================================================================================
PARTICIPATION AGREEMENT
dated as of December 15, 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 December 15, 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 December 15, 19B6,
with the Owner Trustee, as Indenture Trustee
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
as Lessee
================================================================================
Sale and Leaseback of a .7933333% Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2
and a .2644444% Undivided Interest in Certain Common
Facilities
================================================================================
6091.100.2898.27A:9
TABLE OF CONTENTS
Page
----
SECTION 1 Definitions .......................................... 2
SECTION 2 Participation by the
Loan Participant ..................................... 2
SECTION 3 Participation by the
Owner Participant .................................... 3
SECTION 4 Purchase, Sale
Financing and Lease of
the Undivided Interest;
Purchase, Sale and Lease
of the Real Property
Interest ............................................. 3
SECTION 5 Notice of Closing;
Closing .............................................. 4
SECTION 6 Representations
Warranties and
Agreements of the Loan
Participant; Direction
to the Indenture Trustee ............................. 5
SECTION 7 Representations
Warranties and
Agreements of the Owner
Participant .......................................... 8
SECTION 8 Representations
Warranties and
Agreements of the Owner
Trustee and FNB ...................................... 15
SECTION 9 Representations
Warranties and
Agreements of Chemical
Bank ................................................. 22
--i--
6091.lOO.2898.27A:9
TABLE OF CONTENTS (Continued)
Page
----
SECTION 10 Representations,
Warranties and
Agreements of the Lessee ............................. 24
SECTION 11 Conditions Precedent ................................. 50
SECTION 12 Consent to Assignment of
the Facility Lease;
Consent to Indenture;
Consent to Assignment of
Notes ................................................ 62
SECTION 13 Lessee's Indemnities and
Agreements ........................................... 63
SECTION 14 Transaction Expenses ................................. 78
SECTION 15 Owner Participant's
Transfers ............................................ 81
SECTION 16 Brokerage and Finders'
Fees and Commissions ................................. 83
SECTION 17 Survival of
Representations and
Warranties; Binding
Effect ............................................... 84
SECTION 18 Notices .............................................. 85
SECTION 19 Miscellaneous ........................................ 86
SCHEDULES
Schedule 1 - Notice of Closing
--ii--
6091.1OO.2898.27A:9
TABLE OF CONTENTS (Continued)
Page
----
Schedule 2 - Pricing Assumptions
Schedule 3 - Xxxx of Sale and Assignment (Section 7(b) (4))
Schedule 4 - Recordations and Filings
Schedule 5 Affidavit of Owner Trustee (Section 7(c)(6))
- APPENDIX
Appendix A - Definitions
-- iii --
6091.100.2898.27A:9
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of December 15, 1986 among CHASE
MANHATTAN REALTY LEASING CORPORATION, a New York corporation (the Owner
Participant), FIRST PV FUNDING CORPQRATION, 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 December 15, 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
December 15, 1986, with the Owner Trustee, and PUBLIC SERVICE COMPANY OF NEW
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 Lease;
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 Fixed Rate Notes and the granting of the security therefor, and the
Indenture Trustee will authenticate the Fixed Rate Notes; and
WHEREAS, the Loan Participant is willing to purchase the Fixed
Rate Notes on the terms and conditions set forth herein;
6091.l00.2898.27A:9
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.
(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 79.646017% of the Purchase Price.
(b) Payment; Term of the Fixed Rate Notes.
(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 Fixed Rate Notes. The Loan shall be evidenced by
the Fixed Rate Notes. The Fixed Rate Notes shall be issued by the Owner
Trustee under and pursuant to the Indenture, shall be in the principal
amount of the Loan and shall bear interest at the rate or rates per
annum and shall be payable as set forth in the Indenture.
-2-
6091.100.2898.27A:9
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 20.353983% of the Purchase Price, (ii) make an equity investment with
respect to the Real Property Interest in the amount set forth in the Notice of
Closing (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 avail-able funds, at the Indenture Trustee's Office. The
Estimated Transaction Expenses shall be paid to the Owner Trustee, in
immediately available funds, at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
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 (z)
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 $25,155,556 (the Purchase Price) and (ii) 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.
-3-
6091.100.2898.27A:9
(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 two Business Days prior to 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.
(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
-4-
6091.100.2898.27A:9
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
Xxxx of Sale, the Deed and the Assignment of Beneficial Interest.
SECTION 6. Representations, Warranties and Agreements of the Lean
Participant; Direction to the Indenture Trustee.
(a) The Loan Participant represents and warrants 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 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.
-5-
6091.100.2898.27A:9
(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) (1) of the Code.
(6) Securities Act. The Loan Participant understands that (i) none
of the Notes to be acquired by it has been registered under the
Securities Act and (ii) each will bear the legend set forth in the form
of such Notes. The Loan Participant will acquire each Note to be
acquired by it hereunder and under the Indenture solely for purposes of
pledging such Notes to the Collateral Trust Trustee to secure Bonds
issued from time to time under the Collateral Trust Indenture.
-6-
6091.100.2898.27A:9
(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.
-7-
6091.100.2898.27A:9
(c) Direction to the Indenture Trustee. The Loan Participant, as
purchaser of the Fixed Rate Notes, (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 Notes
in the name of the Loan Participant and, upon authentication and delivery
thereof pursuant to this Participation Agreement and the Indenture, to deliver
such Notes (upon completion by the Loan Participant of the assignment attached
to each of the Fixed Rate Notes) 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.
-8-
6091.100.2898.27A:9
(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 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
-9-
6091.100.2898.27A:9
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
flew Mexico Public Utility Act, the Arizona Public Utility Act, energy
or nuclear matters, public utilities, the environment, health and safety
or Unit 2.
(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 Date, 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.
(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.
-10-
6091.100.2898.27A:9
(8) No Sales or Solicitations. Except as contemplated by the
Financing Documents and as described in a letter to the Lessee dated
November 17, 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
provisions 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 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.
-11-
6091.100.2898.27A:9
(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) or 16 of the Facility Least 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
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 Xxxx 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
Trustee, 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.
-12-
6091.100.2898.27A:9
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 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) or 16 at 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 the Owner Trustee has
thereby acquired an interest) pursuant to Section 5.1 or 5.3 of the
Indenture) shall not be deemed to be canceled 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) or
16 together with interest thereon at the Penalty Rate (computed in
accordance with the Facility Lease) from the data 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 security interest in and general lien upon) all of the 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:
-13-
6091.100.2898.27A:9
(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 for, 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.
(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
-14-
6091.l00.2898.27A:9
consent of the transferring Owner Participant (I) take any action or
deliver any instruction under any Transaction Document the effect of
which would be to CA) 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 g(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 8(a)) in its
individual capacity, represents and warrants that:
(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
-15-
6091.lOO.2898.27A:9
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 FNB (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 PUB 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 Fixed Rate Notes,
authentication thereof by the Indenture Trustee pursuant to the
Indenture and delivery thereof against payment therefor in accordance
with this Participation Agreement, each 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)
-16-
6091.100.2898.27A:9
(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 Xxxx 0, 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 2.
(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
-17-
6091.l00.2898.27A:9
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 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.
(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.
-18-
6091.100.2898.27A:9
The representations and warranties in Section 8(a) (2) Section 8(a) (3) and
Section 8(a) (5) as to Transaction Documents and the Fixed Rate Notes being
legal, valid and binding obligations enforceable in accordance with their
respective terms, are given by FNB only 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,
or is to become on or before the Closing Date, 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.
(3) Change in Location of Chief Place of Business and Chief
Executive Office, etc. F'NB shall notify the Lessee, the Loan
Participant and the Indenture Trustee promptly after any change in
-19-
6091.l00.2898.27A:9
location of 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 AHPP
Participants (other than (i) the Lessee or (ii) any Person who shall
become an ANPF Participant in respect of the Lessor's Interest (as
defined in Section S(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
Trustee) in all dealings with the other ANPP Participants in relation to
the property, rights, titles and interests of the Lessee transferred to
-20-
6091.100.2898.27A:9
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 Hatters. 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.
(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.
-21-
6091.100.2898.27A:9
SECTION 9. Representations, Warranties and Agreements of Chemical
Bank.
(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 Bank and each has been or
will have been duly executed and delivered by Chemical Bank.
(3) Authentication of the Fixed Rate Notes. The officer of Chemical
Bank who shall authenticate the Fixed Rate Notes 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 Fixed Rate Notes, nor the consummation by it
of the transactions contemplated hereby or thereby, nor the 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
-22-
6091.100.2898.27A:9
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 2 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 tiling 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.
(4) Acknowledgment. The Indenture Trustee hereby acknowledges the
provisions of Section 7(b) (4) of this Participation Agreement.
-23-
6091.100.2898.27A:9
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
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.
-24-
6091.100.2898.27A:9
(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
materially adversely affects or in the future is likely (so tar 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
-25-
6091.l00.2898.27A:9
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 2 or otherwise with respect to Unit
2 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 2 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, 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
-26-
6091.100.2898.27A:9
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 2, (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 2.
(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 2, the Undivided Interest or any other undivided
interest in Unit 2, the Facility Lease or any other lease of an
undivided interest in Unit 2, 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 issued or to be issued to finance the
Undivided Interest to the registration requirements of such Section 5.
(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 ail Liens, except Permitted Liens (other than
-27-
6091.100.2898.27A:9
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 2 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 ANPP 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.
(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 Xxxx of Sale, the Deed, the
-28-
6091.100.2898.27A:9
Assignment of Beneficial Interest and the Assignment and Assumption with
respect to, the interests in PVNGS granted or to be granted under the
Xxxx of Sale, the Deed, the Assignment of Beneficial Interest and the
Assignment and Assumption.
(9) Personal Property. Unit 2, 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 td 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 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000.
(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
Xxxxxxx Xxxxxxxx & Co., and (B) as of September 30, 1986 and 1985,
respectively, and the related consolidated statements of earnings,
retained earnings and changes in financial position for the nine-month
periods ended September 30, 1986 and September 30, 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
periods then ended, in conformity with generally accepted accounting
principles applied on a consistent basis and in conformity with
applicable Accounting Practice.
-29-
6091.100.2898.27A:9
(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 content-plated 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 Lessee's Quarterly Report on Form 1O-Q for
the quarters ended March 31, June 30 and September 30, 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, July 16,
July 31, September 2, September 9, and December 15, 1926.
(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 Lessee,
threatened against the Lessee before any court, arbitrator or
administrative or governmental body which questions the validity or
-30-
6091.l00.2898.27A:9
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 perform 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 filed, 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 2 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) 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) 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 IRS 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.
-31-
6091.l00.2898.27A:9
(16) Regulation. So long as the Facility Lease is in effect,
assuming the proper filing of Form 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, ma 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 corn-mission or other regulatory body, authority or group
(including, without limitation, the SEC, the XXXX, the NMPSC 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 10(b) (3) (ii) hereof) it will not
become, a It "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.
(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,
-32-
6091.100.2898.27A:9
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 other 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 ANPP 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 ANPP 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 2 or the rights, interests and benefits of
the Owner Trustee or the Owner Participant under any Transaction
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
-33-
6091.l00.2898.27A:9
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 2. The description of Unit 2 set forth in Exhibit B to the
Xxxx of Sale is correct and sufficiently complete to identify such
property.
(21) Investment Company Act. The Lessee is not, and will not become,
an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act
(b) Agreements of Lessee.
(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 10(b) (1) (iii) and (v) hereof, the Owner Trustee):
-34-
6091.l00.2898.27A:9
(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
firm 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 of 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);
-35-
609l.100.2898.27A:9
(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 l20 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 Xxxxxxx &
XxXxxx, P.A., as general counsel for the Lessee, Xxxxx & Xxxxxx,
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
rerecordations) required to (i) convey to the Owner Trustee, and
establish, preserve, protect and perfect the title of the Owner
-6-
6091.100.2898.27A:9
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 tiled under Applicable Law; such
opinion shall also address such additional matters relating to
actions taken by the Lessee pursuant to Section 10(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
Reports (or comparable successor report) and of all material
-37-
6091.100.2898.27A:9
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 2, 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 furnished a
letter to the Owner Participant dated August 12, 1986,
describing its internal procedures for monitoring PVNGS and
reporting to the Owner Participant with respect thereto, prior
written 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 PYNGS 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 2 for such
fiscal year and current information respecting the status of
decommissioning funding arrangements for Unit 2; and
(ix) Requested Information: with reasonable promptness, such
other data and information as to the business and properties of
the Lessee or as to Unit 2, 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
-38-
6091.100.2898.27A:9
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 4, 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 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 conduct of its business
and does not materially and adversely affect or diminish any right of
the Owner Participant or the Loan Participant.
-39-
6091.100.2898.27A:9
(ii) Merger Sale, etc.: Owner Participant. Without the consent of
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 ANPP
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 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 2 (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 2 (including the Undivided Interest);
-40-
6091.l00.2898.27A:9
(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 form 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 the Surviving Lessee) after giving effect to such
transaction, (1) shall be rated at least "investment grade" by
Standard & Poor's Corporation and Xxxxx'x Investors Service, Inc.
and (2) shall have an investment rating by Standard & Poor's
Corporation and Xxxxx'x 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);
-41-
6091.100.2898.27A:9
(E) the Surviving Lessee shall have a Minimum Net Worth;
(F) the Surviving Lessee shall have delivered to the Owner
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 Xxxx
Xxxxxxx Xxxxxxxxx & Xxxxxx, such counsel to be reasonably
satisfactory to the Owner Participant) to the Surviving Lessee
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.
-42-
601.100.2898.27A:9
(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 Xxxxx'x
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.
(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
-43-
6091.100.2898. 27A: 9
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 121st 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.
(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 2 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
AMPP 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 to, nor accept or approve any 4mendment 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
-44-
6091. 100.2898.27A:9
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, (E) 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 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.
-45-
6091.1OO.2898.27A:9
(ix) Notes and Bonds. 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 Xxxx 0 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).
(xi) Decommissioning. (A) The Lessee will comply with its
obligations under Applicable Law concerning the decommissioning and
retirement from service of Unit 2 (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 Xxxx 0, (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
-46-
6091.100.2898.27A:9
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, it 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, title or
interest in Unit 2, 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 service of Unit 2, notwithstanding (i) the occurrence of
the Lease Termination Date, any Event of Default, Default, Event of
Loss, Deemed Loss 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 (B) are
-47-
6091.100.2898.27A:9
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 or 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 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 10(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. (0) 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
-42-
6091.100.2898.27A:9
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 10(b)
(3) (xi) with respect to the period from and after the date of such sale
through the remaining useful life of Unit 2 (whereupon the reimbursement
obligations of the Lessor under this Section 10(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
determining Facility Cost under clauses (C) and (D) of this Section
10(b) (3) (xi), Facility Cost
-49-
6091.100.2898.27A:9
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 Conditions. The obligation of (x) the
Loan Participant to make the 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):
(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
Fixed Rate Notes 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.
-50-
6091.100.2898.27A:9
(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) Fixed Rate Notes 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 Series B Bonds as a result of the consummation of the
transactions contemplated by the Underwriting Agreement, (B) the Owner Trustee
shall have executed, and the Indenture Trustee shall have authenticated and
delivered to the Loan Participant, the Fixed Rate Notes evidencing the Loan made
on the Closing Date, (C) the Collateral Trust Trustee shall have accepted the
Series S Supplemental Indenture and the related Supplemental Indenture of Pledge
(as defined in the Series S Supplemental Indenture) and shall have released the
amount of the Lean from the lien of the Collateral Trust Indenture, and (D) 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.
-51-
6091.100.2898.27A:9
(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 under the Uniform
Commercial Code and certain Transaction Documents, in each case as enumerated
and described in Schedule 4, 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 bate 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.
(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.
-52-
6091.100.2898.27A:9
(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
Ins and a certificate of the Owner Trustee, dated the Closing Date, to such
effect.
(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 WRC 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.
-53-
6091.l00.2898.27A:9
(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 Underwriting 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 Closing 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 September 30, 1926, and no event has 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.
-54-
6091.100.2898.27A:9
(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 Data 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.
(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.
-55-
6091.100.2898.27A:9
(26) Opinion of the Loan Participant's Counsel. The Loan Participant
shall have received a favorable opinion of the Lean 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 4, or in
connection with the issuance and sale of the Fixed Rate Notes and the Series B
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-70. 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.
(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 2 (including the Undivided
Interest) is at least 38 years and 11 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
-56-
6091.100.2898.27A:9
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 (z) 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 Date by any User is
feasible from an from an engineering and economic point of view and is
commercially reasonable.
(30) Offering and Sale of Interest. The Loan Participant, the Owner
Trustee and the Owner Participant shall have received a letter from each of
Xxxxxx Xxxxxxx and Xxxxxxx, Xxxxx & Co. 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
2.
(31) Extension latter. 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, which order shall
be final and non-appealable), 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
-57-
6091.100.2898.27A:9
the nuclear plant site, which report does not disclose any exceptions materially
adverse to the possession or operation of Unit 2 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.
(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, 1979.
(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 2 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
-58-
609l.l00.2898.27A:9
modified from time to time to reflect Unit 2 as actually completed), Applicable
Law (including, but without limitation, the regulations of the NRC), the License
and the ANPP Participation Agreement, (B) all Governmental Action necessary for
the commercial operation of Unit 2 (including the Undivided Interest) have been
received, other than Governmental Action that is routine in nature for PVNGS 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 2 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 2 were and the operation and maintenance programs for Unit 2
are consistent with such plans and specifications, Applicable Law and prudent
engineering practice, (E) Unit 2 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 2
will have the capacity and functional ability to perform in commercial
operation, on a continuing basis, the function for which it is 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 2 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 2 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
-59-
6091.100.2898.27A:9
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 2, (ii) the use, operation and possession of Unit 2, (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 2 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 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 X.X. Xxxxxxx, Senior
Vice President, Power Supply, PMN 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.
-60-
6091.100.2898.27A:9
(39) Consent of Certain Unit 1 lessors. 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.
(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 (25) of said
paragraph (a).
-61-
6091.100.2898.27A:9
(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, Xxxxxxx, Xxxxxxxx & Co., to the effect that,
under generally accepted accounting principles and FASB 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) (iii) of the Facility
Lease) on an annual basis to exceed 11.7% of Facility Cost.
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
-62-
6091.l00.2898.27A:9
(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.
(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, tram 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) Xxxx 0, the Undivided
Interest, the Real Property Interest, PVNGS or the PVNGS Site, or any part of
-63-
6091.100.2898.27A:9
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 2 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
to the Termination Obligation) of the Undivided Interest, Unit 2, 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, (3) 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-xxxx 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 Xxxx 0, 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
-64-
6091.100.2898.27A:9
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 Xxxx 0, 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, Xxxx 0, the Real Property Interest or the Undivided Interest other than
in connection with any early termination of the Facility Lease or any exercise
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 the net amount actually
-65-
6091.100.2898.27A:9
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 is consummated, except as provided in
Section 13(b) (2), the Lessee shall pay, and shall indemnify, defend and
hold each Indemnitee harmless, on an After-Tax Basis, from and against,
any and all Taxes howsoever imposed (whether imposed on or with respect to
the Indemnitee, the Lessee, Xxxx 0, 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
aver 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 Trusteees Liens on, Xxxx 0, the Undivided Interest, the Real
Property Interest, any Capital Improvement or the PVNGS Site, or any part
-66-
6091.l00.2S98.27A:9
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, Xxxx 0, 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) Xxxx 0, the Undivided Interest, the
Real Property Interest, any Capital Improvement or the PVNGS Site, or any
part thereof, or interest therein, or the applicability of the Facility
Lease to the Undivided Interest or any Capital Improvement, or any part
thereof or interest therein, (E) this Participation Agreement, any other
Transaction 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) (1) (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, surcharges, 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
-67-
6091.l00.2898.27A:9
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 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 (whether 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,
-68-
6091.100.2898.27A:9
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 of the aforementioned dates;
(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 fee, 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;
-69-
6091.100.2898.27A:9
(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;
(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 13(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;
-70-
6091.100.2898.27A:9
(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 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
-71-
6091.100.2898.27A:9
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
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, (H) 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
-72-
6091.100.2898.27A:9
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 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,
-73-
6091.l00.2898.27A:9
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, Xxxx 0,
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 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 a 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)(6) 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
l3(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); provided, further,
-74-
6091.100.2898.27A:9
however, that notwithstanding 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 Indemnity 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 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 the Lessee does not request that a Tax be contested
pursuant to this paragraph (5), the Lessee shall pay the Indemnitee
therefor unless such Tax was not included in the indemnification under
Section 13(b) (1) or was excluded by Section 13 (b) (2).
-75-
6091.100.2898.27A:9
(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 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
-76-
6091.100.2898.27A:9
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, xxxx 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 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.
-77-
6091.100.2898.27A:9
(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.
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 2 sold on August 16, 1986) 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;
-78-
6091.100.2898.27A:9
(ii) the initial (but not the ongoing) fees and expenses of the
Owner Trustee and the Indenture Trustee;
(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);
(iv) rendered the fee rendered and the services Section 11 (a) (29),
the fees of the appraiser for services as contemplated by Section 11
(a)(38) fees of the insurance consultant for services rendered as
contemplated by 11(a) (35);
(v) all costs of issue of the Series B 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, 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, rating agency fees, the fees and commissions of
the underwriters of the Series B Bonds and the fees, expenses and
disbursements of the Loan Participant; and
-79-
6091.100.2898.27A:9
(vi) the fees and out-of-pocket expenses of Xxxxxx Peabody and
Xxxxxxx, Xxxxx & Co. 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 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 Lass 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 and (f) any transfer contemplated by Section
7(b)(4).
(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 2.5%.
-80-
6091.100.2898.27A:9
SECTION 15. Owner Participant's Transfers.
(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
-81-
6091.100.2898.27A:9
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 15(a) (ii)) shall continue to be liable for (or the parent of
such Transferee, which shall otherwise be a permitted Transferee, 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
(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
-82-
6091.100.2898.27A:9
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 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.
-83-
6091.100.2398.27A:9
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 2 or any other property referred to in this Participation Agreement and the
expiration or other termination or any or the Transaction Documents or 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 10(b) (1) (ix), 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
-84-
6091.100.2898.27A:9
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 2 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 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 (i) if to the Owner Participant, at One
Chase Xxxxxxxxx Xxxxx (00xx xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention of
Leasing Administrator; (ii) if to First PV Funding Corporation at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention of
-85-
6091. l00.2898.27A:9
President; (iii) if to The First National Bank of Boston, at 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention of Corporation Trust Division; (iv) if to
Chemical Bank, at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of
Corporate Trustee Administration; and (v) if to Public Service Company of New
Mexico, at Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000, 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.
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
-86-
6091.100.2898.27A:9
control of nor shall they be deemed to be under the control of any other Person
having any interest in Unit 2, 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
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 New York.
(d) Amendment, 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
-87-
6091.100.2898.27A:9
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
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
-88-
6091..lOO.2898.27A:9
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.
-89-
6091.100.2898.27A:9
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: December 17, 1986
FIRST PV FUNDING CORPORATION
By
-------------------
Vice President
Date: December ____, 1986
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By
-------------------
Vice President and
Treasurer
Date: December_____, 1986
6091.100.2898.27A:9
THE FIRST NATIONAL BANK OF
BOSTON, in its individual capacity
and as Owner Trustee
By:
------------------------
Assistant Vice President
Date: December 16, 1986
CHEMICAL BANK, in its individual capacity
and as Indenture Trustee
By____________________________
Vice President
Date: December 16, 1986
6091.100.2898.27A:9
Schedule 1
PUBLIC SERVICE COMPANY OF NEW MEXICO
PALO VERDE NUCLEAR GENERATING
STATION UNIT 2
NOTICE OF CLOSING
CHASE MANHATTAN REALTY LEASING CORPORATION
Pursuant to Section 5(a) of the Participation Agreement, dated
as of December 15, 1986 (the Participation Agreement) among Chase Manhattan
Realty Leasing Corporation, as Owner Participant (the Owner Participant), First
PV Funding Corporation, as Loan Participant, The First National Bank of Boston,
as Owner Trustee, Chemical Bank, as Indenture Trustee, and Public Service
Company of New Mexico (PIOC), PNM hereby gives notice of a Closing to occur at
10:00 a.m. on December 17, 1986 (the Closing bate). The Closing will be held at
the offices of Messrs. Xxxxx Xxxx Xxxxxxx Xxxxxxxxx & Xxxxxx, 000 Xxxxxx Xxxx,
Xxx Xxxx, Xxx Xxxx 00000.
(i) Based upon information supplied to PNM, the current estimate of
Transaction Expenses is an aggregate of $ 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 an Omnibus Transfer
Instruction and Receipt to be executed by all parties to the
Participation Agreement on the Closing Date.
(iii) The Real Estate Investment is $ ___________.
6091.100.2898.27A:9
Capitalized terms used herein and not otherwise specifically
defined herein shall have the meanings set forth in Appendix A to the
Participation Agreement.
IN WITNESS WHEREOF, Public service Company of New Mexico has
executed this Notice of closing this 10th day of December, 1986.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------------
Senior Vice President and
Chief Financial Officer
-2-
6091.100.2898.27A:9
Schedule 2
PRICING ASSUMPTONS
Basic Rent and the Schedules of 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:
1. Investment Percentage: 20.353983%
2. Loan Percentage: 79.646017%
3. Interest Rate on:
(a) Fixed Rate Note due
January 15, 1992
($1,270,000) 8.05%
(b) Fixed Rate Note due
January 15, 1997
($3,501,000) 8.95%
(c) Fixed Rate Note due
January 15, 2016
($23,229,000) 10.15%
4. Federal ACRS Deductions: 10-year public utility property
deductions on the basis
of 100% of Facility Cost.
5. State and City Deductions: 16 Year 150% declining balance
switching to straight line at
the optimal point, using the
half year convention, on the
basis of 100% of Lessor's
Cost.
6091.100.2898.27A:9
6. Owner Participant's Tax
Year-End: December 31, 1986.
7. Closing Date: December 17, 1986.
8. Transaction Expenses: 2.0% of Facility
Cost paid by the
Owner Participant
addition to its
Investment
(amortized on a
straight-line basis
during the Basic
Lease Term).
9. Real Estate Investment: $19, 554.
l0. Basic Rent Payment Date: January 15 and
July 15 of each year
(rent payable in
arrears) a
ll. First Basic Rent Payment
Date: July 15, 1987.
l2. Last Basic Rent Payment
Date: January 15, 2016.
13. Interim Rent Payment Date: January 15, 1987
14. Marginal Federal Tax Rate: 46% in 1926;
39.950625% in 1927;
and 34% in 1928.
15. Marginal Combined New York
State and City Tax Rate: 8.6% deductible for
Federal taxes.
16. First Estimated Tax Payment
Date: March 15, 1927.
17. Tax Accounting Method: Accrual.
18. Amortization of the Fixed
Rate Notes: See schedule attached thereto.
-2-
Schedule 3
XXXX OF SALE AND ASSIGNMENT
================================================================================
XXXX OF SALE AND ASSIGNMENT
dated as of 19
----------------------- --
from
[CHASE MANHATTAN REALTY LEASING CORPORATION)
to
PUBLIC SERVICE COMPANY OF NEW MEXICO
================================================================================
6091.100.2898.27:1
XXXX 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).
W I T N E S S E T H:
WHEREAS, pursuant to Section 7(b)(4) of the participation
Agreement dated as of December 15, 1986 (relating to Unit 1) among the Owner
Participant, First PV Funding corporation, as Loan participant, The First
National Bank of Boston, as owner Trustee, Chemical Bank, as Indenture Trustee
and PNM, as Lessee, (the Participation Agreement), the owner participant desires
to sell and PNM desires 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.
6091.100.2898.27:1
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 Participants 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 PNM. 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) 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
payments in a like amount with respect to Basic Rent or supplemental Rent paid
by application of such payments (and in which the 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) or 16 of the Facility Lease, as the case may be.
-2-
6091.100.2898.27:1
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) or
16 of the Facility Lease, as the case may be:
SECTION 2.02. 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) or 16] of the
Facility Lease.
ARTICLE III
EFFECTIVENESS OF TRANSFER
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 Xxxx of
Sale and Assignment and the furnishing of a counterpart of this Xxxx of Sale and
Assignment to the Owner Trustee.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Successors and Assigns. This Xxxx 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 Xxxx of Sale and Assignment
shall be governed by and construed and enforced in accordance with the law of
the State of New York.
-3-
6091.100.2898.27:1
SECTION 4.03. Headings. The division of this Xxxx 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
Xxxx of Sale and Assignment.
IN WITNESS WHEREOF, the undersigned has caused this Xxxx of
Sale and Assignment to be duly executed as of the day and year written above.
[CHASE MANHATTAN REALTY
LEASING CORPORATION]
By
-----------------------
Title:
-4-
6091.100.2898.27:1
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) Xxxx of sale;
(iii) Assignment and Assumption;
(iv) Facility Lease;
(v) Indenture;
(vi) Indenture of Partial Facility; and
(vii) Indenture of Partial Release/Real Property
Part II. UCC-l 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-l 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 reflecting the
supplementation of the Collateral Trust Indenture by the supplemental
Indenture of Pledge (as contemplated by the Series B supplemental
Indenture)
B. Secretary of State, Arizona:
6091.100.2898.27:1
(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; 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 financing statement on form UCC-l naming the Owner Trustee,
as debtor, and the Indenture Trustee, as secure a party, in respect of
the Lease Indenture Estate; and
(iv) A financing statement amendment on form UCC-2 reflecting the
supplementation of the collateral Trust Indenture by the Supplemental
Indenture of Pledge (as contemplated by the Series B 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-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 reflecting the
supplementation of the collateral Trust Indenture by the Supplemental
Indenture of Pledge (as contemplated by the Series B Supplemental
Indenture).
-2-
6091.100.2898.27:1
D. Secretary of State, New Mexico:
(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;
(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 reflecting the
supplementation of the Collateral Trust Indenture by the supplemental
Indenture of Fledge (as contemplated by the Series B Supplemental
Indenture)
E. Secretary of State, Massachusetts:
(i) A financing statement on form UCC-l naming the Owner Trustee,
as debtor, and the Indenture Trustee, as secured party, in respect of
the Lease Indenture Estate.
Part III. Other Filings:
Filing of the Indenture with the Secretary of State of the State
of New Mexico pursuant to the New Mexico public utility Act.
-3-
6091.100.2898.27:1
Schedule 5
AFFIDAVIT OF TRUSTEE
THE FIRST NATIONAL BANK OF BOSTON,
as Owner Trustee under that certain
Trust Agreement dated as of
December 15, 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, as 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 December ____, 1986, as instrument No. 86-records of Maricopa
County, Arizona; being further described in that certain Deed and Xxxx of sale
recorded December _____, 1986, as instrument No. 86____________, records of
Maricopa County, Arizona; being further described in that certain Assignment,
Assumption and Further Agreement recorded December ______, 1986, as instrument
No. 86-______, records of Maricopa County, Arizona; and being further described
in that certain Deed and Assignment of Beneficial Interest dated December 1986,
and that certain related __________ Amended Affidavit of Trustee executed by
Title USA Company of Arizona as Trustee of its Trust No. 530 and recorded
December _______, 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
Xxxxxxxx Xxxxxx
X. X. Xxx 0000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
6091.100.2898.27:1
A copy of the Trust Agreement is available for inspection at
the offices of The First National Bank of Boston, 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000.
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 December 15, 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 December 15, 1986 with Chase Manhattan Realty
Leasing Corporation.
-----------------------------
Notary Public
-2-
6091.100.2898.27:1
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 Xxxxx-Xxxxxxxx Act or the
Atomic Energy Act (or the regulations of the NRC relating thereto) if, after
giving effect to such change or new interpretation:
(A) (a) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed $6.563 billion (assuming 101
operating nuclear facilities participating in the deferred premium or
similar plan referred to in clause (c) below and subject to adjustment
in an amount not exceeding (X) $63 million for each increase or decrease
6O9l.l00.2898.55:l
in said number of operating nuclear facilities and (Y) the aggregate of
all changes in such "aggregate liability" to reflect the effects of
inflation contemplated pursuant to clause (c) below)
(b) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed the sum of, without duplication,
(X) the amount of insurance coverage available from commercial insurance
underwriters on terms substantially equivalent (in the reasonable
opinion of the Owner Participant) to the terms in effect on the Closing
Date under Applicable Law and required to be maintained by each licensee
with respect to any single nuclear facility, and (Y) the maximum
aggregate amount payable with respect to a single "nuclear incident" by
all licensees of nuclear facilities participating in any deferred
premium or similar plan required under Applicable Law, by more than $40
million
(c) the amount payable by all licensees of a single nuclear facility
with respect to such facility under any deferred premium or similar plan
required under Applicable Law shall not exceed $63 million per "nuclear
incident" (subject to an annual adjustment upward for each calendar year
after the enactment of a change in the Xxxxx-Xxxxxxxx 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
-2-
6091.100.2898.55:1
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 (c)
beyond $63 million until such lower deferred premium (as so inflated)
equals or exceeds $63 million);
(d) the amount payable by all licensees of a single nuclear facility
with respect to such facility in any one year with respect to any one
"nuclear incident" under any deferred premium or similar plan required
under Applicable Law shall not exceed $12 million;
(e) insurance or other financial protection shall be in effect under
which the providers of such insurance or other financial protection
shall agree to pay any amount payable by any licensee under any deferred
premium or similar plan upon a default in such payment by such licensee
up to a maximum aggregate amount for all such defaults in payment of not
less than $30 million;
(f) a provision shall be included (X) which authorizes (whether or not
subject to appropriation acts) the NRC or other Governmental Authority
to borrow from the United States Treasury (1) to make payments on behalf
of any licensees under any deferred premium or similar plan and (2) to
make payments to claimants in the event that funds available to pay
valid claims in any year are insufficient as a result of any limitation
on the amount or deferred premiums that may be required of a licensee
under Applicable Law (in both cases the reimbursement obligation of such
-3-
6091.100.2898.55:1
licensees in any calendar year shall not exceed $12 million, plus
interest) , or (V) which makes the exclusive source of payments for
public liability claims the funds provided by financial protection
required by Applicable Law and, where appropriate, funds provided as a
result of NRC or other Governmental Authority borrowings or (Z) which
establishes another mechanism under which the maximum potential
liability of all Persons during any calendar year as a result of a
"nuclear incident" shall not exceed the amount of insurance or other
financial protection required to be available during such calendar year
to pay all amounts which may become payable by any such Person, when and
as they become payable, in respect of such liability;
(g) there shall be no claim, liability or expense excluded (1) from the
limitation of liability established by the xxxxx-Xxxxxxxx Act (as in
effect on the Closing Date) (through modification of the definitions of
"aggregate liability", "persons indemnified", "nuclear incident" or
otherwise) or (2) under commercially available insurance or other
financial protection required under Applicable Law (as in effect on the
Closing Date) (other than an exclusion of the costs of investigating and
settling claims and defending suits for damages) , except, for purposes
of sub-clauses (1) and (2) of this clause (g), to the extent excluded
pursuant to Applicable Law as in effect on the Closing Date;
(h) subject only to clause (b) above, policies of insurance, including
policies in respect of any deferred premium or similar plan, shall
provide, or shall have been amended or modified to provide, in both
timing and amount, and make available, or shall have been amended or
modified to make available, financial protection required under
Applicable Law.; and
-4-
6091.100.2896.55:1
(i) neither the Owner Trustee nor the Owner Participant shall be (in the
opinion of independent counsel to the Owner participant) exposed to any
other increase in its real or potential liability with respect to a
"nuclear incident", either during or subsequent to the Lease Term; or
(B) at all times from the date of such change to, but not including, the Lease
Termination Date,
(a) a provision shall be included, with language reasonably satisfactory
to the Owner Participant, which exempts the Owner Trustee and the Owner
Participant from all real or potential liability in respect of a
"nuclear incident" so long as neither the Owner Trustee nor the Owner
Participant is in actual possession and control of Unit 1 or the
undivided Interest, unless (in the opinion of independent counsel to the
Owner Participant) (x) a court could reasonably hold that the statute
incorporating such provision is unconstitutional or (y) there shall have
occurred a subsequent change in, or new interpretation by Governmental
Authority having jurisdiction of, the exemption from liability provided
by such provision as to interests of the Owner Trustee and the Owner
Participant in Unit 1 which change or new interpretation renders
ineffective such exemption;
(b) the "aggregate liability" for a single "nuclear incident" of
"persons indemnified" shall not exceed $13 billion (assuming 101
operating nuclear facilities participating in the deferred premium or
similar plan referred to in clause (c) of paragraph (A) above and
subject to adjustment in an amount not exceeding CX) $126 million for
each increase or decrease in said number of operating nuclear facilities
-5-
6091.100.2898.55:1
and (V) the aggregate of all changes in such "aggregate liability" to
reflect the effects of inflation contemplated pursuant to clause (a) of
paragraph (A) above (but without giving effect to clause (it) of the
proviso set forth in such clause) ); and
(c) the amount payable by all licensees of a single nuclear facility in
respect of such facility and with respect to any one "nuclear incident"
under any deferred premium or similar plan required by Applicable Law
shall not exceed $3(3 million (subject to adjustment as provided in
sub-clause (V) of the preceding clause (b))
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 Series B Bonds.
Additional Equity Investment shall have the meaning specified in
Section 8(f) of the Facility Lease.
Additional Notes shall have the meaning set forth in the recitations
in the Indenture, which Additional Notes shall be issued, if at all, pursuant to
Section 3.5 of the Indenture.
Affiliate, with respect to any Person, shall mean any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlled byes 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.
-6-
6091.100.2898.55.l
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.
ANPP Administrative committee shall mean the committee established
pursuant to Section 6.1.1 of the ANPP Participation Agreement (or any comparable
successor provision).
ANPP operating Committee shall mean the committee established
pursuant to Section 6.1.2 of the ANPP Participation Agreement (or any comparable
successor provision).
ANPP Participants shall have the meaning assigned to the word
"Participant" under the ANPP Participation Agreement.
ANPP Participation Agreement shall mean the Arizona Nuclear Power
Project Participation Agreement, dated as of August 23, 1973, among APS, Salt
River, Southern California, PNM, (pound)1 Paso, LADWP and SCPPA, as heretofore
and hereafter amended pursuant to the terms thereof.
-7-
6091.100.2898.55:1
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.
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
appraisers, 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
-8-
6091.100.2898.55:1
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
conclusive on the Lessor and the Lessee. The fees and expenses of appraisers
incurred in connection with any Appraisal Procedure relating to any transaction
contemplated by any provision of any Transaction Document shall be divided
equally between the Lessor and the Lessee (except pursuant to Section 16 of the
Facility Lease, which shall be paid solely by the Lessee)
An 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.
-9-
6091.100.2898.55:1
Assignment and Assumption Sha11 mean the Assignment, Assumption and
Further Agreement, dated as of December 15, 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 Mo. 530, dated
as of December 15, 1986, from PNM to the Owner Trustee.
Assumption Agreement Sha11 mean the Assumption Agreement of PUM
substantially in the form of Exhibit B to the Indenture.
Assumptions shall mean the Pricing Assumptions and the Tax
Assumptions.
Atomic Energy Act shall mean the Atomic Energy Act of 1954, as
amended, and regulations from time to time issued, published or promulgated
pursuant thereto.
Authorized Officer shall mean, with respect to the Indenture
Trustee, any officer of the Indenture Trustee who shall be duly authorized by
appropriate corporate action to authenticate a Note and shall mean, with respect
to the Owner Trustee, any officer of the Owner Trustee who shall be duly
authorized by appropriate corporate action to execute any Transaction Document.
Bankruptcy Code shall mean the Bankruptcy Reform Act of 1978, as
amended, and any law with respect to bankruptcy, insolvency or reorganization
successor thereto.
Basic Lease Term 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.
-10-
6091.l00.2898.55:1
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 15 of each year during the Renewal Term, commencing July
15, 2015 and ending on the last day of the Renewal Term.
Xxxx of Sale shall mean the Deed and Xxxx of Sale, dated as of
December 15, 1986, between PNM and the Owner Trustee.
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 Series B Bonds and any
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 Common Facilities
or the replacement of any such property with other property, irrespective-of
whether (i) such replacement property constitutes an enlargement or betterment
of the property which it replaces, (ii) the cost of 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 or the Common Facilities, as built, and (b)
any alteration, modification, addition or improvement to Unit 1 or the Common
Facilities, other than original, substitute or replacement parts incorporated
into Unit 1 or the Common Facilities; provided, however, that any Capital
Improvement with respect to a Common Facility shall mean only an undivided
.566667% interest in and to such Capital Improvement.
-11-
6091.100.2898.55:1
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 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 Interest,
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 are 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)
-12-
6091.100.2898.55:1
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.
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 December 17, 1986.
Code shall mean the Internal Revenue Code of 1986, 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.
-13-
6091.100.2898.55:1
Common Facilities shall mean all PVNGS common facilities as set
forth in Item B of Exhibit B to the Xxxx of Sale other than excluded common
facilities as set forth in said Item B to such Exhibit B or common facilities
constituting Unit 1 Retained Assets.
Coverage Ratio shall mean the fraction (i) the denominator of which
shall be the sun (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.
-14-
6091.100.2898.55:1
Deed shall mean the Deed, dated as of December 15, 1986, from PNN to
the Owner Trustee.
Deemed Loss Event shall mean any of the following events (unless
waived by the Owner participant which waiver shall be in writing and may be
either indefinite or for a 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 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", an "electric utility company", a "public utility", a
"public utility company", a "holding company" 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
-15-
6091.l00.2898.55:l
thereof or any other property, assets or rights of the Lessor or the Owner
Participant or the lien of the Indenture thereon, (iii) the Lessee shall have
furnished the Owner Trustee, the Owner Participant, and the Indenture Trustee
with an opinion of independent counsel satisfactory to each such Person to the
effect that there exists a reasonable basis for contesting such determination,
(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 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 Xxxxx-Xxxxxxxx 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 Xxxxx-Xxxxxxxx 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
Xxxxx-Xxxxxxxx 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
-16-
6091.100.2898.55:1
any increased real or potential liability in respect of a "nuclear incident",
(iii) the amount of financial protection 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 Government 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 impermissible 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 184 of the Atomic Energy Act and the
NRC's regulations thereunder (including, without limitation, 10 CFR S50.8l, 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
-17-
6O9l.l00.2898.55:l
Action or 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 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 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 Xxxxx-Xxxxxxxx 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 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; (S) 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 I to Appendix C to 10 CFR, 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 willful or flagrant violations in any
"activity area", repeated poor performance in a particular "activity area" or
-18-
6091.100.2898.55:1
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 tine, 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(6) 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.
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,
-19-
6091.100.2898.55:1
the penultimate day of the Lease Term, (6) any degradation of the rated capacity
of Unit 1 to below, or the inability of Unit 1 to produce electricity at a level
above, 530 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
(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 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 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
-20-
6091.100.2898.55:1
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 Cost shall mean the Purchase Price plus the sum of (x) all
supplemental Financing Amounts, and (y) all Additional Equity Investment
amounts.
Facility Lease shall mean the Facility Lease, dated as of December
15, 1986, between PNM, as Lessee, and the Owner Trustee, as Lessor.
Fair Market Rental Value or Fair 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 tile Lessor's rights and
obligations under the Assignment and Assumption and the Assignment of Beneficial
Interest and rights under the Deed and the Xxxx 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
-21-
6091.100.2898.55:1
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 1
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 10(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 PNM, as possessor of the undivided Interest and the Real
Property Interest, is otherwise in compliance with the requirements of all
Transaction Documents. Fair Market Rental value shall be determined on the
assumption that rent will be payable in equal semi-annual installments in
arrears.
Federal Power Act shall mean the Federal Power Act, as amended.
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, 1985 (Docket No. EL86-5-000).
Final Prospectus shall mean the Prospectus included in the
Registration Statement relating to the Series B Bonds, including documents
incorporated into said Prospectus by reference and any applicable Prospectus
Supplement.
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
-22-
6091.100.2898.55:1
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 I as a result of either
(x) the occurrence of an Nuclear Occurrence or an Incipient Extraordinary
nuclear Occurrence relating to Unit 1 or (y) a Nuclear Incident relating to Xxxx
0 and, in the case of this clause (y) the continuation of such cessation for the
Minimum Period, (iv) damage to Xxxx 0 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 I, (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.
Financing Documents shall mean the collateral Trust Indenture, the
Underwriting Agreement, the Series B Supplemental Indenture and the supplemental
Indenture of Pledge.
Fixed Rate Xxxxx shall mean the non-recourse promissory notes,
substantially in the forms of Exhibits X-0, X-0 and A-3 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.
-23-
6091.100.2898.55:1
FNB shall mean the Owner Trustee in its individual capacity, and
successors and assigns.
Form U-70 shall mean the certificate to be filed pursuant to Rule
7(d) of the Holding Company Act for the purpose of exempting the Owner
Participant and the Owner Trustee from registration under the Holding Company
Act.
Funding Corp. shall mean First PV Funding Corporation, a Delaware
corporation.
Generating Unit shall mean Unit 1 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
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 1, including the Undivided Interest and the Real
Property Interest.
-24-
6091.100.2898.55:1
Governmental Authority Sha11 mean a n y 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)
determines to be substantial and which such consultant determines has resulted
in substantial injury to persons on or off the PVNGS Site or substantial damage
to property off the PVNGS Site.
Indemnitee shall mean the Owner Participant, the Owner Trustee, FNB,
the Owner Participant, the stockholder of Funding Corp. and its officers and
directors, Chemical Bank, the Indenture Trustee, each Holder of a Note from time
to time Outstanding, the collateral Trust Trustee, the Trust, the Trust Estate,
the Lease Indenture Estate, the indenture estate under the Collateral Trust
Indenture, any Affiliate of any of the foregoing and the respective successors,
assigns, agents, officers, directors or employees of the foregoing, excluding,
however, any 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 December 15, 1986, between the
Owner Trustee and the Indenture Trustee.
-25-
6O9l.100.289855:1
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 individual capacity, but solely as Indenture Trustee
under the Indenture and each successor trustee and co-trustee thereunder.
Indenture Trustee's counsel Sha11 mean Xxxxxxx Xxxx & Xxxxxxxxx, One
Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
office as may be designated by the Indenture Trustee to the Owner Trustee and
each Holder of a Note Outstanding under the Indenture.
Investment shall have the meaning set forth in Section 3 of the
Participation Agreement.
Investment Company Act shall mean the Investment Company Act of
1S40, as amended.
IRS shall mean the Internal Revenue Service of the united States
Department of the Treasury or any successor agency.
-26-
6091.100.2898.55:1
Xxxxxx Peabody shall mean Bidder, 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 Term shall mean the aggregate of the Basic Lease Term and the
Renewal Term, if any. Lease Termination Date shall mean the last day of the
Lease Term (whether occurring by reason of a termination or expiration of the
Lease Term).
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 Transaction Documents and Financing Documents to
which it is a signatory
Lessee's FUC Counsel shall mean Xxxxxx & Xxxxxxxxxx, P.C., 1615 L
street, Washington, D. C. 20036.
Lessee's General Counsel shall mean Xxxxxxx & MeLeod, P.A., X. X.
Xxxxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx 00000.
Lessee's Special Arizona Counsel shall mean Xxxxx & Xxxxxx, 0000
Xxxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000.
Lessee's Special Counsel shall mean Xxxxx Xxxx Xxxxxxx Xxxxxxxxx &
Xxxxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
-27-
6091.l00.2898.55:l
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 or the Trust Estate or the transactions
contemplated by the Transaction Documents or the Financing Documents.
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.
-28-
6091.100.2898.55:1
Loan Participant's Counsel shall mean Nudge Xxxx Xxxxxxx Xxxxxxxxx &
Xxxxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
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 5ha11 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 APS, dated
November 15, 1984, (v) Reload Nuclear Fuel Contract between APS and Combustion
Engineering, Inc., dated November 5, 1986, (vi) Agreement for the Sale and
Purchase of Waste Water Effluent between the City of Xxxxxxxx, APS and Salt
River, dated June 12, 1981, (vii) Agreement for Construction of Arizona Nuclear
Power Project between Xxxxxxx Power Corporation (Bechtel) and APS, dated January
15, 1973, (viii) Agreement for Engineering and Procurement Services between APS
and Bechtel, dated January 15, 1973, (ix) Option and Purchase of Effluent dated
April 23, 1973, among the Cities of Phoenix, Glendale, Mesa, Tempe and
Scottsdale, the Town of Youngtown, APS and Salt River, (x) Agreement for
Conversion Services between Allied Chemical Corporation and APS, dated November
17, 1975, as amended, (xi) Uranium Concentrate Sales Agreement between Energy
Fuels Exploration Company and APS, dated as of December 1, 1982, (xii) Uranium
Concentrate Sales Agreement between Energy Fuels Exploration and APS, dated as
of October 23, 1931, as amended, (xiii) Agreement for Sale of Uranium
Concentrates between Pathfinder Mines Corporation and APS, dated December 1,
1983, (xiv) Contract for Disposal of Spent Nuclear Fuel and/or High Level
Radioactive Waste between USA and APS, dated July 21, 1984, and (xv) the ANPP
Participation Agreement.
-29-
6091.100.2898.55:1
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 Term1 (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, wen 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.
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
-30-
6091.100.2898.55:1
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 or "Deemed Loss Event". The period
specified in the foregoing clause (a) (1) shall be determined by an independent
nuclear consultant agreed to by the Lessee and the Owner Participant, or,
failing prompt agreement upon such consultant, appointed by the American
Arbitration Society (or comparable or successor organization).
Modification order shall mean: (i) an order modifying the License or
the NRC 2icense for either PVNGS Xxxx 0 or PVNGS Unit 3 effective immediately
upon issuance thereof; (ii) an order modifying the License or the NRC license
for either PVNGS 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 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 FVNGS 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 Release shall mean the Indentures of partial Release, to be
dated the Closing Date, under and with respect to the Existing Mortgage.
-31-
6091.100.2898.55:1
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
30,1 983, 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, 1973.
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.
-32-
6091.l00.2898..55:l
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 Fixed Rate Notes and any 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 50-52S) , December 12,
1985.
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.
-33-
6091.100.2898.55:1
Original of the Facility Lease shall mean the fully executed
counterpart of the Facility Lease, marked "This Counterpart 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
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 set 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.
-34-
6091.100.2898.55:1
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, Xxxxxx, Xxxxxxx & Xxxxxxx, 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000.
Owner Participant's Special NRC Counsel shall mean Shaw, Pittman,
Xxxxx & Xxxxxxxxxx, 0000 X Xxxxxx, XX, Xxxxxxxxxx, C. C. 20036.
Owner Participant's Special New Mexico Counsel shall mean Xxxxx,
Dickason, Sloan, Akin & Xxxx, P.A., 00 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxx
Xxxxxx 00000.
Owner Participant's special Counsel shall mean Milbank, Tweed,
Xxxxxx & XxXxxx, Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000.
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, 0 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000.
Participation Agreement sha11 mean the Participation Agreement,
dated as of December 15, 1986, among the Owner Trustee, the Indenture Trustee,
Funding Corp., the Owner Participant and PNM.
-35-
6091.100.2898.55:1
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 (z) impair payment of Rent; (v) inchoate materialmen's,
mechanics', workmens, repairmen's, employees', carriers', warehousemen'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; ('iii) xxxxxx Liens that have been bonded for the full amount
in dispute or as to which other satisfactory security arrangements shall have
been made and which are being contested diligently by the appropriate party in
good faith and by appropriate proceedings so long as such proceedings shall not
violate clause (x) , (y) or (z) of clause (iv) above; (viii) xxxxxx 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
-36-
6091.100.2898.55:1
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 ANPP
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 Mew Mexico, a New Mexico
corporation.
Xxxxx-Xxxxxxxx Act shall mean the Xxxxx-Xxxxxxxx Act, Pub. L. No.
85-256, 71 Stat. 576 (1957), as amended to the Closing Date.
Pricing Assumptions shall mean the pricing assumptions set forth in
schedule 2 to the Participation Agreement.
Prime Rate shall mean the rate of interest 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.
-37-
6091.100.2898.55:1
Project Manager shall have the meaning assigned thereto in the
ANPP Participation Agreement.
Purchase Documents shall mean the Xxxx 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 Xxxx of Sale.
Real Estate Investment shall have the meaning set forth
in Section 3 of the Participation Agreement.
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
Registration Statement shall mean the registration statements
on Form S-3 (File Nos. 33-2031 and 33-8650) , as amended, and any other similar
registration statement, including all exhibits and all documents incorporated in
any such registration statement by reference, filed with the SEC under the
Securities Act in connection with the offer, issue and sale of the Series B
Bonds.
-38-
6091.100.2898.55:1
Regulations shall mean the income tax regulations issued, published
or promulgated under the Code.
Renewal Term shall have the meaning set forth in Section 12 of the
Facility Lease.
Rent shall mean Basic Rent and supplemental Rent.
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 to 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.
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 Interest, (ii) Severable Capital Improvements title
to the undivided interest in which is retained by the Lessee in accordance with
-39-
6O9l.l00.2898.55:l
Section 8(e) of the Facility Lease, and (iii) any additional interest in and to
PVNGS (other than the Undivided Interest, the related Generation Entitlement
Share and the Real Property Interest) to which the Lessee becomes entitled in
consequence of Sections 16.2 or 23.5 of the ANPP Participation Agreement (except
as otherwise provided in Section 5(a) or 19 of the Facility Lease).
Sale Proceeds shall mean, with respect to any sale of the Undivided
Interest and the Real Property Interest by the Lessor to any Person other than
the Lessee, the gross proceeds of such sale payable in cash, less all costs and
expenses whatsoever incurred by the Lessor and the Owner Participant in
connection therewith.
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(0). 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.
Securities Act shall mean the Securities Act of 1933, as amended.
-40-
6091.100.2898.55.1
Securities Exchange Act shall mean the Securities Exchange Act of
1934, as amended
Series B Bonds shall mean the Lease Obligation Bonds, Series 19863
of Funding Corp., issued, authenticated and delivered pursuant to the
Underwriting Agreement and the Collateral Trust Indenture, as supplemented and
amended by the Series B Supplemental Indenture.
Series B Supplemental Indenture shall mean the Collateral Trust
Indenture Supplement dated as of November 18, 1986, providing, among other
things, for the issuance, authentication and delivery of Funding Corp.'s Lease
Obligation Bonds, Series 1986B.
Severable, when used with respect to any Capital Improvement,. shall
mean any Capital Improvement which can be removed from Unit 1 or the Common
Facilities without materially damaging Unit 1 or the Common Facilities or
materially diminishing or impairing the value, utility or condition which Unit 1
or the Common Facilities 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
-41-
6091.100.2898.55:1
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.
Substituted Lessee shall have the meaning specified in Section
6.8(c) of the Indenture.
Supplemental Indenture of Pledge shall mean the Supplemented
Indenture of Pledge, dated as of December 15, 1986, between the Loan
Participant, the Lessee and the Collateral Trust Trustee, substantially in the
form attached as Exhibit A to the Series B supplemental 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 shall mean that portion of 1.700000%
of the cost of a Capital Improvement to Unit 1 and .566667% 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 Participants 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.
-42-
6091.100.2898.55:1
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
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 at the transactions included or reflected in the Pricing
Assumptions
Tax Indemnification Agreement shall mean the Tax
Indemnification Agreement, dated as of December 15, 1986, between PNM and the
Owner Participant.
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
-43-
6091.100.2898.55:1
required to pay under Section 14 of the Facility Lease, under any circumstances
and in any event, in an amount at least sufficient to pay in full as of any
Basic Rent Payment Date the aggregate unpaid principal amount of all Notes
Outstanding at the close of business on such date, together with accrued and
unpaid interest on such Notes.
Transaction Documents shall mean the Participation Agreement, the
Facility Lease; the Trust Agreement, the Indenture, the Extension Letter, the
Tax Indemnification Agreement, the Mortgage Release, the Assignment and
Assumption, each Purchase Document and the Notes.
Transaction Expenses shall have the meaning set forth in Section 14
(a) of the Participation Agreement.
Transfer shall mean the transfer, by xxxx 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), together 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.
-44-
6091.100.2898.55.1
Trust Agreement shall mean the Trust Agreement, dated as of December
15, 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, Xxxxxx Peabody, Goldman, Sachs & Co. and Drexel Burnhain Xxxxxxx
Incorporated (all acting either as underwriters or representatives of the
underwriters named therein) relating to the purchase, sale and delivery of the
Series B Bonds and any applicable pricing agreements.
-45-
6091.100.2898.55:1
Underwriters' Counsel shall mean Xxxxxxx Xxxx & Xxxxxxxxx, One
Citicorp Center; 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Undivided Interest shall mean a 1.700000% undivided interest in Xxxx
0 and a .566667% undivided interest in Common Facilities; the owner of the
Undivided Interest shall be a tenant-in-common with the owners (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 sha11 mean 1.700000%; provided,
however, that with respect to the portion of the Undivided Interest constituting
Common Facilities, the Undivided Interest Percentage shall be a percentage equal
to .566667%
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 B to the Xxxx of Sale, together with all Capital Improvements
thereto, but excluding all common facilities.
-46-
6091.100.2898.55:1
Unit 1 Decommissioning Costs sha1l mean approximately $23,OOO,OOC
(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 Xxxx 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 Xxxx 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 Lease
Termination Date.
-47-
6091.100.2898.55:l
