Execution Copy
Document No. P-5
PVNGS CAPITAL TRUST
VARIABLE RATE TRUST NOTES
PVNGS NOTE AGREEMENT
Dated as of July 31, 1998
TABLE OF CONTENTS
Page
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1. AUTHORIZATION OF ISSUE OF NOTES..........................................1
2. PURCHASE AND SALE OF NOTES...............................................1
3. CONDITIONS OF CLOSING....................................................2
3A. Notes..............................................................2
3B. Representations and Warranties; No Default.........................2
3C. Trust Agreement in Effect..........................................2
3D. No Material Adverse Change.........................................2
3E. Purchase Permitted By Applicable Laws..............................2
3F. Proceedings........................................................2
4. PREPAYMENTS; ADDITIONAL DRAWDOWNS........................................2
4A. Scheduled Mandatory Prepayments....................................3
4B. Unscheduled Mandatory Prepayments..................................3
4C. Optional Prepayments...............................................3
4D. Notice of Optional Prepayment......................................3
4E. Retirement of Notes................................................4
4F. Additional Drawdowns...............................................4
4G. Interest Rebate....................................................4
5. COVENANTS................................................................5
5A. Statements and Other Reports.......................................5
5B. Inspection of Property.............................................5
5C. Existence..........................................................5
5D. Payment of Taxes and Claims........................................5
6. EVENT OF DEFAULT.........................................................5
6A. Acceleration.......................................................6
6B. Other Remedies.....................................................6
6C. Nature of Obligation...............................................6
6D. No Contest; Waiver, etc............................................6
7. REPRESENTATIONS, COVENANTS AND WARRANTIES................................7
7A. Organization.......................................................7
7B. Authorization......................................................7
7C. Actions Pending....................................................7
7D. Title to Properties................................................7
7E. Conflicting Agreements and Other Matters...........................7
7F. Offering of Notes..................................................8
7G. Regulation G, Etc..................................................8
7H. Governmental Consent...............................................8
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8. COVENANTS OF THE TRUSTEE IN ITS INDIVIDUAL CAPACITY......................8
9. REPRESENTATIONS AND COVENANTS OF EACH PURCHASER..........................8
9A. Purchase not for Distribution......................................8
9B. No ERISA Funds.....................................................8
9C. Notice of Reset....................................................9
10. DEFINITIONS..............................................................9
11. MISCELLANEOUS...........................................................10
11A. Course of Dealing.................................................10
11B. Persons Deemed Owners.............................................10
11C. Survival of Representations and Warranties; Entire Agreement......10
11D. Successors........................................................10
11E. Disclosure to Other Persons.......................................10
11F. Notices...........................................................11
11G. Limitation of Liability and Trustee's Obligations.................11
11H. Descriptive Headings..............................................11
11I. Governing Law.....................................................11
11J. Counterparts......................................................11
ANNEX
Annex I - Note Information
EXHIBITS
Exhibit A - Form of Note
Schedule I - Principal Prepayment Schedule
Schedule II - Prepayment Premium Schedule
Exhibit B - Form of Notice of Reset
Exhibit C - Sample Interest Rate Reset Calculation
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PVNGS CAPITAL TRUST
c/o The Bank of New York (Delaware)
White Clay Center
Newark, Delaware 19711
Phone: (302) 451-2500
As of July 31, 1998
Public Service Company of New Mexico
Alvarado Square
Albuquerque, New Mexico 87158
Attention of Treasurer
Gentlemen:
PVNGS Capital Trust, a Delaware statutory business trust (the "Trust"),
hereby agrees with Public Service Company of New Mexico, a New Mexico
corporation ("PNM"), as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The governing instrument of the
Trust (the Amended and Restated Declaration of Trust dated as of July 31, 1998;
hereinafter, the "Trust Agreement") authorizes the Trust to issue notes under
this Agreement, in substantially the form of EXHIBIT A hereto, in an aggregate
principal amount equal to $419,817,809.24. The term "Notes" as used herein shall
include each Note delivered pursuant to any provision of this Agreement and each
Note delivered in substitution or exchange for any such Note. The term
"Purchaser" as used herein shall mean PNM or any registered owner of a Note and
the term "Purchasers" shall mean PNM and all registered owners of Notes, in each
case except as otherwise indicated. Capitalized terms used herein without
definition shall have the respective meanings specified in the Trust Agreement
as in effect on the date hereof.
2. PURCHASE AND SALE OF NOTES. (a) The Trust hereby agrees to sell to
PNM and, subject to the terms and conditions herein set forth, PNM hereby agrees
to purchase from the Trust the Notes more particularly identified in Annex I,
each at a purchase price equal to the principal amount thereof. Each Note shall
bear interest from the "Interest Start Date" as set forth therein. The Trust
will deliver to PNM, at the offices of Winthrop, Stimson, Putnam & Roberts at
One Battery Park Plaza, New York, New York, on August 6, 1998, or on any other
date upon which the Trust and PNM may mutually agree (the "Date of Closing"),
the Notes registered in PNM's name in the denomination or denominations
specified by PNM, against payment of the purchase price thereof.
(b) Each Note corresponds to either one (in the case of Owner Trust No.
1) or two Trust Lessor Notes as follows: the designation given each note under
the caption "Tranche Designation" on Annex I is comprised of a number followed
by a "/" and one or more letters and, in two cases, a number. The letter(s) and
number (if any) following the "/" correspond to the designation given the
corresponding Trust Lessor Notes in Schedules I-A and I-B to the Trust
Agreement. Notwithstanding the foregoing, all Notes are equally general
unsecured obligations of the Trust payable in accordance with their respective
terms and this Agreement.
3. CONDITIONS OF CLOSING. PNM's obligation to purchase and pay for the
Notes on the date of closing is subject to the satisfaction, on or before the
date of closing, of the following conditions:
3A. Notes. There shall have been delivered to PNM the
appropriate Notes, duly completed and executed by the Regular Trustee on behalf
of the Trust.
3B. Representations and Warranties; No Default. The
representations and warranties of the Trust contained in paragraph 7 shall be
true on and as of the date of closing and there shall exist on the date of
closing no Event of Default.
3C. Trust Agreement in Effect. The Trust Agreement shall be in
full force and effect.
3D. No Material Adverse Change. There shall not have occurred
any condition, event or act which would materially and adversely affect the
property or assets, condition (financial or otherwise) or the activities of the
Trust or the ability of the Trust to repay the Notes or to perform under this
Agreement.
3E. Purchase Permitted By Applicable Laws. The purchase of and
payment for the Notes to be purchased by PNM on the date of closing on the terms
and conditions herein provided (including the use of the proceeds of such Notes
by the Trust) shall not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securities Act or Regulations
G, T or X of the Board of Governors of the Federal Reserve System), and shall
not subject PNM to any tax, penalty, liability, or other onerous condition under
or pursuant to any applicable law or governmental regulation, and PNM shall have
received such certificates or other evidence as it may request to establish
compliance with this condition.
3F. Proceedings. All proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in substance and form to PNM, and PNM shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
4. PREPAYMENTS; ADDITIONAL DRAWDOWNS. Each Note shall be subject to
prepayment with respect to the required prepayments specified in paragraphs 4A
and 4B, and also under the circumstances set forth in paragraph 4C. The
principal amount owing on each Note may be increased from time to time under the
circumstances set forth in paragraph 4F. PNM and the Trust shall jointly
maintain a master schedule showing such prepayments and increases (if any) in
respect of the Notes, individually and in the aggregate. Such schedule shall be
updated on the date of each such prepayment or increase.
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4A. Scheduled Mandatory Prepayments. Each tranche of Notes
shall be prepaid in accordance with Schedule I attached thereto; provided,
however, that if the payment of principal which is received by the Trust (the
"Actual Principal Payment") on the corresponding Trust Lessor Note tranche
specified on said Schedule I exceeds the principal amortization amount specified
for that date on said Schedule I for such tranche of Notes, the prepayment of
such Notes required to be made on that date shall be increased by an amount
equal to 94% of such excess (but not by an amount greater than the outstanding
principal amount of such tranche of Notes). If the Actual Principal Payment is
less than the principal amortization amount specified for that date on said
Schedule I for such tranche of Notes, the required prepayment shall be reduced
(but not to less than zero) by an amount equal to 94% of the shortfall. In each
instance where there is an increase or reduction in the prepayment amount
specified on said Schedule I, the amount of the increase or reduction, as the
case may be, shall be noted on said Schedule I by the affected Purchasers.
4B. Unscheduled Mandatory Prepayments. Whenever (i) a Trust
Lessor Note (A) is prepaid, in whole or in part, other than in accordance with
its scheduled amortization, or (B) is sold by the Trust or (ii) any other debt
security previously acquired by the Trust (including a Replacement Security as
hereinafter defined) is sold or subject, in whole or in part, to prepayment,
purchase, redemption or other unscheduled payment or distribution, the
corresponding Note shall be prepaid in an amount not less than 94% of the
Accrued Book Value of such Trust Lessor Note or other debt security, or relevant
portion or portions thereof (or, at the option of the Trust, in a greater
amount, up to 100% of the available funds received after deducting therefrom any
interest or premium payable with respect to the affected Note in connection with
the application of such funds) within thirty-five (35) days of the date on which
the Trust receives such funds, at a redemption price equal to the principal
amount of the Notes to be prepaid, together with interest accrued thereon to the
date of redemption, plus the Mandatory Redemption Premium set forth on Schedule
II to such Notes (except in case of a prepayment under clause (i)(A) above, in
which case there shall be no premium); provided, however, that this paragraph 4B
shall not apply, and no redemption shall be required, if: (i) the securities
being sold are replaced by a like principal amount of non-callable debt
securities (the "Replacement Securities") rated at least as high as the
securities they replace, but no lower than A (or a gradation thereof), by both
Moody's Investors Service, Inc. and Standard & Poor's Investor Services, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"), (ii) the time
and amount of debt service payments on such Replacement Securities (without
regard to any reinvestment thereof) will permit debt service payments to be made
in full on the Notes when due without regard to the adjustments permitted by
Section 4A hereof and (iii) no more than 5% of the value of such Replacement
Securities and any other Replacement Securities acquired by the Trust represents
securities of any one issuer or affiliates thereof.
4C. Optional Prepayments. A Note may be prepaid, in whole but
not in part, on any interest payment date occurring on or after the date
specified in Schedule II to such Note at a price equal to the outstanding
principal amount of such Note, together with accrued interest thereon to the
date of redemption, plus the Optional Redemption Premium, if any, set forth on
such Schedule II.
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4D. Notice of Optional Prepayment. The Trust shall give the
holder of each Note notice of any prepayment pursuant to Section 4C at least
five days prior to any such prepayment. Any notice given under this Section 4D
may be revoked (and no prepayment shall be required) not less than twenty-four
hours prior to the applicable prepayment.
4E. Retirement of Notes. Except as provided in this Agreement,
the Notes may not be redeemed, prepaid or otherwise retired, in whole or in
part, prior to their stated final maturity.
4F. Additional Drawdowns. In the event that a scheduled
mandatory prepayment of a Note (as contemplated by Section 4A hereof) is reduced
to zero, the amount, if any, that such mandatory prepayment would have been
reduced below zero but for the fact that no reduction below zero is permitted,
shall be treated as an Additional Drawdown as of the mandatory prepayment date
and shall be recorded as such on Schedule I to such Note by the affected
Purchaser. All amounts shown on Schedule I to a particular Note as Additional
Drawdowns, whether because of the reduction alluded to above or because of being
set forth thereon at the time of the issuance of such Note, shall be deemed to
be an increase in the outstanding principal amount of the Note effective as of
the date of such Additional Drawdown. Any Additional Drawdown shall first be
credited to payments of interest then due and owing on the Notes before being
applied to any other purpose. To the extent Additional Drawdowns are credited to
payments of interest on a Note, such interest shall be deemed to be paid and no
longer owing.
4G. Interest Rebate. In the event that a Specified Prepayment
(as hereinafter defined) shall occur, then, on the date of such Specified
Prepayment, the interest paid on the corresponding Note to the owner thereof
during the twelve month period ending on the date of such prepayment (the
"Rebate Period") shall be rebated on or before the date of such Specified
Prepayment by the registered owner of such corresponding Note to the Trust to
the extent (if any) of the excess of (A) the Accrued Book Value of such Trust
Lessor Note over (B) the proceeds of such Specified Prepayment (or the pro rata
portion of such Accrued Book Value in the event that the Trust Lessor Note in
question has been prepaid in part only). In the event that a Note subject to
interest rebate shall have been owned by more than one registered owner during a
Rebate Period, each owner shall contribute to the required rebate pro rata in
accordance with the actual interest actually received by it during such Rebate
Period, however, insofar as the Trust shall be concerned, each such owner shall
be liable for the amount of the rebate in question (and the Trust shall have the
right to offset from amounts due on the Note in respect of which the rebate is
due). In the event that an obligated owner shall fail to contribute as provided
in the immediately preceding sentence, upon payment in full of the required
rebate by one or more other owners, such other owners shall be subrogated to
claims against the defaulting owner. "Specified Prepayment" is (i) any optional
prepayment of principal of Trust Lessor Notes, (ii) any mandatory prepayment of
principal pursuant to the Indenture referenced in the Trust Lessor Note in
question, (iii) any purchase of the Trust Lessor Note pursuant to Section 6.8(b)
of the Indenture referenced in such Trust Lessor Note and (iv) any other
repayment or prepayment of principal of the Trust Lessor Note in question (it
being the intent of the parties hereto that a Specified Prepayment shall not
include the payment of regularly scheduled installments of principal as provided
on such Trust Lessor Note). Anything in this Section 4G to the contrary
notwithstanding, no rebate shall be due (I) to the extent that any excess of (A)
over (B) shall have arisen from the Trust Lessor Note in question not having
been paid when and as contemplated thereby and by the related Lessor Note
Documentation or (II) in connection with any repayment (other than a repayment
in full of the Trust Lessor Note in question) occurring during, or in connection
with, a "Lease Event of Default" of the type specified in Section 15(vii) of any
Facility Lease (Section 15(viii) in the case of the Facility Leases dated as of
August 12, 1986) comprising part of the Lessor Note Documentation relating to
the Trust Lessor Note in question.
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5. COVENANTS.
5A. Statements and Other Reports. The Trust will maintain or
cause to be maintained complete and accurate books of account with respect to
all of the receipts, disbursements and transactions of the Trust and will
deliver to the holder of the Notes, with reasonable promptness, such financial
data or information as any such holder may reasonably request.
5B. Inspection of Property. The Trust covenants that it will
permit any Person designated by a Purchaser, upon two (2) Business Days prior
notice to the Regular Trustee, to visit and inspect any of the properties of the
Trust, to examine the books and financial records of the Trust and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of the Trust with the officers of the Regular Trustee and the Trust's
independent public accountants or other experts which it has retained, all at
such reasonable times during normal business hours of the Regular Trustee and as
often as a Purchaser may reasonably request.
5C. Existence. The Trust will (i) do or cause to be done all
things necessary to preserve and keep in full force and effect the existence and
rights of the Trust and to comply with all laws and government rules,
regulations and orders applicable to the Trust and (ii) at all times maintain,
preserve and protect all franchises, rights, licenses and other authorizations
and preserve all of the property necessary for the conduct of the Trust's
activities.
5D. Payment of Taxes and Claims. The Trust will pay all taxes,
assessments and other governmental charges imposed upon any of the properties or
assets of the Trust before the same become delinquent, and all claims for sums
which have become due and payable and which by law have or may become a Lien or
charge upon any of such properties or assets, provided that no such charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted if (i) such proceedings shall
suspend during their pendency the collection thereof from any Person, and (ii)
none of such properties or assets or any interest therein would thereby be
subject to a material risk of being sold, forfeited, confiscated, condemned or
lost.
6. EVENT OF DEFAULT. It shall be an Event of Default if the Trust
defaults in the payment of principal or interest on any Note when the same shall
become due by the terms thereof or by mandatory prepayment or otherwise and such
default shall continue for 5 Business Days; provided, however, that, prior to
the Cross-Over Date, it shall not be an Event of Default under this Agreement,
and the Notes shall not be subject to acceleration, during such time as (i)
PNM's senior unsecured notes are rated B2 or better by Moody's Investors
Service, Inc. or B or better by Standard & Poor's, unless the Trust's failure to
pay extends for more than 180 consecutive days and (ii) the Trust's non-payment
in respect of a Note results from a failure by PNM to pay scheduled installments
of rent under the Lessor Note Documentation relating to the corresponding Trust
Lessor Note. Interest on overdue principal and premium, if any, and (to the
extent permitted by applicable law) any overdue interest on a Note shall be paid
from the due date thereof at the rate per annum equal to 1% plus the then
applicable interest rate on such Note for the period during which any such
principal, premium or interest shall be overdue; provided, however, that
interest on overdue amounts shall be payable only to the extent the Trust shall
have indefeasibly received interest on overdue amounts in respect of the Trust
Lessor Note that corresponds to such Note.
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6A. Acceleration. If an Event of Default shall have occurred,
the holder of the Notes may at its option, by notice in writing to the Regular
Trustee, declare all of the Notes held by such holder to be, and all of the
Notes held by such holder shall thereupon be and become, immediately due and
payable together with interest accrued thereon, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Trust.
6B. Other Remedies. If an Event of Default shall occur and be
continuing, the holder of the Notes may proceed to protect and enforce its
rights under this Agreement and such Notes by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of the Notes is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise. Anything to the contrary in the
foregoing notwithstanding, no remedy which would do other than cause the
liquidation of the assets of the Trust shall be available to a holder of the
Notes.
6C. Nature of Obligation. The obligations of the Trust
hereunder and under the Notes (the "Obligations") are general unsecured,
unsubordinated obligations of the Trust; the holders of the obligations as such
have no interest, beneficial or otherwise, in the property of the Trust. The
Trust will duly and punctually pay, or cause to be paid, the principal of, and
premium, if any, and interest on the Obligations in accordance with the terms
thereof. Anything in this Agreement or in the Trust Agreement to the contrary
notwithstanding (other than Section 11G), the right of any holder of an
obligation to receive payment of the principal of, and premium, if any, and
interest on or after the respective due dates thereof (as the same may be
postponed in accordance with the terms of the Obligations), or to institute suit
for enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
6D. No Contest; Waiver, etc. Each Purchaser (i) agrees that it
will not, nor will it permit any Affiliate of such Purchaser to, (x) object to
or otherwise contest, in any manner, the eligibility of the Trust under Section
109 of the Bankruptcy Code (or any successor provision) to commence, be the
subject of, or be the debtor in a Chapter 11 or Chapter 7 case under the
Bankruptcy Code including, but without limitation, whether or not the Trust
constitutes a "person", "corporation" or "business trust" within the meaning of
Section 101 of the Bankruptcy Code (or any successor provision), or (y) seek a
dismissal or conversion from Chapter 11 to Chapter 7 of any such case, (ii) to
the extent permitted by applicable law, hereby waives any right it may have
under Sections 1104(a)(1) and (a)(2) of the Bankruptcy Code (or any successor
provision) to seek appointment of a trustee for the Trust except for reasons of
6
fraud, dishonesty or gross incompetence, misconduct, mismanagement or
irregularity in the management of the affairs of the debtor by current
management (collectively, "Stipulated Cause") and, (iii) to the extent permitted
by applicable law, hereby waives any right it may have under Section 1104(b) of
the Bankruptcy Code (or any successor provision) to seek appointment of an
examiner for the Trust other than to investigate allegations of Stipulated
Cause. Without limiting the generality of Section 11B hereof, each Purchaser
further agrees that it will not sell, assign or transfer any Note unless the
purchaser, assignee or transferee, as the case may be, shall have expressly
agreed to this Section 6D.
7. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Trust represents,
covenants and warrants:
7A. Organization. The Trust is a validly existing business
trust duly created under the laws of the State of Delaware and under the Trust
Agreement, and the Trust has the legal power to own its property and to carry
out the transactions contemplated hereunder.
7B. Authorization. The Trust has the legal capacity to enter
into this Agreement, and to issue the Notes. The execution, delivery and
performance of this Agreement and the issuance of the Notes are within the
powers of the Trust under the Trust Agreement. All action on the part of the
Trust necessary for the authorization, execution, delivery and performance of
all obligations of the Trust under this Agreement and the Notes has been taken.
This Agreement and the Notes have been duly executed and delivered by, and are
the legal, valid and binding obligations of, the Trust, and each is enforceable
against the Trust in accordance with its terms, except as may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors
rights in general and by general principles of equity, and each is in full force
and effect.
7C. Actions Pending. There is no action, suit, investigation
or proceeding pending or, to the knowledge of the Trust, threatened against the
Regular Trustee, as such, or the Trust, or any properties or rights of the
Regular Trustee, as such, or the Trust, by or before any court, arbitrator or
administrative or governmental body.
7D. Title to Properties. The Trust has good title to its
properties and assets, subject to no Lien of any kind other than the Lien
granted in Section 9.6 of the Trust Agreement.
7E. Conflicting Agreements and Other Matters. The Trust is not
a party to any contract or agreement which might materially and adversely affect
the property or assets of the Trust or the condition (financial or otherwise) of
the Trust or might have a material adverse effect on the ability of the Trust to
perform under this Agreement or to repay the Notes. Neither the execution nor
delivery of this Agreement or the Notes nor fulfillment of nor compliance with
the terms and provisions hereof and thereof will conflict with, or result in a
breach of, the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien upon
any of the properties or assets of the Trust pursuant to, the Trust Agreement
(other than the Lien granted in Section 9.6 of the Trust Agreement), any award
of any arbitrator or any agreement, instrument, order, judgment, decree,
statute, law, rule or regulation to which the Trust is subject.
7
7F. Offering of Notes. Neither the Trust nor any agent acting
on its behalf has, directly or indirectly, offered the Notes or any similar
security of the Trust for sale to, or solicited any offers to buy the Notes or
any similar security of the Trust from, or otherwise approached or negotiated
with respect thereto with, any Person other than PNM and neither the Trustee nor
any agent acting on its behalf has taken or will take any action which would
subject the issuance or sale of the Notes to the provisions of section 5 of the
Securities Act or to the provisions of any securities or blue sky law of any
applicable jurisdiction.
7G. Regulation G, Etc. The Trust does not own or have any
present intention of acquiring any "margin stock" as defined in Regulation G (12
CFR Part 207) of the Board of Governors of the Federal Reserve System (herein
called "margin stock"). None of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally incurred
to purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation G. Neither the Trust nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation G, Regulation T or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934, as amended, in each case as in effect now or as the same may
hereafter be in effect.
7H. Governmental Consent. Neither the nature of the Trust, nor
any of its activities or properties, nor any relationship between the Regular
Trustee or the Trust and any other Person, nor any circumstance in connection
with the offering, issuance, sale or delivery of the Notes is such as to require
any authorization, consent, approval, exemption or other action by or notice to
or filing with any court or administrative or governmental body in connection
with the execution and delivery of this Agreement.
8. COVENANTS OF THE TRUSTEE IN ITS INDIVIDUAL CAPACITY. The Bank of New
York ("BNY") in its individual capacity covenants that it will, at its own cost
and expense, promptly take such action as may be necessary to duly discharge any
Liens on any part of the properties and assets of the Trust resulting from acts
of or claims against BNY in its individual capacity arising out of events or
conditions not related to or connected with the ownership and administration of
the properties and assets of the Trust or any transaction contemplated by the
Trust Agreement or the Notes.
9. REPRESENTATIONS AND COVENANTS OF EACH PURCHASER.
9A. Purchase not for Distribution. Each Purchaser represents,
and it is specifically understood and agreed, that such Purchaser is not
acquiring the Notes to be purchased by it hereunder with a view to or for sale
in connection with any distribution thereof within the meaning of the Securities
Act.
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9B. No ERISA Funds. Each Purchaser represents that no part of
the funds being used by it to pay the purchase price of the Notes being
purchased by it hereunder constitutes assets allocated to any separate account
maintained by the Purchaser in which any employee benefit plan participates to
the extent of 10% or more. For the purpose of this paragraph 9B, the term
"separate account" and "employee benefit plan" shall have the respective meaning
specified in section 3 of ERISA.
9C. Notice of Reset. Not sooner than 120 days and not later
than 60 days prior to each Reset Date (as defined in the Notes) the Purchasers
shall give notice, in the form attached hereto as EXHIBIT B, to each holder of
Class B Securities of the Trust of such Reset Date and of such holder's right to
propose that the Formula Rate be reduced by a factor specified by such holder to
the Purchasers within 30 days of receipt of such notice. So long as Citicorp
North America, Inc. holds any of the Class B Securities of the Trust such notice
shall be sent to:
Citibank, N.A.
Global Energy & Power Group Utilities
399 Park Avenue
4th Floor, Zone 20
New York, New York 10043
and to:
Citicorp North America, Inc.
Asset Finance Group/Risk Manager
399 Park Avenue
6th Floor, Zone 3
New York, New York 10043
or to such other address or addresses as Citicorp North America, Inc. shall
specify to the Purchasers. Attached as EXHIBIT C hereto is a sample interest
rate reset calculation.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined
in the paragraphs above shall have the respective meanings specified therein,
and the following terms shall have the meanings specified below with respect
thereto:
"Business Day" shall mean any day other than a Saturday, a
Sunday or any other day on which banking institutions in New York, New
York, or Albuquerque, New Mexico are authorized or required by law to
close.
"Cross-Over Date" means the date on which the Trust Lessor
Notes first comprised less than 66-2/3% of the assets of the Trust.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
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"Event of Default" shall mean the event specified in paragraph
6, provided that there has been satisfied any requirement in connection
with such event for the lapse of time or the happening of any further
condition.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of
or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction).
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
11. MISCELLANEOUS.
11A. Course of Dealing. No course of dealing between the Trust
and the holder of the Notes nor any delay in exercising any rights hereunder or
under the Notes shall operate as a waiver of any rights of any holder of the
Notes.
11B. Persons Deemed Owners. The Trust may treat the Person in
whose name any Note is registered on the note register maintained by the Trustee
for that purpose, as the owner and holder of such Note for the purpose of
receiving payment of principal of and premium, if any, and interest on such Note
and for all other purposes whatsoever, whether or not such Note shall be
overdue, and the Regular Trust shall not be affected by notice to the contrary.
No Person may become a registered or beneficial holder of a Note unless (A)(I)
such Person is already a holder or an Affiliate of a holder or (II)(i) the Trust
and each holder of Class B Securities shall have been given at least 10 days
prior written notice of the proposed transfer, (ii) the Trust and each holder of
Class B Securities shall have been provided with any information concerning the
proposed transferee that it shall have reasonably requested, (iii) after giving
effect to such transfer, there shall be no more than twenty holders of Notes
issued pursuant to this Agreement, (iv) such Person is a bank, trust company,
institutional investor or other Person having a net worth (determined in
accordance with generally accepted accounting practices) of at least $25,000,000
and (v) such Person shall have executed an addendum to this Agreement pursuant
to which (x) it makes representations and warranties to the effect set forth in
Sections 9A and 9B and (y) it agrees to be bound as a Purchaser under this
Agreement (including, but without limitation, paragraph 6D hereof) to the same
extent as originally named herein as such and (B) in connection with the
transfer of a Note, the transferor and the transferee shall deliver an opinion
of counsel that the circumstances of such transfer were not such as would
subject the Notes to the provisions of Section 5 of the Securities Act or to the
provisions of any securities or blue sky law of any applicable jurisdiction.
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11C. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein or made in
writing by or on behalf of the Trust in connection herewith shall survive the
execution and delivery of this Agreement and the Notes.
11D. Successors. All covenants and other agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors in interest of the parties
hereto whether so expressed or not.
11E. Disclosure to Other Persons. The Trust acknowledges that
the holders of the Notes may deliver copies of any financial statements and
other documents delivered to such holder, and disclose any other information
disclosed to such holder, by or on behalf of the Trust in connection with or
pursuant to this Agreement to (i) such holder's directors, officers, employees,
agents and professional consultants, (ii) any federal or state regulatory
authority having jurisdiction over such holder, or (iii) any other Person to
which such delivery or disclosure may be necessary or appropriate (a) in
compliance with any law, rule, regulation or order applicable to such holder,
(b) in response to any subpoena or other legal process, (c) in connection with
any litigation to which such holder is a party or (d) in order to protect such
holder's investment in the Notes.
11F. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight delivery
service (with charges prepaid) or by facsimile transmission and (i) if to the
holder of the Notes, addressed to such holder at such address or to the
facsimile number, if applicable, as such holder shall have specified to the
Trustee in writing, and (ii) if to the Trust, addressed to it at the address set
forth above with a copy to the Trust c/o The Bank of New York, 101 Barclay
Street, 21 West , New York, New York 10286, Attention of Corporate Trustee
Administration, or, if applicable, to the facsimile number (212) 815-5915, or at
such other address or facsimile number as the Trustee shall have specified to
the holder of the Notes in writing. Any such written communications sent by
facsimile transmission shall be confirmed promptly in writing sent by first
class mail or nationwide overnight delivery service in the manner provided
above.
11G. Limitation of Liability and Trustee's Obligations. It is
expressly understood and agreed by each Purchaser that, except with respect to
the covenants in Section 8, this Agreement is executed by BNY not in its
corporate and individual capacity but solely as Regular Trustee under the Trust
Agreement in the exercise of the power and authority conferred and vested in it
as Regular Trustee. It is further understood and agreed that, except for a
breach of a covenant in Section 8, BNY shall not be personally liable for any
breach of any representation, warranty or covenant of the Regular Trustee or the
Trust contained herein, in the Notes or in any of the certificates delivered
hereunder and nothing herein contained shall be construed as creating any
liability on BNY in its corporate and individual capacity to make any payment or
to perform any covenant, agreement or undertaking contained herein, all such
liability being expressly waived by each Purchaser, and that each Purchaser
shall look solely to the properties and assets of the Trust for the payment of
any amounts due and payable on account of the Notes and for the payment,
performance, or other satisfaction of this Agreement and any claim against the
Regular Trustee by reason of the transactions contemplated hereby.
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11H. Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
11I. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Delaware without giving effect to principles of
conflicts of law.
11J. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Trust, whereupon this letter shall become a binding agreement between you and
the Trust.
Very truly yours,
PVNGS CAPITAL TRUST
by The Bank of New York,
as Regular Trustee
By: ________________________
Van K. Brown
Assistant Vice President
The foregoing Agreement is
hereby accepted as of the
date first above written.
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:_______________________
Mitchell J. Marzec
Treasurer
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