Exhibit 99.B-2
CERTAIN RIGHTS OF THE LESSOR UNDER THIS LEASE AND IN THE UNDIVIDED INTEREST
COVERED HEREBY HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN
FAVOR OF, CHEMICAL BANK, AS INDENTURE TRUSTEE. THIS LEASE HAS BEEN EXECUTED IN
SEVERAL COUNTERPARTS. SEE SECTION 20(e) FOR INFORMATION CONCERNING THE RIGHTS OF
HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS THE ORIGINAL COUNTERPART
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AMENDED AND RESTATED LEASE
dated as of
September 1, 1993
between
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity, but solely as Owner Trustee under a Trust
Agreement dated as of January 2, 1985 with DCC Project Finance Two, Inc.
LESSOR
and
PUBLIC SERVICE COMPANY OF NEW MEXICO
LESSEE
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EASTERN INTERCONNECTION PROJECT LEASE
THIS AMENDED AND RESTATED LEASE dated as of September 1, 1993,
between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but
solely as Owner Trustee under a Trust Agreement dated as of January 2, 1985 with
DCC Project Finance Two, Inc., as lessor (the LESSOR), and PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation, as lessee (the LESSEE).
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore executed and delivered
the Lease dated February 5, 1985 with respect to the Undivided Interest (such
Lease, as amended and/or supplemented by (i) Supplement Number One thereto dated
as of September 30, 1985 and (ii) Lease Amendment No. 2 thereto dated as of
March 7, 1987, being hereinafter called the "Original Lease"), which Lease was
recorded (a) at Volume Misc. 174, page 808 in the Office of the County Clerk of
Xxxxxxxx County, New Mexico, (b) at Volume 512, page 608 in the Office of the
County Clerk of Santa Fe County, New Mexico, (c) at Volume Misc. 230, page 2850
in the Office of the County Clerk of San Xxxxxx County, New Mexico, (d) at
Volume Misc. 52, page 701, in the Office of the County Clerk of Xxxxxxxxx
County, New Mexico, (e) at Volume 57 Misc., page 843, in the Office of the
County Clerk of Xx Xxxx County, New Mexico, (f) at Volume Misc. 76, page 353, in
the Office of the County Clerk of Quay, County, New Mexico, (g) at Volume Misc.
45, page 459, in the Office of the County Clerk of Roosevelt County, New Mexico,
and (h) at Volume 94 Misc., page 521, in the Office of the County Clerk of Xxxxx
County, New Mexico; and
WHEREAS, in connection with the prepayment of the Initial Series
Note as contemplated by the Amended and Restated Participation Agreement of even
date hereof among the Lessor, the Lessee and the other parties named therein,
the parties hereto have agreed to amend and restate the Original Lease in the
terms set forth herein;
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 purposes hereof, capitalized terms used herein shall have the
meanings set forth in Appendix A hereto. References in this Agreement to
sections, paragraphs and clauses are to sections, paragraphs and clauses in this
Lease unless otherwise indicated.
SECTION 2. LEASE OF UNDIVIDED INTEREST; TERM.
Upon and subject to the terms and conditions of this Lease, the
Lessor hereby agrees to lease to the Lessee, and the Lessee hereby agrees to
lease from the Lessor, the Undivided Interest. The term of this Lease (the LEASE
TERM) began on February 5, 1985 and shall end on April 1, 2015, or such earlier
or later date on which, or to which, this Lease shall have been terminated,
extended or renewed pursuant to the terms hereof.
SECTION 3. RENT; ADJUSTMENTS TO RENT.
(a) BASIC RENT. The Lessee shall pay to the Lessor as basic
rent (BASIC RENT) for the Undivided Interest, the following amounts:
(1) (i) on October 1, 1993, an amount equal to the product obtained
by multiplying Lessor's Cost by 0.0000000%; (ii) on April 1, 1994, an
amount equal to the product obtained by multiplying Lessor's Cost by
3.9629251%; (iii) on October 1, 1994, an amount equal to the product
obtained by multiplying Lessor's Cost by 5.1917930%; and (iv) on each
Basic Rent Payment Date during the Basic Term from and including April 1,
1995 to and including April 1, 2015 (unless the Basic Term is terminated
prior to such date in accordance with the terms hereof), an amount,
determined initially on the basis of the Pricing Assumptions, but subject
to adjustments pursuant to Section 3(d), equal to the product obtained by
multiplying Lessor's Cost by 5.1222827%;
(2) on each Basic Rent Payment Date subsequent to the date of
execution of a Lease Supplement in respect of any Additional Equity
Investment or Supplemental Financing and during the Basic Term, an amount
set forth in, and determined under, such Lease Supplement, subject to
adjustments pursuant to Section 3(d);
(3) on the date of any refunding of the Refunding Notes or any
Additional Notes which shall occur on any date other than a Basic Rent
Payment Date, an amount equal to any principal of, and premium, if any,
and interest on, the Notes so refunded and payable on the date of such
refunding in accordance with the terms of such Notes;
(4) on each Basic Rent Payment Date during any Fixed Rent Renewal
Term permitted pursuant to Section 13(a)(2), an amount equal to 50% of the
installment of Basic Rent paid or payable on the last Basic Rent Payment
Date; and
(5) on each Basic Rent Payment Date during any Fair Market Renewal
Term permitted pursuant to Section 13(a)(1), an amount equal to the Fair
Market Rental Value of the Undivided Interest established for such Fair
Market Renewal Term pursuant to Section 13(b).
(b) SUPPLEMENTAL RENT. The Lessee shall pay the following amounts
as supplemental rent (SUPPLEMENTAL RENT):
(1) on demand, any amount (other than Basic Rent, Casualty Value,
Special Casualty Value and Early Purchase Value) which the Lessee assumes
the obligation to pay, or agrees to pay, under this Lease (including each
Lease Supplement) or any other Transaction Document;
(2) on the date herein provided, any amount, or the sum of any
amounts, payable hereunder (including each Lease Supplement) as Casualty
Value, Special Casualty Value or Early Purchase Value; and
(3) on demand and in any event on the next succeeding Basic Rent
Payment Date, to the extent permitted by applicable law, interest
(computed on the basis of a 360-day year of twelve 30-day months) at a
rate per annum equal to (i) the Overdue Interest Rate, on that portion of
any payment of Basic Rent or Supplemental Rent distributable pursuant to
clause "FIRST" of Section 5.1 or clause "SECOND" of Section 5.3 of the
Indenture (determined prior to the computation of interest on overdue
payments referred to in such clauses), and (ii) 2% over the Prime Rate, on
the balance of any such payment of Basic Rent or Supplemental Rent
(including, in the case of both clause (i) and clause (ii) above, but
without limitation, to the extent permitted by law, interest payable
pursuant to this clause (3)) not paid when due (whether or not declaration
of this Lease to be in default for such nonpayment is subject to any
period of grace) for any period for which the same shall be overdue.
In the event of any failure on the part of the Lessee to pay any Supplemental
Rent when the same shall become due and payable, the Lessor shall have all
rights, powers and remedies provided for in this Lease or in equity or otherwise
in the case of nonpayment of Basic Rent.
(c) FORM OF PAYMENT. All payments of Rent shall be made by wire
transfer of immediately available funds on the date each such payment shall be
payable hereunder and shall be paid to either (i) in the case of payments other
than Excepted Payments, the Lessor at its address set forth in Section 17 or to
such other Person at such other address in New York, New York as the Lessor may
direct by notice in writing to the Lessee, or (ii) in the case of Excepted
Payments, the Person entitled to receive such payments under the terms hereof
(including each Lease Supplement) or of any other Transaction Document at such
address in New York, New York as such Person may direct by notice in writing to
the Lessee. The Lessee shall cause each such wire transfer to be initiated by
such time as to permit oral confirmation thereof (specifying the wire number) to
be given no later than 11:00 a.m., New York City time on the date the
corresponding payment of Rent is payable hereunder, and shall cause such
confirmation to be duly given in each such case. If the date on which any
payment of Rent is due shall not be a Business Day, such payment shall be
payable on the next succeeding Business Day, together with interest thereon at
the Overdue Interest Rate or 2% over the Prime Rate, as the case may be, for the
period from, and including, the due date to, but excluding, such next succeeding
Business Day.
(d) ADJUSTMENTS. Basic Rent payable under Section 3(a)(1) and
Section 3(a)(2) and the Schedules of Casualty Value, Special Casualty Value and
Early Purchase Value attached hereto from time to time (after giving effect to
any prior adjustments pursuant to this Section 3(d)) shall be subject to
adjustment, upward or downward, to reflect and to preserve Net Economic Return
in consequence of, any Additional Equity Investment, any Supplemental Financing,
or any
refunding of the Refunding Notes, any Additional Notes or all Notes, which
adjustment shall be made on or before the Basic Rent Payment Date next
following such refunding, shall take into account the terms of such
refunding, Additional Equity Investment or Supplemental Financing (including,
without limitation, any payment of principal, premium, if any, and interest
on any Notes refunded and paid on or to a date other than a Basic Rent
Payment Date), and shall be effective as of the date of such Additional
Equity Investment, Supplemental Financing or refunding.
(e) ADEQUACY AND CONFIRMATION OF ADJUSTMENTS. Notwithstanding any
adjustment pursuant to this Section 3, each installment of Basic Rent, as
adjusted, shall be, under any circumstances and in any event, at least
sufficient to pay on each Basic Rent Payment Date thereafter all principal of,
and premium, if any, and interest on, all Notes then due and payable. The amount
of any such adjustment shall first be determined by the Owner Participant, in
its sole discretion, but shall be subject to verification by Salomon Brothers
Inc if the Lessee shall so request. Subject only to such verification, such
adjustment shall be conclusive and binding on the Lessee if the Owner
Participant confirms to the Lessee in writing that such adjustment was computed
on a basis consistent with the original computation of Basic Rent and Casualty
Value, Special Casualty Value and Early Purchase Value. Each adjustment pursuant
to this Section 3 shall be evidenced by the execution and delivery of a Lease
Supplement, but shall be effective as provided herein without regard to when
such Lease Supplement is so executed and delivered.
SECTION 4. NET LEASE.
This Lease shall be a net lease and the Lessee hereby acknowledges
and agrees that the Lessee's obligation to pay all Rent hereunder, and the
rights of the Lessor in and to such Rent, shall be absolute and unconditional
and shall not be affected by any circumstances of any character, including,
without limitation, (i) any set-off, abatement, counterclaim, suspension,
recoupment, reduction, defense or other right which the Lessee may have against
the Lessor, the Owner Participant, Funding Corp, the Indenture Trustee, the
Collateral Trust Trustee, the Contractor or any vendor or manufacturer of any
equipment or assets incorporated in the Transmission System or any other Person
for any reason whatsoever, (ii) any defect in or failure of the title,
merchantability, condition, design, compliance with specifications, operation or
fitness for use of all or any part of the Transmission System, (iii) any loss,
theft or destruction of all or any part of the Transmission System, or any
interference, interruption or cessation in the use or possession thereof or of
the Undivided Interest by the Lessee by any Person for any reason whatsoever or
of whatever duration, (iv) any restriction, prevention or curtailment of or
interference with any use of all or any part of the Transmission System or of
the Undivided Interest, (v) any insolvency, bankruptcy, reorganization or
similar proceeding by or against the Lessee, the Lessor, the Owner Participant,
Funding Corp or any other Person, (vi) the invalidity, illegality or
unenforceability of this Lease or of any other Transaction Document or any other
infirmity herein or therein or any lack of right, power or authority of the
Lessor or the Lessee, the Owner Participant, Funding Corp, the Indenture Trustee
or any other party to enter into this Lease or any other Transaction Document,
(vii) the breach or failure of any warranty or representation made in this Lease
or in any other Transaction Document by the Lessor, the Owner Participant,
Funding Corp, the Indenture Trustee or any other Person,
(viii) any amendment or other change of, or any assignment of rights under,
this Lease, or any other Transaction Document, or any waiver or any other
action or inaction under or in respect of this Lease or any other Transaction
Document, or any exercise or nonexercise of any right or remedy under this
Lease or any other Transaction Document, including, without limitation, the
exercise of any foreclosure or other remedy under the Indenture, the
Refunding Collateral Trust Indenture, or this Lease, or the sale of the
Transmission System, the Undivided Interest, or any part thereof or any
interest therein, or (ix) any other circumstance or happening whatsoever
whether or not similar to any of the foregoing. The Lessee hereby waives, to
the extent permitted by applicable law, any and all rights which it may now
have or which at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, cancel, quit or surrender this Lease except in
accordance with the express terms hereof. If for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, the Lessee nonetheless
agrees to pay to the Lessor an amount equal to each installment of Basic Rent
and all Supplemental Rent at the time such payment would have become due and
payable in accordance with the terms hereof had this Lease not been terminated
in whole or in part. Each payment of Rent made by the Lessee shall be final,
and the Lessee shall not seek to have any right to recover all or any part of
such payment from the Lessor or any other Person for any reason whatsoever.
SECTION 5. RETURN OF TRANSMISSION SYSTEM.
(a) RETURN OF TRANSMISSION SYSTEM. Upon the expiration or
termination of the Lease Term or the last applicable Renewal Term, as the case
may be, the Lessee will surrender possession of the Undivided Interest to the
Lessor, subject to the terms and provisions of the Support Agreements. At the
time of such return the Undivided Interest shall be free and clear of all Liens
(other than Lessor's Liens, Owner Participant's Liens and the Lien of the
Support Agreements), and the Transmission System shall be in the condition and
repair required by Section 8 hereof.
(b) DISPOSITION SERVICES. The Lessee agrees that if it does not
exercise its option to renew or purchase as provided in Sections 13 and 14,
respectively, then during the last twenty-four months of the Basic Term or the
applicable Renewal Term, as the case may be, the Lessee will fully cooperate
with the Lessor in connection with the Lessor's efforts to dispose of, and in
addition the Lessee will make a reasonable effort to dispose of, the Undivided
Interest and the Lessor's interest under the Support Agreements. The Lessor
agrees to reimburse the Lessee for its reasonable out-of-pocket costs and
expenses of such cooperation or such reasonable effort incurred, at the Lessor's
request, whether or not the Lessor disposes of the Undivided Interest.
SECTION 6. WARRANTY OF THE LESSOR.
(a) QUIET ENJOYMENT. The Lessor warrants that during the Basic Term
and any applicable Renewal Term, if the Lessee is in compliance with each and
every term and provision of this Lease and each other Transaction Document to
which it is a party, the Lessee's use of the Transmission System, including the
Undivided Interest, shall not be interrupted by the Lessor or
any Person claiming through or under the Lessor, and their respective assigns.
(b) DISCLAIMER OF OTHER WARRANTIES. The warranty set forth in
Section 6(a) is in lieu of all other warranties of the Lessor, whether written,
oral or implied, with respect to this Lease, the Transmission System or the
Undivided Interest. As between the Lessor and the Lessee, execution by the
Lessee of this Lease (including each Lease Supplement) shall be conclusive proof
of the compliance of the Transmission System, any Alteration and any Replacement
Component and the Undivided Interest with all requirements of this Lease and any
such Lease Supplement, and THE LESSOR LEASES AND THE LESSEE TAKES THE UNDIVIDED
INTEREST AS IS AND WHERE IS, and the Lessor shall not be deemed to have made,
and THE LESSOR HEREBY DISCLAIMS, ANY OTHER REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE DESIGN OR CONDITION OF THE TRANSMISSION SYSTEM OR THE UNDIVIDED INTEREST, OR
ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY
PARTICULAR PURPOSE, TITLE TO THE TRANSMISSION SYSTEM OR THE UNDIVIDED INTEREST,
OR ANY PART THEREOF, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO THE PLANS AND SPECIFICATIONS, OR THE ABSENCE OF ANY LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, NOR SHALL THE LESSOR BE LIABLE
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LIABILITY IN TORT, STRICT OR
OTHERWISE), it being agreed that all such risks, as between the Lessor and the
Lessee, are to be borne by the Lessee, but the Lessor authorizes the Lessee, at
the Lessee's expense, to assert for the Lessor's account, during the Lease Term,
so long as no Default or Event of Default shall have occurred and be continuing
hereunder, all of the Lessor's rights under any applicable warranty and any
other claims that the Lessee or the Lessor may have against the Contractor,
whether under the Construction Contract or otherwise, or any vendor,
manufacturer or sub-contractor with respect to the Transmission System or the
Undivided Interest hereunder or under the Purchase Documents, and the Lessor
agrees to cooperate, at the Lessee's expense, with the Lessee in asserting such
rights. Any amount received by the Lessee as payment under any such warranty or
other claim shall be applied FIRST, to restore the Transmission System to the
condition required by Section 8 hereof, SECOND, to reimburse the Lessee for its
reasonable out-of-pocket fees and expenses, if any, incurred in enforcing any
such warranty or other claim, and THIRD, the balance, if any, of such amount
shall, to the extent, but only to the extent, of the Lessor's Share, be paid
over to and retained by the Lessor.
SECTION 7. LIENS.
The Lessee will not directly or indirectly create, incur, assume or
suffer to exist any Liens on or with respect to the Undivided Interest, the
Lessor's title thereto or any interest of the Lessor therein (and the Lessee
will promptly, at its own expense, take such action as may be necessary duly to
discharge any such Lien), except Permitted Liens.
SECTION 8. OPERATION AND MAINTENANCE; MARKING; INSPECTION.
(a) OPERATION AND MAINTENANCE. The Lessee covenants that it will (i)
operate, service and maintain the Transmission System so that the condition of
the Transmission System and the operating efficiency thereof will be maintained
and preserved, ordinary wear and tear excepted, in accordance with (x) Prudent
Utility Practice, (y) such operating standards as shall be required to enforce
warranty claims against the Contractor and all vendors, manufacturers and
subcontractors; PROVIDED, HOWEVER, that the Lessee may operate the Blackwater
HVDC Station at levels above the limits provided by the Contractor under the
Construction Contract in respect of the Contractor's warranties so long as such
operation will not, in the Lessee's reasonable judgment, cause damage to the
Blackwater HVDC Station or reduce the useful life of the Transmission System and
(z) the terms and conditions of all insurance policies in effect at any time
with respect to the Transmission System, the Undivided Interest or any part
thereof, (ii) comply with all Governmental Rules, whether pertaining to health,
safety, the environment or otherwise, affecting the Transmission System and the
use, operation and maintenance thereof, and (iii) keep and maintain proper books
and records relating to all services rendered and all funds expended for
operation and maintenance of the Transmission System and the acquisition,
construction and installation of all Replacement Components and Alterations
incorporated in the Transmission System, all in accordance with the Uniform
System of Accounts and customary practices in the electric utility industry in
the Southwestern region of the United States of America. The Lessor shall not be
obliged in any way to maintain, alter, repair, rebuild or replace the Undivided
Interest or the Transmission System or any portion thereof, and the Lessee
expressly waives the right to perform any such action at the expense of the
Lessor pursuant to any law at any time in effect.
(b) INSPECTION. The Lessor, the Owner Participant, the Indenture
Trustee and the Collateral Trust Trustee shall have the right, but not the duty,
to inspect the Transmission System at their expense. Upon the request of the
Lessor, the Owner Participant, the Indenture Trustee or the Collateral Trust
Trustee, the Lessee shall, at any reasonable time, make the Transmission System,
and the Lessee's operating, maintenance and repair records pertaining to the
Transmission System, available to the Lessor, the Owner Participant, the
Indenture Trustee or the Collateral Trust Trustee for inspection at such times
during business hours as the Lessor, the Owner Participant, the Indenture
Trustee or the Collateral Trust Trustee may reasonably request.
(c) REPLACEMENT OF COMPONENTS. If and to the extent required by
paragraph (a) above and in compliance with the Lessee's covenant and agreement
thereunder, UNLESS prohibited by applicable Governmental Rule, the Lessee, at
its sole expense, will promptly replace each necessary and useful Component, the
replacement of which shall be required in accordance with Prudent Utility
Practice (each replacement of a Component being herein referred to as a
REPLACEMENT COMPONENT), which may from time to time be incorporated in the
Transmission System and which may from time to time fail to function in
accordance with its intended use, or become worn out, destroyed, damaged beyond
repair, lost, condemned, confiscated, stolen or seized for any reason
whatsoever. In addition, in the ordinary course of maintenance, service, repair
or testing, the Lessee may remove any Component; PROVIDED, HOWEVER, that the
Lessee shall cause such Component to be
replaced by a Replacement Component as promptly as practicable and, subject
to this paragraph (c), the Lessee shall be entitled to retain the entire
amount of the net proceeds of (including the Undivided Interest in the net
proceeds of) any sale or disposition of such removed Component. Each
Replacement Component shall be free and clear of all Liens EXCEPT Permitted
Liens and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Component replaced, assuming such replaced
Component was in at least the condition and repair required to be maintained
under paragraph (a) above. The Undivided Interest in each Component at any
time removed from the Transmission System shall remain the property of the
Lessor, no matter where located, until such time as such Component shall be
replaced by a Replacement Component which has been incorporated in the
Transmission System (including the Undivided Interest) and which meets the
requirements for Replacement Components specified above. Immediately upon any
Replacement Component becoming incorporated in the Transmission System,
without further act, (i) title to an Undivided Interest in the removed
Component shall thereupon vest in the Lessee or such other Person as shall be
designated by the Lessee, free and clear of all rights of the Lessor, the
Indenture Trustee or the Collateral Trust Trustee, (ii) title to an undivided
interest in such Replacement Component, the percentage of which shall be
equal to the Lessor's Share, shall thereupon vest in the Lessor and (iii)
such undivided interest in such Replacement Component shall become subject to
this Lease and be deemed part of the Undivided Interest and the Transmission
System for all purposes hereof to the same extent that the Lessor had an
Undivided Interest in the Component originally incorporated in the
Transmission System.
(d) REQUIRED ALTERATIONS. The Lessee shall make all Severable and
Nonseverable Alterations to the Transmission System as may be required from time
to time to maintain the Transmission System in accordance with Prudent Utility
Practice or to meet applicable Governmental Rules (all such Alterations being
herein referred to as REQUIRED ALTERATIONS). All Required Alterations shall be
completed in a good and workmanlike manner, with reasonable dispatch.
(e) OPTIONAL ALTERATIONS. The Lessee may from time to time make such
Severable and Nonseverable Alterations to the Transmission System which are not
Required Alterations (all such Alterations being herein referred to as OPTIONAL
ALTERATIONS) as the Lessee, in its sole discretion, may deem desirable in the
proper conduct of its business; PROVIDED, HOWEVER, that no Optional Alteration
shall diminish the value, utility or condition of the Transmission System below
the value, utility and condition thereof immediately prior to such Optional
Alteration, assuming the Transmission System was then in at least the condition
and repair required to be maintained by the terms of this Lease. If at any time
the Lessee shall propose to incorporate in the Transmission System any
Nonseverable Optional Alteration with a cost in excess of $2,000,000, the Lessee
will give to the Lessor 30 days' prior written notice thereof, including the
Lessee's proposal for the financing of the cost of the Lessor's Undivided
Interest therein. Such alteration shall be subject to the Lessor's consent;
PROVIDED, HOWEVER, that if the Lessor shall not have objected to the
incorporation of such proposed Nonseverable Optional Alteration in the
Transmission System within such 30-day period, the Lessor will be deemed to have
consented thereto. In such connection, the Lessor acknowledges that its interest
in the Transmission System is only with
respect to its Undivided Interest and, therefore, that the Lessee shall be
required to take into account the rights and interests of all other Persons
having an undivided interest in the Transmission System, including any
undivided interest in such proposed Nonseverable Optional Alteration. All
Optional Alterations shall be completed in a good and workmanlike manner,
with reasonable dispatch.
(f) REPORTS OF ALTERATIONS. On or before April 1 of each year
throughout the Lease Term, commencing April 1, 1993, the Lessee shall furnish
the Lessor with a report describing separately and in reasonable detail (i) each
Alteration having a cost in excess of $500,000 which was incorporated in the
Transmission System during the preceding calendar year and (ii) each Alteration
having an estimated cost in excess of $500,000 which the Lessee then proposes to
incorporate in the Transmission System during the calendar year which includes
the date of such report. Each such report shall indicate, separately with
respect to each Alteration, (x) in the case of Alterations referred to in clause
(i) above, the actual cost thereof, the arrangement for the financing thereof
and the Person or Persons who hold title thereto or to an undivided interest
therein in accordance with the provisions of paragraph (g) of Section 8, and (y)
in the case of Alterations referred to in clause (ii) above, the estimated cost
thereof, any proposed arrangement (including, without limitation,a proposed
Supplemental Financing and any request for Additional Equity Investment) for the
financing of an undivided interest therein, the percentage of which shall be
equal to the Lessor's Share and the Person who, upon completion could or, upon
completion of any plan for the financing of such an undivided interest would,
hold title thereto in accordance with the provisions of paragraph (g) of this
Section 8.
(g) TITLE TO ALTERATIONS. Title to an undivided interest, the
percentage of which shall be equal to the Lessor's Share, in each Alteration
shall vest, as follows:
(1) in the case of each Alteration other than a Severable Optional
Alteration, whether or not the Lessor shall have financed or provided
financing (in whole or in part) for such undivided interest by an
Additional Equity Investment or a Supplemental Financing, or both,
effective on the date such Alteration shall have been incorporated in the
Transmission System, the Lessor shall, without further act, acquire title
to such undivided interest in such Alteration;
(2) in the case of each Severable Optional Alteration, if the Lessor
shall have financed (by an Additional Equity Investment or a Supplemental
Financing or both) its Share in any such Alteration, effective on the date
of payment, or the date on which the Lessor shall unconditionally be
obligated to make payment of an amount equal to the product obtained by
multiplying the cost (or the then estimated cost) thereof by the Lessor's
Share, the Lessor shall, without further act, acquire title to such
undivided interest in such Alteration; and
(3) in the case of each Severable Optional Alteration the Lessor's
Share of the cost of which the Lessor does not finance, the Lessee shall
retain title to such undivided interest, and the Lessor shall have no
interest therein, and neither such Alteration nor any such undivided
interest shall thereafter be, or be deemed to be, incorporated in the
Undivided Interest.
Immediately upon title to such undivided interest in any Alteration vesting in
the Lessor pursuant to subparagraph (1) or (2) of this paragraph (g), such
undivided interest in such Alteration shall, without further act, become subject
to this Lease and be deemed part of the Undivided Interest and the Transmission
System for all purposes hereof.
(h) FUNDING OF ALTERATIONS AND REPLACEMENT COMPONENTS. The Lessee
may request that the Lessor provide financing of an undivided interest in (i)
any Alteration or (ii) the Incremental Cash Cost of any Replacement Component
incorporated in the Transmission System at any time during the preceding twelve
months, in each case in an amount equal to the product obtained by multiplying
the actual cost thereof or the Incremental Cash Cost thereof by the Lessor's
Share; PROVIDED that in each case the actual cost and the Incremental Cash Cost
of all Alterations and Replacement Components included in such request shall
exceed the Lessor's Share of $3,000,000. Such request may be made (i) in the
notice given under paragraph (e) above in respect of each such Nonseverable
Optional Alteration, (ii) in the report given under paragraph (f) above in
respect of each such Alteration other than a Nonseverable Optional Alteration,
or (iii) on February 1 of each year during the Lease Term, commencing February
1, 1993, in respect of the Incremental Cash Cost of each such Replacement
Component. With respect to (i), (ii) and (iii) of the preceding sentence, the
Lessor may, with funds provided by the Owner Participant in its sole discretion,
make an additional direct investment in any such Alteration or the Incremental
Cash Cost of any such Replacement Component (any such direct investment being
herein referred to as an ADDITIONAL EQUITY INVESTMENT). If no Default or Event
of Default shall have occurred and be continuing and if the Lessee so elects,
the Lessee shall have the right to cause the Lessor, without the Lessor's
consent, to issue one or more Additional Notes to finance (x) the difference
between (A) an amount equal to the product obtained by multiplying the actual
cost of any such Alteration or the Incremental Cash Cost of any such Replacement
Component by the Lessor's Share, and (B) any Additional Equity Investment, or
(y) if the Owner Participant shall elect not to make any Additional Equity
Investment, the product obtained under sub-clause (A) of clause (x) above, by
arranging for one or more other Persons (other than a party affiliated with the
Lessee within the meaning of section 318 of the Code) to provide to the Lessor,
through the Indenture, the funds required to finance the amount determined under
clause (x) or clause (y) above (such financing being herein called a
SUPPLEMENTAL FINANCING); PROVIDED, HOWEVER, that, unless the Lessor shall have
given its prior written consent, the Lessor shall not be obligated to accept any
Supplemental Financing pursuant to clause (y) above to the extent that the total
amount financed by the Lessor pursuant to such Supplemental Financing, when
added to the amount of previous Supplemental Financings under clause (y) above,
effected without the prior written consent of the Lessor, exceeds the Lessor's
Share of $10,000,000; and PROVIDED, FURTHER, that such Supplemental Financing
shall
comply with the requirements of Section 3.5 of the Indenture, as if such
requirement were fully set forth herein and shall not, in the opinion of
independent tax counsel for the Owner Participant, adversely affect the
status of this Lease as a "true lease" for Federal income tax purposes or, in
the opinion of the Owner Participant, otherwise adversely affect the capacity
or the anticipated value or useful life of the Undivided Interest after the
termination or expiration of this Lease. The failure or inability of the
Lessee to effect a Supplemental Financing in respect of any such Alteration
or the Incremental Cash Cost of any such Replacement Component shall not in
any manner affect (i) the Lessee's obligation to make any Required Alteration
or to incorporate such Replacement Component in the Transmission System in
accordance with the terms of this Lease, in which case the Lessee shall carry
out such obligation at its own expense and title to such Alteration shall in
such case vest as provided in paragraph (g) of this Section 8, or (ii) the
Lessee's obligations under the Tax Indemnity Agreement. Any Supplemental
Financing shall be conditioned upon the Lessee's having a credit rating at
the time of such Supplemental Financing at least equal to the Lessee's credit
rating at February 5, 1985. Each such Supplemental Financing and each such
Additional Equity Investment shall be subject to the condition that the Owner
Participant and the Lessee negotiate in good faith the specific terms
thereof, including, without limitation, (A) the amount of such Additional
Equity Investment, if any, (B) the terms of the Additional Notes (including,
but not limited to, interest rate, amortization and maturity (which must be
earlier than, or co-terminus with, the Basic Term)), (C) the nature and
extent of any Federal tax benefits attributable thereto and to the Lessor's
acquisition thereof and investment therein and appropriate indemnification
with respect to such tax benefits if, and to the extent that the value
thereof is reflected in adjustments referred to below, (D) the net economic
return then required by the Owner Participant in its sole discretion, and (E)
the adjustments to Basic Rent, Casualty Value, Special Casualty Value and
Early Purchase Value pursuant to Section 3(d). As soon as possible
thereafter, such terms shall be reflected in, and the Lessor and Lessee shall
execute, a Lease Supplement and the parties thereto shall execute a
Supplemental Indenture and amendments to any other Transaction Documents,
including, without limitation, the Tax Indemnity Agreement, affected thereby.
Except as amended or modified by such Lease Supplement, this Lease shall
continue in full force and effect.
(i) MARKING. The Lessee agrees, at its own cost, expense and
liability, to maintain in a prominent place in the control room of the
Blackwater HVDC Station a durable, readily visible inscription of such type and
content as from time to time may be required by law or otherwise deemed
necessary by the Lessor or the Indenture Trustee in order to protect the title
of the Lessor to the Undivided Interest, the rights of the Lessor under this
Lease and the Lien of the Indenture Trustee under the Indenture. The Lessee will
replace promptly such marking if the same shall have been removed, defaced,
obliterated or destroyed.
SECTION 9. EVENT OF LOSS; DEEMED LOSS EVENT.
(a) EVENT OF LOSS. In the event that the Transmission System shall
suffer either (i) an Event of Loss or (ii) an event which, in the reasonable
opinion of the Lessee, might constitute an Event of Loss, such fact and the date
of the occurrence thereof shall promptly be reported by the Lessee to the
Lessor. In the case of any event described in clause (ii) of the preceding
sentence, the
Lessee shall determine, within six months of the occurrence of such event,
whether such event constitutes an Event of Loss and shall furnish the Lessor
with a copy of the opinion of an independent engineer (to the extent required
pursuant to the definition of Event of Loss) upon which such determination is
based.
(b) PAYMENT OF CASUALTY VALUE. In the case of an Event of Loss, on
the Basic Rent Payment Date next following the date of any report given pursuant
to paragraph (a) above (but in no event later than the six month period referred
to in paragraph (a)), the Lessee shall pay to the Lessor Casualty Value
determined as of such Basic Rent Payment Date, plus any Basic Rent or
Supplemental Rent then owing. Upon receipt of such amount, the Lessor shall
terminate the Easement and the Operating Agreement and transfer the Undivided
Interest to the Lessee on an AS IS, WHERE IS basis, free and clear of all
Lessor's Liens and Owner Participant's Liens, but without any other recourse,
representation or warranty, express or implied, by the Lessor or the Owner
Participant.
(c) DEEMED LOSS EVENT. In the case of a Deemed Loss Event, on the
last day of the month during which such event occurs or, if such last day shall
be less than 30 days following the date on which such event shall occur, on the
last day of the month following the month during which such event occurs, the
Lessee shall pay to the Lessor the Special Casualty Value applicable on such
date, plus any Supplemental Rent then owing. Upon payment of Special Casualty
Value the Lessor shall terminate the Easement and the Operating Agreement and
transfer the Undivided Interest to the Lessee on an AS IS, WHERE IS basis, free
and clear of all Lessor's Liens and Owner Participant's Liens, but without any
other recourse, representation or warranty, express or implied, by the Lessor or
the Owner Participant.
(d) TERMINATION OF OBLIGATION. Upon satisfaction by the Lessee of
all requirements of either paragraph (b) or paragraph (c) above, as the case may
be, the Lessee's obligation to pay further Basic Rent shall cease, but the
Lessee's obligation to pay all Supplemental Rent becoming due before, on and
after such satisfaction shall remain unchanged and shall survive such
termination.
SECTION 10. INSURANCE.
The Lessee will, at its own expense, cause to be carried and
maintained insurance, with financially sound and reputable insurers satisfactory
to the Lessor, against damage to or destruction of any substations and the
Blackwater HVDC Station (but specifically excluding all towers and lines
included in the Transmission System), and liability insurance with respect to
third party bodily injury and property damage, in each case in amounts (after
deductibles) and against risks (i) consistent with Prudent Utility Practice,
(ii) at least comparable in amounts and against risks customarily insured
against by the Lessee or others in the electric utility business in the
Southwestern region of the United States and (iii) sufficient to prevent the
Lessor and the Indenture Trustee from becoming at any time a coinsurer with
respect to any loss relating to events or occurrences covered under any policy;
PROVIDED, HOWEVER, that in the case of insurance in respect of
damage to or destruction of the Transmission System, the Lessee shall not be
required to insure towers and lines, but the insurance so provided shall
cover the loss of or damage to any substations included in the Transmission
System and the Blackwater HVDC Station and such insurance shall be in an
amount equal to that portion of Casualty Value which bears the same relation
to Casualty Value as the aggregate construction cost of such substations and
Station bears to Transmission System Cost. Any policies with respect to such
insurance shall (i) name the Lessee, the Lessor, the Owner Participant and
the Indenture Trustee as insureds and loss payees, as their interests may
appear, (ii) provide for at least 60 days prior written notice by the
insurance carrier to the Lessor, the Owner Participant and the Indenture
Trustee in the event of cancellation, expiration or material modification
thereof, (iii) waive any right to claim any premiums or commissions against
the Lessor, the Owner Participant or the Indenture Trustee, (iv) provide that
the insurers shall waive any rights of subrogation against the Lessor, the
Owner Participant or the Indenture Trustee, (v) provide that if such
insurance is cancelled for any reason whatsoever, or any substantial change
is made in the coverage which affects the interest of the Lessor, the Owner
Participant or the Indenture Trustee, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall not
be effective against the Lessor, the Owner Participant or the Indenture
Trustee for 60 days after receipt by the Lessor, the Owner Participant and
the Indenture Trustee, respectively, of written notice from any applicable
insurers of such cancellation, change or lapse, and (vi) provide that each of
the Lessor, the Owner Participant and the Indenture Trustee shall be
permitted to make payments to effect the continuation of such insurance
coverage upon notice of cancellation due to nonpayment of premiums. Each such
policy shall be primary without right of contribution from any other
insurance which is carried by the Lessor, the Owner Participant or the
Indenture Trustee with respect to its interest in the Transmission System.
The Lessee shall, on or before April 1 of each year, commencing April 1,
1994, furnish to the Lessor, the Owner Participant and the Indenture Trustee
(i) a certificate signed by an independent insurance broker satisfactory to
the Lessor, the Owner Participant and the Indenture Trustee showing the
insurance then maintained by the Lessee pursuant to this Section 10 and
stating that in the opinion of such independent broker such insurance
complies with the provisions hereof, and (ii) copies of policies carried and
maintained by the Lessee pursuant to this Section 10. The Lessee shall not
reduce the amounts of its liability insurance as in effect on February 5,
1985. In the event that the Lessee shall fail to maintain insurance as herein
provided the Lessor, the Owner Participant or the Indenture Trustee may at
its option maintain insurance which is required to be maintained by the
Lessee hereunder, and, in such event, the Lessee shall reimburse such party
upon demand for the cost thereof, together with interest thereon at the
Overdue Interest Rate, as Supplemental Rent. So long as no Default or Event
of Default shall have occurred and be continuing, all insurance proceeds paid
in respect of damage to or destruction of the Undivided Interest and received
by the Lessor (directly or from the Indenture Trustee) in respect of the
Undivided Interest with respect to an occurrence not constituting an Event of
Loss shall be paid to the Lessee. Nothing in this Section 10 shall prohibit
the Lessee or the Owner Participant from placing at its expense insurance on
or with respect to the Transmission System or the Undivided Interest, or the
operation of either thereof, naming the Lessee or the Owner Participant, as
the case may be, as insured and loss payee, in an amount exceeding the amount
of insurance required to be maintained by the Lessee hereunder from time to
time, unless, in the case of insurance maintained by the Lessee, such
insurance would
conflict with or otherwise limit the insurance to be provided or maintained
by the Lessee in accordance with this Section 10.
SECTION 11. INDEMNIFICATION.
The Lessee agrees, whether or not any of the transactions
contemplated hereby shall be consummated and whether or not this Lease shall
have expired or terminated, to assume liability for, and does hereby agree to
indemnify, protect, save and keep harmless each Indemnitee, on an After-Tax
Basis, from and against any and all Claims which may be imposed on, incurred by
or asserted against any Indemnitee, whether or not such Indemnitee shall also be
indemnified as to any such Claim by any other Person, (i) in any way relating to
or arising out of this Lease, any other Transaction Document or any Financing
Document, or the performance or enforcement of any of the terms hereof or
thereof, (ii) in any way relating to a disposition of all or any part of the
Undivided Interest in connection with a termination upon an Event of Default, an
Event of Loss or a Deemed Loss Event or (iii) in any way relating to or arising
out of the design, manufacture, erection, purchase, acceptance, rejection,
financing, ownership, delivery, lease, sublease, possession, use, operation,
maintenance, condition, sale, return, storage or disposition of the Transmission
System or any accident in connection therewith (including, without limitation,
latent and other defects, whether or not discoverable, and any Claim for patent,
trademark, service-xxxx or copyright infringement and expenses of any such
Indemnitee incurred in the administration of this Lease, any other Transaction
Document or any Financing Document, and not paid as a Transaction Expense or
included in Lessor's Cost, and reasonable fees and disbursements of outside
counsel incurred in connection therewith); PROVIDED, HOWEVER, that the Lessee
shall not be required to indemnify any Indemnitee for (A) any Claim in respect
of the Transmission System or the Undivided Interest arising from acts or events
which occur after possession of the Undivided Interest has been redelivered to
the Lessor in accordance with Section 5 hereof (other than after an Event of
Default), EXCEPT as provided in the Participation Agreement, (B) any Claim
resulting from acts which would constitute the willful misconduct or gross
negligence of such Indemnitee, (C) any Transaction Expenses to be paid by the
Lessor or the Owner Participant pursuant to Section 14 of the Amended and
Restated Participation Agreement, (D) any Claim resulting directly from a
transfer by such Indemnitee of all or part of its interest in this Lease, the
Undivided Interest or the Transmission System other than in connection with an
Event of Default, an Event of Loss, a Deemed Loss Event or the exercise by the
Lessor of its rights under Section 16 of this Lease, (E) any Claim, including
attorney fees, arising out of either (1) the preparation or approval of maps,
drawings, opinions, reports, surveys, change orders, designs or specifications
by such Indemnitee, or any agent or employee of such Indemnitee, or (2) the
giving of or the failure to give directions or instructions by such Indemnitee,
or any agent or employee of such Indemnitee, where such giving of or failure to
give directions or instructions is the primary cause of bodily injury to persons
or damage to property, or (F) any Claim in respect of the payment of principal,
premium, if any, or interest on the Notes or the Bonds. The Lessor shall have no
duty to give any such directions or instructions referred to in Clause (E)
above, except as expressly provided herein. To the extent that an Indemnitee in
fact receives indemnification payments from the Lessee under this Section 11,
and so long as no Default or Event of Default shall have occurred and be
continuing, the Lessee shall be subrogated, to the extent of any indemnity paid,
to such Indemnitee's rights with respect to the transaction or event requiring
or giving rise to such indemnity.
SECTION 12. ASSIGNMENT OR SUBLEASE.
Without the prior written consent (which consent shall not be
unreasonably withheld) of the Lessor, the Lessee shall not assign, transfer,
encumber (EXCEPT for Permitted Liens) or sublease its leasehold interest under
this Lease. The Lessee shall not, without the prior written consent of the
Lessor and the Owner Participant, part with the possession or control of, or
suffer or allow to pass out of its possession or control, the Transmission
System, EXCEPT to the extent permitted by the provisions of this Section 12 or
the provisions of the Support Agreements. No wheeling agreement, interconnection
agreement, power sales contract, grant by the Lessee of any right to tap the
Transmission System or utility agreement or grant, however denominated, shall be
deemed to be an assignment, transfer, encumbrance or sublease for purposes of
this Section, so long as any such agreement or grant shall not transfer
possession or control of the Transmission System, or purport to create or grant
rights to use the Transmission System, beyond the end of the Lease Term.
SECTION 13. LEASE RENEWALS.
(a) LEASE RENEWAL. At the end of the Basic Term or the then
applicable Renewal Term, as the case may be, PROVIDED that no Default or Event
of Default shall have occurred and be continuing hereunder and the Notes shall
have been paid in full, the Lessee shall have the right to exercise one of the
following two options to renew the term of this Lease for the Renewal Term or
Renewal Terms described below:
(1) At the end of the Basic Term, the Fixed Rent Renewal Term, if
any, elected by the Lessee under clause (2) below, or any expiring Fair
Market Renewal Term theretofore elected by the Lessee under this clause
(1), upon notice given as provided in Section 13(b), the Lessee may renew
the term of this Lease during the remaining term of the Support Agreements
for one or more periods of not less than three years, nor more than five
years (each such period so determined being herein referred to as a FAIR
MARKET RENEWAL TERM), each at a Fair Market Rental Value, payable on each
Basic Rent Payment Date occurring during such Fair Market Renewal Term;
PROVIDED, HOWEVER, that if the Lessee shall elect more than one Fair
Market Renewal Term, all such Fair Market Renewal Terms shall be
successive; and PROVIDED, FURTHER, that notwithstanding the foregoing, the
last Fair Market Renewal Term may be for a period of less than three years
if the period from the expiration of the preceding Fair Market Renewal
Term to the expiration date of the Support Agreements shall be less than
three years; and
(2) Upon notice given as provided in Section 13(b), at the end of
the Basic Term only, the Lessee may renew the term of this Lease for one
period of not less than one year nor more than the Maximum Option Period
(such period so determined being herein referred to as the FIXED RENT
RENEWAL TERM), in which case the Basic Rent payable under the Fixed Rent
Renewal Term shall be the rental provided in Section 3(a)(4) hereof.
(b) NOTICE; APPRAISAL. Not less than two years prior to the
expiration date of the Basic Term, or the then applicable Fixed Rent Renewal
Term or any then applicable Fair Market Renewal Term, the Lessee may indicate
its desire to exercise the lease renewal option described in either Section
13(a)(1) or, only in respect of the expiration of the Basic Term, Section
13(a)(2). Any such election shall be irrevocable, but shall be binding against
the Lessor only if on the effective date thereof no Default or Event of Default
shall have occurred and be continuing. The Maximum Option Period or the Fair
Market Rental Value of the Undivided Interest, as the case may be, shall be
established in accordance with the Appraisal Procedure. Upon a determination of
the Maximum Option Period the Lessor and the Lessee shall amend the Support
Agreements to extend the date of the expiration thereof to the then estimated
useful life of the Transmission System.
SECTION 14. PURCHASE OPTIONS.
(a) Unless a Default or Event of Default shall have occurred and be
continuing, the Lessee shall have the right to exercise one of the following
options to purchase the Undivided Interest:
(1) On the date of expiration of the Basic Term, the Fixed Rent
Renewal Term or any then applicable Fair Market Renewal Term, the Lessee
shall have the right upon not less than two years' prior written notice,
to purchase the Undivided Interest on the date of expiration of such Term
at a purchase price equal to the Fair Market Value thereof; or
(2) On the Basic Rent Payment Date designated in a written notice
given at least two years prior to such Basic Rent Payment Date (which date
may only be a Basic Rent Payment Date during the Basic Term occurring on
or after the thirtieth Basic Rent Payment Date), at a purchase price equal
to the greater of the Early Purchase Value applicable on the date of
purchase and the Fair Market Value of the Undivided Interest on such date,
plus an amount equal to the sum of any Basic Rent then owing and any
premium due on prepayment of the Notes.
(b) Any such election shall be irrevocable, but shall be binding
against the Lessor only if on the effective date thereof no Event of Default
shall have occurred and be continuing. If the Lessee shall have elected to
purchase the Undivided Interest, payment by the Lessee of the purchase price
thereof plus all Rent then due and owing shall be made in immediately available
funds against delivery of (i) a xxxx of sale transferring and assigning to the
Lessee all right, title and
interest of the Lessor in and to the Undivided Interest free and clear of all
Lessor's Liens and all Owner Participant's Liens, but without other recourse,
representation or warranty, and (ii) the agreement of the Lessor and the
Indenture Trustee (in recordable form) terminating their respective interests
in the Undivided Interest and under the Transaction Documents to which the
Lessor or the Indenture Trustee, as the case may be, is a party, EXCEPT that
indemnity obligations of the Lessee with respect to periods prior to the date
of termination shall survive. In connection with any sale by the Lessor to
the Lessee under this Section 14, the Lessor may specifically disclaim
representations and warranties (other than as contemplated by clause (i) of
the preceding sentence) in a manner comparable to that set forth in the
second sentence of Section 6(b).
SECTION 15. EVENTS OF DEFAULT.
The term EVENT OF DEFAULT, wherever used herein, shall mean any of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary, or come about or be effected by operation
of law, or be pursuant to or in compliance with any Governmental Rule or
Governmental Action):
(1) the Lessee shall fail to make, or cause to be made, payment of
Casualty Value, Special Casualty Value or Early Purchase Value when due,
any payment of Basic Rent within 10 days after the same shall become due,
or any payment of Supplemental Rent (other than Casualty Value, Special
Casualty Value or Early Purchase Value) within 30 days after the same
shall become due; or
(2) the Lessee shall fail to maintain insurance as required
by Section 10 hereof; or
(3) the Lessee shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under Section 12
hereof or Section 10(b)(iii) of the Participation Agreement (except as
expressly permitted by the terms of this Lease or the Participation
Agreement, as the case may be); or
(4) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under this Lease
or any other Transaction Document to which the Lessee is a party, and such
failure shall continue for a period of 30 days after there shall have been
given to the Lessee by the Lessor or the Indenture Trustee a notice
specifying such failure; or
(5) any representation or warranty made by the Lessee in this Lease,
any other Transaction Document to which the Lessee is a party, any
Financing Document, or any agreement, document or certificate delivered by
the Lessee in connection herewith or therewith shall prove to have been
incorrect in any material respect when any such representation or warranty
was made or given; or
(6) the Lessee shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing; or an involuntary case or other proceeding
shall be commenced against the Lessee seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or agent of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or
(7) final judgment for the payment of money in excess of $1,000,000
shall be rendered against the Lessee and the Lessee shall not have
discharged the same or provided for its discharge in accordance with its
terms or bonded the same or procured a stay of execution thereof within 30
days from the entry thereof; or
(8) an event of default under any other lease to the Lessee of any
undivided interest in the Transmission System shall occur, and any
applicable grace period shall have expired.
SECTION 16. REMEDIES.
(a) REMEDIES. Upon the occurrence of any Event of Default and so
long as the same shall be continuing, the Lessor may, at its option, declare
this Lease to be in default by written notice to such effect given to the
Lessee, and at any time thereafter the Lessor may exercise one or more of the
following remedies, as the Lessor in its sole discretion shall elect:
(1) the Lessor may, by notice to the Lessee, rescind or terminate
this Lease and exercise its rights under the Support Agreements;
(2) the Lessor may sell the Undivided Interest, together with its
interest under the Support Agreements and any other Transaction Document
to which the Lessor is a party, or any part thereof, at public or private
sale, as the Lessor may determine, free and clear of any rights of the
Lessee in the Undivided Interest and without any duty to account to the
Lessee with respect to such action or inaction or any proceeds with
respect thereto (except to the extent required by paragraph (4) below if
the Lessor shall elect to exercise its rights thereunder), in which event
the Lessee's obligation to pay Basic Rent hereunder for periods commencing
after the date of such sale shall be terminated (except to the extent that
Basic Rent is to be included in computations under paragraph (3) or (4)
below if the Lessor shall elect to exercise its rights thereunder);
(3) the Lessor may, whether or not the Lessor shall have exercised
or shall thereafter at any time exercise its rights under paragraph (2)
above, demand, by written notice to the Lessee specifying a payment date
not earlier than 10 days after the date of such notice, that the Lessee
pay to the Lessor, and the Lessee shall pay to the Lessor, on the payment
date specified in such notice, as liquidated damages for loss of a bargain
and not as a penalty (in lieu of the Basic Rent due after the payment date
specified in such notice), any unpaid Rent due through the payment date
specified in such notice plus whichever of the following amounts the
Lessor, in its sole discretion, shall specify in such notice (together
with interest on such amount at the interest rate specified in Section
3(b)(3) hereof from the payment date specified in such notice to the date
of actual payment):
(i) an amount equal to the excess, if any, of Casualty
Value, computed as of the payment date specified
in such notice, over the Fair Market Rental Value
of the Undivided Interest (determined on the basis
of the actual condition of the Transmission
System) until the end of the Basic Term or the
then applicable Renewal Term, after discounting
such Fair Market Rental Value semiannually to
present value as of the payment date specified in
such notice at a rate per annum equal to the
Overdue Interest Rate;
(ii) an amount equal to the excess, if any, of such Casualty Value over
the Fair Market Value of the Undivided Interest (determined on the
basis of the actual condition of the Transmission System) as of the
payment date specified in such notice;
(iii) an amount equal to the greater of (A) such Casualty Value, (B) such
discounted Fair Market Rental Value or (C) such Fair Market Value
(assuming, in the case of (B) and (C) above, that the Transmission
System was then maintained in accordance with this Lease) and, in
such event, upon full payment by the Lessee of all sums due
hereunder, the Lessor shall, at its option, either (x) exercise its
best efforts promptly to sell the Undivided Interest together with
its interest under the Support Agreements and any other Transaction
Document to which the Lessor is a party, and pay over to the Lessee
the sale proceeds up to the amount claimed under (A), (B) or (C)
above and actually paid by the Lessee to the Lessor, or (y) deliver
to the Lessee (AA) a xxxx of sale transferring and assigning to the
Lessee all right, title and interest of the Lessor in and to the
Undivided Interest free and clear of all Lessor's Liens and Owner
Participant's Liens, but without recourse or warranty, and (BB) the
agreement of the Lessor terminating its interest under the Support
Agreements and any other Transaction Document to which the Lessor is
a party, whereupon this Lease shall terminate, except that indemnity
obligations of the Lessee incurred prior to the date of termination
shall survive; or
(iv) an amount equal to the excess of (A) the present value as of the
payment date specified in such notice of all installments of Basic
Rent until the end of the Basic Term, discounted semiannually at a
rate of 10% per annum, over (B) the present value as of such payment
date of the Fair Market Rental Value of the Undivided Interest
(determined on the basis of the actual condition of the Transmission
System) until the end of the Basic Term, discounted semiannually at
a rate of 10% per annum; or
(4) if the Lessor shall have sold the Undivided Interest together
with its interest under the Support Agreements and any other Transaction
Document to which the Lessor is a party pursuant to paragraph (2) above,
the Lessor, in lieu of exercising its rights under paragraph (3) above
with respect to the Undivided Interest and its interest under the Support
Agreements and any other Transaction Document to which the Lessor is a
party, may, if it shall so elect, demand that the Lessee pay to the
Lessor, and the Lessee shall pay to the Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty (in lieu
of Basic Rent due for periods commencing after the next Basic Rent payment
date following the date of such sale), any unpaid Basic Rent and
Supplemental Rent due through such payment date, plus the amount of any
deficiency between the sale proceeds and Casualty Value, computed as of
such payment date, together with interest at the Overdue Interest Rate on
the amount of such Rent and such deficiency from the date of such sale
until the date of actual payment.
(b) NO RELEASE. No rescission or termination of this Lease, in whole
or in part, or repossession of the Undivided Interest or exercise of any remedy
under paragraph (a) of this
Section 16 shall, except as specifically provided therein, relieve the Lessee
of any of its liabilities and obligations hereunder. In addition, the Lessee
shall be liable, except as otherwise provided above, for any and all unpaid
Rent due hereunder before, after or during the exercise of any of the
foregoing remedies, including all reasonable legal fees and other costs and
expenses incurred by the Lessor or the Indenture Trustee by reason of the
occurrence of any Event of Default or the exercise of the Lessor's remedies
with respect thereto. At any sale of the Undivided Interest and the Lessor's
interest under the Support Agreements and any Transaction Documents to which
the Lessor is a party or any part thereof pursuant to Section 16(a) hereof,
the Lessor, the Owner Participant or the Indenture Trustee may bid for and
purchase such property.
(c) REMEDIES CUMULATIVE. No remedy under paragraph (a) of this
Section 16 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy provided under such paragraph (a) or otherwise
available to the Lessor at law or in equity. No express or implied waiver by the
Lessor of any Default or Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default. The failure or delay of the Lessor in exercising any rights granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such contingencies or similar contingencies and any single or partial
exercise of any particular right by the Lessor shall not exhaust the same or
constitute a waiver of any other right provided herein. To the extent permitted
by applicable law, the Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require the Lessor to sell, lease or
otherwise use the Undivided Interest or the Transmission System in mitigation of
the Lessee's damages as set forth in paragraph (a) of this Section 16 or which
may otherwise limit or modify any of the Lessor's rights and remedies provided
in such paragraph.
(d) EXERCISE OF OTHER RIGHTS OR REMEDIES. In addition to all other
rights and remedies provided in this Section 16, the Lessor may exercise any
other right or remedy that may be available to it under applicable law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof.
SECTION 17. NOTICES.
All communications and notices provided for in this Lease shall be
given in person or by means of telex, telecopy, or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified mail,
addressed as follows:
(i) if to the Lessor:
The First National Bank of Boston,
as Owner Trustee
Blue Hill Office Park
Mail Stop 45-02-15
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust
Division;
(ii) if to the Lessee:
Public Service Company of Xxx Xxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Secretary;
(iii) in each case with copies to:
(A) the Indenture Trustee:
Chemical Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trustee
Administration Department;
(B) the Collateral Trust Trustee:
Chemical Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trustee
Administration Department;
(C) the Owner Participant:
DCC Project Finance Two, Inc.
c/o Xxxx Commercial Credit Corporation
0000 Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Operations Manager - Public Service
Company of New Mexico
or at such other address as such parties or such Persons shall from time to time
designate by notice in writing to such other parties or such other Persons. All
such communications and notices given in such manner shall be effective on the
date of receipt of such communication or notice.
SECTION 18. SUCCESSORS AND ASSIGNS.
This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of the Lessor and its
successors and permitted assigns, and the Lessee and its successors and, to the
extent permitted hereby, assigns.
SECTION 19. RIGHT TO PERFORM FOR LESSEE.
If the Lessee shall fail to make any payment of Rent to be made by
it hereunder or shall fail to perform or comply with any of its other agreements
contained herein, the Lessor, the Owner Participant or the Indenture Trustee
may, but shall not be obligated to, make such payment or perform or comply with
such agreement, and the amount of such payment and the amount of all costs and
expenses (including, without limitation, reasonable attorneys' and other
professionals' fees and expenses) of the Lessor, the Owner Participant or the
Indenture Trustee incurred in connection with such payment or the performance of
or compliance with such agreement, as the case may be, together with interest
thereon at the Overdue Interest Rate, shall be deemed Supplemental Rent, payable
by the Lessee upon demand.
SECTION 20. AMENDMENTS AND MISCELLANEOUS.
(a) AMENDMENTS IN WRITING. The terms of this Lease shall not be
waived, altered, modified, amended, supplemented or terminated in any manner
whatsoever EXCEPT by written instrument signed by the Lessor and the Lessee.
(b) SURVIVAL. All agreements, indemnities, representations and
warranties contained in the Transaction Documents or any agreement, document or
certificate delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery of this Lease and the
expiration or other termination of this Lease.
(c) SEVERABILITY OF PROVISIONS. Any provision of this Lease which
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and no such prohibition or unenforceability in any
jurisdiction shall invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the Lessee hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
(d) TRUE LEASE. This Lease shall constitute an agreement of lease
and nothing herein shall be construed as conveying to the Lessee any right,
title or interest in or to the Transmission System, except as lessee only.
(e) ORIGINAL LEASE. The single executed original of this Amended and
Restated
Lease marked "ORIGINAL" shall be the "ORIGINAL" of this Lease. To the extent
that this Lease constitutes chattel paper, as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction, no
security interest in this Lease may be created through the transfer or
possession of any counterpart other than the "ORIGINAL".
(f) GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the law of the State of New York.
(g) HEADINGS. The division of this Lease into sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Lease.
(h) COUNTERPART EXECUTION. This Lease may be executed in any number
of counterparts and by each of the parties hereto on separate counterparts, all
such counterparts together constituting but one and the same instrument, with
the counterparts delivered to the Indenture Trustee pursuant to the Indenture
being deemed the "Original" and all other counterparts being deemed duplicates.
(i) ENTIRE AGREEMENT. This Lease, including the Schedules, Exhibit
and Appendix hereto, supersedes all prior agreements, written or oral between or
among the parties hereto (including the Original Lease) and each of the parties
hereto represents and warrants to the other that this Lease and the other
Transaction Documents (and any documents to be delivered hereby or thereby)
constitute the entire agreement among the parties hereto and thereto relating to
the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have each caused
this Lease to be duly executed in New York, New York, on the date first above
written, by their respective officers thereunto duly authorized.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity, but solely
as OWNER TRUSTEE under a Trust Agreement
dated as of January 2, 1985 with DCC Project
Finance Two, Inc.
By /s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
Account Manager
PUBLIC SERVICE COMPANY OF NEW MEXICO,
as LESSEE
By /s/ Xxxxx Xxxx
-----------------------------------
Xxxxx Xxxx
Assistant Treasurer
ACKNOWLEDGMENTS
STATE OF NEW MEXICO )
) SS.:
COUNTY OF BERNALILLO )
This instrument was acknowledged before me on September __, 1993, by
Xxxxx X. Xxxx, Assistant Treasurer of Public Service Company of New Mexico, a
New Mexico Corporation.
/s/ Xxxx Novarrete
-----------------------------------
Notary Public
My Commission Expires: July 19, 0000
XXXXXXXXXXXX XX XXXXXXXXXXXXX )
)SS.
COUNTY OF NORFOLK )
The undersigned a notary public for the County of Norfolk,
Commonwealth of Massachusetts, does certify that on the _____ day of September,
1993, before me came Xxxxx Xxxxxxx, to me known, who, being by me duly sworn,
did depose and say that she is an Account Manager of The First National Bank of
Boston, a national banking association, the corporation described in and which
executed the foregoing instrument, that she signed her name to said instrument
on behalf of said association under authority of the by-laws of said
association.
/s/ Xxxxxxx Xxxxx
-----------------------------------
Notary Public
Term Expires: September 5, 1997
TABLE OF CONTENTS
Section Title Page
------- ----- ----
SECTION 1. DEFINITIONS. ................................................... 1
SECTION 2. LEASE OF UNDIVIDED INTEREST; TERM. ............................. 1
SECTION 3. RENT; ADJUSTMENTS TO RENT. ..................................... 2
(a) BASIC RENT.............................................. 2
(b) SUPPLEMENTAL RENT....................................... 2
(c) FORM OF PAYMENT......................................... 3
(d) ADJUSTMENTS............................................. 3
(e) ADEQUACY AND CONFIRMATION OF ADJUSTMENTS................ 4
SECTION 4. NET LEASE. ..................................................... 4
SECTION 5. RETURN OF TRANSMISSION SYSTEM. ................................ 5
(a) RETURN OF TRANSMISSION SYSTEM........................... 5
(b) DISPOSITION SERVICES.................................... 5
SECTION 6. WARRANTY OF THE LESSOR. ........................................ 5
(a) QUIET ENJOYMENT......................................... 5
(b) DISCLAIMER OF OTHER WARRANTIES.......................... 6
SECTION 7. LIENS. ........................................................ 6
SECTION 8. OPERATION AND MAINTENANCE; MARKING; INSPECTION. ................ 7
(a) OPERATION AND MAINTENANCE............................... 7
(b) INSPECTION.............................................. 7
(c) REPLACEMENT OF COMPONENTS............................... 7
(d) REQUIRED ALTERATIONS.................................... 8
(e) OPTIONAL ALTERATIONS.................................... 8
(f) REPORTS OF ALTERATIONS.................................. 9
(g) TITLE TO ALTERATIONS.................................... 9
(h) FUNDING OF ALTERATIONS AND REPLACEMENT
COMPONENTS.............................................. 10
(i) MARKING................................................. 11
SECTION 9. EVENT OF LOSS; DEEMED LOSS EVENT. .............................. 11
(a) EVENT OF LOSS........................................... 11
(b) PAYMENT OF CASUALTY VALUE............................... 12
(c) DEEMED LOSS EVENT....................................... 12
(d) TERMINATION OF OBLIGATION............................... 12
TABLE OF CONTENTS (CONTINUED)
Section Title Page
------- ----- ----
SECTION 10. INSURANCE. .................................................... 12
SECTION 11. INDEMNIFICATION. .............................................. 14
SECTION 12. ASSIGNMENT OR SUBLEASE. ....................................... 15
SECTION 13. LEASE RENEWALS. ............................................... 15
(a) LEASE RENEWAL........................................... 15
(b) NOTICE; APPRAISAL....................................... 16
SECTION 14. PURCHASE OPTIONS. ............................................ 16
SECTION 15. EVENTS OF DEFAULT. ........................................... 17
SECTION 16. REMEDIES. ..................................................... 18
(a) REMEDIES................................................ 18
(b) NO RELEASE.............................................. 20
(c) REMEDIES CUMULATIVE..................................... 21
(d) EXERCISE OF OTHER RIGHTS OR REMEDIES.................... 21
SECTION 17. NOTICES. ...................................................... 21
SECTION 18. SUCCESSORS AND ASSIGNS. ....................................... 22
SECTION 19. RIGHT TO PERFORM FOR LESSEE. .................................. 22
SECTION 20. AMENDMENTS AND MISCELLANEOUS. ................................. 23
(a) AMENDMENTS IN WRITING................................... 23
(b) SURVIVAL................................................ 23
(c) SEVERABILITY OF PROVISIONS.............................. 23
(d) TRUE LEASE.............................................. 23
(e) ORIGINAL LEASE.......................................... 23
(f) GOVERNING LAW........................................... 23
(g) HEADINGS................................................ 23
(h) COUNTERPART EXECUTION................................... 23
(i) ENTIRE AGREEMENT........................................ 24
TABLE OF CONTENTS (CONTINUED)
Section Title Page
------- ----- ----
SCHEDULES
SCHEDULE 1 Schedule of Casualty Values
SCHEDULE 2 Schedule of Special Casualty Values
SCHEDULE 3 Schedule of Early Purchase Values
APPENDIX
APPENDIX A Definition of Terms
================================================================================
APPENDIX A
DEFINITION OF TERMS
================================================================================
EASTERN INTERCONNECTION PROJECT LEASE
BOND REFUNDING
================================================================================
DEFINITION OF TERMS
The terms defined herein relate to all Transaction Documents and
such terms shall include the plural as well as the singular.
ACCOUNTING METHOD shall have the meaning set forth in the Tax
Indemnity Agreement.
ACCOUNTING PRACTICE shall mean generally accepted utility accounting
practice in accordance with the Uniform System of Accounts.
ACRS DEDUCTIONS shall have the meaning set forth in the Tax
Indemnity Agreement.
ADDITIONAL EASEMENTS shall have the meaning set forth in Section
2(d) of the Easement.
ADDITIONAL EQUITY INVESTMENT shall have the meaning set forth in
Section 8(h) of the Lease.
ADDITIONAL NOTES shall mean any non-recourse promissory notes (other
than the Refunding Notes) issued by the Owner Trustee and authenticated by the
Indenture Trustee under the terms of the Indenture.
ADJUSTED LESSOR'S COST shall have the meaning set forth in the Tax
Indemnity Agreement.
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. The term "control" (including the correlative
meanings of the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
AFFILIATE TRANSACTION shall have the meaning set forth in Section
10(b)(v) of the Participation Agreement.
AFTER-TAX BASIS shall mean, with respect to any payment received or
deemed to have been received by any Person, the amount of such payment
supplemented by a further payment to that Person so that the sum of the two
payments shall, after deduction of all taxes and other charges (taking into
account any credits or deductions arising therefrom and the timing thereof)
resulting from the receipt (actual or constructive) of such two payments imposed
under any Governmental Rule or by any Governmental Authority, the United States
of America, or any territory or possession of the United States of America, or
any governmental authority of any foreign country or any subdivision or any
taxing authority thereof, or any international taxing authority, be equal to
such payment received or deemed to have been received.
ALTERATIONS shall mean alterations, modifications, additions and
improvements to the Transmission System (including the Undivided Interest) the
cost of which is required to be added to capital accounts pursuant to the
Uniform System of Accounts; and such term shall include, as appropriate, all
Severable Required Alterations, Nonseverable Required Alterations, Severable
Optional Alterations and Nonseverable Optional Alterations, but shall not
include any original or substitute Component or any Replacement Component.
AMENDED AND RESTATED LEASE means the Amended and Restated Lease
dated as of September 1, 1993 between the Owner Trustee and PNM.
AMENDED AND RESTATED PARTICIPATION AGREEMENT means the Amended and
Restated Participation Agreement dated as of September 1, 1993 between the Owner
Participant, Funding Corp, the Owner Trustee, the Indenture Trustee and PNM.
AMENDED AND RESTATED TIA means the Amended and Restated Tax
Indemnity Agreement dated as of September 1, 1993 between the Owner Participant
and the Lessee.
AMENDMENT shall mean the Amendment dated the Closing Date to the
Original Participation Agreement.
AMORTIZATION DEDUCTIONS shall have the meaning set forth in the Tax
Indemnity Agreement.
APPLICABLE AGREEMENT shall have the meaning set forth in Section 2
of the Operating Agreement.
APPLICABLE LAWS shall mean all applicable laws, including, without
limitation, Federal and state securities laws, ordinances, judgments, decrees,
injunctions, writs and orders of any Governmental Authority and rules,
regulations, orders, interpretations, licenses and permits of any Governmental
Authority.
APPRAISAL PROCEDURE shall mean a procedure whereby, the Lessor and
the Lessee having failed to agree, two independent appraisers, one chosen by the
Lessee and one by the Lessor, shall mutually agree upon the determinations then
the subject of appraisal. The Lessor or the Lessee, as the case may be, shall
deliver a written notice to the other appointing its appraiser within 15 days
after receipt from the other of a written notice appointing its appraiser. If
one party shall fail to appoint its appraiser within 15 days after receipt from
the other party of a written notice appointing its appraiser, the determination
of the single appraiser shall be final. If within 30 days after appointment of
the two appraisers they are unable to agree upon the amount in question, a third
independent appraiser shall be chosen within ten days thereafter by the mutual
consent of such first two appraisers or, if such first two appraisers fail to
agree upon the appointment of a third appraiser, 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
utility transmission system 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 30 days after the selection of such third appraiser. If three
appraisers shall be appointed and the determination of one appraiser is
disparate from the middle determination by more than twice the amount by which
the other 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.
ASSIGNMENT OF CONSTRUCTION CONTRACT shall mean the Assignment of
Construction Contract dated the Closing Date from PNM to the Owner Trustee.
ASSIGNMENT OF RIGHT OF USE shall mean the Assignment of Right of Use
dated the Closing Date from PNM to the Owner Trustee.
B-A PROPERTY shall mean that portion of the Transmission System
which is a part of the facility known as the "B-A Station".
BLM shall mean the United States Department of the Interior, Bureau
of Land Management.
BASIC RENT shall mean the rent payable pursuant to Section 3(a) of
the Lease, PROVIDED, HOWEVER, that Basic Rent as of any date shall be, under any
circumstances and in any event, an amount at least sufficient to pay in full the
aggregate of the regular installments of principal and interest due and payable
and unpaid on the applicable Basic Rent Payment Date on all Notes then
Outstanding under the Indenture, together with all accrued and unpaid interest
thereon.
BASIC RENT PAYMENT DATES shall mean and include each April 1 and
October 1 of each year, commencing October 1, 1985, throughout (and including
the last day of) the Basic Term and each elected Renewal Term.
BASIC RENT PREPAYMENT shall mean the amount of Basic Rent prepaid by
the Lessee on the Refunding Date.
BASIC TERM shall mean the period commencing on the Closing Date and
ending on April 1, 2015, or such shorter period as may result from earlier
termination of the Lease as provided in the Lease.
XXXX OF SALE shall mean the Xxxx of Sale dated the Closing Date from
PNM to the Owner Trustee.
BLACKWATER HVDC STATION shall mean the high voltage direct current
converter station located in the Clovis-Portales area of Eastern New Mexico and
constructed for PNM by the Contractor pursuant to the Construction Contract.
BONDS shall mean the Refunding Bonds.
BUSINESS DAY shall mean any day other than a Saturday or Sunday or
other day on which banks in
New York,
New York are authorized to remain closed.
CASUALTY VALUE, as of any Basic Rent Payment Date, shall mean (i)
during the Basic Term, an amount equal to the product obtained by multiplying
Lessor's Cost by the percentage in the Schedule of Casualty Values attached to
the Lease (which Casualty Values as originally attached to the Lease are based
upon the Pricing Assumptions and are subject to adjustment pursuant to Section
3(d) of the Lease) and set forth opposite such Basic Rent Payment Date and (ii)
during any Renewal Term, the amount determined by amortizing ratably the Fair
Market Value of the Undivided Interest as of the day following the last day of
the Basic Term or the last preceding Renewal Term, as the case may be, in semi-
annual steps over the remaining term of the Easement, as such term may be
extended in consequence of a determination of the Maximum Option Period, which
amortized amounts shall be set forth in a revised Schedule of Casualty Values
and attached to the Lease pursuant to a Lease Supplement prior to the last day
of the Basic Term or
the last preceding Renewal Term, as the case may be; PROVIDED, HOWEVER, that,
after giving effect to the payment of Basic Rent on such Basic Rent Payment
Date and the application thereof to the payment of the regular installment of
principal of, and all accrued and unpaid interest on, the Notes then due,
Casualty Value as of any date shall be, under any circumstances and in any
event, an amount at least sufficient to pay in full the aggregate unpaid
principal amount of all Notes then Outstanding under the Indenture.
CERTIFICATE OF ACCEPTANCE shall mean a certificate, substantially in
the form of Exhibit A to the Original Lease, duly completed and executed and
delivered on the Closing Date or, in the case of any Alteration acquired by the
Lessor pursuant to the terms of the Lease, a date required by the applicable
Lease Supplement.
CHANGE IN TAX LAWS shall have the meaning set forth in the Tax
Indemnity Agreement.
CLAIMS shall mean liabilities, costs, obligations, losses, damages,
penalties, claims (including, without limitation, claims involving liability in
tort, strict or otherwise), actions, suits, judgments, costs, expenses and
disbursements (including without limitation legal fees and expenses) of any kind
and nature whatsoever without any limitation as to amount.
CLOSING shall mean the proceedings which occurred on the Closing
Date, as contemplated by the Original Participation Agreement.
CLOSING DATE shall mean the date the sale and leaseback of the
Undivided Interest was completed and payment of Lessor's Cost was made. The
Closing Date is February 5, 1985.
COLLATERAL TRUST TRUSTEE shall mean the trustee from time to time
under the Refunding Collateral Trust Indenture.
COMPONENTS shall mean appliances, parts, instruments, appurtenances,
accessories, furnishings, equipment and other property of whatever nature that
may from time to time be incorporated in the Transmission System or any part
thereof.
CONSTRUCTION CONTRACT shall have the meaning set forth in the
Assignment of Construction Contract.
CONSULTING ENGINEER shall mean Xxxxxxxx and Xxxxxxx or such other
firm of construction engineers as shall be selected by the Owner Participant and
approved by the Lessee.
CONTRACTOR shall mean Xxxxx Bovari Corporation, a New York
corporation.
DEEMED LOSS EVENT shall mean the following event: 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 any part thereof by the Lessor or the lease of the Undivided Interest to the
Lessee or any of the other transactions contemplated by the Transaction
Documents (the term OWNER PARTICIPANT, as used in this definition, not including
any Transferee who at the time of transfer to such Transferee is a non-exempt
entity of the type referred to in this 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 as,
an "electric utility" or a "public utility" or a
"public utility holding company" under any Governmental Rule or by reason of
any Governmental Action, and the effect thereof on the Lessor or the Owner
Participant would be, in the sole reasonable judgment of either such Person,
adverse, and the Lessor and the Owner Participant have not waived application
of this definition (which waiver shall be in writing and may be either
indefinite or for a specific period); 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 definition, 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 or any part thereof or any interest therein, (ii) such
contest does not adversely affect the Undivided Interest or any part 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 Lessor, 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 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 Lessor and the Owner Participant, and
the Owner Participant shall have determined that the Lessor's continued
ownership of the Undivided Interest during the pendency of such contest or
such contest will not adversely affect its business, and (v) the Lessee shall
have indemnified the Lessor 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 Lessee's contest.
DEFAULT shall mean an event which, after giving of notice or lapse
of time, or both, would become 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 of the aggregate
unpaid principal amount of all Notes Outstanding under the Indenture, directing
the Indenture Trustee to take or refrain from taking the action specified in
such instrument.
EARLY PURCHASE VALUE as of any Basic Rent Payment Date occurring on
or after the thirtieth Basic Rent Payment Date, shall mean an amount equal to
the product obtained by multiplying Lessor's Cost by the percentage in the
Schedule of Early Purchase Values attached to the Lease (which Early Purchase
Values as originally attached to the Lease are based upon the Pricing
Assumptions and are subject to adjustment pursuant to Section 3(d) of the Lease)
and set forth opposite such Basic Rent Payment Date; PROVIDED, HOWEVER, that,
after giving effect to (A) the payment of Basic Rent on such Basic Rent Payment
Date and the application thereof to the payment of the regular installment of
principal of, and accrued interest on, the Notes then due, and (B) the payment
of premium, if any then due on the Notes, Early Purchase Value as of any date
shall be, under any circumstances and in any event, an amount at least
sufficient to pay in full the aggregate unpaid principal amount of all Notes
then Outstanding under the Indenture.
EASEMENT shall mean the Easement dated the Closing Date between PNM
and the Owner Trustee, as supplemented on March 27, 1987.
ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended, or any comparable successor law.
EVENT OF DEFAULT shall have the meaning set forth in Section 15 of
the Lease.
EVENT OF LOSS shall mean any of the following events: (a) the loss
of the Transmission System (including the Undivided Interest) due to theft,
disappearance, destruction or, in the good faith and reasonable opinion of the
Lessee (confirmed by an independent engineer reasonably satisfactory to the
Owner Participant), damage beyond repair; (b) the receipt of insurance proceeds
based upon an actual or constructive total loss with respect to the Transmission
System; or (c) the confiscation or seizure of title to the Transmission System
(including the Undivided Interest) or the property subject to the Easement (in
its entirety or such a substantial portion that the then remaining portion
cannot practically be utilized for the purposes intended) or the condemnation of
the Undivided Interest or the property subject to the Easement by any Person
other than the Lessee or a Person related to the Lessee, or the requisition of
use of the Transmission System (including the Undivided Interest) or the
property subject to the Easement (in its entirety or a substantial portion as
aforesaid) for a stated period which shall, or for an indefinite period which is
reasonably expected to, exceed the remaining portion of the Basic Term or any
then effective Renewal Term.
EXCEPTED PAYMENTS shall mean any and all payments not due to or in
respect of the Trust Estate or the Lease Indenture Estate or otherwise included
in the Lease Indenture Estate, including (i) any indemnity or other payment
(whether or not Supplemental Rent and whether or not a Default or Event of
Default exists) payable under any Transaction Document directly to any Person,
other than the Indenture Trustee or the Lessor (except Chemical Bank or FNB), or
payable by the Lessee to the Lessor, FNB or the Owner Participant to reimburse
any such Person for its costs and expenses in exercising its rights under the
Transaction Documents, (ii) (A) insurance proceeds, if any, payable to the
Lessor, FNB, Chemical Bank or the Owner Participant under insurance separately
maintained by the Lessor, FNB, Chemical Bank or the Owner Participant with
respect to the Undivided Interest as permitted by the Lease or (B) proceeds of
personal injury or property damage liability insurance maintained under any
Transaction Document for the benefit of the Lessor, FNB, Chemical Bank or the
Owner Participant, (iii) any amounts payable under any Transaction Document to
reimburse the Lessor or the Owner Participant (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 (including, but without
limitation, amounts payable pursuant to Section 14 of the Participation
Agreement), (iv) any amount payable to the Owner Participant by any Transferee
as the purchase price of the Owner Participant's interest in the Trust Estate,
(v) any payments, insurance proceeds or other amounts with respect to the
Undivided Interest or any portion thereof which have been released from the lien
of the Indenture and (vi) any payments in respect of interest to the extent
attributable to payments referred to in clauses (i) through (v) above.
EXCEPTED RIGHTS shall mean (a) all rights with respect to Excepted
Payments of the Person entitled thereto and (b) all rights and privileges
expressly reserved to the Owner Trustee or the Owner Participant exclusively or
jointly with the Indenture Trustee pursuant to the Indenture (including, but
without limitation, Section 6.11 thereof) for the periods specified in the
Indenture.
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 have the meaning set forth in Section 7.01 of the
Trust Agreement.
EXPIRATION DATE shall have the meaning set forth in the Operating
Agreement.
FAIR MARKET RENEWAL TERM shall mean a Renewal Term elected pursuant
to Section 13(a)(1) of the Lease.
FAIR MARKET RENTAL VALUE or FAIR MARKET VALUE of any property or
service as of any date shall mean the cash rent or cash price obtainable in an
arm's-length lease, or sale or supply, respectively, between an informed and
willing lessee or buyer (under no compulsion to lease or purchase) and an
informed and willing lessor or seller or supplier (under no compulsion to lease
or sell or supply) of the property or service in question, and shall, in the
case of the Transmission System, be determined (except pursuant to Section
16(a)(3)(i), (ii) and (iv) of the Lease) on the basis that (i) the Transmission
System has been maintained in accordance with, and the Lessee has complied with,
the requirements of the Lease and the other Transaction Documents, (ii) the
lessee or the buyer shall have rights in, or an assignment of, the Transaction
Documents (including, without limitation, the Support Agreements) to which the
Lessor is a party and (iii) the Lessee has complied with the requirements of the
Lease and each Transaction Document to which the Lessee is a party. If the
Lessor and the Lessee are unable to agree upon a determination of Fair Market
Rental Value or Fair Market Value, as the case may be, such Fair Market Rental
Value or Fair Market Value shall be determined in accordance with the Appraisal
Procedure.
FEDERAL POWER ACT shall mean the Federal Power Act, as amended.
FEDERAL SECURITIES shall have the meaning set forth in Section
2.4(b) of the Indenture.
FEE LAND shall mean the parcels of land described in Part I of
Exhibit A to the Easement.
FERC shall mean the Federal Energy Regulatory Commission of the
United States of America.
FERC ORDER shall mean the Order Granting Petition for Declaratory
Order, Authorizing Sale of Facilities, Noting Intervention, and Terminating
Dockets issued by the FERC on December 31, 1984 (Docket Nos. EC85-4-000 and
EL85-9-000).
FINAL PROSPECTUS means the prospectus with respect to the Refunding
Bonds and the offering thereof constituting part of the Registration Statement
at the time the Registration Statement is declared effective by the SEC,
together with any supplement or modification to, or completion of, such
prospectus filed by PNM with the SEC pursuant to Rule 424 under the Securities
Act.
FINANCING DOCUMENTS shall mean the Underwriting Agreement, the
Registration Statement, the Refunding Collateral Trust Indenture, the Refunding
Supplemental Indenture and the Refunding Bonds.
FIRST BASIC RENT PAYMENT DATE shall mean October 1, 1985.
FIXED RENT RENEWAL TERM shall mean a Renewal Term elected pursuant
to Section 13(a)(2) of the Lease.
FNB shall mean The First National Bank of Boston, a national banking
association, in its individual capacity.
FORM U-7D shall mean the certificate 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 EIP Refunding Corporation, a Delaware
corporation.
FUNDING CORP'S COUNSEL shall mean Xxxxx Xxxx Xxxxxxx Xxxxxxxxx &
Xxxxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
GOVERNMENTAL ACTIONS shall mean all authorizations, consents,
approvals, waivers, exceptions, variances, filings 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 the Participation Agreement), and shall include,
without limitation, those siting, environmental and operating permits and
licenses which are required for the use and operation of the Transmission
System, including the Undivided Interest.
GOVERNMENTAL AUTHORITY shall mean any Federal, state, county,
municipal, regional or other governmental or taxing authority, agency, board or
court.
GOVERNMENTAL RULES shall mean statutes, laws, rules, codes,
ordinances, regulations, permits, certificates and orders of any Governmental
Authority, including without limitation those pertaining to health, safety, the
environment or otherwise.
GRANTING CLAUSE DOCUMENTS shall have the meaning set forth in
Section 2.1 of the Indenture.
GROUP shall mean the affiliated group of corporations of which the
Owner Participant is a member.
HOLDERS shall mean the holders of the Notes.
HOLDING COMPANY ACT shall mean the Public Utility Holding Company
Act of 1935, as amended.
"INCORPORATED IN" shall mean incorporated or installed in, attached
to, or otherwise made a part of the Transmission System.
INCREMENTAL CASH COST of a Replacement Component shall mean the
difference between the actual cost of the Replacement Component and the sum of
any insurance proceeds received in respect of, and (if not assigned to the
insurance carrier) the salvage value of, the Component replaced.
INDEMNITEE shall mean the Owner Participant, FNB, the Owner Trustee,
the Indenture Trustee, Funding Corp, the Collateral Trust Trustee, the Escrow
Fund created under the Escrow Deposit Agreement, the Trust Estate, the Lease
Indenture Estate and each other holder of a Note from time to time Outstanding
under the Indenture, and the successors, assigns, agents and employees of each
such Person and
any Affiliate of each such Person. The failure to include in the definition of
"Indemnitee" a Person which is an "Indemnitee" under the 1985 Transaction
Documents shall not operate to alter or abridge the rights and obligations of
such Person as an "Indemnitee" under the 1985 Transaction Documents.
INDENTURE shall mean the Amended and Restated Trust Indenture and
Security Agreement dated as of September 1, 1993 between the Owner Trustee and
Chemical Bank.
INDENTURE DEFAULT shall mean an event which, after giving of notice
or lapse of time, or both, would become an Indenture Event of Default.
INDENTURE EVENT OF DEFAULT shall mean any of the events specified in
Section 6.2 of the Indenture.
INDENTURE TRUSTEE shall mean the trustee from time to time under the
Indenture.
INDENTURE TRUSTEE OFFICE shall mean the office of the Indenture
Trustee located at 000 Xxxx 00xx 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.
INDENTURE TRUSTEE'S COUNSEL shall mean Cravath, Swaine & Xxxxx,
Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
INITIAL SERIES NOTE means the Owner Trustee's Nonrecourse Promissory
Note, Due 1990-2015, Initial Series, issued on the Closing Date pursuant to the
1985 Lease Indenture.
INSTRUMENT OF ASSIGNMENT OF OTHER CONSTRUCTION CONTRACTS shall mean
the Instrument of Assignment of Other Construction Contracts dated the Closing
Date between PNM and the Owner Trustee.
INTEREST DEDUCTIONS shall have the meaning set forth in the Tax
Indemnity Agreement.
INVESTMENT COMPANY ACT shall mean the Investment Company Act of
1940, as amended.
INVESTMENT CREDIT shall have the meaning set forth in Section 1(b)
of the Tax Indemnity Agreement.
LEASE means the Original Lease as amended and restated by the
Amended and Restated Lease.
LEASE INDENTURE ESTATE shall have the meaning set forth in Section
2.1 of the Indenture.
LEASE SUPPLEMENT shall mean a supplement to the Lease for purposes
of (i) adjusting Basic Rent, Casualty Value, Special Casualty Value and Early
Purchase Value pursuant to Section 3(d) of the Lease, (ii) adding the Lessor's
Share in any Alteration, if title thereto shall vest in the Owner Trustee
pursuant to the terms of the Lease, (iii) effecting Supplemental Financings and
Additional Equity Investments, or (iv) otherwise changing or modifying the terms
of the Lease, all in accordance with and subject to the terms of the Lease.
LEASE TERM shall have the meaning set forth in Section 2 of the
Lease.
LEASE TERMINATION DATE shall mean the last day of the Lease Term
(whether occurring by reason of the termination or the expiration of the Lease).
LESSEE shall mean Public Service Company of New Mexico, a New Mexico
corporation.
LESSEE REQUEST shall have the meaning set forth in Section 1.01 of
the Refunding Collateral Trust Indenture.
LESSEE'S GENERAL COUNSEL shall mean Xxxxxxx & XxXxxx, P.A.,
000 Xxxxxx Xxxxxx X.X., Xxxxxxxxxxx, Xxx Xxxxxx 00000.
LESSEE'S SPECIAL COUNSEL shall mean Xxxxx Xxxx Xxxxxxx Xxxxxxxxx &
Xxxxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
LESSOR shall mean the Owner Trustee.
LESSOR'S COST shall mean the Purchase Price of the Undivided
Interest.
LESSOR'S LIENS shall mean Liens (other than Permitted Liens
described in clauses (a) and (c) through (e) of the definition of such term)
which result from acts of, or any failure to act by, or as a result of claims
against, FNB or the Lessor unrelated either to the ownership of the Undivided
Interest, the administration of the Trust Estate or the transactions
contemplated by the Transaction Documents.
LESSOR'S SHARE shall mean the Share of the Lessor.
LIEN shall mean any mortgage, pledge, security interest,
encumbrance, lien 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 of the
Participation Agreement.
MAJORITY IN INTEREST OF HOLDERS OF NOTES shall mean a majority of
Holders of all Notes Outstanding at the time of any such determination.
XXXXXXXX AND XXXXXXX shall have the meaning set forth in the Tax
Indemnity Agreement.
MAXIMUM OPTION PERIOD shall mean the period, determined as of the
date of expiration of the Basic Term, (i) at the end of which the residual value
of the Undivided Interest, without regard to inflation or deflation from the
Basic Lease Commencement Date, but taking into consideration the existence and
effect of the Support Agreements (including any extension of the terms thereof
in consequence of any determination of the Maximum Option Period), shall be at
least equal to 20% of Lessor's Cost, and (ii) which, when added to the Basic
Term, does not exceed 80% of the sum of the then appraised remaining useful life
of the Transmission System and 30 years.
MORTGAGE RELEASE shall mean the Indenture of Partial Release dated
the Closing Date.
NET ECONOMIC RETURN shall mean the Owner Participant's (i) after tax
yield and (ii) present value of after tax cash flow, each as of December 31,
1991 and each computed on a basis consistent with the computation of Basic Rent
as adjusted on and as of the Refunding Date pursuant to the terms of the Lease.
NET WORTH shall mean the excess of assets over liabilities
determined by PNM's independent accountants on the basis of generally accepted
accounting principles.
NEW MEXICO COUNTIES shall mean Xxxxxxxx, Santa Fe, San Miguel,
Guadalupe, Xx Xxxx, Xxxx, Xxxxxxxxx and Xxxxx Counties, New Mexico.
NEW MEXICO COMMISSION means the New Mexico Public Utility
Commission, formerly known as the New Mexico Public Service Commission,
established pursuant to Section 00-0-0, Xxx Xxxxxx Statutes Annotated (1978).
NEW MEXICO ORDER means the 1985 Order and the 1993 Order.
NEW MEXICO PUBLIC UTILITY ACT shall mean the New Mexico Public
Utility Act, as amended.
1985 BONDS means the "Security Facility Bonds, due 1990-2015" issued
by 1985 Funding Corp under the 1985 Collateral Trust Indenture in the original
principal amount of $54,382,000.
1985 COLLATERAL TRUST INDENTURE means the Collateral Trust Indenture
dated as of February 5, 1985 among PNM, 1985 Funding Corp. and the 1985
Collateral Trust Trustee, as amended and supplemented by (i) Indenture
Supplement No. 1 dated as of the Closing Date and (ii) the 1992 Supplemental
Indenture dated as of November 4, 1992.
1985 COLLATERAL TRUST TRUSTEE means Xxxxxx Guaranty Trust Company of
New York, a New York Banking Corporation, as trustee under the 1985 Collateral
Trust Indenture.
1985 EXTENSION LETTER means the Extension Letter dated the Closing
Date to the 1985 Collateral Trust Trustee from the owner participant named
therein, the Owner Trustee, 1985 Funding Corp, PNM and the 1985 Indenture
Trustee.
1985 FUNDING CORP. means E.I.P. Funding Corporation, a
Delaware Corporation.
1985 INDENTURE TRUSTEE means Xxxxxx Guaranty Trust Company of New
York, a New York banking corporation, as trustee under the 1985 Lease Indenture.
1985 LEASE INDENTURE means the Trust Indenture and Security
Agreement dated as of January 2, 1985 between the Owner Trustee and the 1985
Indenture Trustee.
1985 ORDER means the order issued by the New Mexico Public
Service Commission on December 31, 1984 in Case No. 1930.
1985 TRANSACTION DOCUMENTS means the Transaction Documents
(including the 1985 Extension Letter) as in effect immediately preceding the
Signing Date.
1993 ORDER means the order issued by the New Mexico Public
Utility Commission on March 1, 1993 in Case No. 2482.
NONSEVERABLE, when used in respect to any Alteration, shall mean any
Alteration which is not a Severable Alteration.
NOTEHOLDER shall mean any holder from time to time of a Note
Outstanding under the Indenture.
NOTES shall mean the Refunding Notes and any Additional Notes issued
by the Owner Trustee and authenticated by the Indenture Trustee under the
Indenture.
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.
OMNIBUS ACKNOWLEDGMENT has the meaning specified in Section 4(a) of
the Amended and Restated Participation Agreement.
OMNIBUS RECEIPT shall mean the Omnibus Notice, Receipt, Payment
Instruction and Acknowledgment with Respect to (I) the Issuance of the Secured
Facility Bonds Due 1995 and 2012 and (II) the Redemption of the Secured Facility
Bonds Due April 1, 1995 and April 1, 2015.
OPERATING AGREEMENT shall mean the Operating Agreement dated the
Closing Date between PNM and the Owner Trustee.
OPERATING PERIOD shall have the meaning set forth in the Operating
Agreement.
OPERATOR shall have the meaning set forth in Section 2 of the
Operating Agreement.
OPTIONAL ALTERATIONS shall have the meaning set forth in Section
8(e) of the Lease.
ORIGINAL LEASE means the Lease dated the Closing Date from the Owner
Trustee, as lessor, to PNM, as lessee, as amended and/or supplemented by (i)
Supplement Number One to Lease dated as of September 30, 1985 between the Owner
Trustee and PNM and (ii) Lease Amendment No.2 dated as of March 9, 1987 between
the Owner Trustee and PNM.
ORIGINAL OF THE LEASE shall mean the fully executed counterpart of
the Amended and Restated Lease marked "Original" pursuant to Section 20(e) of
the Lease.
ORIGINAL PARTICIPATION AGREEMENT means the Participation Agreement
dated as of January 2, 1985, as amended by the Amendment dated the Closing Date
among the owner participant named therein, 1985 Funding Corp, the Owner Trustee,
the 1985 Indenture Trustee and PNM.
ORIGINAL TIA means the Tax Indemnity Agreement dated the Closing
Date between the Owner Participant and the Lessee.
OTHER CONSTRUCTION CONTRACTS shall have the meaning set forth in the
Instrument of Assignment of Other Construction Contracts.
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 such
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 unless, in the case of the
Owner Trustee, it shall own all Notes issued by it.
OVERDUE INTEREST RATE shall mean the rate per annum equal to 1%
above the interest rate applicable to that portion of the Refunding Note that is
due April 1, 2012.
OWNER PARTICIPANT shall mean DCC Project Finance Two, Inc., a
Delaware corporation.
OWNER PARTICIPANT'S COUNSEL shall mean Hunton & Xxxxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
OWNER PARTICIPANT'S LIENS shall mean Liens (other than Permitted
Liens described in clauses (a) and (c) through (e) of the definition of such
term) 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.
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 Owner Trustee
under the Trust Agreement.
OWNER TRUSTEE'S COUNSEL shall mean Xxxxxxx & Xxxxxxx, 000 Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
PARTICIPANT shall mean Funding Corp or the Owner Participant.
PARTICIPATION AGREEMENT means, (i) as to the Persons which are party
to both, the Original Participation Agreement as amended and restated by the
Amended and Restated Participation Agreement and, (ii) as to any Person which is
party to one but not the other of such instruments, the instrument to which such
Person is party.
PERMITTED INVESTMENTS shall mean (i) obligations of the United
States of America, or fully guaranteed as to interest and principal by the
United States of America, maturing in not more than one year, (ii) certificates
of deposit having a final maturity of not more than 30 days after the date of
issuance thereof of any commercial bank incorporated under the laws of the
United States of America or any state thereof or the District of Columbia which
bank is a member of the Federal Reserve System and has a combined capital and
surplus of not less than $100,000,000 and (iii) commercial paper, rated P-1 by
Xxxxx'x Investors Services, Inc., or A-1 by Standard and Poor's Corporation,
having a remaining term until maturity of not more than 90 days, other than any
such obligation, certificate of deposit or commercial paper issued by FNB,
Chemical Bank or any institution which shall become a successor Owner Trustee,
Indenture Trustee or Collateral Trust Trustee; PROVIDED, HOWEVER, that no such
investment made while there shall have occurred and be continuing an Indenture
Default or an Indenture Event of Default shall be a Permitted Investment if it
has a maturity in excess of 30 days.
PERMITTED LIENS shall mean (a) the respective rights and interests
of the Lessee, the Owner Participant, the Lessor, the Indenture Trustee and
Funding Corp, as provided in the Transaction Documents, (b) Lessor's Liens and
Owner Participant's Liens, (c) Liens for Taxes either not yet due or being
contested in good faith and by appropriate proceedings, so long as such
proceedings shall not involve any danger of the sale, forfeiture or loss of any
part of the Undivided Interest, the Trust Estate, the Lease Indenture Estate,
title thereto or any interest therein and shall not interfere with the use or
disposition of any part of the Undivided Interest, the Trust Estate, the Lease
Indenture Estate, title thereto or any interest therein, or the payment of Rent,
and the Lessee shall have provided adequate reserves for the payment of such
Taxes, (d) materialmen's, mechanics', workers', repairmen's, employees' or other
like Liens arising in the ordinary course of business of the Lessee for amounts
either not yet due or being contested in good faith and by appropriate
proceedings so long as such proceedings shall not involve any danger of the
sale, forfeiture or loss of any part of the Undivided Interest, the Trust
Estate, the Lease Indenture Estate, title thereto or any interest therein and
shall not interfere with the use or disposition of any part of the Undivided
Interest, the Trust Estate, the Lease Indenture Estate, title thereto or
interest therein, or the payment of Rent, and the Lessee shall have provided
adequate reserves for the payment of such amounts, (e) Liens arising out of
judgments or awards against the Lessee with respect to which at the time an
appeal or proceeding for review is being prosecuted in good faith and either
which have been bonded or for the payment of which adequate reserves shall have
been provided so long as such judgment, award or appeal shall not involve any
danger of the sale, forfeiture or loss of any part of the Undivided Interest,
the Trust Estate, the Lease Indenture Estate, title thereto or any interest
therein and shall not interfere with the use or disposition of any part of the
Undivided Interest, the Lease Indenture Estate, title thereto or any interest
therein, or the payment of Rent, and (f) Liens consented to by the Lessor in
accordance with the provisions of Section 12 of the Lease.
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.
PLANS AND SPECIFICATIONS shall mean the technical specifications of
the Transmission System (x) attached as Exhibit A to the Construction Contract
and entitled "Public Service Company of New Mexico Technical Specifications for
the Clovis Area Blackwater HVDC Station Specification HVDC-83-1 dated February
7, 1983" and all amendments thereto or modifications thereof as permitted by the
Construction Contract, the Participation Agreement, and the Lease and the
Assignment of Construction Contract, and (y) attached to, or constituting part
of, the Other Construction Contracts.
PNM shall mean Public Service Company of New Mexico, a New Mexico
corporation.
PREMIUM DEDUCTION shall have the meaning set forth in the Tax
Indemnity Agreement.
PRICING ASSUMPTIONS shall mean the pricing assumptions set forth in
Schedule II to the Amended and Restated Participation Agreement; PROVIDED,
HOWEVER, that from and after any adjustment pursuant to Section 3(d) of the
Lease such term shall mean such pricing assumptions, as so adjusted.
PRUDENT UTILITY PRACTICE shall mean, at a particular time, those
practices, methods and acts as are in accordance with standards of prudence
applicable to the electric utility industry in the Southwestern region of the
United States of America which would have been expected to accomplish the
desired result at the lowest reasonable cost consistent with reliability, safety
and expedition. PRUDENT UTILITY PRACTICE is not intended to be limited to the
optimum practice, method or act, to the exclusion of all others, but rather is a
spectrum of possible practices, methods and acts which could have been expected
to accomplish the desired result at the lowest reasonable cost consistent with
reliability, safety and expedition, but PRUDENT UTILITY PRACTICE is intended to
mean at least the same standard as the Lessee would, in the prudent management
of its own properties, use from time to time. PRUDENT UTILITY PRACTICE shall not
include any practice, method or act that discriminates against the Transmission
System or the Undivided Interest in relation to those practices, methods or acts
employed by the Lessee with respect to transmission facilities other than the
Transmission System or those practices, methods or acts which would have been
employed by the Lessee if it had been the owner of the Transmission System and
such other transmission facilities in their entirety.
PURCHASE DOCUMENTS shall mean the Xxxx of Sale.
PURCHASE PRICE means $43,800,000.
QUALIFIED INVESTMENT shall have the meaning set forth in Section
1(b) of the Tax Indemnity Agreement.
REFUNDING ACCOUNT shall have the meaning set forth in paragraph 3 of
the Omnibus Receipt.
REFUNDING AMORTIZATION DEDUCTIONS shall have the meaning set forth
in the Tax Indemnity Agreement.
REFUNDING BONDS means the "Secured Facility Bonds, Due 1995 and
2012" issued by Funding Corp under the Refunding Collateral Trust Indenture as
supplemented by the Refunding Supplemental Indenture.
REFUNDING COLLATERAL TRUST INDENTURE means the Collateral Trust
Indenture dated as of September 1, 1993 among Funding Corp, PNM and Chemical
Bank.
REFUNDING DATE means the date on which the Refunding Bonds are
issued and sold.
REFUNDING EXTENSION LETTER means the Extension Letter to be dated
the Refunding Date to the Collateral Trust Trustee from the Owner Participant,
the Owner Trustee, Funding Corp, and the Indenture Trustee.
REFUNDING NOTE SUPPLEMENTAL INDENTURE means Supplemental
Indenture No. 1 dated as of the Refunding Date between the Owner Trustee
and the Indenture Trustee pursuant to which the Refunding Notes are to be
issued.
REFUNDING NOTES means the Owner Trustee's "Nonrecourse Promissory
Notes, Refunding Series" issued by the Owner Trustee under the Indenture as
supplemented by the Refunding Note Supplemental Indenture.
REFUNDING SUPPLEMENTAL INDENTURE means the Refunding Bond
Supplemental Indenture dated as of the Refunding Date among Funding Corp, PNM
and the Collateral Trust Trustee pursuant to which the Refunding Bonds are to be
issued.
REGISTRATION STATEMENT means the registration statement on Form S-3
under the Securities Act filed by PNM, as the "issuer" and "registrant" of the
Refunding Bonds (in each case, for purposes of the Securities Act and the
Securities Act Rules), with the SEC (Registration Number 33-56148), together
with any amendments thereto, the prospectus constituting a part thereof and the
documents incorporated by reference therein.
REGULATIONS shall mean the income tax regulations promulgated under
the Code.
RENEWAL TERM shall mean each period during which the Undivided
Interest may be leased as permitted by Section 13 of the Lease, or such shorter
period as may result from earlier termination as provided in the Lease.
RENT shall mean Basic Rent and Supplemental Rent, collectively.
REPLACEMENT COMPONENT shall have the meaning set forth in Section
8(c) of the Lease.
REQUIRED ALTERATIONS shall have the meaning set forth in Section
8(d) of the Lease.
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, 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.
SEC shall mean the Securities and Exchange Commission of the United
States of America.
SECURED FACILITY BONDS shall mean Bonds issued by Funding Corp under
the Refunding Collateral Trust Indenture.
SECURITIES ACT shall mean the Securities Act of 1933, as amended.
SECURITIES ACT RULE shall mean any Rule promulgated by the SEC under
the Securities Act.
SECURITIES EXCHANGE ACT shall mean the Securities Exchange Act of
1934, as amended.
SECURITIES EXCHANGE ACT RULE shall mean any Rule promulgated by the
SEC under the Securities Exchange Act.
SEVERABLE, when used with respect to any Alteration, shall mean any
Alteration which can be readily removed from the Transmission System without
materially damaging the Transmission System or materially diminishing or
impairing the value, utility or condition which the Transmission System would
have had if the applicable Alteration had not been made.
SFAS NO. 13 shall mean Statement of Financial Accounting Standards
No. 13, as amended.
SHARE shall mean a percentage equal to the percentage of the
Undivided Interest.
SIGNING DATE means September 8, 1993.
SPECIAL CASUALTY VALUE, as of the last day of any month on which
Special Casualty Value shall be payable under the Lease, shall mean (i) during
the Basic Term, the amount determined by multiplying Lessor's Cost by the
percentage in the Schedule of Special Casualty Values attached to the Lease
(which Special Casualty Values as originally attached to the Lease are based
upon the Pricing Assumptions and are subject to adjustment pursuant to Section
3(d) of the Lease) and set forth opposite such day of such month and (ii) during
any Renewal Term, the amount determined by amortizing ratably the Fair Market
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 Easement, as such
term may be extended in consequence of a determination of the Maximum Option
Period, which amortized amounts shall be set forth in a revised Schedule of
Special Casualty Values and attached to the Lease prior to the last day of the
Basic Term or the last preceding Renewal Term, as the case may be; PROVIDED,
HOWEVER, that Special Casualty Value as of any date shall be, under any
circumstances and in any event, an amount at least sufficient to pay in full the
aggregate unpaid principal amount of all Notes then Outstanding under the
Indenture, together with all accrued and unpaid interest thereon.
SUBSTITUTED LESSEE shall have the meaning set forth in Section
6.8(c) of the Indenture.
SUPPLEMENTAL FINANCING shall have the meaning set forth in Section
8(h) of the Lease.
SUPPLEMENTAL RENT shall have the meaning set forth in Section 3(b)
of the Lease.
SUPPORT AGREEMENTS shall mean the Operating Agreement, the Easement
and the Assignment of Right of Use, collectively.
TAX shall mean any and all fees (including, without limitation,
documentation, recording, license and registration fees), taxes (including,
without limitation, income, gross receipts, sales, use, property (personal and
real, tangible and intangible), intangibles, excise and stamp taxes), levies,
imposts, duties, charges, assessments or withholdings of any nature whatsoever,
general or special, ordinary or extraordinary, together with any and all
penalties, fines, additions to tax and interest thereon.
TAX COUNSEL shall have the meaning set forth in the Tax Indemnity
Agreement.
TAX INDEMNITY AGREEMENT shall mean the Original Tax Indemnity
Agreement, as amended
and restated by the Amended and Restated TIA.
TAX LOSS shall have the meaning set forth in the Tax Indemnity
Agreement.
THIRD PARTY TRANSACTION shall have the meaning set forth in Section
10(b)(iv) of the Participation Agreement.
TRANSACTION DOCUMENTS shall mean the Participation Agreement, the
Lease, the Easement, the Operating Agreement, the Tax Indemnity Agreement, the
Trust Agreement, the Indenture, the Notes, the Assignment of Construction
Contract, the Instrument of Assignment of Other Construction Contracts, the
Refunding Extension Letter, the Xxxx of Sale, the Omnibus Notice and the Omnibus
Receipt, together with all amendments and supplements thereto.
TRANSACTION EXPENSES shall be the sum of all amounts paid or payable
pursuant to Section 14 of the Participation Agreement and shall mean and
include:
(i) the reasonable fees of Funding Corp's Counsel, Owner
Trustee's Counsel, Indenture Trustee's Counsel and Owner
Participant's Counsel for their services rendered in connection with
the transactions occurring on the Signing Date and the Refunding
Date and all expenses and disbursements incurred by them in
connection with such transactions;
(ii) the reasonable initial fees of the Owner Trustee and the
Indenture Trustee, and out-of-pocket expenses of each through the
Refunding Date;
(iii) an amount equal to the product of (A) the aggregate of
all costs of issue of the Bonds including, without limitation, the
costs of preparing the Financing Documents, filing fees relating to
the Registration Statement and the reasonable fees, expenses and
disbursements of the Collateral Trust Trustee's counsel and the
Underwriter's counsel, the reasonable initial fees of the Collateral
Trust Trustee and its out-of-pocket expenses through the Refunding
Date, rating agency fees, and the fees and commissions of the
Underwriter, multiplied by (B) the Lessor's Share.
(iv) all stenographic, printing and reproduction costs and
expenses incurred in connection with the execution and delivery of
the Amended and Restated Participation Agreement and the other
Transaction Documents and all other agreements, documents or
instruments prepared in connection therewith; and
(v) the out-of-pocket expenses for travel, computer and
related costs of the Owner Participant, but such amount shall not
exceed an amount equal to the product obtained by multiplying
$25,000 by the Lessor's Share.
TRANSFER shall mean the transfer, by xxxx of sale or otherwise, by
the Lessor to the Lessee of
all the Lessor's right, title and interest in and to the Undivided Interest
on an "AS IS, WHERE IS" basis, free and clear of all Lessor's Liens but
otherwise without recourse, representation or warranty, express or implied,
including an express disclaimer of representations and warranties in a manner
comparable to that set forth in Section 6(b) of the Lease, together with the
due assumption by the Lessee of, and the due release of the Lessor from, all
the Lessor's obligations and liabilities under the Transaction Documents by
instrument or instruments satisfactory in form and substance to the Lessor,
and TRANSFERRED shall be construed accordingly.
TRANSFEREE shall have the meaning set forth in Section 16 of the
Participation Agreement.
TRANSMISSION SYSTEM shall mean the 216 mile, 345 kV Bulk power
transmission line between existing PNM facilities near Bernalillo, New Mexico,
and the Blackwater HVDC Station and an interconnection with the transmission
system of Southwestern Public Service Company in the area of Clovis/Portales,
New Mexico, as more particularly described in the Xxxx of Sale.
TRANSMISSION SYSTEM COST shall mean the fair market value of the
Transmission System, as set forth in, or determined in accordance with, the
letter of Xxxxxxxx and Xxxxxxx.
TRUST shall mean the trust created by the Trust Agreement.
TRUST AGREEMENT shall mean the Trust Agreement dated as of January
2, 1985 between the Owner Participant and FNB.
TRUST ESTATE shall have the meaning set forth in Section 2.02 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
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(b)(ii) of the Participation
Agreement.
UCC OR UNIFORM COMMERCIAL CODE shall mean the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts and the State of New
Mexico, respectively.
UNCONTROLLABLE FORCES shall have the meaning set forth in the
Operating Agreement.
UNDERLYING EASEMENTS shall mean the easements of right-of-way set
forth and described in Parts II and III of Exhibit A to the Easement.
UNDERWRITER means Salomon Brothers Inc.
UNDERWRITING AGREEMENT means the Underwriting Agreement dated as of
September 2, 1993 among Funding Corp, PNM and the Underwriter.
UNDIVIDED INTEREST shall mean a 60% undivided interest of the Owner
Trustee in the Transmission System.
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 revised from time to
time.
USER shall have the meaning set forth in Section 2 of the Operating
Agreement.
