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PARTICIPATION AGREEMENT
dated as of July 31, 1986
among
CHASE MANHATTAN REALTY LEASING CORPORTION
as Owner Participant
FIRST PV FUNDING CORPORATION
as Loan Participant
THE FIRST NATIONAL BANK OF BOSTON,
in its individual capacity and as Owner Trustee
under a Trust Agreement,
dated as of July 31, 1986,
with the Owner Participant, as Owner Trustee
CHEMICAL BANK,
in its individual capacity and as Indenture Trustee
under a Trust Indenture, Mortgage, security Agreement
and Assignment of Rents,
dated as of July 31, 1986,
with the Owner Trustee, as Indenture Trustee
and
PUBLIC SERVICE COMPANY Of NEW MEXICO,
as Lessee
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Sale and Leaseback of a 1.133333% Undivided Interest
in Palo Verde Nuclear Generating Station unit 1
and a .377777% Undivided Interest in Certain Common
Facilities
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TABLE OF CONTENTS
Page
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SECTION 1 Definitions ......................................... 2
SECTION 2 Participation by the
Loan Participant;
Refunding ........................................... 2
SECTION 3 Participation by the
Owner Participant ................................... 4
SECTION 4 Purchase, Sale,
Financing and Lease of
the undivided Interest;
Purchase, Sale and Lease
of the Real Property
Interest ............................................ 4
SECTION 5 Notice of Closing;
Closing ............................................. 5
SECTION 6 Representations,
Warranties and
Agreements of the Loan
Participant; Direction
to the Indenture Trustee ............................ 6
SECTION 7 Representations,
Warranties and
Agreements of the Owner
Participant ......................................... 9
SECTION 8 Representations,
Warranties and
Agreements of the Owner
Trustee and FNB ...................................... 16
SECTION 9 Representations,
Warranties and
Agreements of Chemical
Bank ................................................. 23
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TABLE OF CONTENTS (Continued)
Page
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SECTION 10 Representations,
warranties and
Agreements of the Lessee ............................. 25
SECTION 11 Conditions Precedent ................................. 51
SECTION 12 Consent to Assignment of
the Facility Lease;
Consent to Indenture;
Consent to Assignment of
Notes ................................................ 66
SECTION 13 Lessee's Indemnities and
Agreements ........................................... 67
SECTION 14 Transaction Expenses ................................. 82
SECTION 15 Owner Participant's
Transfers ............................................ 84
SECTION 16 Brokerage and Finders'
Tees and Commissions ................................. 87
SECTION 17 Survival of
Representations and
Warranties; Binding
Effect ............................................... 87
SECTION 18 Notices .............................................. 89
SECTION 19 Miscellaneous ........................................ 90
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SCHEDULES
TABLE OF CONTENTS (continued)
Page
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Schedule 1 Notice of Closing
Schedule 2 Pricing Assumptions
Schedule 3 Bill of Sale and Assignment (Section 7(b)(4))
Schedule 4 Recordations and Filings
Schedule 5 Affidavit of Owner Trustee (Section 7(c)(6))
APPENDIX
Appendix A Definitions
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PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of July 31, 1986 among CHASE
MANHATTAN REALTY LEASEING CORPORATION, a New York corporation (the Owner
Participant), THE FIRST PV FUNDING CORPORATIOND a Delaware corporation (the Loan
Participant), THE FIRST NATIONAL BANK OF BOSTON, a national banking association,
in its individual capacity (FNB) and as Owner Trustee (the Owner Trustee) under
a Trust Agreement, dated as of July 31, 1986, with the Owner Participant,
CHEMICAL BANK, a New York banking corporation, in its individual capacity
(Chemical Bank) and as Indenture Trustee (the Indenture Trustee) under a Trust
Indenture, Mortgage, Security Agreement and Assignment of Rents, dated as of
July 31, 1986, with the Owner Trustee, and PUBLIC SERVICE COMPANY OF MEW MEXICO,
a New Mexico Corporation (the Lessee).
WITNESSETH:
WHEREAS, the Owner Participant desires to cause the Trust to
acquire the Undivided Interest and the Real Property Interest and to lease the
Undivided Interest and the Real Property Interest to the Lessee under the
Facility Lease;
WHEREAS, the Lessee desires to sell the Undivided Interest and
the Real Property Interest to the Trust and lease the Undivided Interest. and
the Real Property Interest back from the Trust under the Facility Leases.
WHEREAS, the Owner Trustee and the Lessee will enter into the
Purchase Documents with respect to the sale and purchase of the Undivided
Interest and the Real Property Interest;
WHEREAS, pursuant to the terms and provisions of the
Indenture, the Owner Trustee will authorize the creation, issuance, sale and
delivery of the Initial Series Note and the granting of the security therefor,
and the Indenture Trustee will authenticate the Initial Series Note; and
WHEREAS, the Loan Participant is willing to purchase the
Initial Series Note on the terms and conditions set forth herein;
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NOW, THEREFORE in consideration of the premises and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions.
For the purposes hereof, capitalized terms used herein shall
have the meanings assigned to such terms in Appendix A. References in this
Participation Agreement to sections, paragraphs and clauses are to sections,
paragraphs and clauses in this Participation Agreement unless otherwise
indicated.
SECTION 2. Participation by the Loan Participant; Refunding.
(a) Loan Participant's Commitment. Subject to the.
satisfaction of the conditions in Sections 5(a) and 11(a), on the closing Date
the Loan Participant agrees to lend to the Owner Trustee, on a non-recourse
basis, an amount (the Loan) equal to 8O% of the Purchase Price.
(b) Payment; Terms of the Initial series Note.
(1) Payment. Proceeds of the Loan shall be paid directly to
the Indenture Trustee, for the account of the Owner Trustee, in
immediately available funds, at the Indenture Trustee's Office,
(2) Terms of the Initial series Note. The Loan shall be
evidenced by the Initial Series Note. The Initial Series Note shall be
issued by the Owner Trustee under and pursuant to the Indenture, shall
be in the principal amount of the Loan and shall bear interest at the
rate or rates per annum and shall be payable as set forth in the
Indenture.
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(a) Refunding of the Initial Series Note. Subject to the
satisfaction of the conditions set forth in Section 11(c), on the Refunding Date
the Loan Participant agrees to lend to the Owner Trustee, on a non-recourse
basis, an amount (the Refunding Loan) equal to the amount necessary to refund
the Initial Series Note. Proceeds of the Refunding Loan shall be paid directly
to the Indenture Trustee to the extent necessary to refund the Initial Series
Note in immediately available funds, at the Indenture Trustee's Office. The
Refunding Loan shall be represented by the Fixed Rate Note, which Note shall be
issued by the Owner Trustee under and pursuant to the Indenture and shall be in
the principal amount of the Refunding Loan and shall bear interest at the rates
per annum and shall be payable 85 set forth in the Indenture. On the Refunding
Date the Fixed Rate Note shall be exchanged by the Owner Trustee for the Initial
Series Note. Not less than 1 Business Day prior to the Refunding Date, the Loan
Participant shall deliver to the Owner Participant and the Lessee a certificate
setting forth the information necessary to complete the form of Fixed Rate Note
(including the schedules thereto) set forth in the Indenture. Upon such
delivery, and upon approval by the Lessee and the Owner Participant of the terms
thereof, the Owner Participant and the Lessee shall cause the form of Fixed Rate
Note to be completed. The parties hereto shall make a good faith effort to
cooperate to effect such amendments of the Transaction Documents as may be
necessary or appropriate to effect such refunding. The refunding contemplated by
this section 2(c) shall be effected at the request of the Lessee given in
writing at least 5 Business Days prior to the Refunding Date; provided, however,
that (i) no such request shall be made or refunding occur while an Event of
Default shall have occurred and be continuing; (ii) unless waived by the Owner
Participant, Net Economic Return shall not be adversely affected thereby (or
appropriate adjustments shall have been made or shall be made on the Refunding
Date pursuant to Section 3(e) of the Facility Lease to preserve Net Economic
Return); (iii) unless waived by the Owner Participant, any modifications of the
Transaction Documents shall satisfy the provisions of Revenue Procedure 75-21,
Revenue Procedure 75-28 and any other applicable statute, regulation, revenue
procedure, revenue ruling or technical information release relating to the
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subject matter of such revenue procedures; and (iv) unless waived by the Owner
Participant, such modifications (after giving effect to any adjustments pursuant
to clause (ii) above) shall not, in the opinion of the Owner Participant's
Special Counsel, adversely affect the tax benefits contemplated by the Owner
Participant in entering into the transactions contemplated by this Participation
Agreement and the other Transaction Documents.
SECTION 3. Participation by the Owner Participant.
Subject to the satisfaction of the conditions in Sections 5(a)
and 11(a), on the Closing Date the Owner Participant agrees to (i) make an
equity investment with respect to the Undivided Interest in an amount (the
Investment) equal to 20% of the Purchase Price, (ii) make an equity investment
with respect to the Real Property Interest in the amount of $19,417 (the Real
Estate Investment), and (iii) provide to the Owner Trustee an amount equal to
the Estimated Transaction Expenses. Proceeds of the Investment and the Real
Estate Investment shall be paid directly to the Indenture Trustee, in
immediately available funds, at the Indenture Trustee's Office. The Estimated
Transaction Expenses shall be paid to the Owner Trustee, in immediately
available funds, at 100 Federal Street, Boston, Massachusetts 02110 Attention:
Manager, Corporate Trust Department.
SECTION 4. Purchase, sale, Financing and Lease of the Undivided
Interest; Purchase, Sale and Lease of the Real Property Interest.
(a) The Undivided Interest. Subject to (x) the satisfaction of
the conditions in Sections 5(a) and 11(a), (y) receipt from the Owner
Participant of the Investment and an amount equal to Estimated Transaction
Expenses and (a) receipt from the Loan Participant of the proceeds of the Loan,
on the Closing Date the Owner Trustee shall (i) cause the Trust to purchase the
Undivided Interest from the Lessee for $50,000,000 (the Purchase Price) and (ii)
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disburse an amount equal to the Estimated Transaction Expenses as contemplated
by Section 14. Subject to the satisfaction of the conditions in Section 11(b),
on the Closing Date the Lessee shall sell the Undivided Interest to the Trust
for the Purchase Price. Concurrently with such purchase and sale, the Trust
shall lease the Undivided Interest to the Lessee, and the Lessee shall lease the
Undivided Interest from the Trust, pursuant to the Facility Lease.
(b) The Real Property Interest. Subject to (x) the satisfaction
of the conditions in Sections 5(a) and 11(a) and (y) receipt from the
Owner Participant of the Real Estate investment, on the Closing Date the
Owner Participant shall cause the Trust to purchase the Real Property
Interest from the Lessee for a purchase price equal to the Real Estate
Investment. Subject to the satisfaction of the conditions in Section
11(b), on the Closing Date the Lessee shall sell the Real Property
Interest to the Trust for such purchase price. Concurrently with such
purchase and sale, the Trust shall lease the Real Property Interest to
the Lessee, and the Lessee shall lease the Real Property Interest from
the Trust, pursuant to the Facility Lease.
SECTION 5. Notice of Closing; Closing.
(a) Notice of Closing. Not later than the Closing Date, the
Lessee shall deliver to the Owner Participant, the Owner Trustee, the Loan
Participant,. the Collateral Trust Trustee and the Indenture Trustee a notice,
substantially in the form of Schedule 1 (the Notice of Closing), which shall (i)
state that the Closing Date shall occur on the date specified therein, (ii) set
forth a list of the then known Transaction Expenses payable by the Owner Trustee
pursuant to Section 14(a)(the Estimated Transaction Expenses) and (iii) provide
payment instructions in respect of the disposition of the Purchase Price and the
amount of the Real Estate Investment.
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(b) Closing. Upon satisfaction of the conditions in Section
5(a) and Section 11(a) and upon receipt from the Owner Participant of the amount
of the Investment, the Real Estate Investment and the Estimated Transaction
Expenses and from the Loan Participant of the Loan, on the Closing Date the
Owner Trustee shall (i) instruct the Indenture Trustee to pay to the Lessee an
amount equal to the Purchase Price and the amount of the Real Estate Investment
in immediately available funds and (ii) disburse the Estimated Transaction
Expenses as contemplated by Section 14. Upon satisfaction of the conditions in
Section 11(b), on the Closing Date, the Lessee shall deliver to the Owner
Trustee the Bill of Sale, the Deed and the Assignment of Beneficial Interest.
SECTION 6. Representations, warranties and Agreements of the
Loan Participant; Direction to the Indenture Trustee.
(a) The Loan Participant represents and war rants that:
(1) Due Organization. The Loan Participant is a corporation
duly organized and validly existing in good standing under the laws of
the State of Delaware and has the corporate power and authority to carry
on its business as presently conducted, own its properties, and enter
into and perform its obligations under this Participation Agreement and
each other Transaction Document and each Financing Document to which it
is, or is to become on or before the Closing Date, a party.
(2) Due Authorization; Enforceability. The execution, delivery
and performance by the Loan Participant of this Participation Agreement
and each other Transaction Document and each Financing Document to
which it is, or is to become, a party on or before the Closing Date,
have been duly authorized by all necessary corporate action on the part
of the Loan Participant and do not require the consent or approval of
the stockholder of the Loan Participant. This Participation Agreement
and each other Transaction Document and each Financing
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Document to which the Loan Participant is, or is to become, a party,
have been, or on or before the Closing Date will have been, duly
executed and delivered by the Loan Participant and constitute, or upon
execution and delivery thereof will constitute, legal, valid and binding
agreements of the Loan Participant enforceable against it in accordance
with their respective terms.
(3) No Violation. Neither the execution, delivery or
performance by the Loan Participant of this Participation Agreement, any
other Transaction Document or any Financing Document to which it is, or
is to become on or before the Closing Date, a party, nor the
consummation by the Loan Participant of the transactions contemplated
hereby or thereby, nor compliance by the Loan Participant with the
provisions hereof or thereof conflicts or will conflict with, or results
or will result in the breach of any provision of, the Certificate of
Incorporation or By-Laws of the Loan Participant or any Applicable Law
or any indenture, mortgage or agreement to which the Loan Participant is
a party or by which it or its property is bound or requires any
Governmental Action, except such as have been, or on or before the
Closing Date will have been, duly obtained, given or accomplished.
(4) No Other Business. Except as contemplated by this
Participation Agreement, the other Transaction Documents and the
Financing Documents and except as otherwise contemplated by the Section
6(c) Application, the Loan Participant has not engaged, and will not
engage, in any business or activity of any type or kind whatever.
(5) ERISA. The Loan Participant is not acquiring any Note with
the "plan assets" of any "employee benefit plan" within the meaning of
section 3(3) of ERISA or any "plan" within the meaning of section
4975(e)(l) of the Code.
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(6) Securities Act.. The Loan Participant understands that
none of the Notes to be acquired by it has been registered under the Securities
Act and will bear the legend set forth in the form of such Note.
(b) Agreements of the Loan Participant. The Loan Participant
agrees that:
(1) Transfers of the Notes. Any transfer or assignment of any
Note or of all or any part of the Loan Participant's interest hereunder
or under any other Transaction Document or any Financing Document shall
be effected in a transaction constituting an exempted transaction under
the Securities Act and on the express condition that the transferee,
assignee or participant shall agree to be bound by the terms and
provisions hereof and thereof. Neither the Loan Participant nor any
subsequent Holder of a Note may sell, exchange or transfer any Note to
any other Person (other than the Collateral Trust Trustee) unless such
transferee delivers to the other parties hereto a representation and
warranty (and an opinion of counsel satisfactory to each of the other
parties hereto) to the effect that neither the transfer of such Note
to, nor the ownership of such Note by, such transferee will cause such
transferee, or any other party hereto, to be engaged in a "prohibited
transaction", as defined in section 406 of ERISA or section 4975 of the
Code, which is not at such time subject to an exemption contained in
ERISA or in the rules, regulations, releases or bulletins adopted
thereunder.
(2) Quiet Enjoyment. The Loan Participant acknowledges Section
6(a) of the Facility Lease.
(3) No Other Business. During such time as any Note is
outstanding and held by the Loan Participant or the Collateral Trust
Trustee, the Loan Participant will not (i) engage in any business or
activity other than (1) in connection with the Transaction Documents or
the Financing Documents or (2) as otherwise contemplated by the section
6(c) Application or (ii) amend or engage in any activity or take any
action not permitted by Article THIRD, FOURTH or SIXTH of its
Certificate of Incorporation, as in effect on the date of execution and
delivery hereof, without, in each case, the consent of the other
parties hereto.
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(c) Direction to the Indenture Trustee. The Loan Participant, as
purchaser of the Initial Series Note, (i) hereby authorizes and directs
the Indenture Trustee to execute, deliver and perform this Participation
Agreement, (ii) hereby authorizes and directs the Indenture Trustee to
register such Note in the name of the Loan Participant and, upon
authentication and delivery thereof pursuant to this Participation
Agreement and the Indenture, to deliver such Mote (upon completion by
the Loan Participant of the assignment attached to the Initial series
Note) to the Collateral Trust Trustee pursuant to the Collateral Trust
Indenture, (iii) acknowledges and agrees that, in connection with this
Participation Agreement, the Indenture Trustee shall have the benefits
and protections of Article VIII of the Indenture and (iv) agrees that,
in the event of a conflict between the provisions of this Participation
Agreement and the Indenture, the Indenture Trustee shall, as between the
Indenture Trustee and the Loan Participant, be fully protected in
relying on the express terms of the Indenture.
SECTION 7. Representations, Warranties and Agreements of the
Owner Participant.
(a) Representations and warranties. The Owner Participant
represents and warrants that:
(1) Due Organization. The Owner Participant is a corporation
duly organized and validly existing in good standing under the laws of
the state of its incorporation and has the corporate power and authority
to enter into and perform its obligations under this Participation
Agreement and each other Transaction Document to which it is, or is to
become, a party.
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(2) Due Authorization. This Participation Agreement and each
other Transaction Document to which the Owner Participant is, or is to
become on or before the Closing Date, a party have been duly authorized
by all necessary corporate action on the part of the Owner Participant
and do not require the consent or approval of its stockholders or any
trustee or holder of any of its indebtedness or other obligations,
except such as have been, or on or before the closing Date will have
been, duly obtained, given or accomplished.
(3) Execution. This Participation Agreement and each other
Transaction Document to which the Owner Participant is, or is to become
on or before the Closing Date, a party have been, or on or before the
Closing Date will have been, duly executed and delivered by the Owner
Participant and constitute, or upon execution and delivery thereof will
constitute, its legal, valid and binding agreements, enforceable against
it in accordance with their respective terms (except as may be limited
by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally).
(4) No Violation. Neither the execution, delivery or
performance by the Owner Participant of this Participation Agreement or
any other Transaction Document to which it is, or is to become on or
prior to the closing Date, a party, nor the consummation by the Owner
Participant of the transactions contemplated hereby or thereby, nor
compliance by the Owner Participant with the provisions hereof or
thereof, conflicts with, or results in the breach of any provision of,
or is inconsistent with, its documents of incorporation or By-Laws or
contravenes any Applicable Law applicable to it or any of its
Affiliates, or any indenture, mortgage or agreement for borrowed money
to which the Owner Participant is a party or any other agreement or
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instrument to which the Owner Participant is a party or by which it or
its property is bound or requires any Governmental Action with respect to
the Owner Participant under Federal or New York law on or before the
Closing Date, except such as are contemplated by the Transaction
Documents or the Financing Documents or such as have been, or on or
before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that the Owner Participant makes no
representation or warranty as to any Applicable Law or Governmental
Action relating to the Securities Act, the Securities Exchange Act, the
Trust Indenture Act, the Federal Power Act, the Atomic Energy Act, the
Nuclear Waste Act, ERISA (except to the extent set forth in paragraph (9)
below), the Holding Company Act, the New Mexico Public Utility Act, the
Arizona Public Utility Act, energy or nuclear matters, public utilities,
the environment, health and safety or Unit 1.
(5) No Owner Participant's Liens. Neither the execution and
delivery by the Owner Participant of this Participation Agreement or any
other Transaction Document to which the Owner Participant is, or is to
become on or before the Closing bate, a party, nor the performance by
the Owner Participant of its obligations hereunder or thereunder, will
subject the Trust Estate or the Lease Indenture Estate, or any portion
of either thereof, to any Owner Participant's Lien.
(6) Acquisition. The Owner Participant is acquiring the
beneficial interest in the Trust Estate for its own account in the
ordinary course of its business and the Owner Participant has no
intention of making any sale or other distribution of the beneficial
interest in the Trust Estate in violation of any legislation, rule or
regulation relating to limitations upon the sale or other distribution
of interests such as such beneficial interest.
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(7) No Prior Security Interest. There exists no security
interest in or other Lien on the Lease Indenture Estate in the state of
the chief place of business of the Owner Participant, the State of New
Mexico or the State of Arizona arising as a result of claims against
the Owner Participant unrelated to the transactions contemplated by the
Transaction Documents or the Financing Documents which is prior to the
Indenture Trustee's security interest in the Lease Indenture Estate.
(8) No Sales or Solicitations. Except as contemplated by the
Financing Documents and as described in a letter to the Lessee dated
July 31, 1986, neither the Owner Participant nor anyone acting on its
behalf has directly or indirectly offered or sold, or solicited any
offer to acquire, any beneficial interest in the Trust Estate or any
Note or any Bond.
(9) ERISA. The Owner Participant is not acquiring its interests
in the Trust with the "plan assets" of any "employee benefit plan"
within the meaning of section 3(3) of ERISA or any "plan" within the
meaning of section 4975(e)(l) of the Code.
(b) Agreements of the Owner Participant. The Owner Participant
agrees that:
(1) No Owner Participant's Liens. The Owner Participant will not
create or permit to exist, and, at its own cost and expense, will
promptly take such action as may be necessary duly to discharge, all
Owner Participant's Liens.
(2) Quiet Enjoyment. The Owner Participant acknowledges the
provision. of Section 6(a) of the Facility Lease and Section 8(c) of
this Participation Agreement.
(3) No-Petition Agreement.. Prior to the 181st day following
the payment in full of the Bonds and the discharge in accordance with
its terms of the Collateral Trust Indenture, the Owner Participant
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agrees that it will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or composition
of, or in respect of, the Loan Participant under the Bankruptcy Code, or
any other applicable Federal or state law or the law of the District of
Columbia.
(4) Transfer of Interest in the Trust Estate. Unless the Lessee
shall have assumed the Notes as contemplated by Section 3.9(b) of the
Indenture, upon receipt by the Owner Participant under Section 5.2 of
the Indenture of the payments to be made to the Lessor as provided in
Section 9(c), 9(d), 13(c) or 16 of the Facility Lease and, if
applicable, compliance in full by the Lessee with Section 9(f) of the
Facility Lease, the Owner Participant shall (so long as no Default or
Event of Default shall have occurred and be continuing), and at any time
following the occurrence of an Event of Loss, Deemed Loss Event or a
Special Purchase Event or a Default or Event of Default or event giving
rise to the exercise of the Cure Option the Owner Participant may,
assign, convey and transfer to the Lessee all of the Owner Participant's
right, title and interest in, to and under the Trust Estate (except the
right to receive Excepted Payments), such transfer (i) to be free and
clear of Owner Participant's Liens but otherwise without recourse,
representation or warranty and (ii) if the Owner Participant so elects,
to be effected by the execution and delivery by the Owner Participant to
the Lessee of a Bill of Sale and Assignment substantially in the form of
Exhibit A hereto (and upon the execution and delivery thereof and the
furnishing of executed counterparts thereof to the Owner Trustee such
transfer shall be and become effective automatically and without further
action by the Owner Trustee6 the Owner Participant, the Lessee, the
Lessor, the Indenture Trustee or any other Person). The Lessee hereby
agrees to accept the transfer contemplated by this Section 7(b)(4) and
the parties hereto acknowledge and agree that at the time of such
transfer the Lessee shall be deemed to be a Transferee that has
satisfied all conditions set forth in Section 15(a) of this
Participation Agreement and Section 11.09 of the Trust Agreement.
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If, in accordance with the preceding paragraph, the Owner
Participant shall assign, convey and transfer to the Lessee all of the
Owner Participant's right, title and interest in, to and under the Trust
Estate (except the right to receive Excepted Payments) following the
occurrence of an Event of Loss, Deemed Loss Event or a Special Purchase
Event or a Default or Event of Default or event giving rise to the Cure
Option, but the transferring Owner Participant shall not have received
under Section 5.2 of the Indenture the payments to be made to the Lessor
as provided in Section 9(c), 9(d), 13(c) or 16 of the Facility Lease, as
the case may be, the obligation of the Lessee to make such payments
(together with interest thereon in accordance with Section 3(b)(iii) of
the Facility Lease) (or to make other payments in a like amount with
respect to Basic Rent or Supplemental Rent paid by application of such
payments (and in which Owner Trustee has thereby acquired an interest)
pursuant to Section 5.1 or 5.3 of the Indenture) shall not be deemed to
be cancelled or discharged but shall continue until all such amounts are
so received by the Lessee, as successor Owner Participant, or by the
transferring Owner Participant pursuant to the following provisions of
this Section 7(b)(4). The Lessee as successor Owner Participant hereby
agrees to pay to the transferring Owner Participant on the date of
transfer an amount equal to the amount of the payments to be made to the
Lessor as provided in Section 9(c), 9(d), 13(c) or is together with
interest thereon at the Penalty Rate (computed in accordance with the
Facility Lease) from the date of transfer, such payments (the Secured
Obligations) to be made only from amounts payable to the Owner
Participant from the Trust Estate. The Secured Obligations shall be
secured by (and the Lessee hereby grants to the transferring Owner
Participant a security interest in and general lien upon) all of the
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right, title and interest of the Lessee as successor Owner Participant
in, to and under the Trust Estate. In connection therewith, the Lessee
as successor Owner Participant hereby agrees as follows:
(i) The transferring Owner Participant shall have all of
the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New York (as such
law may at any time be amended).
(ii) Upon the occurrence of such transfer, the Lessee as
successor Owner Participant shall appoint, and hereby does
appoint, the transferring Owner Participant Its
attorney-in-fact, irrevocably, with full power of substitution,
to the exclusion of the Lessee as successor Owner Participant,
to ask, require, demand, receive and give acquittance for any
and all moneys and claims for moneys due and to become due to
the Lessee as successor Owner Participant under or arising out
of the Trust Estate, to endorse any checks or other instruments
or orders in connection therewith, and to take any action
(including the filing of financing statements or other documents
and the delivery of written instructions to the Owner Trustee
and the Indenture Trustee specifying that all payments to be
made to the Lessee as successor Owner Participant under the
Trust Agreement and the Indenture shall be made directly to the
transferring Owner Participant so long as any portion of the
Secured Obligations remains outstanding) or institute any
proceedings which the transferring Owner Participant may deem
necessary or appropriate to protect and preserve the security
interest of the transferring Owner Participant in the Trust
Estate and the rights of the transferring Owner Participant to
receive payments thereunder.
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(iii) Upon the occurrence of such transfer, and until the
Secured obligations have been paid in full, the Lessee (in its
capacity as such and as successor Owner Participant) shall
not, without the prior written consent of the transferring
Owner Participant (1) take any action or deliver any
instruction under any Transaction Document the effect of which
would be to (A) relieve or otherwise affect the obligation of
the Lessee to make such payments, (B) terminate the Trust
Agreement, (C) terminate or rescind the Facility Lease, (D)
sell, assign, transfer or deliver the Trust Estate to any
Person (except, in the case of the Trust Estate, as
contemplated by section 9(j) of the Facility Lease) or (2)
accept, or approve, any amendment to any Transaction Document.
(iv) The Lessee (as such and as successor Owner
Participant) covenants and agrees to do all such acts and
execute all such instruments of further assurance as shall be
reasonably requested from time to time by the transferring
Owner Participant for the purpose of fully carrying out and
effectuating the provisions of this Section 7(b)(4) and the
intent thereof.
Upon the payment in full of the Secured Obligations, the security interest
hereinabove provided shall terminate and the transferring Owner Participant, at
the request of the Lessee as successor Owner Participant, shall execute and
deliver to the Lessee as successor Owner Participant such termination
statements, releases or other instruments presented to the transferring Owner
Participant as shall be reasonably required to effect such termination.
SECTION 8. Representations, Warranties and Agreements of the
Owner Trustee and FNB.
(a) Representations and warranties. FNB as Owner Trustee and
(except as otherwise provided in the last sentence of this Section a(a)) in its
individual capacity, represents and warrants that:
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(1) Due Organization. FNB is a national banking association duly
organized and validly existing in good standing under the laws of the
united States of America and has all requisite corporate power and
authority to enter into and perform its obligations under (x) the Trust
Agreement and, to the extent it is a party hereto in its individual
capacity, this Participation Agreement and (y) acting as Owner Trustee,
this Participation Agreement and each other Transaction Document to
which FNB is, or is to become on or before the Closing Date, a party as
Owner Trustee
(2) Due Authorization; Enforceability; etc. This Participation
Agreement and each other Transaction Document to which FNB is, or is to
become on or before the Closing Date, a party have been duly authorized
by all necessary corporate action of ma (in its individual capacity or
as Owner Trustee, as the case may be) and, upon execution and delivery
hereof and thereof, this Participation Agreement and each such other
Transaction Document will be duly executed and delivered and will be
legal, valid and binding agreements of FNB (in its respective
capacities), enforceable against it (in its respective capacities) in
accordance with their respective terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally); it being understood that FNB is not
making any representation or warranty as to the priorities of the Liens
created or to be created under any Transaction Document, title to the
Trust Estate or recordings or filings necessary in connection therewith.
(3) Notes. Upon execution of the Initial Series Note,
authentication thereof by the Indenture Trustee pursuant to the
Indenture and delivery thereof against payment therefor in accordance
with this Participation Agreement, such Note will be a legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally).
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(4) No Violation. Neither the execution and delivery by (x) FNB of the
Trust Agreement and, to the extent FNB is a party hereto in its
individual capacity, this Participation Agreement and (y) the Owner
Trustee of this Participation Agreement and each other Transaction
Document (other than the Trust Agreement) to which the Owner Trustee is,
or is to become on or before the Closing Date, a party, nor the
performance by FNB, in its individual capacity or as Owner Trustee, as
the case may be, of its obligations under each, conflicts with, or
results in the breach of any provision of, its Articles of Association or
By-Laws and does not contravene any Applicable Law of the United States
of America or The Commonwealth of Massachusetts governing the banking or
trust powers of FNB, and does not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which FNB is a party or by which it is bound or require any
Governmental Action with respect to the Owner Trustee under any Federal
or Massachusetts law, except such as are contemplated by the Transaction
Documents or the Financing Documents or such as have been, or on or
before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that no representation or warranty is
made with respect to the right, power or authority of FNB or the Owner
Trustee to act under the ANPP Participation Agreement or the License in
respect of the undivided interest or Unit 1, and the Owner Trustee makes
no representation or warranty as to any Applicable Law or Governmental
Action relating to the Securities Act, the securities Exchange Act, the
Trust Indenture Act, the Federal Power Act, the Atomic Energy Act, the
Holding Company Act, the New Mexico Public Utility Act, the Arizona
Public utility Act, the Nuclear Waste Act, ERISA, energy or nuclear
matters, public utilities, the environment, health and safety or unit 1.
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(5) Defaults. To the best knowledge of the Owner Trustee, no
Indenture Default or Indenture Event of Default has occurred and is
continuing. The Owner Trustee is not in violation of any of the terms of
this Participation Agreement or any other Transaction Document to which
it is, or is to become on or before the Closing Date, a party.
(6) Litigation. There is no action, suit, investigation or
proceeding pending or, to the knowledge of FNB, threatened against FNB (in any
capacity) before any court, arbitrator or administrative or governmental body
and which relates to its banking or trust powers which, individually or in the
aggregate, if decided adversely to the interests of FNB in such capacity, would
have a material adverse effect upon the ability of FNB (in any capacity) to
perform its obligations under this Participation Agreement or any other
Transaction Document to which it is, or is to become on or before the Closing
Date, a party (in any capacity).
(7) Location of the Chief Place of Business and Chief Executive
Office, etc. The chief place of business and chief executive office of
the Owner Trustee and the office where its records concerning the
accounts or contract rights relating to the transactions contemplated
hereby are kept is located in Boston, Massachusetts.
(8) No Prior Security Interest. There exists no security
interest in the Lease Indenture Estate in the States of New Mexico, New
York or Arizona or in The Commonwealth of Massachusetts arising as a
result of any claim against FNB unrelated to the transactions
contemplated by the Transaction Documents or the Financing Documents
which is prior to the Indenture Trustee's security interest in the Lease
Indenture Estate.
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(9) No Owner Trustee's Liens. Neither the execution by FNB (in
any capacity) of this Participation Agreement or any other Transaction
Document to which it (in any capacity) is, or is to become on or before
the Closing Date, a party, nor the performance in such capacity by it
of its obligations hereunder or thereunder, will subject the Trust
Estate or the Lease Indenture Estate, or any portion thereof, to any
Owner Trustee's Lien.
The representations and warranties in Section 8(a)(2) and Section 8(a)(2), as to
Transaction Documents and the Initial Series Mote being legal, valid and binding
obligations enforceable in accordance with their respective terms, are given
only by FNB in its capacity as Owner Trustee and not in its individual capacity,
except that FNB does represent in its individual capacity that it is authorized
under the laws of The Commonwealth of Massachusetts to execute and deliver the
Transaction Documents to which it is a party.
(b) Agreements. FNB agrees, in its individual capacity, that:
(1) Discharge of Liens. FNB will not create or permit to exist,
and will, at its own cost and expense, promptly take such action as may
be necessary duly to discharge, all Owner Trustee's Liens.
(2) Certain Amendments. FNB agrees that unless a Default or an
Event of Default has occurred and is continuing or an Event of Loss or
Deemed Loss Event has occurred, FNB will not amend any of the payment
terms of any Note, or take any action to refund any Note after the date
of issue thereof pursuant to the terms of this Participation Agreement
and the Indenture without the prior written consent of the Lessee. FNB
agrees that except for amendments or supplements, if any, made pursuant
to Article x of the Trust Agreement or contemplated by Section 7(b)(4),
FNB will not amend or supplement, or consent to any amendment of or
supplement to, the Trust Agreement if such amendment would materially
and adversely affect the rights of the Lessee under the Facility Lease
and this Participation Agreement, without the prior written consent of
the Lessee unless a Default or an Event of Default has occurred and is
continuing or the Lease Termination Date has occurred.
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(3) Change in Location of Chief Place of Business and chief
Executive Office, etc. FNB shall notify the Lessee, the Loan
Participant and the Indenture Trustee promptly after any change in its
chief executive office, principal and chief place of business or place
where its records concerning the accounts or contract rights relating
to the transactions contemplated hereby are kept.
(4) No Petition Agreement. Prior to the 181st day following the
payment in full of the Bonds and the discharge in accordance with its
terms of the Collateral Trust Indenture, FNB (in all capacities) agrees
that it will not file a petition, or join in the filing of a petition,
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Loan Participant under the Bankruptcy Code or any other
applicable Federal or state law or the law of the District of Columbia
(5) Quiet Enjoyment. FNB acknowledges Section 6(a) of the
Facility Lease.
(C) Agreements of the Owner Trustee. The Owner Trustee agrees
that:
(1) Subject and Subordinate. The rights and remedies of the
Owner Trustee and the Owner Participant in the Undivided Interest, the
Real Property Interest and the related Generation Entitlement Share are
subject and subordinate to the rights and remedies of the ANPP
Participants (other than (i) the Lessee or (ii) any Person who shall
become an ANPP Participant in respect of the Lessor's Interest (as
defined in Section B(c)(3)) under the ANPP Project Agreements.
(2) Lessee to be Participant. Except as provided in Sections
15.2.2, 15.6.4 and 15.10 (or any comparable successor provisions) of the
ANPP Participation Agreement, the Lessee shall be and remain the sole
"Participant for all purposes of the ANPP Participation Agreement and
the sole representative (with power to bind the Lessor and the Indenture
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Trustee) in all dealings with the other ANPP Participants in relation
to the property, rights, titles and interests of the Lessee transferred
to the Lessor pursuant to the Transaction Documents; provided, however,
that the foregoing shall not limit in any way the effect of Section 15
or 16 of the Facility Lease or any liability or obligation that the
Lessee may incur to the Owner Trustee or the Owner Participant under
any Transaction Document as a result thereof (including, without
limitation, any liability that PNM may incur under Section 16 of the
Facility Lease as the result of an Event of Default).
(3) Cash Bids. Upon the expiration of the Facility Lease and
upon the Lessee failing to purchase or otherwise reacquire all the
right, title and interest in PVNGS and contractual rights related
thereto necessary for the operation of the interest (the Lessor's
Interest) acquired by the Lessor pursuant to the Transaction Documents,
the Lessor shall entertain cash bids from each ANPP Participant for the
Lessor's Interest.
(4) Survival. The provisions of this paragraph (4) and Sections
8(c)(1), (2) and (3) shall remain in full force and effect until such
time as the ANPP Administrative Committee or the ANPP Participants shall
otherwise consent.
(5) License Matters. The Owner Trustee acknowledges that before
taking possession of the Undivided Interest or any part thereof or of
any other interest in PVNGS, either of the following may be required:
(i) the issuance of an appropriate license from the NRC, whether by
amendment to the License or otherwise, or (ii) a partial transfer of the
License authorizing the Lessor to possess its interest in PVNGS, to the
extent of the undivided Interest, upon application for partial transfer
of such License to such extent filed pursuant to Applicable Law. Neither
the Owner Trustee nor the Owner Participant shall have any
responsibility whatsoever to take or initiate any action with respect to
any NRC licensing matter.
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(6) Acknowledgment and Agreement. The Owner Trustee hereby
acknowledges and agrees to the provisions of Section 7(b)(4) of this
Participation Agreement. The Owner Trustee hereby agrees, upon the
request of the Owner Participant, to execute and cause to be filed with
the County Recorder, Maricopa County, Arizona a duly completed affidavit
in substantially the form of Schedule 5 hereto.
SECTION 9. Representations, Warranties and Agreements of
Chemical lank.
(a) Representations and Warranties. Chemical Bank represents
and warrants that:
(1) Due Organization. Chemical Bank is a banking corporation
duly organized and validly existing in good standing under the laws of
the State of New York and has the corporate power and authority and
legal right to enter into and perform its obligations under the
Indenture, this Participation Agreement and each other Transaction
Document to which it is, or is to become on or before the Closing Date,
a party.
(2) Due Authorization. This Participation Agreement and each
other Transaction Document to which Chemical Bank Is, or is to become on
or before the Closing Date, a party have been or will be duly authorized
by all necessary corporate action of Chemical lank and each has been or
will have been duly executed and delivered by Chemical Bank.
(3) Authentication of the Initial Series Note. The officer of
Chemical Bank who shall authenticate the Initial Series Note to be
issued pursuant to the Indenture shall be, at the time of such
authentication, an Authorized Officer.
(4) No Violation. Neither the execution and delivery by
Chemical Bank of this Participation Agreement or the Indenture, nor the
authentication by it of the Initial Series Note, nor the consummation
by it of the transactions contemplated hereby or thereby, nor the
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compliance by it with the provisions hereof or thereof will contravene
any Applicable Law governing its banking or trust powers, or
contravenes or results in a breach of, or constitutes a default under,
its Articles of Incorporation or By-laws, or requires any Governmental
Action under any Federal or New York law, except such as have been, or
on or before the Closing Date will have been, duly obtained, given or
accomplished; provided, however, that no representation or warranty is
made as to (i) any Applicable Law or Governmental Action relating to
the Securities Act, the Securities Exchange Act, the Trust Indenture
Act, the Federal Power Act, the Atomic Energy Act, the Holding Company
Act, the New Mexico Public Utility Act, the Arizona Public Utility Act,
the Nuclear Waste Act, ERISA, energy or nuclear matters, public
utilities, the environment, health and safety or Unit 1 or (ii) the
Lease Indenture Estate to the extent it may constitute real property
under Applicable Law.
(b) Agreements. The Indenture Trustee agrees that:
(1) Agreement to Discharge Liens. The Indenture Trustee will
not create or permit to exist, and will promptly take such action as
may be necessary duly to discharge, all Indenture Trustee's Liens.
(2) No Petition Agreement. Prior to the 181st day following
the payment in full of the Bonds and the discharge in accordance with
its terms of the Collateral Trust Indenture, the Indenture Trustee
agrees that it will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or
composition of or in respect of the Loan Participant under the
Bankruptcy Code or any other applicable Federal or state law or the law
of the District of Columbia.
(3) Quiet Enjoyment. The Indenture Trustee agrees to be bound
by Section 6(a) of the Facility Lease.
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(4) Acknowledgment. The Indenture Trustee hereby acknowledges
the provisions of Section 7(b)(4) of this Participation Agreement.
SECTION 10. Representations, Warranties and Agreements of the
Lessee.
(a) Representations and Warranties. The Lessee represents and
warrants that:
(1) Due Organization. The Lessee is a corporation duly organized
and validly existing in good standing under the laws of the State of New
Mexico and has the corporate power and authority to carry on its
business as presently conducted, to own or hold under lease its
properties and to enter into and perform its obligations under this
Participation Agreement and each other Transaction Document and
Financing Document to which it is, or is to become, a party. The Lessee
is duly qualified and in good standing to do business as a foreign
corporation in the State of Arizona and has not failed to qualify to do
business or to be in good standing in any other jurisdiction where
failure so to qualify or be in good standing would materially and
adversely affect the financial condition of the Lessee or its ability to
perform any obligations under this Participation Agreement, any other
Transaction Document or any Financing Document to which it is, or is to
become on or before the Closing Date, a party.
(2) Due Authorization. The execution, delivery and performance
by the Lessee of this Participation Agreement and each other Transaction
Document and each Financing Document to which it is, or is to become on
or before the Closing Date, a party, have been duly authorized by all
necessary corporate action on the part of the Lessee and do not, and
will not, require the consent or approval of the stockholders of the
Lessee or any trustee or holder of any indebtedness or other obligation
of the Lessee, other than (i) the Mortgage Release, (ii) the finding of
the ANPP Administrative Committee described in Section 15.6.2 of the
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ANPP Participation Agreement and (iii) such other consents and
approvals as have been, or on or before the closing Date will have
been, duly obtained, given or accomplished, with true copies thereof
delivered to the Owner Participant prior to the Closing Date.
(3) Execution. This Participation Agreement and each other
Transaction Document and each Financing Document to which the Lessee is,
or is to become on or before the closing Date, a party, will have been
duly executed and delivered by the Lessee, and this Participation
Agreement constitutes, and upon execution and delivery thereof, each
such Transaction Document and each such Financing Document will
constitute, the legal, valid and binding agreement of the Lessee,
enforceable against the Lessee in accordance with their respective
terms.
(4) No Violation, etc. Neither the execution, delivery or
performance by the Lessee of this Participation Agreement or any other
Transaction Document or any Financing Document to which it is, or is to
become on or before the closing Date, a party, nor the consummation by
the Lessee of the transactions contemplated hereby or thereby, nor
compliance by the Lessee with the provisions hereof or thereof,
conflicts or will conflict with, or results or will result in a breach
or contravention of any of the provisions of, the Restated Articles of
Incorporation or By-Laws of the Lessee or any Affiliate of the Lessee,
or any Applicable Law, or any indenture, mortgage, lease or any other
agreement or instrument to which the Lessee or any Affiliate of the
Lessee is a party or by which the property of the Lessee or any
Affiliate of the Lessee is bound, or results or will result in the
creation or imposition of any Lien (other than Permitted Liens) upon any
property of the Lessee or any Affiliate of the Lessee. There is no
provision of the Restated Articles of Incorporation or By-Laws of the
Lessee or any Affiliate of the Lessee, or any Applicable Law, or any
such indenture, mortgage, lease or other agreement or instrument which
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materially adversely affects or in the future is likely (so far as the
Lessee can now foresee) to materially adversely affect the business,
operations, affairs, condition, properties or assets of the Lessee, or
its ability to perform its obligations under this Participation
Agreement or any other Transaction Document or any Financing Document
to which it is, or is to become on or before the Closing Date, a party.
(5) Governmental Actions. No Governmental Action is or will be
required in connection with the execution, delivery or performance by
the Lessee of, or the consummation by the Lessee of the transactions
contemplated by, this Participation Agreement, any other Transaction
Document or any Financing Document, except such Governmental Actions (i)
as have been, or on or before the closing Date will have been, duly
obtained, given or accomplished, with true copies thereof delivered to
the Owner Participant and the Loan Participant, (ii) as may be required
under existing Applicable Law to be obtained, given or accomplished from
time to time after the closing Date in connection with the maintenance,
use, possession or operation of Unit 1 or otherwise with respect to Unit
1 and the Lessee's or the Operating Agent's involvement therewith and
which are, for PVNGS, routine in nature and which the Lessee has no
reason to believe will not be timely obtained and (iii) as may be
required under Applicable Law not now in effect. No Governmental Action
(except Governmental Action as may be required by any Governmental
Authority of or in New York or Delaware) is or will be required (a) in
connection with the participation by the Owner Trustee, the Indenture
Trustee, the Owner Participant or the Loan Participant in the
consummation of the transactions contemplated by this Participation
Agreement, any other Transaction Document or any Financing Document or
(b) to be obtained by any of such Persons during the term of the
Facility Lease with respect to Unit 1 except such Governmental Actions
(i) as have been, or on or before the Closing Date will have been, duly
obtained, given or accomplished, with true copies thereof delivered to
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the Owner Participant, the Owner Trustee and the Loan Participant prior
to the closing Date, (ii) as may be required by Applicable Law not now
in effect, (iii) as may be required in consequence of any transfer of
ownership of the Undivided Interest or the Real Property Interest by
the Owner Trustee, (iv) as would be required by existing Applicable Law
upon termination or expiration of the Facility Lease in connection with
taking possession of an interest in Unit 1, (V) as may be required by
existing Applicable Law if, after termination or expiration of the
Facility Lease, the Lessee should provide transmission services for the
Owner Trustee or cease to be agent for the Owner Trustee as provided
under the Assignment and Assumption, or (vi) as may be required in
consequence of any exercise of remedies or other rights by any such
Person in connection with taking possession of an interest in Unit 1.
(6) Securities Act. Neither the Lessee nor anyone acting on its
behalf has directly or indirectly offered or sold any Bond, any interest
in any Note, any note issued with respect to any other undivided
interest in Unit 1, the Undivided Interest or any other undivided
interest in Unit 1, the Facility Lease or any other lease of an
undivided interest in Unit 1, or any similar security or lease, or any
interest in any security or lease the offering of which, for purposes of
the Securities Act, would be deemed to be part of the same offering as
the offering of the aforementioned securities or leases, in either case,
or solicited any offer to acquire any of the aforementioned securities
or leases in violation of Section 5 of the Securities Act, and except as
contemplated by this Participation Agreement, neither the Lessee nor any
one authorized to act on its behalf will take any action which would
subject the issuance or sale of any Note or any interest in the Facility
Lease or any other debt instrument (other than the Refunding Bonds)
issued or to be issued to finance the Undivided Interest to the
registration requirements of such Section 5.
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(7) Title to the Undivided Interest and Real Property
Interest; Security Interest. On the Closing Date, (A) good and
marketable title to the Undivided Interest and the related Generation
Entitlement Share will be duly, validly and effectively conveyed and
transferred to the Owner Trustee, free and clear of all Liens, except
Permitted Liens (other than those described in clause (ii) of the
definition of such term and that portion of clause (iv) of such
definition relating to Liens for taxes being contested), (B) good and
marketable title to the Real Property Interest will be duly, validly
and effectively conveyed and transferred to the Owner Trustee, as
provided in the Deed and the Assignment of Beneficial Interest, (C) the
Lessee will have good and marketable title to its ownership interest in
the Retained Assets, free and clear of all Liens except Permitted
Liens, the Lien of the Existing Mortgage and matters disclosed in the
title report referred to in Section 11(a)(33), (D) the Lessee will have
good and valid title to its ownership interest in the PVNGS Site, (E)
Unit 1 will be wholly located on the PVNGS Site without any material
encroachments by any portion thereof on any other property, (F) all
filings and recordings necessary or advisable to perfect the Owner
Trustee's right, title and interest in and to the Undivided Interest,
the related Generation Entitlement Share and the Real Property
Interest, and to perfect for the benefit of the Indenture Trustee and
the holders of the Notes the first priority security interest, mortgage
and assignment of rents provided for in the Indenture, will have been
duly made and (G) no other action, including any action under any
fraudulent conveyance statute, will be required to protect the title
and interests of the Owner Trustee in and to the Undivided Interest,
the related Generation Entitlement Share and the Real Property Interest
against the claims of all Persons other than the ANPP Participants
under the AMPP Project Agreements (in accordance with the terms
thereof), or to perfect such first priority security interest, mortgage
and assignment of rents in favor of the Indenture Trustee.
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(8) Non-Interference. None of the Permitted Liens will, on and
after the Closing Date, materially interfere with the use or possession
of the Undivided Interest, the related Generation Entitlement Share or
the Real Property Interest or the use of or the exercise by the Owner
Trustee of its rights under the Bill of Sale, the Deed, the Assignment
of Beneficial Interest and the Assignment and Assumption with respect
to, the interests in PVNGS granted or to be granted under the Bill of
Sale, the Deed, the Assignment of Beneficial Interest and the
Assignment and Assumption.
(9) Personal Property. Unit 1, based on the agreements of the
Lessee and the other ANPP Participants in the ANPP Participation
Agreement and of the Lessee and the Owner Trustee herein and in the
other Transaction Documents, is to the full extent permitted by
Applicable Law personal property under the laws of the State of Arizona.
(10) Location of Chief Executive Office. The chief executive
office and place of business of the Lessee and the office where it keeps
its records concerning its accounts or contract rights is at Alvarado
Square, Albuquerque, Bernalillo County, New Mexico 87158.
(11) Financial Statements. The consolidated balance sheets of
the Lessee and subsidiaries (A) as of December 31, 1985 and 1984,
respectively, and the related consolidated. statements of earnings,
retained earnings and changes in financial position for each of the
years in the three-year period ended December 31, 1985, together with
the notes accompanying such financial statements, all certified by Peat,
Marwick, Mitchell & Co., and (B) as of March 31, 1986 and 1985,
respectively, and the related consolidated statements of earnings,
retained earnings and changes in financial position for the three-month
period ended March 31, 1986 and March 31, 1985 respectively, all
certified by the Controller or an Assistant Controller of the Lessee, as
furnished to the Owner Participant, fairly present the financial
position of the Lessee and its subsidiaries taken as a whole at each
such date and the results of their operations for each of the
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periods then ended, in conformity with generally accepted accounting
principles applied on a consistent basis and in conformity with
applicable Accounting Practice.
(12) Disclosure. None of the financial statements to which
reference is made in paragraph 11 above nor the reports to which
reference is made in this paragraph 12 nor any (other than publicly
available documents of any Governmental Authority, (other than documents
prepared by or on behalf of the Lessee), and any press reports,
insurance reports, if delivered on or before the Closing Date, and
appraisals) certificate., written statement or other document furnished
to the Owner Participant or the Appraiser by the Lessee in connection
with the transactions contemplated hereby (under the circumstances at
the time and for the purposes for which any statement made therein was
made) contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein not misleading.
There is no fact known to the Lessee that materially and adversely
affects or, so far as the Lessee can now reasonably foresee, is likely
to materially and adversely affect, the business or financial condition
of the Lessee or any material portion of its properties or its ability
to perform its obligations under this Participation Agreement or any
other Transaction Document or any Financing Document to which the Lessee
is, or is to become, a party. The Lessee has heretofore delivered to the
Owner Participant the Lessee's Annual Report on Form 10-K for the year
ended December 31, 1985, the Lessees Quarterly Report on Form l0-Q for
the quarter ended March 31, 1986 and the Current Reports on Form 8-K
filed on February 12, 1985 (as amended by Form 8 filed April 12, 1985),
January 14, March 3, June 30 and July 16, 1986 and to be filed on or
about July 31, 1986.
(13) Litigation. Except as disclosed in the reports to which
reference is made in paragraph 12 above, there is no action, suit,
investigation or proceeding pending or, to the knowledge of the
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Lessee, threatened against the Lessee before any court, arbitrator or
administrative or governmental body which questions the validity or
enforceability of this Participation Agreement or any other Transaction
Document or any Financing Document to which the Lessee is, or is to
become, a party, or which, individually or in the aggregate, if decided
adversely to the interests of the Lessee, would have a material adverse
effect on the business or financial condition of the Lessee or
materially and adversely affect the ability of the Lessee to per-form
its obligations under this Participation Agreement or any other
Transaction Document or any Financing Document to which it is or is to
become a party.
(14) Tax Returns. The Lessee has filed all Federal, state, local
and foreign, if any, tax returns which were required to be tiled, and
has paid all Taxes shown to be due and payable on such returns and has
paid all other Taxes in respect of the Lessee's interest in Unit 1 and
in the PVNGS Site which are payable by the Lessee to the extent the same
have become due and payable and before they have become delinquent,
except (i) for any Taxes the amount, applicability or validity of which
may be in dispute and which are currently being contested in good faith
by appropriate proceedings and with respect to which the Lessee has set
aside on its books reserves (segregated to the extent required by
generally accepted accounting principles) deemed by it to be adequate
and (ii) for any Taxes relating to PVNGS in respect of which the
Operating Agent has not given notice to the Lessee that the same are due
and payable. The Federal income tax returns of the Lessee have been
audited by the ms for taxable years through 1980.
(15) ERISA. In reliance upon, and subject to the accuracy of,
the representations made by the Loan Participant in Section 6(a)(5) and
the Owner Participant in Section 7(a)(9), the execution and delivery of
this Participation Agreement, the other Transaction Documents and the
Financing Documents by the Lessee will not involve any prohibited
transaction within the meaning of ERISA or section 4975 of the Code.
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(16) Regulation. So long as the Facility Lease is in effect,
assuming the proper filing of Form U 7D with the SEC on or within 30
days after the Closing Date, under Applicable Law now in effect, neither
the Loan Participant, the Owner Participant, FNB nor the Owner Trustee
will be or become, solely by reason of either its entering into this
Participation Agreement or any other Transaction Document to which any
of them is, or is to become, a party, or the transactions contemplated
hereby or thereby, subject to regulation (i) as an "electric utility",
an "electric utility company", a "public utility", a "public utility
company", a "holding company", or a "public utility holding company" by
any Federal, state (other than, as to the Owner Participant, New York,
as to which no representation. or warranty is given) or local public
utility commission or other regulatory body, authority or group
(including, without limitation, the SEC, the FERC, the MMPSC or the
Arizona Corporation Commission). or (ii) in any manner by the NRC. The
Lessee is not, and covenants that (except in connection with a
transaction permitted by Section l0(b)(3)(ii) hereof) it will not
become, a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of
the Holding Company Act. The Lessee is not subject to regulation by the
Arizona Corporation Commission as a public utility or a public service
corporation.
(17) Authorizations, etc. The Lessee has not failed to obtain
any Governmental Action or other authorization, license, approval,
permit, consent, right or interest, where a failure to obtain such would
materially and adversely affect the ability of the Lessee to carry on
its business as presently conducted or as described in the Registration
Statement.
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(18) No Default, etc. The Lessee is not in default, and no
condition exists that, with the giving of notice or lapse of time or
both, would constitute a default by the Lessee, under any material
mortgage, deed of trust, indenture, lease, contract or other instrument
or agreement to which the Lessee is a party or by which it or any of
its properties or assets may be bound.
(19) Certain Documents. True and correct copies of the ANPP
Participation Agreement, the Material Project Agreements and the
Existing Mortgage have been delivered to the Owner Participant's Special
Counsel for and on behalf of the Owner Participant prior to the date of
execution hereof. No ANPP Project Agreement will, on and after the
closing Date, materially and adversely interfere with ( i ) (except for
the AMP? Participation Agreement in the case of the Generation
Entitlement Share only) the title of the Owner Trustee to the Undivided
Interest, the related Generation Entitlement Share or the Real Property
Interest or (ii) except for the ANPP Participation Agreement, the use
of, or the exercise by the Owner Trustee of its rights under the
Facility Lease, the Deed, the Assignment of Beneficial Interest and the
Assignment and Assumption with respect to, the Undivided Interest, the
related Generation Entitlement Share, and the interests in the PVNGS
Site (including the Real Property Interest) granted or to be granted
under the Deed, the Assignment of Beneficial Interest and the Assignment
and Assumption. No payment default or other default of a material nature
by the Lessee has occurred and is continuing under the Existing Mortgage
or any ANPP Project Agreement. The AMPP Participation Agreement and each
other ANPP Project Agreement are in full force and effect and no breach
of any thereof, to the Lessee's knowledge, by any other party thereto
has occurred and is continuing, except where the failure to be in force
and effect or such breach would not have a material and adverse effect
on the Undivided Interest, the related Generation Entitlement Share, the
Real Property Interest, Unit 1 or the rights, interests and benefits of
the Owner Trustee or the Owner Participant under any Transaction
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Document. Upon execution and delivery of the Mortgage Release and the
recordation thereof or of UCC releases in respect thereof, (i) the
mortgagee and secured party thereunder will have released the lien of
the Existing Mortgage on the Undivided Interest, the related Generation
Entitlement Share and the Real Property Interest and (ii) the rights of
the Owner Trustee in the Undivided Interest and the Real Property
Interest and the related Generation Entitlement Share will not be, and
will not become, subject or subordinate to the rights of any Person,
except the Indenture Trustee under the Indenture and the ANPP
Participants to the extent expressly set forth in the ANPP
Participation Agreement (as in effect on the Closing Date) and except
as may otherwise expressly be permitted by the Facility Lease. The lien
of the Existing Mortgage does not extend to rights of PNM under
Transaction Documents (other than the Lessee's leasehold interest under
the Facility Lease) or to the Generation Entitlement Share related to
the Undivided Interest. Neither Section 15.6.3.5 of the ANPP
Participation Agreement nor Section 8(c)(3) of this Participation
Agreement (i) requires the Owner Trustee to accept any cash bid
referred to therein or (ii) otherwise materially impedes the Owner
Trustee's right, upon a failure by the Lessee to purchase or otherwise
reacquire the Undivided Interest and the Real Property Interest, to
conclude a sale or lease to a Person constituting a "Transferee" under
Section 15.10 of the ANPP Participation Agreement
(20) Unit 1. The description of unit 1 set forth in Exhibit B
to the Bill of Sale is correct and sufficiently complete to identify
such property.
(21) Investment Company Act. The Lessee is not, and will not
become1 an "investment company or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act.
(b) Agreements of Lessee.
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(1) Delivery of Documents. The Lessee agrees that it will
deliver to the Owner Participant and the Loan Participant (and, in the
case of sections l0(b)(1)(iii) and (v) hereof, the Owner Trustee)
(i) Financial Statements: (A) as soon as practicable, and
in any event within 120 days, after the end of each fiscal year
of the Lessee, a consolidated balance sheet of the Lessee and
subsidiaries as of the end of such fiscal year and related
consolidated statements of earnings, retained earnings and
changes in financial position for such year, all in reasonable
detail and certified in an opinion by a nationally recognized
term of independent public accountants, and the annual and
interim reports of the Lessee to its stockholders as soon as the
same have been mailed to such stockholders, (B) as soon as
practicable, and in any event within 60 days, after the end of
each fiscal quarter (other than the last fiscal quarter) of each
fiscal year of the Lessee, a consolidated balance sheet of the
Lessee and subsidiaries as of the end of said period and a
related consolidated statement ~f earnings, retained earnings
and changes in financial position for said period, all in
reasonable detail, and certified by the Controller or an
Assistant Controller or the Chief Financial Officer of the
Lessee and (C) as soon as practicable after the same have been
filed, a copy of all documents filed by the Lessee with the SEC
pursuant to the reporting requirements of the securities
Exchange Act;
(ii) Other Reports: promptly upon their becoming
available, any registration statement, offering statement,
investment memorandum or prospectus prepared by the Lessee in
connection with the public offering of securities (other than
public offerings of securities under employee stock option,
consumer stock or dividend reinvestment plans);
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(iii) Notice of Default: promptly upon the Lessee becoming
aware of the existence thereof, written notice specifying any
condition which constitutes a Default or an Event of Default or
a default by any ANPP Participant under the ANPP Participation
Agreement and the nature and status thereof;
(iv) Annual Certificate: within 120 days after the end of
each fiscal year of the Lessee, a certificate of the Lessee,
signed by the Controller or an Assistant Controller or the Chief
Financial Officer of the Lessee, to the effect that such officer
has reviewed, or caused to be reviewed by individuals under his
supervision, this Participation Agreement and each other
Transaction Document and each Financing Document to which the
Lessee is a party and has made, or caused to be made under his
supervision, a review of the transactions contemplated hereby
and thereby and the condition of the Lessee during such
preceding fiscal year, and such review has not disclosed the
existence during such fiscal period, nor does such officer have
knowledge of the existence as at the date of such certificate,
of any condition or event that constitutes a Default or Event of
Default or, if any such condition or event exists, specifying
the nature and period of existence thereof and any action the
Lessee has taken, is taking, or proposes to take with respect
thereto;
(v) Opinion of Counsel: within 120 days after the end of
each fiscal year of the Lessee, an opinion or opinions,
satisfactory to the Owner Participant, the Owner Trustee, the
Collateral Trust Trustee and the Indenture Trustee, of Keleher &
McLeod, P.A., as general counsel for the Lessee, Snell & Wilmer,
as special Arizona counsel for the Lessee, and/or other counsel
acceptable to the Owner Participant (A) either to the effect
that (1) all filings and recordations (or refilings and
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rerecordations) required to (i) convey to the Owner Trustee,
and establish, preserve, protect and perfect the title of the
Owner Trustee to, the Undivided Interest, the related
Generation Entitlement Share and the Real Property Interest
and establish, preserve and protect the Owner Trustee's rights
under this Agreement and the other Transaction Documents, and,
(ii) so long as any Note is Outstanding, grant, perfect and
preserve the security interest of the Indenture Trustee in the
Lease Indenture Estate have been duly made, or (2) no such
additional filings, recordations, refilings or rerecordations
are necessary, to (i) convey to the Owner Trustee, and
establish, preserve, protect and perfect the title of the
Owner Trustee to, the Undivided Interest, the related
Generation Entitlement Share and the Real Property Interest
and establish, preserve and protect the Owner Trustee's rights
under this Agreement and the other Transaction Documents, and
(ii) so long as any Note is Outstanding, grant, perfect and
preserve the security interest of the Indenture Trustee in the
Lease Indenture Estate and (B) specifying the particulars of
all action required during the period from the date of such
opinion through the last day of the next succeeding calendar
year, including, in the case of each UCC continuation
statement required to be filed during such period, the office
in which each such continuation statement is to be filed and
the filing date and filing number of the original financing
statement or fixture filing to be continued, and the dates
within which such continuation statement may be filed under
Applicable Law; such opinion shall also address such
additional matters relating to actions taken by the Lessee
pursuant to Section 1O(b)(2) as the Loan Participant or the
Owner Participant may reasonably request;
(vi) ANPP Information: upon receipt by the Lessee, copies or
advice of all Systematic Assessment of Licensee Performance
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Reports (or comparable successor report) and of all material
notices, data, information and other written communications
received by the Lessee under or pursuant to any ANPP Project
Agreement or otherwise with respect to Unit 1, PVNGS or the
PVNGS Site, subject in each case to applicable confidentiality
undertakings with respect thereto, unless prohibited by
Applicable Law;
(vii) Other PVNGS Information: the Lessee having undertaken to
furnish a letter to the Owner Participant to be dated August
12, 1986, describing its internal procedures for monitoring
PVNGS and reporting to the Owner Participant with respect
thereto, prior writ. ten notice of any material change in such
procedures; and, upon receipt by the Lessee, copies or advice
of all notices of violation or other material communications
from the NRC and all notices of nuclear incidents or other
material occurrence at PVNGS given to the NRC;
(viii) Annual PVNGS Report: within 120 days after the end of
each fiscal year of the Lessee, a certificate of the Lessee
with respect to the status and operations of Unit 1 for such
fiscal year and current information respecting the status of
decommissioning funding arrangements for Unit 1;
(ix) Information Relating to Weighted Annual Lease Rate
Factor under New Mexico Order: through the Refunding Date,
promptly after any change (other than a change resulting from
changes in the interest rate borne from time to time by the
Initial Series Notes) in the "weighted annual lease rate factor"
referred to in Section 13(c) of the Facility Lease, a notice
specifying the amount of such change,. the amount of such factor
after giving effect to such change and the event or events which
resulted in such change and, promptly following the Owner
Participant's request therefor, from time to time, such other
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information regarding such factor and any events which have
resulted or may result in a change therein; and
(x) Requested Information: with reasonable promptness,
such other data and information as to the business and
properties of the Lessee or as to Unit 1, PVNGS or the PVNGS
Site as from time to time may be reasonably requested by the
Owner Participant, subject in each case to applicable
confidentiality undertakings with respect thereto, unless
prohibited by Applicable Law.
(2) Further Assurances. The Lessee will cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as the Owner Participant may from time to time
reasonably request in order to carry out more effectively the intent and
purposes of this Participation Agreement, the other Transaction
Documents and the Financing Documents, and the transactions contemplated
hereby and thereby. The Lessee will cause the financing statements (and
continuation statements with respect thereto) and the documents
enumerated and described in Schedule 3, and all other documents
necessary or advisable in that connection, to be recorded or filed at
such places and times, and in such manner, and will take all such other
actions or cause such actions to be taken, as may be necessary or
reasonably requested by the Owner Participant, the Collateral Trust
Trustee, the Owner Trustee or the Indenture Trustee, in order to
establish, preserve, protect and perfect the title of the Owner Trustee
to the Undivided Interest, the related Generation Entitlement share and
the Real Property Interest, and the Owner Trustee's rights and interests
under this Participation Agreement and the other Transaction Documents
and, so long as any Note is Outstanding, the first and prior security
interest of the Indenture Trustee in the Lease Indenture Estate and the
Indenture Trustee's rights under this Participation Agreement and the
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other Transaction Documents, all referred to and included under the
granting clause of the Indenture.
(3) Covenants. The Lessee covenants and agrees as follows:
(i) Maintenance of Corporate Existence, etc. The Lessee
shall at all times maintain its existence as a corporation under
the laws of the State of New Mexico, except as permitted by
paragraph (ii) below. The Lessee will do or cause to be done all
things necessary to preserve and keep in full force and effect
its rights (charter and statutory) and franchises; provided,
however, that the Lessee may discontinue any right or franchise
if its board of directors shall determine that such
discontinuance is necessary or desirable in the con duct of its
business and does not materially and adversely affect or
diminish any right of the Owner Participant or the Loan
Participant.
(ii) Merger, Sale, etc.: Owner Participant. Without the
consent 6f the Owner Participant, the Lessee shall not (1)
consolidate with any Person, (2) merge with or into any Person,
or (3) except in connection with normal dividend policy of the
Lessee, convey, transfer, lease, or dividend (other than
transfers and dividends described in the Lessee's proxy
statement dated April 11, 1986 and transfers and conveyances
constituting sale and leaseback transactions under the AMP?
Participation Agreement) to any Person more than 5% of its
assets, including cash, in any single transaction or series of
related transactions; unless, immediately after giving effect to
such transaction:
(A) the Person who is the Lessee immediately
following such consolidation, merger, conveyance,
transfer or lease (the Surviving Lessee) shall be a
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corporation or (with the prior consent of the Owner
Participant, which consent shall not be unreasonably
withheld) other legal entity which (i) is organized
under the laws of the United States of America, a state
thereof or the District of Columbia, (ii) is a "public
utility" under applicable state and Federal laws, (iii)
is an ANPP Participant under the ANPP Participation
Agreement with respect to Unit 1 (including the
Undivided Interest), (iv) if other than the Lessee
immediately prior to such transaction, shall have
assumed each covenant and condition of the Lessee under
the ANPP Participation Agreement and each other ANPP
Project Agreement and (v) holds a valid and subsisting
license from the NRC to possess Unit 1 (including the
Undivided Interest);
(B) the Surviving Lessee, if other than the
Lessee immediately prior to such transaction, shall
execute and deliver to the Owner Participant an
agreement, in farm and substance reasonably
satisfactory to the Owner Participant, containing the
assumption by the Surviving Lessee of each covenant
and condition of this Participation Agreement, each
other Transaction Document and each Financing
Document to which the Lessee immediately prior to
such transaction was a party immediately preceding
such transaction;
(C) no Default (other than a failure to deliver
documents and other information specified in Section
10(b)(l)(vi), (vii) or (viii) hereof), Event of
Default, Event of Loss or Deemed Loss Event shall
have occurred and be continuing;
(D) the Bonds (or, if the Bonds are not then
rated, the preferred stock of
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6091.50.2831.27:2
the Surviving Lessee) after giving effect to such
transaction, (1) shall be rated at least "investment
grade" by Standard & Poor's Corporation and Moody's
Investors Service, Inc. and (2) shall have an
investment rating by Standard & Poor's Corporation and
Moody's Investors Service, Inc. not less than one
'smallest notch" below the rating assigned to the Bonds
(or, if the Bonds are not then rated, the preferred
stock of the Surviving Lessee) immediately prior to
such transaction (or, if neither of such rating
organizations shall rate the Bonds (or, if applicable,
the preferred stock of the surviving Lessee) at the
time, by any nationally recognized rating organization
in the United States of America);
(E) the Surviving Lessee shall have a Minimum
Net Worth;
(F) the Surviving Lessee shall have delivered to
the Qwner Participant and the Indenture Trustee an
Officers' Certificate and an opinion, reasonably
satisfactory to the Owner Participant, of counsel to
the Surviving Lessee, each stating that (1) such
transaction complies with this subparagraph (ii) and
(2) all conditions precedent to the consummation of
such transaction have been satisfied and any
Governmental Action required in connection with such
transaction has been obtained, given or accomplished;
(G) the Surviving Lessee shall have delivered to
the Owner Participant an opinion, reasonably
satisfactory to the Owner Participant, of independent
counsel (if other than nudge Rose Guthrie Alexander &
Ferdon, such counsel to be reasonably satisfactory to
the Owner Participant) to the Surviving Lessee
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6091.50.2831.27:2
stating that such transaction does not and will not
cause a Loss (as defined in the Tax Indemnification
Agreement);
(H) such transaction is otherwise permitted by
and in accordance with the ANPP Participation
Agreement; and
(I) the Coverage Ratio of the Surviving Lessee
shall be at least 1.6 to 1.
Upon the consummation of such transaction the Surviving Lessee,
if other than the Lessee immediately prior to such transaction,
shall succeed to, and be substituted for, and may exercise
every right and power of, the Lessee immediately prior to such
transaction under this Participation Agreement and each other
Transaction Document and each Financing Document to which the
Lessee immediately prior to such transaction was a party
immediately preceding the date of such transaction, with the
same effect as if the Surviving Lessee had been named herein
and therein.
(iii) Merger, Sale, etc.: Bondholders. The Lessee shall not
enter into any transaction constituting a consolidation, merger,
conveyance, transfer, lease or dividend not permitted by Section
l0(b)(3)(ii), irrespective of any consent or waiver of the Owner
Participant, unless immediately after giving effect to such
transaction, the Bonds (or, if the Bonds are not then rated, the
preferred stock of the Surviving Lessee), after giving effect to
such transaction, shall be rated at least "investment grade" by
Standard & Poor's Corporation and Moody's Investors Service,
Inc.
(iv) Prior Notice to Rating Agencies. Prior to entering into
any transaction as to which the conditions set forth in
paragraphs (ii) and (iii) above shall be applicable, the Lessee
shall give notice thereof to the rating agencies specified in
such paragraphs, such notice to be sufficiently in advance of
such transaction to enable the rating agencies to respond
thereto prior to consummation thereof.
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6091.50.2831.27:2
(V) Incurrence of Debt. Without the consent of the Owner
Participant, the Lessee shall not issue or assume any secured or
unsecured indebtedness maturing more than eighteen months after
the date of issuance thereof, if, immediately after such issue
or assumption, the total amount of all secured and unsecured
indebtedness of the Lessee maturing more than one year after the
date of such issue or assumption shall exceed 65% of the
aggregate of (x) such total amount and (y) the total of the
capital and surplus of the Lessee.
(vi) Change in Chief Executive Office. The Lessee will
notify the Owner Trustee, the Owner Participant, the Loan
Participant and the Indenture Trustee promptly after any change
of location of its chief executive office and place of business,
principal place of business or place where the Lessee maintains
its business records.
(vii) No Petition Agreement. Prior to the 181st day
following the payment in full of the Bonds and the discharge in
accordance with its terms of the Collateral Trust Indenture, the
Lessee will not file a petition, or join in the filing of a
petition, seeking reorganization, arrangement, adjustment or
composition of or in respect of the Loan Participant under the
Bankruptcy Code or any other applicable Federal or state law or
the law of the District of Columbia.
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(viii) ANPP Project Agreements. Except where the failure to
do so would not have a material and adverse effect on the
Undivided Interest, the Real Property Interest, Unit 1 or the
rights, interests and benefits of the Owner Trustee or the Owner
Participant under any Transaction Document the Lessee (without
limiting its obligations under the next sentence) at all times,
unless the Owner Participant shall otherwise consent, (1) will
perform its obligations under and comply with the terms of each
ANPP Project Agreement to be complied with by it, (2) will
exercise its rights under the ANPP Participation Agreement to
maintain each ANPP Project Agreement in full force and effect,
(3) will keep unimpaired all of the Lessee's rights, powers and
remedies under each ANPP Project Agreement and prevent any
forfeiture or impairment thereof, (4) will enforce the ANPP
Participation Agreement in accordance with its terms and (5)
will not take or fail to take or join in (i) any action with
respect to1 nor accept or approve any amendment to or any other
change in, the ANPP Participation Agreement or any other ANPP
Project Agreement, or (ii) any action or change the effect of
which would be to relieve the Lessee of any obligation under the
ANPP Participation Agreement on or after the Closing Date. The
Lessee will not, unless the Owner Participant otherwise
consents, accept or approve any amendment to any ANPP Project
Agreement the effect of which would be to (A) reduce the
Generation Entitlement Share related to the Undivided Interest,
(B) impose, directly or indirectly, at any time on the Owner
Trustee or the Owner Participant any obligations (unless such
Person is then an ANPP Participant), (C) discriminate against
(x) the Owner Trustee or the Owner Participant in its capacity
as lessor in a sale and lease-back transaction or (y) any
present or future ANPP Participant because such ANPP Participant
derived or will derive its status as "Participant" under the
ANPP Participation Agreement from a lessor in a sale and
lease-back transaction, (K) deprive the Owner Trustee or the
Owner Participant, as the case may be, of the benefit of
Sections 15.2.2, 15.10 and 32.1 of the ANPP Participation
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Agreement (or any comparable successor provisions), or (F) amend
or otherwise change section 15.10 of the ANPP Participation
Agreement. The Lessee shall (A) provide copies of any proposed
amendment to or modification of the ANPP Participation Agreement
to the Owner Participant not less than 45 days prior to the
execution thereof by the Lessee (except where the Lessee is
unaware thereof 45 days prior to such execution, in which case
the Lessee shall provide notice thereof as promptly as possible
after becoming so aware) and (B) upon such execution furnish to
the Owner Participant a copy of any such amendment or
modification as executed. The Lessee will not, except as
permitted by paragraph (ii) above or by the Assignment and
Assumption, sell, transfer, assign or otherwise. dispose of all
or any of its rights or interests in and to PVNGS.
(ix) Notes and Bands. The Lessee will not, and will not
permit any of its Affiliates to, acquire any of the Notes or,
except in connection with the selection of Bonds for redemption
pursuant to the Collateral Trust Indenture, the Bonds.
(x) Cooperation. The Lessee will cooperate with the Owner
Participant and the Owner Trustee in obtaining the valid and
effective issue, or, as the case may be, transfer or amendment
of all Governmental Actions (including, but without limitation,
the License) necessary or, in the opinion of the Owner
Participant, desirable for the ownership, operation and
possession of the Undivided Interest, the Real Property Interest
or any portion of Unit 1 represented thereby by the Owner
Trustee or any transferee, lessee or assignee thereof for the
period from and after the Lease Termination Date. The Lessee
agrees to accept and cooperate in receiving any transfer of the
Owner Participant's right, title and interest in the Trust
Estate made pursuant to Section 7(b)(4)
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6091.50.2831.27:2
(xi) Decommissioning. (A) The Lessee will comply with its
obligations under Applicable Law concerning the decommissioning
and retirement from service of Unit 1 (which term shall include,
for all purposes of this paragraph (xi), (i) the cost of
removal, decontamination and disposition of equipment and
fixtures, the cost of safe storage for later removal,
decontamination and disposal and the cost of entombment of
equipment and fixtures, and (ii) the cost of (x) razing of Unit
1, (y) removal and disposition of debris from the PVNGS Site and
(z) restoration of relevant portions of the PVNGS Site) . If
Applicable Law or Governmental Action shall not, on or before
December 31, 1990, impose upon the Lessee the obligation to
create, fund and maintain an external reserve fund dedicated to
paying all the costs of decommissioning and removing from
service the Undivided Interest, then the Lessee will create and
maintain the Decommissioning Fund; if Applicable Law or
Governmental Action shall thereafter impose upon the Lessee an
obligation to create and maintain such a fund, any fund in
compliance with Applicable Law or such Governmental Action shall
be deemed satisfactory to the Owner Participant for purposes of
the preceding sentence; provided, however, the Lessee shall in
any and all events maintain and fund such an external reserve in
accordance with prudent utility practice and thereafter review
such fund, at least every five years after its creation, and
modify the same as to amount or rate of accumulation to bring
the same, if necessary, into conformity with prudent utility
practice. (B) Except to the extent provided in clauses (C) and
(D) below, as between the Lessee, the Owner Trustee, the Owner
Participant and any transferee (including by way of lease) or
assignee of any of the Lessor's or the Owner Participant's
right,
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title or interest in Unit 1, the Lessee agrees to pay, be
solely responsible for, and to indemnify such parties against,
all costs and expenses relating or allocable to, or incurred in
connection with, the decommissioning and retirement from
5ervice of Unit 1, notwithstanding (i) the occurrence of the
Lease Termination Date, any Event of Default, Default, Event of
Loss, Deemed Lass Event or any other event or occurrence, (ii)
any provision of any Transaction Document, or other document,
instrument or agreement, including the ANPP Participation
Agreement, (iii) any provision of the License or any other
license or permit, or (iv) any Applicable Law, charter or
by-law provision, Governmental Action or other impediment,
including, without limitation, the bankruptcy or insolvency of
the Lessee, either now or hereafter in effect; it being
understood that the obligations of the Lessee under this clause
(3) are and shall be absolute and unconditional. (C) In the
event that (i) the Facility Lease shall have expired upon
expiration (or early termination pursuant to section 14(e) of
the Facility Lease) of the Lease Term (other than in connection
with an Event of Loss, Deemed Loss Event or Event of Default)
and (ii) thereafter the Lessor shall (1) re-lease the Undivided
Interest to any Person or (2) retain the Undivided Interest and
sell power and energy from its Generation Entitlement Share
through PNM, as agent, then after the Lessor has received (x)
in the case of clause (1) above, gross rents in an aggregate
amount (when discounted back to such Lease Termination Date at
a rate per annum equal to the Prime Rate) equal to 20% of
Facility Cost, or (y) in the case of clause (2) above, net
electric revenues in an aggregate amount (discounted as
aforesaid) equal to 20% of Facility Cost, the Lessor shall
thereafter reimburse the Lessee in respect of the
decommissioning obligation of the Lessee hereunder in an amount
equal to any further rent received or proceeds received
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from the sale of power and energy to the extent that such rent
or proceeds are attributable to the decommissioning obligation
of the Lessee under this Section l0(b)(3)(xi) with respect to
the period from and after such Lease Termination Date (payable
on an annual basis with respect to each year or portion thereof
during the term of such lease referred to in clause (1) above
or such agency period referred to in clause (2) above);
provided, however, that when such amount has been paid the
Lessor shall be relieved of all obligations to make further
reimbursement to the Lessee for such purpose. (D) In the event
that (i) the Facility Lease shall have expired upon the
expiration (or early termination pursuant to Section 14(e) of
the Facility Lease) of the Lease Term (other than in connection
with an Event of Loss, Deemed Loss Event or Event of Default,
(ii) the Lessor shall sell (other than in connection with the
termination by the Lessee of the Facility Lease for
obsolescence pursuant to Section 14 of the Facility Lease) the
Undivided Interest to any Person (including the Lessee in
connection with the exercise by the Lessee of the purchase
option provided by Section 13(b) of the Facility Lease), and
(iii) the net sales proceeds (discounted back to such Lease
Termination Date at a rate per annum equal to the Prime Rate)
received by the Lessor in connection therewith shall exceed 20%
of Facility Cost (reduced by the percentage of Facility Cost,
if any, actually realized by the Lessor pursuant to clause (C
above), then the Lessor shall reimburse the Lessee in respect
of the decommissioning obligation of the Lessee hereunder in an
amount equal to any net proceeds of such sale to the extent
that such proceeds are attributable to the decommissioning
obligation of the Lessee under this Section l0(b)(3)(xi) with
respect to the period from and after the date of such sale
through the remaining useful life of Unit 1 (whereupon the
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reimbursement obligations of the Lessor under this Section
l0(b)(3)(xi) shall terminate); provided, however, that any such
reimbursement shall not reduce the amount of such net sales
proceeds retained by the Lessor to an amount (discounted as
aforesaid) equal to less than 20% of Facility Cost (reduced by
the percentage of Facility Cost, if any, actually realized by
the Lessor pursuant to clause (C) above). The reimbursement
obligations of the Lessor under clauses (C) and (D) above are
for the sole benefit of the Lessee, and no other Person shall be
a third party beneficiary with respect thereto. In the event
that the Lessee and the Lessor shall not agree as to the amount
of gross rents, net electric revenues or net sales proceeds
attributable to the decommissioning obligation of the Lessee
under this Section 10(b)(3)(xi), such amount shall be determined
by the Appraisal Procedure. For purposes of deter mining
Facility Cost under clauses (C) and (D) of this Section
l0(b)(3)(xi), Facility Cost shall be adjusted to reflect any
inflation or deflation from the Closing Date to the time of the
determination.
(xii) Acknowledgment and Agreement.
The Lessee hereby acknowledges and agrees to the provisions of
Section 7(b)(4) of this Participation Agreement.
SECTION 11. Conditions Precedent.
(a) Owner Participant and Loan Participant Conditions. The
obligation of (x) the Loan Participant to make the Loan on the Closing Date, and
(y) the Owner Participant to make the Investment and the Real Estate Investment
on the Closing Date, shall be subject to the fulfillment on or prior to the
Closing Date of the following conditions precedent (each instrument, document,
certificate or opinion referred to below to be in form and substance
satisfactory to the Loan Participant and the Owner Participant):
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(1) Notice of Closing; Transaction Documents. Each shall have
received executed copies, or sets of executed counterparts, of (x) the
Notice of Closing, and (y) each Transaction Document (other than the
Tax Indemnification Agreement), the Mortgage Release, each Financing
Document being executed on the closing Date and such other documents.
as are contemplated by this Participation Agreement.
(2) Tax Indemnification Agreement. The Owner Participant shall
have received an executed copy of the Tax Indemnification Agreement.
(3) Authentication Request etc. The Owner Trustee shall have
delivered to the Indenture Trustee (x) a request, dated the Closing
Date, authorizing the Indenture Trustee to authenticate and deliver the
Initial Series Note to the Loan Participant upon its payment to the
Indenture Trustee, for the account of the Owner Trustee, of the
proceeds of the Loan, and (y) the Original of the Facility Lease.
(4) Due Authorization, Execution and Delivery. All of the
documents described in clauses (1) and (2) of this Section 11(a) shall
have been duly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect on the Closing
Date, and the Loan Participant and the Owner Participant shall have
received evidence as to such authorization, execution and delivery.
(5) Initial Series Note and Bond Transactions; Investment. In
the case of the Loan Participant, (A) the Loan Participant shall have
received the proceeds from the sale of the Initial Series Bonds as a
result of the consummation of the transactions contemplated by the Term
Loan Agreement, (6) the Owner Trustee shall have executed, and the
Indenture Trustee shall have authenticated and delivered to the Loan
Participant, the Initial series Note evidencing the Loan made on the
Closing Date, (C) the Collateral Trust Trustee shall have accepted the
Term Note Supplemental Indenture and shall have
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released the amount of the Loan from the lien of the Collateral Trust
indenture, and CD) the Owner Participant shall have made the Investment
and the Real Estate Investment on the Closing Date.
(6) Loan. in the case of the Owner Participant, the Loan
Participant shall have made the Loan.
(7) ANPP Administrative Committee. The ANPP Administrative
Committee shall have made the finding required by section 15.6.2 of the
ANPP Participation Agreement, and the Lessee shall have delivered
evidence of such finding having been made.
(8) No Violation. The making by the Owner Participant of the
Investment and the Real Estate Investment and by the Loan Participant
of the Loan shall not violate any Applicable Law.
(9) No Default. No Default or Event of Default or, in the case
of the, Loan Participant, Indenture Default or indenture Event of
Default, shall have occurred and be continuing.
(10) Recording and Filing. The financing statements and fixture
filings under the Uniform Commercial Code and certain Transaction
Documents, in each case as enumerated and described in Schedule 3, shall
have been duly filed or recorded in the respective places or offices set
forth in such Schedule and all recording and filing fees with respect
thereto shall have been paid.
(11) Representations and Warranties of the Loan Participant. in
the case of the Owner Participant, the representations and warranties of
the Loan Participant set forth in Section 6(a) shall be true and correct
on and as of the Closing Date with the same effect as though made on and
as of the Closing Date, and the Owner Participant shall have received an
Officers' Certificate of the Loan Participant, dated the Closing Date,
to such effect.
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(12) Opinion of the Loan Participant's Counsel. In the case of
the Owner Participant, it shall have received a favorable opinion of the
Loan Participant's counsel, dated the Closing Date and addressed to the
Owner Participant, addressing such matters relating to the transactions
contemplated hereby and by the other Transaction Documents as the Owner
Participant may reasonably request.
(13) Representations and Warranties of the Owner Participant. In
the case of the Loan Participant, the representations and warranties of
the Owner Participant set forth in Section 7(a) shall be true and
correct on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, and the Loan Participant shall have
received a certificate of an officer of the Owner Participant, dated the
Closing Date, to such effect.
(14) Opinion of the Owner Participant's Special Counsel. In the
case of the Loan Participant, it shall have received a favorable opinion
of the Owner Participant's Special Counsel, dated the Closing Date and
addressed to the Loan Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents, as the Loan Participant may reasonably request.
(15) Representations and Warranties of the Owner Trustee. The
representations and warranties of FNB and the Owner Trustee set forth in
Section 8(a) shall be true and correct on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, and
the Loan Participant and the Owner Participant shall have received a
certificate from an officer of FNB and a certificate of the Owner
Trustee, dated the Closing Date, to such effect.
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(16) Opinion of the Owner Trustee's Counsel. The Loan
Participant and the Owner Participant shall have received a favorable
opinion of the Owner Trustee's counsel, dated the Closing Date and
addressed to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant may reasonably
request.
(17) Representations and Warranties of the Indenture Trustee.
The representations and warranties of the Indenture Trustee set forth in
Section 9(a) shall be true and correct on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, and
the Loan Participant and the Owner Participant shall have received a
certificate of the Indenture Trustee, dated the closing Date, to such
effect.
(18) Opinion of the Owner Participant's Special NRC Counsel. The
Owner Participant shall have received a favorable opinion of the Owner
Participant's special NRC Counsel, dated the Closing Date and addressed
to the Owner Participant, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Owner Participant may reasonably request.
(19) Representations and warranties of the Lessee. (A) The
Representations and Warranties of the Lessee set forth in Section 10(a),
in each other Transaction Document, in the Term Loan Agreement and in
each certificate or other document to which the Lessee is a party
executed or delivered in connection with the transactions contemplated
hereby or thereby shall be true and correct on and as of the Closing
Date with the same effect as though made on and as of the Closing Date
and (3) no Default, Event of Default, Deemed Loss Event or Event of Loss
shall have occurred and be continuing and the Loan Participant and the
Owner Participant shall have received an Officers' Certificate of the
Lessee, dated the Clo5ing Date, to such effect. Such Officers'
Certificate shall state that there has been no material adverse change
in the properties, business, prospects or financial condition of the
Lessee since March 31, 1986, and no event has
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occurred since that date which would materially adversely affect the
ability of the Lessee to perform its obligations under this Participation
Agreement or any other Transaction Document to which it is or is to
become a party.
(20) Opinion of the Lessee's Special Counsel. The Loan
Participant and the Owner Participant shall have received a favorable
opinion of the Lessee's Special Counsel, dated the Closing Date and
addressed to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant shall reasonably
request.
(21) Opinion of Lessee's General Counsel. The Loan Participant
and the Owner Participant shall have received a favorable opinion of the
Lessee's General Counsel, dated the Closing Date and addressed to each
such Person, addressing such matters relating to the transactions
contemplated hereby and by the other Transaction Documents as the Loan
Participant or the Owner Participant shall reasonably request.
(22) Opinion of Lessee's Arizona Counsel. The Loan Participant and the
Owner Participant shall have received a favorable opinion of the
Lessee's Special Arizona Counsel, dated the Closing Date and addressed
to each such Person, addressing such matters relating to the
transactions contemplated hereby and by the other Transaction Documents
as the Loan Participant or the Owner Participant shall reasonably
request.
(23) Opinion of Owner Participant's Special Arizona Counsel. The Owner
Participant shall have received a favorable opinion of the Owner
Participant's Special Arizona Counsel, dated the Closing Date and
addressed to the Owner Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents as the Owner Participant shall reasonably request.
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(24) Opinion of Owner Participant's Special New Mexico Counsel. The
Owner Participant shall have received a favorable opinion of the Owner
Participant's Special New Mexico Counsel, dated the Closing Date and
addressed to the Owner Participant, addressing such matters relating to
the transactions contemplated hereby and by the other Transaction
Documents as the Owner Participant may reasonably request.
(25) Opinion of the Owner Participant's special Counsel. The Owner
Participant shall have received a favorable opinion of the Owner
Participant's Special Counsel, dated the Closing Date and addressed to
the Owner Participant, with respect to such Federal tax and other tax
matters as the Owner Participant may reasonably request.
(26) Opinion of the Loan Participant's Counsel. The Loan Participant
shall have received a favorable opinion of the Loan Participant's
Counsel, dated the Closing Date and addressed to it, with respect to
such matters as the Loan Participant shall reasonably request.
(27) Taxes. All Taxes, if any, payable in connection with the execution,
delivery, recording and filing of the Transaction Documents and all the
documents and instruments enumerated and described in Schedule 3, or in
connection with the issuance and sale of the Initial Series Note and the
Initial Series Bonds and the making by the Owner Participant of the
Investment and the Real Estate Investment, and all Taxes payable in
connection with the consummation of the transactions contemplated hereby
and by the other Transaction Documents, shall have been duly paid in
full by the Lessee.
(28) Form U-7D. A certificate on Form U-7D with respect to the Facility
Lease shall have been duly executed and delivered by the Owner Trustee
and the Owner Participant and shall be in due form for filing.
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6091.50.2831.27:2
(29) Appraisal. The Owner Participant shall have received a
letter, dated the Closing Date and addressed to the Owner Participant, from the
Appraiser containing an appraisal of the Undivided Interest, which appraisal
shall reflect the Appraiser's reasonable conclusion that (w) the fair market
value in the hands of the Owner Trustee of the Undivided Interest on the Closing
Date, taking into account the effect and existence of the Real Property
Interest, the Assignment and Assumption and the ANPP Participation Agreement, is
equal to the Purchase Price as set forth in the Notice of Closing, (x) the
estimated remaining economic useful life of Unit 1 (including the undivided
Interest) is at least 38 years and 6 months, (y) at the expiration of the first
two years of the Renewal Term the undivided Interest will have an estimated
residual value taking into account the effect and the existence of this
Participation Agreement, the Real Property Interest, the Assignment and
Assumption and the ANPP Participation Agreement, in the hands of the Owner
Trustee or a Person (unrelated to the Lessee) who could lease or purchase the
Undivided :Interest from the Owner Trustee for commercial use, equal to at least
20% of the Purchase Price, determined without including in such value any
increase or decrease for inflation or deflation during the period from the
Closing Date through the expiration of the first two years of the Renewal Term,
and (2) taking into account the effect and the existence of the Real Property
Interest, the Assignment and Assumption and the ANPP Participation Agreement,
the use of the Undivided Interest at the Lease Termination bate by any User is
feasible from an engineering and economic point of view and is commercially
reasonable.
(30) Offering and Sale at Interest. The Loan Participant,
the Owner Trustee and the Owner Participant shall have received a letter from
Kidder Peabody with respect to the offering and sale of the interests in the
transactions contemplated by this Participation Agreement and each other
participation agreement relating to an undivided interest in Unit 1.
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6091.50.2831.27:2
(31) Extension Letter. The Extension Letter shall have been
duly executed by the respective parties thereto and delivered to the
collateral Trust Trustee.
(32) Governmental Action. The Lessee shall have obtained all
Governmental Actions (including, without limitation, the New Mexico
Order and the FERC Order, which order. shall be final and
non-appealable, and the NRC Order, which order shall be final) required
or, in the opinion of the Owner Participant, advisable for the
consummation of all the transactions contemplated by this Participation
Agreement and the other Transaction Documents and the Financing
Documents in accordance with their terms
(33) Title Report Title Insurance. The Owner Participant shall have
received (i) an updated title report, dated the Closing Date, with
respect to the nuclear plant site, which report does not disclose any
exceptions materially adverse to the possession or operation of Unit 1
or the performance by the Lessee of its obligations under this
Participation Agreement and the other Transaction Documents to which the
Lessee is, or is to become, a party; and (ii) such title insurance.
policies with respect to the nuclear plant site and improvements thereon
(including the Owner Trustee's interests therein) as it shall have
reasonably requested, such policies to be in form and substance
satisfactory to the Owner Participant.
(34) No Change or Proposed Change in Tax Laws. No change shall have
occurred or been proposed in the Code or any other tax statute, the
regulations thereunder or any interpretation thereof that would
adversely affect the tax consequences anticipated by the Owner
Participant with respect to the transactions contemplated by the
Transaction Documents, unless the Lessee shall have agreed in writing to
protect the Owner Participant, in the Tax Indemnification Agreement or
otherwise, in a manner reasonably satisfactory to it, against the effect
of such change or proposed change.
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(35) Insurance. The Owner Participant shall have received a
written report from its independent insurance consultant in form and
substance satisfactory to the Owner Participant.
(36) Site Arrangement Plan. The Owner Participant's special
Counsel shall have received a site arrangement plan of the nuclear
plant site prepared subsequent to January 1, l979
(37) special Certificate of the Lessee. The Owner
Participant shall have received a certificate of the Lessee, dated
the Closing Date, to the effect that, except as set forth on the
Schedule thereto, (A) Unit 1 has been in all material respects
completed in a good and workmanlike manner and in accordance with the
plans and specifications relating thereto (as the same may have been
modified from time to time to reflect Unit 1 as actually completed),
Applicable Law (including, but without limitation, the regulations of
the NRC), the License and the AN?? Participation Agreement, (B) all
Governmental Action necessary for the commercial operation of Unit 1
(including the Undivided Interest) have been received, other than
Governmental Action that is routine in nature for PVNCS or that
cannot be obtained under Applicable Law, or is typically not applied
for, prior to the time it is required, and that the Lessee reasonably
expects to be obtained in due course, (C) the plans and
specifications relating to Unit 1 are complete in all material
respects (modified or to be modified as aforesaid) and consistent
with prudent engineering practice, (D) the testing and startup
procedures for Unit 1 were and the operation and maintenance programs
for Unit 1 are consistent with such plans and specifications,
Applicable Law and prudent engineering practice, (I) Unit 1 has been
tested in accordance with all customary testing and startup
procedures which would have been performed on or prior to the Closing
Date, and such tests and procedures indicate that Unit 1 will have
the capacity and functional ability to perform in commercial
operation, on a continuing basis, the function for which it is
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designed in accordance with such plans and specifications and has a
nominal capacity of 1,270 megawatts electric, (F) all material
Governmental Actions relating to the construction, operation or
maintenance of Unit 1 are listed in a schedule to such certificate, (G)
there is no present event or condition which would materially adversely
affect the capability of Unit 1 to operate in accordance with such
plans and specifications and (H) based upon the Lessee's present
reasonable expectations, and subject to Applicable Law, the rights and
interests made available to the ANPP Participants (including the
Lessee) pursuant to the ANPP Participation Agreement, as such rights
and interests are made available to the Owner Trustee, any successor or
assign of the Owner Trustee or any "Transferee" of the Owner Trustee
under Section 15.10 of the ANPP Participation Agreement, under and
pursuant to this Agreement, the Deed, the Assignment of Beneficial
Interest or the Assignment and Assumption, together with the rights to
be made available under and pursuant to the Assignment and Assumption,
are adequate to permit, during the period following the Lease
Termination Date or the taking of possession of the Undivided Interest
and the Real Property Interest in the exercise of remedies under
section 16 of the Facility Lease, in accordance with the ANPP Project
Agreements (i) the construction, location, occupation, connection,
maintenance, replacement, renewal, repair or removal of Unit 1, (ii)
the use, operation and possession of Unit 1, (iii) the construction,
use, operation, possession, maintenance, replacement, renewal and
repair of all alterations, modifications, additions, accessions,
improvements, appurtenances, replacements and substitutions thereof and
thereto, (iv) adequate ingress to and egress from Unit 1 for any
reasonable purpose in connection with the exercise of rights under the
Assignment and Assumption and the Owner Trustee's or any transferee's
ownership and possession of the Undivided Interest and (v) the
obtaining of nuclear fuel, of water and of transmission services to the
ANPP switchyard sufficient to enable delivery of the Generation
Entitlement share related to the undivided Interest in a commercially
efficient manner and on commercially reasonable
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terms. Nothing in the foregoing clause (H) shall be deemed to be or be
construed as a warranty by the Lessee as to the performance by the
Operating Agent of its obligations under the ANPP Participation
Agreement. Such certificate shall also be attested to by J.L. Wilkins,
Senior Vice President, Power Supply, PNM Electric, who shall state that
(i) he has made such investigation, inspection and review as he deems
necessary to make the statements in the certificate and (ii) to the best
of his knowledge, the statements of the Lessee in such certificate are
true and correct.
(38) Real Estate Appraisal. The Owner Participant shall have received an
appraisal of the Real Property Interest, which appraisal shall reflect
the appraiser's reasonable conclusion that the fair market value in the
hands of the Owner Trustee of the Real Property Interest on the Closing
Date is equal to the Real Estate Investment. Such appraisal shall cover
such other matters as the Owner Participant shall have requested.
(39) Other Unit 1 Leases. The Lessee shall have obtained the consent
required by Section 10 (b)(3)(xii) of each of the three Participation
Agreements dated as of December 16, 1985, relating to separate sale and
leaseback transactions involving undivided interests in Unit 1 in
respect of which the Lessee is lessee.
(40) opinion of Lessee's FERC Counsel. The Loan Participant and the
Owner Participant shall have received a favorable opinion of Lessee's
FERC Counsel, dated the Closing Date and addressed to each such Person,
addressing such FERC matters as the Loan Participant or the Owner
Participant may reasonably request.
(41) Other Matters. The Loan Participant and the Owner Participant shall
have received such other documents, certificates and opinions as the
Loan Participant or the Owner Participant, or their respective counsel,
shall reasonably request.
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(b) Lessee Conditions. The obligation of the Lessee to sell
and lease back the undivided Interest and the Real Property Interest on the
Closing Date pursuant to Section 4 shall be subject to the fulfillment on or
prior to the Closing Date of the following conditions precedent, in each case in
form and substance satisfactory to the Lessee:
(1) Paragraph (a) Documents. The Lessee, the Owner Trustee and
the Indenture Trustee shall have received executed copies of the
documents, certificates, opinions (other than the opinion referred to
in Section 11 (a)(25)), appraisals, letters and forms described in
paragraph (a) of this Section 11. All such opinions shall be addressed
to the Lessee, the Owner Trustee and the Indenture Trustee except the
opinions or documents to which reference is made in clauses (18), (23),
(24) and (251 of said paragraph (a).
(2) Payment of Purchase Price. The Owner Trustee shall have
paid to the Lessee an amount, in immediately available funds, equal to
the Purchase Price and the Real Estate Investment.
(3) Special Opinion of the Lessee's Special Counsel. The
Lessee shall have received a favorable opinion of the Lessee's Special
Counsel, dated the Closing Date and addressed to the Lessee, with
respect to such Federal tax and other matters as the Lessee may
reasonably request.
(4) Accountant's Letter. The Lessee shall have received a
letter satisfactory to it from Peat, Marwick, Mitchell & Co., to the
effect that, under generally accepted accounting principles and FASS
No. 13, the Facility Lease is an "operating lease".
(5) Changes in Pricing Assumptions. If any change or changes
in the Pricing Assumptions shall have occurred on or before the Closing
Date, the effect of such change or changes will not require the payment
of Basic Rent (as to be adjusted pursuant to Section 3(e)(iv) 0(pound)
the Facility Lease) on an annual basis to exceed 11.7% of Facility
Cost.
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(C) Conditions to Refunding. In addition to the limitations
set forth in Section 2(c), the obligation of the Owner Participant and the Loan
Participant to participate in a refunding of the Initial Series Note as provided
in section 2(c) shall be subject to the fulfillment on or before the Refunding
Date of the following conditions precedent (each instrument, document,
certificate or opinion to be in form and substance satisfactory to the Loan
Participant and the Owner Participant):
(1) Authentication Request, etc. The Owner Trustee shall have delivered
to the Indenture Trustee a request, dated the Refunding Date,
authorizing the Indenture Trustee to authenticate and deliver the Fixed
Rate Note to the Loan Participant against redelivery of the Initial
series Note to the Indenture Trustee for cancellation.
(2) Fixed Rate Note and Bond Transaction. (A) The Loan Participant shall
have received the proceeds from the sale of Refunding Bonds in an amount
sufficient to make the Refunding Loan, (B) the Owner Trustee shall have
executed, and the Indenture Trustee shall have authenticated and
delivered to the Loan Participant, the Fixed late Note evidencing the
Refunding Loan made on the Refunding Date and (C) the Collateral Trust
Trustee shall have accepted the Refunding Supplemental Indenture
subjecting the Fixed Rate Note to the lien of the Collateral Trust
Indenture and shall have released the Initial Series Note from the lien
of the Collateral Trust Indenture.
(3) No Default. No Default or Event of Default or Indenture
Event of Default shall have occurred and be continuing.
(4) Representations and warranties of the Owner Participant. The
representations and warranties of the Owner Participant set forth in
section 7(a) shall be true and correct on and as of the Refunding Date
with the same effect as though made on and as of the Refunding Date
(with all references to the Closing Date in such representations and
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warranties being changed to references to the Refunding Date), and the
Loan Participant shall have received a certificate of the Owner
Participant, dated the Refunding Date, to such effect.
(5) Representations and warranties of the Owner Trustee. The
representations and warranties of FNB and the Owner Trustee set forth in
Section 8(a) shall be true and correct on and as of the Refunding Date
with the same effect as though made on and as of the Refunding Date
(with all references to the Closing Date in such representations and
warranties being changed to references to the Refunding Date), and the
Loan Participant and the Owner Participant shall have received a
certificate from an officer of FNB and a certificate of the Owner
Trustee, dated the Refunding Date, to such effect.
(6) Representations and warranties of the Lessee. (A) The
representations and warranties of the Lessee set forth in Section 10(a)
shall be true and correct on and as of the Refunding Date with the same
effect as though made on and as of the Refunding Date (with all
references to the Closing Date in such representations and warranties
being changed to references to the Refunding Date), (B) no Event of
Default, Deemed Loss Event or Event of Loss shall have occurred and be
continuing and the Loan Participant and the Owner Participant shall have
received an Offic9rs' Certificate of the Lessee, dated the Refunding
Date, to such effect and (C) on the date it became effective and on the
Refunding Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading, and
the Final Prospectus did not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements contained therein not misleading under the circumstances
under which any such shall have been made.
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(7) Opinions at Counsel. The Loan Participant and the Owner
Participant shall have received a favorable opinion of each of the
Owner Participant's special Counsel, the Owner Trustee's Counsel, the
Lessee's Special Counsel and the Lessee's General Counsel, each dated
the Refunding Date and addressing such matters relating to the
transactions in connection with the Refunding Note as the Loan
Participant or the Owner Participant (or any other party hereto) may
reasonably request.
SECTION 12. Consent to Assignment of the Facility Lease;
Consent to Indenture; Consent to Assignment of Notes.
(a) Consent to Assignment of Facility Lease. The Lessee hereby
acknowledges, and consents in all respects to, the partial assignment of the
Facility Lease by the Owner Trustee to the Indenture Trustee under and pursuant
to the Indenture and agrees:
(i) to make each payment of Basic Rent and supplemental Rent due
or to become due thereunder to the extent constituting Assigned
Payments (excluding, in any event, all Excepted Payments)
directly to the Indenture Trustee at the Indenture Trustee's
Office, so long as any of the Notes shall be Outstanding and
unpaid; and
(ii) not to seek to recover any payment (other
than a payment that both the Owner Trustee and the Lessee agree
was made in mistake) made to the Indenture Trustee in accordance
with the Indenture once such payment is made.
(b) Consent to Indenture. The Lessee hereby consents in all
respects to the execution and delivery of the Indenture, and to all of the terms
thereof, and the Lessee acknowledges receipt of an executed counterpart of the
Indenture; it being understood that such consent shall not be construed to
require the Lessee's consent to any future supplement to, or amendment, waiver
or modification of the terms of, the Indenture or any Note, except to the extent
expressly provided for.
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(C) Consent to Assignment by Loan Participant. Each of the
parties hereto acknowledges that the Loan Participant is assigning its right,
title and interest in and to the Notes to the Collateral Trust Trustee as
security for the Bonds to the extent set forth in the Collateral Trust
Indenture, and each of the parties hereto consents to such assignment.
SECTION 13. Lessee's Indemnities and Agreements.
(a) General Indemnity. The Lessee agrees, whether or not any
of the transactions contemplated hereby shall be consummated and whether or not
the Facility Lease, any other Transaction Document or any Financing Document
shall have expired or have been terminated, to assume liability for, and the
Lessee does hereby agree to indemnify, protect, defend, save and keep harmless
each Indemnitee, on an After-Tax-Basis, from and against, any and all Claims
which may be imposed on, incurred by or asserted against any Indemnitee (whether
because of act or omission by such Indemnitee or otherwise and whether or not
such Indemnitee shall also be indemnified as to any such Claim by any other
Person) in any way relating to or arising out of (i) Unit 1, the Undivided
Interest, the Real Property Interest, PYNGS or the PVNGS Site, or any part of
any thereof (or any beneficial interest therein) , any ANPP Project Agreement,
the' issuance or payment of the Bonds or the Notes, this Participation Agreement
or any other Transaction Document or any Financing Document (including, without
limitation, the performance or enforcement of any of the obligations and terms
hereunder or thereunder), (ii) a disposition of all or any part of the Undivided
Interest, the Real Property Interest, Unit 1 or any other interest of the Owner
Trustee or Owner Participant in connection with any termination of the Facility
Lease, or (iii) the design, manufacture, financing, erection, purchase,
acceptance, rejection, ownership, acquisition, delivery, nondelivery, lease,
sublease, preparation, installation, repair, transfer of title, abandonment,
possession, use, operation, maintenance, condition, sale, return, storage,
disposition, or decommissioning (including, but without limitation, with respect
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to the Termination Obligation) of the Undivided Interest, Unit 1, the Real
Property Interest, any Capital Improvement, the PVNGS Site, any other facilities
on the PVNGS Site or any other interest of the Owner Trustee or Owner
Participant in any thereof or any accident, nuclear incident or extraordinary
nuclear occurrence in connection therewith (including, without limitation, (A)
claims or penalties arising from any violation of law or liability in tort
(strict or otherwise) or from the active or passive negligence of any
Indemnitee, (B) loss of or damage to any property or the environment or death or
injury to any Person, (C) latent and other defects, whether or not discoverable,
(D) any claim for patent trademark, service-mark or copyright infringement and
(E) any claim of any Indemnitee incurred in the administration of this
Participation Agreement, any other Transaction Document or any Financing
Document and not paid as Transaction Expenses or included in Facility Cost and,
if not included in Transaction expenses, the reasonable fees and disbursements
of counsel and other professionals incurred in connection therewith); provided,
however, that the Lessee shall not be required to indemnify any Indemnitee
pursuant to this section 13(a), (1) for any Claim in respect of unit 1, the
undivided Interest or the Real Property Interest arising from acts or events not
attributable to the Lessee which occur after redelivery of the undivided
Interest to the Owner Trustee in accordance with section 5 of the Facility
Lease, except to the extent expressly provided in any Transaction Document, the
ANPP Participation Agreement or any other agreement or undertaking of the
Lessee, (2) for any Claim against such Indemnitee resulting solely from acts
which would constitute the willful misconduct or gross negligence of such
Indemnitee (unless imputed to such Indemnitee by reason of Unit 1, the undivided
Interest, the Real Property Interest, PVNGS, the PVNGS Site or any other
facilities at the PVNGS Site or any occurrence in connection with any thereof),
(3) for any Transaction Expense to be paid by the Owner Trustee pursuant to
Section 14(a) or (4) for any Claim resulting solely from a transfer by the Owner
Trustee or the Owner Participant of all or part of its interest in the Facility
Lease, unit 1, the Real Property Interest or the undivided Interest other than
in connection with any early termination of the Facility Lease or any exercise
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of remedies under Section 16 thereof or the transfer contemplated by Section
7(b)(4) or the first transfer by the Owner Participant to an Affiliate of the
Owner Participant. To the extent that an Indemnitee in fact receives
indemnification payments from the Lessee under the indemnification provisions of
this Section 13(a), the Lessee shall be subrogated, to the extent of such
indemnity paid, to such Indemnitee's rights with respect to the transaction or
event requiring or giving rise to such indemnity, but only so long as such
subrogation shall not materially adversely affect the rights of such Indemnitee
or any other Indemnitee hereunder. Nothing herein contained shall be construed
as constituting a guaranty by the Lessee of the principal of or premium, if any,
or interest on the Notes or the Bonds or of the residual value or useful life of
the undivided Interest.
(b) General Tax Indemnity.
(1) Indemnity. All payments by the Lessee in connection with the
transactions contemplated by the Transaction Documents shall be free of
withholdings of any nature whatsoever (and at the time that the Lessee
is required to make any payment upon which any withholding is required,
the Lessee shall pay an additional amount such that :he net amount
actually received by the Person entitled to receive such payment will,
after such withholding, equal the full amount of the payment then due)
and shall be free of expense to each Indemnitee for collection or other
charges. If, for any reason, the Lessee is required to make any payment
to a taxing authority with respect to, or as a result of, any
withholding tax imposed on any Indemnitee in respect of the transactions
contemplated by the Transaction Documents by reason of the Indemnitee
not being a united States person, then such Indemnitee shall pay to the
Lessee on an After-Tax-Basis an amount which equals the amount paid by
the Lessee with respect to or as a result of such withholding tax.
whether or not any of the transactions contemplated hereby are
consummated, except as provided in Section 13(b)(2), the Lessee shall
pay, and shall indemnify, defend and hold each Indemnitee harmless, on
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an After-Tax Basis, from and against, any and all Taxes howsoever
imposed (whether imposed on or with respect to the Indemnitee, the
Lessee, Unit 1, the undivided Interest, the Real Property Interest, any
Capital Improvement or the PVNGS Site or any part thereof or interest
therein or otherwise) by any Federal, state or local government or
subdivision thereof or taxing authority in the United States or by any
foreign country or subdivision thereof or by any foreign or
international taxing authority in connection with or relating to (A)
the design, construction, financing, purchase, acquisition, acceptance,
rejection, delivery, nondelivery, transport, ownership, assembly,
possession, repossession, operation, use, condition, maintenance,
repair, improvement, sale, return, abandonment, decommissioning,
preparation, installation, storage, replacement, redelivery,
manufacture, insuring, leasing, subleasing, modification, transfer of
title, rebuilding, rental, importation, exportation or other
application or disposition of, or the imposition of any Lien (or
incurrence of any liability to refund or pay over any amount as a
result of any Lien other than Owner Participant's Liens and Owner
Trustee's Liens) other than Owner Participant's Liens and Owner
Trustee's Liens on, Unit 1, the Undivided Interest, the Real Property
Interest, any Capital Improvement or the PVNGS Site, or any part
thereof or interest therein, (B) the payment of Rent or the receipts or
earnings arising from or received with respect to, and the indebtedness
with respect to, Unit 1, the undivided Interest, the Real Property
Interest or any Capital Improvement, or any part thereof, interest
therein or application or disposition thereof, (C) any amount paid or
payable pursuant to, or contemplated by, this Participation Agreement,
any other Transaction Document or any Financing Document or the
transactions contemplated hereby or thereby (D) Unit 1, the Undivided
Interest, the Real Property Interest, any Capital Improvement or the
PVNGS Site, or any part thereof, or interest there-in, or the
applicability of the Facility Lease to the Undivided Interest or any
Capital Improvement, or any part thereof or interest therein, (2) this
Participation Agreement, any other Transaction
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Document or any Financing Document or (F) otherwise with respect to or in
connection with the transactions contemplated by this Participation
Agreement, any other Transaction Document or any Financing Document.
(2) Exclusions from General Tax Indemnity. Section
13(b)(l)(except for the first sentence thereof) shall not apply to:
(i) Taxes based on, or measured by, net income imposed by
the united States federal government (including, without
limitation, any minimum Taxes, capital gains Taxes, any Taxes
on, or measured by; items of tax preference, surcharge.,
additions to tax, penalties, fines or other charges in respect
thereof);
(ii) Taxes (other than sales, use or rental
Taxes) imposed by any state or local government or subdivision
thereof or other taxing authority in the United States or by any
foreign country or subdivision thereof or by any foreign or
international taxing authority that are based on, or measured
by, the net income, items of tax preference, net worth or
capital of an Indemnitee, or other taxes imposed in lieu of any
such Taxes, except, with respect to the Owner Trustee, the
Trust, the Trust Estate,. the Owner Participant and any
Affiliate of any thereof, any such Taxes imposed by a
jurisdiction as a result of a relation or asserted relation of
such jurisdiction to the transactions contemplated by the
Transaction Documents or the Financing Documents or as a result
of the activities of the Lessee, any ANPP Participant or any
Affiliate of any thereof in such jurisdiction; provided,
however, that the amount of any such excepted Taxes shall be
calculated (i) on a pro forma basis assuming that such
Indemnitee has no other taxable income or loss in the taxing
jurisdiction imposing the Tax (provided that such calculation
shall take into account any allocation or apportionment method
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used by such jurisdiction except to the extent that such
method takes into account the income or activities of business
entities organized outside the united States) and is able to
use any net operating loss carryovers (generated solely by
reason of and solely attributable to the transactions
contemplated by the Transaction Documents or the Financing
Documents, and for this purpose a similar pro forma
calculation shall be made) to the fullest extent, reasonably
determined, in good faith, by the Indemnitee, and (ii) by
taking into account any actual reduction in Taxes in such
jurisdiction or in any other jurisdiction in which such
Indemnitee is subject to tax (whither such reduction results
from the operation of allocation or apportionment formulas,
from credits or otherwise, except that no account shall be
taken of any actual reductions of tax benefits described in
the Tax Indemnification Agreement or any tax liability
generated by transactions other than those contemplated by the
Transaction Documents or the Financing Documents) which
reduction results from the transactions contemplated by the
Transaction Documents or the Financing Documents; provided
further, however, that, with respect to any Tax based on, or
measured by, capital or net worth, the Lessee's indemnity
obligation shall not exceed the incremental portion of such
Tax attributable to the transactions contemplated by the
Transaction Documents;
(iii) Taxes attributable to the undivided Interest or the Real
Property Interest to the extent that such Taxes are imposed
with respect to any period after (a) the Lease Termination
Date and (b) the date possession of the undivided Interest and
the Real Property Interest has been delivered to the Lessor as
provided in Section 5(a) of the Facility Lease, unless such
Taxes relate to events occurring or matters arising prior to
or simultaneously with either at the aforementioned dates;
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(iv) Taxes on or with respect to an Indemnitee
arising from any voluntary transfer by such Indemnitee of any
interest in the undivided Interest, the Real Property Interest,
the Trust Estate, the Indenture Estate, the Notes or any other
right or interest arising under the Transaction Documents or the
Financing Documents, unless an Event of Default has occurred and
is continuing, or Taxes arising from an involuntary transfer by
such Indemnitee of any such interest arising from a bankruptcy
or similar proceeding in which such Indemnitee is the debtor
unless such bankruptcy or other proceeding was caused, in whole
or in part, by the Lessee or any Affiliate thereof;
(v) Taxes based on or measured by any fees, commission or
compensation received by an Indemnitee for acting as trustee, or
for other services rendered, in connection with any of the
transactions contemplated by the Transaction Documents or the
Financing Documents;
(vi) Taxes on or with respect to an Indemnitee
arising by reason of. such Indemnitee's failure to file proper
and timely reports or returns (unless the filing of such reports
or returns is the obligation of the Lessee under the Transaction
Documents or the Financing Documents) and any penalties or
additions to tax imposed by reason of such Indemnitee's failure
to comply with the laws imposing such Tax or its material
failure to comply with its obligations under Section 13 (b)(6),
unless such failure results from any action of the Lessee or
failure by the Lessee to comply with any provision of the
Transaction Documents or the Financing Documents, including the
failure to provide necessary information;
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(vii) Taxes on or with respect to an Indemnitee arising as a
result of a material failure of such Indemnitee to fulfill its
obligations with respect to the contest of any claim in
accordance with Section l3(b)(4) of this Participation
Agreement;
(viii) Taxes imposed on or with respect to a transferee (or
subsequent transferee) of an original Indemnitee (other than a
transferee or subsequent transferee that is an Affiliate of its
transferor) to the extent that the amount of such Taxes exceeds
the amount of taxes that would have been imposed on or with
respect to such original Indemnitee but for the transfer to such
transferee or, if imposed, would not have been subject to
indemnification under this Section 13(b), provided, however,
that the exception in this clause shall not apply to any
transferee where such transfer shall have occurred during the
continuance of an Event of Default;
(ix) any Taxes imposed on the Lessor or the Owner Participant
resulting from, or which would not have occurred but for,
Lessor's Liens or Owner Participant's Liens and any Taxes
imposed on the Indenture Trustee which would not have occurred
but for Indenture Trustee's Liens;
(x) any Tax that results solely from the activities of an
Indemnitee in any taxing jurisdiction which activities are
unrelated to the transactions contemplated by the Transaction
Documents or the Financing Documents;
(xi) any Tax on or with respect to an Indemnitee resulting from
any amendment or modification entered into by such Indemnitee to
any Transaction Document or Financing Document if the Lessee is
not a party to such amendment or modification or has not
consented to such amendment or modification, in each
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case unless an Event of Default shall have occurred and be
continuing; and
(xii) any Tax on or with respect to an Indemnitee
resulting from the gross negligence or willful misconduct of
such Indemnitee (it being understood that no Indemnitee is
responsible for determining whether a Tax is payable if the
Lessee is required to indemnify the Indemnitee for such Tax
under this section 13(b));
provided, however, that the foregoing subclauses (i) through (xii) shall
not apply to any Tax imposed on the Loan Participant or the indenture
estate under the Collateral Trust Indenture.
(3) Calculation of General Tax Indemnity Payments. If any
Indemnitee realizes a net permanent tax benefit by reason of the payment
of any indemnity under section 13(b), such Indemnitee shall pay the
Lessee, but not before the Lessee shall have made all payments
theretofore due to such Indemnitee pursuant to this Section 13(b), an
amount equal to the lesser of (x) the sum of such tax benefit plus any
other net tax benefit realized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence (determined in
a manner consistent with the definition of After-Tax-Basis set forth in
Appendix A and with the last sentence of section 13 (b)(6) hereof) or
(y) the amount of such payment by the Lessee to such Indemnitee and any
other payment by the Lessee to such Indemnitee theretofore made pursuant
to this Section 13(b) less the aggregate amount of all prior payments by
such Indemnitee to the Lessee pursuant to this clause (y) with respect
to amounts paid pursuant to section 13(b) (1), it being intended that no
Indemnitee should realize a net tax benefit pursuant to this Section
13(b) unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 13(b);
provided, however, that in computing any permanent tax benefit, such
Indemnitee shall be deemed first to have utilized all deductions and
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credits available to it otherwise than by reason of any payment by the
Lessee pursuant to this Section 13(b); provided further, however, that
notwithstanding the provisions of this clause (3), such Indemnitee
shall not be obligated to make any payment to the Lessee pursuant to
this clause (3) if at the time such payment shall be due an Event of
Default shall have occurred and be continuing.
(4) General Tax Indemnity-Contests. If a written claim shall be made
against any Indemnitee for any Tax for which the Lessee is obligated
pursuant to this Section 13(b), such Indemnitee shall notify the Lessee
promptly of such claim but the failure so to notify the Lessee shall not
affect any obligation of the Lessee pursuant to this Section 13(b). If
the Lessee shall reasonably request in writing within 30 days after
receipt of such notice, such Indemnitee shall in good faith and at the
Lessee's expense contest the imposition of such Taxes; provided,
however, that such Indemnitee may in its sole discretion select the
forum for such contest and determine whether any such contest shall be
by (A) resisting payment of such Taxes, (B) paying such Taxes under
protest or (C) paying such Taxes and seeking a refund thereof; provided
further, however, that (W) such Indemnitee shall not be obligated to
contest any claim in which the amount in question is less than $250,000,
(X) at such Indemnitee's option, such contest shall be conducted by the
Lessee in the name of such Indemnitee (subject to the preceding proviso)
and (Y) in no event shall such Indemnitee be required or the Lessee
permitted to contest the imposition of any Taxes for which the Lessee is
obligated pursuant to this Section 13(b) unless (u) the Lessee shall
have acknowledged its liability to such Indemnitee for an indemnity
payment pursuant to this Section 13(b) as a result of such claim if and
to the extent such Indemnitee or the Lessee, as the case may be, shall
not prevail in the contest of such claim; (v) such Indemnitee shall have
received from the Lessee (i) satisfactory indemnity for any liability,
expense or loss arising out of or relating to such contest including,
but not limited to, (A) all reasonable legal, accountants' and
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investigatory fees and disbursements, (B) the amount of any interest,
additions to tax or penalties that may be payable as a result of
contesting such claim and (C.) if such contest is to be initiated by the
payment of, and the claiming of a refund for such Tax, sufficient funds
to make such payment on an After-Tax-Basis and (ii) an opinion of
independent tax counsel selected by the Lessee and approved by such
Indemnitee (which approval shall not be unreasonably withheld) and
furnished at the Lessee's sole expense to the effect that a Reasonable
Basis exists for contesting such claim or, in the event of an appeal,
that there exists a substantial possibility that an appellate court or an
administrative agency with appellate jurisdiction, as the case may be,
will reverse or substantially modify the adverse determination that the
Lessee desires to contest; (w) the Lessee shall have agreed to pay such
Indemnitee on demand, and on an After-Tax-Basis, all reasonable costs and
expenses that such Indemnitee may incur in connection with contesting
such claim (including, without limitation, all costs, expenses, losses,
reasonable legal and accounting fees, disbursements, penalties, interest
and additions to tax); (x) such Indemnitee shall have reasonably
determined that the action to be taken will not result in any danger of
sale, forfeiture or loss of, or the creation of any Lien (except if the
Lessee shall have adequately bonded such Lien or otherwise made provision
to protect the interests of such Indemnitee in a manner satisfactory to
such Indemnitee) on, Unit 1, any part thereof, the Undivided Interest,
the Real Property Interest, or any interest in any of the foregoing; and
(y) if such contest shall be conducted in a manner requiring the payment
of the claim, the Lessee shall have paid the amount required. The Lessee
agrees to give such Indemnitee reasonable notice of any contest prior to
the commencement thereof. If any Indemnitee shall obtain a refund of. all
or any part of any Taxes paid by the Lessee, or if any such refund would
be payable to the Indemnitee in the absence of an offsetting liability
for Taxes payable to the taxing authority in question, such Indemnitee
shall pay the Lessee, but not before the Lessee
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shall have made all payments theretofore due to such Indemnitee pursuant
to this Section 13(b), an amount equal to the lesser of (xx) the amount
of such refund so received or receivable, including interest received or
receivable and attributable thereto, plus any net permanent tax benefit
realized by such Indemnitee (determined in a manner consistent with the
definition of After-Tax-Basis set forth in Appendix A and with the last
sentence of Section 13(b)(E) hereof) as a result of any payment by such
Indemnitee made pursuant to this sentence (but only to the extent that
such net permanent tax benefit was not taken into account pursuant to
Section 13(b)(3)), and after taking into account the tax consequences of
the receipt of such refund and such interest) or (yy) such tax payment by
the Lessee to such Indemnitee plus any other payment by the Lessee to
such Indemnitee theretofore made pursuant to this Section 13(b), in
either case, net of any expenses not already paid or incurred by the
Lessee; provided, however, that in computing any net permanent tax
benefit, such Indemnitee shall be deemed first to have utilized all
deductions and credits available to it otherwise than by reason of any
payment by the Lessee pursuant. to this Section 13(b)1 provided, further,
however, that not-withstanding the provisions of this clause (4), such
Indemnitee shall not be obligated to make any payment to the Lessee
pursuant to this clause (4) if at the time such payment shall be due a
Default or an Event of Default shall have occurred and be continuing
under the Facility Lease. An Indemnitee shall not be required to make any
payment pursuant to this clause (4) before such time as the Lessee shall
have made all payments and indemnities then due under the Transaction
Documents to such Indemnitee. Notwithstanding anything contained in this
clause (4) to the contrary, no Indemnitee shall be required to contest
any claim if the subject matter thereof shall be of a continuing nature
and shall have previously been decided pursuant to the contest provisions
of this clause (4) unless there shall have been a change in the law
(including, without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after
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such claim shall have been so previously decided, and such Indemnitee
shall have received an opinion of independent tax counsel selected by the
Lessee and approved by such Indemnitee (which approval shall not be
unreasonably withheld) and furnished at the Lessee's sole expense to the
effect that such change provides a Reasonable Basis for the position
which such Indemnitee and the Lessee, as the case may be, had asserted in
such previous contest or for an alternative position based upon such
change that the Lessee now desires to assert. Nothing contained in this
section 13(b) shall require any Indemnitee to contest or permit the
Lessee to contest a claim which it would otherwise be required to contest
pursuant to this Section 13(b) if such Indemnitee shall waive payment by
the Lessee of any amount that might otherwise be payable by the Lessee
under this Section 13(b) by way of indemnity in respect of such claim. If
Lessee 4oes not request that a Tax be contested pursuant to this
paragraph (5), Lessee shall pay the Indemnitee therefor unless such Tax
was not included in the indemnification under Section 13 (b)(l) or was
excluded by Section 13 (b) (2).
(5) General Tax Indemnity-Reports. If any report, return or statement is
required to be filed with respect to any obligations of the Lessee under
or arising out of this Section 13(b), the Lessee shall timely notify the
Indemnitee and timely file the same, except for any such report, return
or statement which such Indemnitee has notified the Lessee that it
intends to file. The Lessee shall either file such report, return or
statement so as to show the ownership of the undivided Interest or the
Real Property Interest, as the case may be, in the Owner Trustee and
send a copy of such report, return or statement to the Owner Trustee and
such Indemnitee or, where not so permitted, notify the Owner Trustee and
such Indemnitee of such requirement and prepare and deliver such report,
return or statement to the Owner Trustee and such Indemnitee in a manner
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satisfactory to the Owner Trustee and Such Indemnitee within a
reasonable time prior to the time such report, return or statement is
to be filed or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee
under or arising out of this Section 13(b), provide the Owner Trustee
and such Indemnitee with information sufficient to permit such return,
statement or report properly to be made with respect to any obligations
of the Lessee under or arising out of this Section 13(b) (and the
Lessee shall hold each Indemnitee harmless from and against any
liabilities, obligations, losses, damages, penalties, claims, actions,
suits and reasonable costs arising out of any insufficiency or
inaccuracy in any such return, statement report or information). The
Lessee shall not have any right to examine the tax returns of any
Indemnitee.
(6) General Tax Indemnity-Payment. All Taxes
shall be paid when due and payable and, unless otherwise requested by
the appropriate Indemnitee, the Lessee shall pay any Taxes for which it
is liable pursuant to this Section 13(b) directly to the appropriate
taxing authority and shall pay such appropriate Indemnitee promptly on
demand in immediately available funds any amount due such Indemnitee
pursuant to this Section 13(b) with respect to such Taxes. Any such
demand shall specify in reasonable detail the payment and the facts upon
which the right to payment is based. Each Indemnitee shall promptly
forward to the Lessee any notice, bill or advice received by it
concerning any Taxes. Within 30 days after the date of each payment by
the Lessee of any Taxes, the Lessee shall furnish the appropriate
Indemnitee the original or a certified copy of a receipt for the
Lessee's payment of such Taxes or such other evidence of payment of such
Taxes as is acceptable to such Indemnitee. The Lessee shall also furnish
promptly upon request such data as any Indemnitee may require to enable
such Indemnitee to comply with the requirements of any taxing
jurisdiction. whenever any payment is to be made by
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the Lessee under this Section 13(b) and it shall be necessary, in
calculating the After-Tax-Basis amount of such payment, to compute the
amount of any liability for federal, state or local tax imposed on or
measured by the net income of any Indemnitee, such computation shall be
based on the assumption that such taxes shall be payable at the highest
marginal statutory rate in effect for the relevant period.
(7) Definition of Indemnitee. For purposes of this Section 13(b), the
term Indemnitee shall mean and include the successors and assigns of
each respective Indemnitee, and for purposes of federal income taxes,
the affiliated group of corporations and each member thereof (within the
meaning of Section 1504 of the Code) of which such Indemnitee is a
member, if such group shall file a consolidated united States federal
income tax return, and, for purposes of income or franchise taxes
imposed by a particular state or local taxing jurisdiction, shall mean
and include any consolidated or combined group of which such Indemnitee
is or shall be a member that is treated as such by such state or local
taxing jurisdiction.
(C) Supporting Material. Upon receipt of any payment provided for by
this Section 13, the Indemnitee receiving the same shall provide to the Lessee
such supporting material (other than tax returns) as the Lessee shall reasonably
request. The Lessee shall reimburse to any Indemnitee, on an After-Tax-Basis,
any expenses incurred in providing requested supporting material to the Lessee.
(d) Coordination with Tax Indemnification Agreement. Any amounts that
the Lessee is liable to pay pursuant to this Section 13(b) shall be payable by
the Lessee hereunder even if such Taxes are not the liability of the Lessee
pursuant to the Tax Indemnification Agreement.
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6091.5O .2831.27:2
SECTION 14. Transaction Expenses.
(a) Transaction Expenses. Subject to the provisions of
paragraph (c) below, with funds provided by the Owner Participant, the Owner
Trustee hereby agrees that it will pay when due an appropriate portion (taking
into account the other undivided interests in Unit 1 sold on December 31, 1985)
of the following costs and expenses (Transaction Expenses):
(i) the reasonable legal fees and disbursements of the
Loan Participant's Counsel, the Owner Participant's Special
Arizona Counsel, the Owner Participant's Special New Mexico
Counsel, the Owner Participant's Special Counsel, the Owner
Participant's Special NRC Counsel, the Owner Trustee's Counsel
and the Indenture Trustee's Counsel for their services
rendered in connection with the execution and delivery of this
Participation Agreement and the other Transaction Documents
and all fees, expenses and disbursements incurred by them in
connection with such transactions; and reasonable legal fees,
expenses and disbursements in connection with NRC and ANPP
Participant approvals in connection with such transactions;
(ii) the initial (but not and expenses of the Owner
Indenture Trustee; the ongoing) fees Trustee and the
(iii) all stenographic, printing, reproduction, and other
reasonable out-of-pocket expenses (other than investment
banking or brokerage fees) incurred in connection with the
execution and delivery of this Participation Agreement and the
other Transaction Documents and all other agreements,
documents or instruments prepared in connection therewith
(including all computer analysis and travel related costs);
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(iv) the fees of the Appraiser for services rendered as
contemplated by Section 11(a)(29), the fees of the appraiser for
services rendered as contemplated by Section 11(a)(38) and the
fees of the insurance consultant for services rendered as
contemplated by Section 11(a)(35);
(V) all costs of issue of the Initial Series Bonds and
the Refunding Bonds including, without limitation, the costs of
preparing the Financing Documents, filing fees relating to the
Registration Statement and the fees, expenses and disbursements
of Collateral Trust Trustee's Counsel, Bank Counsel, Loan
Participant's special Arizona counsel and special New Mexico
counsel, underwriter's Counsel, the initial fees of the
Collateral Trust Trustee and its out-of-pocket expenses through
the Refunding Date, rating agency fees, the fees and commissions
of the underwriters of the Refunding Bonds and the fees,
expenses and disbursements of the Loan Participant; and
(vi) the fees and out-of-pocket expenses of Kidder
Peabody in connection with the placement of the beneficial
interest in the Trust.
Subject to the provisions of paragraph (c) below, funds for the payment of
Transaction Expenses will be provided by the Owner Participant to the Owner
Trustee and the Owner Trustee will promptly disburse such funds.
(b) Post-closing Expenses. The Lessee will pay, as
Supplemental Rent, (i) the ongoing fees, expenses, disbursements and costs
(including legal and other professional fees and expenses) of or incurred by the
Owner Trustee, the Indenture Trustee and the collateral Trust Trustee, including
in connection with the issue, sale and purchase of Notes and Bonds after the
Closing Date, and (ii) all fees, expenses, disbursements and costs (including
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legal and other professional fees and expenses) incurred by the Loan
Participant, the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Collateral Trust Trustee in connection with (a) any Default, Event of
Default, Indenture Default or Indenture Event of Default, (b) the entering into
or giving or withholding of any amendment, modification, supplement, waiver or
consent with respect to any Transaction Document or Financing Document, (c) any
Event of Loss or Deemed Loss Event, (d) any transfer of all or any part of the
right, title and interest of the Indenture Trustee in, to and under the
Transaction Documents, (e) any transfer of all or any part of the right, title
and interest of the Owner Trustee in the undivided Interest, the Real Property
Interest or in, to and under the Transaction Documents, (f) any transfer
contemplated by Section 7(b)(4), (g) the fees and expenses of Owner
Participant's special Counsel in connection with the review of changes in the
Price-Anderson Act up to $25,000 and (h) any refunding referred to in section
2(c) (except to the extent constituting Transaction Expenses).
(C) Lessee's Obligation. Notwithstanding Section 14(a) hereof,
(i) in the event the transactions contemplated by this Participation Agreement
shall not be consummated, the Lessee shall pay or cause to be paid, and shall
indemnify and hold harmless the Loan Participant, the Indenture Trustee, the
Collateral Trust Trustee, the Owner Trustee and the Owner Participant in respect
of all Transaction Expenses unless such failure to consummate shall result
solely from the Owner Participant's default in making its Investment hereunder
and (ii) the Lessee shall pay or cause to be paid that portion of Transaction
Expenses which exceeds a percentage of the Purchase Price equal to 2.50%.
SECTION 15. Owner Participant's Transfers.
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(a) Transfers. After the Closing Date, except as contemplated
by Section 7(b)(4), the Owner Participant shall not assign, convey or otherwise
transfer all or any part of (including without limitation an undivided interest
in) its right, title or interest in and to this Participation Agreement, any of
the other Transaction Documents or the Trust Estate (except its right to receive
Excepted Payments) to any Person (a Transferee) except on the following
conditions:
(i) the Transferee shall enter into an agreement or
agreements whereby such Transferee confirms that (1) it shall
be bound by the terms of this Participation Agreement and each
other Transaction Document, to the extent of the interest
transferred, as if it had been originally named as the Owner
Participant hereunder and thereunder and (2) if such
Transferee is a public utility company, it shall have waived
its right to claim Special Casualty Value upon the occurrence
of a Deemed Loss Event (of the type specified in clause (1) of
the definition thereof) under the Facility Lease;
(ii) the Transferee shall be either (A) a financial
institution, a corporation or a partnership with a net worth
or capital and surplus of at least $25,000,000 (or, in the
case of a partnership, at least one of whose general partners
has such a net worth or capital and surplus), or a direct or
indirect wholly owned subsidiary of such a financial
institution or corporation, (B) a direct or indirect wholly
owned subsidiary of (1) the Owner Participant or (2) any
parent of the Owner Participant, (C) the Lessee or such other
Person as shall have been approved by the Lessee or (D) any
Person; provided, however, that if the Transferee is a
subsidiary referred to in clause (A) above or a Person
referred to in clause (D) above, the transferring Owner
Participant (and any parent thereof secondarily liable
pursuant to this section l5(a)(ii)) shall continue to be
liable for (or the parent of such Transferee, which shall
otherwise be a permitted Transferee,
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shall enter into an agreement whereby such parent confirms that
it shall be secondarily liable for) the obligations of such
Transferee under section 7(b)(1) notwithstanding such transfer;
and
(iii) such transfer shall not violate the securities Act or any
provision of, or create a relationship which would be in
violation of, any Applicable Law or agreement to which the
transferring Owner Participant or the Transferee is a party or
by which its property is bound
Upon any such transfer, the transferring Owner Participant shall, except as
expressly provided in clause (ii) above, be released from its obligations under
this Participation Agreement and the other Transaction Documents to the extent
of the interest transferred. An agreement to transfer shall not in and of itself
constitute a transfer for purposes of this Section 15
(b) Procedure. If the Owner Participant transfers all or any
part of its interest hereunder pursuant to this Section 15, it shall give
written notice thereof to the Lessee, the Owner Trustee, the Indenture Trustee
and the Loan Participant, specifying the name and address for notices to the
Transferee, such other information and evidence as shall be necessary to
establish compliance with this Section 15 and the extent of the interest
transferred to such Transferee. If, as a result of any such transfer, the
original Owner Participant is not to continue to receive all payments to be made
by the Indenture Trustee to the "Owner Participant" under the Indenture, the
original Owner Participant shall from time to time, by notice to the Indenture
Trustee, with copies to the Lessee, the Owner Trustee and the Collateral Trust
Trustee, designate the manner in which any such payments to the "Owner
Participant" are to be allocated, and the Indenture Trustee shall be entitled to
rely on such notice for all purposes. This Section 15 (other than the notice
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provisions contained in the first sentence of this section 15(c)) is for the
benefit of the Lessee, the Owner Trustee and the Owner Participant and may not
be enforced by any other party hereto.
SECTION 16. Brokerage and Finders' Fees and Commissions.
Except to the extent of amounts payable by the Owner Participant
pursuant to Section 14, the Lessee will indemnify and hold harmless the Loan
Participant, the Indenture Trustee, the Owner Trustee and the Owner Participant
in respect of any commissions, fees, judgments or other expenses of any nature
and kind which any of them may become liable to pay by reason of any claims by
or on behalf of brokers, finders, agents, advisors or investment bankers in
connection with the transactions contemplated by this Participation Agreement,
any other Transaction Document or any Financing Document, or any litigation or
similar proceeding arising from any such claim, other than those claims arising
out of written undertakings of the party claiming indemnification under this
Section 16 or any Affiliate or shareholder (or Affiliate of such shareholder) of
such Person with any such broker, finder, agent, advisor' or investment banker.
SECTION 17. Survival of Representations and warranties; Binding
Effect.
(a) Survival. All indemnities, representations and warranties
contained in this Participation Agreement, in any other Transaction Document, in
any Financing Document and in any agreement, document or certificate delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
survive, and shall continue in effect following, the execution and delivery of
this Participation Agreement, the making of the investments and the loans
referred to herein, any disposition of any interest in the undivided Interest,
Unit 1 or any other property referred to in this Participation Agreement and the
expiration or other termination of any of the Transaction Documents or
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Financing Documents and shall be and continue in effect notwithstanding (i) any
investigation made by the Owner Participant or the Loan Participant or (ii) the
fact that any of the Indenture Trustee, the Owner Trustee, the Loan Participant
or the Owner Participant may waive compliance with any of the other terms,
provisions or conditions of any of the Transaction Documents or Financing
Documents. The obligations of the Lessee under sections l0 (b)(l)(x), 10 (b)(2),
10 (b)(3)(vii), 10(b)(3)(x), 10(b)(3)(xi), 13, 14, 16 and 19(f) shall survive
the expiration or other termination of this Participation Agreement or any other
Transaction Document or Financing Document. The extension of any applicable
statute of limitations by the Owner Trustee, the Indenture Trustee, the Lessee,
the Owner Participant, the Loan Participant or any Indemnitee shall not affect
such survival.
(b) Binding Effect. All agreements, representations and warranties in
this Participation Agreement, the other Transaction Documents and the Financing
Documents and in any agreement, document or certificate delivered concurrently
with the execution of this Participation Agreement or from time to time
thereafter, shall bind the party making the same and its successors and
permitted assigns and shall inure to the benefit of each party for whom made and
its successors and permitted assigns, and, to the extent provided in the next
sentence, each Indemnitee and its successors and assigns. The obligations of the
Lessee under Section 13 hereof and Section 20 of the Facility Lease are
expressly made for the benefit of, and shall be enforceable by, any Indemnitee,
separately or together, without declaring the Facility Lease to be in default
and notwithstanding any assignment by the Lessor of the Facility Lease or any of
its rights thereunder or any disposition of all or any part of any interest in
the Undivided Interest, the Real Property Interest, Unit 1 or any other property
referred to in this Participation Agreement, or in this Participation Agreement
or any other Transaction Document or any Financing Document. All payments
required to be made pursuant to Section 13 hereof shall be made directly to, or
as otherwise
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6091.50.2831.27:2
requested by, the Indemnitee entitled thereto upon written demand by such
Indemnitee. The Lessee shall not assign any of its rights. or obligations
hereunder without the prior written consent of the Owner Participant and the
Owner Trustee. Except as otherwise indicated, all references herein to any party
to this Participation Agreement and the other Transaction Documents shall
include the permitted successors and assigns of such party.
SECTION 18. Notices.
All communications, notices and consents provided for herein
shall be in writing, including telex, telecopy or other wire transmission
containing a request for assurance of receipt in a manner typical with respect
to communications of that type, or mailed by registered or certified mail,
personally delivered (with signed receipt of an officer of the Owner Participant
in the case of delivery to the Owner Participant) or delivered by express
delivery service, and shall be addressed (1) if to the Owner Participant, at One
Chase Manhattan Plaza (20th floor), New York, New York 10081, Attention of
Leasing Administrator; (ii) if to First PV Funding Corporation at Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, Attention of
President; (iii) if to The First National Bank of Boston, at 100 Federal Street,
Boston, Massachusetts 02110, Attention of Corporation Trust Division; (iv) if to
Chemical Bank, at 55 Water Street, New York, New York 10041, Attention of
Corporate Trustee Administration; and (v) if to Public Service Company of New
Mexico, at Alvarado Square, Albuquerque, New Mexico 87158, Attention: Secretary;
or at such other address as any party hereto may from time to time designate by
notice duly given in accordance with the provisions of this Section to the other
parties hereto. All such communications, notices and consents given in the
manner provided above shall be effective on the date of receipt of such
communication or notice.
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6091.50.2831.27:2
SECTION 19. Miscellaneous.
(a) Execution. This Participation Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Although this Participation Agreement is dated as of the date
first above written for convenience, the actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
and this Participation Agreement shall be effective on the latest such date.
(b) Intention of the Owner Trustee and the Owner Participant.
Each of the Owner Trustee and the Owner Participant intends to exercise its
rights and carry out its obligations hereunder and under the other Transaction
Documents solely with a view to furthering its own best interests and does not
have, and does not expect to have, any form of joint profit motive with any
other Person. The Owner Trustee and the Owner Participant shall not be required
to share any Rent to which they are entitled under the Facility Lease, or the
residual value of the Undivided Interest or the Real Property Interest, with any
other person. The Owner Trustee and the Owner Participant are not under the
control of nor shall they be deemed to be under the control of any other Person
having any interest in Unit 1, and shall not be the agent of or have a right or
power to bind any such Person (other than the Owner Participant as regards the
Owner Trustee) without its express written consent. The Owner Trustee and the
Owner Participant accordingly do not intend to create any form of partnership or
joint venture with any other Person by virtue of the transactions contemplated
hereby or by any of the Transaction Documents. In the event that it is
determined, contrary to the intent of the Owner Trustee and the Owner
Participant, that, for purposes of the Code or any other income tax law, a form
of partnership or joint venture exists between the Owner Trustee or the Owner
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Participant and any other Person, the Owner Trustee and the Owner Participant
hereby elect to the extent permitted by law (i) not to have the partnership
provisions of the Code or such other income tax law apply to any of the
transactions contemplated hereby or by any of the Transaction Documents and (ii)
to be treated solely as owning the Undivided Interest.
(c) Governing Law. This Participation Agreement has been
negotiated and delivered in the State of New York and shall be governed by, and
be construed in accordance with, the laws of the State of Mew York.
(d) Amendments, Supplements, etc. Neither this Participation
Agreement nor any of the terms hereof may be amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which enforcement of such change is sought.
(e) Headings. The headings of the sections and paragraphs of
this Participation Agreement have been inserted for convenience of reference
only and shall in no way restrict or otherwise modify any of the terms or
provisions hereof.
(f) Bankruptcy of Owner Participant. If (a) the Owner
Participant or the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, or any successor provision, (b) pursuant to
such reorganization provisions the Owner Participant or the Owner Trustee is
required, by reason of the Owner Participant being held to have recourse
liability directly or indirectly to the Holder of any Note or the Indenture
Trustee, to make payment on account of any amount payable as principal or
interest, and premium (if any), on such Note and (c) such Holder or the
Indenture Trustee actually receives any Excess Amount (as hereinafter defined)
which reflects any payment by the Owner Participant on account of clause (b) of
this Section, then such Holder or the Indenture Trustee, as the case may be,
shall promptly refund to the Owner Participant such Excess Amount. For purposes
of this Section, "Excess Amount" means the amount by which such payment exceeds
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6091.50.2831.27:2
the amount which would have been received on or prior to the date of such
payment by such Holder or the Indenture Trustee if the Owner Participant or the
Owner Trustee had not become subject to the recourse liability referred to in
clause (b) of this Section. Nothing contained in this Section shall prevent such
Holder or the Indenture Trustee from enforcing any personal recourse obligation
(and retaining the proceeds thereof) of the Owner Participant expressly provided
for under this Participation Agreement.
(g) Entire Agreement. This Participation Agreement (including the
Schedules hereto), the other Transaction Documents and the Financing Documents
supersede all prior agreements, written or oral, between or among any of the
parties hereto relating to the transactions contemplated hereby and thereby and
each of the parties hereto represents and warrants to the others that this
Participation Agreement and the other Transaction Documents and the Financing
Documents constitute the entire agreement among the parties relating to the
transactions contemplated hereby and thereby.
(h) Publicity. Each party hereto agrees that it will not issue or release for
external publication any article or advertising or publicity matter relating to
the transaction contemplated hereby or any similar transaction and mentioning or
implying the identity of the Owner Participant without the prior written consent
of the Owner Participant; provided, however, that the Owner Participant agrees
that such written consent shall not be withheld if such disclosure is required
by Applicable Law.
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6091.50.2831.27:2
IN WITNESS WHEREOF, the parties hereto have each. caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the dates set forth below.
CHASE MANHATTAN REALTY LEASING
CORPORATION
By
--------------------------
Vice President
Date: July 31, 1966
FIRST PV FUNDING CORPORATION
By
--------------------------
Vice President
Date: July 31, 1986
PUBLIC SERVICE COMPANY OF NEW MEXICO
BY
--------------------------
Senior Vice President and
Chief Financial Officer
Date: July 31, 1986
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6091.50.2831.27:1
THE FIRST NATIONAL BANK OF
BOSTON, in its individual capacity and
as Owner Trustee
By:
--------------------------
Assistant Vice President
Date: July 31, 1986
CHEMICAL BANK, in its individual
capacity and as Indenture Trustee
By
--------------------------
Vice President
Date: July 31, 1986
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6091.50.2831.27:1
Schedule 1
PUBLIC SERVICE COMPANY OF NEW MEXICO
PALO VERDE NUCLEAR GENERATING
STATION UNIT 1
NOTICE OF CLOSING
CHA8E MANHATTAN REALTY LEASING CORPORATION
Pursuant to Section 5(a) of the Participation Agreement, dated
as of July 31, 1986 (the Participation Agreement) among Chase Manhattan Realty
Leasing Corporation, as Owner Participant (the Owner Participant), First PY
Funding Corporation, as Loan Participant, The First National Bank of Boston, as
Owner Trustee, Chemical Sank, as Indenture Trustee, and Public Service Company
of New Mexico (PNM), PNM hereby gives notice of a Closing to occur at 10:00 a.m.
on August 1, 1986 (the Closing Date). The Closing will be held at the offices of
Messrs. nudge Rose Guthrie Alexander & Ferdon, 180 Maiden Lane, New York, New
York 10038.
(i) Based upon information supplied to PNM, the current
estimate of Transaction Expenses is an aggregate of
$1,000,000. A list of such transaction expenses is attached
hereto.
(ii) Payment of the Purchase Price and the purchase price
for the Real Property Interest shall be made pursuant to the
Omnibus Transfer Instruction and Receipt dated August 1, 1986
(a copy of which is attached hereto).
Capitalized terms used herein and not otherwise specifically defined herein
shall have the meanings set forth in Appendix A to the Participation Agreement.
6091.50.2831.27:2
IN WITNESS WHEREOF, Public Service Company of New Mexico has
executed this Notice of closing this 1st day of August, 1986.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------
Senior Vice President
and Chief Financial Officer
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6091.50.2831.27:2
Schedule 2
PRICING ASSUMPTIONS
Basic Rent, Casualty values, Special Casualty values and
Termination values, as set forth in the Facility Lease as originally executed,
have been computed on the basis of the following pricing assumptions:
l. Investment Percentage: 20%
2. Loan Percentage: 80%
3. Interest Rate on Initial
Series Note: 10.0% per annum.
4. Federal ACRS Deductions: 10-year public utility
property deductions on the basis
of 100% of Facility Cost.
$16,283,450 shall be subject to
Section 168(f) (10) as to which
the ACRI deduction for 1986 shall
be 6/12's of the deduction for the
second year of cost recovery,
1987, the full third year etc.
5. State and City Deductions: 16 Year 150% declining balance
switch to straight line at the
optimal point, using the half year
convention, on the basis of 100%
of Lessor's Cost.
6091.50.2831.27:2
6. Owner Participant's Tax
Year - End: December 31, 1986.
7. Closing Date: July 31, 1986.
8. Transaction Expenses: 2.0% of Facility
Cost paid by the Owner Participant
in addition to its Investment
(amortized on a straight-line
basis during the Basic Lease
Term).
9. Real Estate Investment: $19,417.
1O.Basic Rent Payment Date: January 15 and
July 15 of each year
(rent payable in
arrears).
11. First Rent Payment
Date: July 15, 1987.
12. Last Basic Rent Payment
Date: January 15, 2015.
13. Interim Rent Payment Date January 15, 1987
14. Marginal Federal Tax Rate 46%
15. Marginal Combined New York State
and City Tax Rate: 8.6% deductible for Federal taxes
16. First Estimated Tax Payment
Date: September 15, 1986.
17. Tax Accounting Method: Accrual.
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6091.50.2831.27:2
18. Amortization of Initial
Series Note: See schedule attached thereto.
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6091.50.2831.27:2
Schedule 3
BILL OF SALE AND ASSIGNMENT
================================================================================
BILL OF SALE AND ASSIGNMENT
dated as of ___________, 19___
from
[CHASE MANHATTAN REALTY LEASING CORPORATION]
to
PUBLIC SERVICE COMPANY OF NEW PIEXICO
================================================================================
6091.50.2831.27:2
BILL OF SALE AND ASSIGNMENT, dated as of _________,19_____ from
[CHASE MANHATTAN REALTY LEASING CORPORATION , a New York corporation (the Owner
Participant), to PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(PNM).
WI T N E S S E T H:
WHEREAS, pursuant to Section 7(b)(4) of the Participation
Agreement dated as of July 31, 1986 among the Owner Participant, First PV
Funding Corporation, as Loan Participant, The First National Bank of Boston, as
Owner Trustee, Chemical flank, as Indenture Trustee and PNM, as Lessee, (the
Participation Agreement), the Owner Participant desires to sell and PNM desire
to buy the Assigned Property (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. For purposes hereof, capitalized terms used herein
shall have the meanings assigned to such terms in the Participation Agreement.
References in this Agreement to articles, sections and clauses are to articles,
sections and clauses in this Agreement unless otherwise indicated.
6091.50.2831.27:2
ARTICLE II
ASSIGNMENT OF TRUST ESTATE
SECTION 2.01. Assignment. The Owner Participant does hereby grant,
bargain, convey, sell, assign, transfer and set over to PNM, without recourse,
representation or warranty, express and implied, of any nature whatsoever
(except as set forth in the next succeeding sentence), all of the Owner
Participant's right, title and interest in, to and under the Trust Estate except
the Owner Participant's right to receive Excepted Payments (the Assigned
Property) [subject to the Owner Participant's security interest in, and general
lien upon all of the right, title, and interest of PNM, as successor Owner
Participant in, to and under the Assigned Property*]. The Owner Participant
hereby represents and warrants to PNM that the Owner Participant has good and
valid title to Assigned Property free and clear of all Owner Participant's
Liens.
(Insert the following provision if the Owner Participant has not
received under Section 5.2 of the Indenture the payments provided for in Section
9(c), 9(d) or 16(e) of the Facility Lease, as the case may be:
SECTION 2.02. No Release of nut. Notwithstanding the transfer of
the Assigned Property to PNM pursuant to Section 2.01 hereof, the obligation of
PNM to make the payments as provided in Section (insert applicable section:
9(c), 9(d), 13(c) or 16] of the Facility Lease (together with interest thereon
in accordance with Section 3(b)(iii) of the Facility Lease) (or to make other
payment. in a like amount with respect to Basic Rent or Supplemental Rent paid
by application of such payments (and in which Owner Trustee has thereby
- ----------
*To be inserted if on the date of the transfer the Owner Participant has not
received under Section 5.2 of the Indenture the payments provided for in Section
9(c), 9(d), 13(c) or 16 of the Facility Lease, as the case may be.
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6091.50.2831.27:2
acquired an interest pursuant to Section 5.1 or 5.3 of the Indenture) shall not
be deemed to be cancelled or discharged but shall continue until all such
amounts are so received by PNM, as successor Owner Participant, or by the
transferring Owner Participant pursuant to the provisions of Section 7(b)(4) of
the Participation Agreement.]
(Insert following if the Owner Participant has received under Section
5.2 of the Indenture the payments provided for in Section 9(c), 9(d), 13(c) or
16 of the Facility Lease, as the case may be:
SECTION 2.03. Acknowledgment. The Owner Participant hereby
acknowledges receipt of $______representing payment in full of all amounts due
to the Owner Participant under Section [9(c), 9(d), 13(c) or 16] of the Facility
Lease.
ARTICLE III
EFFECTIVENESS OF TRANFER
SECTION 3.01. Effectiveness of Transfer. The transfer of the
Assigned Property shall become effective without further action upon the
execution and delivery by the Owner Participant to the Lessee of this Bill of
Sale and Assignment and the furnishing of a counterpart of this Bill of Sale and
Assignment to the Owner Trustee.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Successors and Assigns. This Bill of Sale and
Assignment shall be binding upon the Owner Participant and its successors and
shall inure to the benefit of PNM and its successors and assigns.
SECTION 4.02. Governing Law. This Bill of Sale and Assignment
shall be governed by and construed and enforced in accordance with the law of
the State of New York.
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6091.50.2831.27:2
SECTION 4.03. Headings. The division of this Bill of Sale and
Assignment into sections, and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Bill of Sale and Assignment.
IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale
and Assignment to be duly executed as of the day and year written above.
[CHASE MANHATTAN REALTY
LEASING CORPORATION]
By
---------------------------
Title:
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6091.50.2831.27:2
Schedule 4
Recordations and Filings
Part I. Recordations in Respect of the Sale of, and the Owner Trustee's
Title to, the Undivided Interest and the Real Property Interest.
A. County Recorder, Maricopa County, Arizona:
(i) Deed;
(ii) Bill of Sale
(iii) Assignment and Assumption;
(iv) Facility Lease;
(v) Indenture;
(vi) Indenture of Partial Release/Facility; and
(vii) Indenture of Partial Release/Real Property.
Part II. UCC-1 Financing Statements.
A. County Recorder, Maricopa County, Arizona:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-1 naming the Owner
Trustee, as debtor, and the Indenture Trustee, as secured party,
in respect of the Lease Indenture Estate; and
(iii) A financing statement amendment on form UCC-2 naming the
Loan Participant, as debtor, and the Collateral Trust Trustee, 45
secured party, with respect to the Term Note Supplemental
Indenture.
B. Secretary of State, Arizona:
(i) A financing statement on form UCC-1 naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;'
6091.50.2831.27:2
(ii) A financing statement on form UCC-1 naming PNM, as lessee,
the Owner Trustee, as lessor and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease
[Filed as a public utility filing];
(iii) A naming the Indenture respect of financing statement on
Owner Trustee, as debt Trustee , as secured the Lease Indenture
form UCC-1 or, and the party, in Estate; and
(iv) A financing statement amendment on form UCC-2 naming the
Loan Participant, as debtor, and the Collateral Trust Trustee,
as secured party, in respect of the Pledged Property (as defined
in the Collateral Trust Indenture) with respect to the Term Note
supplemental Indenture.
C. Office of County Clerk, Bernalillo County, New Mexico:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-1 naming the Owner
Trustee, as debtor, and the Indenture Trustee, as secured party,
in respect of the Lease Indenture Estate; and
(iii) A UCC financing statement amendment naming the Loan
Participant, as debtor, and the Collateral Trust Trustee, as
secured party, with respect to the Term Note Supplemental
Indenture
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6091.50.2831.27:2
D. Secretary of State, New Mexico:
(i) A financing statement on form UCC-l naming PNM, as lessee,
the Owner Trustee, as lessor, and the Indenture Trustee, as
assignee of the Owner Trustee, in respect of the Facility Lease;
(ii) A financing statement on form UCC-l naming the
Owner Trustee, as debtor, and the Indenture Trustee, as secured
party, in respect of the Lease Indenture Estate; and
(iii) A UCC financing statement amendment naming the Loan
Participant, as debtor, and the Collateral Trust Trustee, as
secured party, with respect to the Term Note Supplemental
Indenture.
E. Secretary of State, Massachusetts:
(i) A financing statement on form UCC-l naming the
Owner Trustee, as debtor, and the Indenture Trustee, as secured
party, in respect of the Lease Indenture Estate.
Part III. Other Filings:
Filing of the Indenture with the Secretary of State of the State
of New Mexico pursuant to the New Mexico Public Utility Act.
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6O9l.5O.283l.27:2
Schedule 5
AFFIDAVIT OF TRUSTEE
THE FIRST NATIONAL BANK OF BOSTON,
as Owner Trustee under that certain
Trust Agreement dated as of July
31, 1986 with Chase Manhattan Realty
Leasing Corporation
The undersigned, being a duly authorized representative of The First
National Bank of Boston, a national banking association, a. Trustee under the
above-captioned Trust Agreement (the Trust Agreement), does hereby affirm and
acknowledge that The First National Bank of Boston, as Trustee, holds legal
title to certain real (and other) property on behalf of a certain beneficiary,
such property and beneficiary being more particularly described in that certain
Deed recorded August 1, 1986, as instrument No. 56 records of Maricopa County,
Arizona; being further described in that certain Deed and Bill of Sale recorded
August 1, 1986, as instrument No. 86-, records of Maricopa County, Arizona;
being further described in that certain Assignment, Assumption and Further
Agreement recorded August 1, 1986, as Instrument No. 86-, records of Maricopa
County, Arizona; and being further described in that certain Deed and Assignment
of Beneficial Interest dated July 31, 1986, and that certain related Third
Amended Affidavit of Trustee executed by Title USA Company of Arizona as Trustee
of its Trust No. 530 and recorded August 1, 1986, as instrument No. 86-, records
of Maricopa County, Arizona; the property descriptions and beneficiary
disclosures contained in or incorporated into each of said instruments being
incorporated herein by this reference as if fully set forth herein.
A certain change in ownership of the beneficial interest in the Trust
Agreement has occurred since the recordation of the above-described instruments.
As now reflected in the records of The First National Bank of Boston, the sole
beneficiary of the Trust Agreement is:
Public Service Company of New Mexico
Alvarado Square
P O Box 2267
Albuquerque, New Mexico 87103
6091.50.2898.57:1
A copy of the Trust Agreement is available for inspection at the offices
of The First National flank of Boston, 100 Federal Street, Boston, Massachusetts
02110.
DATED THIS_____ day of THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement dated as of July
31, 1986, with Chase Manhattan Realty Leasing Corporation
By:
------------------------
Its Authorized Officer
STATE OF ____________)
) ss:
COUNTY of ___________)
The foregoing instrument was acknowledged before me this _____day of
__________, _________, by _________ an Authorized Officer of THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, under that certain Trust
Agreement dated as of July 31, 1986 with Chase Manhattan Realty Leasing
Corporation.
------------------------
Notary Public
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6091.50.2898.57:1
Appendix A
DEFINITION OF TERMS
The terms defined herein relate to the Participation Agreement
(as defined below) and certain Transaction Documents executed, or to be
executed, in connection with the Participation Agreement. Such terms include the
plural as well as the singular. Any agreement defined or referred to below shall
include each amendment, modification and supplement thereto and waiver thereof
as may become effective from time to time, except where otherwise indicated. Any
term defined below by reference to any agreement shall have such meaning whether
or not such document is in effect. The terms "hereof", "herein", "hereunder" and
comparable terms refer to the entire agreement with respect to which such terms
are used and not to any particular article, section or other subdivision
thereof.
If, and to the extent that, either the Participation
Agreement or any other Transaction Document which incorporates this Appendix
shall be amended from time to time pursuant to the respective terms thereof,
this Appendix shall be, or be deemed to have been, amended concurrently with the
execution and delivery of each such amendment in order to conform the
definitions herein to the new or amended definitions set forth in or required by
each such amendment.
Acceptable Change shall mean any change in or new interpretation by
Governmental Authority having jurisdiction of the Price-Anderson Act or the
Atomic Energy Act (or the regulations of the NRC relating thereto) if, after
giving effect to such change or new interpretation: (a) the "aggregate
liability" for a single "nuclear incident of "persons indemnified" shall not
exceed 86.563 billion (assuming 101. operating nuclear facilities participating
in the deferred premium or similar plan referred to in clause (d) below and
subject to adjustment (X) in an amount not exceeding $63 million for each
6091.50.2831.55:2
increase or decrease in said number of operating nuclear facilities and (Y) in
an amount not exceeding the aggregate of all changes in the standard deferred
premium to reflect the effects of inflation contemplated pursuant to clause (d)
below); (b) the amount of primary insurance coverage available from commercial
insurance underwriters on terms substantially equivalent (in the reasonable
opinion of the Owner Participant) to the terms in effect on the Closing Date
under Applicable Law and required to be maintained by licensees with respect to
any single nuclear facility shall be at least equal to $160 million; (c) the
amount of primary financial protection (excluding the primary insurance coverage
referred to in clause (b) above required of each licensee with respect to any
single nuclear facility under Applicable Law shall not exceed $40 million; (d)
the amount payable by any licensee with respect to any single nuclear facility
under any deferred premium or similar plan required under Applicable Law shall
not exceed $63 million per "nuclear incident" (subject to an annual adjustment
upward for each calendar year after the enactment of a change in the
Price-Anderson Act (if such change increases the standard deferred premium) by
an amount equal to, if specified by such change or otherwise by Applicable law,
(X) the annual percentage change during the immediately prior calendar year in
the implicit price deflator for the Gross National Product published by the
United States Department of Commerce or (Y) the annual percentage change in the
consumer price index since the immediately prior calendar year; provided,
however, that (i) in the event that Applicable Law shall not specify an
inflation adjustment, then the inflation adjustment permitted by this
parenthetical shall be that & specified in the preceding sub-clause (x) and (ii)
in the event that Applicable Law shall specify a standard deferred premium below
$63 million, the inflation adjustment factor shall not be available to increase
the standard deferred premium permissible under this clause (d) beyond $63
million until such lower deferred premium (as so inflated) equals or exceeds $63
million) (C) the amount payable by any licensee in any one year with respect to
any one nuclear incident under any deferred premium or similar plan required
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6091.50.2831.55:2
under Applicable Law shall not exceed $10 million; (f) insurance or other
financial protection shall be in effect under which the providers of such
insurance or other financial protection shall agree to pay any amount payable by
any licensee under any deferred premium or similar plan upon a default in such
payment by such licensee up to a maximum aggregate amount for all such defaults
in payment of not less than $30 million; (g) the NRC is, under Applicable Law,
authorized to borrow from the united States Treasury and to make payments on
behalf of any licensees under any deferred premium or similar plan (and the
reimbursement obligation of such licensees in any calendar year shall not exceed
$10 million); (h) as a result of such change or new interpretation, there shall
be no claim, liability or expense excluded from the limitation of liability
established by the Price-Anderson Act (as in effect on the Closing Date)
(through modification of the definitions of "aggregate liability", "persons
indemnified", "nuclear incident" or otherwise) or excluded (or the funding or
payment thereof deferred) under commercially available insurance or other
financial protection provisions provided for by Applicable Law as in effect on
the Closing Date (other than an exclusion of the costs of investigating and
settling claims and defending suits for damages), except, for purposes of this
clause (h), to the extent and in the amount excluded or deferred pursuant to
Applicable Law as in effect on the Closing Date, and (I) neither the Owner
Trustee nor the Owner Participant shall be (in the opinion of independent
counsel to the Owner Participant) exposed to any other increase in its real or
potential liability with respect to a "nuclear incident", either during or
subsequent to the Lease Term. For purposes of this definition, "nuclear
facility" shall mean and refer to a facility designed for producing substantial
amounts of electricity and having a rated capacity of 100,000 electrical
kilowatts or more.
Additional Bonds shall mean Bonds in addition to the Initial
Series Bonds.
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6091.50.2831 55:2
Additional Equity Investment shall have the meaning specified in
Section 8(t) of the Facility Lease.
Additional Notes shall have the meaning set forth in the
recitations in the Indenture, which Additional Notes shall be issued, if at all,
pursuant to Section 3.5 of the Indenture.
Affiliate, with respect to any Person, shall mean any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition, the
term "control" (including the correlative meanings of the terms "controlled by"
and "under common control with), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
After-Tax-Basis shall mean, with respect to any payment
received or accrued or deemed to have been received or accrued by any Person,
the amount of such payment supplemented by a further payment to that Person so
that the sum of the two payments shall, after deduction of all taxes and other
charges (taking into account any credits or deductions arising therefrom and the
timing thereof and computed at the highest marginal statutory tax rate)
resulting from the receipt (actual or constructive) of such two payments imposed
under any Applicable Law or by any Governmental Authority, be equal to such
payment received or accrued or deemed to have been received or accrued.
Agent and Agency Period shall have the meanings specified in
Section 7.01 of the Assignment and Assumption.
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6091.50.2831.55:2
ANPP Administrative Committee shall mean the committee
established pursuant to Section 6.1.1 of the ANPP Participation Agreement (or
any comparable successor provision)
ANPP Operating Committee shall mean the committee established pursuant
to Section 6.1.2 of the ANPP Participation Agreement (or any comparable
successor provision)
ANPP Participants shall have the meaning assigned to the word
"Participant" under the ANPP Participation Agreement.
ANPP Participation Agreement shall mean the Arizona Nuclear
Power Project Participation Agreement, dated as of August 23, 1973, among API,
Salt River, Southern California, PNM, El Paso, LADWP and SCPPA, as heretofore
and hereafter amended pursuant to the terms thereof -
ANPP Project Agreements shall mean the ANPP Participation
Agreement and the other Project Agreements (as such term is defined in the ANPP
Participation Agreement)
ANPP Switchyard shall mean the ANPP High Voltage Switchyard
located at the PVNGS Site, the ownership, construction, operation and
maintenance of which are governed by the ANPP High Voltage Switchyard
Participation Agreement executed as of August 20, 1981 (APS Contract No.
2252-419,00), the parties to which are APS, PNM, Salt River, El Paso, Southern
California and LADWP.
ANPP Transferee shall have the meaning specified in Section
4.01 of the Assignment and Assumption.
-5-
6091.50.2831.55:2
Applicable Law shall mean all applicable laws, statutes,
treaties, rules, codes, ordinances, regulations, permits, certificates, orders,
interpretations, licenses and permits of any Governmental Authority and
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other judicial or quasi judicial tribunal (including those
pertaining to health, safety, the environment or otherwise).
Appraisal Procedure shall mean a procedure whereby two
independent appraiser., one chosen by the Lessee and one by the Lessor, shall
mutually agree upon the value, period or amount then the subject of an
appraisal. If either the Lessor or the Lessee, as the case may be, shall
determine that a value, period or amount to be determined under the Facility
Lease or any other Transaction Document cannot promptly be established by mutual
agreement, such party shall appoint its appraiser and deliver a written notice
thereof to the other party. such other party shall appoint its appraiser within
15 days after receipt from the other party of the foregoing written notice. If
within 20 days after appointment of the two appraisers, as described above, the
two appraisers are unable to agree upon the value, period or amount in question,
a third independent appraiser shall be chosen within ten days thereafter by the
mutual consent of such first two appraisers or, if such first two appraisers
fail to agree upon the appointment of a third appraiser within such period, such
appointment shall be made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators having experience in
the business of operating a nuclear electric generating plant and a familiarity
with equipment used or operated in such business. The decision of the third
appraiser so appointed and chosen shall be given within ten days after the
selection of such third appraiser. If three appraisers shall be so appointed and
the determination of one appraiser is disparate from the middle determination by
more than twice the amount, period or value by which the third determination is
disparate from the middle determination, then the determination of such
appraiser shall be excluded, the remaining two determinations shall be averaged
and such average shall be binding and conclusive on the Lessor and the Lessee;
otherwise the average of all three determinations shall be binding and
-6-
6091.50.2831.55:2
conclusive on the Lessor and the Lessee. The fees and expenses of appraisers
incurred in connection with any Appraisal Procedure relating to any transaction
contemplated by any provision of any Transaction Document shall be divided
equally between the Lessor and the Lessee (except pursuant to Section 16 o; the
Facility Lease, which shall be paid solely by the Lessee).
APS shall mean Arizona Public Service Company, an Arizona
corporation.
Appraiser shall mean Ebasco Business Consulting Company.
Arizona Public Utility Act Sha11 mean Chapter 2, Title 40,
Arizona Revised Statutes.
Assigned Payments shall have the meaning specified in Section
2.1(1) of the Indenture.
Assignment and Assumption shall mean the Assignment, Assumption
and Further Agreement, dated as of July 31, 1986, between PNM and the Owner
Trustee.
Assignment of Beneficial Interest shall mean the Deed and
Assignment of Beneficial Interest under Title USA Company of Arizona Trust No.
530, dated as of July 31, 1986, from PNM to the Owner Trustee.
Assumption Agreement sha11 mean the Assumption Agreement of
PNM substantially in the form of Exhibit B to the Indenture.
Assumptions shall mean the Pricing Assumptions and the Tax
Assumptions.
Atomic Energy Act shall mean the Atomic Energy Act of 1954, as
amended, and regulations from time to time issued, published or promulgated
pursuant thereto.
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6091.50.2831.55:2
Authorized Officer shall mean, with respect to the Indenture
Trustee, any officer of the Indenture Trustee who shall be duly authorized by
appropriate corporate action to authenticate a Note and shall mean, with respect
to the Owner Trustee, any officer of the Owner Trustee who shall be duly
authorized by appropriate corporate action to execute any Transaction Document -
Bank shall mean the bank party to the Term Loan Agreement.
Bank counsel shall mean Milbank, Tweed, Hadley & McCloy, 1
Chase Manhattan Plaza, New York, New York 10005.
Bankruptcy Code shall mean the Bankruptcy Reform Act of 197e,
as amended, and any law with respect to bankruptcy, insolvency or reorganization
successor thereto.
Basic Lease Tern shall mean the initial term of the Facility
Lease, which shall begin on the Closing Date and end on January 15, 2015, unless
earlier terminated as provided in the Facility Lease.
Basic Rent shall have the meaning set forth in Section 3(a) of
the Facility Lease.
Basic Rent Payment Dates shall mean and include July 15, 1987,
and January 15 and July 15 of each year thereafter, commencing January 15, 1988,
and ending January 15, 2015, and, if the Lessee shall elect the Renewal Term,
each January 15 and July l5.of each year during the Renewal Term, commencing
July 15, 2015 and ending on the last day of the Renewal Term.
Bill of sale shall mean the need and Bill of Sale, dated as of
July 31, 1986, between PNM and the Owner Trustee.
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6091.50.2831.55:2
Bonds shall mean all bonds, notes and other evidences of
indebtedness from time to time issued and outstanding under the Collateral Trust
Indenture, including, but without limitation, the Initial Series Bonds, the
Refunding Bonds and any other Additional Bonds.
Business day shall mean any day other than a Saturday or
Sunday or other day on which banks in Albuquerque, New Mexico, New York, New
York or Boston, Massachusetts are authorized or obligated to be closed.
Capital Improvement shall mean (a) the addition, betterment or
enlargement of any property constituting part of Unit 1 or the replacement of
any such property with other property, irrespective of whether (i) such
replacement property constitutes an enlargement or betterment of the property
which it replaces, (ii) the cost of which addition, betterment, enlargement or
replacement is or may be capitalized or charged to maintenance or repairs, in
accordance with the Uniform System of Accounts or, (iii) in the case of any
addition, betterment or enlargement, is not included or reflected in the plans
and specifications for Unit 1, as built, and (b) any alteration, modification,
addition or improvement to Unit 1, other than original, substitute or
replacement parts incorporated into unit 1; provided, however, that any Capital
Improvement with respect to any portion of Unit 1 constituting a Common Facility
shall mean only an undivided interest in and to one-third of such Capital
Improvement.
Casualty Value, as of any Basic Rent Payment Date during the
Basic Lease Term, shall mean the percentage of Facility Cost set forth opposite
such Basic Rent Payment Date in Schedule 1 to the Facility Lease. Anything
contained in the Participation Agreement or the Facility Lease to the contrary
notwithstanding, Casualty Value shall be, when added to all other amounts which
the Lessee is required to pay under Section 9(c) of the Facility Lease (taking
into account any assumption of the Notes by the Lessee), under any circumstances
and in any event, in an amount at least sufficient to pay in
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6091.50.2831.55:2
full, as of any Basic Rent Payment Date, the aggregate unpaid principal amount
of all Notes Outstanding at the close of business on such date, together with
accrued and unpaid interest on such Notes. Casualty Value as of any Basic Rent
Payment Date during the Renewal Term shall mean the unamortized portion as of
such Basic Rent Payment Date of the Fair Market Sales Value of the Undivided
Interest1 determined by the straight-line amortization of such Fair Market Sales
Value at the commencement of such Renewal Term over the period from such
commencement date through the remaining term of the License determined pursuant
to the Appraisal Procedure undertaken in accordance with the last sentence of
Section 13(a) of the Facility Lease.
Change in Tax Law shall mean any change in the State Tax Law
(as such term is defined in Section 1(a) of the Tax Indemnification Agreement),
Code or successor legislation enacted by the appropriate legislative bodies of
New York State or New York City no later than the date of adjournment of the One
Hundredth Congress, or enacted by either the Ninety-ninth or the One hundredth
Congress (without regard to the date of presidential signature), or if prior to
January 15, 1997 (i) there is enacted any technical correction to such enactment
or (ii) there is promulgated, issued or published any proposed, temporary,. or
final Regulations resulting from such enactment (regardless of the effective
date of such technical corrections or Regulations, but only if such technical
corrections or Regulations would affect Net Economic Return).
Chemical Bank shall mean Chemical Bank, a New York banking
corporation.
Chief Financial Officer shall mean the person designated by
the Board of Directors of PNM as the chief financial officer of PNM.
-10-
6091.50.2831.55:2
Claims shall mean liabilities, obligations, losses, damages,
penalties, claims (including, without limitation, claims involving liability in
tort, strict or otherwise), actions, suits, judgments, costs, interest, expenses
and disbursements, whether or not any of the foregoing shall be founded or
unfounded (including, without limitation, legal fees and expenses and costs of
investigation) of any kind and nature whatsoever without any limitation as to
amount.
Closing shall mean the proceedings which occur on the Closing
Date, as contemplated by the Participation Agreement.
Closing Date shall mean August 1, 1986.
Code shall mean the Internal Revenue Code of 1954, as amended,
or any comparable successor law.
Collateral Trust Indenture shall mean the Collateral Trust
Indenture, dated as of December 16, 1985, among PNM, Funding Corp and the
Collateral Trust Trustee - Collateral Trust Indenture Supplement shall mean a
supplement to the Collateral Trust Indenture.
Collateral Trust Trustee shall mean Chemical Bank, not in its
individual capacity, but solely as Collateral Trust Trustee under the Collateral
Trust Indenture, and the successors or assigns of such Trustee.
Common Facilities shall mean all PVNGS common facilities as
set forth in Item B of Exhibit B to the Bill of Sale other than excluded common
facilities as set forth in said Stem B to such Exhibit B or common facilities
constituting Unit 1 Retained Assets.
-11-
6091.50 .2831. 55:2
Coverage Ratio shall mean the fraction (i) the denominator of
which shall be the sum (calculated as of a date no earlier than 135 days prior
to the date of calculation) of (x) the interest that will be payable during the
twelve-month period following the date of the transaction with respect to which
a calculation is required to be made on the debt (both long-term and short-term)
of the Surviving Lessee, and (y) the interest portion of payments due during the
twelve-month period following the date of such transaction on lease obligations
of the Surviving Lessee with a term in excess of one year, and (ii) the
numerator of which shall be the sum of (x) the pro forma net earnings (before
taxes and excluding the allowance for funds used during construction) of the
Surviving Lessee for a twelve-month period ending no earlier than 135 days prior
to the date of such transaction, and (y) such denominator.
Cure Option shall have the meaning set forth in Section 16(e)
of the Facility Lease.
Decommissioning Fund shall mean with respect to Unit 1 Decommissioning
Costs, an external reserve fund which fund shall be segregated from the Lessee's
assets, but may be within the Lessee's administrative control, into which
deposits are made at least annually in an amount equal to the quotient of (i)
Unit 1 Decommissioning Costs (less the balance of the Decommissioning Fund and
reasonably projected earnings thereon through the date of expiry of the License)
divided by (ii) the number of years remaining until date of expiry of the
License, provided that the amount in the Decommissioning Fund, on the date of
expiry of the License, shall be at least equal to Unit 1 Decommissioning Costs,
Deed shall mean the Deed, dated as of July 31, 1986, from PNM to
the Owner Trustee.
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6091.50.2831.55:2
Deemed Loss Event shall mean any of the following events
(unless waived by the Owner Participant, which waiver shall be in writing and
may be either indefinite or for a specific period): (1) if at any time after the
Closing Date and before the Lease Termination Date, the Owner Trustee or the
Owner Participant, by reason of the ownership of the Undivided Interest or the
Real Property Interest or any part thereof by the Lessor (or any beneficial
interest therein by the Owner Participant) or the lease of the Undivided
Interest or the Real Property Interest to the Lessee or any of the other
transactions contemplated by the Transaction Documents (the tern Owner
Participant, as used in this definition, not including any Transferee who at the
time of transfer to such Transferee is a non-exempt entity of the type referred
to in this definition, whether by reason of such ownership, lease, transactions
or otherwise) shall be deemed by any Governmental Authority having jurisdiction
to be, or shall become subject to regulation (other than Non-Burdensome
Regulation) as, an "electric utility" or a "public utility" or a "public utility
holding company" under any Applicable Law or by reason of any Governmental
Action, and the effect thereof on the Lessor or the Owner Participant would be,
in the sole judgment of either such Person, acting on advice of counsel,
adverse, and the Owner Trustee and the Owner Participant have not waived
application of this definition; except that if the Lessee, at its sole cost and
expense, is contesting diligently and in good faith any action by any
Governmental Authority which would otherwise constitute a Deemed Loss Event
under this clause (1), such Deemed Loss Event shall be deemed not to have
occurred so long as (i) such contest does not involve any danger of the
foreclosure, sale, forfeiture or loss of, or the creation of any Lien on, the
Undivided Interest, the Real Property Interest or any part thereof or any
interest therein, (ii) such contest does not adversely affect the Undivided
Interest, the Real Property Interest or any part thereof or any other property,
assets or right. of the Lessor or the Owner Participant or the lien of the
Indenture thereon, (iii) the Lessee shall have furnished the Owner Trustee,
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6091.50.2831.55:2
the Owner Participant, and the Indenture Trustee with an opinion of independent
counsel satisfactory to each such Person to the effect that there exists a
reasonable basis for contesting such determination, (iv) such determination and
the effects thereof shall be effectively stayed or withdrawn during such contest
(and shall not be subject to retroactive application at the conclusion of such
contest) in a manner satisfactory to the Owner Trustee and the Owner
Participant, and the Owner Participant shall have determined that the Lessor's
continued ownership of the Undivided Interest and the Real Property Interest
during the pendency of such contest or such contest will not adversely affect
its or its Affiliate's business, and (v) the Lessee shall have indemnified the
Owner Trustee and the Owner Participant in a manner satisfactory to each such
Person for any liability or loss which either such Person may incur as a result
of the Lessee's contest; (2) any change in, or new interpretation by
Governmental Authority having jurisdiction of, Applicable Law, including without
limitation, the Price-Anderson Act, the Atomic Energy Act or the regulations of
the NRC, in each case as in effect on the Closing Date, as a result of which (in
the opinion of independent counsel to the Owner Participant) (i) the aggregate
liability for a single "nuclear incident" of "persons indemnified" (as each such
term is defined in the Price-Anderson Act as in effect on the closing Date) is
increased, unless the change is such that neither the Owner Trustee nor the
Owner Participant may be exposed, either during or subsequent to the Lease Term,
to any increased real or potential liability in respect of a "nuclear incident",
(ii) the "aggregate liability" for a single "nuclear incident" of "persons
indemnified" (as each term is defined in the Price Anderson Act as in effect on
the Closing Date) exceeds the amount of financial protection established by the
NRC as a condition to the License, unless the change is such that neither the
Owner Trustee nor the Owner Participant may be exposed, either during or
subsequent to the Lease Term, to any increased real or potential liability in
respect of a "nuclear incident", (iii) the amount of financial protection
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6091.50.2831.55:2
required, including but not limited to the limitation on the amount of deferred
premiums for such financial protection, is increased, unless the change is such
that neither the Owner Trustee nor the Owner Participant may be exposed, either
during or subsequent to the Lease Term, to any increased real or potential
liability in respect of a "nuclear incident", or (iv) either the Owner Trustee
or the Owner Participant may be exposed to any other increase in its real or
potential liability in respect of a "nuclear incident", either during or
subsequent to the Lease Term; provided, however, that no such change or new
interpretation shall constitute a Deemed Loss Event if such change or new
interpretation constitutes an Acceptable Change; (3) any change in, or new
interpretation by Governmental Authority having jurisdiction of, Applicable Law
as a result of which the Owner Trustee (but not the Trust Estate), or the Owner
Participant shall become liable in any capacity, in respect of any portion of
the Termination Obligation or, during the Lease Term, any other liability or
obligation imposed as of the date hereof on licensees of the NRC; (4) any change
in, or new interpretation by Governmental Authority having jurisdiction. of,
Applicable Law or any Governmental Action the effect of which is to make the
transactions contemplated by the Transaction Documents unauthorized, illegal or
otherwise contrary to Applicable Law; (5) any change in, or new interpretation
by Governmental Authority having jurisdiction of, the License and the NRC Order
(each as in effect on the Closing Date) constituting an assertion to the effect
that the exercise by the Owner Trustee or the Owner Participant of any right
(irrespective of the event giving rise to such right) under any Transaction
Document would constitute impermissable control over Unit 1 or the licensees of
Unit 1, other than an assertion that affects such rights in a manner consistent
with both Section 1a4 of the Atomic Energy Act and the NRC's regulations
thereunder (including, without limitation, 10 CFR 550.81, as now and hereafter
in effect); (6) any expiration, revocation, suspension, amendment or
interpretation by any Governmental Authority of the NRC Order, the License or
the licensing of the Lessee by the NRC or any other Governmental Action or
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6091.50.2831.55:2
change in, or new interpretation by Governmental Authority having jurisdiction
of, Applicable Law as a result of which either the Owner Trustee or the Owner
Participant shall be required to become a licensee of the NRC prior to the Lease
Termination Date; (7) any policy of public liability insurance with respect to
PVNGS or unit 1 shall be suspended or terminated for any reason whatsoever or
shall be amended or supplemented in a manner which may expose the Owner Trustee
or the Owner Participant, either during or subsequent to the Lease Term, to any
increased real or potential liability in respect of a "nuclear incident" (as
defined in the Price-Anderson Act) and such policy of insurance shall not be
immediately replaced by insurance effective immediately upon such suspension,
termination, amendment or supplementation which, in the reasonable opinion of
the Owner Participant, is at least as protective of it (in all respects
reasonably deemed by it to be material) as the policy of insurance so
terminated, suspended, amended or supplemented, unless the "aggregate liability"
for a "nuclear incident" of "persons indemnified" (as each term is defined in
the Atomic Energy Act of 1954, as amended) is reduced by an amount equal to the
amount of liability insurance so terminated, suspended, amended or supplemented
and, in the reasonable opinion of the Owner Participant, it may not otherwise be
exposed, either during or subsequent to the Lease Term, to any increased real or
potential liability in respect of a "nuclear incident" as a consequence of such
suspension, termination, amendment or supplementation; (8) with respect to
PVNGS, the NRC shall have issued within a five year period three or more
Modification Orders provided that such Modification Orders are issued (x) in
connection with violations constituting "Severity Level I" or "Severity Level
II" violations within the activity area of "Reactor Operations", as such terms
are used in Supplement S to Appendix C to 10 C.F.R., Part 2 as in effect on the
date hereof (or, if such Supplement is amended or superseded to change such
categories of violations or areas, violations or areas falling within comparable
categories) or (y) in connection with wilfull or flagrant violations in any
"activity area", repeated poor performance in a particular "activity area" or
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serious breakdowns in management control; and (9) the cessation of operation of
Unit 1 or as a result of either (x) the occurrence of an Extraordinary Nuclear
Occurrence or an Incipient Extraordinary Nuclear Occurrence at PVNGS Unit 2 or
PVNGS Unit 3 or (y) a Nuclear Incident at PVNGS Unit 2 or PVNGS Unit 3 and the
continuation, in the case of this clause (y), of such cessation for the Minimum
Period.
Default shall mean an event or condition which, with the giving
of notice or lapse of time, or both, would constitute an Event of Default.
Directive shall mean an instrument in writing executed in
accordance with the terms and provisions of the Indenture by the Holders, or
their duly authorized agents or attorneys-in-fact, representing a Majority in
Interest of Holders of Notes, directing the Indenture Trustee to take or refrain
from taking the action specified in such instrument.
Early Termination Date shall have the meaning specified in
section 14(d) of the Facility Lease.
Early Termination Notice shall have the meaning specified in
Section 14(d) of the Facility Lease.
El Paso shall mean El Paso Electric Company, a Texas
corporation.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
Estimated Transaction Expenses shall have the meaning set
forth in Section 5(a) of the Participation Agreement.
Event of Default shall have the meaning set forth in Section
15 of the Facility Lease.
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Event of Loss shall mean any of the following events: (a) a
Final Shutdown, (b) a Requisition of Title, (C) a Requisition of Use which can
reasonably be expected to exceed, or for a stated period which ends on or after,
the penultimate day of the Lease Term, (d) any degradation of the rated capacity
of Unit 1 to below, or the inability of Unit 1 to produce electricity at a level
above, 630 megawatts electric for the minimum Period (for any reason other than
as a result of damage to or destruction of Unit 1, Governmental Action or an
event referred to in clause (iii)(x) or (iii)(y) of the definition of "Final
Shutdown").
Excepted Payments shall mean (i) all payments of Supplemental
Rent, other than payments by the Lessee (x) of Casualty Value, Termination Value
or Special Casualty Value or in connection with the exercise of the Cure Option
or the occurrence of the Special Purchase Event or (y) of indemnity payments to
which either the Loan Participant or any Indemnitee other than the Owner Trustee
or the Owner Participant, or any of their respective Affiliates, (or the
respective successors, assigns., agents, officers, directors or employees of the
Owner Trustee or the Owner Participant) is entitled; (ii) any amounts payable
under any Transaction Document to reimburse the Lessor or the Owner Participant,
or any of their respective Affiliates, (including the reasonable expenses of the
Lessor or the Owner Participant incurred in connection with any such payment)
for performing or complying with any of the obligations of the Lessee under and
as permitted by any Transaction Document, (iii) any amount payable to the Owner
Participant by any Transferee as the purchase price of the Owner Participant's
interest in the Trust Estate, (iv) so long as no Indenture Default or Indenture
Event of Default shall have occurred and be continuing, all payments of Basic
Rent in excess of amounts then due and owing in respect of the principal of and
premium, if any, and interest on all Notes Outstanding; (V) any insurance
proceeds with respect to an Event of Loss in excess of amounts then due and
owing in respect of the principal of and premium, if any, and interest on all
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Notes Outstanding, (vi) any insurance proceeds (or payments with respect to
risks self-insured) under liability policies and (vii) any payments in respect
of interest to the extent attributable to payments referred to in clauses (i)
through (vi) above.
Existing Mortgage shall mean the Indenture of Mortgage and
Deed of Trust dated as of June 1, 1947, between PNM and Irving Trust Company, as
heretofore supplemented by all Supplemental Indentures thereto.
Expenses shall mean liabilities, obligations, losses, damages,
taxes (other than taxes on income), claims, actions, suits, costs, interest,
expenses and disbursements (including legal fees and expenses) of any kind and
nature whatsoever.
Extension Letter shall mean the Extension Letter, to be dated
the Closing Date and addressed to the Collateral Trust Trustee by the parties to
the Participation Agreement.
Extraordinary Nuclear Occurrence shall have its meaning as
defined in Section 11 of the Atomic Energy Act of 1954, as amended to the
Closing Date.
Facility Cast shall mean the Purchase Price plus the sum of (x)
all Supplemental Financing Amounts, and (y) all Additional Equity Investment
amounts.
Facility Lease shall mean the Facility Lease, dated as of July
31, 1986, between PNM, as Lessee, and the Owner Trustee, as Lessor.
Fair Market Rental Value or lair Market Sales value of any
property or service shall mean the value of such property or service for lease
or sale determined on the basis of an arm's-length transaction for cash between
an informed and willing lessee or purchaser (under no compulsion to lease or
purchase) and an informed and willing lessor or seller (under no compulsion to
lease or sell), and shall take into account the Lessor's rights and obligations
under the Assignment and Assumption and the Assignment of Beneficial Interest
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and rights under the need and the Bill of Sale,but shall be without regard to
any rights of the Lessee (including any renewal options) under the Lease. Except
pursuant to Section 16 of the Facility Lease (other than Section 16(a)(v)(D)
thereof) and Section 6.01 of the Assignment and Assumption, Fair Market Rental
Value and Fair Market Sales Value of the Undivided Interest and the Real
Property Interest shall be determined on the assumption that (i) Unit l has been
maintained in accordance with, and the Lessee has complied with, the
requirements of the Facility Lease, the other Transaction Documents and the ANPP
Participation Agreement, (ii) the Lessee shall not bear the obligation imposed
by Section l0(b)(3)(xi) of the Participation Agreement in respect of Transferees
(as defined in the ANPP Participation Agreement) of the Lessor, and (iii) the
Lessee or inn, as possessor of the Undivided Interest and the Real Property
Interest, is otherwise in compliance with the requirements of all Transaction
Documents. Fair Market Rental Value shall be determined on the assumption that
rent will be pay-able in equal semi-annual installments in arrears.
Federal Power Act shall mean the Federal Power Act, as
amended.
Federal Securities shall have the meaning set forth in Section
2.3(c) of the Indenture.
FERC shall mean the Federal Energy Regulatory Commission of
the United States of America or any successor agency.
FERC order shall mean the Order Disclaiming Jurisdiction
issued by FERC on December 5, 19S5 (Docket No. EL86-5-000.
Final Prospectus shall mean the Prospectus included in the
Registration Statement relating to the Refunding Bonds, including documents
incorporated into said Prospectus by reference and any applicable Prospectus
Supplement.
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Final Shutdown shall mean the earlier to occur of (i) the
expiration or revocation of the License, or any portion thereof such that the
operation of Unit 1 or the possession by the Lessee of the Undivided Interest
and the Real Property Interest are no longer permitted; (ii) the taking of any
Governmental Action or the adoption or making of any interpretations, directives
or requests by any Governmental Authority (including, without limitation, the
staff thereof) or the concurrence by any Governmental Authority in the voluntary
action of the operator thereof, in each such case whether formal or informal, by
reason of which Unit 1 shall cease to operate, or shall be unable under
Applicable Law to resume operation, at a capacity level of a least 630 megawatts
electric for the Minimum Period, (iii) the cessation of operation of Unit 1 as a
result of either (x) the occurrence of. an Extraordinary Nuclear Occurrence or
an Incipient Extraordinary Nuclear Occurrence relating to Unit 1 or (y) a
Nuclear Incident relating to Unit 1 and, in the case of this clause (y), the
continuation of such cessation for the Minimum Period, (iv) damage to Unit 1 and
the failure of the Lessee, or of the Lessee and one or more other ANPP
Participants, to agree within three years of the occurrence of such damage to
restore and reconstruct Unit 1, (v) damage to Unit 1, without restoration or
reconstruction having been completed by the expiration of the Minimum Period,
such that Unit 1 has a rated capacity of at least 630 megawatts electric, or
(vi) destruction of Unit 1. For purposes of this definition, Final Shutdown
pursuant to the foregoing clause (iv) will be deemed to have occurred upon the
earlier of (x) the written declaration of the Lessee of its intent not to agree
and (y) the expiration of the 3-year period referred to in said clause (iv)
without written agreement. Final Shutdown pursuant to the foregoing clause (ii),
(iii)(y) or (V) will be deemed to have occurred on the last day of the Minimum
Period.
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Financing Documents shall mean the Collateral Trust Indenture, the Term
Note Supplemental Indenture, the Underwriting Agreement, the Term Loan Agreement
and the Refunding Supplemental Indenture.
Fixed Rate Note shall mean the non-recourse promissory note,
to be issued by the Owner Trustee and authenticated by the Indenture Trustee on
the Refunding Date to refund the Initial Series Note.
FNB shall mean the Owner Trustee in its individual capacity, and its
successors and assigns.
Farm U-7D shall mean the. certificate to be filed pursuant to Rule 7(4)
of the Holding Company Act for the purpose of exempting the Owner Participant
and the Owner Trustee from registration under the Holding Company Act.
Funding Corp shall mean First PV Funding Corporation, a Delaware
corporation.
Generating Unit shall mean Unit 1 or any of the other
Generating Units (as such term is defined in the ANPP Participation Agreement)
constituting PVNGS.
Generation Entitlement Share shall have the meaning assigned
thereto in the ANPP Participation Agreement and (i) when used in reference to
Unit 1, shall mean the Generation Entitlement Share of PNM as the ANPP
Participant with respect to its interest in Unit 1, (ii) when used in reference
to the undivided Interest, shall mean that portion of the Generation Entitlement
Share attributable to the Undivided Interest and (iii) when used in Section 19
of the Facility Lease, shall refer to the Generation Entitlement Share of the
Lessee in all Generating Units at PVNGS.
Governmental Action shall mean all authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses, exemptions,
publications, filings, notices to and declarations of or with any Governmental
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6O9l.50.2831.55:2
Authority (other than routine reporting requirements the failure to comply with
which will not affect the validity or enforceability of any of the Transaction
Documents or have a material adverse effect on the transactions contemplated by
any Transaction Document or any Financing Document) or any other action in
respect of any Governmental Authority and shall include, without limitation, all
siting, environmental and operating permits and licenses which are required for
the use and operation of Unit 19 including the Undivided Interest and the Real
Property Interest.
Governmental Authority sha11 mean any Federal, state, county,
municipal, foreign, international, regional or other governmental authority,
agency, board, body, instrumentality or court.
Holders shall mean the holders of the Notes.
Holding Company Act shall mean the Public utility Holding
Company Act of 1935, as amended.
Incipient Extraordinary Nuclear Occurrence shall mean an event
causing a discharge or dispersal of nuclear source, special nuclear or nuclear
by-product material from its intended place of confinement in amounts off site
or on site or causing a radiation level off site or on site which an independent
nuclear consultant agreed to by the Lessee and the Owner Participant (or,
failing prompt agreement, appointed by the American Arbitration Society) to be
substantial and which such consultant determines has resulted in substantial
injury to persons on or off the PVNGS Site or substantial damage to property off
the PVNGS Site.
Indemnitee shall mean the Owner Participant, the Owner
Trustee, FNB, the Loan Participant, the stockholder of Funding Corp and its
officers and directors, Chemical Bank, the Indenture Trustee, each Holder of a
Note from time to time Outstanding, the Collateral Trust Trustee, the Trust, the
Trust Estate, the Lease Indenture Estate, the indenture estate under the
Collateral Trust Indenture, any Affiliate of any of the foregoing and the
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6091.50.2831.55:2
respective successors, assigns, agents, officers, directors or employees of the
foregoing, excluding, however, any ANPP Participant other than the Owner Trustee
or the Owner Participant.
Indenture shall mean the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of July 31, 1986, between the Owner
Trustee and the Indenture Trustee.
Indenture Default shall mean an event or condition which, after
giving of notice or lapse of time, or both, would become an Indenture Event of
Default.
Indenture Event of Default shall mean any of the events
specified in Section 6.2 of the Indenture.
Indenture Trustee shall mean Chemical Bank, a New York banking
corporation, not in its individua1 capacity, but solely as Indenture Trustee
under the Indenture and each successor trustee and co-trustee thereunder
Indenture Trustee's counsel Sha11 mean Willikie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022.
Indenture Trustee's Liens shall mean Liens against the Lease
Indenture Estate which result from acts of, or any failure to act by, or as a
result of claims against, the Indenture Trustee, in its individual capacity,
unrelated to the transactions contemplated by the Transaction Documents.
Indenture Trustee's Office shall mean the office of the
Indenture Trustee located at 55 Water Street, New York, New York 10041, or such
other office as may be designated by the Indenture Trustee to the Owner Trustee
and each Molder of a Note Outstanding under the Indenture.
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6091.50.2831.55:2
Initial Series Bands sha11 mean the promissory notes of Funding
Corp evidencing the loan made to Funding Corp under the Term Loan Agreement,
issued, authenticated and delivered under the Term Loan Agreement and the
Collateral Trust Indenture, as supplemented by the Term Note Supplemental
Indenture.
Initial Serie5 Note shall mean the nonrecourse promissory
note, substantially in the form of Exhibit A to the Indenture, to be issued by
the Owner Trustee and authenticated by the Indenture Trustee on the Closing Date
to finance a portion of the Purchase Price.
Investment shall have the meaning set forth in Section 3 of the
Participation Agreement.
Investment Company Act shall mean the Investment Company Act
of 1940, as amended.
IRS shall mean the Internal Revenue Service of the United
States Department of the Treasury or any successor agency.
Kidder Peabody shall mean Kidder, Peabody & Co. Incorporated.
LADWP shall mean the Department of Water and Power of The City
of Los Angeles, a department organized and existing under the charter of the
City of Los Angeles, a municipal corporation of the State of California.
Lease Indenture Estate shall have the meaning set forth in
Section 2.1 of the Indenture.
Lease Tern shall mean the aggregate of the Basic Lease Term
and the Renewal Term, if any.
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6091.50.2831.55:2
Lease Termination Date shall mean the last day of the Lease Term
(whether occurring by reason of a termination or expiration of the Lease Term)
Lessee shall mean Public Service Company of New Mexico, a New
Mexico corporation, and its successors and assigns, as lessee under the Facility
Lease and as party to the other Transactions Documents and Financing Documents
to which it is a signatory.
Lessee's FERC Counsel shall mean Newman & Holtzanger, P.C.,
1615 L Street, Washington, D.C. 20036.
Lessee's General Counsel shall mean Keleher & McLeod, P.A.,
P.O. Drawer AA, Albuquerque, New Mexico 87103.
Lessee's Special Arizona Counsel shall mean Snell & Wilmer,
3100 Valley Bank Center, Phoenix, Arizona 85073.
Lessee's Special Counsel shall mean Mudge Rose Guthrie
Alexander & Ferdon, 180 Maiden Lane, New York, New York 10038.
Lessor shall mean the Owner Trustee, as lessor under the
Facility Lease, and its successors and assigns.
Lessor's Interest shall have the meaning set forth in Section
8(c) (3) of the Participation Agreement.
Lessor's Liens or Owner Trustee's Liens shall mean Liens
against the Trust Estate or the Lease Indenture Estate (other than Permitted
Liens) for which the Lessee is not responsible and which result from acts of, or
any failure to act by, or as a result of claims against, FNB or the Lessor,
unrelated to the ownership of the Undivided Interest or the Real Property
Interest, the administration of the Trust Estate or the transactions
contemplated by the Transaction Documents or the Financing Documents.
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6091.50.2831.55:2
License shall mean NRC Facility Operating License No. NPF-41, as
the same may be amended, modified, extended, renewed or superseded from time to
time.
License Expiration Date shall mean the date of expiration of
the License.
Lien shall mean any mortgage, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction.
Loan shall have the meaning set forth in Section 2(a) of the
Participation Agreement.
Loan Participant shall mean Funding Corp.
Loan Participant's Counsel shall mean nudge Rose Guthrie
Alexander & Ferdon, 180 Maiden Lane, New York, New York 10038.
Majority in Interest of Holders of Notes shall mean Holders of
a majority in principal amount of all Notes Outstanding under the Indenture at
the time of any such determination.
Material Project Agreements sha11 mean (i) Nuclear Fuel
Contract between APS and Combustion Engineering, Inc. (CE), dated as of August
20, 1973, (ii)nuclear Steam Supply Contract between APS and CE, dated as of
August 20, 1973, (iii) Turbine Generator Contract between APS and General
Electric Company, dated as of March 21, 1974, (iv) Uranium Enrichment Services
Contract between the United States of America (USA) and APS, dated November 15,
1984, and the Associated Supplemental Agreement of Settlement between USA and
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6091.50.2831.55:2
APS, dated November 15, 1984, (V) Contract between APS and Westinghouse Electric
Corporation for fuel fabrication services for reload batches of nuclear fuel,
dated August 7, 1974, as amended, (vi) Agreement for the Sale and Purchase of
Waste Water Effluent between the City of Tolleson, APS and Salt River, dated
June 12, 1981, (vii) Agreement for Construction of Arizona Nuclear Power Project
between Bechtel Power Corporation (Bechtel) and API, dated January 15, 1973,
(viii) Agreement for Engineering and Procurement Services between APS and
Bechtel, dated January 15, 1973, and (ix) Option and Purchase of Effluent dated
April 23, 1973, among the Cities of Phoenix, Glendale, Mesa, Tempe and
Scottsdale, the Town of Youngtown, APS and Salt River.
Maximum Option Period shall mean the period, in no event
ending after January 15, 2023, determined as provided in section 13(a) of the
Facility Lease as of the date of expiration of the Basic Lease Term, (i) at the
end of which the residual value of the Undivided Interest (without regard to
inflation or deflation from the Closing Date and without regard to the
obligation of the Lessee to pay decommissioning costs pursuant to Section
10(b)(3)(xi) of the Participation Agreement, but taking into consideration the
existence and effect of the Assignment and Assumption, the ANPP Participation
Agreement and the License) shall be equal to at least 20% of Facility Cost, (ii)
which, when added to the Basic Lease Term, does not exceed 80% of the economic
useful life of the Undivided Interest from the Closing Date and (iii) at the end
of which, taking into consideration the existence and effect of the Assignment
and Assumption, the ANPP Participation Agreement and the License, the use of the
Undivided Interest by any User (in a transaction pursuant to which the Owner
Participant. could realize the amount referred to in clause (i) above) is
feasible from an engineering and economic point of view and is commercially
reasonable. Unless the period, as computed in accordance with the preceding
sentence, shall end on a January 15 or July 15, the final date of the Maximum
Option Period shall be the final January 15 or July 15 in the period, as so
computed. In no event shall the Maximum Option Period end after the License
Expiration Date.
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6091.50.2831.55:2
Minimum Net worth means a Net worth equal to the greater of
(x) $700,000,000 and (y) (1) $950,000,000 less (2) with respect to each
Generating Unit as to which PNM shall have entered into one or more transactions
constituting sale and leaseback transactions under the ANPP Participation
Agreement (including, but without limitation, the transaction contemplated by
the Participation Agreement), (A) $50,000,000 (in the case of Unit 1) and
$100,000,000 (in the case of each other Generating Unit) times (B) the aggregate
percentage of the Lessee's undivided interest in such PVNGS unit subject to such
transactions.
Minimum Period shall mean the shorter of (a) the shorter of (1)
an indefinite period unless such period can reasonably be expected to be shorter
than the applicable Benchmark Period and (2) an actual period in excess of the
applicable Benchmark Period and (b) a period beginning on the date of
determination through and including the penultimate day of the Lease Term. The
Benchmark Period shall be a period equal to any. 60 consecutive calendar months
except that a period of 36 consecutive calendar months shall be applicable with
respect to events specified in clause (iii)(y) of the definition of "Final
Shutdown" or clause (9)(y) of the definition of "Deemed Loss Event". The period
specified in the foregoing clause (a)(l) shall be determined by an independent
nuclear consultant agreed to by the Lessee and the Owner Participant, or,
failing prompt agreement upon such consultant, appointed by the American
Arbitration Society (or comparable or successor organization).
Modification Order shall mean: (i) an order modifying the
License or the NRC license for either PVNGS Unit 2 or PVNGS Unit 3 effective
immediately upon issuance thereof; (ii) an order modifying the License or the
NRC license for either PVNGI Unit 2 or PVNGS Unit 3 effective upon the
expiration of the time period for a demand for a hearing if such hearing is not
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6091.50.2831.55:2
demanded within such period or if the penultimate day of the Lease Term occurs
prior to such demand; or (iii) an order modifying the License or the NRC license
for either PVNGS Unit 2 or PVNGS Unit 3 effective following a hearing (and not
subject to further appeal) or subject to a hearing (or to further appeal) on the
penultimate day of the Lease Term.
Mortgage Relea5e shall mean the Indentures of Partial Release,
to be dated the Closing Date, under and with respect to the Existing Mortgage.
Net Economic Return shall mean the after-tax yield and
after-tax cash flows (after all Federal, state and local taxes) and the return
on investment originally expected by the Owner Participant with respect to the
Undivided Interest, utilizing the Pricing Assumptions and the initial
computation of Basic Rent, Casualty values, special Casualty values and
Termination values derived from such Pricing Assumptions.
Net Worth means the excess of assets over liabilities
determined by the Lessee's auditors on the basis of generally accepted
accounting principles.
New Mexico order shall mean the order issued by the NMPSC on
November 27, 1985, as amended by Order Adopting Errata Notice issued on November
30, 1985, in Case No. 1995, approving, among other things, the terms of the
Facility Lease and the execution and delivery of the Facility Lease by PNM.
New Mexico Public Utility Act shall mean the New Mexico Public
Utility Act, as amended.
NMPSC shall mean the New Mexico Public service Commission
established pursuant to Section 62-5-1 of New Mexico Statutes Annotated, 1978.
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Non-Burdensome Regulation sha11 mean (i) regulation to which
the Owner Participant or the Owner Trustee is otherwise subject by reason of its
lease financing or other activities unrelated to the transactions contemplated
by the Transaction Documents, (ii) ministerial regulatory requirements which do
not impose limitations or regulatory requirements on the business or activities
of the Owner Participant and which are deemed, in the reasonable discretion of
the Owner Participant, not to be burdensome, (iii) regulation resulting from any
possession of the Undivided Interest on or after the Lease Termination Date or
(iv) regulation of the Owner Trustee which would be terminated by the
appointment of a successor Owner Trustee or a co-Owner Trustee pursuant to the
terms of the Trust Agreement.
Nonseverable, when used with respect to any Capital
Improvement, shall mean any Capital Improvement which is not a Severable Capital
Improvement.
Noteholder shall mean any Holder from time to time of a Note
Outstanding under the Indenture.
Notes shall mean the (i) Initial Series Note and (ii) Fixed
Rate Note and any other Additional Notes
Notice of Closing shall have the meaning set forth in Section
5(a) of the Participation Agreement.
NRC shall mean the Nuclear Regulatory Commission of the United
States of America or any successor agency.
NRC Order shall mean the Order of the NRC in the matter of
Arizona Public Service Company, et al. (Palo Verde Nuclear Generating Station,
Unit 1); Application In Respect Of A Sale And Leaseback Financing Transaction By
Public Service Company Of New Mexico (Docket No. STN 50-528), December 12, 1985.
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6091.50.2831.55:2
Nuclear Incident shall mean any occurrence causing bodily
injury, sickness, disease, or death, or loss of or damage to, property, or the
loss of use of property, arising out of or resulting from the radioactive,
toxic, explosive or other hazardous properties of nuclear source, special
nuclear or nuclear by-product material.
Officers' Certificate shall mean a certificate signed by the
President or any vice President and by the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Person with respect to which
such term is used.
Operating Agent shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Original of the Facility Lease shall mean the fully executed
counterpart of the Facility Lease, marked "This Counterpart is the Original
Counterpart", pursuant to Section 22(e) of the Facility Lease and containing the
receipt of the Indenture Trustee.
Outstanding, when used with respect to Notes, shall mean, as
of the date of determination, all such Notes theretofore issued, authenticated
and delivered under the Indenture, except (a) Notes theretofore cancelled by the
Indenture Trustee or delivered to the Indenture Trustee for cancellation, (b)
Notes or portions thereof for the payment of which the Indenture Trustee holds
(and has notified the holders thereof that it holds) in trust for that purpose
an amount sufficient to make full payment thereof when due, (C) Notes or
portions thereof which have been pledged as collateral for any obligations of
the obligor thereof to the extent that an amount sufficient to make full payment
of such obligations when due has been deposited with the pledgee of such Notes
for the purpose of holding such amount in trust for the payment of such
obligations in accordance with the indenture or agreement under which such
obligations are secured and (d) Notes in exchange for, or in lieu of, which
other Notes have been issued, authenticated and delivered pursuant to the
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6091.50.2831.55:2
Indenture; provided, however, that any Note owned by the Lessee or the Owner
Trustee or any Affiliate of either thereof shall be disregarded and deemed not
to be Outstanding for the purpose of any Directive.
Overdue Interest Rate shall mean the weighted average rate per
annum of interest payable with respect to overdue payments of principal on the
Notes Outstanding, computed as act forth in such Notes.
Owner Participant shall mean Chase Manhattan Realty Leasing
Corporation, a New York corporation, and the successors and assigns of such
Person in accordance with the Trust Agreement and the Participation Agreement.
Owner Participant's Liens shall mean Liens against the Trust
Estate or the Lease Indenture Estate (other than Permitted Liens) for which the
Lessee is not responsible and which result from acts of, or any failure to act
by, or as a result of claims against, the Owner Participant unrelated to the
transactions contemplated by the Transaction Documents or the Financing
Documents -
Owner Participant's Special Arizona Counsel shall mean Meyer,
Hendricks, Victor, Osborne & Maledon, 2700 North Third Street, Suite 4000,
Phoenix, Arizona 85004.
Owner Participant's Special NRC Counsel shall mean Shaw,
Pittman, Potts & Trowbridge, 1800 M Street, N.W., Washington, D.C. 20036.
Owner Participant's Special New Mexico Counsel shall mean
Rodey, Dickason, Sloan, Akin & Robb, P.A., 20 First Plaza, Suite 700,
Albuquerque, New Mexico 87103.
Owner Participant's Special Counsel shall mean Milbank, Tweed,
Hadley & McCloy, One Chase Manhattan Plaza, New York, New York, 10005.
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I
6091.50.2831.55:2
Owner Trustee shall mean The First National Bank of Boston, a
national banking association, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and each successor as trustee, separate
trustee and co-trustee thereunder.
Owner Trustee's Counsel shall mean Csaplar & Bok, 1 Winthrop
Square, Boston, Massachusetts 02110.
Participation Agreement Sha11 mean the Participation Agreement,
dated as of July 31, 1986, among the Owner Trustee, the Indenture Trustee,
Funding Corp, the Owner Participant and PNM.
Penalty Rate shall mean the greater of 2% per annum in excess of
the Prime Rate and 2% per annum in excess of the weighted average rate of
interest on the Bonds.
Permitted Liens shall mean (i) the respective rights and interests of
the Lessee, the Owner Participant, the Lessor, the Loan Participant and the
Indenture Trustee, as provided in the Transaction Documents; (ii.) the rights of
any sublessee or assignee under a sublease or an assignment permitted by the
terms of the Facility Lease; (iii) the Lien of the Existing Mortgage on the
leasehold estate under the Facility Lease; (iv) Liens for taxes either not yet
due or which are being contested in good faith and by appropriate proceedings
diligently conducted, so long as such proceedings shall not (x) involve any
danger of the sale, forfeiture or loss of the undivided Interest or the Real
Property Interest or any part thereof or interest therein of the Lessor or the
Owner Participant, (y) interfere with the use, possession or disposition of the
Undivided Interest or the Real Property Interest, or any part thereof or
interest therein, or (a) impair payment of Rent; (V) inchoate materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehouse-men's, or
other like Liens arising in the ordinary course of business for PVNGS, and not
delinquent; (vi) Lessor's Liens, Owner Participant's Liens and Indenture
Trustee's Liens; (vii) choate Liens that have
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6091.50.2831.55:2
been bonded for the full amount in dispute or as to which other satisfactory
security arrangements shall have been made and which are being contested
diligently by the appropriate party in good faith and by appropriate proceedings
so long as such proceedings shall not violate clause (x), (y) or (z) of clause
(iv) above; (viii) choate Liens of any of the types described in clause (v)
above that have been bonded for the full amount in dispute or as to which other
satisfactory security arrangements shall have been made and which arise out of
judgments or awards and with respect to which (A) an appeal or proceeding for
review is being prosecuted in good faith and for the payment of which adequate
reserves shall have been provided as required by generally accepted accounting
principles and (B) there shall have been secured a stay of execution pending
such appeal or proceeding for review, so long as such proceedings shall not
violate clause (x), (y) or (z) of clause (iv) above; (ix) the rights and
interests of the Lessee under the Assignment and Assumption; (x) the rights of
the NRC under the License; (xi) the rights of the ANPP Participants (other than
(i) the Lessee and (ii) any Person who shall become an ANPP Participant in
respect of the Undivided Interest and the Real. Property Interest) under the
ANPP Participation Agreement or any other AMP? Project Agreement; and (xii)
Liens on the undivided ownership interests in Unit 1 of the ANPP Participants
and other Persons (other than the Lessee).
Person shall mean any individual, partnership, corporation,
trust, unincorporated association or joint venture, a government or any
department or agency thereof, or any other entity.
PNM' shall mean Public Service Company of New Mexico, a New
Mexico corporation.
Price-Anderson Act shall mean the Price-Anderson Act, Pub. L.
No. 85-256, 71 Stat. 576 (1957), as amended to the Closing Date.
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6091.50.2831.55:2
Pricing Assumptions shall mean the pricing assumptions set
forth in Schedule 2 to the Participation Agreement.
Prime Rate shall mean the rate of interest per annum equal to
the prime commercial rate of The Chase Manhattan Bank (National Association), as
announced from time to time at its principal office in New York, New York, in
effect from time to time.
Project Insurance shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Project Manager shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Purchase Documents shall mean the Bill of Sale, the Deed and
the Assignment of Beneficial Interest and such other documents as the Owner
Participant, the Owner Trustee, the Indenture Trustee, the Loan Participant or
their respective counsel shall deem desirable to convey good and marketable
title to the Undivided Interest and the Real Property Interest to the Trust.
Purchase Price shall have the meaning set forth in section
4(a) of the Participation Agreement.
PVNGS shall mean the. Arizona Nuclear Power Project, as that
term is defined in the ANPP Participation Agreement.
PVNGS Site shall mean the interest in the Arizona land trust
and the real property described in Exhibit A to the Bill of Sale.
Real Estate Investment shall have the meaning set forth in
Section 3 of the Participation Agreement.
-36-
6091.50.2831.55:2
Real Property Interest shall mean the right, title and
interest of the Owner Trustee acquired pursuant to the Deed and the Assignment
of Beneficial Interest
Reasonable Basis for a position shall exist if tax counsel may
properly advise reporting such position on a tax return in accordance with
Formal Opinion 85-352 issued by the Standing Committee on Ethics and
Professional Responsibility of the American Bar Association.
Refunding Bonds shall mean Funding Corp's Lease Obligation
Bonds series 19863, issued, authenticated and delivered under the Collateral
Trust Indenture, as supplemented by the Refunding supplemental Indenture, as
described in the Underwriting Agreement.
Refunding Date shall mean the date of issuance of the Refunding
Bonds.
Refunding Loan shall have the meaning set forth in section
2(c) of the Participation Agreement.
Refunding Supplemental Indenture shall mean the Refunding Bond
Supplemental Indenture, among PNM, Funding Corp and the Collateral Trust
Trustee, supplementing the Collateral Trust Indenture and providing, among other
things, for the issuance of the Refunding Bonds.
Registration Statement shall mean the registration statement
on Form 8-3 (rile No. 33-2031), as amended, and any other similar registration
statement, including all exhibits and all documents incorporated in the
Registration Statement by reference, filed with the SEC under the Securities Act
in connection with the offer, issue and sale of the Refunding Bonds.
-37-
6091.50.2831.55:2
Regulations shall mean the income tax regulations issued,
published or promulgated under the Code.
Renewal Tern shall have the meaning set forth in section 12 of
the Facility Lease.
Rent shall mean Basic Rent and Supplemental Rent.
Rent Differential shall have the meaning set forth in section
3(h) of the Facility Lease.
Requisition of Title shall mean any circumstance or event in
consequence of which Unit 1 or the Undivided Interest shall be condemned or
seized or title thereto shall be requisitioned or taken by any Governmental
Authority under power of eminent domain or otherwise and all administrative or
judicial appeals opposing such condemnation, seizure or taking shall have been
exhausted or the period for such appeal shall have expired.
Requisition of Use shall mean any circumstance or event in
consequence of which the use of Unit 1 or the Undivided Interest shall be
requisitioned or taken by any Governmental Authority under power of eminent
domain or otherwise, other than a Requisition of Title.
Responsible Officer shall mean, with respect to the subject
matter of any covenant, agreement or obligation of any party contained in any
Transaction Document, the President, or any Vice President, Assistant Vice
President, Treasurer, Assistant Treasurer or other officer who in the normal
performance of his operational responsibility would have knowledge of such
matter and the requirements with respect thereto.
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6091.59.2831.55:2
Retained Assets shall mean (i) the Lessee's ownership interest
in PVNGS other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest1 (ii) Severable Capital Improvements title
to the undivided interest in which is retained by the Lessee in accordance with
Section 2(e) of the Facility Lease, and (iii) any additional interest in and to
PVNGS (other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest) to which the Lessee becomes entitled in
consequence of sections 16.2 or 23.5 of the ANPP Participation Agreement (except
as otherwise provided in Section 5(a) or 19 of the Facility Lease).
Sale Proceeds shall mean, with respect to any sale of the
Undivided Interest and the Real Property Interest by the Lessor to any Person
other than the Lessee, the gross proceeds of such sale payable in cash, less all
costs and expenses whatsoever incurred by the Lessor and the Owner Participant
in connection therewith.
Salt River shall mean Salt River Project Agricultural
Improvement and Power District, an Arizona agricultural improvement district.
SCPPA shall mean southern California Public Power Authority, a
California joint powers agency (doing business in Arizona as Southern California
Public Power Authority Association)
SEC shall mean the Securities and Exchange Commission of the
United States of America or any successor agency.
Section 6(c) Application shall mean Funding Corp's Application
for an Order under Section 6(c) of the Investment Company Act of 1940 Exempting
First PV Funding Corporation from All Provisions of such Act, as filed with the
SEC on September 20, 1985, as amended by an Amendment No. 1 thereto dated
November 8, 1985 and Amendment No. 2 thereto dated November 25, 1985.
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6091.50.2831.55:2
Securities Act shall mean the securities Act of 1933, as
amended.
Securities Exchange Act sha11 mean the Securities Exchange Act
of 1934, as amended.
Severable when used with respect to any Capital Improvement,
shall mean any Capital Improvement which can be removed from Unit 1 without
materially damaging Unit 1 or materially diminishing or impairing the value,
utility or condition which Unit 1 would have had if the applicable Capital
Improvement had not been made
Share shall mean a percentage equal to the percentage of
Undivided Interest in Unit 1 or the Common Facilities, as the context so
requires.
Southern California shall mean Southern California Edison
Company, a California corporation.
Special Casualty Value shall mean (i) during the Basic Lease
Term, the percentage of Facility Cost set forth opposite such date in Schedule 2
to the Facility Lease and (ii) during the Renewal Term, the amount determined by
amortizing ratably the Fair Market Sales Value of the Undivided Interest as of
the day following the last day of the Basic Term in monthly steps over the
remaining term of the License determined pursuant to Section 13(a) of the
Facility Lease. Anything contained in the Facility Lease to the contrary
notwithstanding, Special Casualty value shall be, when added to all other
amounts which the Lessee is required to pay under Section 9(d) of the Facility
Lease (taking into account any assumption of the Notes by the Lessee), under any
circumstances and in any event, in an amount at least sufficient to pay in full,
as of any date of payment, the aggregate unpaid principal amount of all Notes
Outstanding at the close of business on such date, together with accrued and
unpaid interest on such Notes.
-40-
6091.50.2831.55:2
Special Purchase Event shall have the meaning specified in
Section 13(c) of the Facility Lease.
Substituted Lessee shall have the meaning specified in.
section 6.8(c) of the Indenture.
Supplemental Financing shall mean a financing of the
Supplemental Financing Amount of Capital improvements made pursuant to Section
8(f) of the Facility Lease.
Supplemental Financing Amount sha11 mean that portion of
1.133333% of the cost of a Capital Improvement to Unit 1 and .377777% of the
cost of a Capital Improvement to the Common Facilities that shall not exceed (i)
the amount of the increase, if any, in the Owner Participant's basis in the
Undivided Interest for purposes of section 1012 of the Code as a result of such
Capital Improvement less (ii) the amount of the related Additional Equity
Investment of the Lessor, if any.
Supplemental Rent shall have the meaning set forth in Section
3(b) of the Facility Lease.
Surviving Lessee shall have the meaning specified in Section
10(b)(3)(ii) of the Participation Agreement.
Tax shall mean any and all fees (including, without
limitation, documentation, recording, filing, license and registration fees),
taxes (including, without limitation, net income, franchise, value added,
advalorem, gross income, gross receipts, sales, use, property, personal and
real, tangible and intangible, excise, and stamp taxes), levies, imposts,
duties, charges, assessments, or withholdings of any nature whatsoever, general
or specific, ordinary or extraordinary, together with any and all penalties,
fines, additions to tax and interest thereon.
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6091.50.2831.55:2
Tax Assumptions shall mean the assumptions set forth in
Section 1(a) of the Tax Indemnification Agreement, with respect to the Federal
income tax consequences of the transactions included or reflected in the Pricing
Assumptions.
Tax Indemnification Agreement shall mean the Tax
Indemnification Agreement, dated as of July 31, 1986, between PNM and the Owner
Participant.
Term Loan Agreement shall mean the Term Loan Agreement dated
as of July 31, 1986 among Funding Corp, PNM and the bank named on the signature
page thereto.
Term Note Supplemental Indenture shall mean the Series 1986A
Term Note Supplemental Indenture dated as of July 31, 1986 among PNM, Funding
Corp and the Collateral Trust Trustee, supplementing the' Collateral Trust
Indenture and providing, among other things, for the issuance of the Initial
Series Bonds.
Termination Date shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination Event shall mean any early termination of the
Facility Lease in accordance with Section 14 thereof.
Termination Notice shall have the meaning set forth in Section
14(a) of the Facility Lease.
Termination Obligation shall have the meaning set forth in
Section 15.10.2 of the ANPP Participation Agreement (or any comparable successor
provision).
Termination Value, as of any Basic Rent Payment Date during
the Basic Lease Term, shall mean the percentage of Facility Cost set forth
opposite such Basic Rent Payment Date in Schedule 3 to the Facility Lease.
Anything contained in the Facility Lease to the contrary notwithstanding,
Termination value shall be, when added to all other amounts which the Lessee is
required to pay under Section 14 of the Facility Lease,
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6091.50.2831.55:2
under any circumstances and in any event, in an amount at least sufficient to
pay in full as of any Basic Rent Payment Date the aggregate unpaid principal
amount of all Motes Outstanding at the close of business on such date, together
with accrued and unpaid interest on such Notes'.
Transaction Documents shall mean the Participation Agreement,
the Facility Lease, the Trust Agreement, the Indenture, the Extension Letter,
the Tax Indemnification Agreement, the Mortgage Release, the Assignment and
Assumption, each Purchase Document and the Notes.
Transaction Expenses shall have the meaning set forth in
Section 14(a) of the Participation Agreement.
Transfer shall mean the transfer, by bill of sale or
otherwise, by the Lessor of all the Lessor's right, title and interest in and to
the Undivided Interest and the Real Property Interest and under the Assignment
and Assumption on an "as is, where is" basis, free and clear of all Lessor's
Liens and Owner Participant's Liens but otherwise without recourse,
representation or warranty (including an express disclaimer of representations
and warranties in a manner 'comparable to that set forth in the second. sentence
of Section 6(b) of the Facility Lease), to9ether with the due assumption by the
transferee of, and the due release of the Lessor from, all the Lessor's
obligations under the Assignment and Assumption and the Assignment of Beneficial
Interest by an instrument or instruments satisfactory in form and substance to
the Lessor and the Owner Participant.
Transferee shall have the meaning assigned thereto in Section 15
of the Participation Agreement.
Trust shall mean the trust created by the Trust Agreement.
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6091.50.2831.55:2
Trust Agreement shall mean the Trust Agreement, dated as of
July 31, 1986, between the Owner Participant and FNB.
Trust Estate shall have the meaning set forth in section 2.03 of
the Trust Agreement.
Trust Indenture Act shall mean the Trust Indenture Act of
1939, as amended.
Trustee's Expenses shall mean any and all liabilities,
obligations, costs, compensation, fees, expenses and disbursements (including,
without limitation, legal fees and expenses) of any kind and nature whatsoever
(other than such amounts as are included in Transaction Expenses) which may be
imposed on, incurred by or asserted against the Indenture Trustee or any of its
agents, servants or personal representatives, in any way relating to or arising
out of the Indenture, the Lease Indenture Estate, the Participation Agreement or
the Facility Lease, or any document contemplated thereby, or the performance or
enforcement of any of the terms thereof, or in any way relating to or arising
out of the administration of such Lease Indenture Estate or the action or
inaction of the Indenture Trustee under the Indenture; provided, however, that
such amounts shall not include any Taxes or any amount expressly excluded from
the Lessee's indemnity obligations pursuant to section 13(a) or 13(b) of the
Participation Agreement
UCC or Uniform Commercial code shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
Underwriting Agreement shall mean the agreement among Funding
Corp, PNM, Kidder Peabody, Goldman, Sachs & Co. and Drexel Burnham Lambert
Incorporated (both acting either as underwriters or representatives of the
underwriters named therein) relating to the purchase, sale and delivery of the
Refunding Bonds and any applicable pricing agreements.
-44-
6091.50.2831.55:2
Underwriters' counsel shall mean Wilikie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022.
Undivided Interest shall mean a 1.133333% undivided interest
in Unit 1 and a .377777% undivided interest in Common Facilities; the owner of
the Undivided Interest shall be a tenant-in-common with the owner. (including
PNM, if it should be such an owner) of all other undivided interests in Unit 1
and the Common Facilities. Unless the context otherwise requires, Undivided
Interest includes an appropriate portion of Generation Entitlement Share.
Undivided Interest Indenture Supplement shall mean the
supplement to the Indenture substantially in the form of Exhibit C thereto
pursuant to which the Owner Trustee causes the Undivided Interest and the Real
Property Interest to be subjected to the Lien of the Indenture.
Undivided Interest Percentage shall mean the respective
percentages identified as such on Schedule 2 to the Participation Agreement;
provided, however, that in respect to the portion of Unit 1 constituting Common
Facilities, the Undivided Interest Percentage shall be a percentage equal to
one-third of the percentage identified on Schedule 2, to the Participation
Agreement with respect to Unit 1.
Uniform System of Accounts shall mean the Uniform System of
Accounts prescribed for Public Utilities and Licensees subject to the provisions
of the Federal Power Act (Class A and Class B), 18 CFR 101, as in effect on the
date of execution of the Participation Agreement, as amended or modified from
time to time after such date.
Unit 1 shall mean the 1,270 megawatt unit commonly known as
Unit 1 at the Palo Verde Nuclear Generating Station, all as more fully described
in Item A of Exhibit I to the Bill of Sale, together with all Capital
Improvements thereto, but excluding all common facilities.
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6091.50.2831.55:2
Unit 1 Decommissioning Costs Sha11 mean approximately
$23,000,000 (1986 dollars) (or such other amount as shall be determined by the
Lessee, in good faith, in accordance with prudent utility practice) adjusted
annually on the last day of each calendar year, for inflation using an inflation
rate twice that indicated by the change in the Consumer Price Index published by
the U. S. Department of Labor, Bureau of Labor Statistics for such calendar
year, such adjustment to take effect on the first day of the succeeding calendar
year.
Unit 1 Retained Assets shall mean (i) all resident fuel
assemblies, equipment and personal property constituting part of the Generating
Unit (as defined in the ANPP Participation Agreement) designated as Palo Verde
Nuclear Generating Station Unit 1 (other than common facilities) owned by the
Lessee but excluded from Unit 1 as set forth in Item A of Exhibit B to the Bill
of Sale and (ii) a one-third interest in all equipment and personal and real
property constituting PVNGS common facilities under the ANPP Participation
Agreement owned by the Lessee but excluded from the Common Facilities as set
forth in Item B of Exhibit B to the Bill of Sale.
User shall mean a Person unrelated to PNM (within the meaning
of Section 318 of the Code) possessing the Undivided Interest after the tease
Termination Date.
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6091.50.2831.55:2
================================================================================
AMENDMENT NO.1
Dated as of November 18, 1986
to
PARTICIPATION AGREEMENT Dated as to July 31, 1986
among
CHASE MANHATTAN REALTY LEASING CORPORATION,
as Owner Participant
FIRST PV FUNDING CORPORATION,
as Loan Participant
THE FIRST NATIONAL BANK OF BOSTON,
in its individual capacity and as Owner Trustee
under a Trust Agreement,
dated as of July 31, 1986,
with the Owner Participant, as Owner Trustee
CHEMICAL BANK,
in its individual capacity and as Indenture Trustee
under a Trust Indenture, Mortgage, Security Agreement
and Assignment of Rents, dated as of July 31, 1986
with the Owner Trustee, as Indenture Trustee
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
as Lessee
================================================================================
Sale and Leaseback of an Undivided Interest in
Palo Verde Nuclear Generating Station Unit 1
and Certain Related ommon Facilities
================================================================================
6091.CHASE.DEBT.181A.1
AMENDMENT NO. 1, dated as of November 18, 1986, to the
Participation Agreement, dated as of July 31, 1986, among CHASE MANHATTAN REALTY
LEASING CORPORATION, a New York corporation (the Owner Participant), FIRST PV
FUNDING CORPORATION, a Delaware corporation (the Loan Participant THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, in its individual
capacity (FNB) and as Owner Trustee (the Owner Trustee) under a Trust Agreement,
dated as of July 31, 1986, with the Owner Participant, CHEMICAL BANK, a New York
banking corporation, in its individual capacity (Chemical Bank) and as Indenture
Trustee (the Indenture Trustee) under a Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of July 21, 1986, with the Owner
Trustee, and PUBLIC SERVICE COMPANY OF NEW Mexico, a New Mexico corporation (the
Lessee).
W I T N E S S E T H:
WHEREAS, the Owner Participant, the Loan Participant, the Owner
Trustee, the Indenture Trustee and the Lessee have previously entered into a
Participation Agreement dated as of July 31, 1986 (the Participation Agreement);
WHEREAS, the Initial Series Note was issued by the Owner Trustee
in connection with the acquisition of the Undivided interest;
WHEREAS, Section 2(c) of the Participation Agreement provides
for a refunding of the Initial Series Note upon the satisfaction of the
conditions set forth in Sections 2(c) and 11(c) of the Participation Agreement;
WHEREAS, the parties hereto wish to refund the Initial Series
Note;
WHEREAS, such refunding of the Initial Series Note necessitates
this Amendment No. 1 to the Participation Agreement (Amendment No. 1);
WHEREAS, Section l0.l(viii) of the Indenture provides, among
other things, that the Owner Trustee and Indenture Trustee may, without the
consent of the Holders of Notes Outstanding, execute a supplement to the
Indenture in order, among other things, to evidence the issuance of and to
provide the terms of Additional Notes;
6091.CHASE.DEBT.181A.1
WHEREAS, the Owner Trustee and the Indenture Trustee intend to
execute Supplemental Indenture No. 1, dated as of November 18, 1986
(Supplemental Indenture No. 1), to the indenture, providing, among other things,
for the issuance under the Indenture of the Fixed Rate Notes (as defined in
Supplemental Indenture No. 1), to the Indenture, providing, among other things,
for the issuance under the Indenture of the Fixed Rate Notes (as defined in
Supplemental Indenture No. 1);
WHEREAS, Section 10.2(ii) of the Indenture provides, among other
things, that, upon receipt of a written instruction from the Lessee and the
Owner Trustee, the indenture Trustee shall consent to certain amendments to the
Facility Lease: and
WHEREAS, the Owner Trustee and the Lessee intend to execute
Amendment No. 1, dated as of November 18, 1986 (Lease Amendment No. 1), to the
Facility Lease, to amend Section 3(a) thereof and the schedules thereto;
NOW, THEREFORE in consideration of the premises and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Amendment.
(a) Definitions. Except as otherwise defined herein and in the
recitals, capitalized terms used herein shall have the respective meanings set
forth in Appendix A to the Participation Agreement.
(b) Amendment to Tax Indemnification Agreement. The fact that
an amendment to the Tax Indemnification Agreement is contained in this Amendment
No 1 to the Participation Agreement does not mean that the consent or agreement
of any party to this Amendment No. 1 to the Participation Agreement other than
the Lessee and the Owner Participant is required to amend the Tax
Indemnification Agreement at this time or at any time in the future. The Lessee
and the Owner Participant hereby amend Section 1(a) (11) of the Tax
Indemnification Agreement to read in its entirety as follows:
"(11) Without giving effect to any credits against tax, the Owner
Participant's (i) marginal federal rate of income tax is 46% in 1986,
39.950685% in 1997 and 34% in 1988 and (ii) New York State and New York
City rates of income tax are 9% and 9%, respectively."
-2-
6091.CHASE.DEBT. 181A:1
SECTION 2. Implementation.
(a) Forms. The forms of Supplemental Indenture No. 1 and Lease
Amendment No. 1 are attached hereto as Exhibit. A and B, respectively. All
blanks in Supplemental Indenture No. 1 and Lease Amendment No. 1 shall be
appropriately filled in or completed, all in a manner consistent therewith and
with the Transaction Documents and the Financing Documents.
(b) Request by the Owner Participant. In accordance with Section
2.01 of the Trust Agreement, the Owner Participant hereby requests that the
Owner Trustee (i) execute and deliver this Amendment No. 1, Supplemental
Indenture No. 1 and Lease Amendment No. 1 (collectively, the Refunding
Amendments); (ii) execute the Fixed Rate Notes and. request the Indenture
Trustee to authenticate and deliver the Fixed Rate Notes pursuant to Section
3.5(2) of the Indenture; and (iii) execute and deliver all other agreements,
instruments and certificates contemplated by the Transaction Documents, the
Financing Documents and the Refunding Amendments.
(c) Instruction and Consent. The Lessee and the Owner Trustee
hereby instruct the Indenture Trustee (i) to consent to Lease Amendment No. 1,
and the Indenture Trustee so consents, and (ii) to execute Supplemental
Indenture No. 1, all in accordance with section 10.2 of the Indenture.
(d) Recordations and Filings. The Lessee agrees that it shall
cause to be made the recordations and filings set forth in Schedule 1 hereto and
represents that such filings and recordations are all the recordations and
filings that are necessary in order to preserve, protect and perfect the Owner
Trustee's rights and interests under the Facility Lease, as amended by Lease
Amendment No. 1, and the first and prior security interest of the Indenture
Trustee in the Lease Indenture Estate under the Indenture, as amended by
Supplemental Indenture No. 1.
-3-
6091.CHASE.DEBT.l81A:l
(e) Refunding of Bonds. The Loan Participant agrees that, unless
it obtains the written consent of the Owner Participant, (1) it will refund its
Lease Obligation Bonds, series 19863 (the Bonds), issued pursuant to the Series
1986B Bond Supplemental Indenture, dated as of November 18, 1986 (the series
1986B Bond Supplemental Indenture), only in connection with the refunding of an
equal principal amount of the Pledged Lessor Notes identified in Schedule 2 to
the series 19863 Bond Supplemental Indenture (the Pledged Lessor Notes) , or, to
the extent that the Lessor Notes described in Schedule 3 to such Series 19863
Bond Supplemental Indenture (the Lessor Notes) are subjected to the lien of the
Collateral Trust Indenture, in connection with the refunding of an equal
principal amount of such Lessor Notes and (2) subsequent to any Lessor Notes
being subjected to the lien of the Collateral Trust Indenture, or, if the Lessor
Notes are not so subjected, a mandatory redemption of Bonds pursuant to Section
1.04 (a) of the Series 19863 Bond Supplemental Indenture, the principal amount
of Pledged Lessor Notes bearing interest at the rates per annum of 8.05%, 8.95%
and 10.15% respectively, and Lessor Notes, if any, bearing interest at the rates
per annum of 8.05%, 8.95% and 10.15%, respectively, shall not be less than the
principal amount of Bonds bearing interest at the rates per annum of 8.05%,
8.95% and 10.15% respectively.
(f) Reoptimization of the Notes. If the Lessee, in a timely
manner, provides the Owner Trustee and the Owner Participant with information
sufficient for the Owner Trustee to direct the adjustments described in Section
2(b) of Supplemental Indenture No. 1, together with a certificate (in form and
substance reasonably satisfactory to the Owner Participant) to the effect that
such adjustments minimize the aggregate increase in Basic Rent occurring as a
result of the operation section 3(d) of the Facility Lease, the Owner Trustee
shall deliver to the Indenture Trustee a certificate pursuant to such Section
2(b). Notwithstanding the foregoing, the Owner Participant, the Indenture
Trustee and the Owner Trustee may rely on such certificate and shall have no
obligation to verify the same.
(g) Payment of Transaction Expenses. The Owner Participant
shall pay to the Owner Trustee on the Refunding Date the sum of $100,000 to be
disbursed by the Owner Trustee on account of Transaction Expenses as
contemplated by section 14 of the Participation Agreement.
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609l.CHASE.DEBT. 18lA: 1
SECTION 3. Miscellaneous.
(a) Execution. This Amendment No. 1 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Although this Amendment No. 1 is dated as of the date first
above written for convenience, the actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
and this Amendment No. 1 shall be effective on the latest of such dates.
(b) Governing Law. This Amendment No. 1 has been negotiated and
delivered in the State of New York and shall be governed by, and be construed in
accordance with, the laws of the State of New York.
(c) Responsibility Far Recitals. The recitals contained herein
shall be taken as the statements of the Lessee, and the other parties hereto
assume no responsibility for the correctness of the same.
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6O91.CHASE.DEBT. 18lA: 1
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment No. 1 to the Participation Agreement to be duly executed by their
respective officers thereunto duly authorized as of the dates set forth below.
CHASE MANHATTAN REALTY
LEASING CORPORATION
By
---------------------------
Vice President
Date: November 25, 1986
FIRST PV FUNDING CORPORATION
By
--------------------------
President
Date: November 25, 1985
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:
-------------------------
Vice President and
Corporate Controller
Date: November 25, 1986
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6091.CHASE.DEBT.181A:l
THE FIRST NATIONAL BANK OF BOSTON;
in itsindividual capacity and
as Owner Trustee
By:
---------------------------
Assistant Vice President
Date: November 25, 1986
CHEMICAL BANK, in its individual
capacity and as Indenture Trustee
By:
--------------------------
Authorized Officer
Date: November 25, 1986
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6O91.CHASE.DEBT.181A:l
Schedule 1
to
Amendment No.1
to
Participation Agreement
RECORDATONS AND FILINGS
Part I. Recordations.
County Recorder, Maricopa County, Arizona:
(i) Amendment No. 1 to the Facility Lease; and
(ii) Supplemental Indenture No. 1 to the Indenture.
Part II. Filings.
(a) Separate financing statement amendments naming PNM as
"Lessee" and the Owner Participant's Owner Trustee as "Lessor", and the
Indenture Trustee, as Assignee of the Owner Trustee, with respect to the
Facility Lease, as amended by Lease Amendment No. 1, to be filed in the records
of:
(1) the Secretary of State of the State of Arizona
(regular and public utility filings);
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the Clerk of Bernalillo County, New Mexico.
(b) Separate financing statement amendments naming the Owner
Trustee as "Debtor" and the Indenture Trustee as "Secured Party", with respect
to the Indenture, as amended by Supplemental Indenture No. 1, to be filed in the
records of:
(1) the Secretary of State of the State of Arizona;
6O9l.CHASE.DEBT. 181A: 1
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico
and
(4) the Clerk of Bernalillo County, New Mexico.
(c) A financing statement amendment naming the Owner Trustee
as "Debtor" and the Indenture Trustee as "Secured Party" with respect to the
Indenture, as amended by Supplemental Indenture No. 1, to be filed with the
Secretary of State of the Commonwealth of Massachusetts.
(d) Separate financing statement amendments naming Funding
Corp. as "Debtor" and the Collateral Trust Trustee as "Secured Party", and
listing, as collateral covered thereby, the "Pledged Property" under the
Collateral Trust Indenture, as amended and supplemented, to be filed in the
records of:
(1) the Secretary of State of the State of Arizona;
(2) the County Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the County Clerk of Bernalillo County, New Mexico.
(e) Supplemental Indenture No. 1 to the Indenture, to be filed
with the Secretary of State of the State of New Mexico, under the Public Utility
Act.
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6O9l.CHASE.DEBT. l8lA:l
PUBLIC SERVICE COMPANY OF NEW MEXICO
Alvarado Square
Albuquerque, New Mexico 87158
November 25, 1986
Chase Manhattan Realty Leasing Corporation
One Chase Manhattan Plaza
New York, New York 10005
Current Pricing Assumptions
Participation Agreement dated as of July 31, 1986,
as amended
Dear Sirs:
Attached hereto as Schedule 1 is a list of the Current Pricing Assumptions used
in connection with the adjustment to Basic Rent, Casualty Values, Special
Casualty Values and Termination Values agreed to in connection with the
transactions consummated on November 25, 1926, with respect to the
above-captioned Participation Agreement and the Facility Lease, as amended, and
the Indenture, as amended, referred to therein.
We understand that the Current Pricing Assumptions reflected on Schedule 1
hereto may not be amended without your prior written consent.
Sincerely,
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ B. D. Lackey
-------------------------------
Vice President and
Corporate Controller
6091.CHASE.DEBT.l81P:l
SCHEDULE 1
CURRENT PRICING ASSUMPTIONS
Basic Rent, Casualty Values, Special Casualty Values and
Termination Values, as set forth in the Facility Lease, as amended by Amendment
No. 1 thereto, have been computed on the basis of the following pricing
assumptions:
1. Investment Percentage: 20%
2. Loan Percentage: 80%
3. Interest Rate on:
(a) Fixed Rate Note due
January 15, 1992
($1,501,000) 8.05%
(b) Fixed Rate Note due
January 15, 1997
($5,625,000) 8.95%
(c) Fixed Rate Note due
January 15, 2015
($32,873,000) 10.15%
(d) Assumed Interest Rate
for interim period 9.9024175%
4. Federal ACRS Deductions: 10-year public util-
ity property deduc-
tions on the basis
of 100% of Facility
Cost.
5. State and City Deductions: 16 Year 150% declin-
ing balance switch-
ing to straight line
at the optimal
point, using the
half year conven-
tion, on the basis
of 100% of Lessor's
Cost.
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6091.CHASE. DEBT. 181P: 1
6. Owner Participant's Tax
Year-End: December 31, 1996
7. Closing Date: August 1, 1986
8. Transaction Expenses: 2.0% of Facility Cost
paid by the Owner
Participant on the
Closing Date and .2%
of Facility Cost paid
on November 25, 1986
in addition to its
Investment Amortized
on a straight-line
basis from the date
of payment through
the end of the Basic
Lease Term)
9. Real Estate Investment: $19,417
10. Basic Rent Payment Date: January 15 and
July 15 of each year
(rent payable in
arrears)
11. First Basic Rent Payment
Date: July 15, 1997
12. Last Basic Rent Payment
Date: January 15, 2015
13. Interim Rent Payment Date: January 15, 1987
14. Marginal Federal Tax Rate: 46% for 1986,
39.950685% for 1987
and 34% thereafter
15. Marginal Combined New York
State and City Tax Rate: 8.6% deductible for
Federal taxes
16. First Estimated Tax Payment
Date: September 15, 1986
17. Tax Accounting Method: Accrual
18. Amortization of Fixed Rate
Notes: As set forth in
schedules attached
thereto
Accepted and Agreed:
CHASE MANHATTAN REALTY LEASING CORPORATION
By
------------------------------
Title: Vice President
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6091.CHASE.DEBT.181P:l