indenture Estate for all purposes of the Indenture and the other Transaction
Documents):
(l) the Undivided Interest and the Real Property Interest,
including, but without limitation, the Owner Trustee's Share of all
capital Improvements (including any which constitute fixtures under
Applicable Law) now existing or which hereafter may become part of the
Undivided Interest;
(2) all right, title and interest of the Owner Trustee in, to
and under (a) the Bill of Sale, (b) the ANPP Participation Agreement,
(c) the Deed and (d) the Assignment of Beneficial Interest, including,
6091.BURNHAM.1106.51:1
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<PAGE>
but without limitation, all amounts of Rent, insurance proceeds and
condemnation, requisition and other awards and payments of any kind for
or with respect to any part of the Lease Indenture Estate as
contemplated in such documents;
(3) all other property of every kind and description, real,
personal and mixed, and interests therein now held or hereafter acquired
by the owner Trustee pursuant to any term of any Transaction Document,
whether or not subjected to the Lien of the Indenture by an indenture
supplemental hereto; and
(4) all proceeds of the foregoing;
but excluding, however, from the Lease Indenture Estate and all
Excepted Payments; and subject, however, to the terms and provisions of
the Indenture and (ii) rights of the Lessee under the Facility Lease.
To HAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in the
Indenture.
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the owner Trustee may exercise all of its rights
under the documents specified in clause (2) above to the same extent as if its
right, title and interest therein had not been assigned to the Indenture Trustee
to the extent set forth above, except that the Indenture Trustee shall receive
all payments of Assigned Payments and all moneys and securities required to be
held by or deposited with the Indenture Trustee hereunder.
The owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
C-3
6091.BURNHAM.1106.51:1
<PAGE>
SECTION 1.6. Real Estate Remedies. In addition to the remedies
specified in the Indenture (including but without limitation Section 6.4
thereof) or otherwise available pursuant to Applicable Law, to the extent that
any portion of the Lease Indenture Estate constitutes fixtures or real property,
the Indenture and this Supplemental Indenture No.__ shall be, and shall be
deemed to be, a realty mortgage and assignment of rents with respect to all
items of real property and fixtures and the Indenture Trustee shall have all the
rights, remedies and benefits of a mortgagee of real property under Applicable
Law (including, but without limitation, rights and remedies pursuant to Arizona
Revised Statutes Section 33-702.3, or any comparable successor provision) and
the Owner Trustee shall be and be deemed to be, a mortgagor with respect to such
fixtures and real property.
SECTION 1.7. certain Releases. In case a release from the
security and other interests created by Section 1.5 hereof by the Indenture
Trustee of a portion of the Undivided Interest shall be necessary in order to
enable the owner Trustee or the Lessee to perform its covenants and agreements
set forth in the Transaction Documents or in the ANPP Participation Agreement or
the owner Trustee or the Lessee to carry out any action required by Section 8 of
the Facility Lease, the Indenture Trustee shall execute and deliver to, or as
directed by, the owner Trustee or the Lessee an appropriate instrument or
instruments provided to the Indenture Trustee by the Owner Trustee or the Lessee
(in due form for filing or recording), so releasing a portion of the Undivided
Interest, provided, however, that the Indenture Trustee shall have first
received an officers' Certificate in form and substance reasonably satisfactory
to the Indenture Trustee, executed by the Lessee, accompanied by an opinion of
counsel reasonably satisfactory to the Indenture Trustee, each of which shall be
to the effect that all necessary actions have been or are being taken
simultaneously with such release in connection with the proposed action to
comply with the terms of this Indenture and Section 8 of the Facility Lease.
SECTION 1.8. Severance. The parties hereto understand and
agree that Unit 2 and the Common Facilities (including the Undivided Interest),
each Capital Improvement and each part thereof is or shall be severed, and shall
be and remain severed, from the real estate constituting the PVNGS Site and even
if physically attached thereto, shall retain the character of personal property,
6091.BURNHAM.1lO6.5l:1
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<PAGE>
shall be treated as personal property with respect to the rights of all persons
whomsoever, shall not be or become fixtures or otherwise part of the real estate
constituting the PVNGS Site, and, by virtue of its nature as personal property,
shall not be affected in any way by any instrument dealing with the real estate
constituting the PVNGS Site.
SECTION 1.9. ANPP Participation Agreement.
The provision by the Owner Trustee to the Indenture Trustee of the realty
mortgage and the security interest contemplated by this Supplemental Indenture
No.______ is in compliance with the provisions of the ANPP Participation
Agreement, including, but without limitation, Section 15.6.3.2 thereof.
8ECTION 1.10. Appointment of Co-Trustees or Separate Trustees.
(a) At any time or times, when necessary or prudent or for the purpose of
meeting the legal requirements of any jurisdiction in which any part of the
Lease Indenture Estate may, at any time, be located, the Indenture Trustee,
except as set forth in subsection (b) (6) of this Section 1.10, may, and upon
receipt of a Directive shall, appoint one or more Persons to act as co-trustee
of all or any such part of the Lease Indenture Estate or to act as separate
trustee of any property constituting part thereof, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
Person or Persons any property, title, right or power deemed necessary or
desirable, subject to the remaining provisions of this Section 1.10. Except as
set forth in subsection (b) (6) of this Section 1.10 the owner Trustee shall
join in any such appointment upon the request of the Indenture Trustee, but such
joining will not be necessary for the effectiveness of such appointment.
(b) Every separate trustee or co-trustee shall be appointed
subject to the following terms:
(1) The rights, powers, duties and obligations conferred or
imposed upon any such separate trustee or co-trustee shall not be
greater than those conferred or imposed upon the Indenture Trustee, and
such rights and powers shall be exercisable only jointly with the
Indenture Trustee, except to the extent that, under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
6091.BURNHAM.1106.51:1
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<PAGE>
such act or acts, in which event, except as set forth in subsection (b)
(6) of this Section 1.10, such rights and powers shall be exercised by
such separate trustee or co-trustee subject to the provisions of
subsection (b) (4) of this Section 1.10.
(2) The Indenture Trustee may at any time, by an instrument in
writing executed by it, accept the resignation of, and may (and upon the
receipt of a Directive, shall) remove any separate trustee or co-trustee
appointed under this Section 1.10.
(3) No trustee under the Indenture and this supplemental
Indenture No. ______, shall be liable by reason of any act or omission
of any other trustee or co-trustee under this Indenture.
(4) Except as set forth in subsection (b) (6) of this Section
1.10, no power given to such separate trustee or co-trustee shall be
separately exercised hereunder by such separate trustee or co-trustee
except with the consent in writing of the Indenture Trustee.
(5) The Indenture Trustee shall maintain custody of all money
and securities.
(6) Notwithstanding anything contained to the contrary in this
Section 1.10, to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly
or through a separate trustee under the direction and control of the
Indenture Trustee, the Owner Trustee, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such
jurisdiction, which separate trustee shall have full power and authority
to take all action hereunder as to matters relating to such jurisdiction
without the consent of the Indenture Trustee, but subject to the same
limitations in any exercise of his power and authority as those to which
the Indenture Trustee is subject.
6091.BURNHAM.l106.5l:l
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<PAGE>
(C) Upon the acceptance in writing of such appointment by any
such separate trustee or co-trustee, it shall be vested with the estates or
property to which its appointment relates as specified in the instrument of
appointment, subject to all the term. of the Indenture and this supplemental
Indenture No. ______.
(4) Any separate trustee or co-trustee may, at any tire,
constitute the Indenture Trustee, its agent or attorney-in-fact, with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of the Indenture and this supplemental Indenture No._______ on its
behalf and in its name. If a separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 1.11. Separability of Provisions. In case any one or
more of the provisions of this supplemental Indenture No.______ or any
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof and
the Indenture and any other application hereof and thereof shall not in any way
be affected or impaired.
SECTION 1.12. Counterpart Execution. This supplemental
Indenture No. _________may be executed in any number of counterparts and by the
different parties hereto and thereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
6091.BURNHAM.l106.5l:l
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this indenture to be duly executed by their respective
officers thereunto duly authorized, all as of the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under the Trust Agreement
dated as of August 12, 1986, with
Burnham Leasing Corporation
By
----------------------------
Title:
CHEMICAL BANK
By
----------------------------
Title:
6091.BURNHAM.1106.51:1
C-8
<PAGE>
SCHEDULE 1
to
INDENTURE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) 2.2666667% undivided interest
in and to the property described under A below and (ii) a 0.7555556% undivided
interest in and to the property described in B below.
A. Unit 2 of the Palo Verde Nuclear Generating Station
(PVNGS), located in Maricopa County, Arizona, approximately 55 miles west of the
city of Phoenix, Arizona, and approximately 16 riles west of the city of
Buckeye, Arizona, consisting of:
I. Unit 2 combustion Engineering "System 80" pressurized water reactor nuclear
steam supply system (the NSSS). The NSSS is comprised of a reactor vessel
containing 241 fuel assemblies with approximately 100 tons of enriched uranium
(fuel assemblies, however, are not part of Unit 1 and are not included in the
Undivided Interest being sold), two steam generators, four reactor coolant pumps
and various additional systems and subsystems. The licensed thermal rating of
the NSSS is 3800 Mw.
II. Unit 2 GE TCSF-43, 1800 RPM tandem-compound, six flow, reheat
turbine-generator including turbine, generator, moisture separator-reheater,
exciter, controls, and auxiliary subsystems. The turbine-generator is conductor
cooled and rated at 1,554 XVA at 24,000 V, 3 phase, 60 Hz, 1.5 in Hg ABS back
pressure, and approximately 1,363 MW maximum gross electric output.
III.Unit 2 146 ft. inside diameter, steel-lined, prestressed concrete
cylindrical containment building with a hemispherical dome designed for 60 psig.
The containment building houses the reactor system.
6091.BURNHAM.ll06.5l:1
<PAGE>
IV. Unit 2 auxiliary systems arid equipment including engineered safeguards
systems, reactor auxiliary systems and turbine-generator auxiliary systems
associated with items I, II, and III above, extending to and including the Unit
2 start-up transformer.
V. Unit 2 cooling tower system consisting of three (3) mechanical draft cooling
towers, including a closed cycle circulating water systems, make-up water
systems and essential spray ponds.
VI. Unit 2 radioactive waste treatment system, including liquid, gaseous, arid
solid waste subsystems, controls, instrumentation, storage, handling and
shipment facilities.
VII. Unit 2 emergency diesel-generator system, including a diesel-generator
building which contains two diesel generators, fuel oil systems, storage tanks,
control arid instrumentation Systems and other equipment.
VIII. Unit 2 internal communication systems, including associated
interconnections and computer data links.
BUT EXCLUDING;:
I. Nuclear fuel for Unit 2, including spare fuel assemblies.
II. Spare Parts (Unit 2).
III. Transmission facilities (including any and all facilities
and equipment providing interconnection between the Unit 2
turbine generator and the ANPP High Voltage switchyard,
including step-up transformers and standby equipment and
systems).
6091.BURNHAM.1106.5l:l
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<PAGE>
IV. Oil and diesel fuel inventories (Unit 2).
B. All PVNGS common facilities, INCLUDING
BUT NOT LIMITED TO:
I. Surveillance systems, including associated radioactive monitoring
systems and equipment.
II. Water treatment facilities and transport systems for supply of
waste water effluent.
BUT EXCLUDING
I. Nuclear fuel, including spare fuel assemblies.
II. All transmission and ANPP High Voltage
switchyard facilities.
III Administration Building.
IV. Administration Annex Building.
V. Technical Support Center.
VI. Visitor Center.
VII External communication systems and equipment, including
associated interconnections and computer data links.
VIII. Parking lot improvements, road improvements, fencing and dikes.
IX. Spare parts (common facilities).
X. Simulator.
XI. Oil and diesel fuel inventories.
XII. Real property, beneficial interest in Title USA company of
Arizona Trust No. 530, and project Agreement interests
described in schedule 2.
XIII. Warehouse.
-3-
6091.BURNHAM.1106.5l:l
<PAGE>
SCHEDULE 2
to
INDENTURE
REAL ESTATE INTEREST DESCRIPTION
The Real Estate Interest is a (i) 0.6548444% undivided
interest in the land described in I below, a (ii) 0.7555555% undivided interest
in the rights and interests described in II below, and (iii) a 0.7555556%
undivided interest in the right arid interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Qua arid Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 3: The East half of Section Four (4), Township One (1) South, Range
Six (S) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 4: The West half of Section Twenty-six (26), Township One (1) North,
Range six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (S)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of Section 27.
PARCEL NO. 6: The Southeast quarter of section Twenty-eight (28), Township One
(1) North, Range Six (S) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
6091.BURNHAM.1106.51:l
<PAGE>
PARCEL NO. 7: The East half of Section Thirty-three (33), Township one (1)
North, Range Six (C) West of the Gila and Salt River Base and Meridian, Maricopa
county, Arizona.
PARCEL NO. 8: All of Section Thirty-four (34) Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of section Thirty-five (35), Township One (1) North,
Range Six (C) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township One (1)
South, Range six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1)South, Range Six (6)
West of the Gila arid salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township one (I) North, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGNNING at the Southeast corner of the said East half of the
Southwest quarter of section 23; thence West, an assured bearing along
the South line of the said East half of the Southwest quarter of
Section 23, for a distance of 762.a4 feet; thence North 0 degrees 03
minutes 39 seconds West; parallel to the East line of the said East
half of the Southwest quarter of Section 23, for a distance of 1946.46
feet to a point on the South right-of-way line of the 200 foot wide
HASSAXAMPA-SALOME HIGHWAY, as recorded in Book 12 of Road flaps, page
92, Maricopa County Recorder, Maricopa County, Arizona; thence
continuing North 0 degrees 03 minutes 39 seconds West for a distance of
234.15 feet to a point on the North right-of-way line of said highway;
thence South 58 degrees 43 minutes 35 seconds East, along said North
6091.BURNHAM.1106.51:1
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<PAGE>
right-of-way line for a distance of 992.17 feet to a point on the said
East line of the East half of the Southwest quarter of Section 23;
thence South 0 degrees 03 minutes 39 seconds East, along said East line
for a distance of 234.15 feet to a point on the said South right-of-way
line; thence continuing South 0 degrees 03 minutes 39 seconds East for
a distance of 1483.31 feet to the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 52, Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HUSSAYAMPA PUMPING STATION AND EFFLUENT PIPELINE
All real property, leases, licenses, easements, rights-of-way
and other property held by Title USA Company of Arizona Trust No.530 established
by that certain Trust Agreement dated October 15, 1975, as amended, but
excluding therefrom all improvements.
III. EMISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permit., which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the Nuclear Plant Site (as
defined in the ANPP Participation Agreement).
6091.BURNHAM.1106.51:l
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<PAGE>
When Recorded, Return to: Greg R. Nielsen
SNELL & WILMER
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
SUPPLEMENTAL INDENTURE NO.1
Dated as of November 18, 1986
To
TRUST. INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of August 12, 1986
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of August 12,
1966 with Burnham Leasing
Corporation
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Original Indenture Recorded August 18, 1986, as
Instrument No. 86-439394 in Maricopa County, Arizona
Recorder's Office.
================================================================================
6091.BURNHAM.DEBT.147:1
<PAGE>
SUPPLEMENTAL INDENTURE No. 1 dated as of November is, 1986 to
Trust Indenture, Mortgage, Security Agreement and Assignment Of Rents dated as
of August 12, 1986, between THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (FNB), not in its individual capacity, but solely as Owner
Trustee the Owner Trustee) under a Trust Agreement dated as of August 12, 1986,
between FNB, whose address is 100 Federal Street, Boston, Massachusetts 02110,
with Burnham Leasing corporation, a New York corporation, and CHEMICAL BANK, a
New York banking corporation (the Indenture Trustee), whose address is 55 Water
Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee and the Indenture Trustee have
entered into a Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of August 12, 1986 (the Indenture) pursuant to which the Owner
Trustee has issued the Initial Series Note;
WHEREAS, Section 3.5(1) of the Indenture provides, among other
things, that the Initial Series Note may be refunded with Additional Notes;
WHEREAS, Section 3.5(4) of the Indenture provides, among other
things, that the Owner Trustee and the Indenture Trustee may enter into
indentures supplemental to the Indenture for, among other things, the purpose of
establishing the terms, conditions and designations of Additional Notes;
WHEREAS, the Owner Trustee desires to issue Additional Notes
to effect a refunding of the Initial Series Note and to enter into this
Supplemental Indenture No. 1 to establish the terms, conditions and designations
of such Additional Notes; and
WHEREAS, Section 10.1(viii) of the Indenture provides that,
without the consent of Holders of the Notes outstanding, the Indenture Trustee
may, with the written consent of the Owner Trustee, from time to time and at any
time execute a supplement to the Indenture in order to evidence the issuance of
and to provide the terms of Additional Notes;
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:
609l.BURNHAM.DEBT.147:l
<PAGE>
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in Appendix A to the
Indenture.
SECTION 2. Terms, Conditions and Designations of the Additional Notes.
(a) The Fixed Rate Notes.
There is hereby created and established a separate series of
Notes of the Owner Trustee designated "Nonrecourse Promissory Notes, Fixed Rate
Series" herein referred to as the Fixed Rate Notes. The Fixed Rate notes shall
be payable as to principal and bear interest on the principal amount thereof as
follows:
Fixed Rate Note Interest Principal
Due Rate Amount
--------------- -------- ---------
January 15, 1992 8.05% $2,716,000
January 15, 1997 8.95% $10,645,000
July 15, 2012 10.15% $60,598,000
-----------
$73,959,000
===========
Each Fixed Rate Note shall bear interest on the principal amount thereof from
time to time Outstanding from the date thereof until paid at the rate of
interest set forth therein. The principal amount of each Fixed Rate Note shall
be payable as set forth in Schedule 1 attached thereto, as such Schedule may be
adjusted, in the case of the Fixed Rate Note due July 15, 2012, from time to
time in accordance with the terms of the Indenture, this Supplemental Indenture
No. 1 and such Fixed Rate Note. Installments of interest on and principal of
(and premium, if any, on) each Fixed Rate Note shall be due and payable at the
rates of interest and on the dates specified in such Fixed Rate Note. The Fixed
Rate Note due January 15, 1992 shall be substantially in the form of Exhibit A
is to this Supplemental Indenture No. 1. The Fixed Rate Note due January 15,
1997 shall be substantially in the form of Exhibit A-2 to this supplemental
Indenture No. 1. The Fixed Rate Note due July 15, 2012 shall be substantially in
the form of Exhibit A-3 to this Supplemental Indenture No. 1.
6091. BURNHAM. DEBT. 147:1
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<PAGE>
(b) Final Date for Adjusting Amortization Schedules of Fixed
Rate Notes.
The date prior to which the schedule of principal amortization
attached to the Fixed Rate Note due July 15, 2012 may be adjusted at the
discretion of the Owner Trustee, as provided in Section 3.12 of the Indenture,
is July 15, 1997. Section 3.12 of the Indenture to the contrary notwithstanding,
in the case of the Fixed Rate Note due July 15, 2012, the maximum increase or
decrease in average life shall be two years.
SECTION 3. Miscellaneous.
(a) Effective Date of Supplemental Indenture.
This Supplemental Indenture No. 1 shall be and become
effective upon the execution hereof by the parties hereto.
(b) Counterpart Execution.
This Supplemental Indenture No. 1 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts. shall together constitute but one and the
same instrument.
(c) Execution as Supplemental Indenture.
This Supplemental Indenture No. 1 is executed and shall be
construed as an Indenture Supplemental to the Indenture and, as provided in the
Indenture, this Supplemental Indenture No. 1 forms a part thereof.
(d) Disclosure.
Pursuant to Arizona Revised Statutes Section 33-401, the
beneficiary of the Trust Agreement is Burnham Leasing Corporation, a 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.
-3-
6091. BURNHAM. DEBT. 147:1
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Supplemental Indenture No. 1 to be duly executed
by their respective officers thereunto duly authorized, all as of the date first
set forth above.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
owner Trustee under the Trust Agreement
dated as of August 12, 1988, with
Burnham Leasing Corporation
By
--------------------------------
Assistant Vice President
CHEMICAL BANK,
By
--------------------------------
Vice President
-4-
6091.BURNHAM.DEBT.147:1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24tn day of November 1986, before me personally cane
Martin P. Henry, to me known, who, being by me duly sworn, did acknowledge,
depose and say that he resides at Boston, Massachusetts: that he is a Assistant
Vice President of THE FIRST NATIONAL BANK OF BOSTON, a national banking
association, described in and which executed the foregoing instrument; and that
he signed his name thereto on behalf of said association by authority of the
Board of Directors of such association.
/s/ Delia T. Santiago
-------------------------
Notary Public
(NOTARIAL SEAL] Term Expires: Delia T. Santiago
Notary Public, State of New York
No. 41-3451160
Qualified in Oueens County
Commission Expires. March 30, 1987
-5-
6091.BURNHAM.DEBT. 147:1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of November, 1986, before me personally came
T. J. FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose
and say that he resides at Bethpage, New York; that he is a Vice President of
CHEMICAL BANK, a New York banking corporation, described in and which executed
the foregoing instrument; and that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such corporation.
/s/ Delia T. Santiago
-------------------------
Notary Public
(NOTARIAL SEAL) Term Expires:
6091. BURNHAM. DEBT. 147:1
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<PAGE>
EXHIBIT A-1
TO SUPPLEMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 1992)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1992)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of August 12, 1986 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV CORPORATION, or registered
assigns, the principal sum of $2,716,000 (Two Million Seven Hundred Sixteen
Thousand Dollars) on January 15, 1992 together with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the aggregate amount of such
principal sum remaining unpaid from time to time from the date of this Fixed
Rate Note until due and payable, in arrears, at the rate of 8.05% per annum.
Payments of principal installments of this Fixed Rate Note shall be made in the
"principal amount payable" and on the "payment dates" specified in Schedule 1
hereto. Payments of accrued interest on this Fixed Rate Note shall be made on
January 15 and July 15 in each year, commencing January 15, 1987, to and
including the last "payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined)
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.05% (computed
on the basis of a 360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
6091. BURNHAM. DEBT. 147:1
<PAGE>
In the event any date on which a payment is due under this
Fixed Rate Mote is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
lock solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees. that in such event it will
look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's office, or as otherwise provided in the Indenture.
609l.BURNHAM.DEBT.147:l
-2-
<PAGE>
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note is not subject to prepayment in whole or
in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
6091.BURNHAM.DEBT.147:l
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<PAGE>
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments. of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6O9l . BURNHAM. DEBT. 147:1
-4-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of August 12, 1986 with
Burnham Leasing Corporation
By
----------------------------------
Assistant Vice President
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
--------------------------------
Vice President
6O9l.BURNHAM.DEBT.147:1
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<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1992)
Schedule of Principal Amortization
$2,716,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
July 15, 1990 $310,000
January 15, 1991 770,000
July 15, 1991 802,000
January 15, 1992 834,000
----------
Principal Amount $2,716,000
==========
Page 1 of 1
6091. BURNHAM. DEBT. 147:1
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First WV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
------------------------
President
<PAGE>
EXHIBIT A-2
TO SUPPLEMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 1997)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1997)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of August 12, 1986 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of $10,645,000 (Ten Million six Hundred
Forty Five Thousand) on January 15, 1997 together with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the aggregate amount of such
principal sum remaining unpaid from time to time from the date of this Fixed
Rate Note until due and payable, in arrears, at the rate of 8.95% per annum.
Payments of principal installments of this Fixed Rate Note shall be made in the
"principal amount payable" and on the "payment dates" specified in schedule 1
hereto. Payments of accrued interest on this Fixed Rate Note shall be made on
January 15 and July 15 in each year, commencing January 15, 1987, to and
including the last "payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.95% (computed
on the basis of a 360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
<PAGE>
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture) between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture.. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
6091.BURNHAM.DEBT.147:l
-2-
<PAGE>
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Motes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
The Fixed Rate Note may be prepaid in whole or in part at any
time on or after January 15, 1992 by the Owner Trustee upon the giving of not
less than 30 days notice (as provided in the Indenture) and at the following
prepayment prices (expressed as a percentage of the unpaid principal amount
hereof), together with interest accrued to the date fixed for prepayment:
6091. BURNHAM. DEBT. 147:1
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<PAGE>
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 date fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred. to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.BURNHAM.DEBT.147: 1
-4-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of August 12, 1986 with
Burnham Leasing Corporation
By
--------------------------------
Assistant Vice President
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
---------------------------------
Vice President
6091. BURNHAM. DEBT. 147:1
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<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1997)
Schedule of Principal Amortization
$10,645,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
July 15, 1992 $ 867,000
January 15, 1993 906,000
July 15, 1993 947,000
January 15, 1994 989,000
July 15, 1994 1,033,000
January 15, 1995 1,080,000
July 15, 1995 1,128,000
January 15, 1996 1,178,000
July 15, 1996 1,231,000
January 15, 1997 1,286,000
-----------
Principal Amount $10,645,000
===========
Page 1 of 1
6091.BURNHAM.DEBT. 147:1
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
-------------------------
President
<PAGE>
EXHIBIT A-3
TO SUPPLEMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JULY 15, 2012)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JULY 15, 2012)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee). under a Trust Agreement
dated as of August 12, 1986 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV, FUNDING CORPORATION, or
registered assigns, the principal sum of $60,598,000 (Sixty Million Five Hundred
Ninety Eight Thousand) on July 15, 2012 together with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the aggregate amount of such
principal sum remaining unpaid from time to time from the date of this Fixed
Rate Note until due and payable, in arrears, at the rate of 10.15% per annum.
Payments of principal installments of this Fixed Rate Note shall be made in the
"principal amount payable" and on the "payment dates" specified in Schedule 1
hereto, as such Schedule may be revised from time to time in accordance with the
Indenture, Supplemental Indenture No. 1 thereto and the terms contained herein.
Payments of accrued interest on this Fixed Rate Note shall be made on January 15
and July 15 in each year, commencing January 15, 1987, to and including the last
"payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined)
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 11.15%
(computed on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium. or interest shall be overdue.
<PAGE>
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture) , between the Owner Trustee and Chemical
Bank, as Trustee (the Indenture Trustee), shall be made only from the Lease
Indenture Estate and the Trust Estate and the Indenture Trustee shall have no
obligation for the payment thereof except to the extent that the Indenture
Trustee shall have sufficient income or proceeds from the Lease Indenture Estate
to make such payments in accordance with the terms of Article V of the
Indenture. The Holder hereof, by its acceptance of this Fixed Rate Note, agrees
that such Holder will look solely to the Trust Estate and the income and
proceeds from the Lease Indenture Estate to the extent available for
distribution to the Holder hereof as above provided, and that neither the Owner
Participant nor, except as expressly provided in the Indenture, the Owner
Trustee nor the Indenture Trustee is or shall be personally liable to the Holder
hereof for any amounts payable under this Fixed Rate Note or for any performance
to be rendered under the Indenture or any other Transaction Document or for any
liability thereunder; provided, however, that in the event the Lessee shall
assume all the obligations of the Owner Trustee hereunder and under the
Indenture pursuant to section 3.9(b) of the Indenture, then all the payments to
be made under this Fixed Rate Note shall be made only from payments made by the
Lessee under this Fixed Rate Note in accordance with the Assumption Agreement
referred to in said Section 3.9(b) and the Holder of this Fixed Rate Note agrees
that in such event it will look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustees Office, or as otherwise provided in the Indenture.
6091.BURNHAM.DEBT.147:l
-2-
<PAGE>
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1997, in connection with an adjustment to Basic Rent under
Section 3(d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.! of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent or the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
6091. BURNHAM. DEBT. 147:1
-3-
<PAGE>
This Fixed Rate Note is subject to prepayment in whole as
contemplated by Section 5.2 of the Indenture and in the circumstances therein
described. In addition, this Fixed Rate Note may be prepaid in whole or in part
at any time on or after January 15, 1992 by the Owner Trustee upon the giving of
not less than 30 days notice (as provided in the Indenture) and at the following
prepayment prices (expressed as a percentage of the unpaid principal amount
hereof) , together with interest accrued to the date fixed for prepayment.
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, 1996 105.684
January 15, 1999 105.278
January 15, 2000 104.872
January 15, 2001 104.466
January 15, 2002 104.060
January 15, 2003 103.654
January 15, 2004 103.248
January 15, 2005 102.842
January 15, 2006 102.436
January 15, 2007 102.030
January 15, 2008 101.624
January 15, 2009 101.218
January 15, 2010 100.812
January 15, 2011 100.406
and thereafter at the principal amount thereof, together with interest accrued
to the date fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Mote upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an
6091. BURNHAM. DEBT. 147:1
-4-
<PAGE>
assumption of the obligation of the Owner Trustee, under this Fixed Rate Note
and the Indenture, in each case in accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.BURNHAM.DEBT. 147:1
-5-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of August 12, 1986 with
Burnham Leasing Corporation
By
-------------------------------
Assistant Vice President
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
-------------------------------
Vice President
6091.BURNHAM.DEBT.147:l
-6-
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JULY 15, 2012)
Schedule of Principal Amortization
$60,598,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
July 15, 1997 $1,344,000
January 15, 1998 1,412,000
July 15, 1998 1,283,000
January 15, 1999 1,210,000
July 15, 1999 862,000
January 15, 2000 1,291,000
July 15, 2000 919,000
January 15, 2001 1,378,000
July 15, 2001 981,000
January 15, 2002 1,471,000
July 15, 2002 1,047,000
January 15, 2003 1,571,000
July 15, 2003 1,117,000
January 15, 2004 1,677,000
July 15, 2004 1,192,000
January 15, 2005 1,790,000
July 15, 2005 1,272,000
January 15, 2006 2,074,000
July 15, 2006 1,586,000
January 15, 2007 1,807,000
July 15, 2007 1,690,000
January 15, 2008 1,969,000
July 15, 2008 2,914,000
January 15, 2009 3,062,000
July 15, 2009 3,217,000
January 15, 2010 3,381,000
July 15, 2010 3,552,000
Page 1 of 2
6091.BURNHAM.DEBT.147.1
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JULY 15, 2012)
Schedule of Principal Amortization
(Continued)
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
January 15, 2011 $ 3,732,000
July 15, 2011 3,922,000
January 15, 2012 4,121,000
July 15, 2012 1,754,000
-----------
Principal Amount $60,598,000
===========
Page 2 of 2
6091.BURNHAM.DEBT.147:1
<PAGE>
ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company. of New Mexico and said Collateral Trust Trustee, without recourse., the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
------------------------
President
<PAGE>
When recorded, return to: Greg R. Nielsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of December 15, 1986
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of July 31,
1986, with chase Manhattan
Realty Leasing Corporation
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Sale and Leaseback of a .7933333% Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2 and a
.2644444% Undivided Interest in Certain Common
Facilities
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
CONSTRUCTION, GOVERNING LAW, INTERPRETATION
AND DEFINITIONS
SECTION 1.1 Governing Law ........................................... 2
SECTION 1.2 Headings and Table of Contents .......................... 2
SECTION 1.3 Definitions; Construction of
References; Schedules ................................... 2
SECTION 1.4 Disclosure of Beneficiaries ............................. 3
ARTICLE II
SECURITY
SECTION 2.1 Grant of Security Interest; Mortgage .................... 4
SECTION 2.2 Payments Under the Facility Lease ....................... 6
SECTION 2.3 Release of Lien on Lease Indenture Estate ............... 7
SECTION 2.4 Power of Attorney ....................................... 9
-i-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION, FORM AND
REGISTRATION OF NOTES
Page
----
SECTION 3.1 Limitation on Notes .................................... 10
SECTION 3.2 Execution of Notes ..................................... 10
SECTION 3.3 Effect of Certificate of
Authentication ......................................... 10
SECTION 3.4 Creation of the Initial Series
Note; Aggregate Principal Amount,
Dating and Terms; Prerequisites to
Authentication and Delivery of the Initial
Series Note; Application of Proceeds ................... 11
SECTION 3.5 Additional Notes ....................................... 12
SECTION 3.6 Security for and Parity of Notes ....................... 15
SECTION 3.7 Source of Payments Limited ............................. 15
SECTION 3.8 Place and Medium of Payment ............................ 16
SECTION 3.9 Prepayment of notes; Assumption by
Lessee; Notice of Assumption or Prepayment ............. 17
SECTION 3.10 Muti1ated, Destroyed, Lost or Stolen Notes ............. 19
-ii-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 3.11 Allocation of Principal and Interest .................. 19
ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF NOTES
SECTION 4.1 Register of Notes ..................................... 20
SECTION 4.2 Registration of Transfer or
Exchange of Notes ..................................... 21
SECTION 4.3 Cancellation of Notes ................................. 22
SECTION 4.4 Limitation on Timing of Registration of Notes ......... 22
SECTION 4.5 Restrictions on Transfer Resulting
from Federal Securities Laws;
Legend ................................................ 22
SECTION 4.6 Charges upon Transfer or Exchange
of Notes .............................................. 23
SECTION 4.7 Inspection of Register of Notes ....................... 23
SECTION 4.8 Ownership of Notes .................................... 23
iii
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE LEASE INDENTURE
ESTATE
SECTION 5.1 Basic Rent, Interest on Overdue
Installments of Basic Rent and
Prepayments of Interest ................................ 24
SECTION 5.2 Amounts Received as Result of
Event of Loss, Deemed Loss Event,
Exercise of Option to Terminate,
Exercise of Cure Option or
Occurrence of Special Purchase
Event .................................................. 25
SECTION 5.3 Amounts Received After, or Held
at Time of, Indenture Event of
Default under Section 6.2 .............................. 26
SECTION 5.4 Amounts Received for Which
Provision Is Made in a Transaction
Document ............................................... 28
SECTION 5.5 Amounts Received for Which No
provision Is Made ...................................... 28
SECTION 5.5 Payments to Owner Trustee .............................. 28
SECTION 5.7 Excepted Payments ...................................... 29
-iv-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VI
REPRESENTATIONS, WARANTIES AND COVENANTS OF
OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES
OF THE INDENTURE TRUSTEE
SECTION 6.1 Representations, Warranties and
Covenants of Owner Trustee ............................. 29
SECTION 6.2 Indenture Events of Default ............................ 30
SECTION 6.3 Enforcement of Remedies ................................ 31
SECTION 6.4 Specific Remedies; Enforcement of
Claims without possession of Notes ..................... 32
SECTION 6.5 Rights and Remedies Cumulative ......................... 33
SECTION 6.6 Restoration of Rights and
Remedies ............................................... 34
SECTION 6.7 Waiver of Past Defaults ................................ 34
SECTION 6.8 Right of Owner Trustee to Pay
Rent; Note Purchase; Substitute
Lessee ................................................. 34
SECTION 6.9 Further Assurances ..................................... 37
SECTION 6.10 Right of Indenture Trustee To
Perform Covenants, etc. ................................ 37
-v-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 6.11 Certain Other Rights of the Owner
Trustee ................................................ 37
ARTICLE VII
CERTAIN DUTIES OF THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 7.1 Duties in Respect of Events of
Default, Deemed Loss Events and
Events of Loss; Acceleration of
Maturity ............................................... 38
SECTION 7.2 Duties in Respect of Matters
Specified in Directive ................................. 39
SECTION 7.3 Indemnification ........................................ 40
SECTION 7.4 Limitations on Duties; Discharge
of Certain Liens Resulting from
Claims Against Indenture Trustee ....................... 40
SECTION 7.5 Restrictions on Dealing with Lease
Indenture Estate ....................................... 41
SECTION 7.6 Filing of Financing Statements and
Continuation Statements ................................ 41
-vi-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 8.1 Acceptance of Trusts; Standard of
Care .................................................... 42
SECTION 8.2 No Duties of Maintenance, Etc ........................... 43
SECTION 8.3 Representations and warranties of
Indenture Trustee and the Owner Trustee ................. 43
SECTION 8.4 Moneys Held in Trust;
Non-Segregation of Moneys ............................... 43
SECTION 8.5 Reliance on Writings, Use of
Agents, Etc.. ........................................... 44
SECTION 8.6 Indenture Trustee to Act Solely as
Trustee ................................................. 45
SECTION 8.7 Limitation on Rights Against
Registered Holders, the Owner
Trustee or Lease Indenture Estate ....................... 46
SECTION 8.8 Investment of Certain Payments
Held by the Indenture Trustee ............................ 46
SECTION 8.9 No Responsibility for Recitals,
etc. ..................................................... 47
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6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 8.10 Indenture Trustee May Engage in
Certain Transactions .................................... 47
SECTION 8.11 Construction of Ambiguous
Provisions .............................................. 47
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1 Resignation and Removal of
Indenture Trustee; Appointment of
Successor ............................................... 47
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
AND OTHER DOCUNENTS
SECTION 10.1 Supplements, Amendments and
Modifications to This Indenture
Without Consent of Holders of
Notes ................................................... 49
SECTION 10.2 Supplements and Amendments to this
Indenture and the Facility Lease
With Consent of Holders of Notes ........................ 49
SECTION 10.3 Certain Limitations on Supplements
and Amendments. ......................................... 51
-viii-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 10.4 Directive Need Not Specify
Particular Form of Supplement or
Amendment .............................................. 51
SECTION 10.5 Trustee to Furnish Copies of
Supplement or Amendment ................................ 52
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Moneys for Payments in Respect of
Notes to be Held in Trust .............................. 52
SECTION 11.2 Disposition of Moneys Held for
Payments of Notes ...................................... 52
SECTION 11.3 Transfers Not to Affect Indenture
or Trusts .............................................. 53
SECTION 11.4 Binding Effect of Sale of Lease
Indenture Estate ....................................... 53
SECTION 11.5 Limitation as to Enforcement of
Rights, Remedies and Claims ............................ 53
SECTION 11.6 Notices ................................................ 54
SECTION 11.7 Separability of Provisions ............................. 54
SECTION 11.8 Benefit of Parties, Successors and
Assigns ................................................ 54
-ix-
6091.CHASEU.LEASE.07:1
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
SECTION 11.9 Survival of Representations and Warranties ............. 55
SECTION 11.10 Bankruptcy of the Owner Trustee ........................ 55
SECTION 11.11 Bankruptcy of the Owner Participant .................... 55
SECTION 11.12 Counterpart Execution .................................. 56
SECTION 11.13 Dating of Indenture .................................... 56
Exhibit A-1 - Form of Fixed Rate Note (Due
January 15, 1992)
Exhibit A-2 - Form of Fixed Rate Note (Due
January 15, 1997)
Exhibit A-3 - Form of Fixed Rate Note (Due
January 15, 2016)
Exhibit B Form of Assumption Agreement
Exhibit C Form of Undivided Interest Indenture Supplement
Schedule 1 Undivided Interest Description
Schedule 2 Real Estate Interest Description
Exhibit A Form of Initial Series Note
Appendix A Definitions
-ix-
6091.CHASEU.LEASE.07:1
<PAGE>
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
dated as of December 15, 1986, between THE FIRST NATIONAL BANK OF BOSTON, a
national banking association (FNB), not in its individual capacity, but solely
as trustee (the Owner Trustee) under a Trust Agreement dated as of December 15,
1986 between FNB, whose address is 100 Federal Street, Boston, Massachusetts
02110, with Chase Manhattan Realty Leasing Corporation, and CHEMICAL BANK, a New
York banking corporation (the Indenture Trustee), whose address is 55 Water
Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee has entered into a Participation Agreement,
dated as of December 15, 1986 among the Owner Participant, First PV Funding
Corporation, a Delaware corporation, Public Service Company of New Mexico, a New
Mexico corporation, and the Indenture Trustee;
WHEREAS, the Owner Trustee, acting on behalf of the Owner Participant,
pursuant to the Trust Agreement and the Participation Agreement, intends to
purchase the Undivided Interest and the Real Property Interest from Public
Service Company of New Mexico and lease the Undivided Interest and the Real
Property Interest to Public Service Company of New Mexico pursuant to the
Facility Lease;
WHEREAS, in order to finance a portion of the Purchase Price of the
Undivided Interest, the Owner Trustee desires to issue its promissory notes
hereunder with such promissory notes to be substantially in the form of Exhibits
A-1, A-2 and A-3 hereto;
WHEREAS, in order to finance all or a portion of the Supplemental
Financing Amount of Capital Improvements and to refund Notes of any series
previously issued, the Owner Trustee may desire to issue additional promissory
notes hereunder (the Additional Notes) secured on a pari passu basis with other
Notes Outstanding from time to time;
WHEREAS, in order to secure the obligations referred to herein, the
Owner Trustee desires to grant to the Indenture Trustee the security interest
herein provided and the parties hereto desire that this Indenture be regarded as
a security agreement" and as a "financing statement" for such security agreement
under the Uniform Commercial Code;
6091.CHASEU2.LEASE.07:1
<PAGE>
NOW, THEREFORE, in consideration of. the premises, of the acceptance by
the Indenture Trustee of the trusts hereby created and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CONSTRUCTIONI GOVERNING LAW,
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Governing Law.
This Indenture (i) is being executed and delivered in the
State of New York, (ii) shall be deemed to be a contract made in such State and
(iii) for all purposes shall be construed in accordance with and governed by the
laws of the State of New York, except to the extent that the laws of the State
of Arizona are mandatorily applicable hereto.
SECTION 1.2. Headings and Table of Contents.
The division of this Indenture into articles and sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
SECTION 1.3. Definitions; Construction of References; Schedules.
In this Indenture, unless the context otherwise requires:
(a) the term this Indenture means this instrument, together with all
exhibits, appendices and schedules hereto, as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto pursuant to the provisions hereof; to designated Articles,
Sections and other subdivisions of this instrument unless otherwise indicated;
6Q9 1 CHASEUZ. LEASE. 07:1
-2-
<PAGE>
(c) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in Appendix A hereto, and the
rules of construction set forth in Appendix A hereto shall be applicable hereto.
(e) Attached as Schedule 1 hereto.is a description of the
Undivided Interest and attached as Schedule 2 hereto is a description of the
Real Property Interest.
SECTION 1.4. Disclosure of Beneficiaries.
Pursuant to Arizbna Revised Statutes Section 33-401, Ci) the
beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation, whose address is One Chase Manhattan Plaza
(20th Floor), flew York, New York 10021, Attention of Leasing Administrator. and
Cii) the beneficiary of this Indenture is the Holder of the Notes, First PV
Funding Corporation, whose address is Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801 and, by pledge and assignment, Chemical Sank,
as trustee under the Collateral Trust Indenture, whose address is S5 Water
Street, New York, New York 10041: Attention of Corporate Trustee Administration.
Copies of the Trust Agreement and this Indenture are available for inspection at
the Indenture Trustee's office.
-3-
<PAGE>
ARTICLE II
SECURITY
SECTION 2.1. Grant of Security Interest; Mortgage.
As security for the due and punctual payment of the principal
of and premium, if any, and interest on the Notes according to their respective
terms and effect and the performance and observance by the Owner Trustee of all
the covenants and agreements made by it or on its behalf in the Notes, the
Participation Agreement and this Indenture, the Owner Trustee does by its
execution and delivery hereof hereby grant a security interest in and grant,
bargain, convey, warrant, assign, transfer, mortgage, pledge and set over unto
the Indenture Trustee, and to its successors and assigns in trust, the following
(the Lease Indenture Estate):
(1) all right, title and interest of the Owner Trustee in, to
and under the Facility Lease recorded concurrently herewith in
the records of Maricopa County, Arizona, to the extent, and
dnly to the extent, constituting Rent (including, but without
limitation, Basic Rent, payments of Casualty Value,
Termination Value and Special Casualty Value, and payments
under and pursuant to section 16 of the Facility Lease~
excluding all Excepted Payments) (the Assigned Payments),
together with all rights, powers and remedies on the part of
the owner Trustee arising under the Facility Lease to demand,
collect or receive the Assigned Payments;
(2) all moneys and securities deposited or required to be
deposited with the Indenture Trustee pursuant to any term of
this Indenture and held or.required to be held by the
Indenture Trustee hereunder;
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(3) all profits, revenues and other income of all property
from time to time subjected to the lien of this Indenture, and
all right, title and interest of every nature whatsoever of
the Owner Trustee in and to the same and every part thereof;
(4) all right, title and interest of the owner Trustee in and
to any right to restitution from the Lessee in respect of any
determination of invalidity of the Facility Lease; and
(5) all proceeds of the foregoing;
but excluding, hovever, from the Lease rndenture Estate any and all Excepted
Payments; and subject, hovever, to Ci) the terms and provisions of this
Indenture and (ii) the rights of the Lessee under the Facility Lease.
To the extent that any portion of the Lease Indenture Estate
constitutes fixtures or real property, this Indenture constitutes a realty
mortgage and an assignment of rents with respect to all such items of real
property and in addition to all other~rights or remedies set forth in this
rndenture, or otherwise available under Applicable Law, the Indenture Trustee
shall have all of the rights, remedies and benefits of a mortgagee of real
property under Applicable Law, including, without limitation, the rights and
remedies pursuant to Arizona Revised Statutes 133-702.5, and the Owner Trustee
shall be deemed a mortgagor with respect to such items.
TO RAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and 'assigns forever, but
in. trust, nevertheless, for the use and purposes and with the power and
authority and subject to the terms and conditions mentioned and set forth in
this Indenture.
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion. of the Indenture Trustee1 to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the Owner Trustee may exercise all of its rights
under the Facility Lease to the same extent as if its right, title and interest
therein had not been assigned to the Indenture Trustee to the extent set forth
above, except that the Indenture Trustee shall receive all payatents of Assigned
Payments and all moneys and securities required to be held by or deposited with
the maenture Trustee hereunder.
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It is expressly agreed that, anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain obligated to the Lessee
under the Facility Lease to perform all of the Owner Trustee's obligations
thereunder in accordance with and pursuant to the terms and provisions thereof,
and the Indenture Trustee shall not be required or obligated in any manner,
except as expressly provided herein, to perform or fulfill any obligations of
the Owner Trustee under the Facility Lease or to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee hereby warrants and represents that it has
not~assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
SECTION 2.2. Payments Under the Facility Lease.
The Facility Lease provides that (i) all payments constituting
Assigned Payments shall be made to the Indenture Trustee at the Indenture
Trustee's Office, (ii) all other payments other than Excepted Payments shall be
made to the Lessor at such address as the Lessor may direct by notice in writing
to the Lessee, and (iii) all Excepted Payments shall be made to the Person
entitled to receive such payments. The Owner Trustee agrees that, ma long as any
Notes shall be Outstanding hereunder, all payments described in clause (i) above
shall be directed to be made to the Indenture Trustee or in accordance with the
Indenture Trustee's instruction and that if it should receive any such payments
or any proceeds for or with respect to the Lease Indenture Estate or otherwise
constituting part of the Lease maenture Estate, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Lessee, the Owner Trustee or otherwise) with. respect
to the Lease Indenture Estate in the manner provided in Section 3.11 and Article
V hereof.
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SECTION 2.3. Release of Lien on Lease Indenture Estate.
(a) Upon receiving evidence satisfactory to the Indenture
Trustee that Ci) it has received, or pro-vision has been made in accordance with
paragraph (c) hereof for, full payment of all principal of and premiurn, if any,
and interest on the Notes and any other sums payable to the Indenture Trustee
and the Holders of the Notes under this Indenture or the Facility Lease, and
(ii) all Trustee's Expenses shall have been paid in full or provision
satisfactory to the Indenture Trustee shall have been made for such payment,
(A) the security interest and all other estate and rights
granted by this Indenture shall cease and become null and void and all
of the property, rights and interests included in the Lease Indenture
Estate shall revert to and revest in the Owner Trustee without any other
act or formality wtatscever, and
(B) the Indenture Trustee shall, at the request of the Owner
Trustee, execute and deliver to the Owner Trustee such termination
statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be
requisite to evidence the satisfaction and discharge of this Indenture
and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the Owner Trustee or as directed by the Owner
Trustee all the Lease Indenture Estate, freed and discharged from the
provisions herein contained with respect thereto, and~to release the
Owner.Trustee from its covenants herein contained.
(b) Upon receipt by the Indenture Trustee of the Assumption
Agreement and other documents and opinions described in Section 3.9(b) hereof,
(i) the security interest and all other estate and rights granted by this
rndenture by or on behalf of the Owner Trustee shall cease and become null and
void and all of the property, rights and interests included in the Lease
Indenture Estate shall revert to and revest in the Owner Trustee without any
other act or formality whatsoever and (ii) the Indenture Trustee shall, at the
request of the Owner Trustee, execute and deliver to the Owner Trustee such
termination statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be requisite
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to evidence the satisfaction and discharge of this Indenture as to the owner
Trustee and the lien hereby created with respect to the Lease Indenture Estate,
to release or reconvey to the Owner Trustee or as directed by the Owner Trustee
all the Lease Indenture Estate, freed and discharged from the provisions herein
contained with respect thereto, and td release the Owner Trustee from its
covenants herein contained.
(C) Any Note shall, prior to the maturity or redemption date
thereof 1 be deemed to have been paid within the meaning and with the effect
expressed in this section 2.3 if (i) there shall have been deposited with the
Indenture Trustee either moneys in an amount which shall be sufficient, or
direct obligations of or obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America or certificates of an
ownership interest in the principal 4 of or interest on obligations of or
guaranteed as to principal and interest by the united States of America (Federal
securities), in each case which shall not contain provisions permitting the
redemption thereof at the option of the issuer, the principal of and the
interest on which when due, and without any reinvestment thereof, will provide
moneys in an amount which shall be sufficient, together with the moneys, if any,
deposited with or held by the Indenture Trustee at the same time (such
sufficiency to be established by the delivery to the Indenture Trustee of a
certificate of an independent public accountant), to pay when due the principal
of and premium, if any, and.interest due and to become due on said Note on and
prior to the redemption date or maturity date thereof, as the case may be, and.
(ii) in the event said Note does not mature or is not to be redeemed 4 within
the next 45 days, the Indenture Trustee shall have been given irrevocable
instructions to give, as soon as practicable, a notice to the registered Holder
of such Note that the deposit required by subolause (i) above has been made with
the Indenture Trustee and that said Note is deemed to have been paid in
accordance with this sectiow2.3 and stating such maturity or redemption date
upon which moneys are to be available for the payment of the principal of and
premiurn, if any, and interest on said Note. Neither the Federal Securities nor
moneys deposited with the Indenture Trustee pursuant to this section 2.3 or
principal or interest payments on any such Federal securities shall be withdrawn
qr used for any purpose other than, and shall be held in trust for, the payment
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of the principal of and premium, if any, and interest on said Note: provided,
however1 that any cash received from such principal or interest payments on such
Federal Securities deposited with the Indenture Trustee, shall be reinvested
pursuant to Section 8.8 hereof in Federal Securities. At such time as any Note
shall be deemed paid as aforesaid, it shall no longer be secured by or entitled
to the benefits of the Lease Indenture Estate or this Indenture, except that
such Note shall be entitled to the benefits of the portions of the Lease
Indenture Estate described in Granting Clauses (2), (3) and (5), to the extent
such portions relate to such moneys or Federal Securities deposited with the
Indenture Trustee.
(d) So long as any Note as to which this Indenture has been
discharged remains unpaid, this Indenture shall continue in effect with respect
to such Note solely with respect to rights of registration of transfer, exchange
or replacement of such Note, rights to receive payment of the principal thereof
and premium, if any, and interest thereon in accordance with the terms of this
Indenture from such deposited funds or the proceeds of or interest on such
Federal Securities and the correlative rights and responsibilities of the
Indenture Trustee; provided, however1 that, following such discharge, no claim
for payment of principal of or premium, if any, or interest on such Note shall
be made against the Owner Trustee or the Lease Indenture Estate other than as
provided in this Section; provided, further, that the Owner Trustee,
following'such 4is-charge, shall be released from any further duties or
obligations under this Indenture and, except as expressly provided therein, any
other Transaction Document.
SECTION 2.4. Power of Attorney.
Subject to the other terms of this. Indenture, the Owner
Trustee hereby appoints the Indenture Trustee the Owner Trustee's
attorney-in-fact, irrevocably, with full power of substitution, to collect, ask,
require, demand, receive and give acquittance for any and all moneys and claims
for moneys due and td become due to the Owner Trustee under or arising out of
the Lease Indenture Estate, to endorse any checks or other instruments or orders
in connection therewith, and to take any action (including the filing of
fiziancing statements or other documents) or institute any proceedings which the
Indenture Trustee may deem to be necessary or apprdpriate to protect and
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preserve the interest of the Indenture Trustee in the Lease Indenture Estate.
Prior to any exercise by it (acting as attorney-in-fact for the owner Trustee)
of the pcwers, authority or rights granted by this Section 2.4, the Indenture
Trustee will give three Business Day's prior written notice to the Owner Trustee
and the Owner Participant.
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION,
FORM AND REGISTRATION OF NOTES
SECTION 3.1. Limitation on Notes.
No Notes may be issued under the provisions of, or become
secured by, this Indenture except in accordance with the provisions of this
Article III. No Note shall be issued in an original principal amount of less
than $5,000.
SECTION 3.2. Execution of Notes.
All Notes shall be manually executed on behalf of the Owner
Trustee by one of its Responsible Officers. In case any Responsible Officer of
the Owner Trustee who shall have executed any of the Notes shall cease to be
such a Responsible Officer before such Motes so executed shall have been
authenticated by the Indenture Trustee and delivered or disposed of by the Owner
Trustee, such Notes nevertheless may be authenticated and delivered or disposed
of as though the person who executed such Notes had not ceased to be such a
Respottsible Officer of the Owner Trustee; and any Note may be executed on
behalf of the Owner Trustee by such person as, at the actual time of execution
of such Note, shall be a Responsible Officer of the Owner Trustee, although at
the date of such Note any such person was not such a Responsible Officer.
SECTION 3.3. Effect of Certificate of Authentication.
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Only such flotes as shall bear thereon a certificate of
authentication substantially in the following form manually executed by the
Indenture Trustee shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate of authentication of the
Indenture Trustee upon any Note executed by the Owner Trustee shall be
conclusive evidence that the Note so authenticated was duly issued,
authenticated and delivered under this Indenture:
This Mote is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL HANK,
as Indenture Trustee
By
----------------------
Authorized Officer
SECTION 3.4. Creation of the Fixed Rate Notes; Aggregate
Principal Amount, Dating and Terms, Prerequisites to Authentication and Delivery
of the Fixed Rate Notes; Application of Proceeds.
(a) There is hereby created and established a separite series
of Notes of the Owner Trustee designated "Nonrecourse Promissory Notes, Fixed
Rate 5eries~' herein referred to as the rixed Rate Notes.. The Fixed Rate Notes
shall be payable in the principal amounts and bear interest as follows:
Fixed Rate Note Interest Principal
Due Rate Amount
--------------- -------- ---------
January 15, 1992 8.05% $1,270,000
January 15, 1997 8.95% $3,501,000
January 15, 2016 10.15% $23,229,000
-----------
$28,000,000
===========
Each Fixed Rate Note shall bear interest on the principal amount thereof from
time to time Outstanding from the date thereof until paid at the rate of
interest set forth therein. The principal amount of each Fixed Rate Note shall
be payable as set forth in Schedule 1 attached thereto, as such Schedule 1 may
be adjusted, in the case of the Fixed Rate Note due January 15, 2016, in
accordance with the terms of such Fixed Rate Note and this Indenture.
Installments of interast on and principal of (and premium, if any, on) each
Fixed Rate Note shall be due and payable on the dates and at the rates
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of interest specified in such rued Rate Note. The Fixed Rate Note due January
15, 1992 shall be substantially in the form of Exhibit A-i to this Indenture.
The Fixed Rate Note due January 15, 1997 shall be substantially in the form of
Exhibit A-2 to this Indenture. The Fixed Rate Note due January .15, 2016 shall
be substantially in the form of Exhibit A-3 to this Indenture.
(b) Subject to the provisions of Section 3.10 hereof, the
aggregate principal amount of the Fixed Rate Notes issued by the Owner Trustee
and authenticated and delivered by the Indenture Trustee hereunder shall not
exceed $28,000,000.
(c) The Fixed Rate Notes, subject to paragraph (d) of this
section 3.4, shall be executed and issued by the Owner Trustee and authenticated
and delivered by the Indenture Trustee on the date and to the Person specified
by the Owner Trustee in its request and authorization for issuance, shall be
dated the date specified by the Cwner Trustee in its request and authorization
for issuance, and shall be in the form of a registered Note payable to the
Person designated in the owner Trustee' S request and authorization for issuance
or its registered assigns.
(d) The Indenture Trustee shall authenticate the Fixed Rate
Notes and deliver the Fixed Rate Notes to the Person designated by the Owner
Trustee in the request and authorization for issuance in respect of the Fixed
Rate Notes in accordance with the provisions of this Section 3.4.
(e) Upon receipt of the proceeds of the Fixed Rate Notes, othe
tndentu're Trustee shall immediately transfer the same to, or pursuant to the
direction of, the Owner Trustee, all as set forth in the request and
authorization for issuance submitted by the Owner Trustee to the Indenture
Trustee.
SECTION 3.5. Additional Notes.
(1) Subject to Section 3.6 hereof, Additional Notes of the
owner Trustee may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Fixed Rate Notes and subject to the
conditions hereinafter provided in this Section, for cash in the amount of the
original principal amount of such Additional Notes, for the purpose of (i)
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refunding any previously issued series of Notes, in whole or in part and/or (ii)
providing funds for the payment of all or any portion of the Supplemental
Financing Amount relating to Capital rrnprovements made or installed from time
to time pursuant to the Facility Lease; provided, however, that in the case of
Notes issued for the purposes set forth in clause (ii) of this section 3.5, no
Note shall be issued by the Owner Trustee pursuant to this Section 3.5 unless
such Notes may be pledged in accordance with Section 2.l5(b) of the Collateral
Trust Indenture and serve as the basis for Additional Bonds.
(2) Before any Additional Notes shall be issued under the
provisions of this Section 3.5, the Owner Trustee shall have received from the
Owner Participant, and delivered to the Indenture Trustee not less than 2
Business Days nor more than 30 Business Days prior to the proposed date of
issuance of such Additional Notes as set forth in the below mentioned request
and authorization, a request and authorization to issue Additional Notes, which
request and authorization shall include the amount of such Additional Notes, the
date of issuance of such Additional Note and details with respect thereto which
are not inconsistent with this section. Additional Notes shall have a
designation so as to distinguish such Additional Notes from the Fixed Rate Notes
but otherwise shall be substantially similar in terms to the Fixed Rate Notes,
shall specify maturity dates, rank pan passu with all Notes then Outstanding, be
dated their respective dates of authentication,, bear interest at such rates
(which may be fixed or floating) as shall be indicated in the aforementioned
request and authorization, and shall be stated to be payable by their terms not
later than the last day of the Basic Lease Term.
(3) Except as to any differences in the rity dates and
amortization schedules of the Additional Notes or the rate or rates of interest
thereon and the date or dates such interest is payable or the provisions for
redemption with respect thereto, if any, such Additional, Notes shall be on a
parity with, and shall be entitled to the same benefits and security of this
Indenture as, other Notes issued pursuant to the terms hereof.
(4) The terms, conditions and designations of such Additional
Notes (which shall be consistent with this rndenture) shall be set forth in an
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indenture supplemental to this Indenture executed by the Owner Trustee and the
Indenture Trustee. Such Additional Notes shall be executed as provided in
section 3.2 and deposited with the Indenture Trustee for authentication, but
before such Additional Notes shall be authenticated and delivered by the
Indenture Trustee there shall be filed with the Indenture Trustee, in addition
to the other documents and certificates required by this section 3.5, the
following, all of which shall be dated as of the date of the supplemental
indenture:
(a) a copy of such supplemental indenture (which shall include
the form of such series of Notes in respect thereof);
(b) a certificate of a Responsible Officer of the Owner
Trustee (i) stating that to the best of his knowledge, no Default or Event of
Default or Indenture Event of Default has occurred and is continuing and (ii)
stating, in reliance upon a certificate of a Responsible officer of the Lessee
as to such matters, that payments pursuant to the Facility Lease of Basic Rent,
casualty Value, special casualty Value and Termination Value and df amounts in
respect of the exercise of the Cure option are sufficient to pay all the
outstanding Notes, after taking into account the issuance of such Additional
Notes and any related redemption;
(c) such additional documents, certificates and~opinions as
shall be reasonably requested by, and acceptable to, the Owner Trustee and the
Indenture Trustee;
(d) a request and authorization to the Indenture Trustee by or
on behalf of the Owner Trustee to authenticate and deliver such Additional Notes
to or upon the order of the Person or Persons noted in such request at the
address set forth therein, and in such principal amounts as are stated therein,
upon payment to the Indenture Trustee, but for the account of the Owner Trustee,
of the sum or sums specified in such request and authorization; and
(e) an opinion of counsel to the effect that the conditions
precedent required under this Indenture for the issuance of such Additional
Notes have been complied with.
When the documents r1eferred to in the foregoing clauses (a)
through (e) above shall have baen filed with the Indenture Trustee and when the
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Additional Notes described in the above-mentioned order and authorization shall
have been executed and authenticated as required by this Indenture, the
Indenture Trustee shall deliver such Additional Notes in the manner described in
clause (d) above, but only upon payment to the Indenture Trustee of the sum or
sums specified in such request and authorization.
SECTION 3.6.
Security for and Parity of Notes
All Notes issued and,outstanding hereunder shall rank on a
parity with each other and shall as to each other be secured equally and ratably
by this Indenture, without preference, priority or distinction of any thereof
over any other by reason of difference in time of issuance or otherwise. The
maximum principal amount of Notes Outstanding and secured by this Indenture
shall be $56,000,000.
SECTION 3.7. Source of Payments Limited.
All payments to be made by the Owner Trustee under this
rndenture or on the Notes shall be made only from the Lease Indenture Estate and
the Trust Estate. Each Holder of a Note, by its acceptance of such Note, and the
Indenture Trustee agree that they will look solely to the Trust Estate and the
income and proceeds from the Lease Indenture Estate to the extent ava4able for
distribution to such Holder or the Indenture Trustee as herein provided and that
neither the Owner Participant nor, except as expressly provided in this
Indenture, the Owner Trustee nor the Indenture Trustee, shall be personally
liable to such Holder of a Note or the rndenture Trustee, as tyle case may be,
for any amounts payable hereunder or under such Note; provided, however, that in
the event that the Lessee shall assume all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes pursuant to Section 3.9(b), then
all payments to be made under this Indenture and the Motes shall be made only
from payments made by the Lessee under the Notes in accordance with the
Assumption Agreement referred to in Section 3.9(b) and each Holder of a Note and
the Indenture Trustee agree that in such event they will look solely to the
Lessee for such payment. Nothing herein contained shall be interpreted as
affecting the duties and obligations of the Indenture Trustee set forth in
Section 7.4 hereof.
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In furtherance of the foregoing, to the fullest extent
permitted by law, each Holder of a Note (and each assignee of such Person), by
its acceptance thereof, and the Indenture Trustee agree, as a condition to the
Notes being secured under this Indenture, that neither such Holder nor the
Indenture Trustee will exercise any statutory right to negate the agreements set
forth in this section 3.7
SECTION 3.8. Place and Mediunt of Payment.
The principal of and premium, if any, and interest on each
Note shall be payable at the Indenture Trustee's office in immediately available
funds in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts.
Notwithstanding the foregoing or any provision in any Note to the contrary, if
so requested by the Holder of any Note, by written notice to the Indenture
Trustee, all amounts (other than the final payment) payable with respect to such
obligation shall be paid by crediting the amount to be distributed to such
Holder to an account maintained by such Holder with the Indentiare Trustee or by
the Indenture Trustee's transferring such amount by wire, with such wire
transfer to be initiated by such time as to permit, to the extent practicable,
oral confirmation thereof (specifying the wire number) to be given no later than
12:00 noon New York City time on the date scheduled for payment, but only to the
extent of funds available for such wire transfer, to such other bank in the
United States having wire transfer facilities, including a Federal Reserve Bank,
as shall have been specified in such notic~, for credit to the account of such
Holder maintained at such bank, any such credit or transfer pursuant to this
Section 3.8 to be in immediately available funds, without any presentinent or
surrender of such Note. Final payment of any such Note shall be made only
against surrender of such Note at the Indenture Trustee's office.
SECTION 3.9. Prepayment of Notes; Assimption by rassee; Notice
of Assumption or Prepayment.
(a) Notes shall be subject to prepayment (other than through
application of the installment payments on such Notes) from time to time only as
provided in this Indenture and as otherwise specifically provided, with respect
to Notes of a particular series, in such Notes.
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(b) In the event of the occurrence of a Deemed Loss Event or
Event of Loss or exercise of the Cure Option, and upon receipt by the Indenture
Trustee of the documents listed below, all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes shall be assumed by the Lessee
and the Owner Trustee shall be released and discharged without further act or
formality whatsoever from all obligations and liabilities hereunder and under
the Notes:
(1) a duly executed Assumption Agreement substantially in the
form of Exhibit B to this Indenture;
(2) an opinion of counsel to the Lessee, addressed to the
Indenture Trustee and the Holders of theOutstanding Notes, to
the effect that the conditions precedent required by this
rndenture for such assumption have been complied with, that the
Assumption Agreement has been duly authorized, executed and
delivered on behalf of the Lessee, that no Governmental Action
is necessary or required in connection therewith (or if any
such Governmental Action is necessary or required, that the
same has been duly obtained and is in full force and effect) ,
and that the Assumption Agreement is a legal, valid and binding
agreement and obligation of the Lessee, enforceable in
accordance with its terms (except as limited by bankruptcy,
insolvency or similar laws of general application affecting the
enforcement of creditors' rights generally and equitable
principles);
(3) copies of all Governmental Actions referred to in such
opinion;
(4) an indenture supplemental to this Indenture which shall,
among other things, confirm the release of the Owner Trustee
and the Lease rndenture Estate thereby effected and contain
provisions appropriately amending references to the Facility
Lease in this Indenture;
(5) a certificate of a Responsible Officer of the Lessee
stating that, to the best of his knowledge (i) the conditions
precedent required by this Indenture for such assumption have
been complied with, (ii) no Indenture Event of Default has
occurred and is
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occurred and is continuing, (iii) such assumption is permitted
by the provisions of the Lessee's Articles of Incorporation
and By-Laws and (iv) the Lessee is not insolvent within the
meaning of any applicable preferential transfer, fraudulent
conveyance or bankruptcy law; and
(6) a certificate of a Responsible Officer of the Owner Trustee
stating that, to the best of his knowledge, no Indenture Event
of Default has occurred and is continuing.
(c) Notice of any assumption or prepayment of Notes shall be
given to the registered Holders of the Notes which have been assumed or are to
be prepaid (and any assignee of a registered Holder which has given the
Indenture Trustee written notice of such assignment) as promptly as practicable
after the Indenture Trustee is notified thereof, and, in the case of prepayment,
in no event later than 30 days before the date fixed for prepayment (provided
the Indenture Trustee receives such notification at least three Business Days
before such 30th day) in the event of the exercise by the Owner Trustee of its
option to terminate the Facility Lease pursuant to Section 14 thereof.
(d) If the assumption described in paragraph (b) above has not
occurred, then, as required by Section 9(j) of the Facility. Lease, not less
than 2 Business Days prior to the date on which the Lessee is required to make
the payments specified in Section 9(c) or 9(d) of the Facility Lease, the Owner
Trustee will cause the Undivided Interest and the Real Property Interest to
be~subjected to the lien of this Indenture by executing and delivering to the
Indenture Trustee an undivided Interest Indenture Supplement substantially in
the form of Exhibit C to this Indenture. Subject to Section 10.3 hereof, the
Indenture Trustee shall execute and accept delivery from the Owner Trustee of
the undivided Interest Indenture supplement.
SECTION 3.10. Mutilated, Destroyed, rast or stolen Notes.
If any Note shall become mutilated or shall be destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the Holder of
such Note, execute, and the Indenture Trustee shall authenticate and deliver in
replacement thereof, a new Note, payable in the same original principal amount
and dated the same date and of the same series as the Note so mutilated,
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destroyed, lost or stolen. The Indenture Trustee shall inake a notation on each
new Note of the amount of all payments of principal theretofore made on the Note
so mutilated, destroyed, lost or stolen and the date to which interest on such
old Note has been paid. If the Note being replaced has been mutilated, such Note
shall be delivered to the Indenture Trustee who shall then deliver a certificate
of destruction of the type required by Section 4.3 hereof. Zf the Note being
replaced has been destroyed, lost or stolen, the Holder of such Note shall
furnish to the Lessee, the Owner Trustee and the Indenture Trustee a bond or
surety agreement of such Holder as shall be satisfactory to them to save the
Lessee, the Owner Trustee, the Indenture Trustee, the Trust Estate and the Lease
Indenture Estate harmless from any loss, however remote, including claims for
principal of, and premium, if any, and interest on the purportedly destroyed,
lost or stolen Note, together with evidence satisfactory to the Lessee, the
Owner Trustee and the Indenture Trustee of the destruction, loss or theft of
such Nqte and of the ownership thereof; provided, however, that if the Holder of
such Note is the Collateral Trust Trustee, the unsecured written undertaking of
the Collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section.
SECTION 3.11. Allocation of Principal and Interest.
In the case of each Note, each payment of principal thereof
and interest thereon shall be applied, first, to the payment of accrued but
unpaid interest on such Note (as well as any interest on overdue principal or,
to the extent permitted by law, interest) to the date of such~payment, second,
to the payment of the principal amount of, and premium, if any, on such Note
then due Cincluding any overdue installment of principal) thereu~der and third,
the balance, if any, remaining thereafter, to the balance of the payment of the
principal amount of, and premium, if any, on such Note.
SECTION 3.12. Certain Adjustments to the Amortization Schedule
of the Fixed Rate Note due January 15, 2016.
(a) The schedule of principal amortization attached to the
Fixed Rate Note due January 15, 2016 may be adjusted at the discretion of the
Owner Trustee at one time prior to July 15, 1997; provided, however, that no
such adjustment shall be made by the Owner Trustee which will increase or reduce
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the average life of such Fixed Rate Note (calculated in accordance with
generally accepted financial practice from the date of initial issuance) by more
than twQ years; provided, however, such adjustment may be made only in
connection with an adjustment to Basic Rent pursuant to Section 3(d) of the
Facility Lease. If the Owner Trustee shall elect to make the foregoing
adjustment, the owner Trustee shall deliver to the Indenture Trustee and to the
Lessee at least 60 days prior to the first payment date (specified on the
schedule to such Fixed Rate~Note) proposed to be affected by such adjustment, a
certificate of the Owner Trustee (x) stating that the Owner Trustee has elected
to make such adjustment, Cy) setting forth the revised schedule of principal
amortization for such Fixed Rate Note and (z) attaching calculations showing
that the average life of such Fixed Rate Note will not be reduced or increased
except as permitted by this Section 3.12(a). The Indenture Trustee may rely on
such Owner Trustee certificate and shall have no duty with respect to the
calculations referred to in the foregoing clause (z).
(b) If the Lessee, in a timely manner, provides the Owner
Trustee and the Owner Participant with information sufficient for the Owner
Trustee to direct the adjustments described 'in paragraph (a) of this Section
3.12, together with a certificate (in form and substance reasonably satisfactory
to the Owner Participant) to the effect that such adjustments minimize the
aggregate increase or decrease in Basic Rent occurring as a result of the
operation of Section 3(d) of the Facility Lease, the owner Trustee shall deliver
to the Indenture Trustee a certificate pursuant to such paragraph (a) .
Notwithstanding the foregoing, the Owner Participant, the Indenture Trustee and
the Owner Trustee may rely on such certificate and shall have no obligation to
verify the same.
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ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF
NOTES
SECTION 4.1. Register of Notes.
The Indenture Trustee on behalf of the Trustee shall maintain
at the Indenture Trustee's Office a register for the purpose of registration,
and registration of transfer and exchange, of the Notes by series and in which
shall be entered the names and addresses of the owners of such Notes and the
principal amounts of the Notes owned by them? respectively. For these purposes,
the Indenture Trustee is hereby appointed transfer agent and registrar for the
Notes.
SECTION 4.2. Registration of Transfer or Exchange of Notes.
A Holder of a Note intending to register the transfer of any
Outstanding Note held by such Holder (including any transfer in the form of a
pledge or assignment) or to exchange any Outstanding Note held by such Holder
for a new Note or Notes of the same series may surrender tuch Outstanding Note
at the Indenture Trustee's Office, together with the written request of such
Holder, or of its attorney duly authorized in writing, in each case with
signatures guaranteed, for the registration of such Note in the name of any
pledgee or assignee (in the case of a transfer in the form of a pledge or
assignment) or for the issuance of a new Note or Notes of the same series,
specifying the authorize& denomination or denominations of any new Note or Notes
to be issued and the name and address of the Person or Persons in whose name or
names the Note or Notes are to be registered (either as pledgee or assignee or
as owner). Promptly upon receipt by the Indenture Trustee of the foregoing and
satisfaction of the requirements of Sections A.5 and 4.6 hereof, the Indenture
Trustee shall register stich Note or Notes in the name or names of the Person or
Persons as shall be specified in the written request and, in the case in which a
new Note or Notes are to be issued, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver such new Note or Notes of the
same series, in' the same aggregate principal amount and dated the same date as
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the Outstanding Note surrendered, in such authorized denomination or
denominations as shall be specified in the written request. The Indenture
Trustee shall make a notation on each new Note of the amount of all payments of
principal theretofore made on the old Note or Notes in exchange or transfer for
which any new Note has been issued and the date to which interest on such old
Note or Notes has been paid.
SECTION 4.3. Cancellation of Notes.
All Notes surrendered to the Indenture Trustee for payment in
full, prepayment in full or registration of transfer or exchange shall be
cancelled by it; and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Notes held by it in a manner satisfactory to the
owner Trustee and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Notes, such acquisition shall not
operate as a redemption of or the satisfaction of the indebtedness represented
by such Notes unless and until the same shall be delivered to the Indenture
Trustee for cancellation.
SECTION 4.4. Limitation on Timing of Registration of Notes.
The Indenture Trustee shall not be required to register
transfers or exchanges of Notes on any date fixed for the payment or prepayment
of principal of or interest on the Notes or during the fifteen days preceding
any such date.
SECTION 4.5. Restrictions on Transfer Resulting from Federal
securities Laws; legend.
If not prohibited by the Securities Act, each Note shall be
delivered to the initial Holder thereof without registration of such Mote under
the Securities Act and without qualification of this Indenture under the Trust
Indenture Act. Prior to any transfer of any Note, in whole or in part, to any
Person other than the Collateral Trust Trusteer the Holder thereof shall furnish
to the Lessee, the Indenture Trustee and the Owner Trustee an opinion of
counsel, which opinion and which counsel shall be reasonably satisfactory to the
Indenture Trustee, the owner Trustee and the Lessee, to the effect that such
transfer will not violate the registration provisions of the Securities Act or
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require qualification of this Indenture under the Trust Indenture Act, and all
Notes issued hereunder shall be endorsed with a legend which shall read
substantially as follows:
This Note has not been registered under the Securities Act of
1933 and may not be transferred, sold or offered for sale in
violation of such Act.
SECTION 4.6. Charges upon Transfer or Exchange of Notes.
As a further condition to registration of transfer or exchange
of any Note, the Indenture Trustee and the Owner Trustee may charge the Holder
thereof for any stamp taxes or governmental charges required to be paid with
respect to such registration of transfer or exchange.
SECTION 4.7. Inspection of Register of Notes.
The register of the Holders of the Notes referred to in
Section 4.1 shall at all reasonable times be open for inspection by any Holder
of a Note. Upon request by any Holder of a Note, or the Owner Trustee or the
Lessee, the Indenture Trustee shall furnish such Person, at the expense of such
Person, with a list of the names and addresses of all Holders of Notes entered
on the register kept by the Indenture Trustee indicating the series, principal
amount and number of each Note held by each such Holder.
SECTION 4.8. Ownership of Notes.
(a) Prior to due presentment for registration of transfer of
any Note, the Owner Trustee and the Indenture Trustee may deem and treat the
Holder of record of such Note as the absolute owner of such Note for the purpose
of receiving payment of all amounts payable with respect to such Note and for
all other purposes, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary.
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(b) The Owner Trustee and the Indenture Trustee may, in their
discretion, treat the Holder of record of any Note as the owner thereof without
actual production of such Note for any purpose hereunder, except as provided in
the last sentence of Section 3.8 hereof.
(c) Neither the owner Trustee nor the Indenture Trustee shall
be bound to take notice of or carry out the execution of any trust in respect of
any Note, and may register the transfer of the same on the direction of the
Holder of record thereof, whether named as trustee or otherwise, as though such
Holder were the beneficial owner thereof.
(d) The receipt by the Holder of record of any Note of any
payment of principal, premium or interest shall be a good discharge to the Owner
Trustee and the Indenture Trustee for the same and neither the Owner Trustee nor
the Indenture Trustee shall be bound to inquire into the title of any such
Holder.
ARTICLE V
RECEIPT, DISTRIBUTION AND
APPLICATION OP INCOME AND PROCEECS
FROM THE LEASE INflENTURE ESTATE
SECTION 5.1. Basic Rent, Thterwt on overdue Installments of
Basic Rent and Prepayments of Interest.
Except as otherwise provided in Section 5.3 or 5.7 hereof,
each payment of Basic Rent, as well as any payment of Supplemental Rent
representing interest on overdue installments of Basic Rent, received by the
Indenture Trustee at any time, shall be distributed by the Indenture Trustee in
the following order of priority: first, so much of such payment as shall be
required to pay in full the aggregate amount~of the payment or payments of
principal and/or interest (as well as any interest on overdue principal or, to
the extent permitted by law, interest) then due and unpaid on all Notes shall be
distributed to the Molders of the Notes ratably, without priority of one over
the other, in the proportion that the aggregate amount of such payment or
payments then due and unpaid on all Notes held by each such Holder on such date
bears to the aggregate amount of such payment or payments then due and unpaid on
all Notes Outstanding on such date, without priority of interest over principal
or principal over interest; and second, the balance, if any, of such payment
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remaining thereafter shall be distributed, concurrently with any distribution
pursuant to clause first hereof, to the Owner Trustee or as the Owner Trustee
may direct. If there shall not otherwise have been distributed on any date (or
within any applicable period of grace), pursuant to this Section 5.1, the full
amount then distributable pursuant to clause first of this Section 5.1, the
Indenture Trustee shall distribute other payments referred to in Sections 5.4
and 5.5 then held by it or thereafter received by it, except as otherwise
provided in Section 5.3, to the Holders of all Notes to the extent necessary to
enable it to make all the distributions then due pursuant to such clause first;
provided that to the extent any distribution is made from amounts held pursuant
to Section 5.4 hereof and the Lessee subsequently makes the payment of Basic
Rent or Supplemental Rent in respect of which such distribution was made, such
payment of Basic Rent or Supplemental Rent shall, unless an Indenture Default or
an Indenture Event of Default shall have occurred and be continuing, be applied
to the purpose for which such amount held pursuant to Section 5.4 had been held,
subject, in all cases, to the terms of Section 5.4. The portion of each such
payment made to the Indenture Trustee which is to be distributed by the
Indenture Trustee in payment of Notes shall be applied in accordance with
Section 3.11. Any payment received by the Indenture Trustee pursuant to Section
6.8 shall be distributed to the Molders of the Notes, ratably, without priority
of one over the other, in the proportion that the amount of such payment or
payments then due and unpaid on all Notes held by each such Holder bears to the
aggregate amount of the payments then due and unpaid on all Notes Outstanding.
Amounts distributed. by the Indenture Trustee pursuant to this Section .5.1
shall be distributed as promptly as practicable after such amounts are actually
received by the Indenture Trustee; provided, however, that in the event the
Indenture Trustee shall be directed to make payments to the Holder of any Note
by wire transfer in accordance with Section 3.8 hereof, any amounts received by
the Indenture Trustee after 11:00 A.M., New York City time, rnay~be distributed
on the following Business Day.
SECTION 5.2. Amounts Received as Result of Event of Loss,
Deemed loss Event, Exercise of Option to Terminate or Exercise of Cure Option.
If an Event of Loss or Deemed Loss Event shall occur or the
Lessee shall exercise the Cure Option, and it either the Assumption Agreement or
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the Undivided Interest Indenture Supplement shall have been executed and
delivered, any amounts of Casualty Value, Special Casualty value or Fair Market
Sales Value received or held by the Indenture Trustee in respect of such Event
of Loss or Deemed Loss Event or exercise of the Cure Option shall, except as
otherwise provided in Section 5.3, be distributed forthwith to the owner
Participant. If the Lessee or the owner Trustee, as the case may be, shall
exercise its option to terminate the Facility Lease pursuant to Section 14
thereof, then there shall be prepaid, on the date payments of proceeds with
respect thereto art received by the indenture Trustee (or as soon thereafter as
practicable) under Section 14 of the Facility Lease, the unpaid principal amount
of all Notes, together with the premium, if any, and all accrued but unpaid
interest thereon to the data of such prepayment. Notice of such prepayment shall
be given as provided in Section 3.9(c) and may provide that it is subject to
receipt of funds for such prepayment. Except as otherwise provided in Section
5.3 or 5.7, any payments received and amounts realized by the Indenture Trustee
upon exercise of the Lessee's or the Owner Trustee's option to terminate the
FacilitY Lease under Section 14 thereof shall in each cas&be distributed on the
date of prepayment as provided in clauses first, second and fifth of Section
5.3.
SECTION 5.3. Amounts Received After, or Held at Time of,
Indenture Event of Default under Section 6.2.
Except as otherwise provided in Section 5.7, all payments
received and amounts realized by the Indentur&Trus~tee in tespect of the Lease
Indenture Estate (including any amounts realized by the Indenture Trustee from
the exercise of any remedies pursuant to the Facility Lease or Article VI of
this Indenture) after an Indenture Eve?1t of Default referred to in Section 6.2
shall have occurred and be continuing and the Notes have been accelerated
pursuant to Section 7.1, as well as all payments thereafter received or amounts
then held by the Indenture Trustee as part of the Lease Indenture Estate, shall
be distributed by the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as sha.1.l be
required to reimburse the Indenture Trustee for any Trustee's Expenses
(to the extent not previously reimbursed) and to pay the reasonable
remuneration of the Indenture Trustee, shall be applied by the
Indenture Trustee to such reimbursement and payment;
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second, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of all
Notes, together with premium, if any, plus accrue& but unpaid interest
(as well as interest on overdue principal and, to the extent permitted
by law, on overdue interest) thereon to~the date of distribution, shall
be distributed to the Holders of such Notes and in case the aggregate
amount so to be distributed shall be insufficient to pay all such Notes
in full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all such Notes held by each such Holder, together with premium, if any,
plus accrued but unpaid interest thereon to the date of distribution
bears to the aggregate unpaid principal amount of all Notes, together
with premium, if any, plus accrued but unpaid interest thereon to the
date of distribution;
third, so much of such payments or amounts remaining as shall
be required to pay the present or former Holders of the Notes the
amounts payable to them as Indemnitees (to the extent not previously
reimbursed) shall be distributed to such Holders; and in case the
aggregate amount so to be paid to all such Holders in accordance with
this clause third shall be insufficient to pay all such amounts as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the amount of such indemnity or other payments to which
such Person is entitled bears to the aggregate amount of such indemnity
or other payments to which all such Persons are entitled;
fourth, the balance, if any, of such payments or amounts
remaining shall be applied to the payment of any other indebtedness at
the time due and owing to the Indenture Trustee or the Holders of the
Notes which this Indenture by its terms secures; and
fifth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to or upon the direction of
the Owner Trustee.
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SECTION 5.4. Amounts Received for which Provision Is Made in a
Transaction Document.
Except as otherwise provided in Section 5.1, 5.3 or 5.7
hereof, any payments received by the Indenture Trustee in respect of the Lease
Indenture Estate for which provision as to the application thereof is made in a
Transaction Document shall be applied to the purpose for which such payment was
made in accordance with the terms of such Transaction Document, as determined,
in the first instance, from instructions or other information accompanying such
payment, or, other-wise, in accordance with instructions from the payor of such
payments.
SECTION 5.5. Amounts Received for which No Provision Is Made.
Except as otherwise provided in Section 5.1, 5.2, 5.3 or 5.7,
any payments received and any amounts realized by the Indenture Trustee in
respect of the Lease Indenture Estate.
(a) for which no provision as to the application thereof is made in i
Transaction Document or elsewhere in this Article V shall be held by the
Indenture Trustee as part of the tease Indenture Estate, and
(b) to the extent received or realized at any time after payment in full
of the principal of and premium, if any, and interest on all the Notes,
as well as any other amounts remaining as part of the Lease Indenture
Estate after payment iw lull of the principal of and premiurn, if any,
and interest on all the Notes, shall be distributed by the Indenture
Trustee in the order of priority set forth in section 5.3 (omitting
clause second thereof).
SECTION 5.6. Payments to Owner Trustee.
Unless otherwise directed by the Owner Trustee, all payments
to be made to the Owner Trustee hereunder shall be made to the Owner Participant
by wire transfer of immediately available funds as soon as practicable t'ut in
any event no later than the close Qf business on the date of receipt (assuming
the Indenture Trustee has received such funds prior to 11:00 a.m. New York City
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time on the same day), to such account at such bank or trust company as the
Owner Participant shall from time to time designate in writing to the Indenture
Trustee.
SECTION 5.7. Excepted Payments.
Anything in this Article V or elsewhere in this Indenture to
the contrary notwithstanding, any Excepted Payment received at any time by the
Indenture Trustee shall be distributed as promptly as practicable to the Person
entitled to receive such Payment (such entitlement to be conclusively determined
by reference to payment instructions from such Person)
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER TRUSTEE; EVENTS
OF DEFAULT; REMEDIES OF THE
INDENTURE TRUSTEE
SECTION 6.1. Representations, Warranties and Covenants of
Owner Trustee.
The Owner Trustee hereby covenants and agrees that (i) it will
duly and punctually pay the principal of, and premium, if any, and interest on,
the Notes in accordance with the terms thereof and this Indenture, (ii) it will
not pledge, create a security interest in or mortgage1 so long as this Indenture
shall remain in effect, any of its. estate, right, title or interest in and to
the Lease Indenture Estate or otherwise constituting part of the Trust Estate,
to anyone other than the Indenture Trustee, (iii) so long as this Indenture
shall remain in effect, it will not purchase or agree to purchase any property
or asset other than the Undivided Interest and the Real Property Interest and
other than as contemplated by the Transaction Documents, (iv) it will not,
except with the prior written concurrence of the Indenture Trustee or as
expressly provided in or permitted by this Indenture or with respect to the
Trust Agreement or any property not constituting part of the Lease Indenture
Estate, take any action which would result in an impairment of any Note br the
obligation of the Lessee to pay any amount under the Facility Lease which is
part of the Lease Indenture Estate (not in any event including in respect of
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Excepted Payments) or any of the other rights or security created or effected
thereby, or (v) issue, or incur any obligation in respect of, indebtedness for
borrowed money except for its obligations in respect of Notes.
A signed copy of any amendment or supplement to the Trust
Agreement shall be delivered by the Owner Trustee to the Indenture Trustee and
the Lessee. This Indenture and the Lease Indenture Estate shall not be affected
by any action taken under or in respect of the Trust Agreement except as
otherwise provided in or permitted by this rndenture. The Trust Agreement may
not in any event be terminated by the Owner Participant or the owner Trustee or
revoked by the Owner Participant so long as any of the Notes or any unpaid
obligations under this Indenture remain outstanding. The Owner Trustee may
resign as Owner Trustee, appoint a successor Owner Trustee and take all
necessary and proper action to constitute one or more Persons as co-trustee(s)
jointly with the Owner Trustee or as separate trustee(s), all in accordance with
the terms and conditions of Article IX of the Trust Agreement.
SECTION 6.2. Indenture Events of Default.
The term Indenture Event of Default1 wherever used herein, shall
mean any of the following events (whatever the reason for such Indenture Event
of Default and whether it shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) any of the Events of Default specified in the following
clauses of Section 15 of the Facility Lease: (1) clause (i) (y) , except a
failure of the Lessee to pay any amount which shall constitute an Excepted
Payment; (2) clause (i) (x), except a failure of the Lessee to pay any amount
which shall constitute an Excepted Payment or except where the Owner Trustee
shall not have rescinded or terminated the Facility Lease pursuant to Section
16(a) (i) of the Facility Lease; or (3) clause (vii) ; or
(b) the rescission or termination of, or the taking of action
by the owner Trustee or the Owner Participant the effect of which would be to
rescind or terminate, the Facility Lease, whether pursuant to Section 16(a) (1)
of the Facility Lease or otherwise; or
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(c) any failure by the Lessee to perform and observe. Section
10(b) (3) (iii) of the Participation Agreement; or
(d) the Owner Trustee shall fail to make any payment in
respect of the principal of, or premium, if any, or interest on, the Notes
within ten (10) Business Days after the same shall have become due (other than
by virtue of any failure by the Lessee to make any payment of Rent therefor); or
(a) the Owner Trustee shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section.6.1 of
this Indenture, or the Owner Participant shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 7(b)(l) of
the Participation Agreement and, in any such case, such failure shall continue
for a period of 30 days after notice thereof shall have been given to the Owner
Trustee, the Owner Participant and the Lessee by the rndenture Trustee,
specifying such failure and requiring it to be remedied.
SECTION 6.3. Enforcement of Remedies.
(a) In the event that an Indenture Event of Default shall have
occurred and be continuing, then and in every such case the Indenture Trustee,
subject to paragraph (b) of this Section 6.3 and Section 6.11, may, and when
required pursuant to the provisions of Article VII hereof shall, exercise any or
all of the rights and powers and pursue, subject to the rights of the Lessee
under the Facility Lease, (x) in the event such Indenture Event of 'Default is
referred to in paragraph (d) or (e) of section 6.2, any or all of the remedies
then available pursuant to this Article VI and Article VII, or (y) in the event
such Indenture Event of Default is referred tQ in paragraph (a), (b) or (c) of
Section 6.2, any or all of such remedies concurrently with the exercise and
pursuit by the owner Trustee of any or all of the remedies then available to the
Owner Trustee under the Facility Lease.
(b) Any provisions of the Facility Lease or this Indenture to
the contrary notwithstanding, if the Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment.
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SECTION 6.4. Specific Remedies; Enforcement of Claims without
Possession of Notes.
Subject to Sections 6.2, 6.3 and 6.11 hereof and the terms of
the documents constituting a part of the Lease Indenture Estate, upon the
occurrence and during the continuance of an Indenture Event of Default:
(a) The Indenture Trustee may, in order to enforce the rights
of the Indenture Trustee and of the Holders of the Notes, direct payment to it
of all moneys and enforce any agreement or undertaking. constituting a part of
the Lease Indenture Estate by any action, suit, remedy or proceeding authorized
or permitted by this Indenture or by law or by equity, and whether for the
specific performance of any agreement contained herein, or for an injunction
against the violation of any of the terms hereof, or in aid of the exercise of
any power granted hereby or by Applicable Law, and in addition may sell, assign,
transfer and deliver, from time to time to the extent permitted by Applicable
Law, all or any part of the Lease maenture Estate or any interest therein, at
any private sale or public auction with or without demand, advertisement or
notice (except as herein required or as may be required by Applicable Law) of
the date,. time and place of sale and any adjournment there-of, for cash or
credit or other property, for immediate or future delivery and for such price or
prices and on such terms as the Indenture Trustee, in its tincontrol led
discretion, may determine,. or as may be required by Applicable Law, so long as
the Owner Participant and the Owner Trustee are afforded a commercially
reasonable opportunity to bid for all or such part of the Lease Indenture Estate
in connection therewith. It is agreed that 90 days' notice to the Owner
Participant, the Owner Trustee and the Lessee of the date, time and place of any
proposed sale by the Indenture Trustee of all or any part of the Lease Indenture
Estate or interest therein is reasonable. The Indenture Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee and of the Holders of the
Notes asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.
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(b) Without limiting the foregoing, the Indenture
Trustee, its assigns and its legal representatives, subject to the rights
of the Lessee under the Facility Lease, shall have as to such of the Lease
Indenture Estate as is subject to the Uniform Commercial Code or similar
law in each relevant jurisdiction all the remedies of a secured party
under the Uniform Commercial Code or similar law in such jurisdiction and
such further remedies as from time to time may it hereafter be provided in
such jurisdiction for a secured party.
(c) All rights of action and rights to assert claims under
this Indenture or under any of. the Notes may be enforced by the Indenture
Trustee without the possession of the Notes at any trial or other
proceedings instituted by the Indenture Trustee, and any such trial or
other proceedings shall be brought in its own name as trustee of an
express trust, and any recovery or judgment shall be for the ratable
benefit of the Holders of the Notes as herein provided. In any proceedings
brought by the Indenture Trustee (and also any proceedings involving the
interpretation of any provision of this Indenture to which the Indenture
Trustee shall be a party) the Indenture Trustee shall be held to represent
all the Holders of the Notes, and it shall not be necessary to make any
such Holders parties to such proceedings.
(d) The Indenture Trustee may exercise any other right or
remedy that may be available to it under Applicable Law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof,
SECTION 6.5. Rights and Remedies cumulative.
Subject to Sections 6.2, 6.3 and 6.11 hereof, (a) each and
every right, power and remedy herein specifically given to the Indenture
Trustee under this Indenture shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and as often and in such order
as may be deemed expedient by the Indenture Trustee and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
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construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy, and Cb) no delay or
omission by the Indenture Trustee in the exercise of any right, power
or remedy or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on
the part of the Owner Participant, the Owner Trustee or the Lessee or
to be an acquiescence therein.
SECTION 6.6. Restoration of Rights and Remedies
In case the Indenture Trustee shall have proceeded to enforce
any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued onabandoned for any
reason or shall have been determined adversely to the Indenture Trustee, then
and in every such case the Owner Trustee, the Owner Participant, the Indenture
Trustee and the Lessee shall be restored to their former positions and rights
hereunder with respect to the Lease Indenture Estate, and all rights, powers and
remedies of the Indenture Trustee shall continue as if no such proceedings had
been taken.
SECTION 6.7. Waiver of Past Defaults.
Any past Indenture Default or Indenture Event of Default and
its consequences may be waived by the Indenture Trustee, except an maenture
Default or an Indenture Event of Default (i) in the payment of the principal of
or interest on any Note, subject to the provisions of Section 7.1 hereof, or
(ii) in respect of a covenant or provision hereof which, under Section 10.2
hereof, cannot be. modified or amended without the consent of each Holder~of a
Note then Outstanding. Upon any such waiver, such Indenture Default or Indenture
Event of Default shall cease to exist, and any other Indenture Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall ettend to any subsequent or other Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
SECTION 6.8. Right of owner Trustee to Pay Rent; Note
Purchase; Substitute Lessee.
Anything in this Article VI or Article VII to the contrary
notwithstanding:
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(a) an Indenture Event of Default shall be deemed cured if
such Indenture Event of Default results from non-payment of Basic Rent or
Supplemental Rent under the Facility Lease, and the Owner Trustee or the Owner
Participant shall have paid all principal of and interest on the Nctes due
(other than by acceleration) on the date such Basic Rent was payable (plus
interest on such amount as required hereby) within 20 days after the receipt by
the Owner Trustee of notice of such non-payment1 such receipt to be evidenced
by, among other things',, any notice thereof given to the Owner Trustee
in~adcordance with the notice provisions of the Participation Agreement. The
Owner Trustee or the Owner Participant, upon exercising cure rights under this
paragraph (a), shall not obtain any Lien on any part of the Lease Indenture
Estate on account of such payment for the costs and expenses incurred in
connection therewith nor, except as expressly provided in the succeeding
sentence, shall any claim~ of the Owner Trustee or the Owner Participant against
the Lessee or any other Person for the repayment thereof impair the prior right
and security interest of the Indenture Trustee in and to the o~Lease Indenture
Estate. Upon any payment by the Owner Trustee or the Owner Participant pursuant
to this Section 6.8, the Owner Trustee or the Owner Participant, as the case may
be, shall (to the extent of. such payment made by it) be subrogated to the
rights of the Indenture Trustee and the Holders of the Notes to receive the
payment of Rent with respect to which the Owner Trustee or the Owner Participant
made such payment and interest on account of such Rent payment being overdue in
the manner set forth in the next sentence. If the Indenture Trustee shall
thereafter receive such payment of Rent or such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 5.1, on the date such payment
is received by. the Indenture Trustee, remit such payment of Rent (to the extent
of the payment made by the Owner Trustee or the Owner Participant pursuant to
this Section 6.8) and such interest to the Owner Trustee or the Owner
Participant, as the case may be, in reimbursement for the funds so advanced by
it.
(b) Each Holder of a Note agrees, by accep tance thereof, that
if the Notes have been accelerated pursuant to Section 7.1, and the Owner
Trustee, within 30 days after receiving notice from the Indenture Trustee
pursuant to Section 7.1 hereof, shall give writ-ten notice to the Indenture
Trustee of the Owner Trustee's intention to purchase all of the Notes in
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accordance with this paragraph, accompanied by assurances of the Owner Trustee
to purchase the Notes, then, upon receipt within 10 Business Days after such
notice from the Owner Trustee of an amount equal to the aggregate unpaid
principal amount of and any premium with respect to any unpaid Notes then held
by such Holder, together with accrued but unpaid interest thereon to the date of
such receipt (as well as any interest on overdue principal and, to the extent
permitted by law, interest), such Holder will forthwith sell, assign, transfer
and convey to the Owner Trustee (without recourse or warranty of any kind other
than of title to the Notes so conveyed) all of the right, title and interest of
such Holder in and to the Lease Indenture Estate, this Indenture ~nd all Notes
held by such Holder; pravided, that no such Holder shall be required so to
convey unless (1) the Ow'ner Trustee shall have simultaneously tendered payment
for all other Notes issued by the Owner Trustee at the time Outstanding pursuant
to this paragraph and (2) such conveyance is not in violation of any Applicable
Law.
(c) Each Holder of a Note further agrees by its acceptance
thereof that the Owner Trustee shall have the right, pursuant to Section 16 of
the Facility Lease, to terminate the Facility Lease and, in connection
therewith, to arrange for the substitution of another Person as lessee under a
new lease substantially similar to the Facility Lease (hereinafter the
substituted Lessee) and, subject to: (i) any Indenture Event of Default under
paragraphs (d) and (e) of Section 6.2 having been cured by the Owner Trustee,
(ii) the Substituted Lessee's assuming all of the obligations of the Lessee
under the Facility Lease and (iii) the Substituted Lessee's having an assigned
credit rating by Standard & Poor's Corporation and Moody's Investors Service,
Inc. (or, if either of such organizations shall not rate securities issued by
such Substituted Lessee, by any other nationally recognized rating organization
in the United States of America) with respect to at least one series of its debt
obligations or preferred stock equal to or better than the ratings assigned,
immediately prior to such substitution, by such organizations to comparable
securities of the Lessee immediately prior to such substitution but in no event
less than "investment grade", then the Facility Lease between the Owner Trustee
and such Substituted Lessee shall, for all purposes of this Indenture, be deemed
to be the Facility Lease subject to the lien of this Indenture.
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SECTION 6.9. Further Assurances.
Subject to Section 7.6 hereof, the Owner Trustee covenants
and agrees from time to time to do all such acts and execute all such
instruments of further assurance as shall be reasonably requested by the
Indenture Trustee for the purpose of fully carrying out and effectuating this
Indenture and the intent hereof.
SECTION 6.10. Right of Indenture Trustee To Perform Covenants,
etc.
If the owner Trustee shall fail to make any payment or perform
any act required to be made or performed by it hereunder or under the Facility
Lease or if the Owner Trustee shall fail to release any Lien affecting the Lease
Indenture Estate which it is required to release by the terms of this Indenture,
the Indenture Trustee, without notice to or demand upon the Owner Trustee and
without waiving or releasing any obligation or default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Lease Indenture Estate. All sums so
paid by the Indenture Trustee and all costs and expenses (including without
limitation reasonable fees and expenses of legal counsel and other
professionals) so incurred, together with interest thereon from the date of
payment or occurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Lease Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall.be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 6.11. Certain other Rights of the Owner Trustee.
Notwithstanding any provision to the contrary in this
Indenture, the Owner Trustee shall at all times retain, tb the exclusion of the
Indenture Trustee, all frights of the Owner Trustee to exercise any election or
option or to make any decision or determination or to give or receive any
notice, consent, waiver or approval or to take any other action under or in
respect of the Facility Lease, as well as all rights, powers and remedies on the
part of the Owner Trustee, whether arising under the Facility Lease or by
statute or at law or in equity or otherwise, arising out of any Default or Event
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of Default subject, however, to Section 10.2. Without the prior written consent
of the Indenture Trustee, the exercise of any of the aforesaid rights so
retained by the Owner Trustee shall not be exercised in such a manner as to (i)
reduce the amounts payable by the Lessee under the Facility Lease below the
amounts necessary to provide the Owner Trustee with sufficient monies to make
timely payments in full of amounts due with respect to the principal of and
premium, if any, and interest on all Notes or (ii) rescind or terminate the
Facility Lease pursuant to Section 16 thereof. Nor shall the Owner Trustee
exercise any other right or remedy under the Facility Lease the effect of which
would be to effect such rescission or termination.
ARTICLE VII
CERTAIN DUTIES OF THE OWNER
TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 1.1. Duties in Respect of Events of Default, Deemed
Loss Events and Events of Loss; Acceleration of Maturity.
In the event the Owner Trustee shall have actual knowledge of
an Indenture Event of Default, an Event of Default, a Deemed Loss Event or an
Event of Loss, the Owner Trustee shall give prompt written notice thereof to the
Owner Participant, the Lessee and the Indenture Trustee. In the event the
Indenture Trustee shall have~actual knowledge of an Event of Default, an
Indenture Event of Default, a Deemed Loss Event or an Event of Loss, the
Indenture Trustee shall give prompt written notice thereof to the Owner
Participant, the Owner Trustee, the Lessee and each Holder of a Note. Subject to
the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11 and 7.3 hereof, (a) the Indenture
Trustee shall take such action (including the waiver of past Defaults in
accordance with Section 6.7 hereof), or refrain from taking such action, with
respect to any such Indenture Event of Default, Event of Default, Deemed Loss
Event or Event of Loss as the Indenture Trustee shall be instructed by a
Directive, (b) if the rndenture Trustee shall not have reccived instructions as
above provided within 20 days after mailing by the Indenture Trustee of notice
of such Indenture Event of Default, Event of Default, Deemed Loss Event or Event
of Loss to the
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Persons referred to above, the Indenture Trustee may, subject to instructions
thereafter received pursuant to the preceding sentence, take such action, or
refrain from taking such action, but shall be under no duty to take or refrain
from taking any action, with respect to such Indenture Event of Default, Event
of Default, Deemed Loss Event or Event or Loss as it shall determine advisable
in the best interests of the Holders of the Notes of all series and (c) in the
event that an Indenture Event of Detault shall have occurred and be continuing,
the Indenture Trustee in its discretion may, or upon receipt of a Directive
shall, by~w?itten notice to the Owner Trustee, declare the unpaid principal
amount of all Notes with accrued interest thereon to be immediately due and
payable, upon which declaration such principal amount and such accrued interest
shall immediately become due and p4yable without further act or notice of any
kind. For all purposes of this Indenture, in the absence of actual knowledge,
neither the Owner Trustee nor the Indenture Trustee shall be deemed to have
knowledge of an rndenture Event.of Default or Event of Default except that the
Indenture Trustee shall be deemed to have knowledge of the failure of the Lessee
to pay any installment of Basic Rent within 10 Business Days after the same
shall become due. For purposes of this Section 7.1, neither the Owner Trustee
nor the Indenture Trustee shall be deemed to have actual knowledge of any
Indenture Event of Default, Event of Default, Deemed Loss Event or Event of Loss
unless it shall have received notice thereof pursuant to Section 11.6 hereof or
such Indenture Event of Default or Event of Default shall actually be known by
an officer in the corpor4te trust department of the Owner Trustee or by an.
officer in the Corporate Trustee Administration Department of the Indenture
Trustee, as the case may be.
SECTION 7.2. Duties in Respect of Matters Specified in
Directive.
Subject to the terms of Sections 6.2, 6.3, 6.4, 6.S, 6.11, 7.1
and 7.3 hereof, upon receipt of a Directive, the Indenture Trustee shall take
such of the following actions as may be specified in such Directive: (i) give
such notice or direction or exercise such right, remedy or power permitted
hereunder or permitted with respect to the Facility Lease or in respect of any
part or all of the Lease Indenture Estate as shall be specified in such
Directive; and (ii) take such action to preserve or protect the Lease Indenture
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Estate as shall be specified in such Directive, it being agreed that without
such a Directive, the Indenture Trustee shall not waive, consent to or approve
any such matter as satisfactory to it.
SECTION 7.3. Indemnification.
The Indenture Trustee shall not be required to take or refrain
from taking any action under Section 7.1 or 7.2 or Article VI hereof which shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability unless the Indenture Trustee shall have been indemnified
by the Holders of the Notes against liability, cost or expense (including
counse~ fees) which may be incurred in connection therewith, or unless, in the
reasonable judgment of the Indenture Trustee, the indemnities of the Lessee
shall be adequate for such purpose: provided, however, that if the Holder of
such Motes is the Collateral Trust Trustee, the unsecured written undertaking of
the collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section. The Indenture Trustee shall not be
required to take any action under section 7.1 or 7.2 or Article VI hereof nor
shall any other provision of this Indenture be deemed td impose a duty on the
Indenture Trustee to take any action, if the Indenture Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is likely to
result in personal liability or is contrary to the terms hereof or of the
Facility Lease or is otherwise contrary to law.
SECTION 7.4. Limitations on Duties: oischacge of Certain Liens
Resulting from dabs Against Indenture Trustee.
The Indenture Trustee shall have no duty or obligation to take
or refrain from taking any action under, or in connection with, this Indenture
or the Facility Lease, except as expressly provided by the terms of this
Indenture. The Indenture Trustee nevertheless agrees that it will, in its
individual capacity and at its own cost and expense, promptly take such action
as may be necessary duly to discharge all Liens on any part of the Lease
Indenture Estate which result from acts by or claims against it arising out of
events or conditions not related to its rights in the Lease Indenture Estate or
the administration of the Lease Indenture Estate or the transactions
contemplated hereby.
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SECTION 7.5. Restrictions on Dealing with Lease Indenture
Estate.
Except as provided in the Transaction Documents, the Owner
Trustee shall not use, operate, store, lease, control, manage, sell, dispose of
or 0th-erwise deal with any part of the Lease Indenture Estate.
SECTION 7.6. Filing of Financing Statements and Continuation
Statements.
Pursuant to Section 10(b) (2) of the Participation Agreement,
the Lessee has covenanted to maintain the priority of the lien of this Indenture
on the Lease Indenture Estate. The Indenture Trustee shall, at the- request and
expense of the Lessee as provided in the Participation Agreement, execute and
deliver to the Lessee and the Lessee will file, if not already filed, such
financing statements~or other documents and such continuation statements or
other documents with respect to financing statements or other documents
previously filed relating to the lien created under this Indenture in the Lease
Indenture Estate as may be necessary to protect, perfect and preserve the lien
created under this Indenture. - At any time and from time to time, upon the
request of the Lessee or the Indenture Trustee, at the expense of the Lessee as
provided in the Participation Agreement (and upon receipt of the form of
document so to be executed), the Owner Trustee shall promptly and duly execute
and deliver any and all such further instruments and documents as the Lessee or
the Indenture Trustee may reasonably request in order for the Indenture Trustee
to obtain the full benefits of the security interest, assignment and mortgage
created or intended to be created hereby and of the rights and powers herein
granted. Upon the reasonable instructions (whAch instructions shall be
accompanied by the form of document to be filed) at any time and from time to
time of the Lessee or the Indenture Trustee, the Owner Trustee shall execute and
file any financing statement (and any continuation statement with respect to any
such financing statement), any certificate of title or any other document, in
each case relating to the security interest, assignment and mortgage created by
this Indenture, as may be specified in such instructions. Zn addition, the
Indenture Trustee and the Owner Trustee will execute such continuation
statements with respect to financing statements and other documents relating to
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the lien created under this Indenture in the Lease Indenture Estate as may be
reasonably specified from time to time in written instructions of any Holder of
a Note (which instructions may, by their terms, be operative only at a future
date and which shall be accompanied by the form of such continuation statement
or other document so to be filed).
ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND
THE INDENTURE TRUSTIZ
SECTION 8.1. Acceptance of Trusts; Standard of care.
The Indenture Trustee accepts the trusts hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Indenture and the Participation Agreement and agrees to receive and disburse all
moneys constituting part of the Lease Indenture Estate in accordance with the
provisions hereof, provided that no implied duties or obligations shall be read
into this Inaenture or the Participation Agreement against the Indenture
Trustee. The Indenture Trustee shall enter into and perform its obligations
under the Participation Agreement, and, at the request of the owner Trustee, any
other agreement relating to any transfer of the Undivided Interest or the Real
Property Interest or the assignment of rights under the Assignment
and~Assumption or, at the request of the Owner Trustee, the purchase by any
Person of Notes or Additional Notes. issued hereunder, all as contemplated
hereby. The Indenture Trustee shall not be liable under any circumstances,
except for its own willful misconduct or gross negligence. If any Indenture
Event of Default shall have occurred and be continuing, the Indenture Trustee
shall exercise such of the rights and remedies vested. in it by this Indenture,
subject to the provisions hereof, and shall use the same degree of care in their
exercise as a prudent man would exercise or use in the circumstances in the
conduct of his own affairs; provided that if in the opinion of the Indenture
Trustee such action may tend to involve expense or liability, it shall not be
obligated to take such action unless it is furnished with indemnity satisfactory
to it.
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SECTION 8.2. No Duties of Maintenance, Etc.
Except pursuant to Section 7.2 hereof and except as provided
in, and without limiting the generality of, Sections 7.1 and 7.4 hereof, the
Indenture Trustee shall have no duty (i) to see to any recording or filing of
any Transaction Document, or to see to the maintenance of any such recording or
filing, or (ii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, or assessed or levied against, any part of the Lease Indenture
Estate (except such as are required to be paid or discharged by it pursuant to
this Indenture or any of the other Transaction Documents) or to make or file any
reports or returns related thereto.
SECTION 8.3. Representations and Warranties of Indenture
Trustee and the owner Trustee.
NEITHER THE OWNER TRUSTEE NOR THE INDENTURE TRUSTEE MAKES ANY
REPRESENTATION OR WARRANTY AS TO THE VALUE, CONDITION, MERCHANTABILITY OR
FIThESS FOR USE OF UNIT 2, THE UNDIVIDED INTEREST OR ANY PART OF THE LAASE.
INDENTURE ESTATE OR AS TO ITS INTEREST THEREIN, OR ANY OTHER REPRESENTATION OR
WARRANTY WITH RESPECT TO UNIT 2, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE WHATSOEVER. The Owner Trustee and the Indenture Trustee each
represents and warrants, in its individual capacity, as to itself that this
Indenture has been executed and delivered by one or more of its officers who are
duly authorized to execute and deliver this Indenture on its behalf.
SECTION 8.4. Moneys Held in Trust; Non-Segregation of Moneys.
All moneys and securities deposited with and held by the
Indenture Trustee under this Indenture for the purpose of paying, or securing
the payment of, the principal of or premium or interest on the Notes shall be
held~in trust. Except as provided in Sections 2.3(c), 8.8 and 11.1 hereof,
moneys received by the Indenture Trustee under this Indenture need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law; provided,
however, that any payments received or applied hereunder by the Indenture
Trustee shall be accounted for by the Indenture Trustee so that any portion
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thereof paid or applied pursuant hereto shall be identifiable as to the source
thereof. Except as otherwise expressly provided herein, the Indenture Trustee
shall not be liable for any interest on any money held pursuant to this
Indenture.
SECTION 8.5. Reliance on writings, Use of Agents, Etc.
The Indenture Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
telegram, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. In the case of the Lessee, the Indenture Trustee may accept a copy
of a resolution of the Board of Directors or any duly constituted and authorized
dommittee of the Board of Directors of the Lessee, certified by the Secretary or
an Assistant Secretary of the Lessee as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly adopted by
such Board or Committee and that the same .15 in full force and effect. As to
the aggregate unpaid principal amount of the Notes outstanding as of any date,
the Owner Trustee may for all purposes hereof rely on a certificate signed by
any Authorized Officer of the Indenture Trustee. As to any fact or matter the
manner of ascertainment of which is not specifically described herein, the
Indenture Trustee may for all purposes hereof rely on~a certificate~ signed by
the Chairman of the Board, the president, any Vice President and the Treasurer
or the secretary or any Assistant Treasurer or Assistant secretary of the'
Lessee , or a Holder of a Note or any Responsible Officer of the owner Trustee,
as the case may be, as to such fact or matter, and such certificate shall
constitute full protection to the Indenture Trustee for any action taken or
omitted to be~taken by it in good faith in reliance thereon. The Indenture
Trustee shall furnish to the owner Trustee upon request such information. and
copies of such documents as the Indenture Trustee may have and as are necessary
for the Owner Trustee to perform its duties under Article III hereof. In the
administration of the trusts hereunder, the Indenture Trustee may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys selected by it in good faith and with reasonable
care, and, with respect to matters relating to the Notes, the Lease Indenture
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Estate and its rights and duties under this Indenture and the other Transaction
Documents, may, at the expense of the Lessee, or, if the Lessee shall have
failed to pay or provide for the payment thereof, at the expense of the Lease
Indenture Estate, consult with counsel, accountants and other skilled persons to
be selected and employed by it in good faith and with reasonable care, and the
Indenture Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons so selected. Unless otherwise specified
herein or in any other Transaction Document, any opinion of counsel referred to
in this Indenture or in such other Transaction Document may be relied on by the
Indenture Trustee to the extent it is rendered by an attorney or firm of
attorneys satisfactory to the Indenture Trustee (which may be counsel to the
Owner Participant, the Owner Trustee, the Lessee or any party to any Transactioh
Document).
SECTION 8.6. Indenture Trustee to Act Solely as Trustee.
The Indenture Trustee acts hereunder solely as trustee as
herein provided and not in any individual capacity, except as otherwise
expressly provided herein; and except as provided in Segtions 9(a) and 9(b) of
the Participation Agreement or Section 7.4 or 8.1 hereof, all Persons having any
claim against the Indenture Trustee arising from matters relating to the Notes
by reason of the transactions contemplated hereby shall, subject to the lien and
priorities of payment as herein provided and~to Sections 3.6 arid 5.7, look only
to the Lease Indenture Estate for payment or satisfaction thereof.
SECTION 8.7. Limitation on.Rights Against Registered liolders1
the Owner Trustee or Lease Indenture Estate.
The Indenture Trustee shall be entitled to be paid or
reimbursed for Trustee's Expenses as provided herein and in the other
Transaction Documents. Nonetheless, the Indenture Trustee agrees that it shall
have no right against the Holders of the Notes, the Owner Trustee (except to the
extent included in Transaction Expenses payable by the Owner Participant) or,
except as provided in Article V and Section 6.4 or this Article VIII, the Lease
Indenture Estate for any fee as compensation for its services hereunder.
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SECTION 8.8. Investment of Certain Payments Held by the
Indenture Trustee.
Any amounts held by the Indenture Trustee hereunder other than
pursuant to section 2.3(c) or 11.1 hereof shall be ipvested by the Indenture
Trustee from time to time as directed in writing by the Owner Participant and at
the expense and risk of the Owner participant in Ci) obligations of, or
guaranteed as to interest and principal by, the United States Government
maturing not more than 90 days after such investment, (ii) open market
commercial paper of any corporation incorporated under the laws of the United
States of America or any State thereof rated "prime-1" or its equivalent by
Moody's Investors Service, Inc. or "A-1" or its equivalent by Standard & Poor's
Corporation or (iii) certificates of deposit maturing within go days after such
investment issued by commercial banks orgahired under the laws of the United
States of America or of any political subdivision thereof having a combined
capital and surplus in excess of $500,000,000; provided, however, that the
aggregate amount at any one time so invested (a) in open market commercial paper
of any corporation shall not-exceed $2,000,000 and (b) in certificates of
deposit issued by any one bank shall not exceed $io,000,000. Any income or gain
realized as a result bf any such investment shall be applied to make up any
losses resulting from any such investment to the extent such losses shall not
have been paid by the Owner Trustee or the Owner Participant pursuant to this
Section 8.6. Any further income or gain so realized shall be promptly
distributed (in no event later than the next Business Day) to the Owner Trustee
or the Owner Participant, except after the occurrence and during the continuance
of an maenture Event of Default. The Indenture Trustee shall have no liability
for any loss resulting from any investment made in accordance with this Section.
Any such investment may be sold (without regard to maturity date) by the
Indenture Trustee whenever necessary to make any distribution required by
Article V hereof.
SECTION 8.9. No Responsibility for Recitals, etc.
The Indenture Trustee makes no representation or warrahty as
to the correctness of any statement, recital or representation made by any
Person other than the Indenture Trustee in this Indenture, any other Transaction
Document or the Notes.
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SECTION 8.10. Indenture Trustee May Engage in Certain
Transactions.
The Indenture Trustee may engage in or be interested in any
financial or other transaction with the Lessee, the Owner Participant, the Owner
Trustee and any other party to a Transaction Document, provided that if the
Indenture Trustee determines that any such relation is in conflict with its
duties under this Indenture, it shall eliminate the conflict or resign as
Indenture Trustee.
SECTION 8.11. Construction of Ambiguous rovisions.
The Indenture Trustee, subject to Section 8.1 hereof, may
construe any ambiguous or ;nconsistent provisions of this Indenture, and any
such construction by the Indenture Trustee shall be binding upon the
Noteholders. In construing any such provision, the Indenture Trustee will be
entitled to rely upon opinions of counsel and will not be responsible for any
loss or damage resulting from reliance in good faith thereon, except for its own
gross negligence or willful misconduct.
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION.9.l. Resignation and Removal of Indenture Trustee;
Appointment of Successor.
(a) The Indenture Trustee may resign at any time without cause
by giving at least 30 days' prior written notice to the Owner Participant, the
Owner Trustee, the Lessee and to each Holder of a Note, such resignation to be
effective upon the acceptance of such trusteeship by a successor. In addition,
the Indenture Trustee may be removed without cause by a Directive delivered to
the Owner Participant, the Owner Trustee, the Lessee and the Indenture Trustee,
and the Indenture Trustee shall promptly give notice thereof in writing to each
Holder of a Note. Zn the case of the resignativn or removal of the Indenture
Trustee, a successor trus:tee may be appointed by such a Directive. If a
6091 .CHASEU2 LEASE. 07:1
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<PAGE>
successor trustee shall not have been appointed within 3O days after such notice
of resignation or removal, the Indenture Trustee, the owner Trustee or any
Holder of a Note may apply to any court of competent jurisdiction to appoint a
successor to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Sc appointed by such court shall
immediately and without further act be superseded by any successor appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor trustee, however appointed, shall execute
and deliver to its predecessor and to the Owner Trustee an instrument accepting
such appoint;nent, and thereupon such successor, without further act, shall
become vested with all the estates, properties, rights, powers and duties of its
predecessor hereunder in the trusts under this Indenture applicable to it with
like effect as if originally named the Indenture Trustee; but, nevertheless,
upon the written request of such successor trustee or receipt of a Directive,
its predecessor shall execute and deliver an instrument transferring to such
successor trustee, upon the trusts herein expressly applicable to it, all the
estates1 properties, rights and powers of such predecessor under this Indenture,
and such predecessor shall duly assign, transfer, deliver and pay over to such
successor trustee all moneys or other property then held by such predecessor
under this Indenture.
(c) Any successor trustee, however appointed, shall be a bank
or trust company organized under the laws of the United States or any
jurisdiction thereof having a combined capital and surplus of at least
sioo,ooo,aoo, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be cansolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 9.1, be the Indenture
Trustee under this Indenture without further act.
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6091. CHASEU2 LEASE. 07:1
<PAGE>
ARTICLE X
SUPPLEXENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 10.1. Supplements, Amendments and Modifications to
This Indenture Without Consent of Holders of Notes.
The Indenture Trustee may, with the written consent of the
Owner Trustee, from time to time and at any time execute a supplement to this
Indenture without the consent of the Holders of Notes Outstanding in order to
(i) cure any defect, omission or ambiguity in this Indenture or for any other
purpose if such action does not adversely affect the interests of such Holders,
(ii) grant or confer upon the Indenture Trustee for the benefit of such Holders
arty additional rights, remedies, powers, authority or security which may be
lawfully granted or conferred and which are not contrary to or inconsistent with
this Indenture1 (iii) add to the covenants or agreements to be observed by the
Owner Trustee and which are not contrary to this Indenture or surrender any
right or power of the Owner Trustee, (iv) confirm or amplify, as further
assurance, any pledge under, and the subjection to any lien or pledge created or
to be created by, this Indenture, of the properties covered hereby, or subject
to the lien or pledge of this Indenture additional revenues, properties or other
collateral, including pursuant to an Undivided Interest Indenture Supplement,
(v) qualify this Indenture under the. provisions of the Trust Indenture Act,
(vi) evidence the appointment of any successor Indenture Trustee pursuant to the
terms hereof, (vii) evidence the assumption and release affected by the
Assumption Agreement, or (viii) execute supplemental indentures to evidence the
issuance of and to provide the terms of, Additional Notes to be issued hereunder
in accordance with the terms hereof.
SECTION 10.2. Supplements and Amendments to this Indenture and
the Facility Lease With Consent of Holders of Notes.
Except as provided in Section 10.1 hereof, at any time and
from time to time, (i) upon receipt of a Directive, the Indenture Trustee shall
execute a supplement to this Indenture (to which the Owner Trustee has agreed in
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<PAGE>
writing) for the purpose of adding provisions to, or changing or eliminating
provisions of, this Indenture, but only as specified in such Directive and, (ii)
upon receipt of a written instruction from the Lessee and the Owner Trustee, the
Indenture Trustee shall consent to any amendment of or supplement to the
Facility Lease or execute and deliver such written waiver or modification of the
terms of the Facility Lease to which the Owner Trustee may agree; provided,
however, that, without the consent of the Holders of all the Notes then
Outstanding no such supplement or amendment to this Indenture or the Facility
Lease, or waiver or modification of the terms of either thereof, shall (x)
modify any of the provisions of this SectiQn or of Section 7.1 or 7.2 hereof or
section 4 of the Facility Lease or of the definition of Directive contained in
Appendix A hereto or the definition of Indenture Event of Default herein, reduce
the amount of the Basic Rent, Casualty Value, Special Casualty Value,
Termination Value or any payment under or pursuant to Section 16 of the Facility
Lease as set forth in the Facility Lease below such amount as is required to pay
the full principal of, and premium, if any, and interest on, the Notes when due,
or extend the time of payment thereof, (y) except as permitted by clause (x)
above, modify, amend or supplement the Facility Lease on consent to the
termination or any assignment thereof, in any case reducing the Lessee's
obligations in respect of the payment of the Basic Rent, Casualty Value, Special
Casualty Value, Termination Value or any payment under or pursuant to Section 16
of the Facility Lease below the amount referred to in clause (x) above, or (z)
deprive the Holders of any Notes of the lien of this Indenture on the Lease
Indenture Estate (except as contemplated by section 3.9(b)) ~r materially
adversely affect the rights and reeedies for the benefit of such Holders
provided in Article VI of this Indenture; and, provided, further, that, without
the consent of the Holders of all the Notes then Outstanding and affected
thereby no such supplement or amendment to this Indenture or the Facility Lease,
or waiver or modification of the terms of either thereof, shall reduce the
amount or extend the time of payment of any amount payable under any Note,
reduce or modify the provisions for the computation of the rate of interest
owing or payable thereon, adversely alter or modify the provisions of Article V
with respect to the order of priorities in which distributions there-1 under
with respect to the Notes shall be made, or reduce, modify or amend any
indemnities in favor of the Holders of the Notes. Anything to the contrary
-50-
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<PAGE>
contained herein notwithstanding, without the necessity of the consent of the
Holders of Notes or the Indenture Trustee, (a) any indemnities in favor of the
Owner Trustee or the Owner Participant may be modified, amended or changed and
(b) the owner Trustee may enter into any agreement with respect to the Lease
Indenture Estate which by its terms does not become effective prior to the
satisfaction and discharge of this Indenture, provided, however, that any
agreerr~ent entered into by the Owner Trustee pursuant to this clause (b) shall
not materially adversely affect the Indenture Trustee or the Molder of any Note.
Notwithstanding the foregoing, the Indenture Trustee shall, upon receipt or a
written instruction from the Lessee and the Owner Trustee, consent to an
amendment of the definitions of "Deemed Loss Event, "Event of Loss" and '1rinal
Shutdown" contained in or appended to the Facility Lease or this Indenture. The
Owner Trustee shall deliver to the Indenture Trustee a copy of each amendment to
the Facility Lease whether or not the Indenture Trustee is required to consent
or otherwise act with respect thereto.
SECTION 10.3. Certain Limitations an Supplements and
Amendments.
If in the opinion of the Owner Trustee or the Indenture
Trustee, each of which shall be entitled to rely on counsel for purposes of this
Section 10.3, any document required to be executed by either of them pursuant to
the terms of Section 10.1 or 10.2 does not comply with the provisions of this
Indenture or adversely affects any right, immunity or indemnity in favor of, or
increases any duty of, the Owner Trustee or the Indenture. Trustee under this
Indenture, the Facility Lease or the Participation Agreement, the Owner~Trustee
or the Indenture Trustee, as the case may be, may in its discretion decline to
execute stick document.
SECTION 10.4. Directive Need Not Specify Particular Form of
Supplement or Amendment.
It shall not be necessary for any Directive furnished pursuant
to section 10.2 hereof to specify the particular form of the proposed documents
to be executed pursuant to such Section, but it shall be sufficient if such
request shall indicate the substance thereof.
6091. CHASEU2 LEASE. 07:1
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<PAGE>
SECTION 10.5. Trustee to Furnish Copies of Supplement or
Amendment.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 10.2, the
Indenture Trustee shall mail, by first-class mail, postage prepaid, a conformed
copy thereof to each Holder of an Outstanding Note at the address of such Person
set forth in the register kept pursuant to Section 4.1 but the failure of the
Indenture Trustee to mail such conformed copies shall not impair or affect the
validity of such document.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Moneys for Payments in Respect of Notes to be
Held in Trust.
In case the Holder of any Note shall fail to present the same
for payment on any date on which the principal thereof or interest thereon
becomes payable, the Indenture Trustee may Set aside in trust the moneys then
due thereon uninvested and shall pay such moneys to the Holder of such Note or
such Person upon due presentation or surrender thereof in accordance with the
provisions of this Indenture,'subject always, however, to the provisions of
Sections 3.8 and 11.2.
SECTION 11.2. Disposition of Moneys Held for Payments of
Notes.
Any moneys set aside under Section 11.1 and not paid to
Holders of Notes as provided in Section 11.1 shall be held by the Indenture
Trustee in trust until the latest of (i) the date three years after the date of
such setting aside, (ii) the date all other Holders of the Notes shall have
received full payment of all principal of and interest and other sums payable to
them on such Notes or the Indenture Trustee shall hold (and shall have notified
such Persons that it holds) in trust for that purpose an amount sufficient to
make full payment thereof when due and (iii) the date the Owner Trustee shall
have fully performed and observed all its covenants and obligations contained in
6091.CHASEU2.LEASE.07:l
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<PAGE>
this Indenture with respect to the Notes; and thereafter shall be paid to the
Owner Trustee by the Indenture Trustee on demand; and thereupon the Indenture
Trustee shall be released from all further liability with respect to such
moneys; and thereafter the Holders of the Notes in respect of which such moneys
were so paid to the Owner Trustee shall have no rights in respect thereof except
to obtain payment of such moneys from the Owner Trustee. Upon the setting aside
of such moneys, interest shall cease to accrue on the Notes.
SECTION 11.3. Transfers Not to Affect Indenture or Trusts.
No Holder of a Note shall have legal title to any part of the
Lease Indenture Estate. No transfer1 by operation of law or otherwise, of any
Note or other right, title and interest of any Holder of a Note in and to the
Lease Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts hereunder with respect to such Note or entitle any successor or
transferee of such Molder to an accounting or to the transfer to it of legal
title to any part of the Lease Indenture Estate.
SECTION 11.4. Binding Effect of Sale of Lease Indenture Estate.
Any sale or other conveyance of the Lease Indenture Estate or
any part thereof by the Indenture Trustee~made pursuant to the terms of this
Indenture or the Facility Lease shall bind the Holders of the Notes and shall be
effective to transfer or convey all right,. title and inte,rest.of the Indenture
Trustee, the Owner Trustee and such Holders in and to the same. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee.
SECTION 11.5. Limitation as to Enforcement of Rights, Remedies
and Claims.
Nothing in this Indenture, whether express or implied, shall
be construed to give to any Person, other than the Owner Trustee, the Owner
'Participant, the Lessee (to the extent. the Lessee's consent or other action by
the Lessee is expressly provided for), the :ndenture Trustee and the Holders of
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<PAGE>
the Notes, any legal or equitable right, remedy or claim under or in respect of
this Indenture or any Note.
SECTION 11.6. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices given hereunder to the Lessee, the Owner
Trustee, the owner Participant or the Indenture Trustee shall~be given in the
manner provided in section 18 of the Participation Agreement. Notices by the
Indenture Trustee to any Holder of a Note shall be in writing and shall be given
in person or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type)1 or mailed by registered or certified mail,
addressed to such Holder at the address set forth in the register kept pursuant
to Section 4.1. Whenever any notice in writing is required to be given by the
Indenture Trustee to any Holder of a Note such notice shall be effective (x) if
sent by telex, telecopy or other wire transmission, on the date of transmission
thereof, or (y) if sent by mail, three Business Days after being mailed.
SECTION 11.7. separability of Provisions
In case any one or more of the provisions of this Indenture or
any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
hereof and any other application hereof shall not in any way be affected or
impaired.
SECTION 11.8. Benefit of Parties, Successors and Assigns.
All representations, warranties, covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee, the Indenture Trustee and their respective successors and assigns and
each Holder of a Note, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Holder of a Note shall bind
the successors and assigns of such Holder and any Holder of a Note issued in
transter or exchange of such Note.
6091 CHASEU2 LEASE. 07:1
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<PAGE>
SECTION 11.9. Survival of Representations and Warranties.
All representations and warranties made with respect to the
Notes shall survive the execution and delivery of this Indenture and the issue,
sale and delivery of any Notes and shall continue in effect so long as any Note
issued hereunder is Outstanding and unpaid.
SECTION 11.10. Bankruptcy of the Owner Trustee.
If (a) the Owner Trustee becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, or any successor provision,
(b) pursuant to such reorganization provisions the Owner Trustee is required, by
reason of the Owner Trustee being held to have recourse liability directly or
indirectly to the Holder of any Note or the Indenture -Trustee, to make payment
on account of any amount payable as principal or interest on such Note and (c)
such Holder or the Indenture Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee on account
of clause Cb) of this Section, then such Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Owner Trustee such Excess Amount.
"Excess Amount" means the amount by which such payment exceeds the amount which
would have been received on or prior to the date of such payment by such Holder
or the Indenture Trustee if the Owner Trustee had not become subject to the
recourse liability referred to in clause (b) of this Section. Nothing contained
in this Section shall prevent such Holder dt the Indenture Trustee from
enforcing any recourse obligation (and retaining the proceeds thereof) of the
Owner Trustee expressly provided for under this Indenture or in the Notes.
SECTION 11.11. Bankruptcy of the Owner Participant.
The Indenture Trustee and the Holders of the Notes shall be
bound by the provisions of Section 19(f) of the Participation Agreement.
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<PAGE>
SECTION 11.12. Counterpart Execution.
This Indenture and any amendment or supplement to this
Indenture may be executed in any number of counterparts and by the different
parties hereto and thereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.13. Dating of Indenture.
Although this Indenture is dated for convenience and for the
purpose of reference as of the date mentioned, the actual date or dates of
execution by the owner Trustee and the Indenture Trustee are as indicated by
their respective acknowledgments hereto annexed.
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6091. CHASEU2 LEASE. 07:1
<PAGE>
IN WITNESS Indenttire Trustee duly executed by duly
authorized, above. WHEREOF, the Owner Trustee and the have each caused this
Indenture to be their respective officers thereunto all as of the date first set
forth above.
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under the Trust
Agreement dated as of December 15,
1986 with Chase Manhattan Realty
Leasing Corporation
By
-------------------------------
Assistant Vice President
CHEMICAL BANK
By
-------------------------------
Vice President
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6091. CHASEU2.LEASE. 07:1
<PAGE>
STATE OF NEW YORK COUNTY OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 16th day of December, 1986, before me personally
came Martin P. Henry, to me known, who, being by me duly sworn, did acknowledge,
depose and say that he resides at Boston, Massachusetts; that he is an Assistant
Vice President of THE FIRST NATIONAL BANK OF BOSTON, a national banking
association, described in and which executed the foregoing instrument; and that
he signed his name thereto on behalf of said association by authority of the
Board of Directors of such association.
(NOTARIAL SEAL)
----------------------------
/s/ Delia T. Santiago
Notary Public
DELIA T. SANTIAGO
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
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<PAGE>
STATE OF NEW YORK COUNTY OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 16th day of December, 1986, before me personally care
T.J. FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose
and say that he resides at Bethpage, New York; that he is a Vice President of
CHEMICAL BANK, a flew York banking corporation, described in and which executed
the foregoing instrument; and that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such corporation.
(NOTARIAL SEAL)
----------------------------
/s/ Delia T. Santiago
Notary Public
DELIA T. SANTIAGO
Notary Public State of New York
No 41-3451160
Qualified In Queens County
Commission Expires March 30, 1987
6091. CHASEU2 LEASE.07:1
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<PAGE>
EXHIBIT A-1
TO INDENTURE
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 1992)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1992)
Issued at: New York, New
York Issue Date: December ______, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of December 15, 1986 with Chase Manhattan Realty Leasing Corporation
(the Owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION,
or registered assigns, the principal sum of $1,270,000 (One Million Two Hundred
Seventy Thousand Dollars) on January 15, 1992 together with interest (computed
on the basis of a 360-day year of twelve 30-day months) on the aggregate amount
of such principal sum remaining unpaid from time to time from the date of this
Fixed Rate Note until due and payable, in arrears, at the rate of 8.05% per
annum. Payments of principal installments of this Fixed Rate Note shall be ma4.
in the "principal amount payable and on the "payment dates" specified in
Schedule 1 hereto. Payments of accrued interest on this Fixed Rate Note shall be
made on January 15 and July 15 in each year, commencing January 15, 1987, to and
including the last "payment date" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
6091.CHASEU2.LEASE.07:1
A-1
<PAGE>
Interest on any overdue principal and premium, it any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.05% (computed
on the basis of a 360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 15, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the owner Trustee and chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly .provided in the Indenture, the owner Trustee. nor the Indenture
Trustee is or shall be personally liable to the Holder hereof for any amounts
payable under this Fixed Rate Note or for any performance to be rendered under
the Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
lock solely to the Lessee for such payment.
A-2
6091.CHASEU2.LEASE.07:1
<PAGE>
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes as provided in Section 3.5 of the Indenture, and the several series may be
for varying aggregate principal amounts and may have different maturity dates,
interest rates, redemption provisions and other terms. The properties of the
Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note is not subject to prepayment in whole or
in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
6091.CHASEU2.LEASE.07:1
A-3
<PAGE>
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner with the amount of any applicable transfer taxes. Prior to due
presentment for registration of transfer of this Fixed Rate Note, the owner
Trustee and the Indenture Trustee may treat the person in whose name this Fixed
Rate Note is registered as the owner hereof for the purpose of receiving
payments of principal of and premium, if any, and interest on this Fixed Rate
Note and for all other purposes whatsoever, whether or not this Fixed Rate Note
be overdue, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-4
6091.CHASEU2.LEASE.07:1
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of December 15, 1986 with
Chase Manhattan Realty Leasing
corporation
By
---------------------------------
Assistant Vice President
This Note is one of the Series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
--------------------------------
Authorized Officer
6091.CHASEU2.LEASE.O7:1
A-5
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1992)
Schedule of Principal Amortization
$1,270,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- -----------
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
==========
Page 1 of 1
6091.CHASEU2.LEASE.07:1
<PAGE>
ASSIGNMENT
Date: December ________, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORORATION
By
------------------------
Vice President
<PAGE>
EXHIBIT A-2
TO INDENTURE
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 1997)
THIS NOTE HAS NOT BEEN REGISTERED. UNDER THE
SECURITIES ACT or 1933 AND NAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROSESSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 1997)
Issued at: New York, New York
Issue Date: December __, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of December 15, 1986 with Chase Manhattan Realty Leasing Corporation
(the owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION,
or registered assigns, the principal sum of $3,501,000 (Three Million Five
Hundred One Thousand Dollars) on January 15, 1997 together with interest
(computed on the basis of a 360-day year of twelve 30-day months) on the
aggregate amount of such principal sum remaining. unpaid from time to time from
the date of this Fixed Rate Note until due and payable, in arrears at the rate
of 8.95% per annum. Payments of principal installments of this Fixed Rate Note
shall be made in the "principal amount payable" and on the "payment dates
specified in Schedule 1 hereto. Payments of accrued interest on this Fixed Rate
Note shall be made on January 15 and July 15 in each year; commencing January
15, 1987, to and including the last "payment date" specified in Schedule I
hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, it any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.95% computed
on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium or interest shall be overdue.
<PAGE>
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
data on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 15, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in such event it will
look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
6091.CHASEU2.LEASE.07:1
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<PAGE>
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional Series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which tarts and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note may be prepaid in whole or in part at any
time on or after January 15, 1992 by the Owner Trustee upon the giving of not
less than 30 days' notice (as provided in the Indenture) and at the following
prepayment prices (expressed as a percentage of the unpaid principal amount
hereof), together with interest accrued to the date fixed for prepayment:
Twelve Month Redemption
Period Beginning Price
---------------- ----------
January 15, 1992 102.557%
January 15, 1993 101.279
6091.CHASEU2.LEASE.07:1
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<PAGE>
and thereafter at the principal amount thereof, together with interest accrued
to the date fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with' the terms of the Indenture.
There shall be maintained at the Indenture Trustee' S office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of Fixed Rate Note is
registrable, ,as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
-4-
6091.CHASEU2.LEASE.07:1
<PAGE>
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.CHASEU2.LEASE.07:1
-5-
<PAGE>
IN WZTNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of December 15, 1986 with
Chase Manhattan Realty Leasing
Corporation
By
-------------------------------
Assistant Vice President
This Note is one of the Series of Notes referred to therein
and in the within-mentioned Indenture
CHEMICAL BANK
As Indenture Trustee
By
-------------------------------
Authorized Officer
6091.CHASEU2.LEASE.07.:1
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<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 1997)
Schedule of Principal Amortization
$3,501,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
------- -------------- ------------
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
January15, 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
==========
Page 1 of 1
6091.CHASEU2.LEASE.07.:1
<PAGE>
ASSIGNMENT
Date: December , 1966
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16.,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
------------------------
Vice President
<PAGE>
EXHIBIT A-3
TO INDENTURE
FORM OF FIXED RATE NOTE
(DUE JANUARY 15, 2016)
THIS NOTE HAS NOT BEEN REGISTERED OWNER THE
SECURITIES ACT OF 1933 AND NAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 2016)
Issued at: New York, New York
Issue Date: December __, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of December 15, 1986 with Chase Manhattan Realty Leasing corporation
(the owner Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION,
or registered assigns, the principal sum of $23,229,000 (Twenty Three Million
Two Hundred Twenty Nine Thousand Dollars) on January 15, 2016 together with
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the aggregate amount of such principal sum remaining unpaid from time to time
from the date of this Fixed Rate Note until due and payable, in arrears, at the
rate of 10.15* per annum. Payments of principal installments of this Fixed Rate
Note shall be made in the "principal amount payable" and on the "payment dates"
specified in Schedule 1 hereto, as such Schedule may be adjusted in accordance
with the Indenture and the terms contained herein. Payments of accrued interest
on this Fixed Rate Note shall be made on January 15 and July 15 in each year,
commencing January 15, 1987, to and including the last "payment date" specified
in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, it any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 11.15%
(computed on the basis of a 360-day year of twelve 30- day months) for the
period during which any such principal, premium or interest shall be overdue.
<PAGE>
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 15, 1986, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Fixed Rate
Note shall be made only from payments made by the Lessee under this Fixed Rate
Note in accordance with the Assumption Agreement referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note agrees that in.
such event it will look solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
-2-
6091.CHASEU2.LEASE.07:1
<PAGE>
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1997, in connection with an adjustment to Basic Rent under
Section 3(d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by. its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extant of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note is subject to prepayment in whole as
contemplated by Section 5.2 of the Indenture and in the circumstances therein
described. In addition, this Fixed Rate Note may be prepaid in whole or in part
at any time on or after January 15, 1992 by the Owner Trustee upon the giving of
6091.CHASEU2.LEASE.07:1
-3-
<PAGE>
not less than 30 days' notice (as provided in the Indenture) and at the
following prepayment prices (expressed as a percentage of the unpaid principal
amount hereof), together with interest accrued to the date fixed for prepayment:
Twelve Month Redemption
Period Beginning Price
---------------- ----------
January 15, 1992 108.120%
January is, 1993 107.714
January 15, 1994 107.308
January is, 1995 106.902
January 15, 1996 106.496
January 15, 1997 106.090
January 15, 1998 105.684
January 15, 1999 105.279
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 101.219
January 15, 2010 100.812
January 15, 2011 100.406
and thereafter at the principal amount thereof, together with interest accrued
to the data fixed for prepayment. This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
-4-
6091.CHASEU2 LEASE.07:1
<PAGE>
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.CHASEU2.LEASE.07:l
-5-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF
BOSTON, not in its individual
capacity, but solely as Owner
Trustee under a Trust
Agreement dated as of December
15, 1986 with Chase Manhattan
Realty Leasing Corporation
By
---------------------------
Assistant Vice President
This Note is one of the Series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
-----------------------
Authorized Officer
6091.CHASEU2.LEASE.07:1
-6-
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2016)
Schedule of Principal Amortization
$23,229,000 Principal Amount
Principal Principal
Payment Date Amount Payable Amount Paid
- ------------ -------------- -----------
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
July 15, 2003 472,000
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
Page 1 of 2
6091.CHASEU2.LEASE.07:1
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2016)
Schedule of Principal Amortization
(Continued)
Payment Principal Principal
Date Amount Payable Amount Paid
- ------- -------------- -----------
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
===========
Page 2 of 2
6091.CHASEU2.LEASE.07:1
<PAGE>
ASSIGNMENT
Date: December __ , 1986
For value received, FIRST PV FUNDING CORPORATION (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK, as Collateral Trust
Trustee pursuant to the Collateral Trust Indenture dated as of December 16,
1985, as heretofore amended and supplemented, among First PV, Public Service
Company of New Mexico and said Collateral Trust Trustee, without recourse, the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By
--------------------------
Vice President
<PAGE>
EXHIBIT B
ASSUMPTION AGREEMENT
TO: The Holders (as defined below) from time to tile of the Notes
(as defined below) of The First National Bank of Boston, not
in its individual capacity, but solely as owner trustee under
a Trust Agreement dated as of December 15, 1986 with Qiase
Manhattan Realty Leasing Corporation (in such capacity, the
"Issuer") under the Trust Indenture, Mortgage, Security
Agreement, and Assignment of Rents (the "Indenture") dated as
of December 15, 1986 among the Issuer and Chemical Bank (the
"Trustee").
The undersigned, PUBLIC SERVICE COMPANY OF NEW MEXICO( a New' Mexico
corporation (the "Obligor"), for the purpose of satisfying in part its
obligation to make certain payments under that certain Facility Lease dated as
of December 15, 1986 between the Issuer and the Obligor (the "Facility Lease"),
does hereby covenant and agree with the Holders (as defined in the Indenture)
from time to time at the Notes (as defined in the Indenture) as follows:
SECTION 1. The Obligor does hereby agree to, and does hereby,
assume unconditionally the payment of the principal of the Notes and of the
interest and premium (if any) thereon, At the rates provided in the Notes, when
and as the same shall become due and payable, whether at maturity or upon
mandatory prepayment or upon declaration or otherwise, according to the terms of
the Notes and of the Indenture.
SECTION 2. The assumption herein contained shall be binding
upon the Obligor, its successors and assigns and shall remain in full force and
effect irrespective of the power or authority of the Issuer to issue the Notes
or to execute, acknowledge and deliver the Indenture or the validity of the
Notes, or the Indenture, or of any defense whatsoever that the Issuer may or
might have to the payment of the Motes (principal, interest or premium), or to
B-1
6091.CHASEU2.LEASE.07:1
<PAGE>
the performance or observance of any of the provisions or conditions of the
Indenture or any Note, or of the existence or continuance of the Issuer as a
legal entity; nor shall said assumption be affected by the merger,
consolidation, or other dissolution of the Issuer or the sale or other transfer
of the property of the Issuer or by the Issuer as an entirety, or substantially
so, to any other person; nor shall the assumption be discharged or impaired by
any act, failure or omission whatsoever on the part of any Holder of any Notes
or the Trustee, including, among other such acts) failures and omissions, the
following:
(a) any failure to present any Note for payment or to demand
payment thereof, or to give to the Obligor notice of dishonor and
non-payment of any Note when and as the same may become due and payable,
or notice of any failure on the part of the Issuer to do any act or
thing or to perform or keep any covenant or agreement by it to be done,
kept or performed under the terms of Notes or the Indenture;
(b) any extension of the obligation of any Note, either
indefinitely or for any period of time, or any other modification in the
obligations under any Note or the Indenture or of the Issuer thereon or
in connection therewith;
(C) any act or failure to act with regard to any Note or the
Indenture or anything which might vary the risk of the Obligor; and
(d) any action taken under the Indenture and the Notes in the
exercise of any right or power thereby conferred or any failure or
omission on the part of the Trustee or the Holder of any Note to enforce
any right or security given under the Indenture or any Note, or any
waiver of any right or any failure or omission on the part of the
Trustee or any Holder of any Note to enforce any right of any Holder of
any Note against the Issuer;
provided, always, that the specific enumeration of the above mentioned acts,
failures, waivers or omissions shall not be deemed to exclude any other acts,
failures, waivers or omissions though not specifically mentioned herein, it
being the purpose and intent of this Assumption Agreement that the obligation of
the Obligor shall be absolute and unconditional to the extent herein specified
6091.CHASEU2 LEASE.07:1
B-2
<PAGE>
and shall not be discharged, impaired or varied except by the payment of the
principal of and interest on any Note and any premium thereon in case of
prepayment, and then only to the extent of such payments.
SECTION 3. (a) Subject to the requirements of Sections 10(b)
(3) (iii) and (b) (3) (iv) of the Participation Agreement and to the provisions
of paragraph (b) of this Section, nothing contained in this Assumption Agreement
shall prevent any consolidation or merger of the Obligor with or into any other
corporation or corporations (whether or not affiliated with the Obligor), or
successive consolidations or mergers in which the Obligor or its successor or
successors shall be a party or parties, or shall prevent any sale conveyance or
lease of all or substantially all the property of the Obligor, to any other
corporation authorized to acquire and operate the same; provided, however, and
the Obligor hereby covenants and agrees, that upon any such consolidation,
merger, sale, conveyance or lease, all obligations of the Obligor under this
Assumption Agreement on or in respect of any Note, and the due and punctual
performance and observance of all of the covenants and conditions of this
Assumption Agreement to be performed by the Obligor, shall be expressly and duly
assumed, by an agreement reasonably satisfactory in form and substance to the
Trustee, executed and delivered by the corporation (if other than the Obligor)
formed by such consolidation, or into which the Obligor shall have been merged,
or by the corporation which shall have acquired such property.
(b) The Indenture Trustee (as defined in the Indenture),
subject to applicable provisions of the Indenture, may rely upon an opinion of
counsel to the Obligor as conclusive evidence that any such merger,
consolidation, sale or conveyance complies with the provisions of this Section.
SECTION 4. The Obligor does hereby consent to all of the terms
and conditions of each Note Series and of the Indenture, and hereby waives any
and all rights of notice of any fact or facts or circumstance or circumstances
whatsoever and consents to any extension or extensions of time of any payment or
payments, or of any other act or thing which any Holder or Molders of any Note
or the Issuer may agree to consent to, either expressly, by acquiescence or
otherwise, and hereby agrees not to claim or enforce any rights of subrogation
6091.CHASEU2.LEASE.07:1
B-3
<PAGE>
or any other right or privilege which might otherwise arise on account of any
payment made by it or act or thing done by it on account of or in accordance
with its assumption herein contained, unless and until all of the Notes have
been fully paid and discharged.
SECTION 5. The assumption herein expressed may be transferred
or assigned at any time or from time to time and shall be considered to be
transferred and assigned upon the transfer of any Note, whether with or without
the consent of or notice to the obligor or the Issuer. The Obligor hereby agrees
to execute and deliver such instruments and to do such acts arid "things
requested by the Trustee as shall be reasonably necessary to carry out and
effectuate the purposes and intents of this Assumption Agreement. This
Assumption Agreement may not be amended or modified in any respect without the
prior written consent (evidenced as provided in the Indenture) of the Holders of
not less than a majority in principal amount of the Notes Outstanding (as
defined in the Indenture); provided, however, that without the written consent
of the Holders of all of the Notes Outstanding, no such amendment or
modification shall be effective which will change any of the provisions of
Sections 1, 2, 4 or 5 of this Assumption Agreement. The Obligor agrees to file
with the Indenture Trustee a duplicate original of each such consent.
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By
---------------------------
Title:
ATTEST:
- --------------------------
Title:
6091.CHASEU2.LEASE.07:1
B-4
<PAGE>
EXHIBIT C
UNDIVIDED INTEREST SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE NO. _____ dated as of _________ ____ to
the TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGMENT OF RENTS
(hereinafter, together with supplements thereto, the Indenture) dated as of
December 15, 1986, between THE FIRST NATIONAL BANK OF BOSTON (FNB), not in its
individual capacity, but solely as trustee (the Owner Trustee) under a Trust
Agreement, dated as of December 15, 1986, between FNB, whose address is 100
Federal Street, Boston, Massachusetts 02110, and Chase Manhattan Realty Leasing
Corporation, and CHEMICAL BANK, a New York banking corporation (the Indenture
Trustee), whose address is 55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, in accordance with Section 9(j) of the Facility
Lease., the Owner Trustee is obligated, in certain cases, to cause the Undivided
Interest and the Real Property Interest to be subjected to the Lien of the
Indenture: and
WHEREAS, in order to further secure the obligations referred
to in the Indenture, the Owner Trustee desires to grant to the Indenture Trustee
the security interest and realty mortgage herein provided and the parties hereto
desire that the Indenture be regarded (i) to the extent that the Undivided
Interest constitutes personal property, as a "security agreement" and as a
"financing statement" under the Uniform Commercial Code and (ii) to the extent
that the Undivided Interest and the Real Property Interest constitute fixtures
or real property, as a realty mortgage:
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.1. The Indenture. This Supplemental Indenture
No._________ shall be construed as supplemental to and amendatory of the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
6091.CHASEU2.LEASE.07:1
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SECTION 1.2. Definitions. Capitalized terms used herein, but
which are not otherwise defined herein shall have the meanings set forth in
Appendix A to the Indenture.
SECTION 1.3. Recording Information. The Indenture was recorded
on ___________ in Maricopa County, Arizona [describe] [specify other recorded
documents] [specify other places of recordation].
SECTION 1.4. Governing Law. This Supplemental Indenture No. __
and the Indenture shall, for all purposes, be construed in accordance with and
governed by the laws of the State of New York except to the extent that the laws
of the State of Arizona shall be mandatorily applicable thereto.
SECTION 1.5. Security Interest and Realty Mortgage. As further
security for the due and punctual payment of the principal of and premium, if
any, and interest on the Notes according to their respective terms and effect
and the performance and observance by the Owner Trustee of all the covenants and
agreements made by it or on its behalf in the Notes, the Participation Agreement
and the Indenture, the Owner Trustee does, by its execution and delivery hereof,
hereby grant a security interest in, bargain, convey, warrant, assign, transfer,
mortgage, pledge and set over unto the Indenture Trustee, and to its successors
and assigns in trust, the following (which shall be a part of the Lease
Indenture Estate for all purposes of the Indenture and the other Transaction
Documents):
(1) the Undivided Interest and the Real Property Interest,
including, but without limitation, the Owner Trustee's share of all
capital Improvements (including any which constitute fixtures under
Applicable Law) now existing or which hereafter may become part of the
Undivided Interest;
(2) all right, title and interest of the Owner Trustee in, to
and under (a) the Bill of sale, (b) the ANPP Participation Agreement,
(c) the Deed and (d) the Assignment of Beneficial Interest, including,
but without limitation, all amounts of Rent, insurance
609l.CHASEU2.LEASE.07:1
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proceeds and condemnation, requisition and other awards and payments of
any kind for or with respect to any part of the Lease Indenture Estate
as contemplated in such documents;
(3) all other property of every kind and description, real,
personal and mixed, and interests therein now held or hereafter acquired
by the Owner Trustee pursuant to any term of any Transaction Document,
whether or not subjected to the Lien of the Indenture by an indenture
supplemental hereto; and
(4) all proceeds of the foregoing;
but excluding, however, (i) such of the foregoing as, in accordance with the
terms of the Indenture, shall have been released from the lien of the Indenture
and distributed to the Owner Trustee or the Owner Participant, as the case may
be, and (ii) any and all Excepted Payments; and subject, however, to (x) the
terms and provisions of the Indenture and (y) the rights of the Lessee under the
Facility Lease.
TO HAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in the Indenture
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the Owner Trustee may exercise all of its rights
under the documents specified in clause (2) above to the same extent as if its
right, title and interest therein had not been assigned to the Indenture Trustee
to the extent set forth above, except that the Indenture Trustee shall receive
all payments of Assigned Payments and all moneys and securities required to be
held by or deposited with the Indenture Trustee hereunder.
The Owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
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SECTION 1.6. Real Estate Remedies. In addition to the remedies
specified in the Indenture (including but without limitation Section 6.4
thereof) or otherwise available pursuant to Applicable Law, to the extent that
any portion of the Lease Indenture Estate constitutes fixtures or real property,
the Indenture and this Supplemental Indenture No.__ shall be, and shall be
deemed to be, a realty mortgage and assignment of rents with respect to all
items of real property and fixtures and the Indenture Trustee shall have all the
rights, remedies and benefits of a mortgagee of real property under Applicable
Law (including, but without limitation, rights and remedies pursuant to Arizona
Revised Statutes Section 33-702.3, or any comparable successor provision) and
the Owner Trustee shall be and be deemed to be, a mortgagor with respect to such
fixtures and real property.
SECTION 1.7. Certain Releases. In case a release from the
security and other interests created by Section 1.5 hereof by the Indenture
Trustee of a portion of the Undivided Interest shall be necessary in order to
enable the Owner Trustee or the Lessee to perform its covenants and agreements
set forth in the Transaction Documents or in the ANPP Participation Agreement or
the Owner Trustee or the Lessee to carry out any action required by Section 8 of
the Facility Lease, the Indenture Trustee shall execute and deliver to, or as
directed by, the Owner Trustee or the Lessee an appropriate instrument or
instruments provided to the Indenture Trustee by the Owner Trustee or the Lessee
(in due form for filing or recording), so releasing a portion of the Undivided
Interest, provided, however, that the Indenture Trustee shall have first
received an officer's Certificate in form and substance reasonably satisfactory
to the Indenture Trustee, executed by the Lessee, accompanied by an opinion of
counsel reasonably. satisfactory to the Indenture Trustee, each of which shall
be to the effect that all necessary actions have been or are being taken
simultaneously with such release in connection with the proposed action to
comply with the terms of this Indenture and Section 8 of the Facility Lease.
6091.CHASEU2.LEASE.07:1
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SECTION 1.8. Severance. The parties hereto understand and
agree that Unit 2 and the Common Facilities (including the Undivided Interest),
each Capital Improvement and each part thereof is or shall be severed, and shall
be and remain severed, from the real estate constituting the PVNGS Site and even
if physically attached thereto, shall retain the character of personal property,
shall be treated as personal property with respect to the rights of all persons
whomsoever, shall not be or become fixtures or otherwise part of the real estate
constituting the PVNGS Site, and, by virtue of its nature as personal property,
shall not be affected in any way by any instrument dealing with the real estate
constituting the PVNGS Site.
SECTION 1.9. ANPP Participation Agreement. The provision by
the Owner Trustee to the Indenture Trustee of the realty mortgage and the
security interest contemplated by this Supplemental Indenture No._____ is in
compliance with the provisions of the ANPP Participation Agreement, including,
but without limitation, Section 15.6.3.2 thereof.
SECTION 1.10. Appointment of Co-Trustees or Separate Trustees.
(a) At any time or times, when necessary or prudent or for the
purpose of meeting the legal requirements of any jurisdiction in which any part
of the Lease Indenture Estate may, at any time, be located the Indenture
Trustee, except as set forth in subsection (b) (6) of this Section 1.10, may,
and upon receipt of a Directive shall, appoint one or more Persons to act as
co-trustee of all or any such part of the Lease Indenture Estate or to act as
separate trustee of any property constituting part thereof, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons any property, title, right or power deemed necessary or
desirable, subject to the remaining provisions of this Section 1.10. Except as
set forth in subsection (b)(6) of this Section 1.10 the Owner Trustee shall join
in any such appointment upon the request of the Indenture Trustee, but such
joining will not be necessary for the effectiveness of such appointment.
(b) Every separate trustee or co-trustee shall be
appointed subject to the following terms:
(1) The rights, powers, duties and obligations conferred or
imposed upon any such separate trustee or co-trustee shall not be
6091.CHASEU2.LEASE.07:1
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<PAGE>
greater than those conferred or imposed upon the Indenture Trustee, and
such rights and powers shall be exercisable only jointly with the
Indenture Trustee, except to the extent that, under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event, except as set forth in subsection (b)
(6) of this Section 1.10, such rights and powers shall be exercised by
such separate trustee or co-trustee subject to the provisions of
subsection (b) (4) of this Section 1.10.
(2) The Indenture Trustee may at any time, by an instrument in
writing executed. by it, accept the resignation of, and may (and upon
the receipt of a Directive, shall) remove any separate trustee or
co-trustee appointed under this Section 1.10.
(3) No trustee under the Indenture and this Supplemental
Indenture No._____ all be liable by reason of any act or omission of any
other trustee or co-trustee under this Indenture.
(4) Except as set forth in subsection (b) (6) of this section
1.10, no power given to such separate trustee or co-trustee shall be
separately exercised hereunder by such separate trustee or co-trustee
except with the consent in writ mg of the Indenture Trustee.
(5) The Indenture Trustee shall maintain custody of all money
and securities.
(6) Notwithstanding anything contained to the contrary in this
Section 1.10, to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone, jointly
or through a separate trustee under the direction and control of the
Indenture Trustee, the Owner Trustee, at the instruction of the
Indenture Trustee, shall appoint a separate trustee for such
jurisdiction, which separate trustee shall have full power and authority
to take all action hereunder as to matters relating to such jurisdiction
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6091.CHASEU2.LEASE. 07:1
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without the consent of the Indenture Trustee, but subject to the same
limitations in any exercise of his power and authority as those to
which the Indenture Trustee is subject.
(c) Upon the acceptance in writing of such appointment by any
such separate trustee or co-trustee, it shall be vested with the estates or
property to which its appointment relates as specified in the instrument of
appointment, subject to all the terms of the Indenture and this Supplemental
Indenture No.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Indenture Trustee, its agent or attorney-in-fact, with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of the Indenture and this Supplemental Indenture No.______ on its
behalf and in its name. If a separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 1.11. Separability of Provisions. In case any one or
more of the provisions of this Supplemental Indenture No. __ or any application
thereof shall be invalid, illegal or unenforceable in any. respect, the
validity, legality and enforceability of the remaining provisions hereof and the
Indenture and any other application hereof and thereof shall not in any way be
affected or impaired.
SECTION 1.12. Counterpart Execution. This Supplemental
Indenture No._____ may be executed in any number of counterparts and by the
different parties hereto and thereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
6091.CHASEU2.LEASE.07:1
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IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Indenture to be duly executed by
their respective officers thereunto duly authorized, all as of
the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under the Trust Agreement
dated as of December 15,1986, with
Chase Manhattan Realty Leasing
Corporation
By
---------------------------
Assistant Vice President
CHEMICAL BANK
By
----------------------------
Vice President
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6091.CHASEU2.LEASE.O7:1
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SCHEDULE 1
to
INDENTURE
UNDIVIDED INTEREST DESCRIPTION
The Undivided Interest is a (i) .7933333% undivided interest
in and to the property described under A below and (ii) a .2e44444% undivided
interest in and to the property described in B below.
A. Unit 2 of the Palo Verde Nuclear Generating Station
(PVNGS), located in Maricopa County, Arizona,
approximately 55 miles west of the City of Phoenix,
Arizona, and approximately 16 miles west of the City
of Buckeye, Arizona, consisting of:
I. Unit 2 Combustion Engineering "System 80" pressurized water reactor
nuclear steam supply system (the NSSS). The NSSS is comprised of a
reactor vessel containing 241 fuel assemblies with approximately 100
tons of enriched uranium fuel assemblies, however, are not part of Unit
2 and are not included in the Undivided Interest being sold), two steam
generators, four reactor coolant pumps and various additional systems
and subsystems. The licensed thermal ratin4 of the NSSS is 3800 MW.
II. Unit 2 GE TC6F-43, 1800 RPM tandem-compound, six flow, reheat
turbine, generator including turbine, generator, moisture
separator-reheater, exciter, controls, and auxiliary subsystems. The
turbine-generator is conductor cooled and rated at 1,554 MVA at 24,000
V, 3 phase, 60 Hz, 1.5 in Hg ABS back pressure., and approximately
1,363 MW maximum gross electric output.
III. Unit 2 146 ft. inside diameter, steel-lined, prestressed concrete,
cylindrical containment building with a hemispherical dome designed for
60 psig. The containment building houses the reactor system.
6091.CHASEU2.LEASE.07:1
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IV. Unit 2 auxiliary systems and equipment including engineered
safeguards Systems, reactor auxiliary systems and turbine-generator
auxiliary systems associated with items I, II, and III above, extending
to and including the Unit 2 start-up transformer.
V. Unit 2 cooling tower system consisting of three (3) mechanical draft
cooling towers, including a closed cycle circulating water system,
make-up water systems and essential spray ponds.
VI. Unit 2 radioactive waste treatment system, including liquid,
gaseous, and solid waste subsystems, controls, instrumentation,
storage, handling and shipment facilities.
VII. Unit 2 emergency diesel-generator system, including a
diesel-generator building which contains two diesel generators, fuel
oil systems, storage tanks, control and instrumentation systems and
other equipment.
VIII. Unit 2 internal communication systems, including associated
interconnections and computer data links.
BUT EXCLUDING:
I. Nuclear fuel for Unit 2, including spare fuel assemblies.
II. Spare Parts (Unit 2).
III. Transmission facilities (including any and all facilities and
equipment providing interconnection between the Unit 2 turbine
generator and the ANPP High Voltage Switchyard, including step-up
transformers and standby equipment and systems).
6091.CHASEU2 LEASE.07:1
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IV. Oil and diesel fuel inventories (Unit 2).
B. All PVNGS common facilities, INCLUDING LIMITED BUT NOT TO
I. Surveillance systems, including associated radioactive monitoring
Systems and equipment.
II. Water treatment facilities and transport systems for supply of
waste water effluent.
III. Warehouse and related storage facilities and equipment.
BUT EXCLUDING:
I. Nuclear fuel, including spare fuel assemblies.
II. All transmission and ANPP High Voltage Switchyard facilities.
III. Administration Building.
IV. Administration Annex Building.
V. Technical Support Center.
VI. Visitor Center.
VII.External communication systems and equipment, including associated
interconnections and computer data links.
VIII. Parking lot improvements, road improvements, fencing and dikes.
IX. Spare parts (common facilities).
X. Simulator.
XI. Oil and diesel fuel inventories.
XII.Real property, beneficial interest in Title USA Company of Arizona
Trust No. 530, and Project Agreement interests described in Schedule 2.
6091.CHASEU2.LEASE.07:l
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<PAGE>
SCHEDULE 2
to
INDENTURE
REAL PROPERTY NTEREST DESCRIPTION
The Real Property Interest is a (i) .2333334% undivided
interest in the land described in I below, a (ii) .2644444% undivided interest
in the rights and interests described in II below, and (iii) a .2644444%
undivided interest in the right and interests described in III below.
I. PVNGS PLANT SITE
PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter; and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian Maricopa
County, Arizona.
PARCEL NO. 2: All of Section Three (3), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 3: The East half of Section Four (4) Township One (1) South, Range
Six (6) West of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona.
PARCEL NO. 4: The West half of, Section Twenty-six (26), Township One (l)
North', Range Six (6) West of the Gila and salt River Base and Meridian,
Maricopa County, Arizona.
PARCEL NO. 5: Section Twenty-seven (27), Township One (1) North, Range Six (6)
West of. The Qua and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the Northwest quarter of section 27.
PARCEL NO. 6 The Southeast quarter of Section Twenty-eight (28), Township One
(1) North, Range Six (6) West of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and geothermal resources recovered from or developed on the property, as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.
6091.CHASEU2.LEASE.07:1
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PARCEL NO. 7: The East half of Section Thirty-three (33) Township One (1) North,
Range Six (6) West of the Gila and Salt River Ease and Meridian Maricopa County,
Arizona.
PARCEL NO. 8: All of Section Thirty-four (34), Township One (1) North, Range Six
(6) west of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1) North,
Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona.
PARCEL NO. 10: The Southeast quarter of Section Nine (9), Township one (1)
South, Range Six (6) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.
PARCEL NO. 11: All of Section Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.
PARCEL NO. 12: That part of the East half of the Southwest quarter of Section
Twenty-three (23), Township One (1) North, Range Six (6) West of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona, more particularly
described as follows:
BEGINNING at the Southeast corner of the said East half of the
Southwest quarter of Section 23; thence West, an assumed bearing along
the South line of the said East half of the Southwest quarter of Section
23, for a distance of 762.04 feet; thence North 0 degrees 03 minutes 39
seconds West; parallel to the East line of the said East half of the
Southwest quarter of Section 23, for a distance of 1946.46 feet to a
point on the South right-of-way line of the 200 foot wide
HASSAXAMPA-SALOME HIGHWAY, as recorded in Book 12 of Road Maps., page
82, Maricopa County Recorder, Maricopa County, Arizona; thence
continuing North 0 degrees 03 minutes 39 seconds west for a distance of
234.15 feat to. a point on the North right-of-way line of said highway;
thence South 58 degrees 43 minutes 35 seconds East, along said North
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right-of-way line for a distance of
892.17 feet to a point on the said East line of the East half of the
Southwest quarter of Section 23; thence South 0 degrees 03 minutes 39
seconds East, along said East line for a distance of 234.15 feet to a
point on the said South right-of-way line; thence continuing South 0
degrees 03 minutes 39 seconds East for a distance of 1483.31 feet to
the true point of beginning;
EXCEPT the East 305 feet of the South 305 feet thereof; and
EXCEPT one-half of the minerals and mineral rights and mineral
estates of every kind and nature, as set forth in Deed recorded in
Docket 11652, page 526 Maricopa County Records.
PARCEL NO. 13: The North half of the South half of the Northwest quarter of the
Northwest quarter of Section. Ten (10), Township One (1) South, Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.
II. HASSAYAMPA PUNPING STATION AND EFFLUENET PIPELINE All real property, leases,
licenses, easements, rights-of-way and other property held by Title USA Company
of Arizona Trust No. 530 established by that certain Trust Agreement dated
October 15, 1975, as amended, but excluding therefrom all improvements.
III. MISCELLANEOUS REAL PROPERTY INTERESTS
Those ANPP Project Agreements (as defined in the ANPP
Participation Agreement), in addition to the Trust Agreement for Title USA
Company of Arizona Trust 530, consisting of leases, licenses, easements, and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage treatment plant serving the
Phoenix Metropolitan area and (b) railroad access to the nuclear 'Plant Site (as
defined in the ANPP Participation Agreement).
6091.CHASEU2.LEASE.07:1
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BURNHAM LEASING CORPORATION
60 Broad Street
New York, New York 10004
August 18, 1986
Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Attention of J. D. Geist
Chairman and President
Sale and Leaseback of an Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2
Waiver of Deemed Loss Event
Dear Mr. Geist:
We refer to the Participation Agreement, dated as of August 12,
1986, among Public Service Company of New Mexico, Burnham Leasing Corporation,
Chemical Bank, in its individual capacity and as Indenture Trustee, The First
National Bank of Boston, in its individual capacity and as Owner Trustee, and
First PV Funding Corporation (the Participation Agreement), the Facility Lease
dated as of the same date and the other Transaction Documents referred to in the
Participation Agreement. Capitalized terms used herein without definition shall
have the respective meanings set forth in Appendix A to the Participation
Agreement.
6091.BURNHAM.1106.99B:l
<PAGE>
Such Appendix A includes a definition of the term "Deemed Less
Event". With respect to any change enacted after the date hereof in the
Price-Anderson Act, the Atomic Energy Act or any other Applicable Law, or the
regulations of the NRC (or other Governmental Authority having jurisdiction)
implementing any such change, which would otherwise constitute a Deemed Loss
Event by virtue of clause (2) of such definition, we hereby waive such Deemed
Loss Event for all purposes of the Facility Lease and the other Transaction
Documents if, but only if , after giving effect to such change or
interpretation: (a) the aggregate liability for a single Nuclear Incident of
"persons indemnified" (within the meaning of Section 170(e) of the Atomic Energy
Act; such Act, together with the regulations of the NRC or other Governmental
Authority having jurisdiction implementing such Act, all as in effect on the
Closing Date, being herein referred to as Existing Law) shall not exceed $6.563
billion (assuming 101 operating nuclear facilities participating in the deferred
premium or similar plan referred to in clause (d) below and subject to
adjustment (X) in an amount not exceeding $63 million for each increase or
decrease in said number of operating nuclear facilities and (V) in an amount not
exceeding the aggregate of all changes in the standard deferred premium to
reflect the effects of inflation contemplated pursuant to clause (d) below): (b)
the amount of primary insurance coverage available from commercial insurance
underwriters on terms substantially equivalent (in the reasonable opinion of the
owner Participant) to the terms in effect on the Closing Date under Existing Law
and required to be maintained by licensees with respect to any single nuclear
facility shall be at least equal to $160 million; (C) the amount of primary
financial protection (excluding the primary insurance coverage referred to in
clause (b) above) required of all licensees with respect to any single nuclear
facility under Applicable Law shall not exceed $40 million; (d) the aggregate
amount payable by all licensees of any single nuclear facility under any
deferred premium or similar plan required under Applicable Law shall not exceed
$63 million per Nuclear Incident (subject to an annual adjustment upward for
each calendar year after the enactment of a change in Existing Law (if such
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change increases the standard deferred premium) by an amount equal to, if
specified by such change or otherwise by Applicable law, a percentage of (X) the
annual percentage change during the immediately prior calendar year in the
implicit price deflator for the Gross National Product published by the united
States Department of Commerce or (V) the annual percentage change in the
consumer price index since the immediately prior calendar year; provided,
however, that (i) in the event that Applicable Law shall not specify an
inflation adjustment, then the inflation adjustment permitted by this
parenthetical shall be that specified in the preceding sub-clause (X) and (ii)
in the event that Applicable Law shall specify a standard deferred premium below
$63 million, the inflation adjustment factor shall not be available to increase
the standard deferred premium permissible under this clause (d) beyond $63
million until such lower deferred premium (as so inflated) equals or exceeds $63
million); (e) the aggregate amount payable by all licensees in any one year with
respect to any one Nuclear Incident under any deferred premium or similar plan
required under Applicable Law shall not exceed $12 million; (f) insurance or
other financial protection shall be in effect under which the providers of such
insurance or other financial protection shall agree to pay any amount payable by
any licensee under any deferred premium or similar plan upon a default in such
payment by such licensee up to a maximum aggregate amount for all such defaults
in payment of not less than $30 million; (g) a mechanism in form and substance
reasonably satisfactory to the Owner Participant shall be in effect under which
the maximum potential liability of all Persons during any calendar year as a
result of a Nuclear Incident shall not exceed the amount of insurance or other
financial protection required to be available during such calendar year to pay
all amounts which may become payable by any such Person, when and as they become
payable, in respect of such liability; (h) the form and source (other than
commercial insurance under-writers in respect of $160 million of primary
insurance coverage and licensees of nuclear facilities in respect of deferred
premiums) of insurance and other financial protection required under Applicable
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6091.BURNHAM.l106.99B:l
<PAGE>
Law to be maintained in respect of liability arising from a Nuclear incident
shall be reasonably satisfactory to the Owner Participant; (i) as a result of
such change or interpretation, there shall be pa claim, liability or expense
excluded from the limitation of liability established by Existing Law (through
modification of the meaning of the phrases of "aggregate liability", "persons
indemnified", "nuclear incident" or otherwise) or excluded (or the funding or
payment thereof deferred) under commercially available insurance or other
financial protection provisions provided for by Existing Law except, for
purposes of this clause (i), to the extent and in the amount excluded pursuant
to Existing Law; and (j) neither the Owner Trustee nor the Owner Participant
shall be (in the opinion of independent counsel to the Owner Participant)
exposed to any other increase in its real or potential liability with respect to
a Nuclear incident, either during or subsequent to the Lease Term; provided,
however that this waiver shall not continue beyond the date of enactment of the
first change in the Price-Anderson Act, the Atomic Energy Act or any other
Applicable Law relating to any of the issues set forth above and affecting
licensees of nuclear facilities, but shall continue with respect to any
regulations of the NRC adopted thereafter implementing such change. For purposes
hereof, "nuclear facility" shall mean and refer to a facility designed for
producing substantial amounts of electricity and having a rated capacity of
100,000 electrical kilowatts or more.
Notwithstanding any other provision hereof, the waiver set forth
herein shall automatically terminate in the event (i) the aggregate liability
for a single Nuclear incident of "persons indemnified" (within the meaning of
Section 170(e) of the Atomic Energy Act) shall equal or exceed, after giving
effect to any adjustments pursuant to clause (a) above, $10 billion, or (ii) the
aggregate amount payable by all licensees of any single nuclear facility under
any deferred premium or similar plan required under Applicable Law shall equal
or exceed, after giving effect to any adjustments to reflect the effects of
inflation contemplated pursuant to clause (d) above, $97.03 million.
-4-
6091. BURNHAM. 1106. 99B: 1
<PAGE>
This letter shall constitute a Transaction Document for all
purposes of the Participation Agreement and the other Transaction Documents. The
waiver contained herein shall be governed by, and construed in accordance with,
the laws of the State of New York.
BURNHAM LEASING CORPORATION
by
-----------------------
Assistant Treasurer
Acknowledged and agreed
this 18th day of August, 1986.
PUBUC SERVICE COMPANY OF NEW MEXICO
by
------------------------------
Vice President, Revenue
Management
-5-
6091.BURNHAM. 1106. 99B: 1
CGI CAPITAL, INC.
Barley Mill Plaza
4303 Lancaster Pike
Wilmington, Delaware 19805
August 18, 1986
Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Attention of J. D. Geist
Chairman and President
Sale and Leaseback of an Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2
waiver of Deemed loss Event
Dear Mr. Geist:
We refer to the Participation Agreement, dated as of August 12,
1986, among Public Service Company of New Mexico, CCI Capital, Inc., Chemical
flank, in its individual capacity and as Indenture Trustee, The First National
Bank of Boston, in its individual capacity and as owner Trustee, and First PV
Funding Corporation (the Participation Agent) the Facility Lease dated as of the
same date and the other Transaction Documents referred to in the Participation
Agreement. Capitalized terms used herein without definition shall have the
respective meanings set forth in Appendix A to the Participation Agreement.
6091.CGI. 106.99A: 1
<PAGE>
Such Appendix A includes a definition of the term "Deemed Loss
Event". With respect to any change enacted after the date hereof in the
Price-Anderson Act, the Atomic Energy Act or any other Applicable Law, or the
regulations of the NRC (or other Governmental Authority having jurisdiction)
implementing any such change, which would otherwise constitute a Deemed Loss
Event by virtue of clause (2) of such definition, we hereby waive such Deemed
Loss Event for all purposes of the Facility Lease and the other Transaction
Documents if, but only if, after giving effect to such change or interpretation:
(a) the aggregate liability for a single Nuclear Incident of "persons
indemnified" (within the meaning of section 170(e) of the Atomic Energy Act;
such Act, together with the regulations of the NRC or other Governmental
Authority having jurisdiction implementing such Act, all as in effect on the
Closing Date, being herein referred to as Existing Law) shall not exceed $6.563
billion (assuming 101 operating nuclear facilities participating in the deferred
premium or similar plan referred to in clause (d) below and subject to
adjustment in an amount not exceeding $63 million for each increase or decrease
in said number of operating nuclear facilities): (b) the amount of primary
insurance coverage available from commercial insurance underwriters on terms
substantially equivalent (in the reasonable opinion of the Owner Participant) to
the terms in effect on the Closing Date under Existing Law and required to be
maintained by licensees with respect to any single nuclear facility shall be at
least equal to $160 million; (c) the amount of primary financial protection
(excluding the primary insurance coverage referred to in clause (b) above)
required of all licensees with respect to any single nuclear facility under
Applicable Law shall not exceed $40 million; (d) the aggregate amount payable by
all licensees of any single nuclear facility under any deferred premium or
similar plan required under Applicable Law shall not exceed $63 million per
Nuclear Incident; (e) the aggregate amount payable by all licensees in any one
year with respect to any one Nuclear Incident under any deferred premium or
similar plan required under Applicable Law shall not exceed $12 million; (f)
-2-
6091.CGI .1106.99A: 1
<PAGE>
insurance or other financial protection shall be in effect under which the
providers of such insurance or other financial protection shall agree to pay any
amount payable by any licensee under any deferred premium or similar plan upon a
default in such payment by such licensee up to a maximum aggregate amount for
all such defaults in payment of not less than $30 million; (9) a mechanism in
form and substance reasonably satisfactory to the Owner Participant shall be in
effect under which the maximum potential liability of all Persons during any
calendar year as a result of a Nuclear Incident shall not exceed the amount of
insurance or other financial protection required to be available during such
calendar year to pay all amounts which may become payable by any such Person,
when and as they become payable, in respect of such liability; (h) the form and
source (other than commercial insurance under-writers in respect of $160 million
of primary insurance coverage and licensees of nuclear facilities in respect of
deferred premiums) of insurance and other financial protection required under
Applicable Law to be maintained in respect of liability arising from a Nuclear
Incident shall be reasonably satisfactory to the Owner Participant; (i) as a
result of such change or interpretation, there shall be no claim, liability or
expense excluded from the limitation of liability established by Existing Law
(through modification of the meaning of the phrases of "aggregate liability",
"persons indemnified", "nuclear incident" or otherwise) or excluded (or the
funding or payment thereof deferred) under commercially available insurance or
other financial protection provisions provided for by Existing raw except, for
purposes of this clause (i), to the extent and in the amount excluded pursuant
to Existing Law; and (j) neither the Owner Trustee nor the Owner Participant
shall be (in the opinion of independent counsel to the Owner Participant)
exposed to any other increase in its real or potential liability with respect to
a Nuclear Incident, either during or subsequent to the Lease Term; provided,
however, that this waiver shall not continue beyond the date of enactment of the
first change in the Price Anderson Act, the Atomic Energy Act or any other
Applicable Law relating to any of the issues set forth above and affecting
6091.CGI. 1106.99A: 1
-3-
<PAGE>
licensees of nuclear facilities, but shall continue with respect to any
regulations of the NRC adopted thereafter implementing such change. For purposes
hereof, "nuclear facility" shall mean and refer to a facility designed for
producing substantial amounts of electricity and having a rated capacity of
100,000 electrical kilowatts or more.
This letter shall constitute a Transaction Document for all
purposes of the Participation Agreement and the other Transaction Documents. The
waiver contained herein shall be governed by, and construed in accordance with,
the laws of the State of New York.
CGI CAPITAL, INC.
by
----------------------
Vice President
Acknowledged and agreed
this 18th day of August, 1986.
AGREEMENT NO 13904
OPTION AND PURCHSE OF EFFLUENT
1. PARTIES: The parties to this Agreement are the CITY OF PHOENIX
("Phoenix") , the City of Glendale ("Glendale") the City of Mesa
("Mesa") , the City of Scottsdale ("Scottsdale 11), the City of Tempe
("Tempe") and the Town of Youngtown ("Youngtown") Arizona municipal
corporations (hereinafter collectively called "Cities"), ARIZONA PUBLIC
SERVICE COMPANY, an Arizona corporation (hereinafter called "Arizona"),
and SALT RIVER PROJECT AGRICULTURAL IMPR0VEMENT AND POWER DISTRICT, an
Arizona agricultural improvement district (hereinafter called "Salt
River Project") (hereinafter collectively called "Participants").
2. RECITALS: This Agreement is made with reference to the following facts,
among others:
2.1 Phoenix owns and operates the 23rd Avenue Plant, a waste
water treatment plant. Cities share in the owner-ship of plant capacity
and share the costs of operating and maintaining the 91st Avenue Plant,
a waste water treatment plant, which is operated and maintained by
Phoenix in its own behalf and as administrative agent for all others
presently involved in the Multi-City Sewerage Plan. Effluent is
available from the 23rd Avenue Plant and the 91st Avenue Plant for
beneficial uses.
2.2 Beneficial use of Effluent is in tile best interests of
the cities and the users thereof because of the reclamation of waters
in an arid region arid the economic benefits of such reclamation and
use.
<PAGE>
2.3 The Participants are studying and planning Arizona Nuclear
Power Project ("ANPP") to be located in the Central Arizona Water
Conservation District organized and existing pursuant to Arizona
Revised Statutes SS 45-2601 et seq. In order for the Participants to
prepare environmental and site selection studies in the form and
substance as required by the U. S. Atomic Energy Commission
(hereinafter referred to as "USAEC") and by the State of Arizona
pursuant to ARS SS 40-360 and 40.360.0l to 40-360.12, the Participants
must secure an assured and adequate water supply for construction and
operation of ANPP.
2.4 The Participants desire to obtain sufficient Effluent to
proceed with ANPP site selection studies arid the Cities desire to
contract for the sale, transfer and delivery of such Effluent as set
forth in this Agreement, including their respective rights therein
after delivery thereof to Participants to waive their right to reuse or
otherwise dispose of such Effluent upon the terms and conditions
hereinafter set forth.
3. AREEMENT: In consideration of the terms , covenants and conditions
contained in this Agreement, the parties agree as follows:
4. EFFECTIVE DATE: This Agreement shall become effective when executed
by the parties hereto and shall terminate forty (40) years after the
last ANPP Unit has been placed in operation, but in no event later than
the year 2040, unless the parties shall agree upon an extension hereof.
<PAGE>
5. DEFINITIONS:
5.1 USAEC: The United States Atomic Energy Commission.
5.2 ANPP: The Arizona Nuclear Power Project which may consist
of one or more nuclear steam electric generating units.
5.3 ANPP UNITS: Units 1, 2, 3 and 4.
5.4 W & S DIRECTOR: The person designated by Phoenix to
perform the duties and responsibilities of the Water & Sewer Director
as set forth in this Agreement.
5.5 COMMITTED EFFLUENT: Effluent which the Cities, as of the
date of this Agreement, have consented to the use thereof, by others,
as described on Exhibit A, and such amount of Effluent as may
reasonably be required in connection with the operation and maintenance
of the 23rd Avenue Plant and the 91st Avenue Plant, but excluding
Effluent sold or used for irrigation of any lands beyond the plant
sites described in Exhibits B and C attached hereto.
5.6 CONSTRUCTION WATER: The water requirements of each ANPP
Unit prior to its Date of Firm Operation.
5.7 DATE OF FIRM OPERATION: The date on which each ANPP Unit
can be expected to operate reliably at any load up to its rated
capacity as determined by the Project Manager.
<PAGE>
5.8 EFFLUENT: The waste water discharged from the 23rd Avenue
Plant and the 91st Avenue Plant after the processing thereof.
5.9 OPERATING AGENT: The entity determined by the Participants
to be their agent for operation, maintenance, repair and replacement of
each ANPP Unit. Arizona shall be the Operating Agent for Unit 1. The
Participants shall designate in writing the Operating Agent for Unit 2,
Unit 3 and Unit 4.
5.10 OPERATING AGENT'S ENGINEER: The person designated in
writing by the Operating Agent to perform the duties and
responsibilities of the Operating Agent's Engineer as set forth in this
Agreement.
5.11 OPERATING EMERGENCY: An unplanned event or circumstance
which reduces or may reduce the Cities' ability to deliver or the
Participants' ability to receive Uncommitted Effluent.
5.12 PARTICIPANTS: Arizona, Salt River Project and any other
electric utility, person or agency providing electric service who
becomes the holder of an ownership interest in any ANPP Unit.
5.13 PARTICIPANTS' FACILITIISS: All facilities, structures,
and equipment owned by Participants, wherever located, used or useful
for the receipt, treatment, storage, transportation and use of
Effluent, including without limitation all such facilities, structures
and equipment which may be located on property owned by the Cities or
any of them.
<PAGE>
5.l4 PROJECT MANAGER: The entity determined by the
Participants to be their agent for construction of each ANPP Unit.
Arizona shall be Project Manager for Unit 1. The Participants shall
designate in writing the Project Manager for Unit 2, Unit 3 and Unit 4.
5.15 PROJECT MANAGER'S ENGINEER: The person designated in
writing by the Project Manager to perform the duties and
responsibilities of the Project Manager's Engineer as set forth in this
Agreement.
5.16 SCHEDULED OUTAGE: A planned event or circumstance which
reduces or may reduce the Cities' ability to deliver, or the
Participants' ability to receive, Uncommitted Effluent;
5.17 SHUTDOWN DATE: The date on which any ANPP Unit is taken
out of service and retired from use as a source of electric generation
as determined by the Operating Agent, customarily expected to be
approximately forty (40) years after such Unit is placed in commercial
operation.
5.18 UNCOMMITTED EFFLUENT: The Effluent in excess of that
which is indicated oil Exhibit A available at any time from the 23rd
Avenue Plant and the 91st Avenue Plant including but not limited to
Option Effluent.
-5-
<PAGE>
5.19 OPTION EFFLUENT: The sum of Unit 1 Water Requirements,
Unit 2 Water Requirements, Unit 3 Water Requirements and Unit 4 Water
Requirements.
5.20 UNIT 1, UNIT 2, UNIT 3 and UNIT 4: Each of the respective
complete systems of ANPP for generating electricity, including without
limitation the nuclear; steam supply system and its containment or any
other complete steam supply systems, the turbine generator, all
auxiliary structures, system facilities and equipment necessary or
useful in the operation of the Unit.
5.21 UNIT 1 OPTION: The option given by the Cities to the
Participants under this Agreement to acquire Effluent in the amount of
Unit 1 Water Requirements.
5.22 UNIT 2 OPTION The option given by the Cities to the
Participants under this Agreement to acquire Effluent in the amount of
Unit 2 Water Requirements in the amount of Unit.
5.23 UNIT 3 OPTION The option given by the Cities to the
Participants under this Agreement to acquire Effluent in the amount of
Unit 3 Water Requirements.
5.24 UNIT 4 OPTION The option given by the Cities to the
Participants under this Agreement to acquire Effluent in the amount of
Unit 4 Water Requirements
-6-
<PAGE>
5.25 UNIT 1 OPTION From the effective date of this Agreement
until the date of issuance of the last of any authorizations required
by federal, state or local laws prior to commencement of construction
of Unit 1, including without limitation any authorizations for
construction of any water or Effluent facility required to construct,
operate and maintain such unit, but in no event later than December 31,
1995.
5.26 UNIT 2 OPTION - INITIAL TERM: From the effective date of
this Agreement until the date of issuance of the last of any
authorizations required by federal, state or local laws prior to
commencement of construction of Unit 2, including without limitation
any authorizations for construction of any water or Effluent facility
required to construct, operate and maintain such unit, but in no event
later than December 31, 1995.
5.27 UNIT 3 OPTION - INITIAL TERM: From the effective date of
this Agreement until the date of issuance of the last of any
authorizations required by federal, state or local laws prior to
commencement of construction of Unit 3, including without limitation
any authorizations for construction of any water or Effluent facility
to construct, operate and maintain such unit, but in no event later
than December 31, 1995.
5.28 UNIT 4 OPTION - INITIAL TERM: From the effective date of
this Agreement until the date of issuance of the last of any
authorizations required by federal, state or local laws prior to
commencement of construction of Unit 4, including without limitation
any authorizations for construction of any water or Eff1uent facility
required to construct, operate and maintain such unit, but in no event
later than December 31, 1995.
-7-
<PAGE>
5.29 UNIT 1 OPTION - EXTENDED TERM: From the date of
expiration of the Unit 1 Option - Initial Term to December 31, 2000.
5.30 UNIT 2 OPTION - EXTENDED TERM: From the date of
expiration of the Unit 2 Option - Initial Term to December 31, 2000.
5.31 UNIT 3 OPTION - EXTENDED TERM: From the date of
expiration of the Unit 3 Option - Initial Term to December 31, 2000.
5.32 UNIT 4 OPTION - EXTENDED TERM: From the date of
expiration of the Unit 4 Option - Initial Term to December 31, 2000.
5.33 UNIT 1 WATER REQUIREMENTS: The annual water requirements
of Unit 1 which shall be deemed to be 35,000 acre-feet, provided that
the Unit 1 Project Manager may establish a lesser amount for all
purposes hereof by delivery to Phoenix of a written notice stating the
revised water requirements for such unit not later than the expiration
of the Unit 1 Option - Extended Term.
5.34 UNIT 2 WATER REQUIREMENTS: The annual water requirements
of Unit 2 which shall be deemed to be 35,000 acre-fact, provided that
the Unit 2 Project Manager may establish a lesser amount for all
purposes hereof by delivery to Phoenix of a written notice stating the
revised water requirements for such unit not later than the expiration
of the Unit 2 Option - Extended Term.
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<PAGE>
5.35 UNIT 3 WATER REQUIREMENTS: The annual water requirements
of Unit 3 which shall be deemed to be 3S,O00 acre-feet, provided that
the Unit 3 Project Manager may establish a lesser amount for all
purposes hereof by. delivery to Phoenix of a written notice stating the
revised water requirements for such unit not later than the expiration
of the Unit 3 Option - Extended Term.
5.36 UNIT 4 WATER REQUIREMENTS: The annual water requirements
of Unit 4 which shall be deemed to be 35,000 acre-feet, provided that
the Unit 4 Project Manager may establish a lesser amount for all
purposes hereof by delivery to Phoenix of a written notice stating the
revised water requirements for such unit not later than the expiration
of the Unit 4 option - Extended Term.
5.37 23RD AVENUE PLANT: Phoenix's waste water processing plant
located at 23rd Avenue and the Salt River, including all land and land
rights that are a part thereof, all as more particularly shown on
Exhibit B, and any' future land acquisitions thereto.
5.38 91ST AVENUE PLANT: Cities.' waste water processing plant
located at 91st Avenue and the Salt River, including all land and land
rights that are a part thereof, all more particularly shown on Exhibit
C, and any future land acquisitions thereto.
-9-
<PAGE>
5.39 23RD AVENUE DELIVERY POINT: The location on or adjacent
to the 23rd Avenue Plant site where the Participants take delivery of
Effluent.
5.40 91ST AVENUE DELIVERY POINT: The location on or adjacent
to the 91st Avenue Plant site where the Participants take delivery of
Effluent.
6. OPTION FOR EFFLUENT:
6.1 The Cities hereby convey and grant to the Participants the
Unit 1 Option, Unit 2 Option, Unit 3 Option and Unit 4 Option for the
purchase, transfer, delivery and right to use a portion. of the
Uncommitted Effluent in the amount of the Unit 1 Water Requirements,
Unit 2 Water Requirements, Unit 3 Water Requirements and Unit 4 Water
Requirements, respectively.
6.2 The Participants may exercise all or a portion of the Unit
1 Option, the Unit 2 Option, the Unit 3 Option and the Unit 4 Option,
on or before the expiration of the Unit 1 Option - Extended Term, the
Unit 2 Option - Extended Term, the Unit 3 Option - Extended Term and
the Unit 4 Option - Extended term, respectively, by delivery of written
notice to Phoenix of such exercise 12 months in advance of the
effective date of such exercise, but in no event later than December
31, 2000.
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<PAGE>
6.3 In the event the Initial Term Option, Unit 2 Option, Unit
3 Option or of the Unit 1 Unit 4 Option has expired and construction
has not started by December 31, 1995, on the respective ANPP Unit, then
the option for such unit shall expire and the Cities shall be under no
obligation to sell or transfer any amount of Effluent covered by such
unit to Participants.
6.4 The Participants may by written notice to Phoenix release,
remise and surrender all or any portion of the Unit 1 Option, Unit 2
Option, Unit 3 Option or Unit 4 Option or may transfer all or any
portion of any of said options for use in connection with the
construction, operation and maintenance of any other electric
generating units wherever located. In the event of the transfer of any
of said options or any portion thereof for use at any other electric
generating units, the terms of the original option, including without
limitation the Initial and Extended Term thereof, the option payments,
exercise of the option delivery and acceptance of Option Effluent and
payments therefor, shall apply in respect of the transferred option.
The release, remise and surrender of any such Options or portions
thereof not so transferred shall be effective upon receipt of such
notice by Phoenix, and from and after such date neither the Cities nor
the Participants shall have any rights, duties, powers, privileges or
obligations hereunder with regard to the Option Effluent released
pursuant to this Section 6.4.
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<PAGE>
6.5 From the effective date of this Agreement and until the
exercise of, release of or expiration of the Unit 1 Option - Initial
Term, the Unit 2 Option - Initial Term, the Unit 3 Option - Initial
Term and the Unit 4 Option - Initial Term, respectively, the
Participants shall pay to Phoenix for the use and benefit of the
Cities, as their respective interests may appear from time to time,
annually in advance the amount equal of $1.00 times the number of
acre-feet of Option Effluent actually available during the year
preceding the date of payment, but not to exceed the sum of the Unit 1
Water Requirements, Unit 2 Water Requirements, Unit 3 Water
Requirements and Unit 4 Water Requirements.
6.6 In the event the Participants do not exercise, transfer or
release the Unit 1 Option, Unit 2 Option, Unit 3 Option and Unit 4
Option, in each case, during the Initial Term thereof, from the
beginning of the Extended Term until the exercise, transfer, or release
or termination of the Term of, the Unit 1 Option Extended Term, the
Unit 2 Option - Extended Term, the Unit 3 Option Extended Term, and
the. Unit 4 Option - Extended Term, the Participants shall pay to
Phoenix for the use and benefit of the Cities, as their respective
interests may appear from time to time, annually in advance the amount
equal to $2.00 tines tile number of acre-feet of the Option Effluent
actually available in the year preceding the date of payment, but not
to exceed the sum of the applicable Unit 1 Water Requirements, Unit 2
Water Requirements, Unit 3 Water Requirements and Unit 4 Water
Requirements.
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<PAGE>
6.7 Any payments to be made by the Participants to Phoenix
pursuant to Sections 6.5 and 6.6 hereof shall be due and payable on the
effective date of this Agreement and each succeeding anniversary
thereof, provided, h9wever, that the final payment due on account of
Unit 1 Option, Unit 2 Option, Unit 3 Option and Unit 4 Option, in each
case, shall be prorated and Phoenix acting on its own behalf and as
agent for the other Cities shall reimburse or credit the Participants
as follows:
R = OP x X x OAU
--- ---
365 OA
Where R is Reimbursement or credit;
OP is the Option Payment made pursuant to Section 6.5 or 6.6,
whichever is applicable; X is 365 minus the number of days which have
elapsed since the preceding payment to the date on which Unit 1
Option, Unit 2 Option, Unit 3 Option and Unit 4 Option, in each case,
has been exercised or released and terminated pursuant to this
Agreement; OA is the amount of the Unit 1 Option, the Unit 2 Option,
the Unit 3 Option or the Unit 4 Option, as the case may be; and OAU is
the amount of the Unit 1 Option, the Unit 2 Option, the Unit 3 Option
or the Unit 4 Option as the case may be, actually used in the year in
which payments therefor pursuant to Section 8 hereof first become due.
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<PAGE>
6.8 All payments made by the Participants to Phoenix pursuant
to Sections 6.S and 6.6 hereof shall be credited by Phoenix against
amounts due from the Participants pursuant to Section 8 hereof. For
purposes of applying such credit, Phoenix shall record separately the
amounts paid on account of the Unit 1 Option, Unit 2.Option, Unit 3
Option and Unit 4 Option. In the event the Unit 1 Option, Unit 2
Option, Unit 3 Option, or Unit 4 Option, in whole or in part, is
released and terminated or any portion of any such Option is not used
pursuant to Section 6.4 hereof there shall be no credit due the
Participants on account of the payments applicable thereto.
6.9 It shall be presumed that Option Effluent actually
available from the 91st Avenue Plant shall be deemed to be fully
committed to the Participants hereunder prior to the commitment of any
Effluent from the 23rd Avenue Plant.
6.10 It is understood that the volumes of Uncommitted Effluent
available and the volumes of Effluent required for electric electric
generation are estimates and that the actual needs in future years
could be less, but the construction of generating units is intended to
parallel the needs for power and availability of Uncommitted Effluent.
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<PAGE>
7. SALE OF EFFLUENT; QUALITY OF EFFLUENT; PROCESSING SERVICE:
7.1 When the Participants desire to exercise all or any
portion of the Unit 1 Option, Unit 2 Option, Unit 3 Option or Unit 4
Option, in each or any case pursuant to Section 6.2 hereof, the
Participants shall promptly execute and deliver to Phoenix one or more
completed instruments in the form of Exhibit D, which shall be
effective as of the effective date provided in such instrument,
providing for the sale, transfer, delivery and right to use Effluent in
the amounts of the Unit 1 Water Requirements, Unit 2 Water
Requirements, Unit 3 Water Requirements or Unit 4 Water Requirements or
so much thereof as the Participants have exorcised their option
therefor. The source and quality of Effluent to be transferred from and
processed in the 23rd Avenue Plant and to be transferred from and
processed in the 91st Avenue Plant shall be as shown on Exhibit B In
the event that the Participants' water requirements are less than the
amounts indicated in the Options, in each and any case, and the
Participants exercise such Options, in each and any case, in amounts
less than the amounts indicated in the Options, then the balance of the
Effluent in the amount for which the Option is not exercised, in each
aria any case, shall become Uncommitted Effluent, not under Option, and
available to be used at the Cities' sole discretion.
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<PAGE>
7.2 Following any execution of an instrument pursuant to
Section 7 hereof and during the term thereof as set forth in Section
7.S hereof, Phoenix shall collect waste-water, process the same and
deliver Effluent of the quality shown on Exhibit E to either or both
the 23rd Avenue Plant Delivery Point and the 91st Avenue Plant Delivery
Point as the Participants may from time to time designate and in the
amounts as the Participants have exercised their Option thereof;
provided that such amounts are available at the designated delivery
point; and provided, however, that the Participants shall not be
obligated to accept delivery of Effluent which does not meet the
quality set forth in Exhibit E.
7.3 Phoenix on behalf of itself and the other Cities covenants
and agrees that it will operate, maintain, repair and replace the 23rd
Avenue Plant and 91st Avenue Plant in at least substantially the same
condition as they exist upon the date of the execution of this
Agreement, ordinary wear and tear excepted and shall enlarge the
capacity of the 91st Avenue Plant as required from tune to time to
treat increased quantities of wastewater delivered to the plant in a
manner and on a schedule such that the annual average DOD of the
Effluent from said plant shall not exceed 30 mg/l due to increased
flows through said Plant. Phoenix may make alterations in,
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<PAGE>
modifications to, replacements , betterments and improve ments of and
to the 23rd Avenue Plant and the 91st Avenue Plant; provided, however,
that the Cities shall at all times carry out their obligations pursuant
to Section 7.2 hereof. The Cities further covenant and agree that they
will not install, operate and maintain any new sewage treatment plant
at any other location if the installation, operation and maintenance of
such new plant would impair the ability of the Cities to transfer and
deliver Effluent pursuant to this Agreement. In this connection,
however, it is recognized that the long-range Master Plan for the
collection and treatment of wastewater from the urban development in
the metropolitan. area extends into drainage basins not normally
tributary to the 23rd Avenue or the 91st Avenue Wastewater Treatment
Plants. New treatment facilities for the Gila and lower Litchfield
tributary basins are envisioned, as generally described in the
"Wastewater Report for the Valley Metropolitan Area of Phoenix,
Arizona" by John Carollo Engineers, dated December, 1968. Nothing
herein is intended to impair the implementation of the Master Plan nor
to grant Participants any rights or interests in wastewater collected
in the Gila and lower Litchfield tributary basins, and treated at such
envisioned new facilities. Prior to the beginning of each calendar
year, the Participants shall submit to the W&S Director in writing, the
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<PAGE>
estimates of water requirements (including Construction Water) on a
daily basis or by month for the ensuing calendar year. Such estimates
will be used by the W &S Director as an operational guide and for
planning purposes. It is understood that Water Requirements cited in
Section S of this Agreement are annual quantities only. Nothing herein
shall obligate Phoenix to operate the wastewater treatment plants in
such a manner as to process Effluent in uniformly equal daily or
monthly quantities, it being understood that the proper operation of
the plants is dependent upon the operation of other related wastewater
disposal facilities and the amount of non-consumptive use of
water-producing raw wastewater discharged into the sanitary sewer
system. Like wise, it is understood that the maximum amount of Effluent
available for the Participants' use is restricted to the amount of
Uncommitted Effluent which has been processed at the treatment plants.
The Participant's Facilities located at the 23rd Avenue and 91st Avenue
Delivery Points shall include metering devices, approved by the W & S
Director and the Operating Agent's Engineer, which shall be the basis
for determining the amount of Effluent sold.
7.4 Prior to the effective date of the exercise of any option
pursuant to Section 6.2 the W & S Director and the Operating Agent's
Engineer shall agree upon written practices and procedures relating to
processing and delivery of Effluent pursuant to this Section 7, and its
receipt, storage and transportation by the Participants during
Operating Emergencies and Scheduled Outages.
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7.5 The transfer, sale and delivery of Effluent by the City
to the Participants in amounts equal to the Unit 1 Water Requirements,
Unit 2 Water Requirements, Unit 3. Water Requirements and Unit 4 Water
Requirements; shall in each case terminate and expire on the Unit 1
Shutdown Date, Unit 2 Shutdown Date, Unit 3 Shutdown Date and Unit 4
Shutdown Date, respectively. On such dates the amount of the sale and
purchase of Effluent related to each ANPP Unit shall terminate, without
further act of the Participants. The Participants agree to provide
Phoenix with at least 24 months' notice of intent of any Shutdown Date.
7.6 Nothing herein shall be construed to constitute a
waiver, relinquishment, abandonment or forfeiture of any appropriative
water rights of any of the Cities or any other party hereto.
8. PAYMENT FOR DELIVERY OF EFFLUENT:
8.1 In consideration of the transfer, sale and delivery of
Effluent made by the Cities and the services to be performed by them
pursuant to Section 7 hereof; the Participants shall make payments to
Phoenix in the manner and as determined pursuant to this Section 8.
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8.2 ANPP, through its Participants, shall pay for all Effluent
delivered hereunder which meets the quality set forth in Exhibit E,
whether the Effluent be used for Construction Water, operating needs or
other uses, a price per acre-foot equal to Forty percent (40%) of the
then-current price charged per acre-foot for Central Arizona Project
Municipal and Industrial Water, but in no event less than Twenty
Dollars ($20.00) per acre-foot nor more than Thirty Dollars ($30.00).
In the event that Effluent is delivered under the terms of this
Agreement in the absence of a currently effective price for Central
Arizona Project Municipal and Industrial Water, the price of the
Effluent for a period of Twenty (20) years from the effective date of
this Agreement shall be Twenty Dollars ($20.00) per acre-foot, and
Twenty-Five Dollars $25.00 per acre-foot thereafter until the
expiration of this Agreement.
8.3 The price per acre-foot determined in accordance with
Section 8.2 above, shall be paid for each acre-foot of Effluent, which
meets the quality set forth on Exhibit E, that is actually delivered in
any month during the term of this Agreement as measured by the metering
devices provided at the 23rd Avenue and 91st Avenue Delivery Points
pursuant to Section 7.3 hereof.
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8.4 In the event the amount of Effluent delivered in any year
hereunder is less than the amount of Effluent the Cities could be
required to deliver in such year under Section 7, then the Participants
shall pay, in addition to the payment required under Section 8.2
hereof, an amount equal to Two Dollars ($2.00) per acre-foot times tile
amount in acre-feet of the difference between (i) the amount of
Effluent the Cities are required to deliver under Section 7 (excluding
any amount thereof which may be rejected by the Participants as not
meeting the quality set forth in Exhibit E) and (ii) the amount of
Effluent actually delivered hereunder.
8.5 The payments to be made by the Participants under this
Section 8 shall be computed and billed monthly in accordance with
Section 8.3 hereof by Phoenix. Within ten (10) days of receipt the
Participants shall pay such billings to Phoenix for the use and benefit
of the Cities as their respective interests may appear from time to
time. Any applicable credit determined pursuant to Section 6.8 hereof
shall be used to reduce the first and succeeding monthly payments due
hereunder until such credit is fully used. In no event shall such
reduction in monthly payments be applied in a manner such that the
total of all payments made in any current calendar year pursuant to
Sections 6 and 8 hereof shall not be reduced to an amount less than an
amount equal to (I) the total of all payments made tinder this
Agreement in the preceding calendar year less (ii) any reduction in
payments due under this Agreement during said current calendar year
because of the release, termination or expiration by the Participants
0r their rights to receive Effluent hereunder.
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9. DELIVERY OF CONSTRUCTION WATER; PARTICIPANTS' FACILITIES:
9.1 Whether or not the Unit 1 Option, Unit 2 Option, Unit 3
Option and Unit 4 Option has been exercised pursuant to Section 7
hereof, the Project Manager's Engineer by written notice to the W & S
Director may schedule Construction Water for delivery at either the
23rd Avenue Delivery Point or the 91st Avenue Delivery Point, provided
that such volumes are available at the designated delivery point. The
Cities shall make available the Construction Water in accord with such
schedule and it shall meet the quality specified in Exhibit E. The
Participants shall pay for all Effluent delivered in accordance with
this Section 9.1 at the price determined in accordance with Section 8
hereof.
9.2 It is recognized that the scope, location and design of
Participants' Facilities shall not occur for some time following the
execution of this Agreement. It shall be a responsibility 0(pound) the
W & S Director and the Project Manager's Engineer to coordinate the
location, design, operation and maintenance of the Participants'
Facilities as may be located on the treatment plant sites.
10. OTHER USES OP EFFLUENT SUBORDINATED:
10.1 Any use of Option Effluent by the Cities or any of them
and by others claiming by, through or under the Cities or any of them
shall be subordinated to the rights of the Participants pursuant to
this Agreement.
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10.2 The Cities or any of them shall include in any instrument
or document to which the are or it is a party that relates to the use
of Option Effluent a provision stating that any sales, grants to or any
rights and interests of the other party or parties thereto, are
subordinate to the rights and interests of the Participants pursuant to
this Agreement and that the Participants shall have the first right and
call on all Effluent pursuant to the Options cited in this Agreement.
11. OPERATION AND MAINTENANCE - RIGHTS OF WAY:
11.1 The Cities at their expense shall operate, maintain,
repair and replace the 91st Avenue Plant and Phoenix at its expense
shall operate, maintain, repair and replace the 23rd Avenue Plant.
11.2 The Participants at their expense shall operate,
maintain, repair and replace the Participants' Facilities. Phoenix and
the Project Manager or Operating Agent may agree by separate agreement
that Phoenix shall operate and maintain certain of Participants'
Facilities or engage in other activities for the Participants and shall
be compensated therefore.
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11.3 The Cities without cost to the Participants shall grant
leases, or right1/2:-of-way and easements, to the Participants for all
Participants' Facilities as may be located at the 23rd Avenue Plant and
the 91st Avenue Plant and on, in, under and over any other property
owned by the Cities or any of them or in which they or any of them have
the power to grant rights therein for any public use. It shall be a
responsibility. of the W & S Director and the Project Manager's
Engineer to agree upon the description of such rights-of-way and
easements.
11.4 It shall be the responsibility of the W & S Director
and the Project Manager's Engineer or Operating Agent's Engineer to
develop practices and procedures for the operation and maintenance of
the 23rd Avenue Plant, the 91st Avenue Plant and the Participants'
Facilities insofar as they relate to and affect the duties and
obligations of the Cities and the Participants to deliver and to
receive Effluent, without undue interference with the normal operation
and maintenance of the wastewater treatment plants.
12. TRANSFER AND ASSIGNMENT:
12.1 The Cities and the Participants shall have the right at
any time and from time to time to mortgage, create or provide for a
security interest in or convey in trust all or part of their respective
interests in this Agreement and in any property installed or maintained
subject to this Agreement including without limitation Participants'
Facilities, to a trustee or trustees under deeds, mortgages or
indentures or to a secured party or parties under a security agreement
as security for its present or future successors or assigns thereof,
without need for the prior written consent of any other party or
Participant and without such mortgagee, trustee or secured party
assuming or becoming in any respect obligated to perform any
obligations under this Agreement.
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12.2 Any mortgagee, trustee or secured party under present or
future deeds of trust, mortgages, indentures or security agreements of
any City or Participant and any successor or assign thereof, and any
receiver, referee or trustee in bankruptcy or reorganization of any
City or Participant, and any successor by action of law or otherwise,
and any purchaser, transferee or assignee of any thereof may, without
need for the prior written consent of any other City or Participant,
succeed to and acquire all the rights, titles and interests of such
City or Participant in this Agreement and in any property installed or
maintained subject to this Agreement and may take over possession of or
foreclose upon said rights, titles and interests of such City or
Participant.
12.3 Each Participant shall have the right to transfer and
assign all or part of its interest in this Agreement to any other
Participant without the prior written consent of the Cities or any
other Participant. Upon any such transfer, the Participant acquiring
such interest shall assume all the duties and obligations related
thereto and, with the written consent of the Cities which shall not be
unreasonably withheld, the Participant transferring such interest shall
be released and discharged therefrom.
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12.4 Except as otherwise provided in Sections 12.1, 12.2 and
12.3 hereof, any successor to the rights, titles and interests of a
City or Participant shall assume and agree to fully perform and
discharge all of the obligations hereunder of such City or Participant,
and such successor shall notify each of the other Cities and
Participants in writing of such transfer, assignment or merger, and
shall furnish to each City and Participant evidence of such transfer,
assignment or merger.
12.5 Except as provided in Section 12.1, 12.2 and 12.3 hereof,
neither the Cities nor the Participants shall transfer or assign any of
their respective rights, titles and interest in and to this Agreement
without the prior written consent of any other party and Participants.
12.6 Effluent made available under this Agreement, shall in no
event be directly or indirectly utilized other than for the purposes
stated in this Agreement without the prior written consent of the
Cities.
\
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<PAGE>
13. ENFORCEMENT OF LAWS AND CONTRACTS; IMPROVEMENT AND ADDITIONS:
13.1 The Cities shall enforce all valid laws, ordinances,
rules and regulations regarding discharges into their respective
wastewater collection systems which are tributary to the 23rd Avenue
Plant and the 91st Avenue Plant. The Cities shall also enforce all
contracts heretofore or hereafter entered into with others relating to
connection with said collection Systems and discharge of waste therein,
and the Cities agree that they will not hereafter modify any such
contracts nor enter into any other contracts relating to connection
with the said collection systems and discharge of waste therein, sewage
treatment or disposal of Effluent, which shall impair the Cities'
ability to transfer and deliver the quantity and quality of Effluent in
accordance with the terms of this Agreement. Control of connections to
and discharges into said collection systems shall be established and
maintained in a manner that the quality of Effluent can be maintained
in accord with the standards set forth in Exhibit E. If in the exercise
of due diligence by enforcing its valid laws ordinances, rules and
regulations regarding discharges and contracts heretofore or hereafter
entered into, the Cities are unable to prevent any third party from
discharging wastes into their respective collection systems of a
quality which shall result in the delivery of Effluent from the 23rd
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Avenue Plant or the 91st Avenue Plant that does not meet the quality
specifications set forth in Exhibit E, then Phoenix in respect of the
23rd Avenue Plant and the Cities in respect of the 91st Avenue Plant
shall, at its or their expense as the case may be, make all
improvements modifications and additions to the 23rd Avenue Plant or
91st Avenue Plant which may be required for the Effluent to satisfy
such specifications insofar as they relate to the Rules and Regulations
for Effluent quality of the Arizona State Department of Health and the
United States Environmental Protection Agency. In the event Phoenix or
the Cities shall fail, refuse, or be unable to make required
improvements, modifications and additions, the Participants shall have
the right with the concurrence of the Cities, which shall not
unreasonably be withheld, to install any facilities on Participants'
property necessary to provide the treatment of Effluent required to
meet such quality specifications and payments required to be made by
Participants pursuant to Section 8 hereof shall be reduced by the
amount of all costs reasonably incurred by Participants to install
operate and maintain such facilities, including reasonable fixed
charges and operating and maintenance expenses.
14. COMPLIANCE WITH HEALTH LAWS: Participants shall obtain necessary
permits for the use of Effluent for their intended purposes front the
Arizona State Department of Health, and shall use such Effluent in
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accordance with the applicable laws of the United States of America,
the State of Arizona, the Rules and Regulations of the State Health
Department and of the Maricopa County Health Department, and the
ordinances of any of the Cities having lawful jurisdiction to regulate
such use; provided, however, that in the event any such laws or
regulations shall be amended in the future so as to make it impossible
or unfeasible to use Effluent for the purposes specified in this
Agreement, Participants shall, at their option, have the right to
cancel and terminate this Agreement upon giving thirty (30) days'
notice in writing to each of the Cities.
15. INDEMNIFICATION: Participants hereby indemnify the Cities against any
claim resulting from the control, transmission, use or disposal of
Effluent by Participants after delivery thereof.
16. DESTRUCTION, DAMAGE OR CONDEMNATION:
16.1 If all, or any part, of the 23rd Avenue Plant or the 91st
Avenue Plant should be destroyed, damaged or condemned, Phoenix or the
Cities as the case may be shall restore or reconstruct the 23rd Avenue
Plant or the 91st Avenue Plant in such a manner as to permit the Cities
to deliver Effluent to the Participants pursuant to this Agreement, or
in the event substitute wastewater treatment facilities arc constructed
at a new location other than the 23rd Avenue or 91st Avenue Plants in
lieu of restoration or reconstruction of either such plant, the Cities
shall transfer, sell and deliver the same rights to the treated
wastewater from such substitute facilities on the same terms and
conditions as apply to Uncommitted Effluent from the destroyed, damaged
or condemned plant.
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16.2 If all or a portion of the Participant's Facilities are
destroyed or condemned, the Participants shall repair, restore or
reconstruct the Participants' Facilities in a manner to permit the
Participants to receive and transport Effluent pursuant to this
Agreement.
17. TAXES:
17.1 If any general and/or special city, county, state or
other real property taxes, or any other type of taxes and imposts, are
assessed or levied against the 23rd Avenue Plant and the 91st Avenue
Plant, Phoenix or the Cities as the case may be shall pay all such
taxes prior to delinquency. In the event the State of Arizona, County
of Maricopa or the federal government should require that the Cities
pay a tax resulting from the sale of Effluent to the Participants, then
the price for the Effluent shall be increased by the amount of such
tax.
17.2 If any general and/or special city, county, state or
other real property taxes, or any other typical taxes or imposts are
properly assessed or levied against the Participants' Facilities, the
Participants shall pay all such taxes prior to delinquency. In the
event the
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Cities or any of them should require that Participants pay a tax
resulting from the sale of Effluent by the Cities, then the price of
Effluent shall be decreased by the amount of such tax.
17.3 Nothing contained in this Section 17 shall be
construed as a recognition or admission by the Cities or the
Participants of the validity of any such tax, levy or assessment.
18. LIENS:
18.1 Phoenix shall keep the 23rd Avenue Plant and the Cities
shall keep the 91st Avenue Plant free and clear of all liens arising
out of or claimed by reason of any work performed, material furnished
or obligations incurred by or at the instance of Phoenix or the Cities,
and Phoenix and the Cities as the case may be shall indemnify and save
the Participants harmless from all such items or claims of lien and all
attorneys' fees and other costs and expenses incurred by reason
thereof, provided, however, that neither Phoenix nor the Cities shall
be required to pay or discharge any such lien so long as it shall be
contesting the same in any proceeding which while pending prevents the
collection or enforcement of the lien so contested.
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18.2 The Participants shall keep the Participants' Facilities
free and clear of all liens arising out of or claimed by reason of any
work performed, material furnished or obligations incurred by or at the
instance of the Participants, and shall indemnify and save the Cities
harmless from all such liens or claims of lien and all attorneys' fees
and other costs and expenses incurred by reason thereof, provided,
however, that the Participants shall not be required to pay or
discharge any such lien so long as they shall be contesting the same in
any proceeding which while pending prevents the collection or
enforcement of the lien so contested.
19. LIABILITY AND INSURANCE
19.1 Except for the negligence of the Participants, their
officers, directors, employees and agents, Phoenix and the Cities,
respectively, shall be liable insofar as the Participants are
concerned, for any physical damage to property and death of, and
personal injury to, anyone arising out of the ownership, use,
occupancy, operation, maintenance, repair, replacement and
reconstruction of the 23rd Avenue Plant and the 91st Avenue Plant, and
Phoenix and the Cities, respectively, hereby indemnify and hold the
Participants harmless from any cost, expense, claim or loss from such
damage or injury.
19.2 Except for the negligence of the Cities,. its officers,
managers employees or agents, the Participants shall be liable insofar
as the Cities are concerned for any physical damage to property and
death of, and personal injury to, anyone arising out of Participants'
owner-ship, use, occupancy, operation, maintenance, repair, replacement
and reconstruction of the Participants' Facilities, and the
Participants hereby indemnify and hold the Cities harmless from any
cost; expense, claim or loss from such damage or injury.
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19.3 The Cities and the Participants shall procure and
maintain insurance against physical damage to property and death of,
and personal injury to, persons of the kind and with coverages normally
carried by entities operating properties similar to the 23rd Avenue
Plant, the 91st Avenue Plant and the Participants' Facilities. Nothing
contained herein shall prohibit the Cities and the Participants from
adopting a self-insurance program of a type and kind being utilized by
entities operating properties similar to the 23rd Avenue Plant, the
91st Avenue Plant and the Participants' Facilities. Upon request, the
Cities and the Participants shall furnish the others with certificates
of insurance demonstrating compliance with this Sec-19.3.
20. COOPERATION OF PARTIES:
20.1 Each of the Cities and the Participants shall fully
cooperate with and assist one another in obtaining all licenses,
permits, authorizations, approvals and consents and all judicial and
administrative proceedings required in or related to the performance of
this Agreement, including, but not limited to, the delivery and
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use of Effluent to and by the Participants, approval of plant site
location by the State of Arizona pursuant to ARS SS 40-360.01 to
40-360.12, and construction and operating permits from the USAEC.
20.2 Each of the Cities and the Participants shall make,
execute and deliver all documents and instruments necessary or useful
to the implementation and performance of this Agreement.
20.3 In the event any proceeding at law or equity is
instituted involving the authority and power of any of the Cities
and/or the Participants to make, execute and deliver this Agreement
and/or to perform its terms, covenants and conditions, or related to
the rights, title and interest of any of the Cities or the Participants
in and to Effluent, then such City and the Participants shall jointly
and cooperatively defend the validity of this Agreement and the use of
Effluent intended thereunder.
21. INTERRUPTION OF DELIVERY OF EFFLUENT:
21.1 Cities shall have the right to refuse to deliver
Effluent under the terms of this Agreement when the following occurs:
(a) There exists in the Cities a critical need for water
to be used for domestic purposes;
(b) All other reasonable sources of water, including any
Uncommitted Effluent in excess of the Option Effluent, have
been exhausted;
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(c) Reasonable steps have been taken to conserve the
water supply in the Cities ; and
(d) Reasonable notice of the critical need has been given
to Participants.
When the critical need expires, or when other reasonable sources of
water become available, Cities can no longer refuse to deliver
Effluent under the terms of this Agreement. The Cities shall use their
best efforts to resume deliveries of Effluent hereunder at the
earliest practical time in the event such deliveries are interrupted
in accordance with this Section 2l.
22. SUCCESSORS AND ASSIGNS:
22.1 The terms, covenants and conditions of this Agreement
shall be binding upon and inure to the benefit of and shall apply to
the respective transferees, successors and assigns of the Cities and
Participants.
23. DEFAULTS:
23.1 The Cities and Participants hereto agree that they,
respectively, shall pay all monies and carry out all other
performances, duties and obligations agreed to be paid and/or performed
by them pursuant to all of the terms and conditions set forth and
contained in this Agreement, and a default by either the Cities or
Participants in the covenants and obligations to be them, respectively,
kept and performed pursuant to the terms and conditions set forth and
contained in this Agreement shall be an actof default under this
Agreement.
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23.2 In the event of a default by either the Cities or the
Participants in any of the terms and conditions of this. Agreement,
then, within thirty (30) days following the giving of written notice of
such default by the other, the defaulting party shall remedy such
default either by advancing the necessary funds and/or rendering the
necessary performance. Such notice shall specify the existence and
nature of such default.
23.3 In the event that either the Cities or the Participants
shall dispute an asserted default, then such party shall pay the
disputed payment or perform the disputed obligation, but may do so
under protest. The protest shall be in writing, shall accompany the
disputed payment or precede the performance of the disputed obligation,
and shall specify the reasons upon which the protest is based. Payments
not made under protest shall be deemed to be correct.
23.4 In the event a default by the Cities or the Participants
in the payment or performance of any obligation under this Agreement
shall continue for a period of two months or more without having been
cured by the defaulting party, or without such party having commenced
or continued action in good faith to cure such default, or in the event
the question of whether an act of default exists is the subject of
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litigation and such default continues for a period of two months
following a final determination by a Court of competent jurisdiction
that an act of default exists and the defaulting party has failed to
cure such default or to commence such action during said two month
period, then, at any time thereafter and while said default is
continuing, the non-defaulting party at its option may, by written
notice to the other, terminate this Agreement.
23.5 If this Agreement is terminated for any reason, the
Cities shall have the immediate right of re-entry of any easement or
leasehold granted to the Participants pursuant to Section 11.3 hereof.
The Participants shall within 180 days or such other time as the
parties agree remove all facilities owned by the Participants located
on property owned by the Cities or any of them. All facilities not
removed from such property within 180 days or such other time as the
parties agree after the termination of this Agreement shall become the
property of the owner of such property.
24. PERFORMANCE AND UNCONTROLLABLE FORCES:
24.1 All terms, covenants and conditions herein contained to
be performed by the Cities or any of them or by the Participants shall
be performed at the sole expense of the party SQ obligated, and if the
other party shall pay any sum of money or do any act which requires the
payment of money, by reason of the failure, neglect or refusal of the
obligated party to perform such term, covenant or condition, the sum of
money so paid by the other party shall immediately be payable to such
party by the party obligated to perform.
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24.2 Neither the Cities nor the Participants hereto shall be
considered to be in default in the performance of any of the
obligations hereunder (other than obligations of either party to pay
casts and expenses) if failure of performance shall be due to an
uncontrollable force. The term 1'uncontrollable force" shall mean any
cause beyond the control of the party affected, including but not
limited to failure of facilities, flood, earthquake, tornado, storm,
fire, lightning, epidemic, war, riot, civil disturbance or
disobedience, labor dispute, and action or nonaction by or failure to
obtain the necessary authorizations or approvals from any governmental
agency or authority or the electorate, labor or material shortage,
sabotage and restraint by Court order or public authority, which by
exercise of due diligence and fore-sight such party could not
reasonably have been expected to avoid and which by exercise of due
diligence it shall be unable to overcome Nothing contained herein shall
be construed so as to require either party to settle any strike or
labor dispute in which it may be involved. Either party rendered unable
to fulfill any obligation by reason of an uncontrollable force shall
exercise due diligence to remove such inability with all reasonable
dispatch.
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25. NOTICES AND EXHIBITS:
25.1 All notices, demands or consents given or made pursuant
to this Agreement shall be in writing unless otherwise specified herein
and be deemed to have been fully given, made or sent when made and
deposited in the United States mail by registered or certified mail and
postage prepaid and addressed as follows:
To City of Phoenix: City Manager
City of Phoenix
Municipal Building
251 West Washington
Phoenix, Arizona 85003
To City of Glendale: City Manager
City of Glendale
7022 North 58th Drive
Glendale, Arizona 85301
To City of Mesa: City Manager
City of Mesa
55 North Center
Mesa, Arizona 85021
To City of Scottsdale: City Manager
City of Scottsdale
3939 Civic Center Plaza
Scottsdale, Arizona 85251
To City of Tempe: City Manager
City of Tempe
35 West Southern Avenue
Tempe, Arizona 85281
To Town of Youngtown: Mayor
Town of Youngtown
12030 Clubhouse Square .
Youngtown, Arizona 85363
To Participants: Arizona Public Service Co.
C/C Secretary
P. 0. Box 21666
Phoenix, Arizona 85036
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Salt River Project Agri-
cultural Improvement and
Power District
c/o Secretary
P. 0. Box 1980
Phoenix, Arizona 85001
The address to which any notice, demand, consent, or other writing may
be given, made or sent to either party may be changed by notice given
by such party as above provided. Routine notices and communications
shall be sent as provided herein or as directed by the City Manager of
Phoenix and the Project Manager's Engineer and Operating Agent's
Engineer.
25.2 The Exhibits referred to in this Agreement as Exhibits
A, B, C, D and B shall be attached hereto and are all incorporated
herein and made a part hereof.
26. WAIVER:
26.1 The waiver by either the Cities or the Participants of
any breach of any term, covenant or condition herein contained shall
not be deemed a waiver of such term, covenant or condition or any
subsequent breach of the same or any other term, covenant or condition
herein contained.
27. SECTION HEADINGS:
27.1 Section headings in this Agreement are for convenience
only and do not purport accurately or completely to describe the
contents of any section. Such headings are not to be construed as a
part of this Agreement or in any way defining, limiting or amplifying
the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this or Agreement to
be executed by their respective officers thereunto duly authorized this 23 day
of April, 1973.
ARIZONA PUBLIC SERVICE COMPANY
By
--------------------------
Vice President
ATTEST:
- ---------------------
Assistant Secretary
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
By
----------------------------
ATTEST & COUNTERSIGN:
- ---------------------
APPROVED AS TO FORM:
- ---------------------
CITY OF PHOENIX
ATTEST:
- --------------------- By
City Clerk -----------------------------
City Manager
APPROVED AS TO FORM:
- ---------------------
City Attorney
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CITY OF GENDALE
By
--------------------------
Mayor/City Manager
ATTEST:
- ---------------------
CITY CLERK
APPROVED AS TO FORM:
- ---------------------
CITY ATTORNEY
CITY OF MESA
By
--------------------------
City Manager
ATTEST:
- ---------------------
CITY CLERK
APPROVED AS TO FORM:
- ---------------------
CITY ATTORNEY
CITY OF SCOTTSDALE
By
--------------------------
Mayor
ATTEST:
- ---------------------
CITY CLERK
APPROVED AS TO FORM:
- ---------------------
CITY ATTORNEY
CITY OF TEMPE
By
--------------------------
Mayor
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TOWN OF YOUNGTOWN
ATTEST: By
--------------------------
- ------------------- Mayor
Town Clerk
APPROVED AS TO FORM
- -------------------
Town Attorney
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this the 4th day of April, 1973, before me the undersigned
Notary Public personally appeared Karl F Abel; and F. E. Smith, who acknowledged
themselves to be the President and Secretary of the SALT RIVER PROJECT
AGRICULTRURAL IMPOVEMENT AND POWER DISTRICT, an agricultural improvement
district organized existing under the laws of the State of Arizona, and that
they, as officers, being authorized so to do, executed the instrument for the
purposes therein contained by signing name of the company by themselves as such
President and Secretary.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Marlaine White
-----------------------
Notary Public
My Commission Expires:
March 15, 1975
<PAGE>
-43-
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this the 5th day of April, l973, before me, the undersigned Notary
Public personally appeared T. G. WOODS, Jr. and Gerald J. Griffin, who
acknowledged themselves to be of the Vice President and Assistant Secretary of
ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, 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 Vice President and Assistant Secretary
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Eloise E. Warren
-----------------------
Notary Public
My Commission Expires:
February 20, 1975
-44-
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this the 12th day of April, l973, before me, the undersigned Notary
Public personally appeared J. A. Petrie and Marston Richards, who
acknowledged themselves to be of the Manager and City Clerk of
CITY OF MESA, ARIZONA, a municipal/corporation, 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 CITY OF MESA, ARIZONA, BY
themselves as such Manager and City Clerk.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Joyce H. West
-----------------------
Notary Public
My Commission Expires:
January 16, 1976
-45-
<PAGE>
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this the 13th day of April, l973, before me, the undersigned Notary
Public personally appeared Dale R. Shumary and Virgina S. Thompson who
acknowledged themselves to be of the Mayor and City Clerk of
CITY OF TEMPE, ARIZONA, a municipal/corporation, 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 CITY OF TEMPE, ARIZONA, BY
themselves as such Mayor and City Clerk.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/
-----------------------
Notary Public
My Commission Expires:
April 17, 1976
-46-
<PAGE>
EXHIBIT A
EFFLUENT COMMITTED
91ST AVE. PLANT
A. f/yr.
--------
Buckeye Irrigation Company 30,000
Arizona Game a Fish Department 7,300
U.S. Water Conservation Lab. 1,200
------
TOTAL 38,500
------
Previous Effluent Commitments. It is understood by the parties that the
Cities have previously authorized the disposition of approximately 36,500
acre-feet of Effluent discharged in each calendar year at the plant to the
United States Department of Agriculture for research and scientific purposes, to
the Arizona Game and Fish Department for wildlife and recreational purposes and
to the Buckeye Irrigation Company for agricultural purposes, and portions of the
Effluent are or may be used for the in-plant use and irrigation of land owned by
the Cities at the plant sites.
A-1
<PAGE>
EXHIBIT B
DESCRIPTION OF 23RD AVENUE PLANT
The 23rd Avenue Wastewater Treatment Plant is located at 23rd Avenue
and Durango Street, Phoenix, Arizona. The plant is solely owned and operated by
the City of Phoenix, and provides secondary treatment, by means of the activated
sludge process, to all wastewater received.
The plant serves part of the Phoenix sewer service area only. Some of
the wastewater flows received at the 23rd Avenue Plant headworks can be diverted
to. the 91st Avenue Plant. The balance of the Phoenix wastewater and all of that
from the other cities participating in the Multi-City Sewerage Program is
treated at the 91st Avenue Wastewater Treatment Plant.
The treatment capacity of the 23rd Avenue Plant, as of March 1973, is
40 million gallons per day. The unit processes employed at the plant, as of
March 1973, are preliminary screening, grit removal, primary sedimentation,
aeration, secondary sedimentation, and anaerobic digestion of the wastewater
solids removed.
Any future additions to the 23rd Avenue Wastewater treatment Plant will
be designed and operated to provide , secondary treatment to all wastewater
received by the plant.
B-l
<PAGE>
EXHIBIT C
DESCRIPTION OF 91ST AVBNUE PLANT
The 91st Avenue Wastewater Treatment Plant is located at 91st Avenue
and Southern Avenue. The plant is under the jurisdiction of and operated by the
City of Phoenix; however, several other cities share with Phoenix in the
ownership of plant capacity. The cities that share in the ownership of plant
capacity by contractual agreements are Phoenix, Glendale, Mesa, Tempe,
Scottsdale and Youngtown.
The 91st Avenue Plant provides secondary treatment, by means of the
activated sludge process, to all wastewater received. The plant receives all of
the wastewater from Tempe, Scottsdale, Glendale, Youngtown, Peoria and Sun City,
and part of the wastewater from Phoenix and Mesa.
The treatment capacity of the 91st Avenue Plant, as of March 1973, is
65 mil1ion gallons per day. The unit processes employed at the plant, as of
March 1973, are preliminary screening, grit removal, primary sedimentation,
aeration, secondary sedimentation, and anaerobic digestion of the wastewater
solids removed.
Any future additions to the 91st Avenue Wastewater Treatment Plant will
be designed and operated to provide secondary treatment to all wastewater
received by the plant.
-C-1-
<PAGE>
EXHIBIT D
EXERCISE OF OPTION
To: City of Phoenix
251 W. Washington
Phoenix, Arizona
Attention: Water & Sewer Director
Pursuant to Agreement No. ______, Option and Purchase of
Effluent, dated ________________________, 19Y3 (hereinafter the Participants,
hereby exercise the Unit ______ Option, in the amount of _____________ acre-feet
per year.
Whenever and to the extent Effluent meeting the requirements of
Appendix E attached to the 4greernent is available for delivery at the Avenue
Plant, the Effluent required to be delivered in fulfillment of this exercise of
the Unit _____ Option shall be delivered at the _______ Avenue Plant Delivery
Point, unless and until the Participants shall hereafter otherwise designate in
writing. The balance, if any, of the Effluent required to be delivered pursuant
to this exercise of the Unit Option shall be delivered at the _____ Avenue Plant
Delivery Point.
It is requested that the Cities take any and all steps necessary
to deliver such Effluent in accordance with. the estimates and schedules to be
submitted by Participants to W & S Director pursuant to Sections 7.3 and 9.1 of
the Agreement. The first of such estimates or schedules shall be given to the W
& S Director not less than
D-1
<PAGE>
two (2) years prior to the delivery of any Effluent to meet the Unit-Water
Requirements (including Construction Water).
[If only a portion of the Unit 1, Unit 2, Unit 3 or Unit 4 Option, as
the case may be is exercised hereunder, Participants shall complete
the following paragraph).
The Participants hereby release, remise and surrender that portion, in
the amount of __________ acre-feet per year, of the Unit Option which has not
been previously transferred or released pursuant to Section 6.4 of the Agreement
ant which is not exercised hereby.
All terms used herein which are defined in the Agreement shall have the
meanings as therein defined.
------------------------------
ANPP Project Manager
as Agent for and on behalf
of the Participants.
D-2
<PAGE>
EXHIBIT E
1. SOURCE OF WASTEWATER
The 23rd Avenue and 91st Avenue Sewage Treatment Plants receive and
treat all wastewater discharged into the respective tributary sanitary sewer
systems of the Cities, which serve residential, commercial and industrial
establishments. Storm water is not intended to be admitted into the sanitary
sewer Systems but is handled by separate storm sewer Systems which are not
tributary to the treatment works.
The water supply from which the wastewater derives, after being used
for domestic, commercial and industrial purposes, consists of surface water from
the Salt and Verde Rivers and ground water from numerous wells. In the future,
Colorado River water may be an added source.
The strength and character of wastewater entering the Phoenix sewer
system is regulated by Ordinance. All establishments that produce wastewater
that exceeds the limits set forth in the Ordinance are required to pretreat
their wastewater before it is accepted into the sewer system. A copy of the
currently effective "Maximum Allowable Limits for Discharge into the Phoenix
Sanitary Sewers System" - P-S3, dated December 22, 1970, is attached, In
addition, tile contractual agreements between Phoenix and the other Cities
involved in the Multi-City Sewerage Plan include restrictions and controls
regarding the strength and character of wastewater consistent with the Phoenix
regulations.
E-1
<PAGE>
2. QUANTITY OF EFFLUENT
Attached is a copy of "Wastewater Flow Projections 1972-2000:
Estimated Uncommitted Effluent Available, Acre Feet/Year."
3. QUALITY OF EFFLUENT AND METHODS OF ANALYSIS
Both the 23rd Avenue and 91st Avenue Sewage Treatment Plants
are designed and operated, as will be any anticipated future additions,
to provide secondary treatment for all wastewaters delivered to them by
the sanitary sewage collection system. This secondary treatment is
presently accomplished at both plants by the activated sludge process.
Effluent quality is based upon and determined at each plant
by suspended solids and BOD analyses performed daily on representative
composite samples. The analyses are performed in accordance with the
latest edition of Standard Methods for the Examination of Water and
Wastewater, published jointly by the American Public Health
Association, American Water Works Association, and the Water Pollution
Control Federation.
The 23rd Avenue and 91st Avenue Sewage Treatment Plants, and
any future addition thereto, will continue to be operated in such a
manner that will produce an Effluent that will comply with the Rules
and Regulations of the Arizona State Department of Health.
E-2
<PAGE>
The City shall exercise all reasonable efforts to operate,
maintain, enlarge and improve the 23rd Avenue and 91st Avenue Plants in
a manner such that the quality of the Effluent therefrom to be
delivered to Participants hereunder shall be compatible with the
operation and maintenance of the Participants' Effluent treatment
facilities in order that the following components of such. Effluent
shall not exceed on an annual average basis the concentrations
indicated below:
Phosphate 60 mg/l
Suspended Solids 30 mg/1
BOD5 30 mg/1
Whenever analyses shall indicate that due to normal or other causes the
quality of the Effluent is in a trend in which it may be anticipated
that the above values indicated as annual average concentrations may be
exceeded for extended periods of time and whenever any upset in the
treatment processes at either 23rd Avenue or 91st Avenue Plant occurs
which may result in the delivery of Effluent with concentrations in
excess of those listed above, for extended periods of time the W & S
Director shall cause the Project Manager's Engineer or the Operating.
Agent's Engineer to be promptly notified of such occurrences.
E-3
<PAGE>
The Cities shall also use their best efforts to regulate the discharge into
their sewerage collection Systems from industrial and commercial sources of
any substances which would be detrimental to the quality of the Effluent
delivered hereunder.
Participants shall not be obligated to accept delivery of, or to pay for any
inadequately treated Effluent which could not otherwise be lawfully discharged
in accordance with the Rules and Regulations of the Arizona State Department
of Health or the United States Environmental Protection Agency.
It is recognized that the Participants' Facilities require storage reservoirs
or ponds for purposes of operational flexibility and as a standby source of
water. Participants shall not be obligated to accept delivery of, or to pay
for any such inadequately treated Effluent that cannot be provides sufficient
dilution by the Participants' storage ponds to render the Effluent compatible
with the operation and maintenance of the Participants' treatment facilities.
E-4
<PAGE>
CITY OF PHOENIX, ARIZONA
WATER AND SEWERS DEPARTMENT
DIVISION OF SEWERS
ORD. G-1049
12/22/70
MAXIMUM ALLOWABLE LIMITS FOR DISCHARGE INTO THE PHOENIX SANITARY SEWERS SYSTEM
SEC. 28-21, 28-22 CITY CODE
CONSTITUENT MAXIMUM
----------- -------
Unpolluted waters rain runoff, single pass None allowed
cooling water, evaporative coller water
Temperature 150F
Floatable Oil, Grease, etc. None visible
Flammable or Explosives None allowed
Total Grease, Oil, Fat, etc. 100 mg/1
Any solid or viscous substance capable of None allowed
causing obstruction to the flow in sewers or
other interference with the proper operation
of the sewage works.
Suspended Solids 350 mg/1
Dissolved Solids Must not require unusual
attention or expense
for treatment and disposal.
Corrosive, noxious or malodorous substances Must not
be injurious to
personnel or to
concrete or iron
structures and must
not be capable of
producing a public
nuisance.
p H p H 5.5 to 9.5
BOD (5 Day, 20 C Biochemical Oxygen Demand) 300 mg/1
Average Daily Flow 50,000 gals/day
*Dissolved Sulfide 0.5 m/1
Toxic, radio-active,or poisonous substances Less than that
sufficient to cause
interference with
any waste treatment
process, or hazard
to humans, animals,
or in receiving
stream.
*Radio-active substances Per latest Arizona Atomic
Energy Commission
regulations
*Cyanide (includes cyanates) 0.1 mg/1
*Heavy Toxic Metals, mg/1:
Arsenic 0.1
Barium 10.
Boron 10.0
Cadmium 0.1
Chromium VI 0.5
Copper 10.0
Lead 0.5
Manganese 0.5
Mercury 0.05
Selenium 0.1
Silver 0.5
Zinc 50.0
*Limits established by Water and Sewers Director in accordance with Sec. 28-22
of the City Code. All other limits listed are from Sec. 28-21 and 28-22 of the
City Code. The Director shall establish permissible limits as required on other
hazardous, toxic or undesirable substances not listed herein.
Date February 16, 1971
- ------------------------- -------------------------
Water and Sewers Director
Approved:
____________________ David Travaini, Director
City Manager Water & Sewers Department
By:_________________ By_________________
Assistant City Manager
PUBLIC SERVICE COMPANY OF NEW MEXICO
by
-------------------------------
President, Revenue Management
6091.CGI. 1106.99A: 1
-4-
5/29/81
AGREEMENT FOR THE SALE AND PURCHASE
OF WASTEWATER EFFLUENT
THIS AGREEMENT, made and entered into this day of 12th day
of June 1981, by and between the City of Tolleson a municipal corporation
organized and existing under and by virtue of the laws of the State of Arizona
("Tolleson") and Arizona Public Service Company, a corporation organized and
existing under and by virtue of the laws of the State of Arizona ("APS") and
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 ("SRP").
W I T N E S S E T H:
WHEREAS, Tolleson owns, operates and maintains a wastewater
treatment plant (hereinafter the "Plant") situated 1/4 mile south of State Route
85 and 1/4 mile west of 91st Avenue at which Tolleson treats raw sewage
collected from sources within and outside of the corporate boundaries of
Tolleson and produces treated wastewater effluent. suitable for discharge into
the Salt River in accordance with the laws of the United States and the State of
Arizona (hereinafter Effluent);
WHEREAS, the capacity of the Plant is currently sufficient
to process and discharge approximately 4 million gallons per day of treated
wastewater and an expansion of the Plant to increase the capacity to
approximately 8 million gallons per day (hereinafter "M.G.D.") is in progress;
-1-
<PAGE>
6/4/81
WHEREAS, pursuant to a commitment previously made, Tolleson
currently is obligated to sell Effluent up to, but not in excess of, 2.0 M.G.D.
for the production of sod on property situated adjacent to the Plant
(hereinafter "Committed Effluent");
WHEREAS, Tolleson desires to reserve for its use and
disposition as it may in its own discretion elect, 10% of the amount of Effluent
in excess 2.0 M.G.D. (hereinafter "Reserved Effluent");
WHEREAS, Tolleson desires to sell and APS and SRP desire to
purchase all available Surplus Effluent which for the purposes hereof shall be
(i) all of the Effluent produced through the operation of the Plant in excess of
the sum of the Committed Effluent and Reserved Effluent and (ii) any amounts of
Committed Effluent not actually sold pursuant to the commitment therefor, and of
Reserved Effluent. not actually used or otherwise disposed of by Tolleson, but
not to exceed 8.3 M.G.D.; and
WHEREAS, the sale and purchase of the Surplus Effluent will
result in its beneficial use and in the reduction in the demand for the limited
supplies of unused surface waters and groundwaters.
NOW THEREFORE, for and in consideration of the mutual
covenants, terms and conditions hereinafter stated,the parties agree as follows:
-2-
<PAGE>
6/4/81
Section 1. Sale and Purchase of Surplus Effluent.
1.1 Except as provided in other Sections of this Agreement,
Tolleson shall sell and deliver to APS and SRP, and APS and SRP shall purchase
and accept all of the Surplus Effluent produced through the operation of the
Plant during the term of this Agreement, including any extension of the
Agreement.
1.2 This Agreement contains no requirement that Tolleson
produce any certain amount of Effluent at the Plant but merely that it deliver
to APS and SRP whatever amount of Surplus Effluent is produced, except as
provided elsewhere in this Agreement.
(End of Section 1]
<PAGE>
5/29/81
Section 2. Price and Payment.
2.1 APS and SRP shall pay to Tolleson for all Surplus
Effluent sold and delivered hereunder a price determined as of July l each year
equal to the greater of (i) $35.00 per acre-foot, plus the adjustment component
determined in accordance with Section 2.4 hereof, (ii) 45% of the price per
acre-foot in effect from time to time for Central Arizona Project Municipal and
Industrial Water, 6r (iii) 190% of the price paid for Uncommitted Effluent under
Agreement No. 13904 between APS and SRP and the Cities of Phoenix, Glendale,
Scottsdale, Tempe and Mesa and the Town of Youngtown
2.2 APS and SRP shall pay Tolleson monthly an amount equal
to the price determined pursuant to section 2.1 hereof multiplied by the number
of acre-feet of surplus Effluent delivered and accepted during the prior month.
such monthly payments shall be due and payable 30 days after receipt of the
inv6ice therefor rendered by Tolleson.
2.3 In the event of a dispute concerning the quantity of
surplus Effluent delivered in any month, APS and SRP shall pay the invoiced
amount) but may do so under written protest. If any protested amount shall
subsequently be determined to have been excessive, the excessive amount thereof
shall be refunded to APS and SRP. Any dispute or protest shall be resolved in
the manner provided by Section 14.7 hereof.
-4-
<PAGE>
5/29/81
2.4 The adjustment component shall be applied to all Surplus
Effluent sold and delivered hereunder on or after July 1, 1981, pursuant to the
price described in Section 2.1(i), and shall be determined once each year as
hereinafter set forth.
2.4.1 The Base Year shall be 1980.
2.4.2 On July 1, 1992, the specified price of $35.00
per acre-foot shall be adjusted (increased or decreased), based on the final
index for the Base Year and the final index for the year 1981 by referring to
the Index of Implicit Price Deflators for Gross National Product, as published
in Table 7.1 of the National Income and Product Accounts Tables of the United
States Department of Commerce Publication entitled "Survey of Current Business"
(hereinafter "IPD") as applied in the following formula:
1981 IPD - 1980 IPD x $35.00
-------------------
1980 IPD
EXAMPLE:
Assume the IPD for the Base Year (1980) is 100 and the IPD
for 1981 is 110, then the adjustment for the year commencing
July 1, 1982, would be determined as follows:
110 - 100 x $35.00= $3.50
---------
100
2.4.3 Pursuant to Section 2.1(i), the price per
acre-foot thereafter shall be adjusted accordingly for each successive year
based on the percentage change in IPD between the final index for the preceding
year and the Base Year.
-5-
<PAGE>
6/4/81
EXAMPLE:
Assume the IPD for the Base Year (1980) is 100 and the IPD
for 1982 is 120, the adjustment for the year commencing July
1, 1983, would be determined as follows:
120 - 100 X $35.00 = $7.00
---------
100
2.4.4 In computing such adjusted price per acre-foot,
fractions of a cent will be dropped if less than one-half (.5) cent and will be
increased to the next higher whole cent if one-half (.5) cent or more.
2.4.5 In the event the "IPD" is not available for use
in determining the adjustment component in July of 1982 or any subsequent year,
the adjustment component shall be held in abeyance for Surplus Effluent
delivered in such year until such index is available, at which time Tolleson
shall determine the adjusted price pursuant to Section 2.1(i), and, if such
price is applicable for any year in question, shall submit, and APS and SRP
shall pay, an adjusted invoice applying the proper adjustment to all surplus
Effluent previously delivered in such year.
2.4.6 In the event the IPO shall be discontinued, an
appropriate index will be substituted therefor by mutual agreement of the
parties.
<PAGE>
5/29/91
Section 3. Quality of the Surplus Effluent
3.1 All Surplus Effluent sold and delivered hereunder shall
have received wastewater treatment, and shall meet the standards, required by
law and specified in Permit No. AZ 200338 i5sued to Tolleson by the
Environmental Protection Agency (hereinafter "EPA"), including any amendments
thereof as may be made from time to time and/or in any other required permit or
authorization as may hereafter be issued by the Arizona Department of Health
services (hereinafter "ADHS"), or any other federal or state agency having
jurisdiction respecting the treatment and/or discharge of waste-water effluent,
except that chlorination of such surplus Effluent sold and delivered hereunder
shall be required and performed only upon the terms and conditions hereinafter
provided.
3.2 Tolleson shall operate, maintain, enlarge and improve
the Plant in such a manner that the quality requirements set forth in Section
3.1 are satisfied.
3.3 APS and SRP shall not be required to purchase or accept
surplus Effluent that does not meet the quality requirement set forth in Section
3.1 hereof.
3.4 To1leson on the written request of APS and SRP shall
chlorine the Surplus Effluent to be delivered to APS and SRP, provided that APS
and SRP shall reimburse Tolleson for its costs for chlorine used in such
chlorination.
-7-
<PAGE>
6/4/81
3.5 Should the applicable state and federal laws change to
require chlorination of Surplus Effluent delivered into the effluent pipeline
between the City of Phoenix 91st Avenue Sewage Treatment Plant and the Palo
Verde Nuclear Generating Station (hereinafter the "Palo Verde Effluent
Pipeline"), but not require chlorination of Effluent 4ia-posed of in the way
Tolleson disposed of the Effluent before entering into this Agreement, then
Tolleson shall chlorinate the Surplus Effluent and APS and SUP shall reimburse
Tolleson for its costs of chlorine used in chlorinating the Surplus Effluent.
(End of Section 3)
-8-
<PAGE>
6/4/81
Section 4. Use of the surplus Effluent.
The primary use of the surplus Effluent purchased and
accepted by APS and SRP is for condenser cooling required for generation of
electric power at the Palo Verde Nuclear Generating station (hereinafter the
"Palo Verde Station") or any other electric generating facility that APS and
SRP, or either of them, may in the future develop. Nonetheless, APS and SRP
shall, at all times and at their sale discretion, have the right to resell or
otherwise dispose of the Surplus Effluent sold and delivered hereunder provided
that such sales or other dispositions are made in compliance with all applicable
laws and are not in competition with sales of other Effluent by Tolleson.
(End of Section 4)
-9-
<PAGE>
5/29/81
Section 5. Delivery Point and Metering.
5.1 Surplus Effluent sold and purchased hereunder shall be
delivered by Tolleson and accepted by APS and SRP at the valve that controls the
flow of Surplus Effluent into the Palo Verde Effluent Pipeline (hereinafter the
"Delivery Point") to be installed in the interconnection between the two outfall
wastewater lines from the Plant to the Salt River (hereinafter the "Outfall
Lines") and the Palo Verde Effluent Pipeline.
5.2 The parties shall cooperate in the design, installation,
operation and maintenance of the interconnection facilities required to provide
for the reliable delivery and control of Surplus Effluent at the Delivery Point.
All costs associated with the design, installation, construction, operation and
maintenance of such facilities shall be borne by APS and SRP and the title to
such facilities shall be vested in APS and SRP jointly.
5.3 The quantity of Surplus Effluent delivered by Tolleson
and accepted by APS and .SRP at the Delivery Point shall be measured by metering
devices installed by APS and SRP as close to the Delivery Point as practicable.
Such metering devices shall be of a design and type acceptable to Tolleson and
APS and SRP. The costs of such devices and their installation, operation,
maintenance, replacements, repair, betterments and calibration shall be borne by
-10-
<PAGE>
6/4/81
APS and SRP, except as otherwise provided in Section 7.3 hereof, and the title
thereto shall be vested in APS and SRP. Provisions shall be made to permit flow
meter information to be continuously displayed in a panel or panels at the Pl4nt
utilizing facilities and equipment as Tolleson may, at its own expense provide,
title to which shall be vested in Tolleson.
5.4 In the event that the flow metering device shall fail or
be inoperative, Tolleson shall have the right to use other in-plant flow
metering equipment to determine the volume of Surplus Effluent delivered for
billing purposes.
(End of Section 5]
-11-
<PAGE>
5/29/81
Section 6. Permits and Authorizations.
6.1 Tolleson shall be solely responsible for securing and
maintaining in force and effect any and all permits and authorizations required
by law for the delivery of Surplus Effluent to APS and SRP at the Delivery Point
and for the discharge into the Salt River or other disposal of Effluent which is
not delivered to and accepted by APS and SRP.
6.2 APS and SRP shall be solely responsible for securing and
maintaining in force and effect any and all permits and authorizations required
by law for the transportation of the Surplus Effluent from the Delivery Point to
the Palo Verde Station or to any other points and for any uses of the Surplus
Effluent that are allowed by Section 4 of this Agreement. Such responsibility of
APS and SRP may be delegated to others, 'but as between the parties the
responsibility rests solely upon APS and SRP.
6.3 Each of the parties shall cooperate with the other party
in securing and maintaining in force and effect the permits and authorizations
required in accordance with Sections 6.1 and 6.2 hereof and shall render such
assistance to the other party as it or they may reasonably request. Each party
shall furnish to the other party a copy of each permit and authorization
obtained pursuant to Sections 6.1 and 6.2 hereof.
-12-
<PAGE>
6/4/81
6.4 Should Tolleson be required by law to treat the Surplus
Effluent in a manner that results in increased expenses to Tolleson because it
is delivering the Surplus Effluent to APS and SRP under this Agreement, which
expense it would not have incurred if the Surplus Effluent was disposed by
Tolleson. into the Salt River, then APS~ and SRP shall have the right to require
Tolleson to so treat the Surplus Effluent and shall reimburse Tolleson for all
expenses (including without limitation any costs of plant additions or
improvements) incurred by Tolleson in providing such treatment.
[End of Section 6]
-13-
<PAGE>
5/29/81
Section 7. Implementation of the Agreement.
7.1 Within 30 days after the effective date of thi5
Agreement, Tolleson shall designate a representative and APS and SRP shall
collectively designate a representative for the purposes of (i) implementing
this Agreement in accordance with its terms, (ii) coordinating the engineering,
design and installation of the interconnecting facilities, including without
limitation the metering facilities, (iii) developing mutually satisfactory
procedures for the installation, operation and maintenance of the
interconnecting facilities, and (iv) developing other practices appropriate for
the implementation of this Agreement. Either Tolleson or APS and SRP may from
time to time designate a substitute or successor authorized representative by
giving written notice of such designation to the other party.
7.2 Within 120 days after the effective date of the
Agreement, the authorized representatives shall establish in writing such
operating procedures and practices as they mutually shall deem to be appropriate
for the delivery and acceptance of Surplus Effluent hereunder, including without
limitation such matters as notification requirements for routine operations and
emergencies, access to control and measurement facilities, maintenance practices
and schedules, and billing practices Such operating procedures and practices may
be amended from time to time in writing as the authorized representatives shall
mutually agree.
-14-
<PAGE>
6/4/91
7.3 The metering devices used to measure the quantity of
Surplus Effluent delivered and accepted hereunder shall be calibrated in a
manner acceptable to the authorized representatives prior to the date when such
devices are placed in service and thereafter not less frequently than once every
six months. The costs of such scheduled calibrations shall be borne by APS and
SRP. The authorized representative for Tolleson may request in writing such
additional calibrations as he in his sole discretion deem. appropriate; provided
that the cost incurred by APS and SRP for each such additional calibration shall
be reimbursed by Tolleson unless any such additional calibration reveals that
the inaccuracy of the metering devices is greater than + 2% in which case the
cost of such additional calibration shall be borne by APS and SRP. Copies of all
records showing calibration of meters and measurements of Surplus Effluent shall
be delivered to Tolleson with cover letters acknowledging the records to be true
copies.
[End of Section 7)
-15-
<PAGE>
6/4/81
Section 8. Commencement of Delivery of Effluent; Effluent Availability Charge;
and Charges for Unaccepted Effluent.
The obligation to sell and deliver Surplus Effluent shall
commence upon the completion of the interconnection facilities between the
Outfall Lines and the Palo Verde Effluent Pipeline (hereinafter the "Completion
Date"). During the period from the Completion Date through April 30, 1983,
Tolleson shall sell and deliver, and APS and SUP shall purchase and accept,
Surplus Effluent in such quantities as may be available and APS and SRP may
require for testing and startup of the Water Reclamation Facility (hereinafter
"WRF"), for filling the reservoir at Palo Verde Station and testing, startup and
operation of Unit 1 at Palo Verde Station. APS and SRP shall use Tolleson
Surplus Effluent for such purposes in precedence to any other effluent from
other sources except to the extent that is desirable to test the WRF with such
other effluent. During the period from July .1, l981, through April 30, 1983,
APS and SRP shall pay to Tolleson an availability charge equal to $2.00 per
acre-foot for the quantity of Surplus Effluent available for sale and delivery,
but not purchased and accepted by APS and SRP during such period. After April
30, 1983, Tolleson shall be obligated to sell and deliver, and APS and SRP shall
be obligated to purchase and accept, all Surplus Effluent available from time to
time. In the event APS and SRP shall, after April 30, 1983, fail or refuse to
accept any available surplus Effluent for reasons other than as provided in
Sections 3.3, 9.1 and 11.1, then APS and SRP shall be obligated to pay (or such
unaccepted Surplus Effluent at the same price and on the same terms and
conditions as would have applied if it had been accepted.
[End of Section 8]
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5/29/81
Section 9. Force Majeure.
9.1 Neither Tolleson nor APS and SRP shall be considered to be
in default in the performance of any of the obligations hereunder if failure of
performance shall be due to an uncontrollable force. The term "uncontrollable
force" shall mean any cause beyond the control of the party affected, including,
but not limited to, failure of facilities, flood, earthquake, tornado, storm,
fire, lightning, epidemic, war, riot, civil disturbance or disobedience, labor
dispute, and action or nonaction by or failure to obtain the necessary
authorizations or approvals from any governmental agency or authority or the
electorate, labor or material shortage, sabotage and restraint by Court order or
public authority, which by exercise of due diligence and foresight such party
could not reasonably have been expected to avoid and which by exercise of due
diligence it shall be unable to overcome. Nothing contained herein shall be
construed so as to require either party to settle any strike or labor dispute in
which it may be involved. Either party rendered unable to fulfill any obligation
by reason of any uncontrollable force shall exercise due diligence to remove
such inability with all reasonable dispatch.
9.2 Whenever uncontrollable force as defined in Section 9.1
prevents APS and SRP from being able to accept or use the Surplus Effluent, then
Tolleson may enter into temporary contracts with any other parties for sale of
the Surplus Effluent. It Tolleson has entered into such temporary contract,
Tolleson shall be allowed up to 30 days to begin delivery of the Surplus
Effluent to APS and SUP after receiving written notice from APS and SRP that the
disability has been removed.
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6/4/81
9.3 Notwithstanding the provisions of Sections 9.1 and 9.2,
if, after the exercise of due diligence, the party rendered unable to fulfill an
obligation remains unable to remove such inability for one full year, the other
party may elect to terminate the Agreement anytime thereafter by tendering 90
days written notice of its intention to terminate.
(End of Section 9
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6/4/81
Section 10. Interruption of Delivery of Surplus Effluent.
Tolleson shall have the right to refuse to deliver Surplus Effluent
or any portion of it under the terms of Agreement when the following occurs:
(a) There exists in Tolleson a critical need for water to be used for
domestic purposes;
(b) All other reasonable sources of water have been exhausted;
(c) Reasonable steps have been taken to conserve the water supply in
Tblleson; and
(d) Reasonable notice of the critical need has been given to APS and
SRP.
When the critical need expires, or when other reasonable sources of water become
available, Tolleson can no longer refuse to deliver Surplus Effluent under the
terms of this Agreement. Tolleson shall use its best efforts to resume delivery
of Surplus Effluent hereunder at the earliest practical time in the event such
deliveries are interrupted in accordance with this Section 10.
[End of Section 10]
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6/4/81
Section 11. Affect of Outage or Malfunction on Acceptance of Effluent.
11.1 In the event that a nonscheduled outage ("nonscheduled"
outage meaning an outage occurring due to reasons outside the control of APS and
SRP), or malfunction of any component or system of the Palo Verde Effluent
Pipeline or the WRF at the Palo Verde Station, restricts the capability of
either of such facilities to transport or treat wastewater effluent from all
sources, then APS and SRP may refuse to accept delivery of the Surplus Effluent
and shall not be required to pay therefor It us understood, however, that the
Surplus Effluent from Tolleson's Plant shall be the last source of effluent that
APS and SR? cut back on during such outage and that APS and SRP shall not refuse
to accept and pay for Tolleson's Surplus Effluent to the extent that they are
accepting and paying for effluent from any other source. Further, a nonscheduled
outage which cuts off or cuts back on the amount of Surplus Effluent accepted
and paid for by APS and SRP shall be treated as an "uncontrollable force" as
defined in Section g of this Agreement and shall be governed by the provisions
of Section 9.
11.2 In the event that an outage as described in Section 11.1
is a scheduled outage ("scheduled" outage meaning an outage that is planned and
controlled by APS and SRP), APS and SRP shall continue to pay for the Surplus
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6/4/81
Effluent that would have been delivered during any scheduled outage lasting up
to one year in length. Should the scheduled outage continue for more than one
year, from that point in time, APS and SRP shall pay one-half the price that
they otherwise would have paid for any Surplus Effluent they do not accept. At
any time that a scheduled outage continues for more than two years, Tolleson may
in its sole discretion elect to terminate the Agreement by giving 90 days
written notice to APS and SRP.
11.3 Except in emergencies, APS and SRP shall give 90 days
written notice in advance of any discontinuation of acceptance of Surplus
Effluent under the provision of this Section.
(End of Section 11]
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5/29/81
Section 12. Liability and Insurance.
12.1 Except for the negligence or intentional acts of APS and
SRP, their officers, directors, employees and agents, Tolleson shall be liable
insofar as APS and Salt are concerned, for any physical damage to property and
death of, and personal injury to, anyone arising out of the ownership, use,
occupancy, operation, maintenance, repair, replacement and reconstruction of the
Plant and the Outfall Lines, and Tolleson hereby indemnifies and holds APS and
SRP harmless from any cost, expense, claim or loss from such damage or injury.
12.2 Except for the negligence or intentional act of Tolleson,
its officers, managers, employees or agents, APS and SRP shall be liable insofar
as Tolleson is concerned for any physical damage to property and death of, and
personal injury to, anyone arising out of the construction, ownership, use,
occupancy, operation, maintenance, repair, replacement and reconstruction of the
delivery facilities at the Delivery Point, the Palo Verde Effluent Pipeline, the
facilities at Palo Verde. Station, or the transportation and use, resale or
disposal of Surplus Effluent delivered and accepted hereunder, and APS and SRP
hereby indemnify and hold Tolleson harmless from any cost, expense, claim or
loss from such damage or injury.
-23-
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6/4/81
12.3 Tolleson shall procure and maintain insurance against
physical damage to property and death of, and personal injury to, persons of the
kind and with coverages normally carried by entities operating properties
similar to the Plant and the Outfall Lines. Upon request, Tolleson shall furnish
to APS and SRP certificates of insurance demonstrating compliance with this
Section 12.3.
12.4 APS and SRP shall procure and maintain insurance against
physical damage to property and death of, and personal injury to, persons of the
kind and with coverages normally carried by entities operating properties
similar to the Palo Verde Effluent Pipeline and the Palo Verde Station. Upon
request, APS and SRP shall furnish to Tolleson certificates of insurance
demonstrating compliance with this Section 12.4.
(End of Section 12)
-24-
<PAGE>
6/4/91
Section 13. Inspections and Access to Records
13.1 Each of the parties shall have the right, during
reasonable hour5, of access to and inspection of the facilities and operations
of the other party which are associated with the treatment, delivery,
measurement, transportation and use of Surplus Effluent sold and purchased
hereunder.
13.2 Each of the parties shall have the right, during
reasonable hours, of access to the records of the other party which are relevant
for proving compliance or noncompliance of each of the parties with any of the
terms of the Agreement.
(End of Section 13)
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6/4/81
Section 14. General.
14.1 Effective Date and Term. This Agreement shall be
effective from and after the date of its execution by the parties. The Initial
Term of this Agreement shall be the period commencing on the date of its
execution by the parties and. expiring December 31, 2001. The Agreement shall
continue in effect and shall be binding upon the parties for four successive
five-year Extended Terms unless Tolleson or APS and SRP shall have given written
notice of termination not less than one year prior to the expiration of the
Initial Term or any or the three succeeding Extended Terms.
14.2 Assignment. Neither Tolleson nor APS and SRP shall
transfer or assign any of their respective rights, titles and interests in and
to this Agreement without the prior written consent of the other parties, except
that (i) APS and SRP shall each have the right to transfer and assign all or any
portion of its right, title and interest in this Agreement to the other or to
any utility participating in the Palo Verde Station or any other electric
generating station which utilizes the Surplus Effluent sold hereunder (ii) APS
and SRP and any of their respective successors or assigns shall each have the
right to transfer its right, title and interest in this Agreement to any
mortgagee, trustee or secured party under present or future deeds of trust,
mortgages, indentures or security agreements. A transfer or assignment by any
-26-
<PAGE>
5/29/81
party shall not release that party from its obligations as the primary obligor
under the Agreement without the written consent of the other parties. In the
event of any transfer or assignment of this Agreement by either Tolleson or APS
and SRP, the terms, covenants and conditions of this Agreement shall be binding
upon and inure to the benefit and shall apply to the respective transferees,
successors and assigns of Tolleson and APS and SRP. Notwithstanding any other
provision of this Agreement, APS and SRP shall have the right, without the
consent of Tolleson, to resell and dispose of all or any portion of the Surplus
Effluent delivered and accepted hereunder in such manner, upon such terms and
conditions and for such reuse as APS and SRP shall in their sole discretion deem
appropriate within the limitations of Section 4 of this Agreement.
14.3 Compliance with Laws. APS and SRP shall use the Surplus
Effluent delivered hereunder in accordance with the applicable laws of the
United States of America, the applicable laws of the State of Arizona and the
rules and regulations of the State Health Department and of the Manicopa County
Health Department; provided, however, that in the event any such laws or
regulations shall be amended in the future so as to make it impossible to use
the surplus Effluent for the purposes specified in this Agreement, APS and SRP
shall, at their option, have the right to cancel and terminate this Agreement
upon giving 90 days notice in writing to Tolleson. In the event Tolleson is
-27-
I
<PAGE>
5/29/81
prohibited by any state or federal laws or regulations hereafter enacted or
adopted from selling effluent for the uses contemplated herein, Tolleson shall
have the right to cancel and terminate this Agreement upon giving 90 days notice
in writing to APS and SRP. Until the notice period runs and the termination
becomes effective, APS and SRP shall continue to pay for the Surplus Effluent
14.4 Notices. All notices, demands, consents or other writings
given or made pursuant to this Agreement shall be in writings and, unless
otherwise specified herein, shall be deemed to have been duly given when made
and deposited in the United States mail by registered or certified mail with
postage prepaid and addressed as follows:
To Tolleson: City Manager
9555 West Van Buren
Tolleson, Arizona 85353
To APS: Arizona Public Service Company
c/o Secretary
P.0. Box 21666
Phoenix, Arizona 85036
To SRP: Salt River Project Agricultural
Improvement and rower District
c/c Secretary
P. 0. Box 1980
Phoenix, Arizona 85001
The address to which any notice, demand, consent or other writing shall be given
to any party may be changed from time to time by written notice of such party to
the other parties as above provided.
-28-
5/29/81
<PAGE>
14.5 Relative Responsibilities of APS and SRP.
14.5.1 APS is authorized to act for and on behalf of SRP
in all matters affecting the implementation and performance of this Agreement
for the use of the Surplus Effluent at the Palo Verde Station, and all actions
and representations taken or made by APS in the implementation and performance
of this Agreement shall be binding upon SRP.
14.5.2 In the event all or a part of the Surplus
Effluent is used other than at the Palo Verde Station, APS and SRP shall be
jointly responsible for the implementation and performance of this Agreement.
14.5.3 Under all circumstances, however, APS and SRP
shall be jointly and severally liable to perform the obligations to Tolleson
that are imposed by this Agreement.
14.6 Waivers. The waiver by either Tolleson or APS and SRP of
any breach of any term, covenant or condition of this Agreement shall not be
deemed a waiver of such term, covenant or condition or any subsequent breach
thereof of any other term, covenant or condition in this Agreement.
14.7 Resolution of conflicts and Disputes. Any conflict or
disputes in the implementation of this Agreement, procedures for implementation
having been provided in Section 7, shall be resolved by arbitration in accord
with the rules of the American Arbitration Association. Any conflicts or
disputes in adjusting the purchase price of the Surplus Effluent as provided in
-29-
<PAGE>
5/29/81
Section 2.1 and any conflict or disputes in the quantity of Surplus Effluent
delivered as discussed in Section 2.3 shall be resolved by arbitration in accord
with the rules of the American Arbitration Association. No other conflicts or
disputes arising out of the Agreement shall be subject to mandatory arbitration.
In all cases, the Agreement shall be interpreted according to the laws of the
State of Arizona.
14.8 Sales and Use Taxes. In the event the State of Arizona,
County of Maricopa or the federal government should require that Tolleson pay a
tax resulting from the sale of Surplus Effluent to APS and SRP, then the price
for the Surplus Effluent shall be increased by the amount of such tax In the
event Tolleson shall levy a tax on the sale or use of the surplus Effluent, then
the amounts of any such tax paid by APS and SRP shall be deducted from the
amounts payable under Section 2.2 hereof.
14.9 Section Headings. Section headings in this Agreement are
for convenience only and do not purport to describe accurately or completely the
contents of any section. Such headings are not to be construed as a part of this
Agreement or in any way defining, limiting or amplifying the provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and attested by their respective duly authorized officers as of the
date first above written.
-30-
<PAGE>
ATTEST CITY OF TOLLESON
By
- ------------------------------- ---------------------------
City Clerk Mayor
Reviewed By
---------------------------
City Manager
Approved as to Form
---------------------------
City Attorney
ATTEST:
ARIZONA PUBLIC SERVICE COMPANY
- --------------------------------- ---------------------------
(Title) WM T. QUINSLER, SECRETARY
APPROVED AS TO FORM By (Title) President
BY
FOR SNELL & WILMER SALT RIVER PROJECT AGRICULTURAL
DATE 6/9/81 IMPROVEMENT AND POWER DISTRICT
ATTEST & COUNTERSIGN
- --------------------------------- ---------------------------
By (Title) President
(Title) Secretary
APPROVED AS TO FORM
Salt River Project Law Dept.
By
Date 7/7/81
-31-
<PAGE>
5/29/81
STATE OF ARIZONA )
) ss:
County of Maricopa )
On this the 13th day of July1981 before me, the, undersigned
Notary Public, personally appeared Mario J. Herrera and Esther Angulo who
acknowledged themselves to be the Mayor and City Clerk of the CITY OF TOLLESON,
ARIZONA, a municipal corporation. 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 CITY OF TOLLESON, ARIZONA, by themselves as
such Mayor and City Clerk.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Pub1ic
My Commission Expires:
My Commission Expires Jan.29, 1984
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this the 12th day of July l981 before me). the undersigned Notary
Public personally appeared __________ and __________ who acknowledged themselves
to be the Secretary and President of ARIZONA PUBLIC SERVICE COMPANY, an Arizona
corporation, and that they as such officers, being authorized so to do, executed
the foregoing instrument for the purposes therein contained the name of, signing
the name of the company by themselves as such Secretary and President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Pub1ic
My Commission Expires:
My Commission Expires Nov. 9, 1982
-32-
<PAGE>
5/29/81
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this the 9th day of July, 1981 before me, the undersigned Notary
Public, personally appeared Karl F. Abel and Paul D. Rice, who acknowledged
themselves to be the who acknowledged themselves to be the President and
Secretary, of the SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER
DISTRICT, an agricultural improvement district organized and existing under the
laws of the State. of Arizona, 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
Secretary.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Pub1ic
My Commission Expires:
My Commission Expires May 3rd, 1983
[Notary Seal]
-33-
<PAGE>
ARIZONA NUCLEAR POWER PROJECT
Post Office Box 21 66
Phoenix, Arizona 85035
El Paso Electric Company
P.O. Box 962 July 16, 1981
215 N. Stanton
El Paso, Texas 79999
Attention: R. E. York, Vice President
Southern California Edison Company
P. O. Box 900
2244 walnut Grove Avenue
Rosemead, California 91770
Attention: Robert Dietch, Vice President
Public Service Company of New Mexico
P. O. Box 2267
Albuquerque, New Mexico 87103
Attention: C. David Bedford, Vice President
Gentlemen:
The City of Tolleson, Arizona Public Service Company (APS) and
Salt River Project Agricultural Improvement and Power District (SRP) have duly
executed the attached Agreement for the Sale and purchase of wastewater
Effluent, dated as of July 7, 1921, providing for the sale and purchase of
wastewater effluent for use at Palo Verde Nuclear Generating Station (PVNGS) or
other electric generating stations as APS and SRP, or either of them, may
develop in the future. APS and SRP have executed such effluent agreement
pursuant to the attached resolution unanimously approved and adopted by the
Arizona Nuclear Power Project (ANPP) Administrative Committee and hereby declare
and designate such agreement to be a Project Agreement, as defined in the ANPP
participation Agreement, in which each participant shall own an undivided
interest as tenant in common in proportion to its Generation Entitlement Share
in PVNGS pursuant to section 4.1 of such Participation Agreement.
APS and SRP further commit, subject to the designation by
the other Participants of such effluent agreement as a Project Agreement, that
all effluent available for purchase under such effluent agreement shall be
dedicated to the operation of PVNGS and shall not be used at any other
generating station without the consent of all Participants.
ARIZONA PUBLIC SERVICE COMPANY SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
By By
- ---------------------------- ------------------------------
President
Attachment
By
------------------------------
Secretary
<PAGE>
The attached Agreement for the Sale and Purchase of Wastewater
Effluent is hereby designated a Project Agreement.
EL PASO ELECTRIC COMPANY
By
-----------------------------
SOUTHERN CALIFORNIA EDISON COMPANY
By
-----------------------------
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
-----------------------------
<PAGE>
12/4/81
AMENDMENT #1 TO THE AGREEMENT FOR THE
SALE AND PURCHASE OF WASTEWATER EFFLUENT
THIS AMENDMENT #1 TO THE AGREEMENT FOR THE SALE AND PURCHASE
OF WASTEWATER EFFLUENT ("Amendment #1"), dated June 12, 1981. made and entered
into as of the 12th day of November, 1981, by and between the City of Tolleson,
a municipal corporation organized and existing under and by virtue of the laws
of the State of Ariz6na ("Tolleson") and Arizona Public Service Company, a
corporation organized and existing under and by virtue of the laws of the State
of Arizona ("APS") and 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 ("SRP").
W I T N E S S E T H
WHEREAS, since June 12, 198A, the date of the Agreement for
the Sale and Purchase of Wastewater Effluent (the "Agreement"), Tolleson has
proceeded with its expansion of its wastewater treatment plant (the "Plant") as
described in the Agreement and the installation of a new outfall line from the
Plant to the Salt River is currently in progress and scheduled for completion
prior to the end of 1981;
WHEREAS, the engineering and design of the facilities
required to establish a temporary and permanent interconnection between the
<PAGE>
Tolleson Outfall Lines (as defined in Section 5.1 of the Agreement) and the Palo
Verde Effluent Pipeline (as defined in Section 3.5 of the Agreement) have been
completed and show. that the provisions of Section 5.2 of the Agreement are
inappropriate; and
WHEREAS, the parties desire to amend said Section 5.2 to
provide that (j) those interconnection facilities which are integral parts of
the Tolleson Outfall Lines, namely the Tolleson Junction Box and Associated
Facilities, as hereinafter defined, shall be owned, operated and maintained by
Tolleson and (ii) those facilities that are integral parts of the Palo Verde
Effluent Pipeline, namely the ANPP Pipeline and Associated Facilities, as
hereinafter defined, shall be owned, operated and maintained by APS and SRP,
their successors and assigns, and to further establish the responsibilities Of
the parties for the construction and installation of such facilities and such
temporary facilities as may be required, the furnishing of materials there-for
and the payment of the costs thereof:
NOW THEREFORE, in consideration of the premises and the
mutual covenants, terms and conditions hereinafter provided, the parties agree
to amend Section 5.2 of the Agreement to read in its entirety as follows:
"5.2.1 Tolleson shall own, operate and maintain the Tolleson
Junction Box and Associated Facilities which shall include the following items:
<PAGE>
12/4/81
a. Tolleson Junction Box and the weir and three manual sluice
gates situated therein;
b. Anchor block adjacent to the Tolleson Junction Box;
c. 18-feet of the new 48-inch pipe connected to the inlet
side of the Tolleson Junction Box;
d. Approximately 15 feet of the new 42-inch pipe connected to
the outlet side of the Tolleson Junction Box;
e. Manhole and stab pipe required to connect the new 42-inch
pipes connected to the inlet and outlet sides of the
manhole;
f. Tolleson Junction Structure Box;
g. All other: portions of the new Tolleson Outfall Line;
h. The portion of the existing Tolleson Outfall Line
(30-inch) within the Tolleson Junction flax;
i. All other: portions of the existing Tolleson Outfall Line;
and
j. Temporary facilities installed in the Tolleson Junction
Box to permit installation of the manual sluice gate on
the existing Tolleson Outfall Line;
all as depicted on drawing nos. AO-W-ZlC-150 Rev. 2 and AO-W-ZlC-l5l Rev. 2,
attached hereto as Appendix A, which facilities are integral parts of the
Tolleson Outfall Lines.
-3-
<PAGE>
12/4/81
"5.2.2 APS and SRP their successors and assigns shall own,
operate and maintain the ANPP Pipeline Junction Box and Associated Facilities
which shall include the following items:
a. ANPP Pipeline Junction Box and all facilities and
equipment situated therein;
b. 30-inch pipe between the ANPP Pipeline Junction Box and
The Tolleson Junction Box;
c. Motorized sluice gate situated in the Tolleson Junction
Box (also referred to as a "valve" in Section 5.1 hereof);
d. Flow metering equipment, including without limitation such
devices as may be necessary for transmission of flow meter
data to the control panels in the Plant; and
e. Temporary bypass facilities, it any, installed to bypass
the Tolleson Junction Box, including without limitation
the pipe and fittings required to connect items e and a
swap pump located in item f (all referred to in Section
5.2.1);
all as depicted in Appendix A, which facilities parts of the Palo Verde Effluent
Pipeline.
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<PAGE>
12/4/81
"5.2.3 Tolleson shall be responsible for the construction and
installation of items c, f. g and i listed in Section 5.2.1. Tolleson shall
engage Kip Construction Company to construct and install items e, f and g and
shall procure items c and d in accordance with plans and specifications prepared
by its engineering consultants, Brown and Caldwell.
"5.2.4 APS and SRP shall be responsible for the construction
and installation of all items listed in Section 5.2.2. With respect to items
listed in Section 5.2.1, APS shall be responsible for the construction and
installation of items a and j, the removal and replacement of item b, the
installation of items C and d using pipes and fittings furnished by Tolleson and
the removal of item h, all in accordance with the plans and specifications
prepared by Bechtel Power Corporation.
"5.2.5 APS and SRP shall not be required to procure,
construct or install item a listed in Section 5.2.2 unless and until 30 days
after receipt of written notice tram Tolleson that (i) such facilities are
required because flows from the Plant will exceed the capacity of the existing
Tolleson Outfall Line and (ii) Tolleson shall have completed construction of all
of items e, if and g listed in Section 5.2.1 and APS and SRP shall not have
completed all work required pursuant to Section 5.2.4 for the operation of the
new Tolleson Outfall Line.
"5.2.6 Tolleson shall pay the costs of procurement,
construction installation of all items listed in Section 5.2.3; provided that
-5-
<PAGE>
APS and SRP shall reimburse Tollson within 30 days after receipt at Tolleson's
invoice or invoices for such costs incurred by Tolleson in connection with item
e and for all engineering fees associated with the design, plan review and
change order preparation associated with the items listed in Section 5.2.1
except items g and i.
"5.2.7 APS and SRP shall pay all costs associated with all
items listed in Section 5.2.4; provided that Tolleson shall pay the costs of
procurement and delivery to the site of the pipes and fittings for items C and C
listed in Section 5.2.1.
"5.2.8 The parties shall cooperate in the construction,
installation,. operation and maintenance of the facilities, equipment and work
described in or required to be performed pursuant to this section 5 in order to
provide for the reliable delivery and control of Surplus Effluent at the
Delivery Point."
All other provisions of the Agreement shall remain in full
force and effect. IN WITNESS WHEREOF, the parties have caused this Amendment #1
to be executed and attested by their respective duly authorized officers as of
the date first above written.
ATTEST:
By
- ----------------------------- -------------------------------
City Clerk Mayor
-6-
<PAGE>
Reviewed By
-------------------------------
City Manager
Approved as to Form
-------------------------------
City Attorney
ATTEST ARIZONA PUBLIC SERVICE COMPANY
- ---------------------------------- ------------------------------
(Title) By Title Vice President
SALT RIVER PROJECT AGRICULTURAL
ATTEST & COUNTERSIGN: IMPROVEMENT AND POWER DISTRICT
- ---------------------------------- ------------------------------
(Title) Secretary By (Title) Vice President
<PAGE>
STATE OF ARIZONA )
)ss:
County of Maricopa )
12/4/81
On this the 14th day of December, 1981, before me, the
undersigned Notary Public, persona1ly appeared Mario J. Herrera and Esther
Angulo, who acknowledged themselves to me the Mayor and City Clerk of the CITY
OF TOLLESON, ARIZONA, a municipal corporation, 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 CITY OF TOLLESON, ARIZONA, by
themselves as such Mayor and City Clerk
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
March 27, 1984
STATE OF ARIZONA )
) ss.
Countyof Maricopa )
On this the 5th day of January, 1982 before me, the
undersigned Notary Public, personally appeared _________and _______, who
acknowledged themselves to be the vice President and ________ of ARIZONA PUBLIC
SERVICE COMPANY, an Arizona corporation, 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 Vice
President and ----------.
IN WITNESS WEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
April 4, 1982
-8-
<PAGE>
12/4/8l
STATE OF ARIZONA )
)ss:
County of Maricopa )
On this the 23rd day of December, 1981, before me, the
undersigned Notary Public, personally appeared John R. Lassen and Paul D Rice,
who acknowledged themselves to be the Vice President and Secretary of the SALT
RIVER PROJECT AGRICULTURAL IMPORVEMENT AND POWER DISTRICT, an agricultural
improvement district organized and existing under the laws of the State of
Arizona, 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 Vice President and Secretary.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
March 15, 1983
-9-
