UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-6986
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PUBLIC SERVICE COMPANY OF NEW MEXICO
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(Exact name of registrant as specified in its charter)
New Mexico 85-0019030
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Alvarado Square, Albuquerque, New Mexico 87158
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(Address of principal executive offices)
(Zip Code)
(505) 241-2700
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock--$5.00 par value 41,774,083 shares
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Class Outstanding at May 1, 1998
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Report of Independent Public Accountants........................ 3
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Earnings-
Three Months Ended March 31, 1998 and 1997...................... 4
Consolidated Statements of Comprehensive Income-
Three Months Ended March 31, 1998 and 1997...................... 5
Consolidated Balance Sheets-
March 31, 1998 and December 31, 1997............................ 6
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1998 and 1997...................... 7
Notes to Consolidated Financial Statements...................... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................... 10
PART II. OTHER INFORMATION:
ITEM 1. LEGAL PROCEEDINGS........................................... 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........ 16
ITEM 5. OTHER INFORMATION........................................... 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 20
Signature ............................................................ 21
2
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Public Service Company of New Mexico:
We have reviewed the accompanying consolidated balance sheet of Public Service
Company of New Mexico (a New Mexico corporation) and subsidiaries as of March
31, 1998, and the related consolidated statements of earnings, consolidated
statements of comprehensive income and consolidated statements of cash flows for
the three-month periods ended March 31, 1998 and 1997. These financial
statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Public Service Company of New
Mexico and subsidiaries as of December 31, 1997 (not presented herein), and, in
our report dated February 10, 1998, we expressed an unqualified opinion on that
statement. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1997, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
April 28, 1998
3
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ITEM 1. FINANCIAL STATEMENTS
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31
-------------------------
1998 1997
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(In thousands except
per share amounts)
Operating revenues:
Electric $ 179,652 $ 161,261
Gas 102,712 123,936
Energy Services 47,400 13,625
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Total operating revenues 329,764 298,822
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Operating expenses:
Fuel and purchased power 55,032 47,118
Gas purchased for resale 64,711 81,660
Gas purchased for resale and
other - Energy Services 52,330 13,402
Other operation and maintenance 84,002 76,546
Depreciation and amortization 21,074 20,453
Taxes, other than income taxes 9,440 9,753
Income taxes 10,896 13,197
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Total operating expenses 297,485 262,129
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Operating income 32,279 36,693
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Other income and deductions, net of taxes 2,722 2,437
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Income before interest charges 35,001 39,130
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Interest charges:
Interest on long-term debt 11,386 12,123
Other interest charges 2,401 2,111
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Net interest charges 13,787 14,234
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Net earnings 21,214 24,896
Preferred stock dividend requirements 147 147
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Net earnings applicable to common stock $ 21,067 $ 24,749
========= =========
Average shares of common stock outstanding 41,774 41,774
========= =========
Net earnings per common share (Basic) $ 0.50 $ 0.59
========= =========
Net earnings per common share (Diluted) $ 0.50 $ 0.59
========= =========
Dividends paid per share of common stock $ 0.17 $ 0.12
========= =========
The accompanying notes are an integral part of these financial statements.
4
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Quarter Ended
March 31
----------------------
1998 1997
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(In thousands)
Net Earnings $ 21,214 $ 24,896
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Other Comprehensive Income, net of tax (note 3):
Unrealized gain on securities:
Unrealized holding gains arising during the period 3,875 2,065
Reclassification adjustment for gains included
in net earnings (87) (77)
Minimum pension liability adjustment - 262
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Total other comprehensive income 3,788 2,250
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Total Comprehensive Income $ 25,002 $ 27,146
======== ========
The accompanying notes are an integral part of these financial statements.
5
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1998 1997
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(Unaudited)
(In thousands)
ASSETS
Utility plant $ 2,597,836 $ 2,576,236
Accumulated provision for depreciation
and amortization (1,024,596) (1,003,086)
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Net utility plant 1,573,240 1,573,150
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Other property and investments 309,250 310,775
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Current assets:
Cash 8,186 8,705
Temporary investments, at cost 14,157 9,490
Receivables 174,505 216,305
Fuel, materials and supplies 34,032 33,664
Gas in underground storage 8,463 13,158
Other current assets 7,034 4,509
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Total current assets 246,377 285,831
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Deferred charges 152,963 149,811
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$ 2,281,830 $ 2,319,567
============ ============
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock $ 208,870 $ 208,870
Additional paid-in capital 467,530 469,073
Accumulated other comprehensive income,
net of tax 3,811 23
Retained earnings since January 1, 1989 141,901 129,188
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Total common stock equity 822,112 807,154
Cumulative preferred stock without mandatory
redemption requirements 12,800 12,800
Long-term debt, less current maturities 574,344 713,995
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Total capitalization 1,409,256 1,533,949
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Current liabilities:
Short-term debt 243,860 114,100
Accounts payable 94,600 154,501
Dividends payable 8,501 7,248
Current maturities of long-term debt - 350
Accrued interest and taxes 42,561 24,161
Other current liabilities 31,620 26,102
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Total current liabilities 421,142 326,462
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Deferred credits 451,432 459,156
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$ 2,281,830 $ 2,319,567
============ ============
The accompanying notes are an integral part of these financial statements.
6
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
----------------------
1998 1997
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(In thousands)
Cash Flows From Operating Activities:
Net earnings $ 21,214 $ 24,896
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation and amortization 24,156 23,275
Accumulated deferred investment tax credit (1,109) (1,119)
Accumulated deferred income tax (1,323) 1,662
Net loss on market sensitive portfolio 2,698 -
Changes in certain assets and liabilities:
Receivables 41,347 30,872
Fuel, materials and supplies 4,326 (430)
Deferred charges (245) 5,116
Accounts payable (59,907) (49,171)
Accrued interest and taxes 18,400 4,741
Deferred credits (3,205) 2,320
Other 378 (4,650)
Other, net 1,618 5,203
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Net cash flows from operating activities 48,348 42,715
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Cash Flows From Investing Activities:
Utility plant additions (25,624) (27,856)
Increase in nuclear decommissioning trust (860) (23,000)
Return of principal PVNGS LOBs 4,994 820
Increase in other property and investments (3) (373)
Increase in temporary investments, net (4,667) (11,326)
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Net cash flows from investing activities (26,160) (61,735)
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Cash Flows From Financing Activities:
Bond redemption premium and costs (3,479) (1,474)
Redemption of first mortgage bonds (140,206) -
Short-term borrowings for first mortgage
bonds redemption 140,206 -
Trust borrowing for nuclear decommissioning 860 23,000
Repayments of short-term borrowings (11,306) (400)
Exercise of employee stock options (1,540) -
Dividends paid (7,242) (5,149)
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Net cash flows from financing activities (22,707) 15,977
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Decrease in cash (519) (3,043)
Cash at beginning of period 8,705 11,125
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Cash at end of period $ 8,186 $ 8,082
========= =========
Supplemental Cash Flow Disclosures:
Interest paid $ 10,936 $ 13,971
========= =========
Income taxes paid, net $ 6,121 $ -
========= =========
The accompanying notes are an integral part of these financial statements.
7
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) General Accounting Policy
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary for a fair presentation of the
consolidated financial statements. The significant accounting policies followed
by Public Service Company of New Mexico (the "Company") are set forth in note
(1) of notes to the Company's consolidated financial statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (the "1997 Form
10-K") filed with the Securities and Exchange Commission ("SEC").
(2) New Senior Unsecured Notes and Indenture
On March 11, 1998, the Company retired $140 million principal amount of first
mortgage bonds and replaced first mortgage bonds in the principal amount of $463
million collateralizing pollution control revenue bonds ("PCBs") with senior
unsecured notes which were issued under a new indenture. While first mortgage
bonds continue to serve as collateral for $111 million of PCBs, the lien on the
mortgage has been substantially reduced to cover only the Company's ownership
interest in the Palo Verde Nuclear Generating Station ("PVNGS"). All future
long-term debt financings are expected to be issued under an indenture similar
to the new indenture.
Coincident with the above transactions, the Company established a five-year,
$300 million unsecured revolving credit facility to replace the Company's $100
million secured revolving credit facility. Funds borrowed through this new
facility were used to retire the $140 million principal amount of first mortgage
bonds.
(3) Other Comprehensive Income
The Company adopted as of January 1, 1998, Statement of Financial Accounting
Standards Board ("SFAS") No. 130, "Reporting Comprehensive Income". This
statement requires the reporting of certain changes in the common stock equity
section of the balance sheet as other comprehensive income.
Minimum Accumulated
Unrealized Pension Other
Gains on Liability Comprehensive
Securities Adjustment Income
---------- ---------- -------------
Beginning Balance at January 1, 1998 $2,750 $(2,727) $ 23
Current Period Changes 3,788 - 3,788
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Ending Balance at March 31, 1998 $6,538 $(2,727) $3,811
====== ======= ======
8
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The Company has two external trusts for funding its executive retirement program
and its share of decommissioning obligations for PVNGS, respectively. The trust
funds are invested partially in fixed income securities and domestic stock,
which are classified as available-for-sale. The Company reflects the unrealized
gains or losses on the investments for the executive retirement program and the
decommissioning trust for PVNGS Unit 3 in other comprehensive income. Such gains
or losses related to the PVNGS Units 1 and 2 trust investments are reflected in
the decommissioning reserve account. All prior periods have been restated for
comparability purposes.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's 1997 Form 10-K PART II, ITEM 7.-"MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" discussed
management's assessment of the Company's financial condition, results of
operations and other issues facing the Company. The following discussion and
analysis by management focuses on those factors that had a material effect on
the Company's financial condition and results of operations during the first
quarter of 1998 and 1997. It should be read in conjunction with the Company's
consolidated financial statements. Trends and contingencies of a material nature
are discussed to the extent known and considered relevant.
LIQUIDITY AND CAPITAL RESOURCES
The previously estimated capital requirements for 1998 of $218.9 million
included utility construction expenditures of $141.3 million and other cash
requirements for long-term debt sinking funds, purchase of PVNGS Lease
Obligation Bonds ("LOBs") and dividend payments for both common and preferred
stock. These projected capital requirements did not include funds for the
retirement of $140 million of taxable first mortgage bonds completed on March
11, 1998, or the planned refinancing of PVNGS lease debt through the issuance of
up to $435 million of senior unsecured notes ("SUNS") discussed below. During
the first quarter, the Company spent approximately $36.3 million for capital
requirements and anticipates spending approximately $182.6 million over the
remainder of 1998, including the $58 million spent on May 1, 1998, for the
purchase of PVNGS LOBs discussed below. The Company expects that these cash
requirements will be met primarily through internally generated cash. However,
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. These estimates are under continuing review and subject
to on-going adjustment.
On March 11, 1998, the Company entered into a five-year, $300 million senior
unsecured revolving credit facility ("Revolver"). Also, on March 11, 1998, the
Company borrowed $148 million under the Revolver for the purpose of retiring its
outstanding taxable first mortgage bonds, which were defeased on March 11, 1998
and subsequently redeemed on April 10, 1998.
Also, on March 11, 1998, the Company replaced the first mortgage bonds
collateralizing $463 million of tax-exempt pollution control revenue bonds
("PCBs") with SUNs issued under a new senior unsecured note indenture. As of
March 31, 1998, there remains outstanding $111 million of tax-exempt PCBs
secured by first mortgage bonds. The 1947 Indenture of Mortgage and Deed of
Trust (the "Mortgage") was amended by vote of the bondholders on March 11, 1998.
A substantial amount of the Company's assets was released from the lien of the
Mortgage, leaving only the Company's owned interest in PVNGS under the lien of
the Mortgage. No future bonds can be issued under the Mortgage. With the
exception of the $111 million of first mortgage bonds securing tax-exempt PCBs,
the SUNs will be the senior debt of the Company. The SUNs indenture contains a
restriction on liens (except in certain limited circumstances) and certain other
covenants and restrictions.
10
<PAGE>
The above mentioned transactions will result in increased administrative,
financial and strategic flexibility for the Company.
On May 1, 1998, the Company purchased $58 million of PVNGS LOBs, 10.15% Series.
The purchase of the LOBs was financed with the Company's liquidity facilities.
On April 27, 1998, the Company requested New Mexico Public Utility Commission
("NMPUC") approval to issue up to $435 million in SUNs to provide funds to
refinance the lease debt associated with the sale and leaseback portions of the
Company's interests in PVNGS ("Lease Debt"). As of May 1, 1998, the Company
holds $277 million in Lease Debt (including the $58 million mentioned above) as
an investment with the remaining $151 million in Lease Debt held in the public
market in the form of LOBs. The Company estimates that the replacement of the
Lease Debt with the issuance of the SUNs will save the Company an average of $3
million a year over the next 18 years. However, due to the recording of the
transaction costs in 1998, the replacement of the Lease Debt will have no impact
on 1998 earnings. Under an NMPUC order, any savings generated from the
refinancing will be split between the Company's customers (40%) and shareholders
(60%). The Company requested NMPUC approval on a schedule that would enable
completion of this transaction in the third quarter of 1998.
RESULTS OF OPERATIONS
Net earnings for the quarter decreased $3.7 million ($.09 per share) from the
corresponding period last year.
Electric gross margin (electric operating revenues less fuel and purchased power
expense) for the current quarter increased $10.5 million from a year ago due to
increased wholesale energy sales of 34.7% as a result of continued improvement
in the Company's wholesale power marketing efforts. However, gas gross margin
(gas operating revenues less gas purchased for resale) decreased $4.3 million
from the corresponding period a year ago as a result of changes in the rate
structure resulting from a 1997 gas rate order.
Energy Services Business Unit gross margin was negative and decreased $5.2
million from a year ago due to the recording of losses related to the gas
marketing portfolio. The Company does not anticipate an earnings contribution
from the Energy Services Business Unit over the next few years.
Other operation and maintenance expenses increased $7.5 million over the
corresponding quarter a year ago due to higher maintenance costs associated with
scheduled outages at the San Juan Generating Station ("SJGS"), increased pension
and benefit expense resulting from changes to the Company's pension plan and
higher costs related to gas marketing activities. Such increases were offset by
lower salary expense of $3.5 million resulting from the recording of
compensation expense in 1997 relating to the exercise of employee stock options.
11
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OTHER ISSUES FACING THE COMPANY
Electric Rate Case
As previously reported, in November 1997, the Company filed its electric rate
case pursuant to an NMPUC order. In the filing, the Company stated that,
although the Company could justify a $5 million rate increase, it would not seek
to increase rates, stating that rate stability is important in preparing for
industry restructuring. In conjunction with the rate case filing, the Company
had requested the New Mexico Supreme Court ("Supreme Court") to issue an order
disqualifying and removing the chairman of the NMPUC from participating in this
rate case. Pending a decision, the Supreme Court issued a stay prohibiting the
chairman of the NMPUC from participating in the rate case. (See PART II, ITEM
7.-"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - OTHER ISSUES FACING THE COMPANY - REGULATORY ISSUES - Electric Rate
Case" in the 1997 Form 10-K.) On April 17, 1998, the Supreme Court lifted the
stay, allowing the chairman of the NMPUC to participate in the Company's
electric rate case.
On April 6, 1998, the NMPUC staff and intervenors in the rate case filed their
testimony. The NMPUC staff recommended a decrease of $33.2 million in current
rates while the New Mexico Attorney General ("AG") and the City of Albuquerque
("COA") recommended decreases of $31.2 million and $45.4 million, respectively,
based on traditional cost of service ratemaking. In addition, the AG recommended
that market pricing should be used to price the generation portion of the
Company's rates and, if stranded costs exist as a result of this pricing, the
Company should only be allowed to recover 50% of such amounts. The Company's
review indicates that if the AG's revaluation proposal is adopted, there could
be an additional $105 million reduction in rates and more than a $960 million
write-down of the Company's generation assets. The New Mexico Industrial Energy
Consumers ("NMIEC") also recommended that the Company's generation assets should
be revalued for ratemaking purposes to reflect the market value of the
facilities. The Company's review indicates that if NMIEC's revaluation proposal
is adopted, there could be an additional $60 million reduction in rates and more
than a $550 million write-down of the Company's generation assets. The Company
has reviewed the testimony of the NMPUC Staff and other intervenors and filed
its rebuttal testimony on May 6, 1998.
In rebuttal testimony, the Company stated that (1) the cost of service rate
reductions proposed by the NMPUC staff, AG and COA were not justified and (2)
the recommendations made by the AG and NMIEC regarding the revaluation of the
Company's generation assets were highly speculative, subject to numerous highly
subjective assumptions, overly complex and inappropriate. The Company's rebuttal
demonstrates that the plant revaluation proposals submitted by the AG and NMIEC
are, in reality, an unjustified attempt to partially rely on the long
discredited reproduction cost method of rate base valuation associated with the
fair value concept of ratemaking found to be inferior to the original cost less
depreciation method of rate base valuation long preferred by courts and
regulators. Hearings in the case are scheduled to begin May 18, 1998 with a
final order from the NMPUC sometime toward the end of 1998. The Company is
unable to predict the ultimate outcome of this case but will vigorously defend
its position and avail itself of any and all judicial remedies to do so.
12
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The City of Albuquerque Retail Pilot Load Aggregation Program
As previously reported, in September 1997, the COA filed a petition with the
NMPUC to institute a retail pilot load aggregation program. In the petition, the
COA stated that it would serve as the aggregator and proposed to solicit bids
for an energy supplier. The plan would apply to certain selected customers,
ranging from residential to industrial classes, and would comprise 10-12 MW of
the Company's peak load. The NMPUC staff presented an alternative proposal to
the COA pilot proposal, which was for a larger pilot that would include a
broader mix of customer classes. The NMPUC staff also proposed that the NMPUC
order a separate proceeding to identify what stranded costs, transition costs
and administrative costs would be incurred by the Company in connection with a
pilot and the proper methodology for quantifying any appropriate recovery. (See
PART II, ITEM 7.-"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - OTHER ISSUES FACING THE COMPANY - City of
Albuquerque Retail Pilot Load Aggregation Program" in the 1997 Form 10-K.)
On March 30, 1998, the NMPUC issued an order scheduling hearings for stranded
cost issues related to the implementation of the pilot program. The Company and
other parties filed testimony on April 16, 1998, addressing: (i) the definition
of stranded costs; (ii) the legal basis of stranded cost recovery; (iii) the
factual basis for stranded cost recovery; (iv) the Company's total stranded
cost; (v) the share, if any, of the Company's stranded costs to be allocated to
the COA's pilot program and the NMPUC staff's proposed pilot program; and (vi)
assuming entitlement to recovery, the methodology for recovery and collection of
the Company's allowable stranded costs.
In its filing, the Company stated that it is impossible to accurately quantify
the stranded generation costs due to the existence of a number of different
variables affecting the market clearing price for generation in New Mexico.
These include the following: (i) the timing of restructuring; (ii) the form of
the restructured industry; (iii) the nature and efficiency of the market; and
(iv) how choice will be made available to customers. Using certain assumptions,
the Company updated the estimate of its stranded costs, using the Texas Public
Utility Commission Economic Cost Over Market Model ("ECOM"), to be between $290
million and $1.2 billion (in year 2001 dollars), depending on the market price
of electricity. Such assumptions included, but were not limited to: (i) a full
access date of 2001, (ii) market price scenarios of 2.5 cents/kWh, 3.0 cents/kWh
and 3.5 cents/kWh; and (iii) price escalation of two percent per year. (See PART
II, ITEM 7.- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - OVERVIEW - Restructuring the Electric Utility Industry"
in the 1997 Form 10-K.) The Company advised the NMPUC that the results of the
ECOM model estimates for stranded generation costs are highly sensitive to
various assumptions, requiring a true-up mechanism to adjust any estimate after
the fact.
Hearings were held before the NMPUC on April 20 and 21, 1998. The Company is
unable to predict the ultimate outcome of this proceeding but still believes
that a pilot program designed as part of the framework for overall industry
restructuring under legislative direction will have the most value for an
effective transition to full retail access.
13
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Supreme Court Decision on Optional Services
On March 18, 1998, the Supreme Court issued its decision on the Company's appeal
of the NMPUC's orders which had denied the Company's proposed tariffs for
certain electric and gas optional services. The Supreme Court ruled that the
NMPUC was within its authority in determining that the optional services could
potentially be conducted through a non-regulated subsidiary and found no
infringement on management prerogatives. It held that, because the optional
services were of the nature of utility service, the NMPUC had the power to
disapprove the offering of such optional services by the gas and electric
divisions. The Company has filed a motion for rehearing in the Supreme Court
asking the Supreme Court to reverse the NMPUC's decision. Action on the motion
for rehearing is expected shortly. The Supreme Court decision did not address
the legality of operations of the Company's Energy Services Business Unit which
has been conducting its operations as a division of the Company. The Company has
concluded that the best approach at this time is to treat the Supreme Court's
decision as providing the NMPUC with authority to require the Energy Services
Business Unit to be operated only as a separate subsidiary. The Company believes
that success in its non-core businesses is imperative if the Company is to
continue to be successful in the anticipated deregulated market environment. A
favorable decision by the NMPUC in Case 2620, an application filed in 1994 to
create three separate subsidiaries, would allow the Company to continue the
Energy Services Business Unit activities through those subsidiaries. The Company
will be filing with the NMPUC in the near future regarding these Energy Services
Business Unit activities, pending a decision in Case 2620.
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. Words such as "estimates," "expects," "anticipates," "plans,"
"believes," "projects," and similar expressions identify forward-looking
statements. 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 costs; (iv) the ability of the Company to
successfully compete outside its traditional regulated market; (v) regional
economic conditions, which could affect customer growth; (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; (x) the cost of
debt and equity capital; (xi) weather conditions; and (xii) technical
development in the utility industry.
14
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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.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Republic Savings Bank ("RSB") Litigation
As previously reported, in July 1996, the United States Supreme Court ruled in
the United States v. Winstar Corporation ("Winstar case") 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. Meadows Resources, Inc. ("Meadows"), a wholly owned subsidiary
of the Company, and Republic Holding Company ("RHC"), wholly owned by Meadows,
have pending before the United States Court of Federal Claims a lawsuit filed in
1992, alleging that the government breached similar contractual arrangements to
those at issue in the Winstar case by refusing to recognize supervisory goodwill
and capital credits. The Federal government filed a counterclaim alleging breach
by RHC of its obligation to maintain RSB's net worth and moved to dismiss
Meadows' claim for lack of standing. (See PART I, ITEM 3. - "LEGAL
PROCEEDINGS-OTHER PROCEEDINGS-Republic Savings Bank ("RSB") Litigation" in the
1997 Form 10-K.)
RSB filed a motion for partial summary judgment on the issue of liability under
its breach of contract claim based on the United States Supreme Court's decision
in the Winstar case. The Federal government filed a cross motion for summary
judgment and opposed RSB's motion. On December 22, 1997, the judge entered an
opinion, addressing eleven issues common to the question of governmental
liability in a number of cases including the RSB case, ruling in favor of the
plaintiffs on all issues and severely critical of the government's litigation
tactics. The judge ordered the Federal government to show cause within sixty
days as to why the motions for summary judgment on contract liability issues of
RSB and plaintiffs in similar cases should not be granted. The Federal
government timely filed its response to the show cause order and RSB filed its
reply.. Decision on summary judgment is still pending. The court has ordered the
parties to appoint representatives to try and develop a process for settlement
of the cases and has assigned a judge to assist with the process. It is
premature to estimate the amount of recovery, if any, by Meadows and RHC.
Nuclear Decommissioning Trust
On March 31 and April 21, 1998, the Company and the trustee of the Company's
master decommissioning trust filed a civil complaint and an amended complaint,
respectively, against several companies and individuals for the
under-performance of a life insurance program. The program, which was approved
by the NMPUC and set up in a trust in 1987, is a type of corporate owned life
insurance, and is used to fund a portion of the Company's nuclear
decommissioning obligations for its 10.2% interest in PVNGS. In the lawsuit, the
Company asserts various tort, contract and equity theories against the
defendants. The Company is seeking, among other things, damages in an amount
that represents the difference between what the defendants represented that the
life insurance program would achieve and the amount that the Company's experts
currently project that the life insurance program will achieve. The Company is
currently unable to predict the ultimate outcome or amount of recovery, if any.
15
<PAGE>
On April 8, 1998, the Company filed a case before the NMPUC to relieve the
Company of the obligation of investing in the life insurance program. A hearing
date for the Company's request has not been scheduled.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Annual Meeting
At the meeting of shareholders held on April 28, 1998, the shareholders
reelected the following three nominees to serve as directors until the annual
meeting of shareholders in 2001, or until their successors are duly elected and
qualified, as follows:
Votes
Against Broker
Director Votes For or Withheld Abstentions Non-Votes
-------- --------- ----------- ----------- ---------
John T. Ackerman 36,036,016 406,388 * *
Joyce A. Godwin 36,038,580 403,824 * *
Manuel Lujan, Jr. 36,016,689 425,715 * *
As reported in the Definitive 14A Proxy Statement filed March 23, 1998, the name
of each other director whose term of office as director continues after the
meeting is as follows:
Robert G. Armstrong
Laurence H. Lattman
Benjamin F. Montoya
Reynaldo U. Ortiz
Robert M. Price
Paul F. Roth
The approval of the selection by the Company's Board of Directors of Arthur
Andersen LLP as independent auditors for the fiscal year ending December 31,
1998, was voted on, as follows:
Votes
Against Broker
Votes for or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
35,961,751 76,915 403,738 *
*Not applicable or not readily available.
16
<PAGE>
Bondholder Consents
By written consents executed March 11, 1998, the holders of more than 75% of the
outstanding first mortgage bonds under the Company's Mortgage, as supplemented
and amended, approved changes, amendments and alterations in the Mortgage, as
contained in the Fifty-third Supplemental Indenture dated as of March 11, 1998.
The holders of $463,345,000 principal amount of outstanding first mortgage bonds
approved the action, while the holders of $111 million principal amount of
outstanding first mortgage bonds did not vote. The revisions to the Mortgage
allow the Company more flexibility with respect to property releases, as well as
with respect to covenants and administrative requirements under the Mortgage.
(See Item 2. - "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES".)
ITEM 5. OTHER INFORMATION
Cobisa-Person Limited Partnership ("PLP")
As previously reported, in October 1996, the Company entered into a long-term
power purchase contract with the 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
unit will be constructed and operated by the PLP and will be located on the
Company's retired Person Generating Station site located in Albuquerque, New
Mexico. (See PART I, ITEM 1. - "BUSINESS - ELECTRIC OPERATIONS - Sources of
Power" in the 1997 Form 10-K.)
On March 18, 1998, the Company and PLP executed amendments to the power purchase
agreement ("PPA"), site lease and the interconnection agreement, and executed a
new water use lease. The PPA was amended to change the maximum capacity the
Company was obligated to take from 116 MW to 132 MW and to change the commercial
operation date from May 1999 to May 2000. The Company formally notified the
NMPUC of such contract changes on March 23, 1998.
As part of the final order concerning the PLP project, the NMPUC approved a
stipulation between the Company and NMPUC staff to develop and evaluate a
Request for Proposals ("RFP") for 5 MW of solar capacity. (See PART I, ITEM 1. -
"BUSINESS - ELECTRIC OPERATIONS - Sources of Power" in the 1997 Form 10-K.) The
stipulation states that the Company will not be obligated to build a unit or
commit to a power purchase agreement for solar power prior to NMPUC approval of
a full-cost recovery mechanism. Any cost recovery approval must not place the
Company at a competitive disadvantage.
An RFP to purchase power from solar generation resources was issued in January
1998. Seven proposals were received by the Company on March 24, 1998. In
cooperation with the NMPUC staff, the Company has selected two companies to
continue in contract negotiations for this project. The Company expects an NMPUC
decision on or about July 31, 1998. The anticipated in-service date of the solar
facility is May 1999.
17
<PAGE>
The 1997 Gas Rate Case
As previously reported, in October 1997, the Company filed its gas rate case
with the NMPUC pursuant to an NMPUC order issued in February 1997. In its
filing, the Company requested a rate increase of $12.6 million. The NMPUC staff
recommended a rate increase of $2.5 million. The AG, however, recommended a rate
decrease of $4.9 million. Other parties to the rate case recommended certain
adjustments to the Company's proposed rate increase. (See PART II, ITEM 7. -
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OTHER ISSUES FACING THE COMPANY- REGULATORY ISSUES- The 1997 Gas Rate
Case" in the 1997 Form 10-K.)
An uncontested stipulation settling the case was filed with the NMPUC on April
3, 1998, for its approval. A hearing on the stipulation is scheduled for May 13,
1998. If approved, there would be no significant change in the Company's overall
revenue levels. However, the stipulation provides for a restructuring of
residential rates, including a decrease in the monthly access fee from $14.56 to
$9.00 with an offsetting increase in the variable rate for gas consumption.
Working groups would be established to address key issues related to
transportation service and rate design. The stipulation also establishes a
mechanism for the recovery of certain costs incurred by the Company in
settlement of past gas supply contracts. Recovery of these costs would be
partially offset by revenues stemming from off-system gas sales. The Company
anticipates a final order from the NMPUC on the stipulation during the second
quarter of 1998.
Should the stipulation be rejected by the NMPUC, a hearing of the full litigated
case would be scheduled for the near future. The Company is currently unable to
predict the ultimate outcome of this case.
Proposed Rulemaking
As previously reported, in February 1998, the NMPUC issued a notice of proposed
rulemaking (the "Notice") which, if adopted, would require additional
information to be disclosed on customer bills. The Notice proposed, among other
things, that each electric utility separately state in its bills to customers
the portions of its rates which are attributable to generation, transmission and
distribution functions, respectively. (See PART I, ITEM 1. - " BUSINESS - RATES
AND REGULATION - Proposed Rulemakings" in the 1997 Form 10-K.)
In March 1998, comments were filed by utility companies which are under NMPUC
jurisdiction, including the Company. The utility companies generally maintain
that dissemination of unbundled billing information as proposed in the Notice is
premature, will confuse consumers, and will not provide them with accurate
information. The utility companies also maintain that their existing billing
systems cannot accommodate such a change without spending large amounts of time
and money on a project of this nature. The utility companies, however, offered
alternatives, such as providing bill stuffers to customers in the interim and
conducting workshops or undertaking further study. The Company is currently
unable to predict the final outcome of this proposed rulemaking.
18
<PAGE>
Nuclear Safety Performance Rating on PVNGS
On April 8, 1998, Arizona Public Service Company, the operating agent of PVNGS,
received the latest Systematic Assessment of Licensee Performance ("SALP")
rating from the Nuclear Regulatory Commission on the operations of the PVNGS
units.
SALP reports rate safety performance at nuclear plants in four functional areas:
(i) plant operations; (ii) maintenance; (iii) engineering; and (iv) plant
support. Ratings of category 1, 2, or 3 are assigned, reflecting "superior,"
"good" or "adequate" performance. PVNGS was rated as "superior" in maintenance,
engineering and plant support categories, and was rated as "good" in the area of
plant operations.
Indian Tribes: Air Quality Planning and Management
On April 13, 1998, the Company, in conjunction with Salt River Project, Nevada
Power Company and Tucson Electric Power Company, filed a petition for review of
the United States Environmental Protection Agency ("EPA") final rule, "Indian
Tribes: Air Quality Planning and Management", in the United States Court of
Appeals for the District of Columbia Circuit. The purpose of this petition is to
challenge the final rule, which is based on treatment of tribes as states under
the Clean Air Act (the "Act"), on several grounds. The particular concerns for
the Company include the lack of judicial review provisions for operating
permits, jurisdictional issues and conflict with pre-existing treaties or
binding agreements. In the appeal, the Company's interests as operator and joint
owner of SJGS, owner of other facilities located on reservations located in New
Mexico, and joint owner of Four Corners Generating Station ("Four Corners") are
involved. The Navajo Nation is a tribe which would potentially assert its status
as a state under the Act pursuant to the EPA rule in question. The Company
cannot predict the outcome of this appeal but believes that the Navajo Nation
would not have jurisdiction to regulate SJGS as the plant is not within
reservation boundaries or within Indian country as that term is used in the EPA
rule in question. Similarly, the Company's position is that Four Corners is not
subject to environmental regulation by the tribe under the lease that is in
effect until 2002.
Transmission Rate Case Settlement
As previously reported, in December 1996, a settlement agreement reached by the
Company and firm transmission customers was filed with the Federal Energy
Regulatory Commission ("FERC"). In accordance with the stipulated agreement, the
Company will refund, including interest, approximately $4.0 million to its firm
transmission customers and its firm wholesale transmission service revenues were
reduced by approximately $1.6 million beginning in 1997. (See PART 1, ITEM 1 -
"BUSINESS - RATES AND REGULATION - Electric Rates and Regulation - FERC -
Transmission Rate Case Settlement" in the 1997 Form 10-K.)
On April 21, 1998, FERC approved the settlement with no changes. The Company was
ordered to refund amounts collected in excess of the settlement rates within 30
days.
The Company's ancillary service rates were not settled in this agreement and a
prehearing conference has been set for May 5, 1998, to set a schedule for the
hearing on these rates.
19
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
3.1* Restated Articles of Incorporation of the Company, as amended
through May 10, 1985
3.2* By-laws of Public Service Company of New Mexico With All Amendments
to and including December 5, 1994
4.3 Fifty-third Supplemental Indenture, dated as of March 11, 1998,
supplemental to Indenture of Mortgage and Deed of Trust, dated as of
June 1, 1947, between the Company and The Bank of New York (formerly
Irving Trust Company), as Trustee
4.4 Indenture (for Senior Notes), dated as of March 11, 1998, between
the Company and The Chase Manhattan Bank, as Trustee
4.5 First Supplemental Indenture, dated as of March 11, 1998,
supplemental to Indenture, dated as of March 11, 1998, between the
Company and The Chase Manhattan Bank, as Trustee
4.6 Second Supplemental Indenture, dated as of March 11, 1998,
supplemental to Indenture, dated as of March 11, 1998, between the
Company and The Chase Manhattan Bank, as Trustee
10.72 Revolving Credit Agreement dated as of March 11, 1998 among the
Company, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty
Trust Company of New York, and Chase Securities, Inc., and the
Initial Lenders Named Therein
10.73 Refunding Agreement No. 8A, dated as of December 23, 1997, among the
Company, the Owner Participant Named Therein, State Street Bank and
Trust Company, as Owner Trustee, The Chase Manhattan Bank, as
Indenture Trustee, and First PV Funding Corporation
10.74** Third Restated and Amended Public Service Company of New Mexico
Performance Stock Plan
15.0 Letter Re: Unaudited Interim Financial Information
27 Financial Data Schedule
99.22 1997 Supplemental Indenture, dated as of December 23, 1997, to Trust
Indenture, Mortgage, Security Agreement and Assignment of Rents,
dated as of August 12, 1986, between State Street Bank and Trust, as
Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee
* The Company hereby incorporates the exhibits by reference pursuant to
Exchange Act Rule 12b-32 and Regulation S-K, Section 10, paragraph (d).
** 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.
20
<PAGE>
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW MEXICO
------------------------------------
(Registrant)
Date: May 8, 1998 /s/ Donna M. Burnett
------------------------------------
Donna M. Burnett
Corporate Controller and
Chief Accounting Officer
(Officer duly authorized to
sign this report)
21
<PAGE>
================================================================================
PUBLIC SERVICE COMPANY OF NEW MEXICO
to
THE BANK OF NEW YORK
(formerly Irving Trust Company),
Trustee
--------------
FIFTY-THIRD SUPPLEMENTAL INDENTURE
Dated as of March 11, 1998
(Supplemental to Indenture of Mortgage and Deed of Trust
dated as of June 1, 1947)
Making Provision for Certain Changes to the Indenture of Mortgage
and Deed of Trust With the Consent of Holders of Bonds
The Mortgage of which this instrument forms a part
covers real property, personal property and
chattels.
The above-described Indenture of Mortgage and Deed of Trust
contains after-acquired property provisions
(subject to certain limitations on such provisions as
therein expressed and subject to Article 6 of this
Fifty-third Supplemental Indenture).
================================================================================
63028791.15 Document No. 503
<PAGE>
FIFTY-THIRD SUPPLEMENTAL INDENTURE dated as of March 11, 1998 between
PUBLIC SERVICE COMPANY OF NEW MEXICO, a corporation organized and existing under
the laws of the State of New Mexico, Alvarado Square, Albuquerque, New Mexico
87158 (hereinafter called the "Company"), party of the first part, and THE BANK
OF NEW YORK (formerly Irving Trust Company), a corporation organized and
existing under the laws of the State of New York, One Wall Street, New York, New
York 10286 (hereinafter sometimes called the "Trustee"), as Trustee, party of
the second part.
WHEREAS, the Company did heretofore execute and deliver an Indenture of
Mortgage and Deed of Trust dated as of June 1, 1947 (hereinafter referred to as
the "Original Indenture"), to the Trustee to secure an issue of First Mortgage
Bonds of the Company, issuable in series, and created thereunder an initial
series of bonds, designated as First Mortgage Bonds, 2-7/8% Series due 1977,
none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain First
Supplemental Indenture dated as of January 1, 1948, to the Trustee and created
thereunder a series of bonds designated as First Mortgage Bonds, 3-3/8% Series
due 1978, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Second Supplemental Indenture dated as of December 1, 1948, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 3-3/8%
Series due 1977, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain Third
Supplemental Indenture dated as of December 1, 1950, to the Trustee and created
thereunder a series of bonds designated as First Mortgage Bonds, 3% Series due
1980, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Fourth Supplemental Indenture dated as of March 1, 1952, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 3-3/4%
Series due 1982, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain Fifth
Supplemental Indenture dated as of April 1, 1954, to the Trustee and created
thereunder a series of bonds designated as First Mortgage Bonds, 3-5/8% Series
due 1984, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain Sixth
Supplemental Indenture dated as of July 1, 1955, to the Trustee for the purpose
of further assuring, conveying and confirming unto the Trustee additional
property and also, by different description, certain property which is described
in the Granting Clauses of the Original Indenture, no bonds having been created
or issued thereunder; and
63028791.15 Document No. 503
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Seventh Supplemental Indenture dated as of June 1, 1958, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 4-3/8%
Series due 1988, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Eighth Supplemental Indenture dated as of February 1, 1961, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 4-7/8%
Series due 1991, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain Ninth
Supplemental Indenture dated as of January 1, 1967, to the Trustee for the
purpose of modifying certain provisions of the Original Indenture, no bonds
having been created or issued thereunder; and
WHEREAS, the Company did heretofore execute and deliver a certain Tenth
Supplemental Indenture dated as of May 1, 1967, to the Trustee and created
thereunder a series of bonds designated as First Mortgage Bonds, 5-7/8% Series
due 1997, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Eleventh Supplemental Indenture dated as of April 1, 1969, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 7-1/4%
Series due 1999 (the "1969 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Twelfth Supplemental Indenture dated as of September 15, 1971, to the Trustee
for the purpose of amending the Original Indenture in one respect and for the
purpose of creating thereunder a series of bonds designated as First Mortgage
Bonds, 8-1/8% Series due 2001 (the "1971 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirteenth Supplemental Indenture dated as of June 15, 1972, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 7-1/2%
Series due 2002 (the "1972 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Fourteenth Supplemental Indenture dated as of December 1, 1974 (hereinafter
referred to as the "Fourteenth Supplemental Indenture"), to the Trustee for the
purpose of amending the Original Indenture in certain respects and for the
purpose of further assuring, conveying and confirming unto the Trustee
additional property, no bonds having been created or issued thereunder; and
WHEREAS, the Company did heretofore execute and deliver a certain
Fifteenth Supplemental Indenture dated as of March 15, 1975, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 9-1/8%
Series due 2005 (the "1975 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Sixteenth Supplemental Indenture dated as of April 1, 1976, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1976
Pollution Control Series, none of which bonds is presently outstanding; and
63028791.15 Document No. 503
2
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Seventeenth Supplemental Indenture dated as of June 1, 1977, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 8-1/8%
Series due 2007 (the "1977 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Eighteenth Supplemental Indenture dated as of March 1, 1978, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1978
Pollution Control Series A, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Nineteenth Supplemental Indenture dated as of April 15, 1978, to the Trustee for
the purpose of further assuring, conveying and confirming unto the Trustee
additional property, no bonds having been created or issued thereunder; and
WHEREAS, the Company did heretofore execute and deliver a certain
Twentieth Supplemental Indenture dated as of May 1, 1978, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 9%
Series due 2008 (the "1978 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-first Supplemental Indenture dated as of September 1, 1979, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 1979 Pollution Control Series A, none of which bonds is presently
outstanding hereunder; and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-second Supplemental Indenture dated as of October 1, 1979, to the Trustee
for the purpose of amending the Original Indenture in one respect and for the
purpose of creating thereunder a series of bonds designated as First Mortgage
Bonds, 10-1/8% Series due 2004, none of which bonds is presently outstanding;
and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-third Supplemental Indenture dated as of May 15, 1980, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1980
Pollution Control Series A, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-fourth Supplemental Indenture dated as of September 15, 1980, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 12.95% Series due 1985, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-fifth Supplemental Indenture dated as of October 1, 1981, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
17-1/2% Series due 2011, none of which bonds is presently outstanding; and
63028791.15 Document No. 503
3
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-sixth Supplemental Indenture dated as of November 1, 1982, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
13-1/8% Series due 2012, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-seventh Supplemental Indenture dated as of September 1, 1983, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 12-7/8% Series due 2013, none of which bonds is presently outstanding;
and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-eighth Supplemental Indenture dated as of November 15, 1983, to the
Trustee for the purpose of further assuring, conveying and confirming unto the
Trustee additional property, no bonds having been created or issued thereunder;
and
WHEREAS, the Company did heretofore execute and deliver a certain
Twenty-ninth Supplemental Indenture dated as of December 1, 1983, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
1983 Pollution Control Series A, none of which bonds is presently outstanding;
and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirtieth Supplemental Indenture dated as of August 15, 1984, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 13-1/8%
Series due 1994, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-first Supplemental Indenture dated as of September 15, 1984, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 1984 Pollution Control Series, none of which bonds is presently
outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-second Supplemental Indenture dated as of December 1, 1984, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 1984 Pollution Control Series A, none of which bonds is presently
outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-third Supplemental Indenture dated as of December 15, 1987 (the "33rd
Supplement"), to the Trustee for the purpose of further assuring, conveying and
confirming unto the Trustee additional property, no bonds having been created or
issued thereunder; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-fourth Supplemental Indenture dated as of March 8, 1991, to the Trustee
and created thereunder a series of bonds designated as first Mortgage Bonds,
1991 Series A, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-fifth Supplemental Indenture dated as of March 8, 1991, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
1991 Series B, none of which bonds is presently outstanding; and
63028791.15 Document No. 503
4
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-sixth Supplemental Indenture dated as of March 8, 1991, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
1991 Series C, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-seventh Supplemental Indenture dated as of November 1, 1992 (hereinafter
referred to as the "Thirty-seventh Supplemental Indenture"), to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1992
Pollution Control Series A (the "1992 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-eighth Supplemental Indenture dated as of January 1, 1993 (hereinafter
referred to as the "Thirty-eighth Supplemental Indenture"), to the Trustee and
created thereunder two new series of bonds designated as First Mortgage Bonds,
1993 Pollution Control Series A, and First Mortgage Bonds, 1993 Pollution
Control Series B (collectively, the "First 1993 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Thirty-ninth Supplemental Indenture dated as of August 15, 1993 (hereinafter
referred to as the "Thirty-ninth Supplemental Indenture"), to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1993
Pollution Control Series C (the "Second 1993 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Fortieth Supplemental Indenture dated as of August 15, 1993 (hereinafter
referred to as the "Fortieth Supplemental Indenture"), to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1993
Pollution Control Series D (the "Third 1993 Series"; together with the First
1993 Series and the Second 1993 Series, the "1993 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-first Supplemental Indenture dated as of December 14, 1993, to the Trustee
and created thereunder a series of bonds designated as First Mortgage Bonds,
1993 Series A, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-second Supplemental Indenture dated as of December 14, 1993, to the
Trustee and created thereunder a series of bonds designated as First Mortgage
Bonds, 1993 Series B, none of which bonds is presently outstanding; and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-third Supplemental Indenture dated as of June 7, 1995, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1995
Series A (the "First 1995 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-fourth Supplemental Indenture dated as of June 7, 1995, to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1995
Series B (together with the First 1995 Series, the "1995 Series"); and
63028791.15 Document No. 503
5
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-fifth Supplemental Indenture dated as of December 1, 1996 (hereinafter
referred to as the "Forty-fifth Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1996
Pollution Control Series A and First Mortgage Bonds, 1996 Pollution Control
Series B (collectively, the "First 1996 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-sixth Supplemental Indenture dated as of December 1, 1996 (hereinafter
referred to as the "Forty-sixth Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1996
Pollution Control Series C and First Mortgage Bonds, 1996 Pollution Control
Series D (collectively, the "Second 1996 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-seventh Supplemental Indenture dated as of December 1, 1996 (hereinafter
referred to as the "Forty-seventh Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1996
Pollution Control Series E and First Mortgage Bonds, 1996 Pollution Control
Series F (collectively, the "Third 1996 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-eighth Supplemental Indenture dated as of December 1, 1996 (hereinafter
referred to as the "Forty-eighth Supplemental Indenture"), to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1996
Pollution Control Series G (the "Fourth 1996 Series"; together with the First
1996 Series, the Second 1996 Series and the Third 1996 Series, the "1996
Series");
WHEREAS, the Company did heretofore execute and deliver a certain
Forty-ninth Supplemental Indenture dated as of February 1, 1997 (hereinafter
referred to as the "Forty-ninth Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1997
Pollution Control Series A and First Mortgage Bonds, 1997 Pollution Control
Series B (collectively, the "First 1997 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Fiftieth Supplemental Indenture dated as of February 1, 1997 (hereinafter
referred to as the "Fiftieth Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1997
Pollution Control Series C and First Mortgage Bonds, 1997 Pollution Control
Series D (collectively, the "Second 1997 Series"); and
WHEREAS, the Company did heretofore execute and deliver a certain
Fifty-first Supplemental Indenture dated as of February 1, 1997 (hereinafter
referred to as the "Fifty-first Supplemental Indenture"), to the Trustee and
created thereunder two series of bonds designated as First Mortgage Bonds, 1997
Pollution Control Series E and First Mortgage Bonds, 1997 Pollution Control
Series F (collectively, the "Third 1997 Series"); and
63028791.15 Document No. 503
6
<PAGE>
WHEREAS, the Company did heretofore execute and deliver a certain
Fifty-second Supplemental Indenture dated as of February 1, 1997 (hereinafter
referred to as the "Fifty-second Supplemental Indenture"), to the Trustee and
created thereunder a series of bonds designated as First Mortgage Bonds, 1997
Pollution Control Series G (the "Fourth 1997 Series"; together with the First
1997 Series, the Second 1997 Series and the Third 1997 Series, the "1997
Series"); and
WHEREAS, on March 11, 1998, all bonds of the 1995 Series were
surrendered by the Company to the Trustee for cancellation; none of the bonds of
the 1995 Series is presently outstanding; and
WHEREAS, on March 11, 1998, (i) the Company deposited with the Trustee
in accordance with the provisions of the Original Indenture cash in the amount
necessary for the redemption of all bonds of the following series: the 1969
Series, the 1971 Series, the 1972 Series, the 1975 Series, the 1977 Series and
the 1978 Series (collectively, the "Defeased Series"), and (ii) notice of
redemption of the Defeased Series was given as in Article 5 of the Original
Indenture provided; none of the bonds of the Defeased Series is presently
outstanding; and
WHEREAS, on March 11, 1998, after giving effect to such surrender,
deposit and giving of notice, the aggregate principal amount of bonds of each
series presently outstanding (the "Presently Outstanding Series") is as follows:
Principal Amount
Series Outstanding
------ ----------------
1992 Series $ 37,300,000
First 1993 Series (Series A) 26,000,000
First 1993 Series (Series B) 20,000,000
Second 1993 Series 100,000,000
Third 1993 Series 36,000,000
First 1996 Series (Series A) 17,712,379
First 1996 Series (Series B) 5,287,621
Second 1996 Series (Series C) 30,838,793
Second 1996 Series (Series D) 9,206,207
Third 1996 Series (Series E) 28,493,828
Third 1996 Series (Series F) 8,506,172
Fourth 1996 Series (Series G) 65,000,000
First 1997 Series (Series A) 24,000,000
First 1997 Series (Series B) 16,000,000
Second 1997 Series (Series C) 22,200,000
Second 1997 Series (Series D) 14,800,000
Third 1997 Series (Series E) 13,800,000
Third 1997 Series (Series F) 9,200,000
Fourth 1997 Series (Series G) 90,000,000
------------
$574,345,000; and
============
63028791.15 Document No. 503
7
<PAGE>
WHEREAS, all bonds of the Presently Outstanding Series have been
pledged in good faith by the Company as specified in the indentures supplemental
to the Original Indenture creating such series; and
WHEREAS, the pledgee of all of the bonds of the Presently Outstanding
Series (the "Pledgee") is not an affiliate of the Company or of any other
obligor on the bonds; and
WHEREAS, the Company desires to change, alter and amend the Original
Indenture (as heretofore supplemented and amended) in certain respects; and to
that end the Company desires to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided; and
WHEREAS, it is provided in Article 15 of the Original Indenture that
the Company and the Trustee, with the consent of the holders of at least 75% in
aggregate principal amount of the bonds at any time outstanding, may enter into
an indenture supplemental thereto for the purpose of changing or altering in any
manner any of the provisions of the Original Indenture subject to certain
limitations specified in said Article 15; and
WHEREAS, the Pledgee has, as to all Presently Outstanding Series
(aggregating $574,345,000 in principal amount) other than the First 1993 Series
($46,000,000 in principal amount) and the Fourth 1996 Series ($65,000,000 in
principal amount) (all bonds of the Presently Outstanding Series other than
bonds of the First 1993 Series and bonds of the Fourth 1996 Series are
hereinafter collectively called the "Consenting Bonds"; the Consenting Bonds
aggregating $463,345,000 in principal amount), consented in writing (the
"Written Consent"), in the manner provided in Article 15 of the Original
Indenture, to the execution and delivery of this Fifty-third Supplemental
Indenture and the changes, alterations and amendments to the Original Indenture
(as heretofore supplemented and amended) made by this Fifty-third Supplemental
Indenture, and the Board of Directors has, by resolution, duly authorized and
directed the execution and delivery of this Fifty-third Supplemental Indenture;
AND WHEREAS, all conditions and requirements necessary to make this
Fifty-third Supplemental Indenture a valid, legal and binding instrument in
accordance with its terms have been done and performed, and the execution and
delivery of this Fifty-third Supplemental Indenture have been in all respects
duly authorized;
NOW, THEREFORE, THIS FIFTY-THIRD SUPPLEMENTAL INDENTURE WITNESSETH:
That Public Service Company of New Mexico, in consideration of the premises and
of One Dollar ($1.00) to it duly paid by the Trustee at or before the ensealing
and delivery of these presents, the receipt whereof is hereby acknowledged, for
itself and its successors, does hereby covenant and agree to and with the
Trustee and its successors in the trust under the Original Indenture, for the
benefit of those who shall hold the bonds, or any of them, to be issued
hereunder and thereunder, as hereinafter provided, as follows:
8
<PAGE>
ARTICLE 1.
CHANGES TO ARTICLES 1 AND 3.
SECTION 1.01. Anything in Section 1.03(g) of the Original Indenture to
the contrary notwithstanding, an engineer may also be a limited liability
company, a limited liability partnership, a limited partnership or any other
firm or person.
SECTION 1.02. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, the Company shall no longer be entitled to apply to the
Trustee for the authentication and delivery of bonds under the Indenture,
whether upon the basis of (i) property additions included in a computation of
net property additions (Section 3.04), (ii) bonds theretofore authenticated and
delivered under the Indenture that shall have been paid, retired, redeemed,
cancelled or surrendered to the Trustee for cancellation, or for the payment,
retirement or redemption of which moneys in the necessary amount shall have been
deposited with, or shall then be held, by the Trustee (Section 3.07), (iii) cash
(Section 3.08) or (iv) prior lien bonds (Section 3.11).
ARTICLE 2.
CHANGES TO ARTICLES 4 AND 6.
SECTION 2.01. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, the following Sections of Article 4 of the Original
Indenture (as heretofore amended and supplemented) are hereby deleted in their
entirety and shall no longer have any force or effect as covenants of the
Company: Sections 4.07, 4.10, 4.11, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21 and 4.22.
SECTION 2.02. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, (i) the dollar amount in Section 4.06 of the Original
Indenture (as heretofore amended) is increased from $500,000 to $25,000,000, and
(ii) the requirement for an annual certificate described in the concluding
sentence of the first paragraph of such Section 4.06 is deleted.
SECTION 2.03. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, the following new Section 4.25 is added to the Original
Indenture:
"Section 4.25. The Company covenants and agrees that (i) it
will request releases from the lien of this Indenture pursuant to
Section 8.14 only if it shall, not later than the effectiveness of such
releases, have subjected to the operation and lien of this Indenture
property as would be included in the definition of property additions
contained in Section 1.05 which has a fair value to the Company at
least equal to the fair value of the property the release of which is
being requested, and (ii) any property so to be subjected to the
operation and lien of this Indenture shall not be subject to a mortgage
or other lien (except permitted encumbrances) prior to the lien of this
Indenture to secure bonds or other evidences of indebtedness of any
person."
9
<PAGE>
SECTION 2.04. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, Section 6.04(d) of the Original Indenture is amended to
eliminate therefrom any requirement that any report be filed by the Trustee with
the Securities and Exchange Commission.
ARTICLE 3.
CHANGES TO ARTICLE 8.
SECTION 3.01. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, Section 8.03 is changed to (i) increase the percentage
in clause (ii)(a) of Section 8.03 from sixty per centum (60%) to one hundred per
centum (100%) and (ii) delete therefrom clause (ii) (b) in its entirety.
SECTION 3.02. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, Section 8.04 is changed to increase the dollar amount
therein specified from $25,000 to $5,000,000.
SECTION 3.03. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, Section 8.11 is changed as follows:
(A) subdivision (1) of Section 8.11 is changed to (i) decrease
the percentage amount in clause (a) of such subdivision from 166% to
100%, (ii) delete in their entirety clauses (b) and (c) of , and the
proviso to, such subdivision and (iii) add a new clause (b): "and/or
(b) in an amount equal to the cost or fair value to the Company
(whichever is less) of property additions then being subjected to the
operation and lien of this Indenture by an indenture supplemental
hereto";
(B) the third paragraph of Section 8.11 is changed to (i)
include a reference to subdivision (1)(b) in addition to the reference
to subdivision (1)(a) and (ii) amend sub-paragraph (a) thereof in its
entirety to read as follows: "(a) an engineer's certificate specifying
the property additions either (i) purchased, constructed or otherwise
acquired by the Company subsequent to the receipt by the Trustee of the
trust monies being withdrawn or (ii) then being subjected to the
operation and lien of this Indenture; and containing the statements
required by paragraphs (a) through (h) of subdivision (3)(B) of Section
3.06 (with such omissions and variations as may be appropriate by
reason of the fact that the withdrawal of trust moneys under this
Section 8.11 rather than the authentication and delivery of bonds is
being applied for;";
(C) the fourth paragraph of Section 8.11 (pertaining to
former subdivisions (1)(b) and (c) of Section 8.11) is deleted in its
entirety; and
(D) the sixth paragraph of Section 8.11 (pertaining to the
purchase or redemption of bonds by the Trustee) is deleted therefrom.
10
<PAGE>
SECTION 3.04. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, the following new Section 8.14 is added to the Original
Indenture:
"SECTION 8.14. The Trustee shall, whenever from time
to time requested by the Company, and without requiring compliance
with any of the provisions of Section 8.03 of this Indenture,
release from the lien of this Indenture any or all of the
mortgaged property; such release to be made upon receipt by the
Trustee of:
(A) A written request of the Company for the release of
any property, describing the same in reasonable detail.
(B) A certificate of the Company stating that no default
as defined in Section 9.01 has happened and is continuing.
(C) An engineer's certificate, made and dated not more
than sixty (60) days prior to the time of such application,
setting forth in substance as follows:
(1) the then fair value, in the opinion of the
signer, of the property to be released;
(2) the then fair value to the Company, in the
opinion of the signer, of any property as would be
included in the definition of property additions
contained in Section 1.05 which will be subjected
to the operation and lien of this Indenture in lieu
of the property being released, which fair value
shall be at least equal to the then fair value
specified in the foregoing clause (1) (if an
independent engineer's certificate as provided for
in the following sub-paragraph (D) is required, the
then fair value of the property to be released
shall be deemed to be as stated in such engineer's
certificate or such independent engineer's
certificate, whichever is the higher); and
(3) that such release is, in the opinion of the
signer, desirable in the conduct of the business of
the Company and will not impair the security under
this Indenture in contravention of the provisions
hereof.
(A) In case, as shown by said engineer's certificate, the
fair value of the property to be released and of all other
property or securities released since the commencement of the
then current calendar year, as set forth in the certificate
required pursuant to sub-paragraph (C), and any similar
certificates pursuant to any other sections of this Article 8
or any sections of any indenture supplemental hereto, is ten
per centum (10%) or more of the aggregate principal amount of
bonds at the time outstanding, unless the fair value of the
property to be released, as set forth in the certificate, is
less than $25,000 or less than one per centum (1%) of the
aggregate principal amount of bonds at the time outstanding,
an independent engineer's certificate, made and dated not more
than sixty (60) days prior to the date of such application,
stating that the signer has examined the written request
furnished to the Trustee; stating as to such property the then
11
<PAGE>
fair value thereof in the opinion of the signer, together with
the signer's report thereon which shall contain a brief
statement of the conditions governing the signer's
determination of such fair value and stating that in the
opinion of the signer such release will not impair the
security under this Indenture in contravention of the
provisions hereof; and in case, as shown by said engineer's
certificate, the consideration for the property to be released
includes additional property of a fair value to the Company of
not less than $25,000 and not less than one per centum (1%) of
the aggregate principal amount of the bonds at the time
outstanding, and if such property has, within six months prior
to the date of acquisition thereof by the Company, been used
or operated by a person or persons other than the Company in a
business similar to that in which it has been or is to be used
or operated by the Company, a similar independent engineer's
certificate with respect to the then fair value to the Company
of such additional property shall also be furnished to the
Trustee.
(B) The indentures supplemental hereto, mortgages, deeds,
conveyances, assignments, transfers and instruments of further
assurance, if any, specified in clause (2) of the opinion of
counsel referred to in the following sub-paragraph (F).
(C) An opinion of counsel:
(1) stating that the instruments which have been
or are therewith delivered to the Trustee conform
to the requirements of this Indenture and
constitute sufficient authority under this
Indenture for the Trustee to execute and deliver
the release requested, and that the property may be
released from the operation of the lien of this
Indenture pursuant to the provisions of this
Section 8.14; and
(2) specifying the indentures supplemental hereto,
mortgages, deeds, conveyances, assignments,
transfers and instruments of further assurance
which will be sufficient to subject to the direct
lien of this Indenture the property described in
clause (2) of the above-mentioned engineer's
certificate.
(A) A certificate of the Company and an opinion of
counsel as to compliance with conditions precedent."
12
<PAGE>
SECTION 3.05. The following new Section 8.15 is added to the Original
Indenture:
"SECTION 8.15. (a) The Trustee shall, whenever from time
to time requested by the Company, and without requiring compliance
with any provisions of Section 8.03 of this Indenture or requiring
the substitution of any property or securities therefor, release
from the lien of this Indenture any or all of the mortgaged
property which, on the date of such release: (I) is (i) properly
chargeable to any of the following accounts established under the
Uniform System of Accounts Prescribed for Public Utilities and
Licensees subject to the provisions of the Federal Power Act as
promulgated by the Federal Energy Regulatory Commission (18 C.F.R.
Part 101) (the "System of Accounts"): 303, 370, 389, 390, 391,
392, 394, 396, 397, 398 and 399, or (ii) property which is carried
on the Company's books of account as "nonutility property" or
"plant held for future use", in each case as more fully detailed
in Annex A to the Fifty-third Supplemental Indenture dated as of
March 11, 1998, which supplemental indenture is an indenture
supplemental hereto (the "Fifty-third Supplemental Indenture");
and (II) is not property which is included or intended to be
included under the lien of the Indenture pursuant to Section 5.04
of the Fifty-third Supplemental Indenture; such release to be made
by the Trustee upon receipt of:
(A) A written request of the Company for the release
of any property, describing the same in reasonable detail and
stating, as applicable, the account under the System of
Accounts to which the same is properly chargeable or that the
property is "nonutility property" or "plant held for future
use" as detailed in Annex A to the Fifty-third Supplemental
Indenture.
(B) A certificate of the Company stating that no
default as defined in Section 9.01 has happened and is
continuing.
(C) An engineer's certificate, made and dated not
more than sixty (60) days prior to the time of such
application, setting forth in substance as follows:
(1) the then fair value, in the opinion of
the signer, of the property to be released (which
fair value, when taken together with the fair value
of any other property theretofore released under this
Section 8.15, as set forth in the applicable
certificate required pursuant to this sub-paragraph
(1), shall not exceed $56,000,000); and
(2) that such release will not, in the
opinion of the signer, impair the security under this
Indenture in contravention of the provisions hereof.
13
<PAGE>
(D) An opinion of counsel stating that the
instruments that have been or are therewith delivered to the
Trustee conform to the requirements of this Indenture and
constitute sufficient authority under this Indenture for the
Trustee to execute and deliver the release requested, and that
the property may be released from the operation of the lien of
this Indenture pursuant to the provisions of this Section
8.15.
(E) A certificate of the Company and an opinion of
counsel as to compliance with conditions precedent.
(b) The provisions of this Section 8.15 shall cease to be
applicable whenever the aggregate principal amount of bonds then
outstanding shall be less than $574,345,000."
ARTICLE 4.
CHANGES TO ARTICLE 12.
SECTION 4.01. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, anything in Article 12 of the Original Indenture to the
contrary notwithstanding, consolidations, mergers, conveyances, transfers and
leases may involve any person having appropriate authority to carry on the
business or businesses in question and/or who is lawfully entitled to acquire or
lease and operate the mortgaged property.
SECTION 4.02. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, Section 12.01 is changed by deleting therefrom in their
entirety the ultimate and the antepenultimate provisos thereto.
ARTICLE 5.
RELEASE OF MORTGAGED PROPERTY
UPON CANCELLATION OF ALL CONSENTING BONDS
SECTION 5.01. Upon surrender for cancellation to the Trustee of all
Consenting Bonds, unless a default as defined in Section 9.01 of the Original
Indenture shall have occurred and be continuing, the Trustee shall, whenever
from time to time requested by the Company, and without requiring compliance
with any of the provisions of Section 8.03 of the Original Indenture, release
from the lien of the Indenture any or all of the mortgaged property other than
the Palo Verde Property (as defined in Section 5.02 of this Fifty-third
Supplemental Indenture); such release or releases to be made upon receipt by the
Trustee of:
(1) A written request of the Company for the release
of any property, either describing the same in reasonable
detail or describing the same in sufficient detail as may (in
the opinion of counsel) be appropriate in order to effectuate
the release;
(2) A certificate of the Company stating that no
default as defined in Section 9.01 of the Original Indenture
has happened and is continuing;
14
<PAGE>
(3) An independent engineer's certificate, made and
dated not more than sixty (60) days prior to the date of such
application, stating that the signer has examined the written
request furnished to the Trustee; stating as to such property
the then fair value thereof in the opinion of the signer,
together with the signer's report thereon which shall contain
a brief statement of the conditions governing the signer's
determination of such fair value and stating that in the
opinion of the signer such release will not impair the
security under this Indenture in contravention of the
provisions hereof; and in case, as shown by said engineer's
certificate, the consideration for the property to be released
includes additional property of a fair value to the Company of
not less than $25,000 and not less than one per centum (1%) of
the aggregate principal amount of the bonds at the time
outstanding, and if such property has, within six months prior
to the date of acquisition thereof by the Company, been used
or operated by a person or persons other than the Company in a
business similar to that in which it has been or is to be used
or operated by the Company, a similar independent engineer's
certificate with respect to the then fair value to the Company
of such additional property shall also be furnished to the
Trustee; provided, however, in the event that the Securities
and Exchange Commission shall have ordered that the Company be
relieved of its obligation under section 314(d) of the Trust
Indenture Act of 1939 to deliver an independent engineer's
certificate as contemplated by said Act in connection with a
release pursuant to this Section 5.01, the Company need not
deliver an independent engineer's certificate pursuant to this
sub-paragraph (3) but shall instead only deliver the
independent engineer's certificate referenced in sub-paragraph
(4) of this Section 5.01;
(4) if, as contemplated by sub-paragraph (3) of this
Section 5.01, the independent engineer's certificate in such
sub-paragraph need not be delivered, an independent engineer's
certificate, made and dated not more than (60) days prior to
the date of such application, stating that the signer has
examined the written request to the Trustee; stating as to the
property remaining subject to the lien of the Indenture after
giving effect to the release or releases for which such
application is being made, the then fair value thereof in the
opinion of the signer, together with the signer's report
thereon which shall contain a brief statement of the
conditions governing the signer's determination of such fair
value; and
(5) A certificate of the Company and an opinion of
counsel as to compliance with conditions precedent.
SECTION 5.02. "Palo Verde Property" shall mean (i) the PVNGS Land
located in Maricopa County, Arizona (the PVNGS Plant Site, the Hassayampa
Pumping Station and Effluent Pipeline and Miscellaneous Real Property Interests)
previously described in the 33rd Supplement (recorded January 11, 1988 as
Instrument No. 88-011327), but only to the extent of the Company's undivided
ownership interest therein (and not of its undivided leasehold interest
therein), including equitable ownership (including the Company's interests in
ATI Title Agency of Arizona Trust No. 530 as described in the Fifteenth Amended
15
<PAGE>
Affidavit of Trustee Trust No. 530 described below), and (ii) PVNGS and Related
Improvements previously described in the 33rd Supplement, but only to the extent
of the Company's undivided ownership interest therein (and not its undivided
leasehold interest therein); provided, however, that Palo Verde Property (1)
shall not include the transmission facilities and oil and diesel fuel
inventories excluded from the 33rd Supplement pursuant to exclusions 1.III,
1.IV, 2.III, 2.IV, 3.III and 3.IV under the caption "B. PVNGS and Related
Improvements" in the 33rd Supplement, (2) shall include the Company's ownership
interests in Units 1 and 2 of PVNGS and common facilities of PVNGS as described
in (i) Deed dated as of March 9, 1998 from State Street Bank and Trust Company
(successor to The First National Bank of Boston), a Massachusetts trust company,
in its capacity as Owner Trustee (the "PV1 Trustee") under that certain Trust
Agreement dated as of December 16, 1985 (as amended as of April 30 and September
2, 1992) with the Company (assignee of Burnham Leasing Corporation, the
beneficiary originally named in said Trust Agreement), to the Company, recorded
on March 10, 1998 in the records of Maricopa County, Arizona as Instrument No.
98-0185678; (ii) Deed and Bill of Sale dated as of March 9, 1998 between the PV1
Trustee and the Company, recorded on March 10, 1998 in the Records of Maricopa
County, Arizona as Instrument No. 98-0185679; (iii) Deed dated as of March 9,
1998 from State Street Bank and Trust Company (successor to The First National
Bank of Boston), a Massachusetts trust company, in its capacity as Owner Trustee
(the "PV2 Trustee") under that certain Trust Agreement dated as of August 12,
1986 (as amended as of April 30 and September 2, 1992) with the Company
(assignee of Burnham Leasing Corporation, the beneficiary originally named in
said Trust Agreement), to the Company, recorded on March 10, 1998 in the records
of Maricopa County, Arizona as Instrument No. 98-0185682; (iv) Deed and Bill of
Sale dated as of March 9, 1998 between the PV2 Trustee and the Company, recorded
on March 10, 1998 in the Records of Maricopa County, Arizona as Instrument No.
98-0185683; and (v) Fifteenth Amended Affidavit of Trustee Trust No. 530 dated
March 10, 1998 of ATI Title Agency of Arizona, Inc., as Trustee of its Trust No.
530, as recorded on March 10, 1998 in the Records of Maricopa County, Arizona,
as Instrument No. 98-0185686 (the documents referenced in subclauses (i) through
(v) of this clause (2) being hereinafter referred to as the "Transfer
Documents"); (3) shall not include the Company's 9.6% undivided ownership
interest in the ANPP High Voltage Switchyard (as defined in the 33rd
Supplement), and (4) shall not include the Company's undivided ownership
interests in any other transmission facilities located wholly or partially on
any of the real property constituting the PVNGS Land pursuant to the 33rd
Supplement.
SECTION 5.03. If any property released from the Lien of this Indenture
as provided in Section 5.01 of this Fifty-third Supplemental Indenture or
otherwise in the Original Indenture (as changed by this Fifty-third Supplemental
Indenture) shall continue to be owned by the Company after such release, this
Indenture shall not become or be, or be required to become or be, a lien upon
such property or any improvement, extension or addition to such property or
renewals, replacements or substitutions of or for any part or parts of such
property unless the Company shall execute and deliver to the Trustee an
indenture supplemental to the Indenture, in recordable form, containing a grant,
conveyance, transfer and mortgage thereof.
SECTION 5.04. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, this Indenture shall not become or be, or be required
to become or be, a lien upon any property acquired by the Company on or after
such effectiveness except that the lien of this Indenture shall include any
improvement, extension or addition to any property not released from the lien of
this Indenture pursuant to Section 5.01 of this Fifty-third Supplemental
Indenture and any renewals, replacements or substitutions of or for any part or
parts of such property.
16
<PAGE>
SECTION 5.05. Effective upon surrender for cancellation to the Trustee
of all Consenting Bonds, anything in the Original Indenture (as heretofore
amended) to the contrary notwithstanding, the Trustee shall forthwith, and
without necessity for an application, request, officers' certificate or opinion
of counsel (except as may otherwise be required by the Trust Indenture Act of
1939, as amended), release any and all trust moneys (as defined in Section 8.11
of the Original Indenture) then held by the Mortgage Trustee.
ARTICLE 6.
CHANGES TO GRANTING CLAUSES
SECTION 6.01. The Company confirms, acknowledges and agrees that, upon
execution, delivery and recordation of the Transfer Documents, the Company's
right, title and interest in and to the property transferred, assigned, granted
and conveyed by the Transfer Documents became subject to the lien of the
Indenture by virtue of the after-acquired property clauses thereof.
SECTION 6.02. Effective upon (i) surrender for cancellation to the
Trustee of all Consenting Bonds, and (ii) the execution, delivery and
recordation of the Transfer Documents, all provisions of the Original Indenture
as heretofore supplemented and amended subjecting to the lien of the Indenture
after-acquired property (including, but without limitation, the full paragraph
on page 69 of the Original Indenture and the first two paragraphs on page 70 of
the Original Indenture, immediately preceding the caption "Excepted Property")
are hereby deleted in their entirety and shall cease to have any force or effect
whatsoever, subject, however, to the provisions of Section 5.04 of this
Fifty-third Supplemental Indenture.
ARTICLE 7.
THE TRUSTEE.
The Trustee accepts the trusts created by this Fifty-third Supplemental
Indenture upon the terms and conditions in the Original Indenture and in this
Fifty-third Supplemental Indenture set forth. Each and every term and condition
contained in Article 13 of the Original Indenture shall apply to this
Fifty-third Supplemental Indenture with the same force and effect as if the same
were herein set forth in full, with such omissions, variations and modifications
thereof as may be appropriate to make the same conform to this Fifty-third
Supplemental Indenture.
The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same.
To the extent permitted by Sections 13.02 and 13.03 of the Original
Indenture, and without limitation of Section 13.06 of the Original Indenture,
the Trustee may rely and shall be fully protected in acting upon any resolution,
certificate, opinion, notice, request, consent, order, appraisal, report, bond,
or other paper or document believed by the Trustee to be genuine and to have
been signed or presented by the proper party or parties.
17
<PAGE>
ARTICLE 8.
MISCELLANEOUS PROVISIONS.
SECTION 8.01. The Original Indenture is in all respects, ratified and
confirmed, and the Original Indenture, this Fifty-third Supplemental Indenture
and all other indentures supplemental to the Original Indenture shall be read,
taken and construed as one and the same instrument. Except as provided by this
Fifty-third Supplemental Indenture, neither the execution of this Fifty-third
Supplemental Indenture nor anything herein contained shall be construed to
impair the lien of the Original Indenture, as supplemented, on any of the
property subject thereto, and such lien shall remain in full force and effect as
security for all bonds now outstanding under the Original Indenture, the
Thirty-seventh Supplemental Indenture, the Thirty-eighth Supplemental Indenture,
the Thirty-ninth Supplemental Indenture, the Fortieth Supplemental Indenture,
the Forty-fifth Supplemental Indenture, the Forty-sixth Supplemental Indenture,
the Forty-seventh Supplemental Indenture, the Forty-eighth Supplemental
Indenture, the Forty-ninth Supplemental Indenture, the Fiftieth Supplemental
Indenture, the Fifty-first Supplemental Indenture or the Fifty-second
Supplemental Indenture. Except as provided by this Fifty-third Supplemental
Indenture, all covenants and provisions of the Original Indenture shall continue
in full force and effect, and this Fifty-third Supplemental Indenture shall form
part of the Original Indenture. All terms defined in Article 1 of the Original
Indenture, as amended, shall, for all purposes of this Fifty-third Supplemental
Indenture, have the meanings in said Article 1 specified, unless the context
otherwise requires.
SECTION 8.02. This Fifty-third Supplemental Indenture may be
simultaneously executed in any number of counterparts, and all such counterparts
executed and delivered, each as an original, shall constitute but one and the
same instrument.
SECTION 8.03. In connection with any release of mortgaged property
effected under the provisions of the Original Indenture (as heretofore modified)
or the Fifty-third Supplemental Indenture, upon request of the Company, the
Trustee shall execute and deliver such additional releases, termination
statements and other instruments as shall be necessary or appropriate, in the
opinion of the Company, to evidence the release of such mortgage property from
the lien of the Indenture.
18
<PAGE>
IN WITNESS WHEREOF, Public Service Company of New Mexico, party of the
first part, has caused its corporate name to be hereunto affixed and this
instrument to be signed by its President or a Vice President or its Treasurer or
an Assistant Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary for and in its behalf; and
The Bank of New York, party of the second part, in evidence of its acceptance of
the trust hereby created, has caused its corporate name to be hereunto affixed,
and this instrument to be signed by its President or a Vice President or an
Assistant Vice President and its corporate seal to be hereunto affixed and
attested by one of its Assistant Secretaries or Assistant Treasurers for and in
its behalf, all as of the day and year first above written.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By
--------------------------------
Name:
Title:
Attest:
- -------------------------
Secretary
(Corporate Seal)
THE BANK OF NEW YORK,
as Trustee
By
--------------------------------
Van K. Brown
Assistant Vice President
Attest:
- -------------------------
Assistant Treasurer
(Corporate Seal)
19
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On this 11th day of March, 1998, before me appeared Van K. Brown, to me
personally known, who, being by me duly sworn, did depose and say that he is an
Assistant Vice President of THE BANK OF NEW YORK, and that the seal affixed to
said instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors, and said Van K. Brown acknowledged said instrument to be
the free act and deed of said corporation.
-------------------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
This instrument was acknowledged before me on March 11, 1998, by Van K.
Brown as an Assistant Vice President of THE BANK OF NEW YORK.
-------------------------------
Notary Public
<PAGE>
ANNEX A
to Fifty-third
Supplemental Indenture
I. NONUTILITY PROPERTY
A. E.W.B.U (ELECTRIC)
LAND: JOHN STREET SUB SITE
LAND: MONROE SUB SITE
LAND: RIBBLE WATER RIGHTS
LAND: PERSON STATION-SCHWARTZMAN
B. G.C.N.M (GAS)
LAND IN BELEN (LOT)
C. ENERGY SERVICES:
L.V. ASYLUM PROPERTY (LAND)
HAGGERMAN LAND & FENCE
SANTA FE PUMP STATION SITE: COLLEGE ST.
SANTA FE PUMP STATION SITE: OLD DEMPSEY
SANTA FE TWO MILE RESERVOIR SITE TRACTS
SANTA FE FILTER PLANT SITE 72 ACRES
CORPORATE-ALLOCATED UTILITY PLANT
LAND: PINO LA CIENAGE-WATER RIGHTS
LAND: HAGGERMAN-WATER RIGHTS
ENERGY SERVICE-G/L ONLY
WATER SERVICES PROPERTY-G/L ONLY
D. CORPORATE;
LAND: HQ
LAND:AS
LEASED FLOOR: HQ
LEASED FLOOR: AS(FBI)
II. PLANT HELD FOR FUTURE USE
F. E.W.B.U (ELECTRIC):
LAND: NORTH ALBUQUERQUE ACRES
LAND: RIO RANCHO ENCHANTED HILLS SUB.
LAND: SANTA FE OLD SERVICE CENTER
LAND: PRAGER STATION
LAND: PERSON STATION
63028791.15 Document No. 503
- --------------------------------------------------------------------------------
PUBLIC SERVICE COMPANY OF NEW MEXICO
to
THE CHASE MANHATTAN BANK
Trustee
--------------
INDENTURE
Dated as of March 11, 1998
--------------
- --------------------------------------------------------------------------------
(For Senior Notes)
63035864.02
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01 Definitions.............................................1
"Act," ......................................................2
"Affiliate" ......................................................2
"Authenticating Agent...................................................2
"Board of Directors.....................................................2
"Board Resolution ......................................................2
"Business Day," ......................................................2
"Capitalization" ......................................................2
"Commission" ......................................................2
"Company" ......................................................3
"Company Request ......................................................3
"Corporate Trust Office.................................................3
"Corporation" ......................................................3
"Covenant Defeasance....................................................3
"Debt" ......................................................3
"Defaulted Interest.....................................................3
"Defeasance" ......................................................3
"Depositary" ......................................................3
"Event of Default ......................................................3
"Exchange Act" ......................................................3
"Expiration Date ......................................................3
"Global Note" ......................................................3
"Holder" ......................................................3
"Indenture" ......................................................3
"independent," ......................................................4
"interest," ......................................................4
"Interest Payment Date..................................................4
"Investment Company Act.................................................4
"Maturity," ......................................................4
"Net Tangible Assets....................................................4
"Notes" ......................................................4
"Note Register" ......................................................4
"Notice of Default......................................................4
"Officers' Certificate..................................................4
"Operating Property.....................................................5
"Opinion of Counsel.....................................................5
"Original Issue Discount Note...........................................5
"Outstanding," ......................................................5
"Paying Agent" ......................................................6
"Person" ......................................................6
"Place of Payment ......................................................6
<PAGE>
"Predecessor Note ......................................................6
"Redemption Date ......................................................6
"Redemption Price ......................................................6
"Regular Record Date....................................................6
"Responsible Officer....................................................6
"Sale and Lease-Back Transaction........................................6
"Securities Act" ......................................................7
"Special Record Date....................................................7
"Stated Maturity ......................................................7
"Subsidiary" ......................................................7
"Trust Indenture Act....................................................7
"Trustee" ......................................................7
"U.S. Government Obligation.............................................7
"Value" ......................................................7
"Vice President ......................................................7
Section 1.02 Compliance Certificates and Opinions....................8
Section 1.03 Form of Documents Delivered to Trustee..................8
Section 1.04 Acts of Holders; Record Dates...........................9
Section 1.05 Notices, Etc., to Trustee and Company..................11
Section 1.06 Notice to Holders; Waiver..............................12
Section 1.07 Conflict with Trust Indenture Act......................12
Section 1.08 Effect of Headings and Table of Contents...............13
Section 1.09 Successors and Assigns.................................13
Section 1.10 Separability Clause....................................13
Section 1.11 Benefits of Indenture..................................13
Section 1.12 Governing Law..........................................13
Section 1.13 Legal Holidays.........................................13
ARTICLE II
NOTE FORMS
Section 2.01 Forms Generally........................................14
Section 2.02 Form of Face of Note...................................14
Section 2.03 Form of Reverse of Note................................16
Section 2.04 Form of Legend for Global Notes........................20
Section 2.05 Form of Trustee's Certificate of Authentication........20
ARTICLE III
THE NOTES
Section 3.01 Amount Unlimited; Issuable in Series...................21
Section 3.02 Denominations..........................................23
Section 3.03 Execution, Authentication, Delivery and Dating.........24
Section 3.04 Temporary Notes........................................25
Section 3.05 Registration, Registration of Transfer and Exchange....26
Section 3.06 Mutilated, Destroyed, Lost and Stolen Notes............27
Section 3.07 Payment of Interest; Interest Rights Preserved.........28
Section 3.08 Persons Deemed Owners..................................29
Section 3.09 Cancellation...........................................29
<PAGE>
Section 3.10 Computation of Interest................................30
Section 3.11 CUSIP Numbers..........................................30
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture................30
Section 4.02 Application of Trust Money.............................31
ARTICLE V
REMEDIES
Section 5.01 Events of Default......................................32
Section 5.02 Acceleration of Maturity; Rescission and Annulment.....33
Section 5.03 Collection of Indebtedness and Suits for
Enforcement by Trustee.................................34
Section 5.04 Trustee May File Proofs of Claim.......................34
Section 5.05 Trustee May Enforce Claims Without Possession of
Notes..................................................35
Section 5.06 Application of Money Collected.........................35
Section 5.07 Limitation on Suits....................................36
Section 5.08 Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................36
Section 5.09 Restoration of Rights and Remedies.....................37
Section 5.10 Rights and Remedies Cumulative.........................37
Section 5.11 Delay or Omission Not Waiver...........................37
Section 5.12 Control by Holders.....................................37
Section 5.13 Waiver of Past Defaults................................38
Section 5.14 Undertaking for Costs..................................38
Section 5.15 Waiver of Stay or Extension Laws.......................39
ARTICLE VI
THE TRUSTEE
Section 6.01 Certain Duties and Responsibilities....................39
Section 6.02 Notice of Defaults.....................................40
Section 6.03 Certain Rights of Trustee..............................40
Section 6.04 Not Responsible for Recitals or Issuance of Notes......41
Section 6.05 May Hold Notes.........................................42
Section 6.06 Money Held in Trust....................................42
Section 6.07 Compensation and Reimbursement.........................42
Section 6.08 Conflicting Interests..................................43
Section 6.09 Corporate Trustee Required; Eligibility................43
Section 6.10 Resignation and Removal; Appointment of Successor......43
Section 6.11 Acceptance of Appointment by Successor.................45
Section 6.12 Merger, Conversion, Consolidation or Succession
to Business............................................46
Section 6.13 Preferential Collection of Claims Against Company......46
Section 6.14 Appointment of Authenticating Agent....................47
<PAGE>
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01 Company to Furnish Trustee Names and Addresses
of Holders............................................49
Section 7.02 Preservation of Information; Communications
to Holders............................................49
Section 7.03 Reports by Trustee....................................49
Section 7.04 Reports by Company....................................50
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.01 Company May Consolidate, Etc., Only on Certain
Terms.................................................50
Section 8.02 Successor Substituted.................................51
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Holders....51
Section 9.02 Supplemental Indentures With Consent of Holders.......53
Section 9.03 Execution of Supplemental Indentures..................54
Section 9.04 Effect of Supplemental Indentures.....................54
Section 9.05 Conformity with Trust Indenture Act...................54
Section 9.06 Reference in Notes to Supplemental Indentures.........54
ARTICLE X
COVENANTS
Section 10.01 Payment of Principal, Premium and Interest............55
Section 10.02 Maintenance of Office or Agency.......................55
Section 10.03 Money for Notes Payments to Be Held in Trust..........55
Section 10.04 Statement by Officers as to Default...................56
Section 10.05 Restrictions on Liens.................................56
Section 10.06 Corporate Existence...................................58
Section 10.07 Maintenance of Properties.............................58
Section 10.08 Waiver of Certain Covenants...........................59
Section 10.09 Calculation of Original Issue Discount................59
Section 10.10 Restrictions on Sale and Lease-Back Transactions......59
ARTICLE XI
REDEMPTION OF NOTES
Section 11.01 Applicability of Article..............................60
Section 11.02 Election to Redeem; Notice to Trustee.................60
Section 11.03 Selection by Trustee of Notes to be Redeemed..........60
Section 11.04 Notice of Redemption..................................61
Section 11.05 Deposit of Redemption Price...........................62
Section 11.06 Notes Payable on Redemption Date......................62
Section 11.07 Notes Redeemed in Part................................62
<PAGE>
ARTICLE XII
SINKING FUNDS
Section 12.01 Applicability of Article..............................63
Section 12.02 Satisfaction of Sinking Fund Payments with Notes......63
Section 12.03 Redemption of Notes for Sinking Fund..................63
ARTICLE XIII
DEFEASANCE AND COVENANT DEFEASANCE
Section 13.01 Company's Option to Effect Defeasance or Covenant
Defeasance............................................64
Section 13.02 Defeasance and Discharge..............................64
Section 13.03 Covenant Defeasance...................................64
Section 13.04 Conditions to Defeasance or Covenant Defeasance.......65
Section 13.05 Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions.........67
Section 13.06 Reinstatement.........................................67
ARTICLE XIV
Meetings of Holders; Action Without Meeting
Section 14.01 Purposes for Which Meetings May Be Called.............67
Section 14.02 Call, Notice and Place of Meetings....................68
Section 14.03 Persons Entitled to Vote at Meetings..................68
Section 14.04 Quorum: Action........................................68
Section 14.05 Attendance at Meetings; Determination of Voting
Rights; Conduct and Adjournment of Meetings...........69
Section 14.06 Counting Votes and Recording Action of Meetings.......70
Section 14.07 Action Without Meeting................................71
ARTICLE XV
Immunity of INCORPORATORS, Stockholders, Officers and Directors
Section 15.01 Liability Solely Corporate............................71
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
<PAGE>
INDENTURE dated as of March 11, 1998 between PUBLIC SERVICE
COMPANY OF NEW MEXICO, a corporation duly organized and existing under the laws
of the State of New Mexico (herein called the "Company"), having its principal
office at Alvarado Square, Albuquerque, New Mexico 87158, and THE CHASE
MANHATTAN BANK, a New York banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its senior notes
(herein called the "Notes"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes or of series
thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01 Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted in the United States of America;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture; and
<PAGE>
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified
in Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Notes
of one or more series.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary or Associate Secretary of the Company to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by
law, regulation or executive order to close, except as may be otherwise
specified for any series of the Notes, as contemplated by Section 3.01.
"Capitalization" means the total of all the following items appearing
on, or included in, the consolidated balance sheet of the Company: (i)
liabilities for indebtedness maturing more than twelve (12) months from the date
of determination; and (ii) common stock, preferred stock, premium on capital
stock, capital surplus, capital in excess of par value, and retained earnings
(however the foregoing may be designated), less, to the extent not otherwise
deducted, the cost of shares of capital stock of the Company held in its
treasury. Subject to the foregoing, Capitalization shall be determined in
accordance with generally accepted accounting principles and practices
applicable to the type of business in which the Company is engaged and that are
approved by independent accountants regularly retained by the Company, and may
be determined as of a date not more than (sixty) 60 days prior to the happening
of an event for which such determination is being made.
"Commissiion" means the Securities and Exchange Commission, from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
2
<PAGE>
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter "
Company" shall mean such successor Person.
"Company or "Company Order" means a written request or order signed in
the name of the Company by its Chairman of the Board, its Vice Chairman of the
Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Corporate Trust Office" means the office of the Trustee in The City of
New York, at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at 450 West
33rd Street - 15th Floor, New York, New York 10001.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 13.03.
"Debt" means any outstanding debt for money borrowed evidenced by
notes, debentures, bonds, or other securities.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Defeasance" has the meaning specified in Section 13.02.
"Depositary" means, with respect to Notes of any series issuable in
whole or in part in the form of one or more Global Notes, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Notes as contemplated by Section 3.01.
"Event of Fault" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.04.
"Global Note" means a Note that evidences all or part of the Notes of
any series and bears the legend set forth in or contemplated by Section 2.04 (or
such legend as may be specified as contemplated by Section 3.01 for such Notes).
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Notes established as contemplated by Section 3.01.
3
<PAGE>
"independent," when applied to any accountant shall mean such a Person
who is in fact independent, selected by the Company and approved by the Trustee
in the exercise of reasonable care.
"interest" when used with respect to an Original Issue Discount Note
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Note, means the
Stated Maturity of an installment of interest on such Note.
"Investment Company Act" means the Investment Company Act of 1940 and
any statute successor thereto, in each case as amended from time to time.
"Maturity," when used with respect to any Note, means the date on which
the principal of such Note or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Net Tangible Assets" means the amount shown as total assets on the
consolidated balance sheet of the Company, less the following: (i) intangible
assets including, but without limitation, such items as goodwill, trademarks,
trade names, patents, and unamortized debt discount and expense and other
regulatory assets carried as an asset on the Company's consolidated balance
sheet; and (ii) appropriate adjustments, if any, on account of minority
interests. Net Tangible Assets shall be determined in accordance with generally
accepted accounting principles and practices applicable to the type of business
in which the Company is engaged and that are approved by the independent
accountants regularly retained by the Company, and may be determined as of a
date not more than sixty (60) days prior to the happening of the event for which
such determination is being made.
"Notes" has the meaning stated in the first recital of this Indenture
and more particularly means any Notes authenticated and delivered under this
Indenture.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 3.05.
"Notice of Default" means a written notice of the kind specified in
Section 5.01(4).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee; provided,
that an Assistant Treasurer or Assistant Secretary need not be an officer of the
Company under the Company's Bylaws. One of the officers signing an Officers'
Certificate given pursuant to Section 10.04 shall be the principal executive,
financial or accounting officer of the Company.
4
<PAGE>
"Operating Property" means (i) any interest in real property owned by
the Company and (ii) any asset owned by the Company that is depreciable in
accordance with generally accepted accounting principles.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, or other counsel who shall be acceptable to the
Trustee.
"Original Issue Discount Note" means any Note which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
"Outstanding," when used with respect to Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(1) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; provided that, if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(3) Notes as to which Defeasance has been effected pursuant to
Section 13.02; and
(4) Notes which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid obligations of the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Outstanding Notes have given, made or taken
any request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date or whether or not a quorum is present at a
meeting of Holders, (A) the principal amount of an Original Issue Discount Note
which shall be deemed to be Outstanding shall be the amount of the principal
thereof which would be due and payable as of such date upon acceleration of the
Maturity thereof to such date pursuant to Section 5.02, (B) if, as of such date,
the principal amount payable at the Stated Maturity of a Note is not
determinable, the principal amount of such Note which shall be deemed to be
Outstanding shall be the amount as specified or determined as contemplated by
Section 3.01, (C) the principal amount of a Note denominated in one or more
foreign currencies or currency units which shall be deemed to be Outstanding
shall be the U.S. dollar equivalent, determined as of such date in the manner
provided as contemplated by Section 3.01, of the principal amount of such Note
(or, in the case of a Note described in Clause (A) or (B) above, of the amount
determined as provided in such Clause), and (D) Notes owned by the Company or
any other obligor upon the Notes or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver or other
action, or upon such determination as to the presence of a quorum, only Notes
which the Trustee actually knows to be so owned shall be so disregarded. Notes
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Company or
any other obligor upon the Notes or any Affiliate of the Company or of such
other obligor.
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"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Notes on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency, instrumentality
or political subdivision thereof.
"Place of Payment," when used with respect to the Notes of any series,
means the place or places where the principal of and any premium and interest on
the Notes of that series are payable as specified as contemplated by Section
3.01.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Notes of any series means the date specified for that purpose as
contemplated by Section 3.01.
"Responsible Officer," when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its corporate trust
matters.
"Sale and Lease-Bank Traction" means any arrangement with any Person
providing for the leasing to the Company of any Operating Property (except for
temporary leases for a term, including any renewal thereof, of not more than
forty-eight (48) months), which Operating Property has been or is to be sold or
transferred by the Company to such Person; provided, however, Sale and
Lease-back Transaction shall not include any arrangement (i) first entered into
prior to the date specified in the first paragraph of this instrument and (ii)
involving the exchange of any Operating Property for any property subject to an
arrangement specified in the preceding clause (i).
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"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity," when used with respect to any Note or any
installment of principal thereof or interest thereon, means the date specified
in such Note as the fixed date on which the principal of such Note or such
installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Notes pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Notes of any series
shall mean the Trustee with respect to Notes of that series.
"U.S. Government Obligation" has the meaning specified in Section
13.04.
"Value" means, with respect to a Sale and Lease-Back Transaction, as of
any particular time, the amount equal to the greater of (1) the net proceeds to
the Company from the sale or transfer of the property leased pursuant to such
Sale and Lease-Back Transaction or (2) the net book value of such property, as
determined in accordance with generally accepted accounting principles by the
Company at the time of entering into such Sale and Lease-Back Transaction, in
either case multiplied by a fraction, the numerator of which shall be equal to
the number of full years of the term of the lease that is part of such Sale and
Lease-Back Transaction remaining at the time of determination and the
denominator of which shall be equal to the number of full years of such term,
without regard, in any case, to any renewal or extension options contained in
such lease.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
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Section 1.02 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer or an Assistant
Treasurer or Assistant Secretary of the Company, or an Opinion of Counsel, if to
be given by counsel, and shall comply with the requirements of the Trust
Indenture Act and any other requirements set forth in this Indenture.
Every certificate (other than certificates pursuant to Section
314(a)(4) of the Trust Indenture Act) or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or an Assistant
Treasurer or Assistant Secretary of the Company, stating that the information
with respect to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
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Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever, subsequent to the receipt by the Trustee of any
Board Resolution, Officers' Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Anything in this Indenture to the contrary notwithstanding, if any
such corrective document or instrument indicates that action has been taken by
or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the action
so taken shall not be invalidated or otherwise rendered ineffective but shall be
and remain in full force and effect, except to the extent that such action was a
result or willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Notes issues under the authority of such defective document
or instrument shall nevertheless be the valid obligations of the Company
entitled to the benefits of this Indenture equally and ratably with all other
Outstanding Notes, except as aforesaid.
Section 1.04 Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; or, alternatively, may be embodied in and
evidenced by the record of Holders voting in favor thereof, either in person or
by proxies duly appointed in writing, at any meeting of Holders duly called and
held in accordance with the provisions of Article Fourteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
of record are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
and so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section. The record of
any meeting of Holders shall be proved in the manner provided in Section 14.06.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his or her authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
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The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.
The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes of any series entitled to give,
make or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given, made
or taken by Holders of Notes of such series, provided that the Company may not
set a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Notes of the relevant series on
such record date, and no other Holders, shall be entitled to take or revoke the
relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes of the relevant series on
the date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Trustee in writing and to each Holder of Notes of the
relevant series in the manner set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.02, (iii) any request to institute
proceedings referred to in Section 5.07(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Notes of such series. If any record
date is set pursuant to this paragraph, the Holders of Outstanding Notes of such
series on such record date, and no other Holders, shall be entitled to join in
such notice, declaration, request or direction or to revoke the same, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Notes of such series on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Notes of the relevant series on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder of Notes of the
relevant series in the manner set forth in Section 1.06.
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<PAGE>
With respect to any record date set pursuant to this Section,
the party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Notes of the relevant series in the manner set
forth in Section 1.06, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the party hereto which set such record date shall be deemed to
have initially designated the 180th day after such record date as the Expiration
Date with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 1.05 Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, election, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with, the Trustee by any Holder or by the Company, or the Company by the Trustee
or by any Holder, shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and delivered personally to
an officer or other responsible employee of the addressee, or transmitted by
facsimile transmission or other direct written electronic means to such
telephone number or other electronic communications address as the parties
hereto shall from time to time designate, or transmitted by first-class mail,
charges prepaid, to the applicable address set opposite such party's name below
or to such other address as either party hereto may from time to time designate:
If to the Trustee, to:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001-2697
Attention: Global Trust Services
Telephone: (212) 946-8595
Telecopy: (212) 946-8160
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If to the Company, to:
Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Attention: Treasurer
Telephone:
Telecopy:
Any communication contemplated herein shall be deemed to have
been made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission or other direct written
electronic means, on the date of transmission, and if transmitted by first-class
mail, on the date of receipt.
Section 1.06 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his or her address as it appears in the
Note Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 1.07 Conflict with Trust Indenture Act.
This Indenture shall be construed as if this Indenture were
qualified under the Trust Indenture Act and governed thereby. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act which would be required under such Act to be a part of and govern this
Indenture if this Indenture were so qualified, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act which may be so modified or excluded if this
Indenture were so qualified, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
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Section 1.08 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 1.09 Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 1.11 Benefits of Indenture.
The trusts created by this Indenture are for the equal and
proportionate benefit and security of the Holders without any priority of any
Note over any other Note. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12 Governing Law.
This Indenture and the Notes shall be governed by and
construed in accordance with the law of the State of New York, without regard to
conflicts of laws principles thereof.
Section 1.13 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Note shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Notes (other than a provision of any Note of any series or in the Board
Resolution or Officers' Certificate which establishes the terms of such Notes
which specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, and, if such payment is made or duly provided for on such Business
Day, then no interest shall accrue on the amount so payable for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to such Business Day.
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ARTICLE II
NOTE FORMS
Section 2.01 Forms Generally.
The Notes of each series shall be in substantially the form
set forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution
thereof. If the form of Notes of any series is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.03 for the authentication and delivery of such Notes.
The definitive Notes shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Notes, as evidenced by their
execution of such Notes.
Section 2.02 Form of Face of Note.
[Insert any legend required by the Internal Revenue Code and
the regulations thereunder.]
PUBLIC SERVICE COMPANY OF NEW MEXICO
...............................
No. .............. $ .............
CUSIP No. ____________
Public Service Company of New Mexico, a corporation duly
organized and existing under the laws of New Mexico (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
..................., or registered assigns, the principal sum of
........................................... Dollars on ................... [if
the Note is to bear interest prior to Maturity, insert - , and to pay interest
thereon from .................... or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semi-annually on
............ and ............ in each year, commencing .............., at the
rate of ....% per annum, until the principal hereof is paid or made available
for payment [if applicable, insert - , provided that any principal and premium,
and any such installment of interest, which is overdue shall bear interest at
the rate of .....% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment, and such interest shall be payable on
demand]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the ............ or ............ (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Notes of this series not less than 10 days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes of this series may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture].
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[If the Note is not to bear interest prior to Maturity, insert
- - The principal of this Note shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ....% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the rate
of ......% per annum (to the extent that the payment of such interest on
interest shall be legally enforceable), from the date of such demand until the
amount so demanded is paid or made available for payment.
Interest on any overdue interest shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if
applicable, insert - any such] interest on this Note will be made at the office
or agency of the Company maintained for that purpose in ............, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts [if applicable, insert - ;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Note Register].
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By..............................
Attest:
................................
Section 2.03 Form of Reverse of Note.
This Note is one of a duly authorized issue of senior notes of
the Company (herein called the "Notes"), issued and to be issued in one or more
series under an Indenture, dated as of [____________], 1998 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. This Note is
one of the series designated on the face hereof [if applicable, insert - ,
limited in aggregate principal amount to $...........].
[If applicable, insert - The Notes of this series are subject
to redemption upon not less than 30 days' notice by mail, [if applicable, insert
- - (1) on ........... in any year commencing with the year ........... and ending
with the year ........... through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and (2)] at any
time [if applicable, insert - on or after .........., 19..], as a whole or in
part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [if applicable,
insert - on or before ..............., ...%, and if redeemed] during the
12-month period beginning ............. of the years indicated,
Year Redemption Year Redemption
Price Price
---- ---------- ---- ----------
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and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption [if applicable, insert - (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Notes, or
one or more Predecessor Notes, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert - The Notes of this series are subject
to redemption upon not less than 30 days' notice by mail, (1) on ............ in
any year commencing with the year .... and ending with the year .........
through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert - on or after ............], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning ............ of the years indicated,
Redemption Price Redemption Price For
For Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
---- ------------------- ----------------------
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Notes, or one or more Predecessor
Notes, of record at the close of business on the relevant Record Dates referred
to on the face hereof, all as provided in the Indenture.]
[If applicable, insert - Notwithstanding the foregoing, the
Company may not, prior to ............., redeem any Notes of this series as
contemplated by [if applicable, insert - Clause (2) of] the preceding paragraph
as a part of, or in anticipation of, any refunding operation by the application,
directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of
less than .....% per annum.]
[If applicable, insert - The sinking fund for this series
provides for the redemption on ............ in each year beginning with the year
....... and ending with the year ...... of [if applicable, insert - not less
than $.......... ("mandatory sinking fund") and not more than] $.........
aggregate principal amount of Notes of this series. Notes of this series
acquired or redeemed by the Company otherwise than through [if applicable,
insert - mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert - mandatory] sinking fund payments otherwise required to be
made [if applicable, insert - , in the inverse order in which they become due].]
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[If the Note is subject to redemption of any kind, insert - In
the event of redemption of this Note in part only, a new Note or Notes of this
series and of like tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert - The Indenture contains provisions for
defeasance at any time of [the entire indebtedness of this Note] [or] [certain
restrictive covenants and Events of Default with respect to this Note] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Note is not an Original Issue Discount Note, insert -
If an Event of Default with respect to Notes of this series shall occur and be
continuing, the principal of the Notes of this series may be declared due and
payable in the manner and with the effect provided in the Indenture.]
[If the Note is an Original Issue Discount Note, insert - If
an Event of Default with respect to Notes of this series shall occur and be
continuing, an amount of principal of the Notes of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.
Such amount shall be equal to [insert formula for determining the amount]. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal, premium and interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
premium and interest, if any, on the Notes of this series shall terminate.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the
Notes at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Notes of each series at the time Outstanding, on behalf of the
Holders of all Notes of such series, to waive compliance by the Company with
certain provisions of the Indenture and to waive certain past defaults under the
Indenture and their consequences, provided, however, that if any such past
default affects more than one series of Notes, the Holders of a majority in
aggregate principal amount of the Outstanding Notes of all such series,
considered as one class, shall have the right to waive such past default, and
not the Holders of the Notes of any one such series. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
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As provided in and subject to the provisions of the Indenture,
the Holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than a majority in aggregate
principal amount of the Notes of all series at the time Outstanding in respect
of which an Event of Default shall have occurred and be continuing shall have
made written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, and
the Trustee shall not have received from the Holders of a majority in principal
amount of Notes of all series at the time Outstanding in respect of which an
Event of Default shall have occurred and be continuing a direction inconsistent
with such request, and shall have failed to institute any such proceeding, for
60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Note for
the enforcement of any payment of principal hereof or any premium or interest
hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Note are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series and of
like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes of this series are issuable only in registered form
without coupons in denominations of $....... and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Notes of this series are exchangeable for a like aggregate principal
amount of Notes of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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Section 2.04 Form of Legend for Global Notes.
Unless otherwise specified as contemplated by Section 3.01 for
the Notes evidenced thereby, every Global Note authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN
PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
Section 2.05 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
CERTIFICATION OF AUTHENTICATION
This is one of the Notes of the series designated therein
referred to in the within-mentioned Indenture.
Dated: [__________________________],
As Trustee
By.........................................
Authorized Officer
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ARTICLE III
THE NOTES
Section 3.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is unlimited. The Notes may be
issued in one or more series. There shall be established by or pursuant to a
Board Resolution and, subject to Section 3.03, set forth, or determined in the
manner provided, in an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Notes of any series,
(1) the title of the Notes of the series (which shall
distinguish the Notes of the series from Notes of any other series);
(2) any limit upon the aggregate principal amount of the Notes
of the series which may be authenticated and delivered under this Indenture
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes of the series pursuant to Section
3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Notes which, pursuant to
Section 3.03, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person or Persons (without specific identification) to
whom interest on Notes of such series shall be payable on any Interest Payment
Date, if other than the Persons in whose names such Notes (or one or more
Predecessor Notes) are registered at the close of business on the Regular Record
Date for such interest;
(4) the date or dates on which the principal of the Notes of
such series is payable or any formula or other method or other means by which
such date or dates shall be determined, by reference to an index or other fact
or event ascertainable outside of this Indenture or otherwise (without regard to
any provisions for redemption, prepayment, acceleration, purchase or extension);
(5) the rate or rates at which the Notes of such series shall
bear interest, if any (including the rate or rates at which overdue principal
shall bear interest, if different from the rate or rates at which such Notes
shall bear interest prior to Maturity, and, if applicable, the rate or rates at
which overdue premium or interest shall bear interest, if any), or any formula
or other method or other means by which such rate or rates shall be determined,
by reference to an index or other fact or event ascertainable outside of this
Indenture or otherwise; the date or dates from which such interest shall accrue;
and the Interest Payment Dates on which such interest shall be payable and the
Regular Record Date, if any, for the interest payable on such Notes on any
Interest Payment Date;
(6) the right, if any, to extend the interest payment periods
and the duration of such extension;
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(7) the place or places at which or methods by which (A) the
principal of and premium, if any, and interest, if any, on Notes of such series
shall be payable, (B) registration of transfer of Notes of such series may be
effected, (C) exchanges of Notes of such series may be effected and (D) notices
and demands to or upon the Company in respect of the Notes of such series and
this Indenture may be served; the Note Registrar and any Paying Agent or Agents
for such series; and if such is the case, that the principal of such Notes shall
be payable without presentment or surrender thereof;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which any Notes of the series may be
redeemed, in whole or in part, at the option of the Company and, if other than
by a Board Resolution, the manner in which any election by the Company to redeem
the Notes shall be evidenced;
(9) the obligation, if any, of the Company to redeem or
purchase any Notes of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which any Notes of the series shall be redeemed or purchased, in whole or in
part, pursuant to such obligation;
(10) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Notes of the series shall be
issuable;
(11) if the amount of principal of or any premium or interest
on any Notes of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be determined to
the extent not established pursuant to clause (5) of this paragraph;
(12) if other than the currency of the United States of
America, the currency, currencies or currency units in which the principal of or
any premium or interest on any Notes of the series shall be payable and the
manner of determining the equivalent thereof in the currency of the United
States of America for any purpose, including for purposes of the definition of
"Outstanding" in Section 1.01;
(13) if the principal of or any premium or interest on any
Notes of the series is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than that or
those in which such Notes are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Notes as to which such election is made shall be payable, the periods within
which and the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount shall be determined);
(14) if other than the entire principal amount thereof, the
portion of the principal amount of any Notes of the series which shall be
payable upon declaration of acceleration of the Maturity thereof pursuant to
Section 5.02;
(15) if the principal amount payable at the Stated Maturity of
any Notes of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Notes as of any such date for any purpose thereunder or
hereunder, including the principal amount thereof which shall be due and payable
upon any Maturity other than the Stated Maturity or which shall be deemed to be
Outstanding as of any date prior to the Stated Maturity (or, in any such case,
the manner in which such amount deemed to be the principal amount shall be
determined);
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(16) if applicable, that the Notes of the series, in whole or
any specified part, shall be defeasible pursuant to Section 13.02 or Section
13.03 or both such Sections and, if other than by a Board Resolution, the manner
in which any election by the Company to defease such Notes shall be evidenced;
(17) if applicable, that any Notes of the series shall be
issuable in whole or in part in the form of one or more Global Notes and, in
such case, the respective Depositaries for such Global Notes, the form of any
legend or legends which shall be borne by any such Global Note in addition to or
in lieu of that set forth in Section 2.04 and any circumstances in addition to
or in lieu of those set forth in Clause (2) of the last paragraph of Section
3.05 in which any such Global Note may be exchanged in whole or in part for
Notes registered, and any transfer of such Global Note in whole or in part may
be registered, in the name or names of Persons other than the Depositary for
such Global Note or a nominee thereof;
(18) any addition to or change in the Events of Default which
applies to any Notes of the series and any change in the right of the Trustee or
the requisite Holders of such Notes to declare the principal amount thereof due
and payable pursuant to Section 5.02;
(19) any addition to or change in the covenants set forth in
Article X which applies to Notes of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.01(5)).
All Notes of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 3.03) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
Section 3.02 Denominations.
Except as permitted by Section 9.01(4), the Notes of each
series shall be issuable only in fully registered form without coupons and only
in such denominations as shall be specified as contemplated by Section 3.01. In
the absence of any such specified denomination with respect to the Notes of any
series, the Notes of such series shall be issuable in denominations of $1,000
and any integral multiple thereof.
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Section 3.03 Execution, Authentication, Delivery and Dating.
Unless otherwise provided as contemplated by Section 3.01 with
respect to any series of Notes, the Notes shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or one of its Vice Presidents, or by any other officer or employee of
the Company who is authorized by a Board Resolution to execute the Notes on
behalf of the Company, under its corporate seal affixed thereto or reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these individuals on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers or other employees of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices or be so employed prior to the
authentication and delivery of such Notes or did not hold such offices or were
not so employed at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes of any series executed
by the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Notes, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Notes. In
authenticating such Notes, and accepting the additional responsibilities under
this Indenture in relation to such Notes, the Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(A) if the form of such Notes has been established by or
pursuant to Board Resolution or in a supplemental indenture as permitted by
Section 2.01, that such form has been duly authorized by the Company and
established in conformity with the provisions of this Indenture;
(B) if the terms of such Notes have been established by or
pursuant to Board Resolution or in a supplemental indenture as permitted by
Section 3.01, that such terms have been duly authorized by the Company and
established in conformity with the provisions of this Indenture;
(C) that such Notes, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will have been duly issued under the
Indenture and will constitute valid and legally binding obligations of the
Company, entitled to the benefits provided by the Indenture, and enforceable in
accordance with their terms, subject to (a) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles and
(b) the qualification that certain waivers, procedures, remedies, and other
provisions of such Notes and this Indenture may be unenforceable under or
limited by state law; and
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(D) that all consents or approvals of the New Mexico Public
Utility Commission (or any successor agency), the Arizona Corporation Commission
(or any successor agency) and of any federal regulatory agency required in
connection with the Company's execution and delivery of this Indenture or such
series of Notes have been obtained and not withdrawn (except that no statement
need be made with respect to state securities laws or the Federal Power Act).
If such form or terms have been so established, the Trustee
shall not be required to authenticate such Notes if the issue of such Notes
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Notes and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee. Notwithstanding the provisions of
Section 3.01 and of the preceding paragraph, if all Notes of a series are not to
be originally issued at one time, it shall not be necessary to deliver the
Officers' Certificate otherwise required pursuant to Section 3.01 or the Company
Order and Opinion of Counsel otherwise required pursuant to such preceding
paragraph at or prior to the authentication of each Note of such series if such
documents are delivered at or prior to the authentication upon original issuance
of the first Note of such series to be issued.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Note shall have been authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Note to the Trustee for cancellation as provided in Section
3.09, for all purposes of this Indenture such Note shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 3.04 Temporary Notes.
Pending the preparation of definitive Notes of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Notes which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers or other employees of the Company executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes of any series are issued, the Company will
cause definitive Notes of that series to be prepared without unreasonable delay.
After the preparation of definitive Notes of such series, the temporary Notes of
such series shall be exchangeable for definitive Notes of such series upon
surrender of the temporary Notes of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Notes of any
series, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor one or more definitive Notes of the same series, of any
authorized denominations and of like tenor and aggregate principal amount. Until
so exchanged, the temporary Notes of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes of such
series and tenor.
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Section 3.05 Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office or in
any other office or agency of the Company in a Place of Payment being herein
sometimes referred to as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided. Anything herein to the contrary notwithstanding, the Company
may designate one or more of its offices as an office in which a register with
respect to the Notes of one or more series shall be maintained, and the Company
may designate itself the Note Registrar with respect to one or more of such
series; provided, however, that there shall be no more than one Note Register
and one Note Registrar for each series of Notes. The Note Register shall be open
for inspection by the Trustee and the Company at all reasonable times.
Upon surrender for registration of transfer of any Note of a
series at the office or agency of the Company in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes of the same series, of any authorized denominations and of like tenor
and aggregate principal amount.
At the option of the Holder, Notes of any series may be
exchanged for other Notes of the same series, of any authorized denominations
and of like tenor and aggregate principal amount, upon surrender of the Notes to
be exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Notes which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Trustee or
the Note Registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company, the Trustee or the Note
Registrar, as the case may be, duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 3.04, 9.06 or 11.07 not involving any transfer.
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If the Notes of any series (or of any series and specified
tenor) are to be redeemed, the Company shall not be required (A) to issue,
register the transfer of or exchange any Notes of that series (or of that series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of any such Notes selected for redemption and ending at the close of
business on the day of such mailing, or (B) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall
apply only to Global Notes:
(1) Each Global Note authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global Note or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Note shall constitute a single Note for
all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no
Global Note may be exchanged in whole or in part for Notes registered, and no
transfer of a Global Note in whole or in part may be registered, in the name of
any Person other than the Depositary for such Global Note or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Note or (ii) has ceased to be a
clearing agency registered under the Exchange Act, (B) there shall have occurred
and be continuing an Event of Default with respect to such Global Note or (C)
there shall exist such circumstances, if any, in addition to or in lieu of the
foregoing as have been specified for this purpose as contemplated by Section
3.01.
(3) Subject to Clause (2) above, any exchange of a Global Note
for other Notes may be made in whole or in part, and all Notes issued in
exchange for a Global Note or any portion thereof shall be registered in such
names as the Depositary for such Global Note shall direct.
(4) Every Note authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Note or any portion
thereof, whether pursuant to this Section, Section 3.04, 3.06, 9.06 or 11.07 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Note, unless such Note is registered in the name of a Person other than
the Depositary for such Global Note or a nominee thereof.
Section 3.06 Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Note of the same series and of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of the
same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes of that series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.07 Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 3.01
with respect to any series of Notes, interest on any Note which is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Note of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes of such series (or their
respective Predecessor Notes) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Note of such
series and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
given to each Holder of Notes of such series in the manner set forth in Section
1.06, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Notes of such series (or their respective Predecessor Notes) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest on
the Notes of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Notes may be listed, and
upon such notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.08 Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving payment of principal of and any premium and
(subject to Section 3.07) any interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
Section 3.09 Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Notes previously authenticated hereunder which the Company has
not issued and sold, and all Notes so delivered shall be promptly cancelled by
the Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Notes held by the Trustee shall be disposed of as
directed by a Company Order; provided, however, that the Trustee shall not be
required to destroy such cancelled Notes.
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Section 3.10 Computation of Interest.
Except as otherwise specified as contemplated by Section 3.01
for Notes of any series, interest on the Notes of each series shall be computed
on the basis of a 360-day year of twelve 30-day months.
Section 3.11 CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Notes herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A)all Notes theretofore authenticated and delivered
(other than (i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.06 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.03) have been delivered to the Trustee for
cancellation; or
(B)all such Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company, and
the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose of making
the following payment, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Notes, money in an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of Notes which
have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
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(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 6.07, the
obligations of the Company to any Authenticating Agent under Section 6.14 and,
if money shall have been deposited with the Trustee pursuant to subclause (B) of
Clause (1) of this Section, the obligations of the Trustee under Section 4.02
and the last paragraph of Section 10.03 shall survive.
If the Company shall have paid or caused to be paid the
principal of and premium, if any, and interest on any Note, as and when the same
shall have become due and payable or the Company shall have delivered to the
Trustee for cancellation any outstanding Note, such Note shall cease to be
entitled to any lien or benefit under this Indenture.
Section 4.02 Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE V
REMEDIES
Section 5.01 Events of Default.
"Event of Default," wherever used herein with respect to Notes
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest upon any Note of
that series when it becomes due and payable, and continuance of such default for
a period of 60 days; or
(2) default in the payment of the principal of or any premium
on any Note of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Note of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this Indenture
solely for the benefit of series of Notes other than that series), and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of a majority in principal amount of
the Outstanding Notes of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder, unless the Trustee, or the Trustee and Holders of a
principal amount of Notes of such series not less than the principal amount of
Notes the Holders of which gave such notice, as the case may be, shall agree in
writing to an extension of such period prior to its expiration; provided,
however, that the Trustee, or the Trustee and the Holders of such principal
amount of Notes, as the case may be, shall be deemed to have agreed to an
extension of such period if corrective action is initiated by the Company within
such period and is being diligently pursued; or
(5) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition by
one or more persons other than the Company seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable
Federal or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 90 consecutive
days; or
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(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the authorization of such action
by the Board of Directors; or
(7) any other Event of Default provided with respect to Notes
of that series.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Notes of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of a majority in principal amount of the Outstanding
Notes of that series may declare the principal amount of all the Notes of that
series (or, if any Notes of that series are Original Issue Discount Notes, such
portion of the principal amount of such Notes as may be specified by the terms
thereof) to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable; provided, however, that if an Event of Default shall have occurred and
be continuing with respect to more than one series of Notes, the Trustee or the
Holders of not less than a majority in principal amount of the Outstanding Notes
of all such series, considered as one class (and not the Holders of the Notes of
any one of such series), may make such declaration of acceleration.
At any time after such a declaration of acceleration with
respect to Notes of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the related Event of Default and its consequences will be
automatically waived, resulting in an automatic rescission and annulment of the
acceleration of the Notes if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A)all overdue interest on all Notes of that series,
(B)the principal of (and premium, if any, on) any Notes
of that series which have become due otherwise than by such declaration
of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Notes,
(C)to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates prescribed
therefor in such Notes, and
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(D)all amounts due to the Trustee under Section 6.07;
and
(2) any other Event of Default with respect to Notes of that
series, other than the non-payment of the principal of Notes of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
Section 5.03 Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Note
when such interest becomes due and payable and such default continues for a
period of 60 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Note at the Maturity thereof, or
(3) default is made in the deposit of any sinking fund
payment, when and as due by the terms of a Note of that series,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Notes, and, in addition thereto, such further amount as shall be sufficient
to cover any amounts due to the Trustee under Section 6.07.
If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon such Notes,
wherever situated.
If an Event of Default with respect to Notes of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Notes of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 5.04 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or such other obligor or their creditors,
the Trustee (irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
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(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and unpaid in
respect of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts due to the Trustee under Section 6.07)
and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and be a member of a
creditors' or other similar committee.
Section 5.05 Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 5.06 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
or any premium or interest, upon presentation of the Notes in respect of which
or for the benefit of which such monies shall have been collected and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
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FIRST: To the payment of all amounts due the Trustee under
Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Notes in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Notes for principal and any premium and interest, respectively; and
THIRD: To the payment of the balance, if any, to the Company
or any other Person or Persons legally entitled thereto.
Section 5.07 Limitation on Suits.
No Holder of any Note of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Notes of that
series;
(2) the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes of all series in respect of which an
Event of Default shall have occurred and be continuing, considered as one class,
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Notes of all series in respect
of which an Event of Default shall have occurred and be continuing, considered
as one class;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 5.08 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section
3.07) interest on such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
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Section 5.09 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and such Holder shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and such Holder shall continue
as though no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section
3.06, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Notes to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
Section 5.12 Control by Holders.
If an Event of Default shall have occurred and be continuing
in respect of a series of Notes, the Holders of a majority in principal amount
of the Outstanding Notes of such series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Notes of such series; provided, however, that if an Event of Default
shall have occurred and be continuing with respect to more than one series of
Notes, the Holders of a majority in aggregate principal amount of the
Outstanding Notes of all such series, considered as one class, shall have the
right to make such direction, and not the Holders of the Securities of any one
of such series; and provided, further, that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.01, the Trustee
shall have the right to decline to follow any such direction if the Trustee in
good faith shall, by a Responsible Officer or Officers of the Trustee, determine
that the proceeding so directed would involve the Trustee in personal liability.
Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Outstanding
Notes of any series may on behalf of the Holders of all the Notes of such series
waive any past default hereunder with respect to such series and its
consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Note of such series, or
(2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent
of the Holder of each Outstanding Note of such series
affected,
provided, however, that if any such default shall have occurred and be
continuing with respect to more than one such series of Notes, the Holders of a
majority in aggregate principal amount of the Outstanding Notes of all such
series, considered as one class, shall have the right to waive such default, and
not the Holders of the Notes of any one such series.
Upon any such waiver, such default shall cease to exist, and
any and all Events of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
The Company and the Trustee agree, and each Holder of any Note
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in aggregate
principal amount of the Outstanding Notes of all series in respect of which such
suit may be brought, considered as one class, or to any suit instituted by any
Holder for the enforcement of the payment of the principal of or premium, if
any, or interest, if any, on any Note on or after the Stated Maturity or
Maturities expressed in such Note (or, in the case of redemption, on or after
the Redemption Date).
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Section 5.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with
respect to Notes of any series,
(1)the Trustee undertakes to perform, with respect to
Notes of such series, such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2)in the absence of bad faith on its part, the Trustee
may, with respect to Notes of such series, conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Notes of any
series shall have occurred and be continuing, the Trustee shall exercise, with
respect to Notes of such series, such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
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(1)this clause (c) shall not be construed to limit the
effect of clause (a) of this Section;
(2)the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3)the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Notes of any one or more series, as provided herein, relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Notes of such series; and
(4)no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
Section 6.02 Notice of Defaults.
If a default occurs hereunder with respect to Notes of any
series, the Trustee shall give the Holders of Notes of such series notice of
such default known to the Trustee as and to the extent provided by the Trust
Indenture Act; provided, however, that in the case of any default of the
character specified in Section 5.01(4) with respect to Notes of such series, no
such notice to Holders shall be given until at least 75 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Notes of such series.
Section 6.03 Certain Rights of Trustee.
Subject to the provisions of Section 6.01 and to applicable
provisions of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
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(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order, or as
otherwise expressly provided herein, and any resolution of the Board of
Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any Holder pursuant to this Indenture, unless such Holder shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall (subject to
applicable legal requirements) be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) except as otherwise provided in Section 5.01(4), the
Trustee shall not be charged with knowledge of any Event of Default with respect
to the Notes of any series for which it is acting as Trustee unless either (i) a
Responsible Officer of the Trustee shall have actual knowledge of the Event of
Default, or (ii) written notice of such Event of Default shall have been given
to the Trustee by the Company, any other obligor on the Notes or by any Holder
of such Notes.
Section 6.04 Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Notes. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Notes or the proceeds thereof.
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Section 6.05 May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any
Note Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 6.08
and 6.13, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or
such other agent.
Section 6.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on or investment of any money received
by it hereunder except as expressly provided herein or otherwise agreed with,
and for the sole benefit of, the Company.
Section 6.07 Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation
as shall be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless from
and against, any and all loss, damage, claims, liability or expense incurred
without negligence, willful misconduct or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or trusts
hereunder, including liability which the Trustee may incur as a result of
failure to withhold, pay or report any tax, assessment or other governmental
charges and the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the Notes
upon all property and funds held or collected by the Trustee as such, except as
otherwise provided in Sections 4.02 and 13.05. "Trustee" for purposes of this
Section shall include any predecessor Trustee; provided, however, that the
negligence, willful misconduct or bad faith of any Trustee hereunder shall not
affect the rights of any other Trustee hereunder.
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In addition to the rights provided to the Trustee pursuant to
the provisions of the immediately preceding paragraph of this Section 6.07, when
the Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 5.01(5) or Section 5.01(6), the expenses (including
the reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
Section 6.08 Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such conflicting interest or resign, to the extent, in the manner and
with the effect, and subject to the conditions provided in the Trust Indenture
Act and this Indenture. To the extent permitted by such Act, the Trustee shall
not be deemed to have a conflicting interest by virtue of being a trustee under
this Indenture with respect to Notes of more than one series.
Section 6.09 Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee
hereunder with respect to the Notes of each series, which may be Trustee
hereunder for Notes of one or more other series. Each Trustee shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee with respect to the Notes of any series
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the
Notes of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 6.11
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes of such series.
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(c) The Trustee may be removed at any time with respect to the
Notes of any series by Act of the Holders of a majority in principal amount of
the Outstanding Notes of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1)the Trustee shall fail to comply with Section 6.08
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
(2)the Trustee shall cease to be eligible under Section
6.09 and shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3)the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Notes, or (B) subject to Section 5.14, any Holder
who has been a bona fide Holder of a Note for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Notes and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Notes of one or more series, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Notes of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Notes of one or more or
all of such series and that at any time there shall be only one Trustee with
respect to the Notes of any particular series) and shall comply with the
applicable requirements of Section 6.11. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Notes of any series shall be appointed by
Act of the Holders of a majority in principal amount of the Outstanding Notes of
such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.11, become the
successor Trustee with respect to the Notes of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Notes of any series shall have been so appointed by
the Company or the Holders and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a Note of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Notes of such series.
(f) So long as no event which is, or after notice or lapse of
time, or both, would become, an Event of Default shall have occurred and be
continuing, and except with respect to a Trustee appointed by Act of the Holders
of a majority in principal amount of the Outstanding Notes pursuant to
subsection (e) of this Section, if the Company shall have delivered to the
Trustee (1) a Board Resolution appointing a successor Trustee, effective as of a
date specified therein, and (2) an instrument of acceptance of such appointment,
effective as of such date, by such successor Trustee in accordance with Section
6.11, the Trustee shall be deemed to have resigned as contemplated in subsection
(b) of this Section, the successor Trustee shall be deemed to have been
appointed by the Company pursuant to subsection (e) of this Section and such
appointment shall be deemed to have been accepted as contemplated in Section
6.11, all as of such date, and all other provisions of this Section and Section
6.11 shall be applicable to such resignation, appointment and acceptance except
to the extent inconsistent with this clause (f).
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(g) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Notes of any series and each
appointment of a successor Trustee with respect to the Notes of any series to
all Holders of Notes of such series in the manner provided in Section 1.06. Each
notice shall include the name of the successor Trustee with respect to the Notes
of such series and the address of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Notes, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee, but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Notes of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Notes of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Notes of that or
those series to which the appointment of such successor Trustee relates, (2) if
the retiring Trustee is not retiring with respect to all Notes, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Notes of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Notes of that or those
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Notes of that
or those series to which the appointment of such successor Trustee relates.
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(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in clause (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 6.13 Preferential Collection of Claims Against Company.
If the Trustee shall be or become a creditor of the Company or
any other obligor upon the Notes (other than by reason of a relationship
described in Section 311(b) of the Trustee Indenture Act), the Trustee shall be
subject to any and all applicable provisions of the Trust Indenture Act
regarding the collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within seven days
after delivery of the goods or securities in currency or in checks or
other orders drawn upon banks or bankers and payable upon demand;
(b) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
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Section 6.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Notes which shall be authorized to act on
behalf of the Trustee to authenticate Notes of such series issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.06, and Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.06 to all Holders of Notes of
the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
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The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section and to
reimburse such Authenticating Agent, from time to time, for its reasonable
out-of-pocket expenses incurred under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Notes of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Notes of the series designated therein
referred to in the within-mentioned Indenture.
Dated: [______________________,
As Trustee
By.........................................
Authenticating Agent
By.........................................
Authorized Officer
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01 Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the
Trustee
(1) fifteen days after each Regular Record Date, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders of Notes of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
Section 7.02 Preservation of Information; Communications to
Holders.
The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.01 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Notes, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 7.03 Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee
shall, within sixty days after each May 15 following the date of this Indenture
deliver to Holders a brief report, dated as of such May 15, which complies with
the provisions of such Section 313(a).
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A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Notes are listed, with the Commission and with the Company. The
Company will promptly notify the Trustee when any Notes are listed on any stock
exchange.
Section 7.04 Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such information, documents and reports to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.01 Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a Person organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and any premium, and interest on all the
Notes and the performance or observance of every covenant of this Indenture on
the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company as a result
of such transaction as having been incurred by the Company at the time of such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
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Section 8.02 Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 8.01, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Notes outstanding hereunder.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Notes, all as provided in Article VIII; or
(2) to add to the covenants of the Company or other provisions
for the benefit of the Holders of all or any series of Notes (and if such
covenants are to be for the benefit of less than all series of Notes, stating
that such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of
the Holders of all or any series of Notes (and if such additional Events of
Default are to be for the benefit of less than all series of Notes, stating that
such additional Events of Default are expressly being included solely for the
benefit of such series); or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate the
issuance of Notes in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or facilitate the
issuance of Notes in uncertificated form; or
(5) to change or eliminate any provision of this Indenture or
to add any new provision to this Indenture; provided, however, that if such
change, elimination or addition shall adversely affect the interests of the
Holders of Notes of any series Outstanding on the date of such indenture
supplemental hereto in any material respect, such change, elimination or
addition shall become effective (1) with respect to such series only pursuant to
the provisions of Section 9.02 hereof or (2) when no Note of such series remains
Outstanding; or
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(6) to secure the Notes; or
(7) to establish the form or terms of Notes of any series as
permitted by Sections 2.01 and 3.01; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of one or more series
and to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11; or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein, or to make any other changes to the provisions hereof or to add other
provisions with respect to matters or questions arising under this Indenture,
provided that such other changes or additions shall not adversely affect the
interests of the Holders of Notes of any series in any material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date specified in the first paragraph of this
instrument or at any time thereafter shall be amended and
(x) if any such amendment shall require one or more changes to
any provisions hereof or the inclusion herein of any additional
provisions, or shall by operation of law be deemed to effect such
changes or incorporate such provisions by reference or otherwise, this
Indenture shall be deemed to have been amended so as to conform to such
amendment to the Trust Indenture Act, and the Company and the Trustee
may, without the consent of any Holders, enter into an indenture
supplemental hereto to effect or evidence such changes or additional
provisions; or
(y) if any such amendment shall permit one or more changes to,
or the elimination of, any provisions hereof which, at the date of the
execution and delivery hereof or at any time thereafter, are required
by the Trust Indenture Act to be contained herein, this Indenture shall
be deemed to have been amended to effect such changes or elimination,
and the Company and the Trustee may, without the consent of any
Holders, enter into an indenture supplemental hereto to evidence such
amendment hereof.
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Section 9.02 Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes of all series then Outstanding under
this Indenture, considered as one class, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture; provided, however, that if
there shall be Notes of more than one series Outstanding hereunder and if a
proposed supplemental indenture shall directly affect the rights of the Holders
of Notes of one or more, but less than all, of such series, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Notes of all series so directly affected, considered as one class,
shall be required; and provided, further, that no such supplemental indenture
shall:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Note, or reduce the principal
amount thereof or the rate of interest thereon (or the amount of any installment
of interest thereon) or change the method of calculating such rate or reduce any
premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Note or any other Note which would be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 5.02, or change the coin or currency (or other property) in
which any Note or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), without, in any such case, the consent of the Holder of such
Note, or
(2) reduce the percentage in principal amount of the
Outstanding Notes of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with any provision of this Indenture or of any default
hereunder and its consequences, or reduce the requirements of Section 14.04 for
quorum or voting, without, in any such case, the consent of the Holder of such
Note, or
(3) modify any of the provisions of this Section, Section 5.13
or Section 10.08 with respect to the Notes of any series, except to increase any
such percentage or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; provided, however, that this clause shall not
be deemed to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and Section
10.08, or the deletion of this proviso, in accordance with the requirements of
Sections 6.11 and 9.01(8).
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Notes, or which
modifies the rights of the Holders of Notes of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Notes of any other series.
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It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. A
waiver by a Holder of such Holder's right to consent under this Section shall be
deemed to be a consent of such Holder.
Section 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any supplemental indenture permitted by this Article may be
executed on behalf of the Company by any officers or employees that are
authorized to do so in a Board Resolution, under its corporate seal affixed
thereto or reproduced thereon attested to by its Secretary or one of its
Assistant Secretaries.
Section 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby. Any supplemental indenture permitted by this
Article may restate this Indenture in its entirety, and, upon the execution and
delivery thereof, any such restatement shall supersede this Indenture as
theretofore in effect for all purposes.
Section 9.05 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
Section 9.06 Reference in Notes to Supplemental Indentures.
Notes of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Notes of any series so modified as to conform, in the opinion
of the Trustee and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Notes of such series.
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ARTICLE X
COVENANTS
Section 10.01 Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Notes that it will duly and punctually pay the principal of and any
premium and interest on the Notes of that series in accordance with the terms of
the Notes and this Indenture.
Section 10.02 Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any
series of Notes an office or agency where Notes of that series may be presented
or surrendered for payment, where Notes of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes of that series and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Notes of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Notes of any series for such purposes.
The Company will give prompt written notice to the Trustee , and prompt notice
to Holders in the manner specified in Section 1.06, of any such designation or
rescission and of any change in the location of any such other office or agency.
Section 10.03 Money for Notes Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Notes, it will, on or before each due date of the
principal of or any premium or interest on any of the Notes of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for
any series of Notes, it will, on or prior to each due date of the principal of
or any premium or interest on any Notes of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
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The Company will cause each Paying Agent for any series of
Notes other than the Trustee to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will (1) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2)
during the continuance of any default by the Company (or any other obligor upon
the Notes of that series) in the making of any payment in respect of the Notes
of that series, upon the written request of the Trustee, forthwith pay to the
Trustee all sums held in trust by such Paying Agent for payment in respect of
the Notes of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or any
premium or interest on any Note of any series and remaining unclaimed for two
years after such principal, premium or interest has become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 10.04 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 10.05 Restrictions on Liens.
(a) So long as any Notes are Outstanding, the Company will not
issue, assume, or guarantee any Debt secured by any mortgage, security interest,
pledge, or lien (herein referred to as a "mortgage") of or upon any Operating
Property of the Company, whether owned at the date specified in the first
paragraph of this instrument or thereafter acquired, without in any such case
effectively securing the Outstanding Notes (together with, if the Company shall
so determine, any other Debt of or guaranteed by the Company ranking senior to,
or equally with, the Notes) equally and ratably with such Debt; provided,
however, that the foregoing restriction shall not apply to Debt secured by any
of the following:
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(i) mortgages on any property existing at the time
of acquisition thereof;
(ii) mortgages on property of a corporation existing
at the time such corporation is merged into or consolidated with the
Company, or at the time of a sale, lease, or other disposition of the properties
of such corporation or a division thereof as an entirety or substantially as an
entirety to the Company, provided that such mortgage as a result of such merger,
consolidation, sale, lease, or other disposition is not extended to property
owned by the Company immediately prior thereto;
(iii) mortgages on property to secure all or part of
the cost of acquiring, constructing, developing, or substantially
repairing, altering, or improving such property, or to secure indebtedness
incurred to provide funds for any such purpose or for reimbursement of funds
previously expended for any such purpose, provided such mortgages are created or
assumed contemporaneously with, or within eighteen (18) months after, such
acquisition or completion of construction, development, or substantial repair,
alteration, or improvement or within six (6) months thereafter pursuant to a
commitment for financing arranged with a lender or investor within such eighteen
(18) month period;
(iv) mortgages in favor of the United States of
America or any State thereof, or any department, agency, or instrumentality or
political subdivision of the United States of America or any State thereof, or
for the benefit of holders of securities issued by any such entity, to secure
any Debt incurred for the purpose of financing all or any part of the purchase
price or the cost of constructing, developing, or substantially repairing,
altering, or improving the property subject to such mortgages;
(v) mortgages on any property (x) which, at any time
subsequent to January 1, 1985 through the date specified in the first paragraph
of this instrument, was leased to the Company, or, (y) pursuant to the terms of
any lease to the Company in effect at any time subsequent to January 1, 1985
through the date specified in the first paragraph of this instrument, title to
which would not have been vested in the Company (assuming such lease remained in
effect on the date of determination as such lease was in effect immediately
prior to the date of this Indenture); or
(vi) any extension, renewal or replacement (or
successive extensions, renewals, or replacements), in whole or in part, of any
mortgage referred to in the foregoing clauses (i) to (v), inclusive; provided,
however, that the principal amount of Debt secured thereby and not otherwise
authorized by said clauses (i) to (v), inclusive, shall not exceed the principal
amount of Debt, plus any premium or fee payable in connection with any such
extension, renewal, or replacement, so secured at the time of such extension,
renewal, or replacement.
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(b) Notwithstanding the provisions of Section 10.05(a), so
long as any Notes are Outstanding, the Company may issue, assume, or guarantee
Debt, or permit to exist Debt, secured by mortgages which would otherwise be
subject to the restrictions of Section 10.05(a) up to an aggregate principal
amount that, together with the principal amount of all other Debt of the Company
secured by mortgages (other than mortgages permitted by Section 10.05(a) that
would otherwise be subject to the foregoing restrictions) and the Value of all
Sale and Lease-Back Transactions in existence at such time (other than any Sale
and Lease-Back Transaction that, if such Sale and Lease-Back Transaction had
been a mortgage, would have been permitted by Section 10.05(a), other than Sale
and Lease-Back Transactions permitted by Section 10.10 because the commitment by
or on behalf of the purchaser was obtained no later than eighteen (18) months
after the later of events described in (i) or (ii) of Section 10.10, and other
than Sale and Lease-Back Transactions as to which application of amounts have
been made in accordance with clause (z) of Section 10.10), does not at the time
exceed the greater of ten percent (10%) of Net Tangible Assets or ten percent
(10%) of Capitalization.
(c) If at any time the Company shall issue, assume, or
guarantee any Debt secured by any mortgage and if Section 10.05(a) requires that
the Outstanding Notes be secured equally and ratably with such Debt, the Company
will promptly execute, at its expense, any instruments necessary to so equally
and ratably secure the Outstanding Notes and deliver the same to the Trustee
along with:
(i) An Officers' Certificate stating that the
covenant of the Company contained in Section 10.05(a) has been complied with;
and
(ii) An Opinion of Counsel to the effect that the
Company has complied with the covenant contained in Section 10.05(a), and
that any instrument executed by the Company in the performance of such covenant
complies with the requirements of such covenant.
In the event that the Company shall hereafter secure
Outstanding Notes equally and ratably with any other obligation or indebtedness
pursuant to the provisions of this Section 10.05, the Trustee is hereby
authorized to enter into an indenture or agreement supplemental hereto and to
take such action, if any, as it may, in its sole and absolute discretion, deem
advisable to enable it to enforce effectively the rights of the Holders of
Outstanding Notes so secured, equally and ratably with such other obligation or
indebtedness.
Section 10.06 Corporate Existence.
Subject to the rights of the Company under Article VIII, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence.
Section 10.07 Maintenance of Properties.
The Company shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) all its properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and shall cause (or, with respect to
property owned in common with others, make reasonable effort to cause) to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as, in the judgment of the Company, may be necessary so that the
business carried on in connection therewith may be properly conducted; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing, or causing the discontinuance of, the operation and maintenance
of any of it properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business.
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Section 10.08 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in (a) Section 10.02 or any
additional covenant or restriction specified with respect to the Notes of any
series as contemplated by Section 3.01 if before the time for such compliance
the Holders of at least a majority in aggregate principal amount of the
Outstanding Notes of all series with respect to which compliance with Section
10.02 or such additional covenant or restriction is to be omitted, considered as
one class, shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition
and (b) Section 10.07 or Article VIII if before the time for such compliance the
Holders of at least a majority in principal amount of Notes Outstanding under
this Indenture shall, by Act of such Holders, either waive such compliance in
such instance or generally waive compliance with such term, provision or
condition; but, in the case of (a) or (b), no such waiver shall extend to or
affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
Section 10.09 Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of
each calendar year a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Notes as of the end of such year.
Section 10.10 Restrictions on Sale and Lease-Back Transactions.
So long as any Notes are Outstanding, the Company will not
enter into any Sale and Lease-Back Transaction with respect to any Operating
Property if, in any case, the commitment by or on behalf of the purchaser is or
was obtained more than eighteen (18) months after the later of (i) the
completion of the acquisition, construction, or development of such Operating
Property or (ii) the placing in operation of such Operating Property or of such
Operating Property as constructed, developed, or substantially repaired,
altered, or improved, unless (x) the Company would be entitled pursuant to
Section 10.05(a) to issue, assume, or guarantee Debt secured by a mortgage on
such Operating Property without equally and ratably securing the Notes or (y)
the Company would be entitled pursuant to Section 10.05(b), after giving effect
to such Sale and Lease-Back Transaction, to incur $1.00 of additional Debt
secured by mortgages (other than mortgages permitted by Section 10.05(a)) or (z)
the Company shall apply or cause to be applied, in the case of a sale or
transfer for cash, an amount equal to the net proceeds thereof (but not in
excess of the net book value of such Operating Property at the date of such sale
or transfer) and, in the case of a sale or transfer otherwise than for cash, an
amount equal to the fair value (as determined by the Board of Directors) of the
Operating Property so leased, to the retirement, within one hundred eighty (180)
days after the effective date of such Sale and Lease-Back Transaction, of Debt
of the Company ranking senior to, or equally with, the Notes; provided, however,
that the amount to be applied to such retirement of Debt shall be reduced by an
amount equal to the principal amount, plus any premium or fee paid in connection
with any redemption in accordance with the terms of Debt voluntarily retired by
the Company within such one hundred eighty (180) day period, excluding
retirement pursuant to mandatory sinking fund or prepayment provisions and
payments at maturity.
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ARTICLE XI
REDEMPTION OF NOTES
Section 11.01 Applicability of Article.
Notes of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.01 for such Notes) in
accordance with this Article.
Section 11.02 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes shall be
evidenced by a Board Resolution, in an Officer's Certificate or in another
manner specified as contemplated by Section 3.01 for such Notes. In case of any
redemption at the election of the Company, the Company shall, at least 45 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Notes of such series to be redeemed and, if applicable,
of the tenor of the Notes to be redeemed. In the case of any redemption of Notes
(a) prior to the expiration of any restriction on such redemption provided in
the terms of such Notes or elsewhere in this Indenture, or (b) pursuant to an
election of the Company which is subject to a condition specified in the terms
of such Notes or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction or condition.
Section 11.03 Selection by Trustee of Notes to be Redeemed.
If less than all the Notes of any series are to be redeemed,
the particular Notes to be redeemed shall be selected by the Trustee from the
Outstanding Notes of such series not previously called for redemption, by such
method as shall be provided for any particular series or, in the absence of any
such provision, by such method of random selection as the Trustee shall deem
fair and appropriate and which may, in any case, provide for the selection for
redemption of portions (equal to the minimum authorized denomination for Notes
of such series or any integral multiple thereof) of the principal amount of
Notes of such series of a denomination larger than the minimum authorized
denomination for Notes of such series; provided, however, that if, as indicated
in an Officer's Certificate, the Company shall have offered to purchase all or
any principal amount of the Notes then Outstanding of any series, and less than
all of such Notes as to which such offer was made shall have been tendered to
the Company for such purchase, the Trustee, if so directed by Company Order,
shall select for redemption all or any principal amount of such Notes which have
not been so tendered.
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The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption as aforesaid and, in case of any Notes
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Notes redeemed or to be redeemed only in part, to the
portion of the principal amount of such Notes which has been or is to be
redeemed.
Section 11.04 Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at his address
appearing in the Note Register.
All notices of redemption shall identify the Notes to be
redeemed (including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Notes of any series and
of a specified tenor consisting of more than a single Note are to be redeemed,
the identification (and, in the case of partial redemption of any such Notes,
the principal amounts) of the particular Notes to be redeemed and, if less than
all the Outstanding Notes of any series and of a specified tenor consisting of a
single Note are to be redeemed, the principal amount of the particular Note to
be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Note is to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the
case, and
(7) such other matters as the Company shall deem desirable or
appropriate.
Unless otherwise specified with respect to any Notes in
accordance with Section 3.01, with respect to any notice of redemption of Notes
at the election of the Company, unless, upon the giving of such notice, such
Notes shall be deemed to have been paid in accordance with Article IV, such
notice may state that such redemption shall be conditional upon the receipt by
the Paying Agent or Agents for such Notes, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such Notes and that if such money shall not have
been so received such notice shall be of no force or effect and the Company
shall not be required to redeem such Notes. In the event that such notice of
redemption contains such a condition and such money is not so received, the
redemption shall not be made and within a reasonable time thereafter notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made,
and the Paying Agent or Agents for the Notes otherwise to have been redeemed
shall promptly return to the Holders thereof any of such Notes which had been
surrendered for payment upon such redemption.
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Notice of redemption of Notes to be redeemed at the election
of the Company, and any notice of non-satisfaction of a condition for redemption
as aforesaid, shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Notice of mandatory
redemption of Securities shall be given by the Trustee in the name and at the
expense of the Company.
Section 11.05 Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest, if any, on,
all the Notes which are to be redeemed on that date.
Section 11.06 Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been satisfied, the Notes so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless, in the
case of an unconditional notice of redemption, the Company shall default in the
payment of the Redemption Price and accrued interest) such Notes shall cease to
bear interest. Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided,
however, that, unless otherwise specified as contemplated by Section 3.01,
installments of interest whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Notes, or one or more Predecessor
Notes, registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.07.
Section 11.07 Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
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ARTICLE XII
SINKING FUNDS
Section 12.01 Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Notes of any series except as otherwise
specified as contemplated by Section 3.01 for such Notes.
The minimum amount of any sinking fund payment provided for by
the terms of any Notes is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of such Notes is herein referred to as an "optional sinking fund payment".
If provided for by the terms of any Notes, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 12.02. Each sinking
fund payment shall be applied to the redemption of Notes as provided for by the
terms of such Notes.
Section 12.02 Satisfaction of Sinking Fund Payments with Notes.
The Company (1) may deliver Outstanding Notes of a series
(other than any previously called for redemption) and (2) may apply as a credit
Notes of a series which have been (a) redeemed either at the election of the
Company pursuant to the terms of such Notes or through the application of
permitted optional sinking fund payments pursuant to the terms of such Notes or
(b) purchased by the Company in the open market, by tender offer or otherwise,
in each case in satisfaction of all or any part of any sinking fund payment with
respect to any Notes of such series required to be made pursuant to the terms of
such Notes as and to the extent provided for by the terms of such Notes;
provided that the Notes to be so credited have not been previously so credited.
The Notes to be so credited shall be received and credited for such purpose by
the Trustee at the Redemption Price, as specified in the Notes so to be
redeemed, for redemption through operation of the sinking fund and the amount of
such sinking fund payment shall be reduced accordingly.
Section 12.03 Redemption of Notes for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date
for any Notes, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such Notes
pursuant to the terms of such Notes, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Notes pursuant to Section 12.02 and
stating the basis for such credit and that such Notes have not been previously
so credited and will also deliver to the Trustee any Notes to be so delivered.
Not less than 30 days prior to each such sinking fund payment date, the Trustee
shall select the Notes to be redeemed upon such sinking fund payment date in the
manner specified in Section 11.03 and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in the manner provided
in Section 11.04. Such notice having been duly given, the redemption of such
Notes shall be made upon the terms and in the manner stated in Sections 11.06
and 11.07.
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ARTICLE XIII
DEFEASANCE AND COVENANT DEFEASANCE
Section 13.01 Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may elect, at its option at any time, to have
Section 13.02 or Section 13.03 applied to any Notes or any series of Notes, as
the case may be, designated pursuant to Section 3.01 as being defeasible
pursuant to such Section 13.02 or 13.03, in accordance with any applicable
requirements provided pursuant to Section 3.01 and upon compliance with the
conditions set forth below in this Article. Any such election shall be evidenced
by a Board Resolution or in another manner specified as contemplated by Section
3.01 for such Notes.
Section 13.02 Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have
this Section applied to any Notes or any series of Notes, as the case may be,
the Company shall be deemed to have been discharged from its obligations with
respect to such Notes as provided in this Section on and after the date the
conditions set forth in Section 13.04 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such
Notes and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same),
subject to the following which shall survive until otherwise terminated or
discharged hereunder: (1) the rights of Holders of such Notes to receive, solely
from the trust fund described in Section 13.04 and as more fully set forth in
such Section, payments in respect of the principal of and any premium and
interest on such Notes when payments are due, (2) the Company's obligations with
respect to such Notes under Sections 3.04, 3.05, 3.06, 10.02 and 10.03 and with
respect to the Trustee under Section 6.07, (3) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option (if any) to
have this Section applied to any Notes notwithstanding the prior exercise of its
option (if any) to have Section 13.03 applied to such Notes.
Section 13.03 Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have
this Section applied to any Notes or any series of Notes, as the case may be,
(1) the Company shall be released from its obligations under Sections 10.05,
10.07, and 10.10, and any covenants provided pursuant to Section 3.01(19),
9.01(2), 9.01(6) or 9.01(7) and 5.01(7) for the benefit of the Holders of such
Notes and (2) the occurrence of any event specified in Section 5.01(4) (with
respect to any of Sections 10.05, 10.07, and 10.10, and any such covenants
provided pursuant to Section 3.01(19), 9.01(2), 9.01(6) or 9.01(7)) and 5.01(7))
shall be deemed not to be or result in an Event of Default with respect to such
Notes as provided in this Section on and after the date the conditions set forth
in Section 13.04 are satisfied (hereinafter called "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that, with respect to such Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section (to
the extent so specified in the case of Section 5.01(4)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or by
reason of any reference in any such Section to any other provision herein or in
any other document, but the remainder of this Indenture and such Notes shall be
unaffected thereby.
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Section 13.04 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of
Section 13.02 or Section 13.03 to any Notes or any series of Notes, as the case
may be:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Notes, (A) money in an amount, or
(B) U.S. Government Obligations which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(C) a combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee to pay and discharge, the principal of
and any premium and interest on such Notes on the respective Stated Maturities
or on any Redemption Date established pursuant to Clause (9) below, in
accordance with the terms of this Indenture and such Notes. As used herein,
"U.S. Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
Clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest evidenced
by such depositary receipt.
(2) In the event of an election to have Section 13.02 apply to
any Notes or any series of Notes, as the case may be, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case (A) or (B) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such Notes
will not recognize gain or loss for Federal income tax purposes as a result of
the deposit, Defeasance and discharge to be effected with respect to such Notes
and will be subject to Federal income tax on the same amount, in the same manner
and at the same times as would be the case if such deposit, Defeasance and
discharge were not to occur.
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(3) In the event of an election to have Section 13.03 apply to
any Notes or any series of Notes, as the case may be, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
such Notes will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with respect to
such Notes and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit and
Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that neither such Notes nor any other Notes
of the same series, if then listed on any securities exchange, will be delisted
as a result of such deposit.
(5) No event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to such Notes or any other
Notes shall have occurred and be continuing at the time of such deposit or, with
regard to any such event specified in Sections 5.01(5) and (6), at any time on
or prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Notes are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) If the Notes are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made.
(10) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant Defeasance have
been complied with.
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Section 13.05 Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
10.03, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 13.04 in respect of any
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any such Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Notes, of all sums
due and to become due thereon in respect of principal and any premium and
interest, but money so held in trust need not be segregated from other funds
except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 13.04 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Outstanding Notes.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 13.04 with respect to any Notes which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect the Defeasance or
Covenant Defeasance, as the case may be, with respect to such Notes.
Section 13.06 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article with respect to any Notes by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Notes from which the Company has been discharged or released
pursuant to Section 13.02 or 13.03 shall be revived and reinstated as though no
deposit had occurred pursuant to this Article with respect to such Notes, until
such time as the Trustee or Paying Agent is permitted to apply all money held in
trust pursuant to Section 13.05 with respect to such Notes in accordance with
this Article; provided, however, that if the Company makes any payment of
principal of or any premium or interest on any such Note following such
reinstatement of its obligations, the Company shall be subrogated to the rights
(if any) of the Holders of such Notes to receive such payment from the money so
held in trust.
ARTICLE XIV
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
Section 14.01 Purposes for Which Meetings May Be Called.
A meeting of Holders of Notes of one or more, or all, series
may be called at any time and from time to time pursuant to this Article to
make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be made, given or
taken by Holders of Notes of such series.
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Section 14.02 Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Notes of one or more, or all, series for any purpose specified in Section 14.01,
to be held at such time and at such place in the Borough of Manhattan, The City
of New York, as the Trustee shall determine, or, with the approval of the
Company, at any other place. Notice of every such meeting, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section
1.06, not less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) If the Trustee shall have been requested to call a meeting
of the Holders of Notes of one or more, or all, series by the Company or by the
Holders of 33% in aggregate principal amount of Notes of all of such series,
considered as one class, for any purpose specified in Section 14.01, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have given the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the Holders
of Notes of such series in the amount above specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or in such other place as shall be determined or approved by the Company,
for such meeting and may call such meeting for such purposes by giving notice
thereof as provided in clause (a) of this Section.
(c) Any meeting of Holders of Notes of one or more, or all,
series shall be valid without notice if Holders of all Outstanding Notes of such
series are present in person or by proxy and if representatives of the Company
and the Trustee are present, or notice is waived in writing before or after the
meeting by the Holders of all Outstanding Notes of such series or by such of
them as are not present at the meeting in person or by proxy, and by the Company
and the Trustee.
Section 14.03 Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Notes of
one or more, or all, series, a Person shall be (a) a Holder of one or more
Outstanding Notes of such series, or (b) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Notes of
such series by such Holder or Holders. The only persons who shall be entitled to
attend any meeting of Holders of Notes of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
Section 14.04 Quorum: Action.
The Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Notes of the series with respect to which a meeting
shall have been called as hereinbefore provided, considered as one class, shall
constitute a quorum for a meeting of Holders of Notes of such series; provided,
however, that if any action is to be taken at such meeting which this Indenture
expressly provides may be taken by the Holders of a specified percentage, which
is less than a majority, in principal amount of the Outstanding Notes of such
series, considered as one class, the Persons entitled to vote such specified
percentage in principal amount of the Outstanding Notes of such series,
considered as one class, shall constitute a quorum. In the absence of a quorum
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within one hour of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Notes of such series, be dissolved. In
any other case the meeting may be adjourned for such period as may be determined
by the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for such period as may be determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Except as provided
by clause (e) of Section 14.05, notice of the reconvening of any meeting
adjourned for more than 30 days shall be given as provided in clause (a) of
Section 14.02 not less than ten days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal amount
of the Outstanding Notes of such series which shall constitute a quorum.
Except as limited by Section 9.02, any resolution presented to
a meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Notes of the series
with respect to which such meeting shall have been called, considered as one
class; provided, however, that, except as so limited, any resolution with
respect to any action which this Indenture expressly provides may be taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Notes of such series, considered as one
class, may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Notes of
such series, considered as one class.
Any resolution passed or decision taken at any meeting of
Holders of Notes duly held in accordance with this Section shall be binding on
all the Holders of Notes of the series with respect to which such meeting shall
have been held, whether or not present or represented at the meeting.
Section 14.05 Attendance at Meetings; Determination of Voting
Rights; Conduct and Adjournment of Meetings.
(a) Attendance at meetings of Holders of Notes may be in
person or by proxy; and, to the extent permitted by law, any such proxy shall
remain in effect and be binding upon any future Holder of the Notes with respect
to which it was given unless and until specifically revoked by the Holder or
future Holder of such Notes before being voted.
(b) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Notes in regard to proof of the holding of such Notes
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Notes shall be
proved in the manner specified in Section 1.04 and the appointment of any proxy
shall be proved in the manner specified in Section 1.04. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 1.04 or
other proof.
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(c) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders as provided in clause (b) of Section 14.02, in which
case the Company or the Holders of Notes of the series calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by vote of
the Persons entitled to vote a majority in aggregate principal amount of the
Outstanding Notes of all series represented at the meeting, considered as one
class.
(d) At any meeting each Holder or proxy shall be entitled to
one vote for each $1 principal amount of Notes held or represented by him or
her; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not Outstanding and ruled by the chairman of
the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Note or proxy.
(e) Any meeting duly called pursuant to Section 14.02 at which
a quorum is present may be adjourned from time to time by Persons entitled to
vote a majority in aggregate principal amount of the Outstanding Notes of all
series represented at the meeting, considered as one class; and the meeting may
be held as so adjourned without further notice.
Section 14.06 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of
Holders shall be by written ballots on which shall be subscribed the signatures
of the Holders or of their representatives by proxy and the principal amounts
and serial numbers of the Outstanding Notes, of the series with respect to which
the meeting shall have been called, held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports of all
votes cast at the meeting. A record of the proceedings of each meeting of
Holders shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 14.02 and, if
applicable, Section 14.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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Section 14.07 Action Without Meeting.
In lieu of a vote of Holders at a meeting as hereinbefore
contemplated in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by Holders
by written instruments as provided in Section 1.04.
ARTICLE XV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 15.01 Liability Solely Corporate.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest, if any, on any Notes, or any part thereof, or
for any claim based thereon or otherwise in respect thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
under this Indenture, against any incorporator, stockholder, employee, officer
or director, as such, past, present or future of the Company or of any
predecessor or successor corporation (either directly or through the Company or
a predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that this
Indenture and all Notes are solely corporate obligations, and that no personal
liability whatsoever shall attach to, or be incurred by, any incorporator,
stockholder, employee, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation, because of the
indebtedness hereby authorized or under or by reason of any of the obligations,
covenants or agreements contained in this Indenture or in any of the Notes or to
be implied herefrom or therefrom, and that any such personal liability is hereby
expressly waived and released as a condition of, and as part of the
consideration for, the execution of this Indenture and the issuance of the
Notes.
----------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By...............................
Name:
Title:
Attest:
..........................
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By................................
Name:
Title:
Attest:
..........................
Name:
Title:
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STATE OF NEW MEXICO )
) ss.:
COUNTY OF BERNALILLO )
On the ____ day of __________ before me personally came ______________, to me
known, who, being by me duly sworn, did depose and say that [s]he is
____________ of Public Service Company of New Mexico, one of the corporations
described in and which executed the foregoing instrument; that [s]he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that [s]he signed [her] [his] name thereto by like
authority.
.....................................
My Commission Expires
................
STATE OF ____________ )
) ss.:
COUNTY OF _________ )
On the ____ day of ___________, before me personally came _____________, to
me known, who, being by me duly sworn, did depose and say that [s]he is
____________ of The Chase Manhattan Bank, one of the corporations described in
and which executed the foregoing instrument; that [s]he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that [s]he signed [her] [his] name thereto by like authority.
.....................................
My Commission Expires
................
48322
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- --------------------------------------------------------------------------------
PUBLIC SERVICE COMPANY OF NEW MEXICO
TO
THE CHASE MANHATTAN BANK
Trustee
--------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 11, 1998
To
INDENTURE
Dated as of March 11, 1998
--------------
- --------------------------------------------------------------------------------
(Creating Seven Series of Farmington Senior Notes)
63036183.02
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of March 11, 1998, between
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation duly organized
and existing under the laws of the State of New Mexico (herein called the
"Company"), having its principal office at Alvarado Square, Albuquerque, New
Mexico 87158, and THE CHASE MANHATTAN BANK, a New York banking corporation, as
Trustee (herein called the "Trustee") under the Indenture dated as of March 11,
1998 between the Company and the Trustee (the "Indenture").
RECITALS OF THE COMPANY
The Company has executed and delivered the Indenture to the Trustee to
provide for the issuance from time to time of its senior notes (the "Notes"),
said Notes to be issued in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide
for establishment of seven new series of its Notes to be respectively known as
set forth under the column entitled, "Series of Farmington Notes" in Exhibit A
hereto (collectively, the "Farmington Notes"), the form and substance of such
Farmington Notes and the terms, provisions, and conditions thereof to be set
forth as provided in the Indenture and this First Supplemental Indenture.
The City of Farmington, in the County of San Juan, an incorporated
municipality, a body politic and corporate, existing under the constitution and
laws of the State of New Mexico (together with its successors and assigns, the
"City") has issued seven series of its Pollution Control Revenue Refunding Bonds
(Public Service Company of New Mexico San Juan Project or San Juan and Four
Corners Projects) (collectively, the "Refunding Bonds") as described under the
column entitled "Pollution Control Revenue Refunding Bonds" in Exhibit A hereto.
The City has appointed First Security Bank of New Mexico, N.A. (formerly named
First National Bank in Alberquerque), as trustee (together with any successor
trustee under the Ordinances (as hereinafter defined), each a "Refunding Bond
Trustee"), with respect to each series of Refunding Bonds, all pursuant to and
as more particularly set forth in the Ordinance and supplements and, to the
extent applicable, amendments thereto, relating to such series of Refunding
Bonds described under the column entitled "City of Farmington Ordinance" in
Exhibit A hereto adopted by the City (collectively the "Ordinances").
The Company by the seven Guaranty Agreements (collectively the
"Guaranties" and individually, a "Guaranty") described under the column entitled
"Guaranties and First Supplemental Guaranties" in Exhibit A hereto related,
respectively, to the seven series of Refunding Bonds, each by and between the
Company and the applicable Refunding Bond Trustee, guaranteed payment of the
principal of and interest on, and the Purchase Price (as defined in the
Ordinances) of, the Refunding Bonds (the "Guaranteed Amounts"). The Company
issued certain of its First Mortgage Bonds ("First Mortgage Bonds") pursuant to
the Company's Indenture of Mortgage and Deed of Trust dated as of June 1, 1947
to The Bank of New York (formerly Irving Trust Company) and indentures
supplemental thereto as security for the performance of the Company's obligation
under the Guaranties to pay the respective Guaranteed Amounts.
1
<PAGE>
Pursuant to each Ordinance and each supplement (collectively, the
"First Supplemental Guaranties"), to each of the corresponding Guaranties
between the Company and the Refunding Bond Trustee, each such supplement dated
as of March 11, 1998 and described under the column entitled, "Guaranties and
First Supplemental Guaranties" in Exhibit A hereto, the First Mortgage Bonds are
being exchanged for the Farmington Notes to be issued under this First
Supplemental Indenture.
Each of the seven new series of Farmington Notes will relate to one of
the seven series of Refunding Bonds and will be issued (x) in an aggregate
principal amount equal to the aggregate principal amount of the Refunding Bonds
of such series, maturing on such dates that upon the stated maturity date of the
Refunding Bonds of such series a corresponding principal amount of Farmington
Notes of such series shall mature, (y) bearing interest (but only from the
Initial Interest Accrual Date, if any, determined in accordance with Section
1.03 below) at the same interest rate borne by the Refunding Bonds of such
series and (z) be subject to redemption prior to maturity at the time, in the
amount, and at the same redemption premium, if any, borne by the Refunding Bonds
of such series. Each series of Farmington Notes will be delivered to the
corresponding Refunding Bond Trustee, as security for the performance of the
Company's obligation under the related Guaranty to pay the Guaranteed Amounts
under such Guaranty.
All things necessary to make this First Supplemental Indenture a valid
agreement of the Company, and to make the Farmington Notes, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the acceptance of the
Farmington Notes by the corresponding Refunding Bond Trustee as collateral
security for the related series of Refunding Bonds, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Farmington Notes and the terms, provisions, and conditions thereof, it is
mutually agreed, for the equal and proportionate benefit of all Holders of the
Farmington Notes, as follows:
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF
THE FARMINGTON NOTES
SECTION 1.01. There shall be and are hereby authorized seven series of
Farmington Notes designated as follows:
1. "6.40% Notes, Series F-1993-A, Due August 15, 2023," limited in
aggregate principal amount to $100,000,000;
2. "6.30% Notes, Series F-1996-A, Due December 1, 2016," limited in
aggregate principal amount to $40,045,000;
2
<PAGE>
3. "6.30% Notes, Series F-1996-B, Due December 1, 2016," limited in
aggregate principal amount to $37,000,000;
4. "5.80% Notes, Series F-1997-A, Due April 1, 2022," limited in
aggregate principal amount to $40,000,000;
5. "5.80% Notes, Series F-1997-B, Due April 1, 2022," limited in
aggregate principal amount to $37,000,000;
6. "5.80% Notes, Series F-1997-C, Due April 1, 2022," limited in
aggregate principal amount to $23,000,000; and
7. "6 3/8% Notes, Series F-1997-D, Due April 1, 2022," limited in
aggregate principal amount to $90,000,000.
The aggregate principal amount of each series of Farmington Notes to be
authenticated and delivered shall be the aggregate principal amount set forth
under the column entitled "Principal Amount" in Exhibit A hereto. Subject to the
provisions of Section 1.03 below, the Farmington Notes shall bear no interest
until an Initial Interest Accrual Date, if any, has been determined in
accordance with Section 1.03 below. The Farmington Notes shall mature and the
principal thereof shall be due and payable, together with all accrued and unpaid
interest thereon, on their respective Stated Maturities set forth under the
column entitled "Stated Maturity of Principal" in Exhibit A hereto, and shall be
issued in the form of registered Farmington Notes without coupons, in
denominations of $1,000 and any integral multiple thereof. Each of the
Farmington Notes shall be dated as of the date of its authentication.
SECTION 1.02. The Farmington Notes shall be issued to and registered in
the name of the Refunding Bond Trustee under the applicable Ordinance and shall
be non-transferable, except as may be required to effect transfer to any
successor trustee to the Refunding Bond Trustee under such Ordinance. Principal
of, and premium, if any, and interest on the Farmington Notes will be payable at
the office or agency of the Company in The City and State of New York. The
Farmington Notes shall be deemed fully paid, and the obligation of the Company
thereunder shall be terminated, to the extent and in the manner provided in
Section 1.05.
SECTION 1.03. Each of the seven series of Farmington Notes has been
issued to the corresponding Refunding Bond Trustee to secure the obligations of
the Company under the related Guaranty to pay the Guaranteed Amounts under such
Guaranty.
In the event of failure by the Company to make any payment of any
Guaranteed Amounts when and as required by the Company under any of the
Guaranties, the related series of Farmington Notes shall bear interest at the
annual rate applicable to such series as set forth under the column entitled
"Interest Rate" in Exhibit A hereto from the last day to which interest on the
corresponding series of Refunding Bonds has been paid in full prior to the
failure of the Company to pay such Guaranteed Amounts (such date being herein
defined as the "Initial Interest Accrual Date"), and interest at such rate shall
be payable on the date due with respect to such Refunding Bonds, commencing on
the first Interest Payment Date applicable to such series set forth in the
column entitled "Interest Payment Date" in Exhibit A hereto ("Interest Payment
Date") following the Initial Interest Accrual Date.
3
<PAGE>
The Trustee may conclusively presume that no payments with respect to
interest on the Farmington Notes are due unless and until the Trustee shall have
received a written certificate from the applicable Refunding Bond Trustee,
signed by an authorized officer of such Refunding Bond Trustee, certifying that
the Company has failed to make a payment of any Guaranteed Amount when and as
required to be made by it under any of the Guaranties and specifying such
Guaranty, such Guaranteed Amount, the interest rate, the Initial Interest
Accrual Date, the Interest Payment Date and such other terms as shall be
applicable to the payment of interest on the applicable series of Farmington
Notes. The Trustee may rely and shall be fully protected in acting upon any such
certificate and shall have no duty with respect to the terms specified in any
such certificate other than to make them available for inspection by the
Company.
SECTION 1.04. The Farmington Notes shall be redeemed, in whole or in
part, at the principal amount thereof plus any premium, and any accrued interest
from the Initial Interest Accrual Date to the redemption date, if the Refunding
Bond Trustee notifies the Trustee in writing that Refunding Bonds are subject to
redemption as provided in Section 3.02 of the Ordinances. Any such notice must
be received by the Trustee no later than five days (unless a shorter period of
time is acceptable to the Trustee) prior to any redemption date fixed for the
Refunding Bonds to be redeemed and shall specify the principal amount of such
Refunding Bonds anticipated as of the date of such notice to be redeemed, the
redemption date, the redemption premium, if any, and the amount of accrued
interest anticipated to be paid thereon. In the event such notice is given to
the Trustee as hereinabove provided, the redemption date of the applicable
series of Farmington Notes shall be the date on which the corresponding series
of Refunding Bonds are to be redeemed, and on such date the said Farmington
Notes shall be redeemed in the same principal amount as the corresponding series
of Refunding Bonds in fact redeemed, pursuant to Section 3.01 of the Ordinances.
The Company shall deposit in trust with the Trustee on the redemption date an
amount of money sufficient to pay the principal amount, plus any premium and
accrued interest, if any, to the date fixed for redemption on the Farmington
Notes to be redeemed (the "Redemption Price"). Upon presentation to the Trustee
of any of the Farmington Notes by a Refunding Bond Trustee for payment of the
Redemption Price, such Farmington Notes so presented shall be redeemed and paid
in full. However, if, in lieu of presenting the Farmington Notes due for
redemption, the Refunding Bond Trustee shall deliver such Farmington Notes to
the Trustee for cancellation, then and in that event, subject to Section 1.05,
such of the Farmington Notes so presented for cancellation shall be deemed fully
paid, and if any moneys shall have been deposited with the Trustee for such
redemption, then such moneys shall be paid over to the Company, and the
Farmington Notes so surrendered shall be canceled in accordance with Section
1.05.
SECTION 1.05 Upon surrender by a Refunding Bond Trustee or the Company
to the Trustee hereunder of any of the Farmington Notes for cancellation, such
notes shall be canceled by the Trustee and delivered to the Company and shall be
deemed fully paid and the obligations of the Company thereunder terminated.
4
<PAGE>
SECTION 1.06 The Farmington Notes shall be defeasible pursuant to
Section 13.02 and Section 13.03 of the Indenture.
ARTICLE TWO
FORM OF FARMINGTON NOTES
SECTION 2.01. The Farmington Notes and the Trustee's certificate of
authentication to be endorsed thereon are to be substantially in the following
form:
Pursuant to Section 1.02 of the First Supplemental Indenture dated as
of March 11, 1998, supplemental to the Indenture, dated as of March 11, 1998,
between Public Service Company of New Mexico and The Chase Manhattan Bank, as
Trustee, this Note is nontransferable, except as may be required to effect
transfer to any successor trustee to the Refunding Bond Trustee (as defined
herein).
PUBLIC SERVICE COMPANY OF NEW MEXICO
____% Notes, Series ____,Due ________________
No. $
----------- ------------
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
organized and existing under the laws of the State of New Mexico (herein called
the "Company" which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to First
Security Bank of New Mexico, N.A., as Trustee under the Ordinance (as defined
herein) on ___*_____ (unless this Note shall have been called for previous
redemption and provision made for the payment of the redemption price thereof),
the principal sum of $* ____________ and to pay interest thereon from the
Initial Interest Accrual Date (as defined herein) to the date of payment of this
Note at the rate of *_______% per annum payable on the first Interest Payment
Date of *______ and *_______ following the Initial Interest Accrual Date.
Payment of the principal of, and premium, if any, and any such interest
on this Note will be made at the office or agency of the Company maintained for
that purpose in The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
This Note is one of a duly authorized issue of senior notes of the
Company (herein called the "Notes"), issued and to be issued in one or more
series under an Indenture, dated as of March 11, 1998 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered, to all of which
the Holder, by accepting this Note, assents. This Note is one of the series
designated on the face hereof, limited in aggregate principal amount to
$*............
- --------
* Insert as appropriate for each series of Farmington Notes, the designation,
principal amount, Interest Rate, Stated Maturities of Principal and Interest,
Interest Payment Dates and other particulars specified in Exhibit A hereto with
respect to such series.
5
<PAGE>
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes of each series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of a majority in principal amount of the Notes at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes of each series at the time Outstanding, on behalf of the Holders of
all Notes of such series, to waive compliance by the Company with certain
provisions of the Indenture and to waive certain past defaults under the
Indenture and their consequences, provided, however, that if any such past
default affects more than one series of Notes, the Holders of a majority in
aggregate principal amount of the Outstanding Notes of all such series,
considered as one class, shall have the right to waive such past default, and
not the Holders of the Notes of any one such series. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than a majority in aggregate
principal amount of the Notes of all series at the time Outstanding in respect
of which an Event of Default shall have occurred and be continuing, considered
as one class, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Notes of all series at the time
Outstanding in respect of which an Event of Default shall have occurred and be
continuing, considered as one class, a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal hereof or interest hereon on or after the respective
due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
6
<PAGE>
The Notes of this series have been issued to First Security Bank of New
Mexico, N.A., Albuquerque, New Mexico, as trustee (the "Refunding Bond
Trustee"), under Ordinance No. *____ adopted by the City of Farmington, New
Mexico (the "City"), on *_________________, as supplemented by Resolution No.
____________ adopted by the City on *_______________ [and amended by Amendatory
Ordinance No. _________ adopted by the City on *_________________] and as
supplemented [and amended] by [Amendatory and] Supplemental Ordinance No.
_*__________ adopted by the City on February 10, 1998 (collectively, as so
supplemented and amended, the "Ordinance"), to secure the guarantee by the
Company under a Guaranty Agreement dated as of *____ between the Company and the
Refunding Bond Trustee and under a First Supplement to *________ Guaranty
Agreement dated as of *____ between the Company and the Refunding Bond Trustee
relating to the Refunding Bonds (collectively, the "Guaranty"), of payment of
the principal of and interest due (the "Guaranteed Amounts") on the Pollution
Control Revenue Refunding Bonds, 199*___ Series *___ (Public Service Company of
New Mexico [San Juan Project] [San Juan and Four Corners Projects]), issued by
the City under the Ordinance (the "Refunding Bonds").
In the event of failure by the Company to make any payment of any
Guaranteed Amount when and as required to be made by it under the Guaranty, this
Note shall bear interest from the last date to which interest on such Refunding
Bonds has been paid in full prior to the failure of the Company to pay such
Guaranteed Amount (such date being herein defined as the "Initial Interest
Accrual Date"), at the rate of *________% per annum payable on the [first]
[fifteenth] day of *__________ and the [first][fifteenth] day of *___________ of
each year, commencing on the first Interest Payment Date following the Initial
Interest Accrual Date.
The Trustee may conclusively presume that no payments with respect to
interest on the Notes of this series are due unless and until the Trustee shall
have received a written certificate from the Refunding Bond Trustee or successor
trustee under the Ordinance, signed by an authorized officer of the Refunding
Bond Trustee or such successor trustee, certifying that the Company has failed
to make a payment of any Guaranteed Amount when and as required to be made by it
under the Guaranty and specifying such Guaranteed Amount, the Initial Interest
Accrual Date and such other matters, if any, as shall be pertinent to the
payment of interest on the Notes of this series. The Trustee may rely and shall
be fully protected in acting upon any such certificate and shall have no duty
with respect to the matters specified in any such certificate other than to make
it available for inspection by the Company.
Upon the surrender for cancellation, at any time or from time to time,
of Notes of this series by the Refunding Bond Trustee, successor trustee under
the Ordinance, or the Company to the Trustee, the Notes so surrendered shall be
deemed fully paid and the obligations of the Company thereunder shall be
terminated, and such Notes shall be canceled by the Trustee and delivered to the
Company.
This Note is nontransferable except to effect transfer to any successor
trustee to the Refunding Bond Trustee, any such transfer to be made as provided
in the Indenture and subject to certain limitations therein set forth, by the
registration of transfer of this Note in the Note Register, upon surrender of
this Note for registration of transfer at the office or agency of the Company in
any place where the principal of and any premium and interest on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the successor
Refunding Bond Trustee.
7
<PAGE>
If an Event of Default with respect to Notes of this series shall occur
and be continuing, the principal of the Notes of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Notes, or any part thereof, or for
any claim based thereon or otherwise in respect thereof, or of the indebtedness
represented thereby, or upon any obligation, covenant or agreement under this
Indenture, against any incorporator, stockholder, employee, officer or director,
as such, past, present or future of the Company or of any predecessor or
successor corporation (either directly or through the Company or a predecessor
or successor corporation), whether by virtue of any constitutional provision,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Indenture and all
Notes are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be incurred by, any incorporator, stockholder,
employee, officer or director, past, present or future, of the Company or of any
predecessor or successor corporation, because of the indebtedness hereby
authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Indenture or in any of the Notes or to be implied
herefrom or therefrom, and that any such personal liability is hereby expressly
waived and released as a condition of, and as part of the consideration for, the
execution of this Indenture and the issuance of the Notes.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Notes of this series shall be redeemable as provided in the First
Supplemental Indenture, dated as of March 11, 1998, supplemental to the
Indenture.
8
<PAGE>
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
---------------------
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By
--------------------------
[TITLE]
Attest:
- ----------------------------
CERTIFICATION OF AUTHENTICATION
This is one of the Notes of the series designated therein referred to
in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK, as Trustee
By
--------------------------
Authorized Officer
9
<PAGE>
ARTICLE THREE
ORIGINAL ISSUE OF FARMINGTON NOTES
SECTION 3.01. The Farmington Notes of the seven series set forth in the
column entitled "Series of Farmington Notes" in the respective principal amounts
thereof set forth under the column entitled Principal Amount" in Exhibit A
hereto , may, upon execution of this First Supplemental Indenture, or from time
to time thereafter, be executed on behalf of the Company by any officer or
employee authorized to do so by a Board Resolution, under its corporate seal
affixed thereto or reproduced thereon attested by its Secretary or by one of its
Assistant Secretaries and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Farmington Notesin
accordance with a Company Order delivered to the Trustee by the Company.
ARTICLE FOUR
PAYING AGENT AND REGISTRAR
SECTION 4.01. The Chase Manhattan Bank will be the Paying Agent and
Note Registrar for the Farmington Notes.
ARTICLE FIVE
SUNDRY PROVISIONS
SECTION 5.01. The Company hereby covenants that so long as any of the
Farmington Notes shall remain outstanding, the Company shall deliver to the
Trustee as soon as available copies (certified by an officer or employee of the
Company to be true) of the Ordinances, the corresponding Installment Sale
Agreement or Amended and Restated Installment Sale Agreement (as defined in the
Ordinances), the Guaranties and copies of any supplements, amendments or
replacements thereto, together with such other documents and instruments as the
Trustee may reasonably request from time to time in connection with the
transactions contemplated hereby. The Trustee shall have no duty to examine or
take any other action with respect to any such documents or instruments so
received by it, other than to retain in its files any of same which it so
receives and to make same available for inspection during normal business hours
by any owner of the Farmington Notes.
SECTION 5.02. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Farmington Notes or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of the Farmington Notes that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
SECTION 5.03. The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
10
<PAGE>
SECTION 5.04. The Trustee hereby accepts the trusts herein declared,
provided, created, supplemented, or amended and agrees to perform the same upon
the terms and conditions herein and in the Indenture, set forth and upon the
following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this First Supplemental
Indenture or for or in respect of the recitals contained herein, all of
which recitals are made by the Company solely. In general, each and
every term and condition contained in Article VI of the Indenture shall
apply to and form part of this First Supplemental Indenture with the
same force and effect as if the same were herein set forth in full with
such omissions, variations, and insertions, if any, as may be
appropriate to make the same conform to the provisions of this First
Supplemental Indenture.
To the extent permitted by Section 6.01 of the Indenture, and without
limitation of Section 6.03 of the Indenture, the Trustee may rely and
shall be protected in acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness,
or other paper or document (including, without limitation, the
Ordinances, the Guaranties, the First Supplemental Guaranties, or any
notice, certificate, or other document provided for in the Ordinances,
the Guaranties, the First Supplemental Guaranties or this First
Supplemental Indenture) believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties.
SECTION 5.05. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental, Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
--------------------------------
M.H. Maerki
Senior Vice President
and Chief Financial Officer
Attest:
- --------------------
Secretary
THE CHASE MANHATTAN BANK, as Trustee
By:
--------------------------------
T.J. Foley
Vice President
Attest:
- --------------------
Senior Trust Officer
STATE OF NEW MEXICO )
) ss.:
COUNTY OF BERNALILLO )
On the ____ day of March, 1998 before me personally came M.H. Maerki,
to me known, who, being by me duly sworn, did depose and say that he is Senior
Vice President and Chief Financial Officer of Public Service Company of New
Mexico, one of the corporations 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 corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
----------------------------
Notary Public
My Commission Expires:
----------------------------
12
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 11th day of March, 1998, before me personally came T.J. Foley,
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of The Chase Manhattan Bank, one of the corporations 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 corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
----------------------------
Notary Public
50022
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A - DESCRIPTION OF 7 SERIES OF FARMINGTON NOTES
SAN JUAN AND FOUR CORNERS PROJECTS
Guaranties
Series of Interest City of and First
Pollution Control Farmington Principal Stated Maturity Interest Payment Farmington Supplemental
Revenue Refunding Bonds Notes Amount of Principal Rate Dates Ordinance Guaranties
----------------------- -------------- --------- --------------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. $100,000,000 City of 6.40% Notes, $100,000,000 August 15, 6.40% February 15 Ordinance No. Guaranty Agree-
Farmington, New Series F-1993-A, 2023 August 15 93-995 adopted ment dated
Mexico, 6.40% Pollu- Due August 15, Aug. 24, 1993 as August 15, 1993;
tion Control Revenue 2023 supplemented by First Supple-
Refunding Bonds, 1993 Resolution No. ment to 1993A
Series A (Public 93-748 adopted Guaranty
Service Company of Aug. 24, 1993 and Agreement dated
New Mexico San Juan as supplemented by as of March 11,
and Four Corners Supplemental 1998.
Projects). Ordinance No. 98-
1065 adopted on
February 10, 1998
2. $40,045,000 City of 6.30% Notes, $40,045,000 December 1, 6.30% June 1 Ordinance No. Guaranty Agree-
Farmington, New Mexico Series F-1996-A, 2016 December 1 96-1049, adopted ment dated
6.30% Pollution Control Due December 1, Nov. 19, 1996 as December 1, 1996
Control Revenue Re- 2016 supplemented by First Supple-
funding Bonds, 1995 Resolution No. 96- ment to 1996A
Series A (Public Service 866 adopted Nov. Guaranty Agree-
Company of New Mexico 19, 1996 and as ment dated as
San Juan Project). amended by Amenda- of March 11,
tory Ordinance 1998.
No. 96-1050
adopted on Nov.
26, 1996 and as
supplemented and
amended by Amenda-
tory and Supple-
mental Ordinance No.
98-1066 adopted on
February 10, 1998
3. $37,000,000 City of 6.30% Notes, $37,000,000 December 1, 6.30% June 1 Ordinance No. 96- Guaranty Agree-
Farmington, New Mexico Series F-1996-B, 2016 December 1 1049, adopted Nov. ment dated
6.30% Pollution Con- Due December 1, 19, 1996 as sup- December 1,1996
trol Revenue Refunding 2016 plemented by First Supplement
Bonds, 1996 Series B Resolution No. 96- to 1996B
(Public Service Company 866 adopted Nov.19, Guaranty Agree-
Mexico San Juan Project) 1996 and as amended ment dated as
by Amendatory Ordi- of March 11,
nance No. 96-1050 1998
adopted on Nov. 26,
1996 and as supple-
mented No. 98-1066
adopted on February
10, 1998
4. $40,000,000 City of 5.80% Notes, $40,000,000 April 1, 2022 5.80% April 1 Ordinance No. 97- Guaranty Agree-
Farmington, New Mexico Series F-1997-A, October 1 1052, adopted Jan. ment dated
Pollution Control Due April 1, 2022 28, 1997 as supple- February 1,1997
Revenue Refunding mented byResolution First supplement
Bonds, 5.80% 1997 No. 97-870, adopted to 1997A
Series A (Public Ser- Jan. 28, 1997 as Guaranty Agree-
vice Company of New amended by Amenda- ment dated as
Mexico San Juan tory Ordinance No. of March 11,
Project). 97-1053 adopated 1998.
Feb. 11, 1997 and
as supplemented by
Supplemental Ordi-
nance No. 98-1067
adopted on February
10, 1998
5. $37,000,000 City of 5.80% Notes, $37,000,000 April 1, 2022 5.80% April 1 Ordinance No. 97- Guaranty Agree-
Farmington, New Mexico Series F-1997-B, October 1 1052, adopted Jan. ment dated
Pollution Control Due April 1, 2022 28, 1997 as supple- February 1, 1997
Revenue Refunding mented byResolution First Supplement
Bonds 5.80% 1997 No. 97-870, adopted to 1997C
Series B (Public Jan 28, 1997 as Guaranty Agree-
Service Company of amended by Amenda- ment dated as
New Mexico San Juan tory Ordinance No. of March 11,
Project). 97-1053 adopted 1998.
Feb. 11, 1997 and
as supplemented by
Supplemental Ordi-
nance No. 98-1067
adopted on February
10, 1998
6. $23,000,000 City of 5.80% Notes, $23,000,000 April 1, 2022 5.80% April 1 Ordinance No. 97- Guaranty Agree-
Farmington, New Mexico Series F-1997-C, October 1 1052, adopted Jan. ment dated
Pollution Control Due April 1, 2022 28, 1997 as supple- February 1, 1997
Revenue Refunding mented byResolution First Supplement
Bonds, 5.80% 1997 No. 97-870, adopted to 1997C
Series C (Public Jan 28, 1997 as Guaranty Agree-
Service Company of amended by Amenda- ment dated as
New Mexico San Juan tory Ordinance No. of March 11,
Project). 97-1053 adopted 1998.
Feb. 11, 1997 and
as supplemented by
Supplemental Ordi-
nance No. 98-1067
adopted on February
10, 1998
7. $90,000,000 City of 6 3/8% Notes, $90,000,000 April 1, 2022 6.3/8% April 1 Ordinance No. 97- Guaranty Agree-
Farmington, New Mexico Series F-1997-D, October 1 1052, adopted Jan. ment dated
6 3/8% Pollution Due April 1, 2022 28, 1997 as supple- February 1, 1997
Control Revenue Re- mented byResolution First Supplement
funding Bonds, 1997 No. 97-870, adopted to 1997C
Series D (Public Jan 28, 1997 as Guaranty Agree-
Service Company of amended by Amenda- ment dated as
New Mexico San Juan tory Ordinance No. of March 11,
Project). 97-1053 adopted 1998.
Feb. 11, 1997 and
as supplemented by
Supplemental Ordi-
nance No. 98-1067
adopted on February
10, 1998
</TABLE>
- --------------------------------------------------------------------------------
PUBLIC SERVICE COMPANY OF NEW MEXICO
TO
THE CHASE MANHATTAN BANK
Trustee
--------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of March 11, 1998
To
INDENTURE
Dated as of March 11, 1998
--------------
- --------------------------------------------------------------------------------
(Creating Three Series of Maricopa Senior Notes)
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of March 11, 1998, between
PUBLIC SERVICE COMPANY OF NEW MEXICO, a corporation duly organized and existing
under the laws of the State of New Mexico (herein called the "Company"), having
its principal office at Alvarado Square, Albuquerque, New Mexico 87158, and THE
CHASE MANHATTAN BANK, a New York banking corporation, as Trustee (herein called
the "Trustee") under the Indenture dated as of March 11, 1998 between the
Company and the Trustee (the "Indenture").
RECITALS OF THE COMPANY
The Company has executed and delivered the Indenture to the Trustee to
provide for the issuance from time to time of its senior notes (the "Notes"),
said Notes to be issued in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of three new series of its Notes to be respectively known
as set forth under the column entitled, "Series of Maricopa Notes" in Exhibit A
hereto (collectively, the "Maricopa Notes"), the form and substance of such
Maricopa Notes and the terms, provisions, and conditions thereof to be set forth
as provided in the Indenture and this Second Supplemental Indenture.
The Maricopa County, Arizona Pollution Control Corporation (the
"Authority") has issued three series of its Pollution Control Revenue Refunding
Bonds (Public Service Company of New Mexico Palo Verde Project) (collectively,
the "Refunding Bonds") as described under the column entitled "Pollution Control
Revenue Refunding Bonds" in Exhibit A hereto.
The Authority has appointed First Security Bank of New Mexico, N.A.
(formerly named First National Bank in Albuquerque), as trustee (together with
any successor trustee under the Indentures of Trust (as hereinafter defined),
each a "Refunding Bond Trustee"), with respect to each series of Refunding
Bonds, all pursuant to and as more particularly set forth in the Indenture of
Trust and Pledge and supplements thereto relating to such series of Refunding
Bonds described under the column entitled "Indenture of Trust" in Exhibit A
hereto made by the Authority to the Refunding Bond Trustee (collectively, the
"Indentures of Trust").
Pursuant to the three Loan Agreements described under the column
entitled "Loan Agreement" in Exhibit A hereto related, respectively, to the
three series of Refunding Bonds (collectively, the "Loan Agreements") each by
and between the Authority and the Company, the Authority loaned (collectively,
the "Loans") to the Company the proceeds from the issuance of the Refunding
Bonds, and the Company is obligated to make certain payments to the Authority,
which payments the Authority has pledged and assigned to the applicable
Refunding Bond Trustee by the terms of the Indentures of Trust to provide for
the payment of principal of and premium, if any, and interest on each of the
corresponding three series of Refunding Bonds.
<PAGE>
Pursuant to the Loan Agreements, as collateral security for the
Refunding Bonds, the Company issued certain of its First Mortgage Bonds ("First
Mortgage Bonds") under the Company's Indenture of Mortgage and Deed of Trust
dated as of June 1, 1947 to The Bank of New York (formerly Irving Trust Company)
and certain supplemental indentures thereto.
Pursuant to each Indenture of Trust and each supplement to the
corresponding Loan Agreement between the Company and the Authority, each such
supplement dated as of March 11, 1998 and entitled "First Supplement to Loan
Agreement" (collectively, the "First Supplemental Loan Agreements"), related,
respectively, to each of the three series of Refunding Bonds, the First Mortgage
Bonds are being exchanged for the Maricopa Notes to be issued under this Second
Supplemental Indenture.
Pursuant to each of the First Supplemental Loan Agreements, each series
of the Maricopa Notes will be pledged to the applicable Refunding Bond Trustee
as security for the performance of the Company's obligations under the
respective Loan Agreement to repay each Loan in an amount equal to the principal
of, premium, if any, and interest due on each of the corresponding series of the
Refunding Bonds (the "Required Amounts").
Each of the three new series of Maricopa Notes will relate to one of
the three series of Refunding Bonds and will be issued (x) in an aggregate
principal amount equal to the aggregate principal amount of the Refunding Bonds
of such series, maturing on such dates that upon the stated maturity date of the
Refunding bonds of such series a corresponding principal amount of Maricopa
Notes of such series shall mature, (y) bearing interest (but only from the
Initial Interest Accrual Date, if any, determined in accordance with Section
1.03 below) at the same interest rate borne by the Refunding Bonds of such
series and (z) be subject to redemption prior to maturity at the time, in the
amount, and at the same redemption premium, if any, borne by the Refunding Bonds
of such series. Each series of Maricopa Notes will be delivered to the
corresponding Refunding Bond Trustee, as security for the performance of the
Company's obligations under the related Loan Agreements to pay the Loan under
such Loan Agreements.
All things necessary to make this Second Supplemental Indenture a valid
agreement of the Company, and to make the Maricopa Notes, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been done.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the acceptance of the
Maricopa Notes by the corresponding Refunding Bond Trustee as collateral
security for the related series of Refunding Bonds, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Maricopa Notes and the terms, provisions, and conditions thereof, it is mutually
agreed, for the equal and proportionate benefit of all Holders of the Maricopa
Notes, as follows:
2
<PAGE>
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF
THE MARICOPA NOTES
SECTION 1.01. There shall be and are hereby authorized three series of
Maricopa Notes designated as follows:
1. "5.75% Notes, Series M-1992-A, Due November 1, 2022," limited in
aggregate principal amount to $37,300,000;
2. "6-3/8% Notes, Series M-1993-A, Due August 15, 2023," limited in
aggregate principal amount to $36,000,000;
3. "6.30% Notes, Series M-1996-A, Due December 1, 2026," limited in
aggregate principal amount to $23,000,000.
The aggregate principal amount of each series of Maricopa Notes to be
authenticated and delivered shall be the aggregate principal amount set forth
under the column entitled "Principal Amount" in Exhibit A hereto. Subject to the
provisions of Section 1.03 below, the Maricopa Notes shall bear no interest
until an Initial Interest Accrual Date, if any, has been determined in
accordance with Section 1.03 below. The Maricopa Notes shall mature and the
principal thereof shall be due and payable together with all accrued and unpaid
interest thereon on their respective Stated Maturities set forth under the
column entitled "Stated Maturity of Principal" in Exhibit A hereto, and shall be
issued in the form of registered Maricopa Notes without coupons. Each of the
Maricopa Notes shall be dated as of the date of its authentication.
SECTION 1.02. The Maricopa Notes shall be issued to and registered in
the name of the Refunding Bond Trustee under the applicable Indenture of Trust
and shall be non-transferable, except as may be required to effect transfer to
any successor trustee to the Refunding Bond Trustee under such Indenture of
Trust. Principal of, and premium, if any, and interest on the Maricopa Notes
will be payable at the office or agency of the Company in The City and State of
New York. The Maricopa Notes shall be deemed fully paid, and the obligation of
the Company thereunder shall be terminated, to the extent and in the manner
provided in Section 1.05.
SECTION 1.03. Each of the three series of Maricopa Notes has been
issued to the corresponding Refunding Bond Trustee to secure the obligations of
the Company under the related Loan Agreement to repay the respective Loan in an
amount equal to the respective Required Amounts.
In the event of failure by the Company to make any payment of any
Required Amount when and as required by the Company under any of the Loan
Agreements, the related series of Maricopa Notes shall bear interest at the
annual rate applicable to such series as set forth under the column entitled
"Interest Rate" in Exhibit A hereto from the last day to which interest on the
3
<PAGE>
corresponding series of Refunding Bonds has been paid in full prior to the
failure of the Company to pay such Required Amount (such date being herein
defined as the "Initial Interest Accrual Date"), and interest at such rate shall
be payable on the date due with respect to such Refunding Bonds, commencing on
the first Interest Payment Date applicable to such series set forth in the
column entitled "Interest Payment Date" in Exhibit A hereto ("Interest Payment
Date") following the Initial Interest Accrual Date.
The Trustee may conclusively presume that no payments with respect to
interest on the Maricopa Notes are due unless and until the Trustee shall have
received a written certificate from the applicable Refunding Bond Trustee,
signed by an authorized officer of such Refunding Bond Trustee or such successor
trustee, certifying that the Company has failed to make a payment of any
Required Amount when and as required to be made by it under the any of the three
Loan Agreements and specifying such Required Amount, the interest rate, the
Initial Interest Accrual Date, the Interest Payment Date and such other matters,
if any, as shall be pertinent to the payment of interest on the applicable
series of Maricopa Notes. The Trustee may rely and shall be fully protected in
acting upon any such certificate and shall have no duty with respect to the
terms specified in any such certificate other than to make it available for
inspection by the Company.
SECTION 1.04. The Maricopa Notes shall be redeemed, in whole or in
part, at the principal amount thereof plus any premium and any accrued interest
from the Initial Interest Accrual Date to the redemption date, if the Refunding
Bond Trustee notifies the Trustee in writing that Refunding Bonds are subject to
redemption as provided in Section 3.02 of the Indentures of Trust. Any such
notice must be received by the Trustee no later than five days (unless a shorter
period of time is acceptable to the Trustee) prior to any redemption date fixed
for the Refunding Bonds to be redeemed and shall specify the principal amount of
such Refunding Bonds anticipated as of the date of such notice to be redeemed,
the redemption date, the redemption premium, if any, and the amount of accrued
interest anticipated to be paid thereon. In the event such notice is given to
the Trustee as hereinabove provided, the redemption date of the applicable
series of Maricopa Notes shall be the date on which the corresponding series of
Refunding Bonds are to be redeemed, and on such date the said Maricopa Notes
shall be redeemed in the same principal amount as the corresponding series of
Refunding Bonds in fact redeemed, pursuant to Section 3.01 of the Indentures of
Trust. The Company shall deposit in trust with the Trustee on the redemption
date an amount of money sufficient to pay the principal amount, plus any premium
and accrued interest, if any, to the date fixed for redemption on the Maricopa
Notes to be redeemed (the "Redemption Price"). Upon presentation to the Trustee
of any of the Maricopa Notes by a Refunding Bond Trustee for payment of the
Redemption Price, such Maricopa Notes so presented shall be redeemed and paid in
full. However, if, in lieu of presenting the Maricopa Notes due for redemption,
the Refunding Bond Trustee shall deliver such Maricopa Notes to the Trustee for
cancellation, then and in that event, subject to Section 1.05, such of the
Maricopa Notes so presented for cancellation shall be deemed fully paid, and if
any moneys shall have been deposited with the Trustee for such redemption, then
such moneys shall be paid over to the Company, and the Maricopa Notes so
surrendered shall be canceled in accordance with Section 1.05.
4
<PAGE>
SECTION 1.05. Upon surrender by a Refunding Bond Trustee or the Company
to the Trustee hereunder of any of the Maricopa Notes for cancellation, such
notes shall be canceled by the Trustee and delivered to the Company and shall be
deemed fully paid and the obligations of the Company thereunder terminated.
SECTION 1.06. The Maricopa Notes shall be defeasible pursuant to
Section 13.02 and Section 13.03 of the Indenture.
ARTICLE TWO
FORM OF MARICOPA NOTES
SECTION 2.01. The Maricopa Notes and the Trustee's certificate of
authentication to be endorsed thereon are to be substantially in the following
form:
Pursuant to Section 1.02 of the Second Supplemental Indenture dated as
of March 11, 1998, supplemental to the Indenture, dated as of March 11, 1998,
between Public Service Company of New Mexico and The Chase Manhattan Bank, as
Trustee, this Note is nontransferable, except as may be required to effect
transfer to any successor trustee to the Refunding Bond Trustee (as defined
herein).
PUBLIC SERVICE COMPANY OF NEW MEXICO
____% Notes, Series ____, Due ________________
No. $
------------ ------------
PUBLIC SERVICE COMPANY OF NEW MEXICO, a corporation organized and
existing under the laws of the State of New Mexico (herein called the "Company"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to First Security Bank
of New Mexico, N.A., as Trustee under the Indenture of Trust (as defined herein)
on [ * ](unless this Note shall have been called for previous redemption and
provision made for the payment of the redemption price thereof), the principal
sum of $[ *] and to pay interest thereon from the Initial Interest Accrual Date
(as defined herein) to the date of payment of this Note at the rate of [ * ]%
per annum payable on the first Interest Payment Date of [ * ]and [ * ] following
the Initial Interest Accrual Date.
Payment of the principal of and premium, if any, and any such interest
on this Note will be made at the office or agency of the Company maintained for
that purpose in The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
- ----------
*Insert as appropriate for each series of Maricopa Notes, the designation,
principal amount, Interest Rate, Stated Maturities of Principal and Interest,
Interest Payment Dates, and other particulars specified in Exhibit A hereto with
respect to such series.
5
<PAGE>
This Note is one of a duly authorized issue of senior notes of the
Company (herein called the "Notes"), issued and to be issued in one or more
series under an Indenture, dated as of March 11, 1998 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered, to all of which
the Holder, by accepting this Note, assents. This Note is one of the series
designated on the face hereof, limited in aggregate principal amount to $[ * ].
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes of each series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of a majority in principal amount of the Notes at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes of each series at the time Outstanding, on behalf of the Holders of
all Notes of such series, to waive compliance by the Company with certain
provisions of the Indenture and to waive certain past defaults under the
Indenture and their consequences, provided, however, that if any such past
default affects more than one series of Notes, the Holders of a majority in
aggregate principal amount of the Outstanding Notes of all such series,
considered as one class, shall have the right to waive such past default, and
not the Holders of the Notes of any one such series. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than a majority in aggregate
principal amount of the Notes of all series at the time Outstanding in respect
of which an Event of Default shall have occurred and be continuing, considered
as one class, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Notes of all series at the time
Outstanding in respect of which an Event of Default shall have occurred and be
continuing, considered as one class, a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal hereof or interest hereon on or after the respective
due dates expressed herein.
6
<PAGE>
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
The Notes of this series have been issued to First Security Bank of New
Mexico, N.A., Albuquerque, New Mexico, as trustee (the "Refunding Bond
Trustee"), under the Loan Agreement dated as of [ * ]between Maricopa County,
Arizona Pollution Control Corporation (the "Authority") and the Company as
supplemented by the First Supplement to Loan Agreement dated as of March 11,
1998 between the Authority and the Company as collateral security for the
payment of the principal of, premium, if any, and interest due (the "Required
Amounts") on the Pollution Control Revenue Refunding Bonds, 199[*] Series [ * ]
(Public Service Company of New Mexico Palo Verde Project), issued by the
Authority under the Indenture of Trust (the "Refunding Bonds").
In the event of failure by the Company to make any payment of any
Required Amount when and as required to be made by it under the Loan Agreement,
this Note shall bear interest from the last date to which interest on such
Refunding Bonds has been paid in full prior to the failure of the Company to pay
such Required Amount (such date being herein defined as the "Initial Interest
Accrual Date"), at the rate of [ * ]% per annum payable on the [first]
[fifteenth] day of [ * ] and the [first] [fifteenth] day of [ * ] of each year,
commencing on the first Interest Payment Date following the Initial Interest
Accrual Date.
The Trustee may conclusively presume that no payments with respect to
interest on the Notes of this series are due unless and until the Trustee shall
have received a written certificate from the Refunding Bond Trustee or successor
trustee under the Indenture of Trust and Pledge dated as of [ * ] between the
Authority and the Refunding Bond Trustee as supplemented by Supplemental
Indenture of Trust and Pledge dated as of March 11, 1998 (the "Indenture of
Trust"), signed by an authorized officer of the Refunding Bond Trustee or such
successor trustee, certifying that the Company has failed to make a payment of
any Required Amount when and as required to be made by it under the Loan
Agreement and specifying such Required Amount, the Initial Interest Accrual Date
and such other matters, if any, as shall be pertinent to the payment of interest
on the Notes of this series. The Trustee may rely and shall be fully protected
in acting upon any such certificate and shall have no duty with respect to the
matters specified in any such certificate other than to make it available for
inspection by the Company.
Upon the surrender for cancellation, at any time or from time to time,
of Notes of this series by the Refunding Bond Trustee, successor trustee under
the Indenture of Trust, or the Company to the Trustee, the Notes so surrendered
shall be deemed fully paid and the obligations of the Company thereunder shall
be terminated, and such Notes shall be canceled by the Trustee and delivered to
the Company.
7
<PAGE>
This Note is nontransferable except to effect transfer to any successor
trustee to the Refunding Bond Trustee, any such transfer to be made as provided
in the Indenture and subject to certain limitations therein set forth by, the
registration of transfer of this Note in the Note Register, upon surrender of
this Note for registration of transfer at the office or agency of the Company in
any place where the principal of and any premium and interest on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the successor
Refunding Bond Trustee.
If an Event of Default with respect to Notes of this series shall occur
and be continuing, the principal of the Notes and this Series may be declared
due and payable in the manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Notes, or any part thereof, or for
any claim based thereon or otherwise in respect thereof, or of the indebtedness
represented thereby, or upon any obligation, covenant or agreement under this
Indenture, against any incorporator, stockholder, employee, officer or director,
as such, past, present or future of the Company or of any predecessor or
successor corporation (either directly or through the Company or a predecessor
or successor corporation), whether by virtue of any constitutional provision,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Indenture and all
Notes are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be incurred by, any incorporator, stockholder,
employee, officer or director, past, present or future, of the Company or of any
predecessor or successor corporation, because of the indebtedness hereby
authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Indenture or in any of the Notes or to be implied
herefrom or therefrom, and that any such personal liability is hereby expressly
waived and released as a condition of, and as part of the consideration for, the
execution of this Indenture and the issuance of the Notes.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
8
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Notes of this series shall be redeemable as provided in the Second
Supplemental Indenture, dated as of March 11, 1998, supplemental to the
Indenture.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
------------------------
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By
------------------------------
[TITLE]
Attest:
- ------------------
CERTIFICATION OF AUTHENTICATION
-------------------------------
This is one of the Notes of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
------------------------
THE CHASE MANHATTAN BANK, as Trustee
By
------------------------------
Authorized Officer
9
<PAGE>
ARTICLE THREE
ORIGINAL ISSUE OF MARICOPA NOTES
SECTION 3.01. The Maricopa Notes of the three series set forth in the
column entitled "Series of Maricopa Notes" in the respective principal amounts
thereof set forth under the column entitled "Principal Amount" in Exhibit A
hereto may, upon execution of this Second Supplemental Indenture, or from time
to time thereafter, be executed on behalf of the Company by any officer or
employee authorized to do so by a Board Resolution, under its corporate seal
affixed thereto or reproduced thereon attested by its Secretary or by one of its
Assistant Secretaries and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Maricopa Notes in
accordance with a Company Order delivered to the Trustee by the Company.
ARTICLE FOUR
PAYING AGENT AND REGISTRAR
SECTION 4.01. The Chase Manhattan Bank will be the Paying Agent and
Note Registrar for the Maricopa Notes.
ARTICLE FIVE
SUNDRY PROVISIONS
SECTION 5.01. The Company hereby covenants that so long as any of the
Maricopa Notes shall remain outstanding, the Company shall deliver to the
Trustee as soon as available copies (certified by an officer or employee of the
Company to be true) of the Indentures of Trust, the First Supplemental Loan
Agreements, the Loan Agreements and copies of any supplements, amendments or
replacements thereto, together with such other documents and instruments as the
Trustee may reasonably request from time to time in connection with the
transactions contemplated hereby. The Trustee shall have no duty to examine or
take any other action with respect to any such documents or instruments so
received by it, other than to retain in its files any of same which it so
receives and to make same available for inspection during normal business hours
by any owner of the Maricopa Notes.
SECTION 5.02. Except as otherwise expressly provided in this Second
Supplemental Indenture or in the form of Maricopa Notes or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of the Maricopa Notes that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
10
<PAGE>
SECTION 5.03. The Indenture, as supplemented by this Second
Supplemental Indenture, is in all respects ratified and confirmed, and this
Second Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
SECTION 5.04. The Trustee hereby accepts the trusts herein declared,
provided, created, supplemented, or amended and agrees to perform the same upon
the terms and conditions herein and in the Indenture, set forth and upon the
following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Second Supplemental
Indenture or for or in respect of the recitals contained herein, all of
which recitals are made by the Company solely. In general, each and
every term and condition contained in Article VI of the Indenture shall
apply to and form part of this Second Supplemental Indenture with the
same force and effect as if the same were herein set forth in full with
such omissions, variations, and insertions, if any, as may be
appropriate to make the same conform to the provisions of this Second
Supplemental Indenture.
To the extent permitted by Section 6.01 of the Indenture, and without
limitation of Section 6.03 of the Indenture, the Trustee may rely and
shall be protected in acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness,
or other paper or document (including, without limitation, the
Indentures of Trust, the Loan Agreements, the First Supplemental Loan
Agreements, or any notice, certificate, or other document provided for
in the Indentures of Trust, the Loan Agreements, the First Supplemental
Loan Agreements, or this Second Supplemental Indenture) believed by the
Trustee to be genuine and to have been signed or presented by the
proper party or parties.
SECTION 5.05. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By:
-----------------------------
M.H. Maerki
Senior Vice President and
Chief Financial Officer
Attest:
- -----------------------------
Secretary
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
T.J. Foley
Vice President
Attest:
- -----------------------------
Senior Trust Officer
12
<PAGE>
STATE OF NEW MEXICO )
) ss.:
COUNTY OF BERNALILLO )
On the ____ day of March, 1998 before me personally came M.H. Maerki,
to me known, who, being by me duly sworn, did depose and say that he is Senior
Vice President and Chief Financial Officer of Public Service Company of New
Mexico, one of the corporations 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 corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
---------------------------
Notary Public
My Commission Expires:
---------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 11th day of March, 1998, before me personally came T.J. Foley,
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of The Chase Manhattan Bank, one of the corporations 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 corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
---------------------------
Notary Public
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A - DESCRIPTION OF 3 SERIES OF MARICOPA NOTES
Loan Agreement
Interest and First
Pollution Control Series of Principal Stated Maturity Interest Payment Indenture of Supplemental
Revenue Refunding Bonds Maricopa Notes Amount of Principal Rate Dates Trust Loan Agreements
----------------------- -------------- --------- --------------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. $37,300,000 Maricopa 5.75% Notes, $37,300,000 November 1, 2022 5.75% May 1 Indenture of Trust Loan Agreement
County, Arizona Series M-1992-A, November 1 and Pledge dated dated as of
Pollution Control Due November 1, as of November 1, November 1,
Corporation, Pollution 2022 1992 between the 1992 between
Control Revenue Authority and the the Authority
Refunding Bonds, 5.75% Refunding Bond and the Com-
1992 Series A (Public Trustee as pany as sup-
Service Company of supplemented by plemental by
New Mexico Palo Verde Supplemental the First
Project). Indenture of Trust Supplement to
and Pledge dated Loan Agree-
as of March 11, ment as of
1998 March 11,
1998
2. $36,000,000 Maricopa 6 3/8% Notes, $36,000,000 August 15, 2023 6-3/8% February 15 Indenture of Trust Loan Agreement
County, Arizona Series M-1993-A, August 15 and Pledge dated dated as of
Pollution Control Due August 15, as of August 15, August 15, 1993
Corporation, 6 3/8% 2023 1993 between the between the
Pollution Control Authority and the Authority and
Revenue Bonds, 1993 Refunding Bond the Company as
Series A (Public Trustee as supplemented
Service Company of supplemented by by the First
New Mexico Palo Verde Supplemental Supplement to
Project). Indenture of Trust Loan Agreement
and Pledge dated dated as of
as of March 11, March 11, 1998
1998
3. $23,000,000 Maricopa 6.30% Notes, $23,000,000 December 1, 2026 6.30% June 1 Indenture of Trust Loan Agreement
County, Arizona Series M-1996-A, December 1 and Pledge dated dated as of
Pollution Control Due December 1, as of December 1, December 1,
Corportion, 6.30% 2026 1996 between the 1996 between
Pollution Control Authority and the the Authority
Revenue Refunding Refunding Bond and the Company
Bonds, 1996 Series A Trustee as as supplemented
(Public Service supplemented by by the First
Company of New Supplemental Supplement to
Mexico Palo Verde Indenture of Trust Loan Agreement
Project) and Pledge dated dated as of
as of March 11, March 11, 1998
1998
Capitalized terms used and not otherwise defined in this Exhibit A shall have the meaning given them in the Second Supplemental
Indenture, of which this Exhibit A forms a part.
</TABLE>
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of March 11, 1998
among
PUBLIC SERVICE COMPANY OF NEW MEXICO
as Borrower,
THE INITIAL LENDERS NAMED HEREIN,
as Lenders,
THE CHASE MANHATTAN BANK
as Administrative Agent,
CITIBANK, N.A.
as Syndication Agent,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Documentation Agent,
CHASE SECURITIES, INC.
as Arranger,
and
THE CHASE MANHATTAN BANK, CITIBANK, N.A. AND MORGAN
GUARANTY TRUST
COMPANY OF NEW YORK
as Initial Issuing Banks,
- --------------------------------------------------------------------------------
NYDOCS03/70502 3
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms...................................... 1
SECTION 1.02. Computation of Time Periods................................ 14
SECTION 1.03. Accounting Terms........................................... 15
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances.............................. 15
SECTION 2.02. Making the Revolving Credit Advances....................... 15
SECTION 2.03. Fees....................................................... 17
SECTION 2.04. Reduction of the Commitments............................... 18
SECTION 2.05. Repayment.................................................. 18
SECTION 2.06. Interest................................................... 18
SECTION 2.07. Additional Interest on Eurodollar Rate Advances............ 19
SECTION 2.08. Interest Rate Determination and Protection................. 19
SECTION 2.09. Rollover and Conversion of Revolving Credit Advances....... 20
SECTION 2.10. Prepayments of Revolving Credit Advances................... 21
SECTION 2.11. Increased Costs............................................ 22
SECTION 2.12. Illegality................................................. 24
SECTION 2.13. Payments and Computations.................................. 24
SECTION 2.14. Taxes...................................................... 25
SECTION 2.15. Sharing of Payments, Etc................................... 27
SECTION 2.16. Letters of Credit.......................................... 28
SECTION 2.17. Use of Proceeds............................................ 32
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness...................... 32
SECTION 3.02. Conditions Precedent to Initial Extension of Credit........ 33
SECTION 3.03. Conditions Precedent to Each Borrowing and to Rollover
of Advances................................................ 33
SECTION 3.04. Determinations Under Section 3.01, 3.02, or 3.03........... 34
NYDOCS03/70502 3
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower............. 35
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants...................................... 39
SECTION 5.02. Negative Covenants......................................... 43
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default.......................................... 46
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default... 48
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action................................... 51
SECTION 7.02. Administrative Agent's Reliance, Etc....................... 51
SECTION 7.03. Chase, Citibank, Morgan and Affiliates..................... 52
SECTION 7.04. Lender Party Credit Decision............................... 52
SECTION 7.05. Indemnification............................................ 52
SECTION 7.06. Successor Agents........................................... 54
SECTION 7.07. Syndication Agent, Documentation Agent..................... 54
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc............................................ 55
SECTION 8.02. Notices, Etc............................................... 55
SECTION 8.03. No Waiver; Remedies........................................ 56
SECTION 8.04. Costs, Expenses and Taxes.................................. 56
SECTION 8.05. Right of Set-off........................................... 57
SECTION 8.06. Binding Effect............................................. 57
SECTION 8.07. Assignments and Participations............................. 57
SECTION 8.08. Governing Law.............................................. 60
SECTION 8.09. Execution in Counterparts.................................. 60
SECTION 8.10. Waiver of Jury Trial....................................... 61
NYDOCS03/70502 3
<PAGE>
EXHIBITS
- --------
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Rollover
Exhibit D - Form of Assignment & Acceptance
Exhibit E - Form of Opinion of Keleher & McLeod, P.A.
Exhibit F - Form of Opinion of Winthrop, Stimson, Putnam & Roberts
Exhibit G - Form of Opinion of Snell & Wilmer
Exhibit H - Form of Accounting Firm Certificate
SCHEDULES
- ---------
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Acceptable Accounting Firms
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(m) - Electric Franchises
Schedule 4.01(n) - ERISA Plans
Schedule 4.01(v) - Material Leases
Schedule 4.01(w) - Indebtedness
Schedule 4.01(x) - Material Lease Interest Payments and Discount Rate
NYDOCS03/70502 3
<PAGE>
REVOLVING CREDIT AGREEMENT
Dated as of March 11, 1998
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(the "Borrower"), the banks, financial institutions and other institutional
lenders listed on the signature pages hereof (the "Banks"), THE CHASE MANHATTAN
BANK ("Chase"), as administrative agent (together with any successor thereto
appointed pursuant to Section 7.06, the "Administrative Agent"), CHASE
SECURITIES, INC. ("CSI"), as arranger (the "Arranger"), CITIBANK, N.A.
("Citibank"), as syndication agent (the "Syndication Agent"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK ("Morgan"), as documentation agent (the "Documentation
Agent" and, together with the Administrative Agent, the Arranger and the
Syndication Agent, the "Agents") and Citibank, Chase and Morgan, as Issuing
Banks, for the Lender Parties (as hereinafter defined) hereunder, agree as
follows:
PRELIMINARY STATEMENT:
The Borrower has requested, and the Agents and the Banks have
agreed, to enter into this Agreement in order to provide financing for a period
of five years on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
of the mutual covenants and agreements contained herein, the Borrower, the
Agents and the Banks do hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Advance" means a Revolving Credit Advance or a Letter of
Credit Advance, as the case may be.
NYDOCS03/70502 3
<PAGE>
2
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
"Agents" has the meaning specified in the recital of parties
to this Agreement.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a
Base Rate Advance and such Lender Party's Eurodollar Lending Office in
the case of a Eurodollar Rate Advance.
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Bond Rating in effect on such date
as set forth below:
Applicable Margin Applicable Margin
Bond Rating for Base Rate for Eurodollar Fees for Letters
Moody's/S&P Advances Rate Advances of Credit
----------- ----------------- ----------------- ----------------
Baa2 or BBB or above 0.000% 0.3750% 0.3750%
below Baa2 and BBB but 0.000% 0.4500% 0.4500%
at least Baa3 or BBB-
below Baa3 and BBB- but 0.000% 0.6250% 0.6250%
at least Ba1 or BB+
below Ba1 and BB+ but 0.000% 1.0000% 1.0000%
at least Ba2 or BB
below Ba2 and BB 0.2500% 1.2500% 1.2500%
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and accepted
by the Administrative Agent, in substantially the form of Exhibit D
hereto.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
<PAGE>
3
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Chase
in New York, New York, from time to time, as Chase's base
rate; or
(b) for any day 2 of one percent per annum above the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such
transactions received by Chase from three Federal funds
brokers of recognized standing selected by it.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.06(a)(i).
"Bond Rating" means, as of any date, the higher of the ratings
that have been most recently announced by either Moody's or S&P, as the
case may be, for senior unsecured debt in effect on such date,
provided, however, that if, for either Moody's or S&P, no rating is in
effect, the rating from Moody's or S&P, as the case may be, on such
date shall be deemed to be Ba2 or BB, as applicable; and, provided
further, that if, as of any date, either Moody's or S&P shall have
ceased to exist or to be in the business of rating securities, (i) the
Bond Rating with respect to whichever of Moody's or S&P shall have
ceased to exist or to rate securities shall mean the rating of senior
unsecured debt by the applicable Substitute Rating Agency in effect on
such date and (ii) each rating specified in any Loan Document for
either Moody's or S&P, as applicable, shall be deemed to be the rating
of such Substitute Rating Agency reasonably equivalent to such rating
of Moody's or S&P.
"Borrowing" means a borrowing consisting of Revolving Credit
Advances of the same Type made on the same day by the Lenders.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings
are carried on in the London interbank market.
<PAGE>
4
"Commitment" means a Revolving Credit Commitment or a Letter
of Credit Commitment.
"Consolidated" refers to the consolidation of financial
statements in accordance with GAAP.
"Convert", "Conversion" and "Converted" each refers to a
Rollover of Advances pursuant to Section 2.09 or 2.11 that also
involves the conversion of Advances of one Type into Advances of
another Type.
"Chase" has the meaning specified in the recital of parties to
this Agreement.
"Citibank" has the meaning specified in the recital of parties
to this Agreement.
"CSI" has the meaning specified in the recital of parties to
this Agreement.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party,
or such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Administrative Agent.
"Eastern Interconnection Project Leases" means the Eastern
Interconnection Project Leases listed in Schedule 4.01(v), "Material
Leases".
"Effective Date" means March 11, 1998.
"Eligible Assignee" means (a) with respect to the Revolving
Credit Facility (i) any commercial bank or savings and loan association
having a net worth in excess of $250,000,000; (ii) any commercial
finance company, or wholly owned finance subsidiary of any corporation,
having a net worth in excess of $250,000,000; (iii) any insurance
company having a net worth in excess of $250,000,000 or (iv) any Bank
or any Affiliate of any Bank and (b) with respect to the Letter of
Credit Facility, a Person that is an Eligible Assignee under subclause
(i) or (iv) of clause (a) of this definition and is approved by the
Administrative Agent and the Borrower.
<PAGE>
5
"Environmental Law" means any federal, state or local law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award relating to the environment, health or safety or
to the release or threatened release of any materials into the
environment, including, without limitation, the Clean Air Act, as
amended, the Clean Water Act of 1977, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Hazardous Materials Transportation Act, as amended, the
Toxic Substance Control Act, as amended, and the Resource Conservation
and Recovery Act of 1976, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" of any Person means any other Person that
for purposes of Title IV of ERISA is a member of such Person's
controlled group, or under common control with such Person, within the
meaning of Section 414 of the Internal Revenue Code.
"ERISA Event" with respect to any Person means (a) the
occurrence of a reportable event, within the meaning of Section 4043 of
ERISA, with respect to any Plan of such Person or any of its ERISA
Affiliates unless the 30-day notice requirement with respect to such
event has been waived by the PBGC; (b) the provision by the
administrator of any Plan of such Person or any of its ERISA Affiliates
of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (c) the cessation
of operations at a facility of such Person or any of its ERISA
Affiliates in the circumstances described in Section 4062(e) of ERISA;
(d) the withdrawal by such Person or any of its ERISA Affiliates from a
Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (e)
the failure by such Person or any of its ERISA Affiliates to make a
payment to a Plan required under Section 302(f)(1) of ERISA; (f) the
adoption of an amendment to a Plan of such Person or any of its ERISA
Affiliates requiring the provision of security to such Plan, pursuant
to Section 307 of ERISA; or (g) the institution by the PBGC of
proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that could
constitute grounds for the termination of, or the appointment of a
trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
<PAGE>
6
"Eurodollar Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, and
interest rate per annum equal to the "Eurodollar Rate" determined (i)
on the basis of the rate for deposits in U.S. dollars for a period
equal to such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period, or if such rate does not appear on
Page 3750 of the Telerate screen (or otherwise on such service), the
rate per annum (rounded upward to the nearest 1/16 of 1% per annum) at
which deposits are offered by another publicly available service
displaying eurodollar rates as may be agreed upon by the Administrative
Agent and the Borrower or (ii) in the absence of such appearance or
agreement, by reference to the average of the rate of interest per
annum (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) at which deposits in
U.S. dollars are offered by the principal office of each of the
Reference Banks in London, England, to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount substantially equal
to such Reference Bank's Eurodollar Rate Advance comprising part of
such Borrowing and for a period equal to such Interest Period. In the
case of any Eurodollar Rate determined pursuant to clause (ii) above,
the Eurodollar Rate for any Interest Period for each Eurodollar Rate
Advance comprising such Revolving Credit Borrowing shall be determined
by the Administrative Agent on the basis of applicable rates received
by the Administrative Agent from the Reference Banks two Business Days
before the first day of such Interest Period, subject, however, to the
provisions of Section 2.08.
"Eurodollar Rate Advance" means an Advance which bears
interest as provided in Section 2.06(a)(ii).
"Eurodollar Rate Reserve Percentage" of any Lender Party for
any Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any
such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Lender Party with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
<PAGE>
7
"Events of Default" has the meaning specified in Section 6.01.
"Existing Agreement" means the Revolving Credit Agreement
dated as of December 14, 1993, as amended by Amendment No. 1 dated June
7, 1995 among the Borrower, the lenders party thereto, Chase, as
administrative agent, Citibank, as documentation agent and Chase and
Citibank, as co-agents.
"Facility" means the Revolving Credit Facility or the Letter
of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"First Mortgage Bonds" means those first mortgage bonds issued
pursuant to the FMB Indenture.
"FMB Indenture" means the Indenture of Mortgage and Deed of
Trust, dated as of June 1, 1947, between the Borrower and The Bank of
New York (formerly Irving Trust Company), as trustee thereunder, as
supplemented and amended.
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means all materials subject to any
Environmental Law, including, without limitation, materials listed in
49 C.F.R. 172.101, materials defined as hazardous pursuant to Section
101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, flammable, explosive or radioactive
materials, hazardous or toxic wastes or substances, petroleum or
petroleum distillates, PCB's or asbestos-containing materials.
<PAGE>
8
"Indebtedness" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services (other than trade payables incurred in the
ordinary course of business), (iv) obligations as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded
as capital leases, (v) obligations, contingent or otherwise, under
acceptance, letter of credit or similar facilities, (vi) all
obligations, contingent or otherwise, under the Material Leases and
(vii) obligations under direct or indirect guaranties 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
clauses (i) through (vi) above.
"Independent Accountants" means Arthur Andersen & Co., any of
the independent public accountants listed on Schedule II or other
independent public accountants of recognized standing acceptable to the
Majority Lenders.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Insured Series First Mortgage Bonds" means First Mortgage
Bonds in the aggregate principal amount of $111,000,000 pledged by the
Borrower to secure guarantees of $111,000,000 principal amount of
pollution control revenue bonds issued by the City of Farmington, New
Mexico, for the benefit of the Borrower, which pollution control
revenue bonds are also supported by a municipal bond insurance policy
issued by AMBAC Indemnity Corporation.
"Interest Period" means, for each Advance comprising part of
the same Borrowing, the period commencing on the date of the making of
such Advance pursuant to Section 2.02 or the date of the Rollover
(whether or not such Rollover includes a Conversion) of any Advance
into such Advance pursuant to Section 2.09, and ending on the last day
of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending on the last day of
the period selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be 1, 2, 3 or 6 months
(or, if available to all of the Lenders, 1 year) in the case of a
Eurodollar Rate Advance and up to 90 days in the case of a Base Rate
Advance, in each case as the Borrower may specify in the applicable
Notice of Borrowing or Notice of Rollover received by the
Administrative Agent by the time specified in Section 2.02 or Section
2.09, as the case may be; provided, however, that:
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9
(i) the Borrower may not select any Interest Period
that ends after the Termination Date;
(ii) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the
same duration; and
(iii) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, in the case of any
Interest Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding
Business Day.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Issuing Bank" means Chase, Citibank, Morgan, any other Lender
Party that has a Letter of Credit Commitment set forth opposite its
name on Schedule I hereto, or any other Eligible Assignee to which a
Letter of Credit Commitment has been assigned pursuant to Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in
Section 6.02.
"L/C Related Documents" has the meaning specified in Section
2.16(e).
"Lender Party" means any Lender or any Issuing Bank.
"Lenders" means the Banks listed on the signature pages hereof
and each Eligible Assignee that shall become a Lender hereunder
pursuant to Section 8.07.
"Letter of Credit" has the meaning specified in Section
2.16(a).
"Letter of Credit Advance" means an advance made by any
Issuing Bank or any Lender pursuant to Section 2.16(c).
"Letter of Credit Agreement" has the meaning specified in
Section 2.16(b)(i).
"Letter of Credit Collateral" has the meaning specified in
Section 6.02.
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10
"Letter of Credit Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such Issuing
Bank's name on Schedule I hereto under the caption "Letter of Credit
Commitment" or, if such Issuing Bank has entered into one or more
Assignments and Acceptances, set forth for such Issuing Bank in the
Register maintained by the Administrative Agent pursuant to Section
8.07(c) as such Issuing Bank's "Letter of Credit Commitment", as such
amount may be reduced at or prior to such time pursuant to Section
2.01.
"Letter of Credit Facility" means, at any time, an amount
equal to the lesser of (a) the aggregate amount of the Issuing Banks'
Letter of Credit Commitments and (b) $50,000,000, as such amount may be
reduced at or prior to such time pursuant to Section 2.04.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"Loan Documents" means this Agreement, the Notes and each
Letter of Credit Agreement, as each may be amended, modified, or
otherwise supplemented from time to time.
"Majority Lenders" means at any time, the Lenders (other than
the Borrower or any Affiliate of the Borrower) holding at least 66 2/3%
of the sum of (a) the then aggregate unpaid principal amount of the
Advances outstanding at such time, (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time and (c) the aggregate
Unused Revolving Credit Commitments at such time.
"Material Lease" means any lease to the Borrower of its
leasehold interests in (i) Unit 1 or Unit 2, and related common
facilities, of the Palo Verde Nuclear Generating Station or (ii) the
electric transmission line, and related facilities, known as the
Eastern Interconnection Project, including, without limitation, any
lease set forth on Schedule 4.01(v) hereto.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" has the meaning specified in the recital of parties
to this Agreement.
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11
"Multiemployer Plan" of any Person means a multiemployer plan,
as defined in Section 4001(a)(3) of ERISA, to which such Person or any
of its ERISA Affiliates is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Multiple Employer Plan" of any Person means a single employer
plan, as defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of such Person or any of its ERISA Affiliates
and at least one Person other than such Person and its ERISA Affiliates
or (b) was so maintained and in respect of which such Person or any of
its ERISA Affiliates could have liability under Section 4064 or 4069 of
ERISA in the event such plan has been or were to be terminated.
"Net Worth" means an amount equal to the sum of preferred
stockholders' equity and common stockholders' equity, as such amounts
would appear on a balance sheet of the Borrower prepared in accordance
with GAAP.
"NMSA" means the New Mexico Statutes Annotated 1978, as
amended or supplemented.
"Note" means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in Section
2.16(b)(i).
"Notice of Rollover" has the meaning specified in Section
2.09(a).
"Notice of Termination" has the meaning specified in Section
2.16(a).
"Palo Verde Leases" means the "Palo Verde Unit 1" and "Palo
Verde Unit 2" leases listed in Schedule 4.01(v), "Material Leases".
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means such of the following as to which,
except as provided below, no enforcement, collection, execution, levy
or foreclosure proceeding shall have been commenced: (a) Liens for
taxes, assessments and governmental charges or levies to the extent
payment of such taxes, assessments, governmental charges or levies is
being contested in good faith and by proper proceedings and as to which
proper reserves are being maintained; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 30
days; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes; and (e) the FMB
Indenture, but only to the extent of the Insured Series First Mortgage
Bonds, and the Apermitted encumbrances under the FMB Indenture..
<PAGE>
12
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Pro Rata Share" of any amount means, with respect to any of
the Lender Parties at any time, the product of (a) a fraction the
numerator of which is the amount of such Lender Party's Commitment
under the applicable Facility or Facilities and the denominator of
which is the aggregate amount of such Facility or Facilities at such
time and (b) such amount.
"Prohibited Transaction" means a transaction that is
prohibited under Section 4975 of the Internal Revenue Code or Section
406 of ERISA and not exempt under Section 4975 of the Internal Revenue
Code or Section 408 of ERISA.
"PUC" means the New Mexico Public Utility Commission (formerly
the New Mexico Public Service Commission) or any successor regulatory
body, including the New Mexico Public Regulation Commission.
"PUC 2183 Amounts" means those amounts, which the Borrower's
Gas Services division has paid or will pay, but expects to recover from
its customers, that are either (1) amounts referenced in PUC Case No.
2183 and related to settlements of gas purchase contract disputes or
(2) amounts referenced in PUC Case No. 2183 and PUC Case No. 2320 and
related to purchased gas costs.
"Recordation Fee" has the meaning specified in Section 8.07(a)
of this Agreement.
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13
"Reference Banks" means Chase, Citibank and Morgan.
"Revolving Credit Advance" means a revolving credit advance by
a Lender Party to the Borrower pursuant to Section 2.01(a), and refers
to a Base Rate Advance or a Eurodollar Rate Advance (each of which
shall be a "Type" of Advance).
"Revolving Credit Commitment" means, with respect to any
Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Revolving Credit Commitment" or,
if such Lender has entered into one or more Assignment and Acceptances,
set forth for such Lender in the Register maintained by the Paying
Agent pursuant to Section 8.07(d) as such Lender's "Revolving Credit
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.04.
"Revolving Credit Facility" means, at any time, the aggregate
amount of the Lender's Revolving Credit Commitments at such time.
"Roll Over", "Rollover" and "Rolled Over" each refers to the
rollover of Advances comprising part of the same Borrowing occurring,
except in the case of Base Rate Advances, on the last day of the
Interest Period for such Advances (or such earlier date as may be
required pursuant to Section 2.12) into another Interest Period
pursuant to Section 2.09, irrespective of whether such rollover also
constitutes a Conversion of Advances of one Type into Advances of
another Type; provided, however, that, as applied to any Advances
comprising part of the same Borrowing, such terms shall at no time
refer to any transaction that results in an increase in the aggregate
outstanding amount of such Advances owing to the Lender Parties.
"Rollover Date" has the meaning specified in Section 2.09 of
this Agreement.
"S&P" means Standard & Poor's Corporation.
"Single Employer Plan" of any Person means a single employer
plan, as defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of such Person or any of its ERISA Affiliates
and no Person other than such Person and its ERISA Affiliates or (b)
was so maintained and in respect of which such Person or any of its
ERISA Affiliates could have liability under Section 4069 of ERISA in
the event such Plan has been or were to be terminated.
"Subsidiary" of any Person means any corporation of which more
than 50% of the issued and outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency) is at the time directly
or indirectly owned or controlled by such Person, by such Person and
one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
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14
"Substitute Rating Agency" means a nationally recognized
statistical rating organization designated by the Administrative Agent
on any date that either Moody's or S&P shall have ceased to exist or to
be in the business of rating securities, which applies ratings criteria
to the Borrower's senior long-term unsecured debt reasonably equivalent
to those used on the date hereof by whichever of Moody's or S&P shall
have so ceased to exist or rate securities.
"Termination Date" means the earlier of March 11, 2003 and the
date of termination of the whole of the Commitments pursuant to Section
2.04 or 6.01.
"Total Capitalization" means the sum of Total Debt plus Net
Worth.
"Total Debt" means an amount equal to (i) the sum of (A) the
current portion of long-term debt, (B) long-term debt and (C) notes
payable, as such amounts would appear on a balance sheet prepared in
accordance with GAAP plus (ii) the net present value (using (A) the
discount rate (1) set forth in Schedule 4.01(x), so long as Schedule
4.01(x) specifies the same relevant discount rate as is used in
calculating such net present value provided to Moody's and S&P or (2)
the discount rate used in calculating such net present value provided
to Moody's and S&P or (B) any such other rate as shall be proposed by
the Borrower (and agreed upon by the Majority Lenders) of all amounts
payable under the Material Leases.
"Unused Revolving Credit Commitment" means, with respect to
any Lender at any time, (a) such Lender's Revolving Credit Commitment
at such time minus (b) the sum of (i) the aggregate principal amount of
all Revolving Credit Advances and Letter of Credit Advances made by
such Lender, in each case in its capacity as a Lender, and outstanding
at such time, and (ii) such Lender's Pro Rata Share of (A) the
aggregate Available Amount of all Letters of Credit outstanding at such
time and (B) to the extent not included in clause (b)(i) of this
definition, the aggregate principal amount of all Letter of Credit
Advances made by the Issuing Banks pursuant to Section 2.16(c) and
outstanding at such time.
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Part IV of ERISA.
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15
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the annual financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
Revolving Credit Advances to the Borrower from time to time on any Business Day
during the period from the date hereof until the Termination Date in an amount
for each such Revolving Credit Advance not to exceed such Lender's Unused
Revolving Credit Commitment at such time. Each Borrowing shall consist of
Revolving Credit Advances of the same Type made on the same day by the Lenders
ratably according to their respective Revolving Credit Commitments and shall be
in an aggregate amount (or an integral multiple of $1,000,000 in excess thereof)
of not less than (a) $5,000,000, if such Borrowing consists of Eurodollar Rate
Advances, or (b) $3,000,000, if such Borrowing consists of Base Rate Advances.
Within the limits of each Lender's Revolving Credit Commitment, the Borrower may
borrow, prepay pursuant to Section 2.10 and reborrow under this Section 2.01.
SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Borrowing shall be made on notice, given by the Borrower to the Administrative
Agent not later than, in the case of a proposed Borrowing to consist of (i)
Eurodollar Rate Advances, 12:00 noon (New York City time) on the third Business
Day prior to such proposed Borrowing, and (ii) Base Rate Advances, 11:00 A.M.
(New York City time) on the date of such proposed Borrowing. The Administrative
Agent shall give prompt notice thereof to each Lender by telecopier, telex or
cable. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by
telecopier, telex or cable, confirmed immediately by a signed original delivered
by regular mail, overnight courier or messenger, in substantially the form of
Exhibit B hereto, specifying therein (i) the requested (A) date of such
Borrowing, (B) Type of Revolving Credit Advances comprising such Borrowing, (C)
aggregate amount of such Borrowing, and (D) initial Interest Period for each
such Revolving Credit Advance and (ii) whether the requested Borrowing is being
made together with a requested Rollover of Revolving Credit Advances pursuant to
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16
Section 2.09 to occur simultaneously on the date of the requested Borrowing. If
such Notice of Borrowing includes a request for a simultaneous Rollover of
Revolving Credit Advances pursuant to Section 2.09, (i) such Notice of Borrowing
shall include the information required for a Notice of Rollover pursuant to
Section 2.09 and shall otherwise comply with the requirements of such Section
2.09 and (ii) the amount of the proposed Borrowing shall in no event be less
than an amount equal to the difference, if any, between the amount of the
Revolving Credit Advances to be Rolled Over on the date of the proposed
Borrowing and the amount of such Revolving Credit Advances following Rollover
thereof. Each Lender shall, before 12:00 noon (New York City time) on the date
of a Borrowing consisting of Eurodollar Rate Advances, or before 2:00 P.M. (New
York City time) on the date of a Borrowing consisting of Base Rate Advances,
make available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in same day
funds, such Lender's ratable portion of such Borrowing. After the Administrative
Agent's receipt of funds and upon fulfillment of the applicable conditions set
forth in Article III, the Administrative Agent will make funds available to the
Borrower at the account specified by the Borrower in the applicable Notice of
Borrowing; provided, however, that if a Borrowing is made simultaneously with a
Rollover of Revolving Credit Advances pursuant to Section 2.09, the
Administrative Agent shall first apply such funds to any prepayment required on
such date by Section 2.10(b)(ii).
(b) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing which the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such Borrowing the applicable conditions set forth
in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(c) Unless the Administrative Agent shall have received notice
from a Lender that such Lender will not make available to the Administrative
Agent such Lender's ratable portion of a Borrowing, if such Borrowing consists
of (i) Base Rate Advances, before 2:00 P.M. (New York City time) on the date of
such Borrowing or (ii) Eurodollar Rate Advances, prior to the date of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
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17
have so made such ratable portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, the interest rate applicable at the time to Advances comprising
such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall repay to the Administrative Agent such corresponding amount,
such amount so repaid shall constitute such Lender's Advance as part of such
Borrowing for purposes of this Agreement.
(d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Fees. (a) Commitment Fee. The Borrower agrees to
pay to the Administrative Agent for the account of each Lender a commitment fee
on the average daily unused portion of such Lender's Revolving Credit Commitment
from the Effective Date until the Termination Date, payable quarterly in arrears
on the last day of each March, June, September and December during the term of
such Lender's Revolving Credit Commitment, commencing on the first such date to
occur after the Effective Date, and on the Termination Date, at the rate of (i)
0.1500% during such times as the Bond Rating by Moody's or S&P is at least Baa2
or BBB, respectively, (ii) 0.1875% during such times as clause (a)(i) of this
Section 2.03 is not applicable and the Bond Rating by Moody's or S&P is at least
Baa3 or BBB-, respectively, (iii) 0.2000% during such times as clause (a)(i) or
(a)(ii) of this Section 2.03 are not applicable and the Bond Rating by Moody's
or S&P is at least Ba1 or BB+, respectively, (iv) 0.2500% during such times as
clause (a)(i), (a)(ii) or (a)(iii) of this Section 2.03 are not applicable and
the Bond Rating by Moody's or S&P is at least Ba2 or BB, respectively, and (v)
0.3750% at all other times.
(b) Administrative Agent's Fees. The Borrower agrees to pay to
the Administrative Agent for its own account the fees (i) set forth in the Fee
Letter, dated December 15, 1997, among the Administrative Agent and the Borrower
at the times specified therein for payment of such fees, and (ii) such other
fees as may from time to time be agreed among the Borrower and the
Administrative Agent.
(c) Letter of Credit Fees. (i) The Borrower shall pay to the
Administrative Agent for the account of each Lender a commission on such Lender
Party's Pro Rata Share of the average daily aggregate Available Amount of all
Letters of Credit outstanding from time to time at a rate per annum equal to the
Applicable Margin in effect from time to time for Eurodollar Rate Advances,
payable in arrears quarterly on the last day of each March, June, September and
December commencing on the first such date to occur after the Effective Date,
and on the earliest to occur of the full drawing, expiration, termination or
cancellation of any such Letter of Credit and on the Termination Date.
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(ii) The Borrower shall pay to each Issuing Bank, for its own
account a fronting fee based on the amount of each Letter of Credit issued by
such Issuing Bank at a rate equal to 0.125% per annum, and such other
commissions, issuance fees, transfer fees and other fees and charges in
connection with the issuance or administration of each Letter of Credit as the
Borrower and such Issuing Bank shall agree.
SECTION 2.04. Reduction of the Commitments. (a) Optional. The
Borrower shall have the right, upon at least three Business Days' notice to the
Administrative Agent, to terminate in whole or reduce ratably in part unused
portion of the Letter of Credit Facility and the Unused Revolving Credit
Commitments, provided that each partial reduction of a Facility shall be in the
aggregate amount of $5,000,000 or an integral multiple thereof.
(b) Mandatory. The Letter of Credit Facility shall be
permanently reduced from time to time on the date of each reduction in the
Revolving Credit Facility by the amount, if any, by which the Letter of Credit
Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
SECTION 2.05. Repayment. The Borrower shall repay the unpaid
principal amount of each Advance owing to each Lender Party on the Termination
Date. In addition, the Borrower shall repay the unpaid principal amount of each
Advance owed to each Lender Party on the last day of each relevant Interest
Period, which repayment may be through the rollover provisions hereof.
SECTION 2.06. Interest. (a) The Borrower shall pay interest on
the unpaid principal amount of each Revolving Credit Advance owing to each
Lender Party from the date of such Revolving Credit Advance until such principal
amount shall be paid in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (A) the Base Rate in
effect from time to time plus (B) the Applicable Margin in effect from
time to time, payable in arrears on the last day of such Interest
Period and on the date such Advance shall be Converted or paid in full.
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(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest Period for such Advance plus (B)
the Applicable Margin in effect from time to time, payable in arrears
on the last day of such Interest Period and on the date such Advance
shall be Converted or paid in full.
(b) Upon the occurrence and during the continuance of any
Event of Default, the Borrower shall pay interest on the unpaid principal amount
of each Revolving Credit Advance owing to each Lender Party and on the unpaid
amount of all interest, fees and other amounts payable hereunder that is not
paid when due, payable in arrears on the dates referred to in clauses (a)(i) and
(a)(ii) above and on demand, at a rate per annum equal at all times to 1% above
the rate per annum otherwise required to be paid on such Advances pursuant to
clauses (a)(i) and (a)(ii) above or in the case of such other amounts, 1% above
the rate per annum required to be paid on Base Rate Advances pursuant to clause
(a)(i) above.
SECTION 2.07. Additional Interest on Eurodollar Rate Advances.
The Borrower shall pay to the Administrative Agent for the account of each
Lender Party additional interest on the unpaid principal amount of each
Revolving Credit Advance of such Lender Party during such periods as such
Advance is a Eurodollar Rate Advance, from the date of such Advance until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder obtained by subtracting (i) the Eurodollar Rate for such
Interest Period for such Eurodollar Rate Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage of such Lender Party for such Interest Period, payable
on each date on which interest is payable on such Eurodollar Rate Advance. Such
additional interest shall be determined by such Lender Party and notified to the
Borrower through the Administrative Agent.
SECTION 2.08. Interest Rate Determination and Protection. (a)
In the event the Eurodollar Rate is determined by reference to clause (ii) of
the definition thereof, each Reference Bank agrees to furnish to the
Administrative Agent timely information for the purpose of determining such
Eurodollar Rate. If in such event, any Reference Bank shall not furnish such
timely information to the Administrative Agent for the purpose of determining
any such interest rate, the Administrative Agent shall determine such interest
rate on the basis of timely information furnished by any other Reference Banks.
(b) The Administrative Agent shall give prompt notice to the
Borrower and the Lender Parties of the applicable interest rate determined by
the Administrative Agent for purposes of Section 2.06(a) and (b).
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(c) If the Eurodollar Rate is determined by reference to
clause (ii) of the definition thereof and no Reference Bank furnishes timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,
(i) the Administrative Agent shall forthwith notify the
Borrower and the Lender Parties that the interest rate cannot be
determined for such Eurodollar Rate Advances,
(ii) the obligation of the Lender Parties to make, or to Roll
Over Advances into Eurodollar Rate Advances shall be suspended until
the Administrative Agent shall notify the Borrower and the Lender
Parties that the circumstances causing such suspension no longer exist,
and
(iii) any request for a Borrowing consisting of, or for a
Rollover of Advances into Eurodollar Rate Advances shall be deemed a
request for a Borrowing consisting of, or a Rollover of Advances into,
Base Rate Advances having the same Interest Period as such requested
Borrowing or Rollover.
(d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Majority Lenders of making, funding or maintaining their respective
Eurodollar Rate Advances for such Interest Period,
(i) the Administrative Agent shall forthwith so notify the
Borrower and the Lender Parties,
(ii) the obligation of the Lender Parties to make, or to Roll
Over Advances into, Eurodollar Rate Advances shall be suspended until
the Administrative Agent shall notify the Borrower and the Lender
Parties that the circumstances causing such suspension no longer exist,
and
(iii) any request for a Borrowing consisting of, or a Rollover
of Advances into, Eurodollar Rate Advances shall be deemed a request
for a Borrowing consisting of, or a Rollover of Advances into, Base
Rate Advances having the same Interest Period as such requested
Borrowing or Rollover.
SECTION 2.09. Rollover and Conversion of Revolving Credit
Advances. (a) Each Rollover may be made on notice given by the Borrower to the
Administrative Agent not later than, if such Rollover is into (i) Eurodollar
Rate Advances, 12:00 noon (New York City time) on the third Business Day prior
to and (ii) Base Rate Advances, 11:00 A.M. (New York City time) on the date of,
the proposed Rollover (the "Rollover Date"), which Rollover Date shall be the
last day of the Interest Period of the Revolving Credit Advances to be Rolled
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Over or such earlier date as shall be required pursuant to Section 2.12, unless
the Revolving Credit Advances to be so Rolled Over are Base Rate Advances. The
Administrative Agent shall give to each Lender Party prompt notice thereof by
telecopier, telex or cable. Each such notice of a Rollover (a "Notice of
Rollover") shall be by telecopier, telex or cable, confirmed immediately by a
signed original delivered by regular mail, overnight courier or messenger, in
substantially the form of Exhibit C hereto, (i) specifying therein (A) the
Revolving Credit Advances to be Rolled Over, (B) the Rollover Date, (C) the
Interest Period for such Revolving Credit Advances upon being Rolled Over, (D)
the Type for such Revolving Credit Advances upon being Rolled Over and (E) the
amount of such Revolving Credit Advances upon being Rolled Over (which amount
shall equal, if such Revolving Credit Advances are to be (x) Base Rate Advances,
$3,000,000 or an integral multiple of $1,000,000 in excess thereof or (y)
Eurodollar Rate Advances, $5,000,000 or an integral multiple of $1,000,000 in
excess thereof), and (ii) specifying whether the requested Rollover is being
made together with a requested Borrowing to occur simultaneously with the
requested Rollover on the applicable Rollover Date pursuant to Section 2.02. If
such Notice of Rollover includes a request for a simultaneous Borrowing pursuant
to Section 2.02, (i) such Notice of Rollover shall include the information
required for a Notice of Borrowing pursuant to Section 2.02 and (ii) the amount
of the proposed Borrowing to occur simultaneously with such Rollover shall in no
event be less than an amount equal to the difference, if any, between the amount
of the Revolving Credit Advances to be Rolled Over and the amount of such
Revolving Credit Advances following Rollover thereof. Upon fulfillment, on the
Rollover Date, of the applicable conditions set forth in Article III of this
Agreement (which conditions shall be deemed fulfilled unless the Administrative
Agent shall have received written notice from any Lender Party pursuant to
Section 3.04 or from the Borrower, if such Rollover is into (i) Eurodollar Rate
Advances, by 12:00 noon (New York City time) on the Rollover Date, or (ii) if
such Rollover is into Base Rate Advances, by 2:00 P.M. (New York City time) on
the Rollover Date), a Rollover of such Revolving Credit Advances shall occur as
set forth in the Notice of Rollover for such Revolving Credit Advances. The
Administrative Agent shall forthwith notify the Borrower and the Lender Parties
if such applicable conditions have not been fulfilled and the Rollover shall
therefore not occur.
(b) Each Notice of Rollover shall be irrevocable and binding
on the Borrower. In the case of any proposed Rollover into Eurodollar Rate
Advances, the Borrower shall indemnify each Lender Party against any loss, cost
or expense incurred by such Lender Party as a result of any failure to fulfill,
on or before the Rollover Date for such Rollover, the applicable conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation of
or reemployment of deposits or other funds acquired by such Lender Party in
connection with the Rollover of the Revolving Credit Advance made by such Lender
Party when such Revolving Credit Advance, as a result of such failure, is not
Rolled Over on the Rollover Date.
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SECTION 2.10. Prepayments of Revolving Credit Advances. (a)
Optional. The Borrower may, (i) in the case of Eurodollar Rate Advances, upon at
least three Business Days' notice to the Administrative Agent and (ii) in the
case of Base Rate Advances, upon notice given to the Administrative Agent no
later than 11:30 A.M. (New York City time) on the proposed date, in either case
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding principal
amounts of the Revolving Credit Advances comprising part of the same Borrowing
in whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that (x) each
partial prepayment shall be in an aggregate principal amount of $5,000,000 or an
integral multiple thereof and (y) in the event of such prepayment of a
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lender
Parties in respect thereof pursuant to Section 8.04(b).
(b) Mandatory. (i) If, after giving effect to a reduction of
Commitments pursuant to Section 2.04 of this Agreement, the aggregate principal
amount of the sum of the aggregate principal amount of the Revolving Credit
Advances and Letter of Credit Advances outstanding plus the aggregate Available
Amount of all Letters of Credit then outstanding shall exceed the aggregate
amount of the Revolving Credit Facility, the Borrower shall immediately prepay
the outstanding principal amount of the Advances in an amount equal to the
amount of such excess.
(ii) If, on the last day of the Interest Period for any
Revolving Credit Advance, any portion of such Revolving Credit Advance shall not
be Rolled Over pursuant to Section 2.09 of this Agreement, the Borrower shall
immediately prepay the portion of such Revolving Credit Advance not so Rolled
Over.
(iii) The Borrower shall prepay Advances to the extent
required by Section 2.12 of this Agreement.
(iv) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid and all amounts then owing under Section 8.04(b) of this
Agreement in respect of such prepayment.
SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender Party of
agreeing to make or making, funding or maintaining Eurodollar Rate Advances,
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23
then the Borrower shall from time to time, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost. Each Lender
Party agrees to use its best efforts to furnish notice to the Borrower promptly
upon its becoming aware of and determining such increased cost. A certificate as
to the amount of such increased cost, submitted to the Borrower and the
Administrative Agent by such Lender Party, shall be conclusive and binding for
all purposes, absent manifest error.
(b) If any Lender Party determines that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder and
other commitments of this type or the issuance or maintenance of the Letters of
Credit (or similar contingent obligations), then, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent), the Borrower
shall immediately pay to the Administrative Agent for the account of such Lender
Party, from time to time as specified by such Lender Party, additional amounts
sufficient to compensate such Lender Party or such corporation in the light of
such circumstances, to the extent that such Lender Party reasonably determines
such increase in capital to be allocable to the existence of such Lender Party's
commitment to lend or to issue Letters of Credit hereunder or the issuance or
maintenance of Letters of Credit (or similar contingent obligations). A
certificate as to such amounts submitted to the Borrower and the Administrative
Agent by such Lender Party shall be conclusive and binding for all purposes,
absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances the
Majority Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Lenders of making, funding or maintaining their Eurodollar Rate Advances
for such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended until
the Administrative Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance will
automatically, upon such demand, Convert into a Base Rate Advance and (ii) the
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24
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
SECTION 2.12. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender Party shall notify the Administrative Agent
that the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender Party or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) the
obligation of the Lender Parties to make, or to Roll Over Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower and the Lender Parties that the circumstances causing such
suspension no longer exist, (ii) the Borrower shall, within five Business Days
of notice from the Administrative Agent, either prepay in full all Eurodollar
Rate Advances of all Lender Parties then outstanding, together with interest
accrued thereon and amounts then owing under Section 8.04(b) of this Agreement
in respect of such prepayment or Convert all Eurodollar Rate Advances of all
Lender Parties then outstanding into Advances of another Type in accordance with
Section 2.09 and (iii) any request for a Borrowing consisting of, or a Rollover
of Advances into, Eurodollar Rate Advances shall be deemed a request for a
Borrowing consisting of, or a Rollover of Advances into, Base Rate Advances
having the same Interest Period as such requested Borrowing or Rollover.
SECTION 2.13. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes not later than 2:00 P.M.
(New York City time) on the day when due in U.S. dollars to the Administrative
Agent at its address referred to in Section 8.02 in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or commitment fees ratably
(other than amounts payable pursuant to Section 2.02(b), 2.07, 2.11, 2.14 or
8.04(b)) to the Lender Parties for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender Party to such Lender Party for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date specified in such Assignment
and Acceptance, the Administrative Agent shall make all payments hereunder and
under the Notes in respect of the interest assigned thereby to the Lender Party
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
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25
(b) All computations of interest based on the Base Rate shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurodollar
Rate or the Federal Funds Rate and of commitment fees shall be made by the
Administrative Agent, and all computations of interest pursuant to Section 2.07
shall be made by a Lender Party, on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest or commitment fees are
payable. Each determination by the Administrative Agent (or, in the case of
Section 2.07, by a Lender Party) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to 11:00 A.M. (New York City time) on the date on which
any payment is due to the Lender Parties hereunder that the Borrower will not
make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Lender Party on such due date an amount equal to the amount
then due such Lender Party. If and to the extent the Borrower shall not have so
made such payment in full to the Administrative Agent, each Lender Party shall
repay to the Administrative Agent forthwith on demand such amount distributed to
such Lender Party together with interest thereon, for each day from the date
such amount is distributed to such Lender Party until the date such Lender Party
repays such amount to the Administrative Agent, at the Federal Funds Rate.
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26
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.13,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender Party and the
Administrative Agent, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Lender Party or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender Party, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Lender
Party's Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender Party or the Administrative Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.14) such Lender Party or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or under the Notes
or from the execution, delivery, filing, recording, or registration of, or
otherwise with respect to, the Loan Documents and the other documents to be
delivered under the Loan Documents (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender Party and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.14) paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender
Party or the Administrative Agent (as the case may be) makes written demand
therefor. The Administrative Agent and the Lender Parties each agree to pay to
the Borrower promptly upon receipt thereof an amount equal to the amount of any
refund received by the Administrative Agent or such Lender Party, as the case
may be, with respect to Taxes or Other Taxes paid by the Borrower.
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27
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof. If no Taxes are payable in respect of any payment hereunder or under
the Notes, the Borrower will, upon request by any Lender Party through the
Administrative Agent, furnish to the Administrative Agent, at such address, a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Administrative Agent, in either case stating that such payment
is exempt from or not subject to Taxes.
(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Bank or Initial Issuing Bank,
as the case may be and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender Party in the case of each other Lender Party, and from
time to time thereafter if requested in writing by the Borrower (but only so
long as such Lender Party remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender Party is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Lender Party at the time such Lender Party
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 2.14(a).
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in Section
2.14(e) (other than if such failure is due to a change in law occurring
subsequent to the date on which a form originally was required to be provided,
or if such form otherwise is not required under the first sentence of subsection
(e) above), such Lender Party shall not be entitled to indemnification under
Section 2.14(c) with respect to Taxes imposed by the United States; provided,
however, that should a Lender Party become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as the Lender Party shall reasonably request to assist the Lender Party to
recover such Taxes.
(g) Notwithstanding any contrary provisions of this Agreement,
in the event that a Lender Party that originally provided such form as may be
required under Section 2.14(e) thereafter ceases to qualify for complete
exemption from United States withholding tax, such Lender Party shall have the
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28
right to assign all of its rights and obligations under this Agreement to any
Eligible Assignee in accordance with Section 8.07(a), provided that the rate of
United States withholding tax applicable to such Eligible Assignee shall not
exceed the rate then applicable to the assignor.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of principal
and interest hereunder and under the Notes.
SECTION 2.15. Sharing of Payments, Etc. If any Lender Party
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Advances owing to it
(other than pursuant to Section 2.02(b), 2.07, 2.11, 2.14 or 8.04(b)) in excess
of its ratable share of payments on account of the Revolving Credit Advances or
Letter of Credit Advances obtained by all the Lender Parties, such Lender Party
shall forthwith purchase from the other Lender Parties such participations in
the Revolving Credit Advances or Letter of Credit Advances made by them as shall
be necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them, provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each Lender Party shall be rescinded and such Lender Party shall
repay to the purchasing Lender Party the purchase price to the extent of such
recovery together with an amount equal to such Lender Party's ratable share
(according to the proportion of (i) the amount of such Lender Party's required
repayment to (ii) the total amount so recovered from the purchasing Lender
Party) of any interest or other amount paid or payable by the purchasing Lender
Party in respect of the total amount so recovered. The Borrower agrees that any
Lender Party so purchasing a participation from another Lender Party pursuant to
this Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.16. Letters of Credit. (a) The Letter of Credit
Facility. Each Issuing Bank severally agrees, on the terms and conditions
hereinafter set forth, to issue letters of credit (the "Letters of Credit") for
the account of the Borrower specified by the Borrower from time to time on any
Business Day during the period from the date hereof until 60 days before the
Termination Date (i) in an aggregate Available Amount for all Letters of Credit
issued by such Issuing Bank not to exceed at any time such Issuing Bank's Letter
of Credit Commitment (or such greater amount as such Issuing Bank shall agree)
and (ii) in an Available Amount for each such Letter of Credit not to exceed an
amount equal to the lesser of (x) the Letter of Credit Facility at such time and
(y) an amount equal to the Unused Revolving Credit Commitments of the Revolving
Credit Lenders at such time.
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29
Letters of Credit issued pursuant to this Section 2.16 may be
automatically renewable annually without amendment, and any such Letter of
Credit shall be automatically renewed unless terminated earlier in accordance
with the provisions of such Letter of Credit. In the event the issuing bank
elects not to renew any such Letter of Credit, the Issuing Bank shall notify the
Borrower (with a copy to the Administrative Agent) on or prior to the date for
notice of termination set forth in such Letter of Credit (but in any event at
least 30 Business Days prior to the date of automatic renewal) of its election
not to renew such Letter of Credit (a "Notice of Termination"). The terms of
each Letter of Credit that is automatically renewable annually shall (x) require
the Issuing Bank that issued such Letter of Credit to give the beneficiary named
in such Letter of Credit notice of any Notice of Termination, (y) permit such
beneficiary, upon receipt of such notice, to draw under such Letter of Credit
prior to the date such Letter of Credit otherwise would have been automatically
renewed and (z) not permit the expiration date (after giving effect to any
renewal) of such Letter of Credit in any event to be extended to a date later
than 10 days before the Termination Date. If a Notice of Termination is given by
the relevant Issuing Bank pursuant to this paragraph, such Letter of Credit
shall expire on the date on which it otherwise would have been automatically
renewed. Within the limits of the Letter of Credit Facility, and subject to the
limits referred to above, the Borrower may request the issuance of Letters of
Credit under this Section 2.16(a), repay any Letter of Credit Advances resulting
from drawings thereunder pursuant to Section 2.16(c) and request the issuance of
additional Letters of Credit under this Section 2.16(a).
(b) Request for Issuance. (i) Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank or by such later date as may be
agreed by the Borrower and such Issuing Bank (subject to the proviso to the
penultimate sentence in Section 2.16(a)), which shall give to the Administrative
Agent and each Revolving Credit Lender prompt notice thereof by telex or
telecopier). Each such notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telephone, confirmed immediately in writing, or telex or
telecopier, specifying therein the requested (A) date of such issuance (which
shall be a Business Day), (B) Available Amount of such Letter of Credit, (C)
expiration date of such Letter of Credit, (D) name and address of the
beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
<PAGE>
30
such Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the
requested form of such Letter of Credit is reasonably acceptable to such Issuing
Bank in its sole discretion and (y) it has not received notice of objection to
such issuance on the grounds that the Borrower has failed to satisfy the
conditions set forth in Section 3.02 from the Majority Lenders, such Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article
III, make such Letter of Credit available to the Borrower at its office referred
to in Section 8.02 or as otherwise agreed with the Borrower in connection with
such issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(ii) Each Issuing Bank shall furnish (A) to the Administrative
Agent on the first Business Day of each week a written report summarizing
issuance and expiration dates of Letters of Credit issued by such Issuing Bank
during the previous week and drawings during such week under all Letters of
Credit issued by such Issuing Bank, (B) to each Revolving Credit Lender on the
first Business Day of each month a written report summarizing issuance and
expiration dates of Letters of Credit issued by such Issuing Bank during the
preceding month and drawings during such month under all Letters of Credit
issued by such Issuing Bank and (C) to the Administrative Agent and each
Revolving Credit Lender on the first Business Day of each calendar quarter a
written report setting forth the average daily aggregate Available Amount during
the preceding calendar quarter of all Letters of Credit issued by such Issuing
Bank.
(c) Drawing and Reimbursement. Unless the Borrower shall have
paid the Administrative Agent for the account of the applicable Issuing Bank
simultaneously with or prior to such Issuing Bank's payment of a draft drawn
under a Letter of Credit issued by it in accordance with the terms of Section
2.16(a) an amount equal to the amount of such payment (such amount to be
notified to the Borrower by the Issuing Bank on the Business Day immediately
preceding any such payment), the payment by such Issuing Bank of a draft drawn
under any such Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. Upon written demand
by any Issuing Bank with an outstanding Letter of Credit Advance, with a copy of
such demand to the Administrative Agent, each Revolving Credit Lender shall
purchase from such Issuing Bank, and such Issuing Bank shall sell and assign to
each such Revolving Credit Lender, such Lender Party's Pro Rata Share of such
outstanding Letter of Credit Advance as of the date of such purchase, by making
available for the account of its Applicable Lending Office to the Administrative
Agent for the account of such Issuing Bank, by deposit to the Administrative
Agent's Account, in same day funds, an amount equal to the portion of the
outstanding principal amount of such Letter of Credit Advance to be purchased by
such Lender Party. The Borrower hereby agrees to each such sale and assignment.
Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an
outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the Issuing Bank which made such Advance, provided notice of
such demand is given not later than 11:00 A.M. (New York City time) on such
Business Day or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by an
Issuing Bank to any Revolving Credit Lender of a portion of a Letter of Credit
Advance, such Issuing Bank represents and warrants to such Lender Party that
such Issuing Bank is the legal and beneficial owner of such interest being
assigned by it, free and clear of any liens, but makes no other representation
or warranty and assumes no responsibility with respect to such Letter of Credit
<PAGE>
31
Advance, the Loan Documents or the Borrower. If and to the extent that any
Revolving Credit Lender shall not have so made the amount of such Letter of
Credit Advance available to the Administrative Agent, such Revolving Credit
Lender agrees to pay to the Administrative Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by such
Issuing Bank until the date such amount is paid to the Administrative Agent, at
the Federal Funds Rate for its account or the account of such Issuing Bank, as
applicable. If such Lender Party shall pay to the Administrative Agent such
amount for the account of such Issuing Bank on any Business Day, such amount so
paid in respect of principal shall constitute a Letter of Credit Advance made by
such Lender Party on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by such
Issuing Bank shall be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender Party to make the Letter of Credit Advance to be made by it on the
date specified in Section 2.16(c) shall not relieve any other Lender Party of
its obligation hereunder to make its Letter of Credit Advance on such date, but
no Lender Party shall be responsible for the failure of any other Lender Party
to make the Letter of Credit Advance to be made by such other Lender Party on
such date.
(e) Obligations Absolute. The Obligations of the Borrower
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement,
any Note, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
<PAGE>
32
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit, unless such draft or
certificate is substantially different from the applicable form
specified by such Letter of Credit;
(vi) any exchange, release or non-perfection of any Letter of
Credit Collateral or other collateral, or any release or amendment or
waiver of or consent to departure from any guarantee, for all or any of
the Obligations of the Borrower in respect of the L/C Related
Documents; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
SECTION 2.17. Use of Proceeds. The proceeds of the Advances
shall be available (and the Borrower agrees that it shall use such proceeds)
solely to (a) refinance approximately $140,000,000 in outstanding First Mortgage
Bonds and outstanding indebtedness under the Existing Credit Agreement, and (b)
to finance ongoing expenditures incurred in the ordinary course of the
Borrower's utility business (including, without limitation, operating
expenditures, capital expenditures, construction expenditures, lease rental
payments, interest and taxes).
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness. This
Agreement and the obligations of the Lender Parties hereunder shall become
effective on the Effective Date, subject to satisfaction of the following
conditions precedent:
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33
(a) The Administrative Agent shall have received on or before
the Effective Date the following, each dated such day, in form and
substance satisfactory to the Lender Parties and (except for the Notes)
in sufficient copies for each Lender Party:
(i) The Notes to the order of the Lenders,
respectively.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower approving each Loan Document, and
of all documents evidencing other necessary corporate action
and governmental approvals, including, without limitation, the
required approval of the PUC, with respect to each such Loan
Document.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign
each Loan Document and the other documents to be delivered
hereunder.
(iv) A favorable opinion of Keleher & McLeod, P.A.,
counsel for the Borrower, substantially in the form of Exhibit
E hereto.
(v) A favorable opinion of Winthrop, Stimson, Putnam
& Roberts, special counsel for the Borrower, substantially in
the form of Exhibit F hereto.
(vi) A favorable opinion of Snell & Wilmer as Arizona
counsel for the Borrower, substantially in the form of Exhibit
G hereto.
(vii) A favorable opinion of Shearman & Sterling,
counsel for the Agents, in form and substance satisfactory to
the Agents.
(b) The Borrower shall have paid all fees and expenses of the
Agents and the Lender Parties, including the accrued fees and expenses
of counsel to the Agents payable on or before the Effective Date.
(c) On the Effective Date, the Bond Ratings by Moody's and S&P
shall be at least Ba1 and BB+, respectively.
SECTION 3.02. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender Party to make an Advance on the occasion of the
initial Borrowing is subject to the condition precedent that the Lender Parties
shall be satisfied that (i) all commitments under the Existing Agreement have
been terminated and (ii) that the First Mortgage Bonds (other than the Insured
Series First Mortgage Bonds) have been retired or defeased, and all amounts owed
with respect to the Existing Agreement and the First Mortgage Bonds (other than
<PAGE>
34
the Insured Series First Mortgage Bonds) have been, or will simultaneously with
the initial Borrowing hereunder, be paid in full, and the Administrative Agent
shall have received copies of all notices, certificates or other evidence of
termination of the commitments under the Existing Agreement and the retirement
or defeasance of the First Mortgage Bonds (other than the Insured Series First
Mortgage Bonds), in form and substance satisfactory to the Lender Parties. Each
Lender Party hereunder that is a party to the Existing Agreement hereby waives,
upon execution of this Agreement, the three Business Days' notice required by
Section 2.04(a) of the Existing Agreement relating to the termination of the
commitments under the Existing Agreement.
SECTION 3.03. Conditions Precedent to Each Borrowing and to
Rollover of Advances. The obligation of each Lender Party to make an Advance on
the occasion of each Borrowing (including the initial Borrowing) or to Roll Over
any Advances comprising part of the same Borrowing on any Rollover Date shall be
subject to the further conditions precedent that on the date of such Borrowing
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing or the giving of the applicable Notice of Rollover
and the failure to otherwise notify the Administrative Agent in writing on the
Rollover Date by the time specified in Section 2.09(a) shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing,
or on the Rollover Date for such Rollover, such statements are true, except
that, in the case of the initial Borrowing hereunder, the Administrative Agent
shall have received for the account of each Lender Party a certificate signed by
a duly authorized officer of the Borrower, dated the date of such Borrowing,
stating that):
(i) The representations and warranties contained in Section
4.01 of this Agreement are correct on and as of the date of such
Borrowing or Rollover, before and after giving effect to such Borrowing
or Rollover and to the application of the proceeds therefrom, as though
made on and as of such date, and
(ii) No event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds therefrom,
which constitutes a Default;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender Party through the Administrative Agent may
reasonably request.
SECTION 3.04. Determinations Under Section 3.01, 3.02, or
3.03. For purposes of determining compliance with the conditions specified in
Section 3.01, 3.02, or 3.03, each Lender Party shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender Parties unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents shall have
<PAGE>
35
received notice from such Lender Party (a) in the case of the Effective Date, by
11:00 A.M. (New York City time) on such date specifying its objection thereto
which notice shall not have been withdrawn by another written notice received by
the Administrative Agent before 2:00 P.M. (New York City time) on such date, and
(b) in the case of a Borrowing consisting of, or a Rollover of Advances into,
(i) Eurodollar Rate Advances, prior to the date of the Borrowing or the Rollover
Date, as the case may be, and (ii) Base Rate Advances, by 2:00 P.M. (New York
City time) on the date of such Borrowing or the Rollover Date, as the case may
be, specifying its objection thereto and (in the case of a Borrowing) declaring
its intention not to fund its ratable portion of such Borrowing, which notice
shall not (in the case of a written notice received prior to the date of the
Borrowing or the Rollover Date) have been withdrawn by another written notice
received by the Administrative Agent before 11:00 A.M. (New York City time) on
the date of such Borrowing or such Rollover Date, as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) The Borrower (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Mexico, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so
qualify or be licensed, and (iii) has all requisite corporate power and
authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted. All of
the outstanding capital stock of the Borrower has been validly issued
and is fully paid and non-assessable.
(b) The execution, delivery and performance by the Borrower of
this Agreement, the Notes and each other Loan Document, and the
consummation of the transactions contemplated hereby, are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not (i) contravene the Borrower's charter or
by-laws, (ii) violate any law (including, without limitation, the
Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of
1970), rule, regulation (including, without limitation, Regulation X of
the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award, (iii) conflict
<PAGE>
36
with or result in the breach of, or constitute a default under, any
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument binding on or affecting the Borrower or any of its
properties or (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the properties of the Borrower.
Neither the Borrower nor any of its Subsidiaries is in violation of any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan
agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which could have a material
adverse effect on the condition (financial or otherwise), results of
operations, assets, business or prospects of the Borrower and its
Subsidiaries on a Consolidated basis.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party (except any authorization or approval obtained
prior to the date hereof, including any authorizations or approvals
required by the PUC) is required for the due execution, delivery and
performance by the Borrower of this Agreement, the Notes, or any other
Loan Document, or for the consummation of the transactions contemplated
hereby.
(d) This Agreement has been, and each of the Notes and each
other Loan Document when delivered hereunder will have been, duly
executed and delivered by the Borrower. This Agreement is, and each of
the Notes and each other Loan Document when delivered hereunder will
be, the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
(e) The Consolidated financial statements of the Borrower and
its Subsidiaries, including the Consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1997 and the related
Consolidated statements of earnings (loss) and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended,
accompanied by an opinion of Independent Accountants, copies of which
have been furnished to each Lender Party, fairly present the
Consolidated financial condition of the Borrower and its Subsidiaries
as at such date and the Consolidated results of the operations of the
Borrower and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles applied on a
consistent basis. Since December 31, 1997, there has been no material
adverse change in the condition (financial or otherwise), results of
operations, assets, business or prospects of the Borrower and its
Designated Subsidiaries, except as disclosed in the Borrower's 1997
Form 10-K.
<PAGE>
37
(f) The Consolidated balance sheet and related statement of
income and cash flow of the Borrower and its Subsidiaries most recently
delivered pursuant to Section 5.01(h)(iii) of this Agreement and the
accompanying opinion of Independent Accountants delivered together
therewith, fairly present the Consolidated financial condition of the
Borrower and its Subsidiaries as at the date of such balance sheet and
the Consolidated results of the operations of the Borrower and its
Subsidiaries for the period ended on such date, all in accordance with
GAAP.
(g) No information, exhibit or report furnished by the
Borrower to the Administrative Agent or to any Lender Party in
connection with the syndication efforts of the Administrative Agent, or
the negotiation of the Loan Documents contained any untrue statement of
a material fact or omitted to state a material fact necessary to make
the statements made therein not misleading.
(h) There is no action, suit, investigation, litigation or
proceeding affecting the Borrower pending or threatened before any
court, governmental agency or arbitrator that is likely to have a
material adverse effect on the condition (financial or otherwise),
results of operations, assets, business or prospects of the Borrower
and its Subsidiaries on a Consolidated basis, except as disclosed in
the Borrower's 1997 Form 10-K (the "Disclosed Litigation"), and there
has been no adverse change in the status, or financial effect on the
Borrower and its Subsidiaries on a Consolidated basis, of the Disclosed
Litigation.
(i) There is no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that
purports to affect the legality, validity or enforceability of this
Agreement, any Note or any other Loan Document, or the consummation of
the transactions contemplated hereby.
(j) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of
the Securities Exchange Act of 1934.
(k) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
<PAGE>
38
(l) Schedule 4.01(m) contains a list of (i) all electric
franchises of the Borrower in effect as of the date of the initial
Borrowing, (ii) expiration dates for each such franchise, and (iii) the
percentage of revenues of all electric utility operations of the
Borrower derived from each operating unit with respect to such
franchises for the September 1997 billing period. Schedule 4.01(m) also
contains similar information with respect to the electric franchise for
the City of Albuquerque, which has expired.
(m) Set forth on Schedule 4.01(n) hereto is a complete and
accurate list of all Plans, Multiemployer Plans and Welfare Plans with
respect to any employees of the Borrower as of the date hereof.
(n) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of the Borrower.
(o) Schedule B (Actuarial Information) to the 1996 annual
report (Form 5500 Series) for each Plan of the Borrower, copies of
which have been filed with the Internal Revenue Service, is complete
and accurate and fairly presents the funding status of such Plan, and
since the date of such Schedule B there has been no material adverse
change in such funding status.
(p) Neither the Borrower nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan.
(q) Neither the Borrower nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and no Multiemployer Plan of the
Borrower is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
(r) No Prohibited Transaction has occurred that has resulted
in or is reasonably likely to result in a material liability of the
Borrower.
(s) The operations and properties of the Borrower comply in
all material respects with all Environmental Laws and neither utilize
nor contain nor are affected by any Hazardous Materials that are not
treated in compliance with all Environmental Laws, and on the date
hereof, the Borrower does not have any material liability, contingent
or otherwise, under any Environmental Law, except as set forth in the
Borrower's 1997 Form 10-K.
<PAGE>
39
(t) The Borrower has filed, has caused to be filed or has been
included in all tax returns (federal, state, local and foreign)
required to be filed and has paid all taxes shown thereon to be due,
together with applicable interest and penalties.
(u) Set forth on Schedule 4.01(v) hereto is a complete and
accurate list of the Material Leases on the date hereof, showing the
expiration date and annual rental cost thereof. The Borrower is
entitled to exercise all of the rights of lessee purported to be
granted to the Borrower under each such Material Lease.
(v) Set forth on Schedule 4.01(w) hereto is a complete and
accurate list of all Indebtedness (other than Material Leases and
intercompany Indebtedness that would be eliminated in preparing the
Consolidated financial statements of the Borrower and its Subsidiaries)
of the Borrower, showing as of the Effective Date the principal amount
outstanding, obligor, obligee and maturity date thereof.
(w) Schedule 4.01(x) hereto, as most recently provided to the
Administrative Agent, sets forth the same (i) amounts with respect to
the interest portion of payments under the Material Leases and (ii)
discount rate used to calculate the net present value of all amounts
payable under the Material Leases as have been most recently provided
(or that the Borrower intends to provide shortly) to Moody's and S&P or
as have otherwise been agreed to by the Majority Lenders.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid or any Lender Party shall have any Commitment hereunder, the
Borrower will, unless the Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with (i) all material laws, rules, regulations and orders (including,
without limitation, ERISA and all applicable Environmental Laws) and
(ii) all other laws, rules, regulations and orders, promptly upon
discovery of any non-compliance.
(b) Payment of Taxes, Etc. Pay and discharge, before the same
shall become delinquent, (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all
lawful claims that, if unpaid, might by law become a Lien (other than a
Permitted Lien) upon its property; provided, however, that the Borrower
shall not be required to pay or discharge any such tax, assessment,
<PAGE>
40
charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained.
(c) Maintenance of Insurance. Maintain insurance with
responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which the Borrower operates; provided that the
Borrower may maintain reasonable amounts of self insurance consistent
with its financial condition and other relevant criteria.
(d) Preservation of Corporate Existence and Approvals.
Preserve and maintain (i) its corporate existence, rights (charter and
statutory), franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the
ownership of its properties; provided, however, that nothing herein
contained shall prevent any merger or consolidation permitted without
the written consent of the Majority Lenders by Section 5.02(b) of this
Agreement; and (ii) all approvals, authorizations, licenses, franchises
and other permissions of all governmental, judicial, regulatory, and
other agencies necessary to enable each of the Borrower to operate and
maintain its property, business and operations in the same condition as
in effect or carried on, as the case may be, on the date hereof or as
such property, business and operations may hereafter be maintained or
carried on in accordance with the Loan Documents, if the failure to so
maintain and preserve any such approval, authorization, license,
franchise or other permission would be reasonably likely to result in a
material adverse change in the condition (financial or otherwise),
results of operations, assets, business or prospects of the Borrower
and its Subsidiaries on a Consolidated basis.
(e) Maintenance of Properties, Etc. Maintain and preserve all
of its properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and tear
excepted.
(f) Transactions with Affiliates. Conduct all transactions
otherwise permitted under the Loan Documents with any of its Affiliates
on terms that are fair and reasonable and no less favorable to the
Borrower than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate.
(g) Total Debt to Total Capitalization. Maintain a ratio of
Consolidated Total Debt to Consolidated Total Capitalization of the
Borrower and its Subsidiaries, measured at the end of each fiscal
quarter, of not more than 0.70 to 1.
<PAGE>
41
(h) Reporting Requirements. Furnish to the Lender Parties:
(i) as soon as possible and in any event within five
days after the occurrence of each Default continuing on the
date of such statement, a statement of the chief financial
officer of the Borrower setting forth details of such Default
and the action that the Borrower has taken and proposes to
take with respect thereto;
(ii) as soon as available and in any event within 60
days after the end of each of the first three quarters of each
fiscal year of the Borrower, the Consolidated financial
statements of the Borrower and its Subsidiaries for such
fiscal quarter, including the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such
quarter and the related Consolidated statements of earnings
(loss) and cash flows of the Borrower and its Subsidiaries for
the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief accounting officer of the
Borrower as having been prepared in accordance with GAAP,
together with (A) a certificate of the chief financial officer
of the Borrower stating that no Default has occurred and is
continuing or, if any such Default has occurred and is
continuing, a statement as to the nature thereof and the
action that the Borrower has taken and proposes to take with
respect thereto and (B) a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower
in determining compliance with the covenants contained in
Sections 5.01(g);
(iii) as soon as available and in any event within
120 days after the end of each fiscal year of the Borrower, a
copy of the annual audit report for such year for the Borrower
and its Subsidiaries, including therein the Consolidated
financial statements of the Borrower and its Subsidiaries for
such fiscal year, including the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal
year and the related Consolidated statements of earnings
(loss) and cash flows of the Borrower and its Subsidiaries for
such fiscal year, in each case accompanied by an opinion
acceptable to the Majority Lenders of Independent Accountants,
together with (A) a certificate of such accounting firm in
substantially the form of Exhibit H (with the schedules
referred to therein attached thereto) and (B) a certificate of
the chief financial officer of the Borrower stating that no
Default has occurred and is continuing or, if any such Default
<PAGE>
42
has occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken and
proposes to take with respect thereto;
(iv) promptly and in any event within 10 Business
Days after the Borrower or any of its ERISA Affiliates knows
or has reason to know that any ERISA Event has occurred, a
statement of the chief financial officer of the Borrower
describing such ERISA Event and the action, if any, that the
Borrower or such ERISA Affiliate has taken and proposes to
take with respect thereto;
(v) promptly and in any event within five Business
Days after receipt thereof by the Borrower or any of its ERISA
Affiliates, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed
to administer any Plan;
(vi) promptly and in any event within 30 days after
the filing thereof with the Internal Revenue Service, copies
of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Plan of the
Borrower;
(vii) promptly and in any event within five Business
Days after receipt thereof by the Borrower or any of its ERISA
Affiliates from the sponsor of a Multiemployer Plan, copies of
each notice received by the Borrower or any of its ERISA
Affiliates concerning (A) the imposition of Withdrawal
Liability by any Multiemployer Plan, (B) the reorganization or
termination, within the meaning of Title IV of ERISA, of any
Multiemployer Plan or (C) the amount of liability incurred, or
that may be incurred, by the Borrower or any of its ERISA
Affiliates in connection with any event described in clause
(A) or (B);
(viii) promptly and in any event within 10 Business
Days after the Borrower or any of its ERISA Affiliates knows
or has reason to know that any Prohibited Transaction that is
reasonably likely to result in a material liability of the
Borrower has occurred, a statement of the chief financial
officer of the Borrower describing such Prohibited Transaction
and the action, if any, that the Borrower or such ERISA
Affiliate has taken and proposes to take with respect thereto;
(ix) promptly after the commencement thereof, notice
of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
<PAGE>
43
instrumentality, domestic or foreign, affecting the Borrower
or any of its Subsidiaries of the type described in Section
4.01(i) or (j);
(x) promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and
reports that the Borrower sends to its stockholders, and
copies of all regular, periodic and special reports, and all
registration statements, that the Borrower files with the
Securities and Exchange Commission or any governmental
authority that may be substituted therefor, or with any
national securities exchange;
(xi) promptly after the furnishing thereof, copies of
any statement or report furnished to any other holder of the
securities of the Borrower with respect to any pending or
potential non-compliance with the terms of any other
indenture, loan or credit or similar agreement, and not
otherwise required to be furnished to the Lender Parties
pursuant to any other clause of this Section 5.01(h);
(xii) promptly, and in any event within five Business
Days after any change in the information regarding Material
Leases of the type contained on Schedule 4.01(x) furnished by
the Borrower to Moody's or S&P, notice of such change; and
(xiii) such other information respecting the
business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower as any
Lender Party may from time to time reasonably request.
(i) Reference Bond Ratings. Use its best efforts to ensure
that its senior unsecured debt is at all times rated by Moody's and
S&P, and promptly notify the Administrative Agent should either such
rating cease to be in effect or become unavailable for any reason.
(j) Visitation Rights. At any reasonable time and from time to
time, permit any Agent or any of the Lender Parties or any agents or
representatives thereof (i) to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Borrower and (ii) to discuss the affairs, finances and accounts of
the Borrower with any of their officers or directors and with their
independent certified public accountants.
(l) Keeping of Books. Keep proper books of record and account,
in which full and correct entries shall be made of all financial
transactions and the assets and business of the Borrower in accordance
with GAAP.
<PAGE>
44
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender Party shall have any Commitment hereunder, the
Borrower will not, without the written consent of the Majority Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or
hereafter acquired, or sign or file, under the Uniform Commercial Code
of any jurisdiction, a financing statement that names the Borrower as
debtor, or sign any security agreement authorizing any secured party
thereunder to file such financing statement, or assign, any accounts or
other right to receive income, excluding, however, from the operation
of the foregoing restrictions the following:
(i) Permitted Liens;
(ii) purchase money Liens upon or in property
acquired or held by the Borrower in the ordinary course of
business to secure the purchase price of such property or to
secure Indebtedness incurred solely for the purpose of
financing the acquisition of any such property to be subject
to such Liens, or Liens existing on any such property at the
time of acquisition, or extensions, renewals or replacements
of any of the foregoing for the same or a lesser amount;
provided, however, that no such Lien shall extend to or cover
any property other than the property being acquired, and no
such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being
extended, renewed or replaced; and provided further that the
aggregate principal amount of the Indebtedness at any one time
outstanding secured by Liens permitted by this clause (ii)
shall not exceed $25,000,000 at any one time outstanding;
(iii) The assignment of, or liens on, utility
regulatory assets related to PUC 2183 Amounts;
(iv) The assignment of, or Liens on, accounts
receivable and signing and filing of related financing
statements under the Uniform Commercial Code of the applicable
jurisdictions;
(v) The assignment of, or Liens on, demand, energy or
wheeling revenues, or on capacity reservation or option fees,
payable to the Borrower with respect to any wholesale electric
service or transmission agreements, the assignment of, or
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45
Liens on, revenues from energy services contracts, and the
assignment of, or Liens on, capacity reservation or option
fees payable to the Borrower with respect to asset sales
permitted herein;
(vi) other Liens not covered in clauses (i) through
(v) above securing Indebtedness in an aggregate amount not to
exceed $10,000,000;
(vii) the creation of Liens in connection with the
refinancing of existing Indebtedness; and
(viii) signing and filing appropriate financing
statements under the Uniform Commercial Code of the applicable
jurisdictions to the extent required in connection with
transactions not otherwise prohibited hereunder.
(b) Mergers, Etc. Merge with or into or consolidate with or
into any Person, or acquire all or substantially all of the assets of
any Person, except that the Borrower may merge or consolidate with or
into any Person if the survivor of such merger or consolidation (A)
assumes the obligations of the Borrower hereunder, (b) is a utility
whose business is not substantially different from that of the Borrower
and (C) the debt rating of the survivor's senior unsecured debt from
each of Moody's and S&P is equal to or better than that of the Borrower
immediately prior to giving effect to such merger or consolidation.
(c) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, any of its assets (including, without limitation, all or
substantially all of its assets, whether in one transaction or a series
of related transactions) except (i) in connection with a transaction
authorized by subsection (b) of this Section; (ii) sales of accounts
receivable and energy services contract revenues; (iii) sales of assets
(excluding those permitted in clauses (i) and (ii) hereof) for fair
value, if such value does not, for each transaction or series of
related transactions in any calendar year, exceed 25% of the book value
of the consolidated assets of the Borrower and its Subsidiaries; (iv)
sales of utility regulatory assets and corresponding accounts
receivable related to PUC 2183 Amounts; and (v) sale, lease, transfer
or other disposition, at less than fair value, of any other assets,
provided that the aggregate book value of such assets shall not exceed
$10,000,000 in any calendar year.
(d) Change in Nature of Business. Except in connection with
transactions permitted under Section 5.02(b) and (c) above, make any
material change in the nature of its business as carried on at the date
hereof.
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46
(e) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required by GAAP, or as permitted by
GAAP, if the amounts involved are not material.
(f) Limitation on Dividends. Declare or make any dividend
payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of common stock of
the Borrower, or purchase, redeem or otherwise acquire for value (or
permit any of its Subsidiaries to do so) any shares of common stock of
the Borrower or any warrants, rights or options to acquire any such
shares, now or hereafter outstanding, except that the Borrower may (i)
declare and make any dividend payment or other distribution payable in
common stock of the Borrower, (ii) purchase, redeem or otherwise
acquire shares of its common stock or warrants, rights or options to
acquire any such shares with the proceeds received from the
substantially concurrent issue of new shares of its common stock and
(iii) declare or pay cash dividends to its common stockholders and
purchase, redeem or otherwise acquire shares of its common stock or
warrants, rights or options to acquire any such shares for cash during
any 12-month period in an amount not to exceed 100% of net income
(excluding extraordinary gains and extraordinary losses, such
extraordinary gains and extraordinary losses to include, but not be
limited to, gains and losses from the sale, lease, transfer or other
disposition of assets of the Borrower and its Subsidiaries for such
period) computed on a consolidated basis, less the amount of cash
dividends declared and paid to the holders of any class of capital
stock (other than common stock) of the Borrower, provided that,
immediately after giving effect to such proposed action, no Event of
Default or event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default would exist.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal of any
Advance when the same becomes due and payable (including, without
limitation, in connection with any mandatory prepayment) or (ii)
interest on any Advance or any other amount under any Loan Document for
five days after such interest or other amount has become due and
payable; or
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47
(b) Any representation or warranty made by the Borrower (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) The Borrower shall fail to perform or observe (i) any
term, covenant or agreement contained in Section 5.01(g), 5.01(h)(i) or
5.02, or (ii) any other term, covenant or agreement contained in any
Loan Document on its part to be performed or observed if such failure
shall remain unremedied for 10 days after written notice thereof shall
have been given to the Borrower by the Administrative Agent or any
Lender Party; or
(d) The Borrower shall fail to pay any principal of or premium
or interest or other amounts on any Indebtedness outstanding in a
principal amount of at least $5,000,000 in the aggregate (but excluding
Indebtedness outstanding hereunder) of the Borrower when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in any
agreement or instrument relating to such Indebtedness; or any other
event shall occur or condition shall exist under any agreement or
instrument relating to such Indebtedness and shall continue after the
applicable grace period, if any, specified therein, if the effect of
such event or condition is to accelerate, or to permit the acceleration
of, the maturity of such Indebtedness; or such Indebtedness shall be
declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed, purchased or
defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the
stated maturity thereof; or
(e) The Borrower shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
the Borrower Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or
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48
(f) Any judgment or order for the payment of money shall be
rendered against the Borrower (i) in excess of $20,000,000 or (ii)
which, when added to all other such judgments or orders rendered on or
after the date hereof, exceeds $40,000,000 in the aggregate, and either
(A) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (B) there shall be any period of 30
consecutive days during which such judgment or order shall not have
been satisfied and a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any ERISA Event shall have occurred with respect to a Plan
of the Borrower and the sum (determined as of the date of occurrence of
such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans of the Borrower with respect
to which an ERISA Event shall have occurred and then exist (or the
liability of the Borrower and its ERISA Affiliates related to such
ERISA Event) exceeds $5,000,000; or
(h) The Borrower or any of its ERISA Affiliates shall have
been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan in an amount
that, when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Borrower and its ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $2,000,000 or requires payments exceeding $1,000,000 per annum;
or
(i) The Borrower or any of its ERISA Affiliates shall have
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower and its ERISA Affiliates to all Multiemployer Plans that are
then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for
the plan years of such Multiemployer Plans immediately preceding the
plan year in which such reorganization or termination occurs by an
amount exceeding $2,000,000; or
(j) A Prohibited Transaction shall have occurred and the
Borrower has incurred or is reasonably likely to incur liability in
connection therewith in an amount exceeding $2,000,000;
<PAGE>
49
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the obligation of each Lender Party to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, in the event of
an actual or deemed entry of an order for relief with respect to the Borrower
under the Federal Bankruptcy Code, (A) the obligation of each Lender Party to
make Advances shall automatically be terminated and (B) the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. (a) If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Majority Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in a special letter of credit cash collateral
account to be maintained with and in the name of the Administrative Agent and
under the sole dominion and control of the Administrative Agent for its benefit
and the ratable benefit of the Lender Parties (the "L/C Cash Collateral
Account"), an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding. If at any time the Administrative Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Administrative Agent and the Lender Parties
or that the total amount of such funds is less than the aggregate Available
Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent determines to be free and clear of any such right and
claim.
(b) The Borrower hereby pledges and assigns to the
Administrative Agent for its benefit and the ratable benefit of the Lender
Parties, and grants to the Administrative Agent for its benefit and the ratable
benefit of the Lender Parties a lien on and a security interest in, the
following collateral (the "Letter of Credit Collateral"):
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(i) the L/C Cash Collateral Account, all cash deposited
therein, and all certificates and instruments, if any, from time to
time representing or evidencing the L/C Cash Collateral Account;
(ii) all notes, certificates of deposit and other instruments
from time to time hereafter delivered to or otherwise possessed by the
Administrative Agent for or on behalf of the Borrower in substitution
for or in respect of any or all of the then existing Letter of Credit
Collateral;
(iii) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Letter of Credit Collateral; and
(iv) to the extent not covered by clauses (i) through (iii)
above, all proceeds of any or all of the foregoing Letter of Credit
Collateral.
The lien and security interest granted hereby secures the payment of all
Obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.
(c) The Borrower hereby authorizes the Administrative Agent to
apply, from time to time after funds are deposited in the L/C Cash Collateral
Account, funds then held in the L/C Cash Collateral Account to the payment of
any amounts, in such order as the Administrative Agent may elect, as shall have
become or shall become due and payable by the Borrower to the Lender Parties in
respect of the Letters of Credit.
(d) Neither the Borrower nor any Person claiming or acting on
behalf of or through the Borrower shall have any right to withdraw any of the
funds held in the L/C Cash Collateral Account, except as provided in Section
6.02(h).
(e) The Borrower agrees that it will not (i) sell or otherwise
dispose of any interest in the Letter of Credit Collateral or (ii) create or
permit to exist any lien, security interest or other charge or encumbrance upon
or with respect to any of the Letter of Credit Collateral, except for the
security interest created by this Section 6.02.
(f) If any Event of Default shall have occurred and be
continuing:
(i) The Administrative Agent may, in its sole discretion,
without notice to the Borrower except as required by law and at any
time from time to time, charge, set off and otherwise apply all or any
part of first, the Obligations with respect to Letters of Credit and
second, the other Obligations of the Borrower now or hereafter existing
under any of the Loan Documents, against the L/C Cash Collateral
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51
Account or any part thereof, in such order as the Administrative Agent
shall elect. The Administrative Agent agrees promptly to notify the
Borrower after any such set-off and application made by the
Administrative Agent, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The
rights of the Administrative Agent under this Section 6.02(f) are in
addition to other rights and remedies (including other rights of
set-off) that the Administrative Agent may have.
(ii) The Administrative Agent may also exercise, in its sole
discretion, in respect of the L/C Cash Collateral Account, in addition
to the other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of New
York at that time.
(iii) Any cash held in the L/C Cash Collateral Account, and
all cash proceeds received by the Administrative Agent in respect of
any sale of, collection from or other realization upon all or any part
of the L/C Cash Collateral Account may, in the discretion of the
Administrative Agent, then or at any time thereafter be applied (after
payment of any amounts payable pursuant to Section 8.04) in whole or in
part by the Administrative Agent for the ratable benefit of the Lender
Parties against all or any part of the obligations of the Borrower now
or hereafter existing under any of the Loan Documents in such order as
the Administrative Agent may elect.
(g) The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Letter of Credit
Collateral if the Letter of Credit Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
property, it being understood that the Administrative Agent shall not have any
responsibility or liability for taking any necessary steps to preserve rights
against any parties with respect to the Letter of Credit Collateral.
(h) Any surplus of the funds held in the L/C Cash Collateral
Account and remaining after payment in full of all of the Obligations of the
Borrower under this Agreement and under any other Loan Document after the
Termination Date shall be paid to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
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52
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender Party
hereby appoints and authorizes, with respect to this Agreement, the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to them by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by the Loan Documents (including, without
limitation, enforcement or collection of, or other actions taken with respect
to, the Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided, however,
that the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or which is contrary to
this Agreement or applicable law. Each Agent agrees to give to each Lender Party
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent, nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it or
them under or in connection with any Loan Document, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, each Agent: (i) may treat the payee of any Note as the holder
thereof until the Administrative Agent receives and accepts an Assignment and
Acceptance entered into by the Lender Party that is the payee of such Note, as
Assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender Party and shall not be responsible
to any Lender Party for any statements, warranties or representations (whether
written or oral) made in or in connection with any Loan Document; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
the Borrower or to inspect the property (including the books and records) of the
Borrower; (v) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument or document furnished pursuant
hereto; and (vi) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
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53
SECTION 7.03. Chase, Citibank, Morgan and Affiliates. With
respect to their Commitments, the Advances made by them and the Note issued to
them, each of Chase, Citibank and Morgan shall have the same rights and powers
under the Loan Documents as any other Lender Party and may exercise the same as
though it were not an Agent; and the term "Lender Party" or "Lender Parties"
shall, unless otherwise expressly indicated, include Chase, Citibank and Morgan
in their individual capacities. Chase, Citibank, Morgan and their affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if it were not an Agent under any Loan
Document and without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05. Indemnification. (a) The Lenders agree to
indemnify each Agent (to the extent not promptly reimbursed by the Borrower),
ratably according to the respective principal amounts of the Notes then held by
each of them (or if no Notes are at the time outstanding or if any Notes are
held by Persons which are not Lender Parties, ratably according to the
respective amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against such Agent in any way relating to
or arising out of any Loan Document or any action taken or omitted by such Agent
under any Loan Document, provided that no Lender Party shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender Party agrees to reimburse each Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
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54
such Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, any Loan Document, to the extent that such
Agent is not promptly reimbursed for such expenses by the Borrower. For purposes
of this Section 7.05(a), the Lenders Parties' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (b) their respective pro rata shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
and (c) their respective Unused Revolving Credit Commitments at such time. The
failure of any Lender party to reimburse any Agent promptly upon demand for its
ratable share of any amount required to be paid by the Lender Parties to such
Agent as provided herein shall not relieve any other Lender Party of its
obligation hereunder to reimburse such Agent for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any other
Lender Party to reimburse such Agent for such other Lender Party's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 7.05(a) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Lender Party severally agrees to indemnify each
Issuing Bank (to the extent not promptly reimbursed by the Borrower) ratably (as
determined below), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Issuing Bank in any way relating to or arising out
of any Loan Document or any action taken or omitted by such Issuing Bank under
any Loan Documents provided, that no Lender Party shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Issuing
Bank's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender Party agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses (including counsel fees)
incurred by such Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of , or legal advice in
respect of rights or responsibilities under, any Loan Document, to the extent
that such Issuing Bank is not promptly reimbursed for such expenses by the
Borrower. For purposes of this Section 7.05(b), the Lenders Parties' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (a) the aggregate principal amount of the Advances outstanding at such
time and owing to the respective Lender Parties, (b) their respective pro rata
shares of the aggregate Available Amount of all Letters of Credit outstanding at
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55
such time, and (c) their respective Unused Revolving Credit Commitments at such
time. The failure of any Lender party to reimburse such Issuing Bank promptly
upon demand for its ratable share of any amount required to be paid by the
Lender Parties to such Issuing Bank as provided herein shall not relieve any
other Lender Party of its obligation hereunder to reimburse such Issuing Bank
for its ratable share of such amount, but no Lender Party shall be responsible
for the failure of any other Lender Party to reimburse such Issuing Bank for
such other Lender Party's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05(b) shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. The Administrative Agent may
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower and may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall, subject to the approval of the Borrower if no Default has occurred and is
continuing on such date (which approval will not be unreasonably withheld), have
the right to appoint a successor Administrative Agent. If within 30 days after
the retiring Administrative Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Administrative Agent, no successor
Administrative Agent shall have (A) been so appointed by the Majority Lenders,
(B) if required, been approved by the Borrower, and (C) accepted such
appointment, then the retiring Administrative Agent may, on behalf of the Lender
Parties, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $50,000,000. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement.
SECTION 7.07. Syndication Agent, Documentation Agent and
Arranger. The Syndication Agent, the Documentation Agent and the Arranger shall
have no duties or obligations under this Agreement or the other Loan Documents
in their respective capacities as Syndication Agent, Documentation Agent or
Arranger, as the case may be.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which, given; provided, however, that no amendment, waiver or consent,
shall, unless in writing and signed by all the Lender Parties, do any of the
following: (a) waive any of the conditions specified in Article III, (b)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations, (c) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder, (d) postpone any date fixed for any payment
<PAGE>
56
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder or (f)
amend this Section 8.01; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by each Issuing Bank in addition to
the Lenders required above to take such action, affect the rights or duties of
the Issuing Banks under this Agreement; and provided further that no amendment,
waiver or consent shall, unless in writing and signed by each Agent in addition
to the Lenders required above to take such action, affect the rights or duties
of such Agent under this Agreement or any Notes.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered, if to the Borrower, at its address at Alvarado
Square, Mail Stop 2704, Albuquerque, New Mexico 87158, Attention: Corporate
Treasury Management; if to any Bank, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender Party, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender Party; if to Chase, as Administrative Agent, at its
address at 270 Park Avenue, New York, New York 10017, Attention: Utilities
Group; if to Citibank, as Syndication Agent, at its address at 399 Park Avenue,
New York, NY 10043, Attention: Utilities Department; and if to Morgan, as
Documentation Agent, at its address at 60 Wall Street, New York, NY 10260,
Attention: Kathy Sayko-Yanes; or, as to each party, at such other address as
shall be designated by such party in a written notice to the other parties.
Unless otherwise specifically provided herein, all such notices and
communications shall, when mailed, telecopied, telegraphed, telexed or cabled,
be effective when deposited in the mails, telecopied, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article II or VII shall not be effective until received by the
Administrative Agent.
<PAGE>
57
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender Party or any Agent to exercise, and no delay in exercising, any right
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes. (a) The Borrower
agrees to pay on demand (i) all costs and out-of-pocket expenses of the Agents
in connection with the syndication, preparation, execution, delivery,
administration, modification and amendment of the Loan Documents and the other
documents to be delivered under the Loan Documents, including, without
limitation, (A) all due diligence, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and out-of-pocket expenses of counsel for
the Agents with respect thereto and with respect to advising the Agents as to
their rights and responsibilities, or the perfection, protection or preservation
of rights or interests under the Loan Documents, and with respect to
negotiations with the Borrower regarding any Default or event or circumstance
that may give rise to any Default, and (ii) all costs and expenses of the Agents
and the Lender Parties, if any (including, without limitation, reasonable
counsel fees and expenses, which may include, without limitation, the reasonable
allocated costs and expenses of in-house counsel; provided, however, that the
fees of in-house counsel shall not be reimbursable to the extent they are
duplicative or redundant of those of outside counsel), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
the Loan Documents and the other documents to be delivered under the Loan
Documents, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of, or Rollover of, any
Eurodollar Rate Advance is made other than on the last day of an Interest Period
relating to such Advance, as a result of a payment or Rollover pursuant to
Section 2.12 or acceleration of the maturity of the Notes pursuant to Section
6.01 or for any other reason, the Borrower shall, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party any amounts required
to compensate such Lender Party for any additional losses, costs or expenses
which it may reasonably incur as a result of such payment or Rollover,
including, without limitation, any loss (including loss of anticipated profits),
costs or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such lender to fund or maintain such
Advance.
<PAGE>
58
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent by the Majority Lenders specified by
Section 6.01 to authorize the Administrative Agent to declare the Notes due and
payable pursuant to the provisions of Section 6.01, each Lender Party is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender Party to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under any Loan Document, whether or not such Lender Party shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender Party agrees promptly to notify the Borrower after
any such set-off and application made by such Lender Party, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender Party under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Lender Party may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agents and
when the Administrative Agent shall have been notified by each Lender Party that
such Lender Party has executed it and thereafter shall be binding upon and inure
to the benefit of the Borrower, each Agent and each Lender Party and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender,
with the consent of the Borrower (which consent shall not be unreasonably
withheld), may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitments, the Advances owing to it and the Note or Notes
held by it): provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations in respect
of the Facilities under this Agreement, (ii) except in the case of (A) an
assignment to a Person that immediately prior to such assignment was a Lender or
(B) an assignment of all of the remaining rights and obligations of such
assigning Lender under this Agreement, the amount of the Commitment of the
assigning Lender Party being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, and shall be an integral
multiple thereof, (iii) the assigning Lender shall, immediately following such
assignment (unless such assignment is of all the rights and obligations of such
assigning Lender under this Agreement, or is made concurrently, with another
such assignment or other such assignments that in the aggregate constitute all
of the rights and obligations of such assigning Lender under this Agreement),
<PAGE>
59
retain a Commitment of at least $5,000,000 under this Agreement, (iv) each such
assignment shall be to an Eligible Assignee, and (v) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee (the "Recordation Fee") of $2,500; and, provided further, that
no consent of the Borrower shall be required for an assignment to any Bank or
any Affiliate of any Bank.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations under this
Agreement, such Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under this Agreement or any other instrument
or document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Agent, such assigning Lender Party
or any other Lender Party and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Agents to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to each Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender or Issuing Bank, as the case may be.
<PAGE>
60
(d) The Administrative Agent shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment of, and principal amount of
the Advances owing to, each Lender Party from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agents and the Lender Parties may treat
each Person whose name is recorded in the Register as a Lender Party hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender Party at any reasonable time and from
time to time upon reasonable prior notice.
(e) Within five Business Days after its receipt of an
Assignment and Acceptance executed by an assigning Lender Party and an assignee
representing that it is an Eligible Assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days of its receipt of such notice, the Borrower,
at its own expense, shall execute and deliver to the Administrative Agent in
exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Revolving Credit Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Lender
Party has retained a Revolving Credit Commitment hereunder, a new Note to the
order of the assigning Lender Party in an amount equal to the Revolving Credit
Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit A
hereto.
(f) Each Issuing Bank may with the consent of the Borrower
(such consent not to be unreasonably withheld) assign to one or more Eligible
Assignee all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided, however, that
(i) except in the case of an assignment to a Person that immediately prior to
such assignment was an Issuing Bank or an assignment of all of an Issuing Bank's
rights and obligations under this Agreement, the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be in an integral multiple of $1,000,000 in excess thereof, (ii) each such
assignment shall be to an Eligible Assignee and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $2,500.
<PAGE>
61
(g) Each Lender Party may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender Party shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
Party shall remain the holder of any such Note for all purposes of this
Agreement, and (iv) the Borrower, the Agents and the other Lender Parties shall
continue to deal solely and directly with such Lender Party in connection with
such Lender Party's rights and obligations under this Agreement; and provided
further that no Lender Party shall give any participant any right to determine
or influence such Lender Party's vote pursuant to Section 8.01 of this
Agreement, except with respect to such matters as are specified in clauses (c),
(d) and (f) of such Section 8.01.
(h) Each Lender Party acknowledges that it has obligations
regarding preservation of the confidentiality of non-public information
regarding the Borrower. Each Lender Party may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided that, prior to are such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 8.08. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 8.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
<PAGE>
62
SECTION 8.10. Waiver of Jury Trial. Each of the Borrower, the
Agents, and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes.
<PAGE>
63
NYDOCS03/70502 3
Borrower
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By ____________________________
Name:
Title:
<PAGE>
64
NYDOCS03/70502 3
Agents
THE CHASE MANHATTAN BANK, as Administrative
Agent and as Lender
By ____________________________
Name:
Title:
CHASE SECURITIES, INC., as Arranger and as
Lender
By ____________________________
Name:
Title:
CITIBANK, N.A., as Syndication Agent and as
Lender
By ____________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent and as Lender
By ____________________________
Name:
Title:
<PAGE>
65
Other Lenders
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By ____________________________
Name:
Title:
CIBC OPPENHEIMER
By ____________________________
Name:
Title:
ABN AMRO BANK N.V.
By ____________________________
Name:
Title:
FIRST SECURITY BANK OF NEW MEXICO, N.A.
By ____________________________
Name:
Title:
<PAGE>
66
NYDOCS03/70502 3
LONG TERM CREDIT BANK OF JAPAN LIMITED
LOS ANGELES AGENCY
By ____________________________
Name:
Title:
MELLON BANK, N.A.
By ____________________________
Name:
Title:
NORWEST BANK NEW MEXICO, N.A.
By ____________________________
Name:
Title:
NYDOCS03/70502 3
<PAGE>
EXHIBIT 1 to
Consent and Directive
REFUNDING AGREEMENT NO. 8A
REFUNDING AGREEMENT NO. 8A dated as of December 23, 1997 (this
"Refunding Agreement") between PUBLIC SERVICE COMPANY OF NEW MEXICO, a New
Mexico corporation ("PNM"), the corporation identified on Schedule I hereto as
the Owner Participant (the "Owner Participant"), STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company ("State Street"), not in its individual
capacity but solely as owner trustee (the "Owner Trustee") under the Trust
Agreement dated as of August 12, 1986 (the "Trust Agreement") with the Owner
Participant, THE CHASE MANHATTAN BANK, a New York banking corporation (formerly
known as "Chemical Bank") ("Chase"), not in its individual capacity, but solely
as lease indenture trustee (the "Indenture Trustee") under the Trust Indenture,
Mortgage, Security Agreement and Assignment of Rents dated as of August 12, 1986
(as heretofore supplemented, the "Lease Indenture") with the Owner Trustee and
FIRST PV FUNDING CORPORATION, a Delaware corporation ("Funding Corporation").
R E C I T A L S
A. PNM, the Owner Participant, the Owner Trustee, the
Indenture Trustee and Funding Corporation are party to (i) the Participation
Agreement dated as of August 12, 1986 (as heretofore amended, the "Participation
Agreement") and (ii) Refunding Agreement No. 8 dated as of September 27, 1996
(the "1996 Refunding Agreement"). State Street is the successor as owner trustee
to The First National Bank of Boston ("FNB"), the owner trustee originally
designated in and party to the Participation Agreement and the other Transaction
Documents (such term and the other capitalized terms used in this Refunding
Agreement without definition being defined as provided in Section 1 below) to
which FNB was party in its capacity as owner trustee.
B. Funding Corporation, PNM and Chase are parties to the
Collateral Trust Indenture dated as of December 16, 1985 (as heretofore
supplemented and amended, the "Collateral Trust Indenture").
C. Pursuant to the 1996 Refunding Agreement, the Owner Trustee
(i) effected a partial prepayment of $1,172,000 in respect of the 10.15%
Non-Recourse Promissory Note, Fixed Rate Series (Due January 15, 2016), dated
November 25, 1986 (the "Subject Note"), theretofore issued by the Owner Trustee
and (ii) issued its Non-Recourse Promissory Note, 1996 Refunding Series (Due
January 15, 2016), issued as of July 15, 1996 (the "PNM Note"), in the original
principal amount of $1,172,000 to PNM. Pursuant to Section 8(a) hereof, the
Owner Trustee has determined to effect a further partial prepayment of
$28,900,000 of the Subject Note (the "Prepayment") on the Closing Date.
<PAGE>
D. Funding Corporation has determined to effect a partial
optional redemption of the securities outstanding under the Collateral Trust
Indenture (the "Redemption"). Funding Corporation intends to redeem $28,316,000
of its 10.15% Lease Obligation Bonds Series 1986B, Due January 15, 2016 (the
"Series B Bonds").
E. The Redemption will occur on January 20, 1998; on such
date, the applicable premium is 5.684% with respect to the $28,316,000 of Series
B Bonds being redeemed on such date. The Prepayment will occur on December 30,
1997; on such date the applicable premium is 6.090% with respect to the
$28,900,000 of the Subject Note being redeemed. The parties have agreed that,
anything in the Subject Note to the contrary not withstanding, the prepayment
price applicable to the Prepayment shall be 105.684% of the principal amount
being prepaid together with interest accrued to the Closing Date, except that,
with respect to $584,000 of such principal amount, the prepayment price shall be
100.000% of such amount together with interest accrued to the Closing Date.
F. The Owner Trustee shall obtain the funds necessary for the
Prepayment (i) by issuing and selling to PNM an Additional Note under the Lease
Indenture (the "Issuance and Sale") in the amount and on the terms specified in
the form of note included as part of Exhibit A hereto (the "1997 Refunding
Note") and (ii) from the payment by PNM of Supplemental Rent (pursuant to
Section 3(b)(ii) of the Facility Lease) to the Owner Trustee in the amount equal
to the prepayment premium (the prepayment price less principal being prepaid and
accrued interest thereon) to be paid in connection with the Prepayment. The
purchase price for the 1997 Refunding Note (the "Purchase Price") will equal the
principal amount thereof plus interest accrued thereon from July 15, 1997 to the
Closing Date.
G. On January 15, 1998, a sinking fund payment of $3,089,000
is due in respect of the Series B Bonds, $584,000 of which, but for the
Prepayment and the Issuance and Sale, would have been funded from scheduled
principal amortization in respect of the $28,900,000 portion of the Subject
Note. Such $584,000 together with accrued interest (but without premium) will
instead be paid from the proceeds of the Purchase Price held by Chase as
Collateral Trust Trustee. The Collateral Trust Trustee, on behalf of Funding
Corporation, gave notice of the sinking fund redemption on December 15, 1997.
H. Funding Corporation shall obtain the funds necessary for
the Redemption from (a) the proceeds of the prepayment price of the further
portion of the Subject Note being prepaid and (b) amounts paid by PNM pursuant
to Section 4(c) of this Agreement.
I. The Owner Trustee, as directed and authorized by the Owner
Participant, wishes to cause the Issuance and Sale in order to effect the
Prepayment and to provide a portion of the funds needed to effect the
Redemption.
J. Section 3.5(1)(i) of the Lease Indenture provides that
Additional Notes may be issued for the purpose of refunding any previously
issued series of Notes, in whole or in part. Section 10.1(viii) of the Lease
Indenture provides that the Indenture Trustee and the Owner Trustee may, without
the consent of the Holders of Notes Outstanding, execute a supplemental
indenture to evidence the issuance of and to provide the terms of Additional
Notes to be issued under the Lease Indenture in accordance with the terms
thereof. Subject to the conditions set forth herein, the Owner Trustee and
Indenture Trustee intend to execute a 1997 Supplemental Indenture to the Lease
Indenture, dated as of December 23, 1997 (the "1997 Note Supplement"), providing
for the issuance under the Lease Indenture of the 1997 Refunding Note as
contemplated in the 1997 Note Supplement. The form of the 1997 Note Supplement
is attached as Exhibit A hereto.
2
<PAGE>
K. Pursuant to the Consent described in Schedule I hereto (the
"Consent"), the Owner Participant has consented to the acquisition by PNM of
Notes, and by executing this Agreement is willing to consent to the acquisition
by PNM of the 1997 Refunding Note on the terms and conditions set forth herein.
L. Since the 1997 Refunding Note taken together with the PNM
Note and the unpaid portion of the Subject Note (as reflected in the Allonge
hereinbelow described) exactly corresponds (as to interest rate, maturity and
principal amortization) to the Subject Note without giving effect to the
Prepayment (as herein defined) and the Prepayment (as defined in the 1996
Refunding Agreement), PNM and the Owner Participant have agreed that no
adjustments pursuant to Section 3(e) of the Lease will be necessary in
connection with the Prepayment and/or the issuance of the 1997 Refunding Note.
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.
(a) For purposes hereof, capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to such terms set
forth in Appendix A to the Participation Agreement or in the Collateral Trust
Indenture, as the case may be.
(b) "Closing Date" means December 30, 1997.
SECTION 2. Agreements of Funding Corporation.
(a) On the Closing Date, Funding Corporation shall issue a
notice of redemption to the Collateral Trust Trustee in the form of Exhibit B
hereto (the "Notice of Redemption") with respect to the optional redemption by
it of $28,316,000 of Series B Bonds (collectively, the "Subject Bonds"). The
redemption date specified in the Notice of Redemption is January 20, 1998 (the
"Redemption Date").
(b) Promptly following the Redemption, Funding Corporation
will deliver to the Collateral Trust Trustee a Company Request under the
Collateral Trust Indenture to effect adjustments to the Sinking Fund schedules
applicable to the Bonds not redeemed as part of the Redemption.
3
<PAGE>
SECTION 3. Agreements of Owner Trustee.
(a) On the Closing Date, the Owner Trustee will:
(i) execute and deliver the 1997 Note Supplement;
(ii) execute and deliver the 1997 Refunding Note;
(iii) execute and deliver a further allonge (the "Allonge") to
the Subject Note in the form of Exhibit C hereto;
(iv) as required by Section 3.5(4)(b) and (d) of the Lease
Indenture, execute and deliver a certificate, request and authorization
in the form of Exhibit D hereto (the "Owner Trustee Instrument");
(v) cause to be delivered an opinion of its counsel in the
form of Exhibit E.1 hereto; and
(vi) make (solely from the proceeds of the Purchase Price and
the payment of Supplemental Rent pursuant to Section 4(c) hereof) the
Prepayment as follows: principal of $28,900,000, premium of
$1,609,481.44 (calculated at 105.684% on principal of $28,316,000) and
accrued interest through the Closing Date of $1,344,452.08 (aggregating
$31,853,933.52).
(b) On the Closing Date, the relevant provisions of this
Refunding Agreement shall constitute notice to the Indenture Trustee of the
Prepayment. The principal portion of the Purchase Price (the "Amount to be
Prepaid" set forth in Schedule I hereto) shall be applied to prepay on the
Closing Date the remaining installments of principal of the Subject Note as
follows: the "principal amount payable" on each "payment date" specified on
Schedule 1 to the Subject Note shall be prepaid by an amount equal to the
"principal amount payable" for such date set forth in Schedule 1 to the 1997
Refunding Note. Annexed as Schedule 1 to the Allonge is the replacement schedule
to the Subject Note which reflects the application of the proceeds of Prepayment
to the remaining installments of the Subject Note. For each date, the sum of (i)
the "principal amount payable" set forth on Schedule 1 to the Allonge for such
date and (ii) the "principal amount payable" set forth on Schedule 1 to the 1997
Refunding Note for such date equals the "principal amount payable" for such date
set forth on Schedule 1 to the Subject Note (without giving effect to the
Prepayment or the Allonge).
SECTION 4. Agreements of PNM.
(a) On the Closing Date, PNM shall acquire the 1997 Refunding
Note for an amount equal to the Purchase Price. The Purchase Price shall be paid
by wire transfer of immediately available funds to an account at Chase to be
designated by Chase on the day immediately preceding the Closing Date (the
"Account").
4
<PAGE>
(b) On the Closing Date, PNM shall pay an amount equal to the
amount specified in item 7 on Schedule I, such payment to be made for the
benefit of the Owner Trustee as Supplemental Rent under Section 3(b)(ii) of the
Facility Lease. Such payment shall be made by wire transfer of immediately
available funds to the Account.
(c) On the Closing Date, PNM shall pay to the Account for the
benefit of Funding Corporation $162,140.61, of which $122,222.92 is accrued
interest from December 31, 1997 through January 15, 1998 on $28,900,000
principal amount of Subject Bonds and $39,917.69 is accrued interest from
January 16, 1998 through the Redemption Date on $28,316,000 principal amount of
Subject Bonds which will be sufficient to pay any remaining moneys due on the
Subject Bonds.
(d) PNM agrees that, upon acquisition by PNM of the 1997
Refunding Note, PNM will not thereafter sell, assign, transfer or otherwise
dispose of any portion of the 1997 Refunding Note or any interest therein (i)
except in a transaction which is exempt from the registration requirements of
the Securities Act of 1933, as amended, (ii) except in a transaction which would
not involve either a prohibited transaction (other than an exempt prohibited
transaction) or an impermissible delegation of authority within the meaning of
the Employee Retirement Income Security Act of 1974, as amended, related
provisions of the Internal Revenue Code of 1986, as amended, and implementing
regulations (collectively, "ERISA") and (iii) without the consent of the Owner
Participant, to any employee benefit plan subject to ERISA.
(e) PNM acknowledges and agrees that the acquisition by it of
the 1997 Refunding Note shall constitute the purchase and acquisition by PNM of
a Note for all purposes of the Consent and reaffirms, for the benefit of the
Owner Participant, each of its covenants and agreements contained therein.
(f) Without the prior written consent of the Owner
Participant, PNM agrees that neither it nor any of its Affiliates, as holder of
the 1997 Refunding Note, will give or participate in any request, demand,
authorization, direction, notice, consent or waiver or other action available to
a holder of the 1997 Refunding Note.
(g) PNM will continue to satisfy its obligations to pay Rent
under the Facility Lease by making cash payments at the time such Rent is due
and payable, and in no case shall PNM tender, or be permitted to tender, any
portion of the 1997 Refunding Note in satisfaction of its obligations to pay
Rent.
(h) PNM represents and warrants that, on, and as of, the
Closing Date, (i) PNM has obtained (A) the consent of each Equity Investor to
the extent that such consent is required to purchase the 1997 Refunding Note and
(B) each other consent that is required under any Participation Agreement and
(ii) PNM is legally entitled to purchase and hold the 1997 Refunding Note.
5
<PAGE>
SECTION 5. Agreements of the Owner Participant.
(a) The Owner Participant agrees that the acquisition by PNM
of the 1997 Refunding Note is in conformity with the Consent and will not,
therefore, result in a breach by PNM of the Participation Agreement (after
giving effect to the amendment to the Participation Agreement set forth in
Section 10 of the 1996 Refunding Agreement).
(b) The Owner Participant will make a good faith effort to
cooperate with the other parties hereto in connection with the Prepayment, the
Redemption and the Issuance and Sale, SUBJECT NEVERTHELESS, to the provisions of
the Transaction Documents, the Consent and this Agreement.
SECTION 6. Closing.
(a) On the Closing Date, subject to the satisfaction of the
conditions set forth in Section 6(b), the parties hereto shall perform their
respective obligations hereunder specified to be performed on or prior to the
Closing Date.
(b) The obligation of the parties hereto to participate in the
Prepayment, the Issuance and Sale and the Redemption shall be subject to the
fulfillment on or before the Closing Date of the following conditions precedent
(each instrument, document, certificate or opinion to be in form and substance
satisfactory to each party hereto):
(i) The Owner Trustee shall have delivered to the Indenture
Trustee the Owner Trustee Instrument with the authorization and
direction subscribed thereon duly executed by the Owner Participant.
(ii) (A) The Owner Trustee and the Indenture Trustee shall
have entered into the 1997 Supplement, (B) the Owner Trustee shall have
executed and delivered (I) the Allonge and (II) the 1997 Refunding
Note, (C) the Indenture Trustee shall have authenticated the 1997
Refunding Note and delivered the same to PNM, (D) the Funding
Corporation and the Collateral Trust Trustee shall have accepted and
countersigned the Allonge and caused the same to be attached to the
Subject Note and (E) the Collateral Trust Trustee shall have sufficient
funds in the Account to pay any amounts due on the Subject Bonds
through January 15, 1998 and from January 16, 1998 through the
Redemption Date.
(iii) No Default or Event of Default or Indenture Event of
Default shall have occurred and be continuing.
(iv) All conditions precedent to the acquisition by PNM of the
1997 Refunding Note specified in the Consent shall have been fulfilled.
(v) The parties shall have received a favorable opinion of
counsel from Keleher & McLeod, P.A., New Mexico counsel for PNM, dated
the Closing Date and addressing such matters relating to the
transactions in connection with the Redemption, the Issuance and Sale
and the Prepayment as any party may reasonably have requested.
6
<PAGE>
(vi) The parties shall have received a favorable opinion of
counsel from Winthrop, Stimson, Putnam & Roberts, special counsel for
PNM and counsel for the Funding Corporation, dated the Closing Date and
addressing such matters relating to the transactions in connection with
the Redemption, the Issuance and Sale and the Prepayment as any party
may reasonably have requested.
(vii) The parties shall have received favorable opinions of
counsel from (1) counsel to the Owner Trustee dated the Closing Date
and in the form of Exhibit E.1 hereto, and (2) Winthrop, Stimson,
Putnam & Roberts dated the Closing Date and in the form of Exhibit E.2
hereto.
(viii) The parties shall have received from the Owner
Participant an acceptable opinion of counsel as to the due
authorization, execution and delivery of this Agreement by, and the
legal, valid and binding effect and enforceability of this Agreement
against, the Owner Participant.
(ix) The Collateral Trust Trustee shall have executed and
delivered a Consent and Directive (delivered in its capacity as
assignee and pledge of Funding Corporation and as holder of all Notes)
pursuant to which, among other things, it consents to Section 10
hereof.
SECTION 7. Expenses. PNM agrees that the fees, expenses,
disbursements and costs of the other parties hereto and the Collateral Trust
Trustee reasonably incurred in connection with the Prepayment, the Issuance and
Sale and the Redemption are payable by PNM, as Supplemental Rent, as
contemplated by Section 14(b) of the Participation Agreement. For purposes of
such Section 14(b), PNM acknowledges and agrees that this Agreement and the
transactions contemplated hereby and by the Consent are within the intent and
scope of Section 14(b)(ii) of the Participation Agreement.
SECTION 8. Request and Consent.
(a) In accordance with Section 2.01 of the Trust Agreement and
Section 3.5(2) of the Lease Indenture, the Owner Participant hereby requests,
authorizes and directs the Owner Trustee and the Indenture Trustee (as
applicable) to execute, deliver and perform this Agreement, the 1997 Note
Supplement, the 1997 Refunding Note, the Allonge and the Owner Trustee
Instrument.
(b) In accordance with Article X of the Lease Indenture, the
Owner Trustee hereby requests that the Indenture Trustee execute and deliver the
1997 Note Supplement and consents to such execution and delivery.
7
<PAGE>
SECTION 9. No Adjustment, etc. Anything in the Facility Lease
or the other Transaction Documents to the contrary not withstanding, Basic Rent
and the schedules to the Facility Lease will not be subject to adjustment to
reflect either (i) the inclusion in income as to the Owner Participant of
transaction expenses paid by PNM in connection with the Prepayment, the Issuance
and Sale and the Redemption or (ii) the current deduction by the Owner
Participant (in consequence of the Prepayment) of any portion of
previously-incurred transaction expenses presently being amortized on a
straight-line basis during the Basic Lease Term. PNM agrees that any net
increase in the Owner Participant's Net Economic Return in consequence of the
foregoing may be retained by the Owner Participant in connection with any future
adjustment under the Facility Lease undertaken with the intent of preserving the
Owner Participant's Net Economic Return.
SECTION 10. Amendment to Subject Note
Anything in the Subject Note to the contrary notwithstanding,
the prepayment price for the portion of the Subject Note which is the subject of
the Prepayment shall be 105.684% of the principal amount being prepaid, together
with interest accrued to the date fixed for the Prepayment, except that the
prepayment price for $584,000 of the Prepayment shall be 100.000% of such amount
together with interest accrued thereon to the date fixed for the Prepayment.
SECTION 11. Additional Provisions.
(a) The following provisions of the Participation Agreement
are incorporated herein by this reference, mutatis mutandis, and shall be
applicable to and enforceable by the relevant party or parties hereto: Sections
16, 17(b) and 18 (except that the addresses of the parties for receipt of
notices, etc., shall be as set forth on Schedule II hereto) and Sections 19(a)
through Section 19(h).
(b) Notwithstanding Section 19(g) of the Participation
Agreement (as incorporated by Section 11(a) hereof), the Consent shall survive
the execution, delivery and performance of this Agreement.
(c) The recitals contained herein shall be taken as statements
of PNM, and the other parties assume no responsibility for the correctness of
the same.
(d) Chase and State Street are entering into this agreement
solely in their respective trust capacities and not in their respective
individual capacities. Anything herein to the contrary notwithstanding, all and
each of the agreements herein made on the part of each such trustee are made and
intended not as personal agreements but are made and intended solely for the
purpose of binding the trust estate in respect of which Chase or State Street,
as the case may be, is trustee.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Refunding Agreement No. 8A to be duly executed by their respective officers
thereunto duly authorized.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:____________________________
Name:
Title:
MFS LEASING CORP.
By:_____________________________
Name:
Title:
FIRST PV FUNDING CORPORATION
By:_______________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:______________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, but solely
as Owner Trustee as aforesaid
By:_______________________________
Name:
Title:
9
<PAGE>
SCHEDULE I to
Refunding Agreement No. 8A
1. Name of Owner Participant: MFS Leasing Corp. (successor by
assignment to Beneficial Leasing
Group, Inc.), a Delaware corporation
2. Note to be Prepaid: 10.15% Non-Recourse Promissory Note,
Fixed Rate Series (Due January 15,
2016), dated November 25, 1986
3. Amount to be Prepaid: $28,900,000
4. Prepayment Premium: $1,609,481.44
5. 1997 Refunding Note:
(i) Interest Rate: 10.15%
(ii) Principal Amount: $28,900,000
(iii) Stated Maturity of Principal: January 15, 2016
(iv) Interest payable from: July 15, 1997
(v) Interest Payment Dates: January 15 and July 15 in each year,
commencing January 15, 1998
(vi) Principal Amortization: As specified in Exhibit A to the
1997 Note Supplement
(vii) Optional Prepayment: As specified in Exhibit A to the
1997 Note Supplement
(viii) Other terms: As specified in Exhibit A to the
1997 Note Supplement
6. Purchase Price for Refunding Note: $28,900,000 plus accrued interest
from July 15, 1997
7. Supplemental Rent Payment: $1,609,481.44
8. Consent: Consent dated as of April 22, 1996,
executed by MFS Leasing Corp.
<PAGE>
SCHEDULE II to
Refunding Agreement No. 8A
ADDRESSES
1. Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Attention of Secretary
2. MFS Leasing Corp.
919 North Market Street, Suite 200
Wilmington, Delaware 19808
Attention of President
3. State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention of Corporate Trust Department
4. The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention of Corporate Trustee Administration
5. First PV Funding Corporation
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Attention of President
<PAGE>
EXHIBIT B to
Refunding Agreement No. 8A
December 30, 1997
THE CHASE MANHATTAN BANK, as trustee
under the Collateral
Trust Indenture dated as
of December 16, 1985
with First PV Funding
Corporation and Public
Service Company of New
Mexico
450 West 33rd Street
New York, New York 10001
Attention of: Ms. Patricia Morabito
Vice President
Re: Optional Redemption of Certain Bonds
Gentlemen:
The undersigned hereby notifies you that it is exercising its
option to effect a redemption of certain securities outstanding under the
above-referenced Collateral Trust Indenture (as heretofore amended and
supplemented, the "Indenture"). Capitalized terms used herein without definition
have the respective meanings specified in the Indenture.
On January 20, 1998 (the "Redemption Date"), the undersigned
will redeem $28,316,000 principal amount of the undersigned's 10.15% Lease
Obligation Bonds Series 1986B with a Stated Maturity of principal of January 15,
2016 (the "2016 Bonds").
This letter constitutes a Company Order with respect to the
foregoing matters.
<PAGE>
Accompanying this notice is a form of notice of redemption for
the 2016 Bonds which are being redeemed.
FIRST PV FUNDING CORPORATION
By: _____________________________
Mark A. Ferrucci
President
By: _____________________________
A.M. Horne
Secretary
cc: Public Service Company
of New Mexico
<PAGE>
*CUSIP Number: 335877AF3
NOTICE OF REDEMPTION
to the Holders of
First PV Funding Corporation
Lease Obligation Bonds
Series 1986B 10.15% due January 15, 2016
NOTICE IS HEREBY GIVEN, pursuant to the provisions of Section 6.03 of the
Collateral Trust Indenture dated as of December 16, 1985 (the "Collateral Trust
Indenture"), among First PV Funding Corporation (the "Company"), Public Service
Company of New Mexico, and The Chase Manhattan Bank (formerly known as "Chemical
Bank"), as Trustee (the "Trustee"), as amended and supplemented by the Series
1986B Bond Supplemental Indenture dated as of November 18, 1986 (the
"Supplemental Indenture"), that said Trustee has received a notice from the
Company with respect to the optional redemption of $28,316,000 principal amount
of the above-described Bonds ("the Bonds") on the redemption date of January 20,
1998 ("Redemption Date") at a redemption price of $1,058.25 per $1,000 of
principal amount (inclusive of premium and accrued interest to the Redemption
Date) (the "Redemption Price").
The numbers and principal amounts of the Bonds to be redeemed
in whole or in part are as follows:
Bond No. Principal Amount
-------- ----------------
R 10168 $17,041,000.00
R 10173 698,000.00
R 10174 9,084,000.00
R 10176 2,000.00
R 10177 1,000.00
R 10186 22,000.00
R 10188 23,000.00
R 10195 1,086,000.00
R 10205 302,000.00
R 10223 9,000.00
R 10227 37,000.00
R 10228 5,000.00
R 10233 6,000.00
On the Redemption Date the Bonds or portions thereof specified
above will be redeemed at the Redemption Price. Each holder of a Bond, a portion
of which has been selected for redemption, shall upon surrender thereof receive
a new Bond, of the same series and Stated Maturity of principal, for the portion
thereof not called for redemption. In order to receive payment of the Redemption
Price, such Bonds or portions thereof must be surrendered for payment on or
after the Redemption Date to The Chase Manhattan Bank as follows:
<PAGE>
By Mail: By Hand: By Courier:
- -------- -------- -----------
The Chase Manhattan Bank The Chase Manhattan Bank The Chase Manhattan Bank
c/o Texas Commerce Bank Corporate Trust Securities c/o Texas Commerce Bank
Corporate Trust Services Window Corporate Trust Services
P.O. Box 219052 55 Water Street-Second Floor 1201 Main Street
Dallas, Texas 75221-9052 Room 234-North Building 18th Floor
New York, New York 10041 Dallas, Texas 75202
On the Redemption Date, the Redemption Price will become due
and payable upon each Bond to be redeemed and from and after the Redemption Date
interest on the Bonds to be redeemed shall cease to accrue.
First PV Funding Corporation
By: The Chase Manhattan Bank,
as Trustee
Dated: December 31, 1997
----------
Under the Interest and Dividend Tax Compliance Act of 1983, we may be required
to withhold 31% of any gross payments made within the United States to certain
holders who fail to provide us with, and certify under penalties of perjury, a
correct taxpayer identifying number (employer identification number or social
security number, as appropriate) or an exemption certificate on or before the
date the securities are presented for payment. Please therefore provide the
appropriate certification when presenting your securities for payment.
*This CUSIP number has been assigned to this issue by an organization not
affiliated with the Trustee and is included solely for the convenience of the
Bondholders. Neither First PV Funding Corporation, Public Service Company of New
Mexico, nor the Trustee shall be responsible for the selection or use of this
CUSIP number, nor is any representation made as to its correctness on the Bonds
or as indicated in any redemption notice.
<PAGE>
EXHIBIT C to
Refunding Agreement No. 8A
ALLONGE
to
$34,101,000 NON-RECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JANUARY 15, 2016) DATED NOVEMBER 25, 1986 OF THE FIRST
NATIONAL BANK OF BOSTON, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY
AS OWNER TRUSTEE,
On December 30, 1997, the undersigned obligor in respect of
the above-captioned promissory note (the "Note"), prepaid $28,900,000 of the
unpaid principal amount of the Note, leaving an unpaid principal amount of
$3,411,000. Schedule 1 to the Note (as added by the Allonge thereto dated
September 27, 1996) is hereby superseded and replaced by Schedule 1 to this
Allonge. The undersigned has succeeded to The First National Bank of Boston as
owner trustee/obligor in respect of the Note.
Date: December 30, 1997 STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity but solely as owner
trustee under the Trust Agreement dated as of
August 12, 1986 with MFS Leasing Corp.
By:_________________________
Name:
Title:
The undersigned acknowledge and accept the foregoing allonge
and agree that it shall be affixed to the Note.
Date: December 30, 1997
THE CHASE MANHATTAN BANK, FIRST PV FUNDING CORPORATION
as Trustee
By:___________________________ By:______________________________
Name: Name:
Title: Title:
<PAGE>
SCHEDULE 1
to Allonge
SCHEDULE 1 (Replacement)
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2016)
Schedule of Principal Amortization
$3,411,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
- --------- -------------- -----------
January 15, 1998 $ 66,000
July 15, 1998 69,000
January 15, 1999 61,000
July 15, 1999 47,000
January 15, 2000 51,000
July 15, 2000 54,000
January 15, 2001 55,000
July 15, 2001 58,000
January 15, 2002 59,000
July 15, 2002 62,000
January 15, 2003 62,000
July 15, 2003 66,000
January 15, 2004 67,000
July 15, 2004 71,000
January 14, 2005 70,000
July 15, 2005 76,000
January 15, 2006 76,000
July 15, 2006 80,000
January 15, 2007 81,000
July 15, 2007 86,000
January 15, 2008 86,000
July 15, 2008 92,000
January 15, 2009 92,000
July 15, 2009 98,000
January 15, 2010 98,000
July 15, 2010 104,000
January 15, 2011 105,000
July 15, 2011 110,000
January 15, 2012 111,000
July 15, 2012 120,000
January 15, 2013 119,000
July 15, 2013 127,000
January 15, 2014 127,000
<PAGE>
Payment Principal Principal
Date Amount Payable Amount Paid
- --------- -------------- -----------
July 15, 2014 124,000
January 15, 2015 134,000
July 15, 2015 146,000
January 15, 2016 301,000
----------
Principal Amount $3,411,000
==========
<PAGE>
EXHIBIT D to
Refunding Agreement No. 8A
CERTIFICATE, REQUEST AND AUTHORIZATION
Reference is made to (i) the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986 (as
heretofore supplemented, the "Indenture") to which the undersigned (the "Owner
Trustee") and THE CHASE MANHATTAN BANK (formerly known as "Chemical Bank"), in
its capacity as Indenture Trustee (the "Indenture Trustee"), are party, and (ii)
the 1997 Supplemental Indenture dated as of December 23, 1997 (the "1997 Note
Supplement") between the Owner Trustee and the Indenture Trustee. Capitalized
terms used herein without definition shall have the respective meanings
specified in the Indenture (including Appendix A thereto).
This Certificate, Request and Authorization (this
"Instrument") is being made and given by the Owner Trustee pursuant to Sections
3.5(4)(b) and (d) of the Indenture in connection with (i) the execution by the
Indenture Trustee of the 1997 Note Supplement and (ii) the issuance,
authentication and delivery of the 1997 Refunding Note (as defined in the 1997
Supplement). This Instrument is being executed and delivered by the Owner
Trustee by one of its Responsible Officers (the "Executing Officer").
1. The Executing Officer CERTIFIES that he is a Responsible
Officer of the Owner Trustee and that he is authorized to execute and deliver
this Instrument on behalf of the Owner Trustee.
2. The Executing Officer further CERTIFIES that
(i) to the best knowledge of such Executing Officer, no
Default or Event of Default or Indenture Event of Default has occurred
and is continuing;
(ii) the conditions in respect of the issuance of the 1997
Refunding Note contained in Section 3.5 of the Indenture have been
satisfied;
(iii) costs and expenses relating to issuance and sale of the
1997 Refunding Note are in excess of $10,000; and
<PAGE>
(iv) 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 or Special Purchase Option, as the case
may be, are sufficient to pay all the Outstanding Notes after taking
into account the issuance of the 1997 Refunding Note and the related
partial prepayment of the Fixed Rate Note due January 15, 2016.
3. By its authorization and direction set forth below, the
Owner Participant (i) has agreed that this Instrument, taken together with the
1997 Note Supplement, constitute compliance with Sections 3.5(1) and (2) of the
Lease Indenture by the Owner Trustee, and (ii) waives the benefit of any time
periods specified in Section 3.5(2) of the Lease Indenture.
4. Upon receipt by the Indenture Trustee, for the account of
the Owner Trustee, of an amount equal to the sum of (i) the principal amount of
the 1997 Refunding Note and (ii) interest accrued thereon from July 15, 1997
through December 30, 1997 (aggregating, $1,344,452.08), the Indenture Trustee is
hereby REQUESTED and AUTHORIZED to authenticate the 1997 Refunding Note and
deliver the same to Public Service Company of New Mexico.
<PAGE>
IN WITNESS WHEREOF, the undersigned Responsible Officer of the
Owner Trustee has executed this Instrument on behalf of the Owner Trustee on the
date below written.
Date: December 30, 1997 STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity but solely as
owner trustee under the Trust Agreement
dated as of August 12, 1986 with the
below named owner participant,
By:_______________________________
Name:
Title:
AUTHORIZATION AND DIRECTION
The undersigned, the sole beneficiary of the above-mentioned
Trust Agreement, hereby AUTHORIZES and DIRECTS the Owner Trustee to execute and
deliver the instrument on which is subscribed this authorization and direction.
Date: December 30, 1997 MFS LEASING CORP.
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT E.1 to
Refunding Agreement No. 8A
[Form of opinion of counsel to the Owner Trustee]
December 30, 1997
MFS Leasing Corp.
919 North Market Street Suite 200
Wilmington, Delaware 19808
State Street Bank and Trust Company, as Owner Trustee
Two International Place
Boston, Massachusetts 02110
The Chase Manhattan Bank, as Indenture Trustee and
as Collateral Trust Trustee
450 West 33rd Street
New York, New York 10001
First PV Funding Corporation
1209 Orange Street
Wilmington, Delaware 19801
Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Re: Refunding Agreement No. 8A dated as of December 23, 1997.
Ladies and Gentlemen:
We have acted as counsel to State Street Bank and Trust
Company, a Massachusetts trust company ("State Street") in connection with the
Refunding Agreement No. 8A dated as of December 23, 1997 (the "Refunding
Agreement") by and among State Street, not in its individual capacity but solely
as owner trustee (in such capacity, the "Owner Trustee") under a Trust Agreement
dated as of August 12, 1986 between MFS Leasing Corp. (successor by assignment
to Beneficial Leasing Group, Inc.), as Owner Participant (the "Owner
Participant") and State Street as successor as Owner Trustee to The First
National Bank of Boston, the owner trustee originally designated therein (the
"Trust Agreement"), Public Service Company of New Mexico ("PNM"), First PV
Funding Corporation ("Funding Corporation"), The Chase Manhattan Bank (formerly
known as "Chemical Bank"), not in its individual capacity but solely as lease
indenture trustee (the "Indenture Trustee") in connection with the 1997 Note
Supplement and the 1997 Refunding Note (as each such term is defined in the
Refunding Agreement).
<PAGE>
All capitalized terms used herein and not otherwise defined
shall have the respective meanings assigned to such terms in (or by reference
in) the Refunding Agreement.
In connection with the opinions expressed below, we have
examined the Refunding Agreement, the 1997 Note Supplement, the 1997 Refunding
Note, the Allonge and the Owner Trustee Instrument (sometimes collectively
referred to herein as the "Refunding Documents"), and the Trust Agreement, and
we have examined such other agreements, documents, certificates and other
statements as we have deemed relevant and necessary as a basis for such
opinions. In such examination, we have assumed the genuineness of all
signatures, the adequate power and due authorization, execution and delivery of
all signatories (other than the Owner Trustee), the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies. We
have assumed that each of the Refunding Documents is the legal, valid and
binding obligation of each of the parties thereto (except that we do not make
that assumption as to the Owner Trustee), duly enforceable against each such
entity in accordance with its terms.
As to factual matters, we have relied exclusively upon the
representations and warranties contained in the Refunding Documents to which
this opinion relates, and those contained in any other documents we have
examined for purposes of this opinion. We have conducted no independent
investigation of any factual matters germane to this opinion, and we have
assumed without independent verification the truth, accuracy and completeness of
all information, representations and warranties in all documents or materials we
have examined.
We render no opinion herein as to compliance with or
satisfaction of the conditions precedent to issuance or authentication of the
1997 Refunding Notes under the Indenture (and we understand that you will be
relying upon a separate opinion of Winthrop, Stimson, Putnam & Roberts of even
date in that regard).
Each of the opinions expressed herein is given as of the date
hereof, and we undertake no responsibility to advise you of any matter, whether
of a factual or legal nature, that may occur or come to our attention after the
date hereof.
Upon the basis of and subject to the foregoing, and the
qualifications or assumptions appearing below, we are of the opinion that:
1. The Owner Trustee is a Massachusetts trust company, duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts.
2. The Owner Trustee has corporate power and authority to
enter into each of the Refunding Documents.
<PAGE>
3. Each of the Refunding Documents has been duly authorized by
all necessary corporate action on the part of the Owner Trustee, and has been
duly executed and delivered by a duly authorized officer of the Owner Trustee.
4. Each of the Refunding Documents constitutes the legal,
valid and binding obligation of the Owner Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, receivership, moratorium and other similar laws affecting creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and
judicial discretion in granting equitable remedy.
We are members of the Bar of The Commonwealth of Massachusetts
only, and the opinions set forth above are limited to the laws of said
Commonwealth in effect as of the date hereof and, to the extent stated
hereinabove, the federal laws of the United States of America in effect as of
the date hereof.
Nothing herein shall constitute an opinion as to choice of
laws, and we have assumed the applicability of Massachusetts law to the matters
addressed herein.
Except as otherwise expressly provided herein, this opinion is
delivered to you solely for your benefit in connection with the execution and
delivery of the Refunding Documents and the closing of the transactions
contemplated by the Refunding Agreement, and it may not be used, circulated or
quoted or otherwise referred to for any other purpose, or to or by any other
person, without our express written consent.
Very truly yours,
PEABODY & ARNOLD
<PAGE>
EXHIBIT E.2 to
Refunding Agreement No. 8A
[Form of Opinion of Winthrop, Stimson, Putnam & Roberts]
December 30, 1997
The Chase Manhattan Bank
as Indenture Trustee
450 West 33rd Street
New York, New York 10001
Ladies and Gentlemen:
We have acted as counsel for First PV Funding Corporation, a
Delaware corporation ("Funding Corporation"), and special counsel for Public
Service Company of New Mexico, a New Mexico corporation ("PNM"), in connection
with the transactions contemplated by Refunding Agreement No. 8A dated as of
December 23, 1997 (the "Refunding Agreement") between State Street Bank and
Trust Company, a Massachusetts trust company ("State Street"), not in its
individual capacity but solely as owner trustee (the "Owner Trustee") under the
Trust Agreement dated as of August 12, 1986 with MFS Leasing Corp. (successor by
assignment to Beneficial Leasing Group, Inc.), as Owner Participant, PNM,
Funding Corporation and The Chase Manhattan Bank (formerly known as "Chemical
Bank"), a New York banking corporation, not in its individual capacity, but
solely as lease indenture trustee under the Lease Indenture referred to below
(the "Indenture Trustee"), and have examined the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of August 12, 1986 (as
heretofore supplemented and as to be further supplemented by the 1997 Note
Supplement (as defined in the Instrument, as defined below), the "Lease
Indenture") between the Indenture Trustee and the Owner Trustee and the Owner
Trustee's Certificate, Request and Authorization dated the date hereof (the
"Instrument") to you as Indenture Trustee pursuant to Sections 3.5(4)(b) and (d)
of the Lease Indenture relating to the issuance, authentication and delivery of
the 1997 Refunding Note (as defined in the Instrument) and the execution and
delivery of the 1997 Note Supplement. Capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to such terms set
forth in Appendix A to the Lease Indenture.
In this connection, we have also reviewed, and have relied as
to matters of fact material to this opinion upon, the Refunding Agreement and
the Instrument, and we have examined such other documents and have satisfied
ourselves as to such other matters as we have deemed necessary in order to
enable us to render this opinion. In such examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents.
<PAGE>
Based on the foregoing, we are of the opinion that the
conditions precedent required under the Lease Indenture for the authentication
and delivery of the 1997 Refunding Note and the execution and delivery of the
1997 Note Supplement have been complied with.
We have read the conditions of the Lease Indenture, and the
definitions therein relating thereto, relating to the authentication and
delivery of the 1997 Refunding Note and the execution and delivery of the 1997
Note Supplement. This opinion is also based on knowledge acquired in the course
of acting as counsel for Funding Corporation and insofar as it relates to
factual matters, on examination of representations by responsible officers and
employees of the Owner Trustee having knowledge of the relevant facts.
In our opinion, we have made such examination or investigation
as is necessary to enable us to express an informed opinion as to whether the
conditions relating to the authentication and delivery of the 1997 Refunding
Note and the execution and delivery of the 1997 Note Supplement have been
complied with; and in our opinion such conditions have been complied with.
This opinion is limited to the laws of the State of New York
and is furnished by us, as special counsel to PNM and counsel to Funding
Corporation, to you, as Indenture Trustee, solely for your use in connection
with the authentication and delivery of the 1997 Refunding Note and the
execution and delivery of the 1997 Note Supplement and may not be relied upon by
any other person or for any other purpose without our express written consent.
Very truly yours,
<PAGE>
THIRD RESTATED AND AMENDED
PUBLIC SERVICE COMPANY OF NEW MEXICO
PERFORMANCE STOCK PLAN
ARTICLE I
Purpose
The purpose of the Public Service Company of New Mexico
Performance Stock Plan (the "Plan") is to increase the proprietary interests in
the Company of certain key employees with the intent of (i) fostering a strong
incentive for such individuals to put forth maximum effort to achieve a pattern
of sustained growth of the Company, and to perform in the best interests of the
Company, its shareholders, customers and employees, (ii) retaining individuals
who will put forth such efforts, and (iii) attracting the best available
individuals to fulfill those positions in the future. The Plan was originally
approved by the shareholders of the Company on May 25, 1993, and was effective
on July 1, 1993. The Plan was first amended on February 23, 1994, and was
restated and amended effective January 1, 1996 (the "First Restated and Amended
Plan"). In 1997, the First Restated and Amended Plan was amended. The Second
Restated and Amended Plan was approved and became effective on March 10, 1998
(the "Second Restatement"). The Company now desires to make certain technical
corrections to the Second Restatement and, for administrative convenience,
wishes to embody the technical corrections in the form of a restatement (the
"Third Restatement").
ARTICLE II
Definitions
The following words and phrases, when used with an initial
capital letter, shall have the meaning set forth below unless the context
clearly indicates otherwise:
2.1 "Award" or "Awarded" shall mean an Option granted pursuant
to the terms and conditions of this Plan.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Cause", subject to the exception and modification set forth
at the end of this Section 2.3, shall mean termination of employment due to:
a. the failure of a Participant to substantially perform
his or her duties with the Company, or
b. the engaging by the Participant in conduct which is
injurious to the Company, monetarily or otherwise.
Provided, however, that Section 2.3a. shall not apply if the
failure results from such Participant's incapacity due to physical or mental
illness.
2.4 "Change in Control", subject to the exceptions and
modifications set forth at the end of this Section 2.4, shall be deemed to have
occurred if:
a. any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act (as hereinafter defined) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities;
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b. during any period of two consecutive years (not
including any period prior to July 1, 1993), the following individuals cease,
for any reason, to constitute a majority of the Board:
(i) those directors who, at the beginning of such
period, constitute the Board; plus
(ii) any new directors whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3rds) of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved (such new directors being referred to as
"Approved New Directors");
c. the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation; or
d. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
Section 2.4a. shall not apply if the "person" as referred to
therein is, or shall be (i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or (ii) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
In Section 2.4b., the Approved New Director shall not include a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 2.4a, 2.4c. or 2.4d.,
hereof.
Section 2.4c. shall not apply to a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as may
be amended from time to time.
2.6 "Committee" shall mean the Compensation and Human Resources
Committee of the Board or any such other committee as may be designated by the
Board to administer the Plan, the membership of such committee not being less
than two members of the Board. All Committee members must be "Non-Employee
Directors" (as defined in Rule 16b-3) if required to meet the conditions for
exemption of the Awards under the Plan from Section 16(b) of the Exchange Act.
2.7 "Company" shall mean the Public Service Company of New
Mexico.
2.8 "Disability" or "Disabled" shall mean the inability of a
Participant to engage in any substantially gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The permanence and degree of such
impairment shall be supported by medical evidence.
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2.9 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as may be amended from time to time. This Plan is a performance
based bonus plan and is not intended to be either an employee pension or welfare
benefit plan subject to ERISA.
2.10 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.11 Exercise Price" shall mean the Fair Market Value of the
Stock on the Grant Date of an Option.
2.12 "Fair Market Value of the Stock" shall mean the closing
sale price of one share of Stock for "New York Stock Exchange Composite
Transactions", as reported in the Western Edition of the Wall Street Journal, on
the date such value is determined (or if Stock is not traded on such date, on
the first immediately preceding business day on which Stock was so traded).
2.13 "Grant Date" shall mean the date an Award is granted to a
Participant. For grants approved after February 9, 1998, "Grant Date" shall mean
the date the Committee approves the Award.
2.14 "Initial Awards" shall mean those Awards pursuant to
Section 7.1 hereof.
2.15 "Officer" shall mean a Participant who is an officer of the
Company. The final classification of a Participant as an Officer under this Plan
shall be in the sole discretion of the Committee.
2.16 "Option" shall mean a right to purchase a share of Stock
granted pursuant to the Plan, containing such terms and conditions as specified
herein. Each Option shall consist of the right to purchase one share of Stock at
the Exercise Price.
2.17 "Option Price" shall mean the value of the Option as
determined in the sole and absolute discretion of the Committee, as of the date
each Award is made. The Option Price shall be the same for all Options awarded
on the same date. The Option Price was only used for Awards on or before
December 31, 1995.
2.18 "Original Plan" shall mean the Plan as originally adopted
on May 25, 1993 and as amended by the First Amendment dated February 23, 1994.
2.19 "Partial Award" shall mean Performance Based Awards as
described in Section 7.2b. below.
2.20 "Participant" shall mean any employee of the Company, who
is selected from time to time to participate in the Plan. The President's right
to participate in the Plan shall be determined in the sole discretion of the
Committee. Selection of all other employees to participate in the Plan shall be
made by the President, in his or her sole discretion.
2.21 "Performance Based Awards" shall mean those Awards granted
pursuant to Sections 7.2 and 7.3.
2.22 "Performance Goals" shall mean those Company-wide goals
established pursuant to Section 7.2 used to determine the Performance Based
Awards awarded under Section 7.2.
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2.23 "Plan" shall mean the Public Service Company of New Mexico
Performance Stock Plan, as set forth herein, and as may hereafter be amended or
restated from time to time.
2.24 "Plan Administrator" shall mean the person holding a
specified position with the Company wherein either such person or such position
is assigned the responsibility by the Committee to administer the Plan.
2.25 "President" shall mean the President of the Public Service
Company of New Mexico.
2.26 "Retirement" or "Retires", for purposes of this Plan, shall
mean retirement as defined within the Public Service Company of New Mexico
Employees' Retirement Plan ("Retirement Plan") if the Participant is covered by
the Retirement Plan. If the Participant is not covered by the Retirement Plan,
retirement shall be deemed to be the attainment of at least age 59 1/2.
2.27 "Salary Range Control Point" shall mean the market control
point within the Company's salary line for those employees in the same salary
range as the Participant, based upon the Participant's employment position with
the Company. The Company's compensation system is segregated into numerous
salary ranges. Each employee is assigned to a salary range and, except in
extraordinary cases, his or her salary will be between the minimum and the
maximum of the salary range. The control point is a point between the minimum
and the maximum, that is either generally the median or the average salary based
upon salary information and the salary ranges accumulated from external market
data. The control point for those Participants who are officers and directors
subject to the restrictions of Section 16 of the Exchange Act shall be
determined in the sole discretion of the Committee. Due to inflationary and
other factors, the ranges may be periodically adjusted, and therefore the Salary
Range Control Point for all salary ranges shall be determined as of the Grant
Date of an Award. Salary Range Control Point is no longer applicable to Options
granted after December 31, 1995.
2.28 "Stock" shall mean the common stock of the Company.
2.29 "Stock Option Agreement" shall mean an agreement between
the Company and a Participant receiving an Award pursuant to this Plan,
evidencing the Award, containing such provisions as may be determined in the
sole discretion of the Committee, which shall be provided to a Participant
promptly after the Grant Date for the Initial Awards and within an
administratively reasonable period of time following the end of the calendar
year to which a Performance Based Award pertains.
2.30 "Target Award" shall mean the number of Options available
for grant for each Participant, for Performance Based Awards awarded under
Section 7.2, if all the Performance Goals are achieved as more fully described
in Section 7.2a. Subject to Section 7.2d, the number of Options in a Target
Award shall be determined annually by, and in the sole discretion of, the
Committee before the beginning of the year, or within an administratively
reasonable period of time after the beginning of the year, to which the
Performance Based Awards apply. The number of Options in the Target Award will
vary: (i) by Participant, (ii) by his or her position with the Company, and
(iii) from year to year.
2.31 "TRS Factor" (i.e., total return to shareholders factor)
shall mean the dollar value determined on the relevant date specified herein of
a $100 investment made five (5) years before the Grant Date to which the
indexing applies pursuant to Section 7.2c., assuming all dividends paid during
such five (5) year period are reinvested. Such determinations shall be based
upon the performance graph disclosed in the proxy materials for the annual
shareholder meeting, immediately following the Award Date, which graph compares
a five (5) year cumulative total return on a $100 investment in Stock, to that
of a comparable industry index selected by, and in the sole discretion of, the
Committee.
4
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ARTICLE III
Administration
Except to the extent certain responsibilities have been reserved
to the Board, the Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee shall have the sole and exclusive power,
discretion and authority to:
a. conclusively interpret the provisions of the Plan and decide
all questions of fact arising in its application, including but not limited to,
the right to determine whether an individual satisfies the requirements to
receive an Award, and the right to determine the application of the rights,
conditions, restrictions and features, set forth in this Plan document, with
respect to the Options granted hereunder;
b. adopt, amend and rescind rules and regulations relating to
this Plan; and
c. make any other determinations it deems necessary or
advisable, subject only to those determinations which may be reserved to the
Board.
Notwithstanding the foregoing, the Committee may delegate
ministerial responsibilities hereunder to the Plan Administrator, including the
decisions on the initial claims procedure review pursuant to Section XIII,
provided that no delegation shall be effective to the extent the Committee has
been assigned the sole discretionary responsibility hereunder.
The Committee shall cause the Company at the Company's expense
to take any action related to the Plan which may be required or necessary to
comply with the provisions of any federal or state law or any regulations issued
thereunder.
ARTICLE IV
Shares Subject to Plan
4.1 Maximum Shares Available. The aggregate maximum number of
Options granted for the purchase of Stock under the Plan shall not exceed five
million (i.e., the right to receive, upon exercise, a maximum of five million
shares of Stock), subject to adjustment pursuant to Section 4.2 and 4.3. In
determining the maximum Options available pursuant to this Section 4.1, the
shares of Stock counted shall include all shares that could be, or could have
been, purchased pursuant to the exercise of all Options previously awarded
(whether or not such Options are vested pursuant to Article VIII), adjusted only
as specified in Section 4.2 and 4.3 below. Such shares of Stock, upon exercise
of the Options, shall be either authorized and unissued shares or shares
purchased on the open market. If such Stock is authorized but unissued shares,
the Committee shall obtain an opinion of counsel that such issuance pursuant to
this Plan conforms with applicable law and regulatory requirements. Prior to
purchasing such shares of Stock on the open market, the Committee will consult
with counsel to determine whether such action conforms with applicable law and
contractual and regulatory requirements.
4.2 Cancellation of Options. If, for any reason, any nonvested
Options granted under the Plan are canceled pursuant to Section 8.4, an
equivalent number of shares of Stock to which such Options applied shall again
be available for new Options in accordance with the terms hereof. Vested Options
that expire shall not again be available for Options hereunder.
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4.3 Adjustments. The aggregate number of shares of Stock
available for Options under the Plan pursuant to Section 4.1, the shares subject
to any Option, and the Exercise Price per share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Stock
subsequent to the effective date of an Award resulting from a stock split-up or
share combination, exchange of shares, recapitalization, merger, consolidation,
acquisition of property or shares, reorganization, liquidation, or the like of
or by the Company. If the Company shall be the surviving corporation in any
merger or consolidation, an Option shall pertain, apply and relate to the
securities to which a holder of the number of shares of Stock subject to the
Option would have been entitled after the merger or consolidation. Upon
dissolution or liquidation of the Company, or upon a merger or consolidation in
which the Company is not the surviving corporation, or upon the sale of all or
substantially all of the assets of the Company, all Options then outstanding
under the Plan will be fully vested and exercisable and all restrictions will
immediately cease, unless provisions are made in connection with such
transaction for the continuance of the Plan and the assumption or the
substitution for such Options of new options to purchase stock of the successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and exercise prices.
ARTICLE V
Effective Date and Term of Plan
5.1 Effective Date. The Original Plan was effective July 1,
1993. The First Amended and Restated Plan was approved by the shareholders and
became effective January 1, 1996. The First Amendment to the First Amended and
Restated Plan became effective for all Performance Based Awards having a Grant
Date after December 31, 1996. The Second Restatement was approved and became
effective on March 10, 1998. The technical corrections set forth in this Third
Restatement shall also be effective as of March 10, 1998.
5.2 Term of Plan. Options may be Awarded as provided herein
through December 31, 2000. The Plan shall continue in effect until all matters
relating to the Options and administration of the Plan have been settled.
ARTICLE VI
Eligibility for Awards
Awards may be made under the Plan only to those Participants who
are employees of the Company on the Grant Date of an Award.
ARTICLE VII
Awards of Options
7.1 Initial Awards. Initial Awards shall not be granted after
July 1, 1994, and those granted before July 1, 1994, shall be subject to the
following terms and conditions. Initial Awards were awarded on, and have a Grant
Date of, July 1, 1993, and were determined by dividing fifteen percent (15%) of
a Participant's Salary Range Control Point by the Option Price, all determined
as of the Grant Date of the Award. Any employee who became a Participant after
July 1, 1993, but before July 1, 1994, received an Initial Award on, and such
Awards have a Grant Date of, July 1, 1994, equal to the Options determined by
dividing seven and one-half percent (7.5%) of the Participant's Salary Range
Control Point by the Option Price, all determined as of the Grant Date of the
Award. There shall be no Award of an Option to purchase a fractional share of
Stock.
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7.2 Performance Based Awards With Grant Dates Prior to January
1, 1998. Performance Based Awards with Grant Dates prior to January 1, 1998
shall be granted on an annual basis, and shall have a Grant Date as of December
31 of each calendar year and shall be based upon satisfactory completion of
Performance Goals. The Original Plan provided for only two (2) Performance
Goals. The Plan, as first restated, provides for two (2) or more Performance
Goals. The goals, shall be established each year by the Committee, in its
absolute and sole discretion, and communicated to the Participants before the
commencement of the calendar year to which such Awards pertain, or within an
administratively reasonable period of time thereafter as determined by the
Committee. After the goals for a specific year have been established and
communicated to the Participants, any such goals may be revised by the
Committee; provided, however, that unless such revisions are expressly
contemplated in the goals as formulated by the Committee, such revisions may be
made only in the following circumstances in the sole discretion of the
Committee: (i) any such revision(s) shall be made only to reflect the impact on
the established goals of material changes in circumstances not foreseen at the
time the goals were established; and (ii) any such revision(s) shall take place
not later than the delivery of Stock Option Agreements to Participants for the
relevant year pursuant to Section 7.2e. The Committee shall also establish the
criteria to be used in determining whether the goals have been achieved. The
Performance Based Awards may be partially or fully Awarded, based upon the
criteria, and the determination of the Committee. If less than all of the goals
have been achieved, Partial Awards may be made at year end as set forth in 7.2
b. below. The number of Options granted pursuant to the Target Award or Partial
Award as described below shall be further adjusted by the indexing and
adjustments provided in Section 7.2c. and d. below. There shall be no Award of
an Option to purchase a fractional share of Stock.
a. Target Award. The Target Award of Options shall be granted if
all Performance Goals are fully achieved.
b. Partial Award. If the Committee determines that less than all
of the Performance Goals have been achieved, the Award of Options shall consist
of the sum of the Options granted in (i) and (ii) below:
(i) Fully Achieved Performance Goals: The Partial Award
for fully achieved Performance Goals shall be determined by multiplying the
Target Award by the percentage determined by dividing one hundred percent (100%)
by the total number of Performance Goals established by the Committee, times the
number of Performance Goals fully achieved.
(ii) Partially Achieved Performance Goals: Under the
Original Plan, Officers could not receive an Award based upon partially achieved
Performance Goals (Section 7.2b.(ii)); only non-Officer participants could
receive Awards for partially achieved Performance Goals. Effective for Awards
after December 31, 1995, Officers may receive Awards, like all other
participants, based upon partially achieved Performance Goals pursuant to this
Section 7.2b.(ii).
If the Committee determines that any of the Performance Goals
were only partially achieved, the Award of Options for a partially achieved
Performance Goal shall be determined on the basis of guidelines established by
the Committee. Unless otherwise determined by the Committee, the guidelines
shall be communicated at the same time it establishes and communicates the
Performance Goals. The guidelines may be changed from year to year, and may vary
between job classifications, as determined in the sole discretion of the
Committee. The Committee also has the sole discretion to determine that
specified Performance Goals for specified job classifications shall only be
awarded if fully achieved.
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c. Indexing of Performance Based Awards. Notwithstanding any
provision herein to the contrary, all Performance Based Awards determined
pursuant to Section 7.2a. and 7.2b. above shall be further adjusted (increased
or decreased) by a factor based upon the comparison of the Stock performance
versus the comparable industry index that is in effect for the calendar year,
pursuant to the Company's proxy statement for the next shareholder meeting
following the end of such calendar year to which such Awards apply. The indexing
shall result in a percentage comparison between the Stock versus the comparable
industry index, resulting in an index percentage (either greater or less than
100%) which shall then be multiplied by Performance Based Awards to determine
the number of Options awarded pursuant to Section 7.2a. and b. The index
percentage shall be determined by dividing (i) by (ii) wherein (i) equals the
percentage determined by dividing the TRS Factor of the Company at the end of
calendar year of the Award by the TRS Factor at the beginning of the calendar
year, and (ii) shall equal the percentage determined by dividing the TRS Factor
at the end of the calendar year of the Award by the TRS Factor at the beginning
of such calendar year for the comparable industry index. The calendar year in
which such index percentage is determined (i.e., determination of the beginning
and end of the year TRS Factor) shall be the same calendar year as to which the
Performance Goal(s) giving rise to the Option pertain.
d. Adjustments Due to Promotions or Demotions. In the event (i)
a Participant is either promoted or demoted during a calendar year or (ii) an
employee first becomes a Participant during a calendar year, pursuant to Section
2.20, following the effective date of this Plan, the Target Award for such
calendar year shall be increased or decreased based upon the promotion, demotion
or initial participation in the Plan. Decisions regarding the adjustments
pursuant to this Section 7.2d. for the President shall be made by the Committee
in its sole discretion. Adjustments pursuant to this Section 7.2d. for all other
employees shall be made by the President, in his or her sole discretion.
e. Delivery of Stock Option Agreements. The Committee shall
cause a Stock Option Agreement evidencing the Options Awarded to be delivered to
a Participant receiving the Award in accordance with Section 2.29.
f. Award Approvals. All Awards shall be approved by the Board or
by the Committee.
7.3 Performance Based Awards With Grant Dates on or After
January 1, 1998. Performance Based Awards with Grant Dates on or after January
1, 1998 shall be determined in the sole discretion of the Committee. The
Committee shall in its sole and absolute discretion declare annually the level
of Options to be granted, based on performance data presented by the President.
The President shall establish criteria for the performance data to be used in
recommending Performance Based Awards to the Committee. The Committee shall
cause a Stock Option Agreement evidencing the Options Awarded to be delivered to
a Participant receiving the Award in accordance with Section 2.29.
ARTICLE VIII
Vesting
8.1 Initial Awards. Subject to the exceptions set forth in
Section 8.3, the Initial Awards shall vest on June 30, 1996, if the Participant
remains in the continuous employ of the Company from the Grant Date until June
30, 1996.
8.2 Performance Based Awards. Subject to the exceptions set
forth in Section 8.3, the Performance Based Awards having a Grant Date of
December 31, 1993, 1994, and 1995 shall likewise vest on June 30, 1996, if the
Participant remains in the continuous employ of the Company from the Grant Date
of such Awards until June 30, 1996. Subject to the modifications set forth in
Section 8.3, all subsequent Performance Based Awards, granted after December 31,
1995, shall vest three (3) years from the Grant Date of the Award, if the
Participant remains in the continuous employ of the Company from the Grant Date
to the third anniversary date of such Grant Date.
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8.3 Vesting Due to Death, Disability, Retirement, Change in
Control or Involuntary Termination.
a. For Options granted and/or approved on or prior to
February 9, 1998, upon (i) the death or Disability of the Participant, (ii) the
Participant being involuntarily terminated by the Company for reasons other than
Cause, (iii) a Change in Control of the Company, or (iv) events resulting in
full vesting as otherwise described in Section 4.3, all nonvested Options shall
be 100% vested.
b. For Options granted and/or approved on February 9, 1998,
in addition to the events specified in Section 8.3a. above, upon Retirement of
the Participant, all nonvested Options shall be 100% vested.
c. For Options granted and approved after February 9, 1998,
upon (i) the death, Disability or Retirement of the Participant, (ii) a Change
in Control of the Company, or (iii) events resulting in full vesting as
otherwise described in Section 4.3, all nonvested Options shall be 100% vested.
8.4 Cancellation of Non-vested Options. For Options granted
and/or approved on or prior to February 9, 1998, upon the involuntary or
voluntary termination of employment of a Participant for reasons other than
those specified in Sections 8.3a. and 8.3b., all nonvested Options previously
Awarded to such Participant shall be canceled. For options granted and approved
after February 9, 1998, upon the involuntary or voluntary termination of
employment of a Participant for reasons other than, those specified in Section
8.3c., all nonvested Options previously Awarded to such Participant shall be
canceled.
ARTICLE IX
Exercise of Options
9.1 Timing of Exercise.
a. Vested Options with Grant Dates prior to December 31,
1997, shall be exercisable at any time following the vesting thereof, on or
before the earlier of (i) three (3) months following a Participant's death,
Disability, Retirement, voluntary or involuntary termination of employment with
the Company (regardless of the reason) or a Change in Control of the Company and
(ii) the tenth anniversary date of the Grant Date of the Options.
b. Vested Options with Grant Dates on or after December 31,
1997, shall be exercisable at any time following the vesting thereof, on or
before the earlier of (i) three (3) months following a Participant's voluntary
or involuntary termination of employment with the Company (for Cause) and (ii)
the tenth anniversary date of the Grant Date of the Options.
c. Vested Options with Grant Dates on or after December 31,
1997, shall be exercisable at any time following the vesting thereof, on or
before the earlier of (i) five (5) years following a Participant's death,
Disability, Retirement, involuntary termination for other than Cause, or a
Change in Control of the Company and (ii) the tenth anniversary date of the
Grant Date of the Options.
9
<PAGE>
9.2 Time and Method of Payment. The Options shall be exercised
by the Participant giving written notice to the Company of his or her intent to
exercise Options, along with the tendering of cash in full payment of the
Exercise Price of the Options being exercised, times the number of such Options
being exercised. Alternatively, in lieu of cash, the Exercise Price may be paid,
in full or in part by the Participant, by assignment and delivery to the
Company, of either Options (other than those being exercised) or Stock of the
Company owned by the Participant. The amount credited against the Exercise Price
for Stock being assigned and delivered to the Company shall equal the Fair
Market Value of the Stock times the number of shares being assigned and
delivered. For the Options being assigned and delivered to the Company, the
credit amount shall equal the Fair Market Value of the Stock on the date of the
transfer, less the Exercise Price of such Options being assigned and delivered,
times the number of such Options.
9.3 Exercise Following a Participant's Death. If a Participant
dies, whether or not the Participant is an employee of the Company at the date
of such death, without having fully exercised his or her vested Options, the
personal representative or the person receiving such Options from the
Participant or his or her estate shall have the right to exercise the Options
pursuant to the timing set forth in Section 9.1 and the method of payment set
forth in Section 9.2.
9.4 Delivery of Shares. Within an administratively reasonable
period of time, after the exercise of an Option, and the payment of the full
Exercise Price, and the satisfaction of all withholding obligations incurred
pursuant to such exercise, the Participant shall receive a stock certificate
evidencing his or her ownership of such Stock. A Participant shall have none of
the rights of a shareholder with respect to Options until the record date of the
stock purchase. No adjustment will be made for dividends or other rights for
which the record date is prior to the date such Stock certificate is issued in
the Participant's name.
9.5 Cash Award. Notwithstanding any other contrary provision in
this Plan, and subject to the provisions of applicable law and to any conditions
the Committee may determine to be necessary in order to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act,
the Committee, in its sole discretion, may elect to settle all or a portion of
an Option following the exercise thereof by a Participant, in cash in lieu of
issuing shares of Stock. Such cash shall be determined based upon the Fair
Market Value of the Stock on the date such Option is exercised less the Exercise
Price.
9.6 Holding Period. If necessary to meet the conditions of SEC
Rule 16b-3, shares of Stock obtained upon the exercise of any Option granted
under the Plan may, in any event, not be sold by persons subject to Section 16
of the Exchange Act until six (6) months after the delivery to the Participant
of the Stock Option Agreement.
ARTICLE X
Termination or Amendment
10.1 Terminations and Amendments. The Board may amend, terminate
or suspend the Plan at any time, in its sole and absolute discretion; provided,
however, that no such amendment or termination shall adversely affect an Award
previously granted without the consent of the Participant holding such Option.
10.2 Other Restrictions on Amendments. If required by law or if
necessary to satisfy the conditions for exemption from Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 promulgated thereunder:
10
<PAGE>
a. No amendment that would change the amount, price or
timing of the Options, other than to comport with the changes in the Code or
ERISA, or the rules and regulations promulgated thereunder, shall be made more
than once every six (6) months;
b. No amendment shall be made without the approval of the
Company's stockholders (as required by Rule 16b-3) that would:
(i) increase the maximum number of shares of Stock
available for an Award of Options under Article IV hereof;
(ii) modify the requirements as to eligibility for an
Award under the Plan; or
(iii) otherwise materially increase the benefits
accruing to Participants under the Plan.
The approval of the Company's stockholders for such amendments
shall be solicited in a manner which conforms to the rules and regulations under
Section 14(a) of the Exchange Act.
ARTICLE XI
Nonexclusivity of the Plan
Nothing contained herein is intended to amend, modify or rescind
any previously approved compensation plan or program entered into by the
Company. This Plan shall be in addition to any other and all other Company plans
or programs. Neither the adoption of this Plan by the Board nor the submission
of the Plan to the Company's stockholders for approval shall be construed as
creating any limitations on the power or authority of the Committee or the Board
to adopt such other additional incentives or other compensation arrangements as
may be deemed necessary or desirable.
ARTICLE XII
Miscellaneous
12.1 Withholding Taxes. The Company shall have the right to
deduct from any payments made by the Company to the Participants, any federal,
state or local taxes of any kind as are required by law to be withheld with
respect to the exercise of Options granted hereunder, or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for withholding and payment of such taxes, including, in its sole
discretion, and subject to the provisions of applicable law and to any
conditions the Committee may determine to be necessary in order to comply with
all applicable conditions of Rule 16b-3 or its successors under the Exchange
Act, to permit the Participant to satisfy, in whole or in part, any tax
withholding obligation which may arise in connection with the exercise of
Options by electing to have the Company liquidate existing options or withhold
shares of Stock having a Fair Market Value of the Stock equal to the amount of
the income tax withholding.
12.2 Compliance with Exchange Act. With respect to persons
subject to Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the Plan or
action by the Board, Committee, President, or the Plan Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
11
<PAGE>
12.3 Plan Expenses. All expenses incurred in administering this
Plan shall be borne by the Company.
12.4 Headings. The headings of the Articles and Sections in this
Plan are for convenience of reference only and are not meant to be of
substantive significance and shall not add nor detract from the meaning of such
Article or Section.
12.5 Gender and Use of Singular/Plural. The use of the masculine
gender herein shall also include within its meaning the feminine, and the
singular shall include the plural, and the plural shall include the singular,
unless the context clearly indicates to the contrary.
12.6 Applicable Law. The place of administration of the Plan
shall be conclusively deemed to be within the State of New Mexico, and the
validity, construction, interpretation and administration with respect to the
Plan and its rules and regulations and the rights of any and all Participants
having or claiming to have an interest hereunder shall be governed first by the
provisions of ERISA or to the extent not preempted by ERISA, exclusively and
solely in accordance with the laws of the State of New Mexico.
12.7 Non-Assignability. Options shall not be transferable other
than by will or by the laws of descent and distribution, and during a
Participant's lifetime shall be exercisable only by the Participant. Except as
provided in the immediately preceding sentence, neither a Participant nor any
person taking on behalf of a Participant may anticipate, assign or alienate
(either at law or in equity) any benefit provided under the Plan and the
Committee shall not recognize any such anticipation, assignment or alienation.
Furthermore, a benefit under the Plan is not subject to attachment, garnishment,
levy, execution or any other legal or equitable process.
12.8 No Obligations to Exercise Options. The granting of an
Option shall impose no obligation upon the Participant to exercise such Option.
12.9 Agreement and Representation of Employees. As a condition
to the exercise of any portion of an Option, the Company may require the person
exercising such Option to represent at the time of such exercise that any shares
of stock acquired at exercise are being acquired only for investment purposes
and without any present intention to sell or distribute such shares, if, in the
opinion of counsel for the Company, such a representation is required under the
Exchange Act or any other applicable law, regulation or rule of any governmental
agency.
12.10 Entire Plan. This Plan contains the entire provisions with
respect to the matters contemplated herein and supersedes all prior plans or
understandings among the parties hereto relating to an Award.
12.11 Employment Agreement. Notwithstanding anything to the
contrary herein contained the Plan, (i) the execution of the Plan shall not
create an express or implied contract of employment for a specified term between
the Participant and the Company and (ii) unless otherwise expressed or provided,
in writing, by an authorized officer, the employment relationship between the
Participant and the Company shall be defined as "employment at will" wherein
either party, without prior notice, may terminate the relationship with or
without cause.
12.12 Service of Process. The Secretary of the Company shall be
an agent for Service of Process for matters relating to this Plan.
12
<PAGE>
12.13 Validity. The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan which shall remain in full force and effect.
12.14 Regulatory Approvals and Listing. The Company shall not be
required to issue any certificate for shares of Common Stock upon the exercise
of an Option granted under the Plan prior to:
(a) the obtaining of any approval or ruling from the Securities
and Exchange Commission, the Internal Revenue Service or
any other governmental agency which the Committee, in its
sole discretion, shall determine to be necessary or
advisable;
(b) the listing of such shares on any stock exchange on which
the Stock may then be listed; or
(c) the completion of any registration or other qualification
of such shares under any federal or state laws, rulings or
regulations of any governmental body which the Committee,
in its sole discretion, shall determine to be necessary or
advisable.
ARTICLE XIII
Claims Procedure
The Committee or its designee, within ninety (90) days after
receipt of a written notice of a claim hereunder, shall render a written
decision on the claim. If there is an adverse determination with respect to the
claim, either in whole or in part, the decision shall include:
(i) The specific reason or reasons for the adverse
determination;
(ii) Any indication of the specific Plan provisions on
which the adverse determination is based;
(iii) A description of any additional material or
information necessary for the claimant to perfect the claim and any explanation
of why such material or information is necessary; and
(iv) An explanation of the Plan's appeal procedure,
indicating that the appeal of the adverse determination must be made in writing
addressed to the Committee, and received within sixty (60) days after the
receipt by the claimant of the Committee's or its designee's written adverse
determination. Failure to protect, perfect and appeal within the sixty-day
period shall make the adverse determination conclusive.
If the claimant should appeal to the Committee, he or she, or
his or her duly authorized representative, must do so in writing and may submit
in writing whatever issues and comments he or she, or his or her duly authorized
representative, feels are pertinent. The claimant, or his or her duly authorized
representative, may review pertinent Plan documents. The Committee shall render
a written decision on the questions raised in the appeal, setting forth a
specific reason for its decision, including reference to the Plan's provisions,
within sixty (60) days after receipt of the request for review unless special
circumstances (such as a hearing) would make a rendering of a decision within
the sixty (60) day limit unfeasible, but in no event shall the Committee render
a decision respecting an appeal of an adverse determination later than one
hundred twenty (120) days after its receipt of a request for review.
13
<PAGE>
Any adverse determination or decision on an appeal of an adverse
determination made by the Committee (or its designee) pursuant to the Plan shall
be stated in writing and such notice shall be written in a manner that may be
understood without legal or actuarial counsel.
IN WITNESS WHEREOF, the Company has caused this Third Restated
and Amended Public Service Company of New Mexico Performance Stock Plan to be
executed, and to be effective as set forth in Section 5.1.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By
--------------------------
BENJAMIN F. MONTOYA,
President and CEO
Doc. No. 54916
14
<PAGE>
ARTHUR
ANDERSEN
-------------------------------
April 28, 1998 Arthur Andersen LLP
-------------------------------
Suite 400
6501 Americas Parkway NE
Albuquerque, NM 87110-5372
(505) 889-4700
Public Service Company of New Mexico:
We are aware that Public Service Company of New Mexico has incorporated by
reference in its Registration Statement Nos. 33-65418, 333-03303, and 333-03289
its Form 10-Q for the quarter ended March 31, 1998 which includes our report
dated April 28, 1998, covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933, that
report is not considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Statement of Earnings, Consolidated Balance Sheets and
Consolidated Statement of Cash Flows for the period ended March 31, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000081023
<NAME> Public Service Company of New Mexico
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> Mar-31-1998
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<TOTAL-NET-UTILITY-PLANT> 1,573,240
<OTHER-PROPERTY-AND-INVEST> 309,250
<TOTAL-CURRENT-ASSETS> 246,377
<TOTAL-DEFERRED-CHARGES> 152,963
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,281,830
<COMMON> 208,870
<CAPITAL-SURPLUS-PAID-IN> 471,341
<RETAINED-EARNINGS> 141,901
<TOTAL-COMMON-STOCKHOLDERS-EQ> 822,112
0
12,800
<LONG-TERM-DEBT-NET> 574,344
<SHORT-TERM-NOTES> 243,860
<LONG-TERM-NOTES-PAYABLE> 0
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0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 628,714
<TOT-CAPITALIZATION-AND-LIAB> 2,281,830
<GROSS-OPERATING-REVENUE> 329,764
<INCOME-TAX-EXPENSE> 12,680
<OTHER-OPERATING-EXPENSES> 286,589
<TOTAL-OPERATING-EXPENSES> 297,485
<OPERATING-INCOME-LOSS> 32,279
<OTHER-INCOME-NET> 2,722
<INCOME-BEFORE-INTEREST-EXPEN> 35,001
<TOTAL-INTEREST-EXPENSE> 13,787
<NET-INCOME> 21,214
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<EARNINGS-AVAILABLE-FOR-COMM> 21,067
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