[EXECUTION COPY]
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REIMBURSEMENT AGREEMENT
dated as of February 1, 1997
between
PUBLIC SERVICE COMPANY
OF NEW MEXICO
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
relating to
Pollution Control Revenue
Refunding Bonds, 1997 Series A
(Public Service Company of New Mexico
San Xxxx Project)
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions........................................ 3
SECTION 2. Accounting Terms................................... 12
SECTION 3. Issuance of the Letter of Credit................... 12
SECTION 4. Reimbursements..................................... 12
SECTION 5. Advances........................................... 12
SECTION 6. Repayments and Prepayments of Advances............. 13
SECTION 7. Interest........................................... 13
SECTION 8. Fees............................................... 14
SECTION 9. Advance Account.................................... 15
SECTION 10. Increased Costs.................................... 15
SECTION 11. Payments and Computations.......................... 16
SECTION 12. Reduction and Reinstatement of Letter of Credit
Amount............................................. 17
SECTION 13. Obligations Absolute............................... 17
SECTION 14. Conditions Precedent............................... 18
SECTION 15. Representations and Warranties..................... 22
SECTION 16. Covenants.......................................... 26
SECTION 17. Events of Default.................................. 32
SECTION 18. Extension of the Termination Date.................. 36
SECTION 19. Amendments and Waivers............................. 37
SECTION 20. Notices............................................ 37
SECTION 21. No Waiver; Remedies Cumulative..................... 00
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XXXXXXX 00. Right of Set-Off................................... 38
SECTION 23. Indemnification.................................... 38
SECTION 24. Survival........................................... 39
SECTION 25. Transfer of the Letter of Credit................... 40
SECTION 26. Confirmation of Lien; Trust........................ 40
SECTION 27. Limited Liability of the Bank...................... 40
SECTION 28. Costs, Expenses and Taxes.......................... 41
SECTION 29. Severability....................................... 42
SECTION 30. Assignments and Participations..................... 42
SECTION 31. Governing Law...................................... 43
SECTION 32. Waiver of Jury Trial............................... 43
SECTION 33. Headings and Table of Contents..................... 43
SECTION 34. Counterparts....................................... 43
SECTION 35. Notification Relating to First Mortgage Bonds...... 44
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SCHEDULE I Disclosure Schedule
EXHIBIT A Form of Irrevocable Letter of Credit No. 3003595
EXHIBIT B Form of Pledge Agreement
EXHIBIT C Form of Opinion of Xxxxxxx & XxXxxx, P.A., Special Counsel to the
Company
EXHIBIT D Form of Opinion of Winthrop, Stimson, Xxxxxx & Xxxxxxx, Bond Counsel
EXHIBIT E Form of Opinion of White & Case, Special New York and California
Counsel to the Bank
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REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of February 1, 1997, between
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the "Company"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"),
W I T N E S S E T H:
WHEREAS, the City of Farmington, New Mexico (the "Issuer"), pursuant to
the laws of the State of New Mexico, has determined to issue and sell its
Pollution Control Revenue Refunding Bonds, 1997 Series A (Public Service Company
of New Mexico San Xxxx Project) in an aggregate principal amount of $40,000,000
(the "Bonds"), and to make the proceeds thereof available to the Company for the
sole purpose of refunding a portion of the Issuer's outstanding Pollution
Control Revenue Refunding Bonds, 1979 Series A (Public Service Company of New
Mexico San Xxxx Project) in an equivalent aggregate amount (the "Refunded
Bonds");
WHEREAS, the Bonds shall be issued pursuant to Ordinance No. 97-1052,
adopted January 28, 1997 by the Issuer (as supplemented by Resolution No.
97-870, adopted January 28, 1997, and as amended by Ordinance No. 97-1053,
adopted February 11, 1997, and as hereafter modified, altered, amended,
supplemented or confirmed by any and all ordinances and resolutions supplemental
thereto or amendatory thereof adopted from time to time pursuant thereto, the
"Ordinance");
WHEREAS, First Security Bank of New Mexico, N.A. has been appointed as
trustee under the Ordinance (in such capacity, together with its duly appointed
successors, the "Trustee");
WHEREAS, the obligations of the Issuer under the Ordinance are to be
secured by an assignment by the Issuer of the Issuer's rights under the
Installment Sale Agreement to the Trustee for the benefit of the holders of the
Bonds;
WHEREAS, in order to provide an inducement to the Trustee to accept its
appointment under the Ordinance and an inducement to the purchase from time to
time of the Bonds by all who shall at any time become holders thereof, the
Company shall execute that certain Guaranty Agreement, dated as of February 1,
1997 (the "Guaranty"), in favor of the Trustee;
WHEREAS, in accordance with the terms of the Guaranty, and as a
condition precedent to the effectiveness of this Agreement, the Company desires
to enter into that certain Forty-ninth Supplemental Indenture, dated as of
February 1, 1997 (the "Supplemental First Mortgage Bond Indenture") to the
Indenture of Mortgage and Deed of Trust, dated as of June 1, 1947 (as amended or
modified from time to time, the "First Mortgage Bond Indenture"), between the
Company and The Bank of New York, formerly known as Irving Trust Company (the
"First Mortgage Bond Trustee") pursuant to which the Company proposes to issue
two additional series of bonds designated as First Mortgage Bonds in an
aggregate principal amount of not less than $40,000,000 (the "1997 First
Mortgage Bonds") to the Trustee for the benefit of (i) the holders of the Bonds
as collateral security for the Company's obligations under the Guaranty to pay
the Guaranteed Amounts and (ii) the Bank as collateral security for the
Company's obligations under this Agreement;
WHEREAS, the obligations of the Company under this Agreement are also
to be secured, pursuant to the Pledge Agreement, by a pledge of the Pledged
Bonds to the Collateral Agent for the benefit of the Bank;
WHEREAS, pursuant to the Bond Purchase Agreement, dated February 20,
1997, as amended, modified or supplemented from time to time (the "Bond Purchase
Agreement"), between the Issuer, Xxxxxx Brothers Inc., as underwriter, Citicorp
Securities, Inc., as underwriter, and Xxxxxx Xxxxxxx & Co. Incorporated, as
underwriter (such underwriters being collectively herein referred to as the
"Underwriters"), the Underwriters have agreed to purchase the Bonds;
WHEREAS, in order to induce the Underwriters to enter into the Bond
Purchase Agreement and in order to provide for the payment when due of:
(i) the principal of that portion of the Bonds (and/or that
portion of the Purchase Price of such Bonds corresponding to principal)
which are in the Flexible Mode with a Rate Period not ending later than
the Scheduled Termination Date or in the Daily Mode or the Weekly Mode,
and
(ii) interest on that portion of the Bonds (and/or that portion
of the Purchase Price of such Bonds corresponding to interest) which
are in the Flexible Mode with a Rate Period not ending later than the
Scheduled Termination Date or in the Daily or Weekly Mode, at an
assumed interest rate of 12% per annum:
(A) for a period of 209 days (computed on the basis
of a year of 365 days) on such portion of the Bonds which are,
at the time, in the Flexible Mode, or
(B) for a period of 60 days (computed on the basis of
a year of 365 days) on such portion of the Bonds which are, at
the time, in the Daily or Weekly Mode,
the Company has requested that the Bank issue the Letter of Credit (as defined
below) to the Trustee in connection with the issuance of the Bonds.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to issue the Letter of Credit, the Company hereby agrees as follows:
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SECTION 1. Definitions. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in this Agreement and in the Disclosure
Schedule, the Letter of Credit, and each notice and other communication
delivered from time to time in connection with this Agreement. The following
terms, as used herein, have the following meanings:
"Advance" is defined in Section 5.
"Agreement" means this Reimbursement Agreement, as amended, modified or
supplemented from time to time.
"Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently announced by the Bank
at its San Francisco, California office as its reference rate; and
(b) the Federal Funds Rate most recently determined by the
Bank plus 2 of 1% per annum.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Bank in connection with extensions of credit. Changes
in the rate of interest on any extensions of credit bearing interest at the
Alternate Base Rate will take effect simultaneously with each change in the
Alternate Base Rate. The Bank will give notice promptly to the Company of
changes in the Alternate Base Rate; provided that any failure to give such
notice shall not affect the occurrence of any change in the rate of interest on
any extensions of credit bearing interest at the Alternate Base Rate in
accordance with the immediately preceding sentence.
"Authorized Officer" means, with respect to the Company, those of its
officers whose signatures and incumbency shall have been certified to the Bank
pursuant to clause (a)(i)(H) of Section 14.
"Available Moneys" is defined in the Ordinance.
"Board of Directors" means either the board of directors of the Company
or a duly authorized committee of that board.
"Bank" is defined in the preamble.
"Bond Purchase Agreement" is defined in the eighth recital.
"Bond Ratings" is defined in the Credit Agreement.
"Bonds" is defined in the first recital.
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"Business Day" means a day of the year on which banks located in all of
the cities in which the principal offices of the Trustee, the Paying Agent, the
Remarketing Agent, and the Bank are located are not required or authorized to
remain closed and on which The New York Stock Exchange is not closed.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"Collateral Agent" means First Security Bank of New Mexico, N.A., as
Collateral Agent under the Pledge Agreement, and its duly appointed successors.
"Contractual Obligation" means, as to any Person, any provision of any
"security" (as defined in the Securities Act of 1933, as amended) issued by such
Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of its property is bound.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Corresponding Securities" is defined in the Ordinance.
"Credit Agreement" means the U.S. $100,000,000 Revolving Credit
Agreement, dated as of December 14, 1993, among the Company, as borrower, The
Chase Manhattan Bank and Citibank N.A., as co-agents thereunder, and the banks
named therein, as amended by Amendment No. 1, dated as of June 7, 1995, but
without regard to any subsequent amendment, modification or waiver thereof.
"Daily Mode" is defined in the Ordinance.
"Debt" means (i) indebtedness of the Company or its Subsidiaries (other
than under this Agreement) for borrowed money or the deferred purchase price of
property or services in respect of which the Company or any Subsidiary is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which the Company or any Subsidiary otherwise assures a creditor
against loss, and (ii) obligations under leases which are or should be, in
accordance with GAAP, recorded as capital leases in respect of which obligations
the Company or any Subsidiary is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which the Company or any Subsidiary
otherwise assures a creditor against loss.
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"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Designated Subsidiary" is defined in the Credit Agreement.
"Disclosure Documents" is defined in clause (e) of Section 15.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Company with the written consent of the Bank.
"Drawing" means a drawing under the Letter of Credit to pay the
principal of, interest on, and/or Purchase Price corresponding to principal or
interest of, Bonds redeemed, purchased or deemed purchased or otherwise due in
accordance with their terms pursuant to the Ordinance, and, in the case of Bonds
purchased or deemed purchased, not remarketed by the Remarketing Agent on the
date such Bonds are to be purchased or deemed purchased.
"Environmental Law" is defined in the Credit Agreement.
"ERISA" is defined in the Credit Agreement.
"ERISA Affiliate" is defined in the Credit Agreement.
"ERISA Event" is defined in the Credit Agreement; provided; however,
that clause (c) of such definition shall be deemed to read as follows: "(c) the
substantial cessation of operations at a facility of such Person or any of its
ERISA Affiliates in the circumstances described in Title IV of ERISA;".
"Event of Default" is defined in Section 17.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum for each day during such period equal to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal fund brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on
transactions received by the Bank from three federal funds brokers of
recognized standing selected by it.
"Fee Letter" means that certain letter agreement dated February 19,
1997 executed by the Company.
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"Final Draft" is defined in the Letter of Credit.
"First Mortgage Bond" means any series of bonds issued pursuant to the
First Mortgage Bond Indenture.
"First Mortgage Bond Indenture" is defined in the sixth recital.
"First Mortgage Bond Trustee" is defined in the sixth recital.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31.
"Flexible Mode" is defined in the Ordinance.
"Flexible Rate Period" means the Rate Period or Period (as defined in
the Ordinance) applicable to Bonds in the Flexible Mode.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty" is defined in the fifth recital.
"Guaranteed Amounts" is defined in the Guaranty.
"Hazardous Material" is defined in the Credit Agreement.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Related Document, the parties hereto agree that the rule of ejusdem
generis shall not be applicable to limit a general statement, which is followed
by or referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indemnified Liabilities" is defined in Section 23.
"Indemnified Parties" is defined in Section 23.
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"Installment Sale Agreement" means the Amended and Restated Installment
Sale Agreement (Amending and Restating the Installment Sale Agreement dated as
of September 1, 1979), dated as of February 1, 1997, between the Issuer, as
vendor, and the Company, as vendee, as amended, modified or supplemented from
time to time.
"Insufficiency" is defined in the Credit Agreement.
"Issuance Date" is defined in Section 3.
"Issuer" is defined in the first recital.
"Letter of Credit" means the Letter of Credit substantially in the form
of Exhibit A, issued by the Bank pursuant to Section 3, as amended, modified or
supplemented from time to time.
"Letter of Credit Amount" means, with respect to the Letter of Credit,
$42,748,493.15, as reduced and reinstated from time to time as provided in the
Letter of Credit.
"Letter of Credit Fee" is defined in clause (a) of Section 8.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Material Adverse Effect" means, relative to any event, occurrence or
circumstance of any nature whatsoever (including any adverse determination in
any litigation, arbitration, investigation, proceeding or labor controversy), a
material adverse effect on
(a) the financial condition, operations, assets, business or
properties of the Company and its Designated Subsidiaries taken as a
whole; or
(b) the validity or enforceability of this Agreement or any
Related Document.
"Maximum Amount" means, at any time, $42,748,493.15, less all permanent
reductions of the Principal Component (as defined in the Letter of Credit) and
the Interest Component (as defined in the Letter of Credit) made effective prior
to or at such time.
"Mode" is defined in the Ordinance.
"Xxxxx'x" is defined in the Credit Agreement.
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"Multiannual Mode" is defined in the Ordinance.
"Multiemployer Plan" is defined in the Credit Agreement.
"Multiple Employer Plan" is defined in the Credit Agreement.
"1997 First Mortgage Bonds" is defined in the sixth recital.
"Official Statement" means the Official Statement relating to the
Bonds, dated February 20, 1997, (including any documents incorporated therein by
reference and any amendments, modifications or supplements thereto).
"Ordinance" is defined in the second recital.
"Organic Documents" means, as to any Person (including, without
limitation, the Company or its Designated Subsidiaries), its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"Participant" means the Bank or any entity to which the Bank or any
Participant has granted a participation in the Letter of Credit and the rights
and benefits under this Agreement.
"PBGC" is defined in the Credit Agreement.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
Government Authority.
"Plan" is defined in the Credit Agreement.
"Pledge Agreement" means the Pledge Agreement, dated as of February 1,
1997, among the Company, the Collateral Agent and the Bank, substantially in the
form of Exhibit B, as amended, modified or supplemented from time to time.
"Pledged Bonds" is defined in the Pledge Agreement.
"Preliminary Official Statement" means the Preliminary Official
Statement relating to the Bonds, dated February 12, 1997 (including any
documents incorporated therein by reference and any amendments, modifications or
supplements thereto).
"Prohibited Transaction" is defined in the Credit Agreement.
"Purchase Price" is defined in the Ordinance.
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"Quarterly Payment Date" means the last Business Day of each of March,
June, September and December.
"Rate Period" is defined in the Ordinance.
"Refunded Bonds" is defined in the first recital.
"Reimbursement Obligations" means, at any time, without duplication,
all unreimbursed Drawings under the Letter of Credit and all outstanding
Advances at such time.
"Related Documents" means the Installment Sale Agreement, the Guaranty,
the Ordinance, the First Mortgage Bond Indenture (as supplemented from time to
time including by the Supplemental First Mortgage Bond Indenture), the Bond
Purchase Agreement, the Pledge Agreement, the Remarketing Agent Agreement, the
Bonds, the 1997 First Mortgage Bonds and any other agreement or instrument
relating thereto or otherwise executed and delivered in connection with the
issuance of the Bonds.
"Release" means a "release", as such term is defined in CERCLA.
"Remarketing Agent" is defined in the Ordinance.
"Remarketing Agent Agreement" means the Remarketing Agent Agreement,
dated as of February 1, 1997, between the Company and the Remarketing Agent, as
amended, modified or supplemented from time to time.
"Requirement of Law" means, as to any Person, the Organic Documents of
such Person, and any law, treaty, rule or regulation, judgment, injunction,
order, decree or other determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"S&P" is defined in the Credit Agreement.
"Scheduled Termination Date" means February 21, 2000.
"Single Employer Plan" is defined in the Credit Agreement.
"Subsidiary" means any corporation of which the Company, indirectly or
directly, owns more than 50% of the outstanding stock having by its terms
ordinary voting power to elect a majority of the board of directors of such
corporation, irrespective of whether at the time stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency.
"Supplemental First Mortgage Bond Indenture" is defined in the sixth
recital.
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"Taxes" is defined in clause (b) of Section 28.
"Termination Date" means the close of business of the Bank on the
earliest of
(a) the Scheduled Termination Date,
(b) the date on which the Bank shall have received written
notice from the Trustee that the principal amount of and interest on
the Bonds have been paid in full,
(c) the fifth Business Day following the date on which the
Bank shall have received written notice from the Trustee of the
occurrence of the effective date of the conversion of all of the Bonds
into any Multiannual Mode or into the Flexible Mode with a Flexible
Rate Period ending after the Scheduled Termination Date,
(d) the date the Bank honors a Final Draft drawn on the Letter
of Credit,
(e) the fifth Business Day following the date on which the
Bank shall have received written notice from the Trustee that an
alternate letter of credit or alternate security has been substituted
for the Letter of Credit in accordance with the Ordinance, or
(f) the date on which the Letter of Credit is surrendered to
the Bank for cancellation.
"Trustee" is defined in the third recital.
"Underwriters" is defined in the eighth recital.
"Weekly Mode" is defined in the Ordinance.
"Welfare Plan" is defined in the Credit Agreement.
"Withdrawal Liability" is defined in the Credit Agreement.
SECTION 2. Accounting Terms. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP as in effect from time to
time, applied on a basis consistent with the most recent consolidated financial
statements of the Company and its consolidated Subsidiaries delivered to the
Bank.
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SECTION 3. Issuance of the Letter of Credit. On at least one (1)
Business Day's prior written notice from the Company to the Bank, on a date not
later than February 21, 1997, and subject to the terms and conditions of this
Agreement, the Bank agrees to issue on the Business Day specified in such notice
(the "Issuance Date") the Letter of Credit in a stated amount equal to the
initial Letter of Credit Amount, effective on the Issuance Date and expiring on
the Termination Date.
SECTION 4. Reimbursements. The Company shall pay to the Bank:
(a) unless otherwise provided by Sections 5 and 6(a),
immediately after (and on the same Business Day as) any amount is
disbursed under the Letter of Credit, an amount equal to the amount of
each Drawing under the Letter of Credit;
(b) upon notice from the Bank of the amount thereof, any and
all charges and expenses, including reasonable transaction fees in
connection with Drawings under the Letter of Credit, which the Bank may
pay or incur relative to the Letter of Credit, together with all
accrued and unpaid interest thereon at the rates set forth in Section
7; and
(c) upon notice from the Bank of the amount thereof, upon any
transfer of the Letter of Credit in accordance with its terms, a sum in
such amount as shall be necessary to cover the costs and expenses of
the Bank incurred in connection with such transfer together with all
accrued and unpaid interest thereon at the rates set forth in Section
7.
SECTION 5. Advances. Subject to the terms and provisions of this
Agreement (including, without limitation, the satisfaction of the conditions set
forth in Section 14(b)), the proceeds of each Drawing shall constitute an
advance made by the Bank to the Company on the date and in the amount of such
Drawing, each such advance being hereinafter referred to as an "Advance".
SECTION 6. Repayments and Prepayments of Advances.ents of Advances
(a) The Company shall repay the aggregate outstanding principal amount
of each Advance to the Bank immediately after (and on the same Business Day as)
any demand by the Bank for such repayment, or without any such demand, on the
Termination Date, together with all accrued and unpaid interest thereon at the
rates set forth in Section 7.
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(b) The Company shall, upon the remarketing, pursuant to Article II of
the Ordinance and the Remarketing Agent Agreement, of any Bonds purchased with
the proceeds of a Drawing, repay to the Bank, without any demand by the Bank, an
amount equal to the aggregate outstanding principal amount of the related
Advance (or if less than all of the Bonds purchased with the proceeds of the
such Drawing are remarketed, the portion of the Advance relating to such
remarketed Bonds), together with all accrued and unpaid interest thereon at the
rates set forth in Section 7.
(c) The Company shall pay to the Bank at any time when the sum of
(i) the aggregate amount of all Reimbursement Obligations, plus
(ii) the Letter of Credit Amount
exceeds the Maximum Amount at such time, the amount of such excess.
(d) The Company may prepay the aggregate outstanding principal amount
of any Advance, or a portion thereof, without premium or penalty on the
following terms and conditions:
(i) the Company shall give the Bank at least one Business
Day's prior written notice of its intent to prepay such Advance and the
amount of such prepayment; and
(ii) each such prepayment, unless equal to the aggregate
outstanding principal amount of all Advances, shall be in a minimum
amount of $500,000 or in any larger integral multiple of $100,000.
SECTION 7. Interest.
(a) So long as no Default or Event of Default shall have occurred, each
Advance shall bear interest from the date such Advance is made until the date it
becomes due at a fluctuating interest rate per annum equal to the Alternate Base
Rate plus 1.5% per annum; provided; however, that such fluctuating interest rate
shall in no event be higher than the maximum rate permitted by applicable law.
Such interest shall be payable in respect of each Advance (i) quarterly in
arrears on each Quarterly Payment Date and (ii) on the date of repayment or
prepayment (on the amount so repaid or prepaid).
(b) (i) Upon the occurrence and during the continuation of a Default or
Event of Default, Advances, and (ii) any and all amounts (whether principal,
interest, fees or any other amount) unpaid by the Company when due (whether at
stated maturity, upon acceleration, or otherwise) hereunder (in the case of
amounts in respect of interest, to the maximum extent permitted by law) for each
day from the date such amounts become due until payment in full, shall bear
interest at a fluctuating interest rate per annum equal to the Alternate Base
Rate plus 3% per annum; provided; however, that such fluctuating interest rate
shall in no event be higher than the maximum rate permitted by applicable law.
Such interest shall be payable on demand.
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SECTION 8. Fees
(a) The Company shall pay to the Bank a nonrefundable letter of credit
fee for the period from (and including) the Issuance Date to (but excluding) the
Termination Date on the Letter of Credit Amount at a rate per annum (the "Letter
of Credit Fee") determined as follows:
(i) If the Bond Rating assigned by Xxxxx'x and S&P is Baa2 and
BBB, respectively, or higher, the Letter of Credit Fee shall be 0.35%;
(ii) During such times as subclause (a)(i) of this Section 8
is not applicable and the Bond Rating assigned by Xxxxx'x or S&P is at
least Baa3 or BBB-, respectively, the Letter of Credit Fee shall be
0.45%;
(iii) During such times as neither subclause (a)(i) nor
(a)(ii) of this Section 8 is applicable and the Bond Rating assigned by
Xxxxx'x or S&P is at least Ba1 or BB+, respectively, or higher, the
Letter of Credit Fee shall be 0.75%;
(iv) During such times as none of subclauses (a)(i), (a)(ii)
or (a)(iii) of this Section 8 is applicable and the Bond Rating
assigned by Xxxxx'x or S&P is at least Ba2 or BB, respectively, the
Letter of Credit Fee shall be 1.00%;
provided that in the event of a split rating of two or more rating
levels, the average of the two rating levels will apply for purposes of
determining the applicable Letter of Credit Fee; provided, further,
that if none of clauses (i) through (iv) is applicable, the Letter of
Credit Fee shall be 1.75%.
The Letter of Credit Fee shall be payable in arrears on each Quarterly Payment
Date and on the Termination Date. Any change in the Letter of Credit Fee
resulting from a change in the Bond Ratings shall become effective on the day
when such change in the Bond Rating shall be announced by S&P or Xxxxx'x, as the
case may be.
(b) The Company shall pay to the Bank the fees and other amounts set
forth in the Fee Letter on the dates set forth therein.
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SECTION 9. Advance Account. The Bank shall maintain in accordance with
its usual practice an account or accounts evidencing each Advance and the
amounts of principal and interest with respect thereto payable and paid from
time to time hereunder. In any legal action or proceeding such accounts shall,
in the absence of manifest error, be conclusive evidence of the existence and
amounts of the obligations of the Company therein recorded. Notwithstanding the
foregoing, the failure of the Bank to maintain such account or accounts or any
error in maintaining such accounts shall not affect the obligations of any party
hereto with respect to any Advance.
SECTION 10. Increased Costs. Increased Costs
(a) If any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration thereof
shall either (i) impose, modify or be deemed by the Bank to make applicable any
reserve, special deposit or similar requirement against letters of credit issued
by, or assets held by, or deposits in or for the account of, the Bank or (ii)
impose on the Bank any other condition regarding this Agreement or the Letter of
Credit, and the result of any event referred to in clause (a)(i) or clause
(a)(ii) shall be to increase the cost to the Bank of issuing, extending or
maintaining the Letter of Credit (which increase in cost may be the result of
the Bank's reasonable allocation of the aggregate of such cost increases
resulting from such events), then, within five (5) Business Days of demand by
the Bank, the Company shall pay to the Bank all additional amounts which are
necessary to compensate the Bank for such increased cost incurred by the Bank.
All amounts payable pursuant to this clause (a) shall bear interest thereon if
not paid within five (5) Business Days of such notice until payment in full
thereof at the rate provided in clause (b) of Section 7. A certificate as to
such increased cost incurred by the Bank as a result of any event mentioned in
clause (a)(i) or clause (a)(ii) and setting forth the additional amount or
amounts to be paid to it hereunder and setting forth in reasonable detail the
basis therefor and the method of calculation thereof shall be prepared in good
faith and submitted by the Bank to the Company and shall be conclusive (absent
manifest error) as to the amount thereof. In determining such amount, the Bank
may use any reasonable averaging and attribution methods.
(b) If after the date hereof the Bank shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Bank
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Bank's capital as a consequence of its obligations under the Letter of Credit to
a level below that which the Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies with respect
to capital adequacy) then, upon notice of such change by the Bank by submission
to the Company of the certificate hereinafter described, the Company shall
within five (5) Business Days of receipt of such notice, pay to the Bank such
additional amount or amounts as will compensate the Bank for such reduction. All
payments pursuant to this clause (b) shall bear interest thereon if not paid
within five (5) Business Days of such notice until payment in full at the rate
provided in clause (b) of Section 7. A certificate of the Bank claiming
compensation under this clause (b) and setting forth the additional amount or
amounts to be paid to it hereunder and setting forth in reasonable detail the
basis therefor and the manner of calculation thereof shall be prepared in good
faith and submitted by the Bank to the Company and shall be conclusive in the
absence of manifest error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
-14-
SECTION 11. Payments and Computations. All payments by the Company to
the Bank hereunder shall be made in lawful currency of the United States,
without setoff, deduction or counterclaim, not later than the close of business
of the Bank in San Francisco, California on the date due, in same day or
immediately available funds, to such account as the Bank shall specify from time
to time by notice to the Company. Funds received after that time shall be deemed
to have been received by the Bank on the next following Business Day. All fees
shall be computed on the basis of the actual number of days (including the first
day but excluding the last day) occurring during the period for which such fee
is payable over a year comprised of 360 days. All interest shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest is payable
over a year comprised of 365 or 366 days, as the case may be. Whenever any
payment hereunder shall be due on a day which is not a Business Day, the date
for payment thereof shall be extended to the next succeeding Business Day, and
any interest payable thereon shall be payable for such extended time at the
specified rate.
SECTION 12. Reduction and Reinstatement of Letter of Credit Amount. The
Letter of Credit Amount shall be reduced or reinstated, as the case may be, as
specified in the Letter of Credit.
SECTION 13. Obligations Absolute. The obligations of the Company under
this Agreement and the Pledge Agreement shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms hereof
and thereof, under all circumstances whatsoever, including the following:
(a) any lack of validity or enforceability of this Agreement, the
Letter of Credit, the Bonds or any other Related Document;
(b) any amendment or waiver of or any consent to departure from this
Agreement, the Letter of Credit, the Bonds or any other Related Document;
(c) the existence of any claim, set-off, defense or other rights which
the Company or any other Person may have at any time against the Trustee, any of
the Underwriters, any beneficiary or any transferee of the Letter of Credit (or
any Person for whom the Trustee, any such beneficiary or any such transferee may
be acting), any Participant or any other Person, whether in connection with this
Agreement, the Related Documents or any unrelated transaction; provided,
however, that nothing in this Section shall prevent the assertion of any such
claim, set-off, defense or other rights by separate suit or counterclaim;
-15-
(d) the existence of any claim, set off, defense or other rights which
the Company or any other person may have at any time against the Bank in
connection with any unrelated transaction;
(e) any statement or any other document presented under the Letter of
Credit proving to be forged, fraudulent or invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(f) payment by the Bank under the Letter of Credit against presentation
of a draft or certificate which does not comply with the terms of such Letter of
Credit; and
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 14. Conditions Precedent.
(a) Conditions Precedent to Issuance of Letter of Credit. The
obligation of the Bank to issue the Letter of Credit on the Issuance Date shall
be subject to the fulfillment of each of the following conditions precedent to
the satisfaction of the Bank:
(i) The Bank shall have received on or before the Issuance
Date the following, each dated such date, each in form and substance
satisfactory to the Bank:
(A) the opinion of Xxxxxxx & XxXxxx, P.A., special
counsel to the Company, substantially in the form of Exhibit C
attached hereto;
(B) the opinion of Winthrop, Stimson, Xxxxxx &
Xxxxxxx, bond counsel, substantially in the form of Exhibit D
attached hereto;
(C) the opinion of White & Case, special New York and
California counsel to the Bank, substantially in the form of
Exhibit E attached hereto;
(D) copies of the resolutions of the Board of
Directors authorizing the execution, delivery and performance
by the Company of this Agreement and the Related Documents to
which the Company is a party, certified by the Secretary or an
Assistant Secretary of the Company (which certificate shall
state that such resolutions are all of the resolutions of the
Board of Directors relating to the execution, delivery and
performance by the Company of this Agreement and the Related
Documents to which the Company is a party and that such
resolutions are in full force and effect on the Issuance
Date);
-16-
(E) certified copies of all approvals, authorizations,
or consents of, or notices to or registrations with, any
Governmental Authority required for the Company to enter into
this Agreement and the Related Documents to which it is a
party;
(F) a certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to sign
this Agreement and the other documents to be delivered by the
Company pursuant hereto, upon which certificate the Bank may
conclusively rely until it shall have received a further
certificate of the Secretary or an Assistant Secretary of the
Company cancelling or amending such prior certificate;
(G) a certificate of the Trustee as to the authority,
incumbency and specimen signatures of officers of the Trustee
authorized to execute and present certificates under the
Letter of Credit and to otherwise communicate with the Bank
regarding the Letter of Credit, upon which certificate the
Bank may conclusively rely until it shall have received a
further certificate of the Trustee cancelling or amending such
prior certificate;
(H) executed counterparts of this Agreement and the
Pledge Agreement and executed copies (or duplicates thereof)
of each other Related Document, each of which shall be in form
and substance satisfactory to the Bank (and in the case of
copies, each of which shall be certified by the Company as
being a true and correct copy of such other Related Document);
(I) a copy of the Official Statement certified by the
Company as being a true and correct copy thereof; and
(J) such other documents, instruments, approvals (and,
if requested by the Bank, certified duplicates of executed
copies thereof) or opinions as the Bank may reasonably
request.
(ii) On the Issuance Date,
(A) the representations and warranties contained in
Section 15 of this Agreement and each of the Related Documents
shall be true and correct on and as of the Issuance Date as
though made on such date, and the Bank shall have received a
certificate signed by an Authorized Officer of the Company,
dated the Issuance Date, to that effect;
-17-
(B) no Default or Event of Default shall have occurred
and be continuing, or would result from the issuance of the
Letter of Credit or the execution and delivery of the Related
Documents, and the Bank shall have received a certificate
signed by an Authorized Officer of the Company, dated the
Issuance Date, to that effect;
(C) Since the date of the audited financial statements
described in clause (g) of Section 15, except as disclosed in
the Disclosure Documents, there shall have been no change in
the financial condition, operations, assets, business or
properties of the Company and its Designated Subsidiaries that
has resulted or could reasonably be expected to result in a
Material Adverse Effect;
(D) the Issuer shall have executed and issued the
Bonds, and the Trustee shall have authenticated and delivered
the Bonds to the Underwriters; and
(E) the Company shall have executed and issued the
1997 First Mortgage Bonds, and the First Mortgage Bond Trustee
shall have authenticated and issued the 1997 First Mortgage
Bonds to the Trustee to be held by it pursuant to the terms of
the Ordinance.
(iii) The following statements shall be true and correct on
the Issuance Date, and the Bank shall have received a certificate
signed by a duly authorized officer of the Issuer, dated the Issuance
Date, stating that:
(A) the Issuer shall have duly adopted resolutions
authorizing the execution, delivery and performance by the
Issuer of the Bonds and each of the Related Documents to which
the Issuer is a party and certified copies of such resolutions
shall have been delivered to the Bank;
(B) the Issuer shall have duly authorized and executed
the Ordinance, and the Ordinance shall be in full force and
effect (assuming the due execution and delivery thereof by the
other parties thereto); and
(C) the Issuer shall have duly authorized, signed and
delivered the Bonds to the Trustee for authentication and
delivery pursuant to the Ordinance.
(iv) The Trustee shall have duly authorized and executed the
Ordinance, and the Ordinance shall be in full force and effect as of
the Issuance Date, and the Bank shall have received a certificate
signed by a duly authorized officer of the Trustee, dated the Issuance
Date, as to such due authorization.
-18-
(v) The First Mortgage Bond Trustee shall have duly authorized
and executed the Supplemental First Mortgage Bond Indenture, and the
First Mortgage Bond Indenture, as supplemented by all indentures
supplemental thereto (including the Supplemental First Mortgage Bond
Indenture), shall be in full force and effect as of the Issuance Date
(assuming the due authorization, execution and delivery by the Company
of the First Mortgage Bond Indenture and each indenture supplemental
thereto (including the Supplemental First Mortgage Bond Indenture)),
and the Bank shall have received a certificate signed by a duly
authorized officer of the First Mortgage Bond Trustee, dated the
Issuance Date, certifying, to the knowledge of such officer, to that
effect.
(vi) The Bank shall have received payment of all fees, costs
and expenses due and payable pursuant to Section 8 and Section 28,
including reasonable fees and disbursements of counsel to the Bank
(including allocated costs of in-house counsel and all disbursements of
in-house counsel), if then invoiced.
(b) Conditions Precedent to Advances. The obligation of the Bank to
make any Advance on any date shall be subject to the fulfillment of the
condition precedent to the satisfaction of the Bank on the date of such Advance
that both before and after giving effect to such Advance, the following
statements shall be true and correct
(i) the representations and warranties contained in Section 15
of this Agreement shall be true and correct with the same effect as if
then made (unless stated to relate solely to an earlier date in which
case such representations and warranties shall be true and correct as
of such earlier date), and
(ii) no Default or Event of Default shall have occurred and
be continuing.
The acceptance of the benefits of each Advance shall constitute a representation
and warranty by the Company to the Bank that all the conditions specified in
this clause (b) of Section 14 exist as of the date of making such Advance.
SECTION 15. Representations and Warranties. The Company represents and
warrants to the Bank:
(a) Organization; Qualification. The Company and each of its Designated
Subsidiaries is validly organized and existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. The Company and each of
its Designated Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
business requires such qualification, and has full power and authority and holds
all requisite governmental licenses, permits and other approvals to own and hold
under lease its property and to conduct its business substantially as currently
conducted by it.
-19-
(b) Corporate Authorization. The execution, delivery and performance by
the Company of this Agreement and each Related Document to which it is a party
are within the Company's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Company's Organic
Documents or (ii) any Requirement of Law or Contractual Obligation binding on or
affecting the Company or any of its Designated Subsidiaries, and do not result
in or require the creation of any Lien upon or with respect to any of their
respective properties, except as contemplated by the Pledge Agreement or the
First Mortgage Bond Indenture.
(c) Governmental Authorization, Investment Company Act. No
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery and
performance by the Company of this Agreement or any Related Document to which
the Company is or is to be a party other than New Mexico Public Utility
Commission approvals relating to collateralization and refunding, each of which
has been duly made or obtained and is in full force and effect. Neither the
Company nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(d) Binding Effect. Each of this Agreement and the Related Documents to
which the Company is a party has been duly executed and delivered by the
Company. Each of this Agreement and the Related Documents to which the Company
is a party is a legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws or equitable principles relating to or limiting creditors' rights
generally.
(e) Litigation. Except as disclosed in the Company's annual report on
Form 10-K for the Fiscal Year ended December 31, 1996 (the "Disclosure
Documents"), there is no pending or, to the knowledge of the Company, threatened
litigation, arbitration, investigation, proceeding or labor controversy
affecting the Company or any of its Designated Subsidiaries, or any of their
respective properties, businesses, assets or revenues, which (i) is reasonably
likely to have a Material Adverse Effect, or (ii) in any manner questions the
validity of this Agreement, the Bonds or any other Related Document.
(f) Related Documents. The representations and warranties of the
Company set forth in the Related Documents to which the Company is a party are
true and correct on and as of the date hereof and are hereby made to the Bank on
and as of the date hereof as if set forth herein in full together with the
related definitions.
-20-
(g) Financial Information. The audited consolidated balance sheets of
the Company and its Subsidiaries as at December 31, 1996, and the related
statements of earnings and cash flow of the Company and its Subsidiaries for the
fiscal year then ended, copies of which have been furnished to the Bank, have
been prepared in accordance with GAAP consistently applied, and present fairly
the consolidated financial condition of the corporations covered thereby as at
the dates thereof and the results of their operations for the period then ended.
(h) No Material Adverse Effect. Since the date of the audited financial
statements described in clause (g) of this Section, there has been no change in
the financial condition, operations, assets, business or properties of the
Company and its Designated Subsidiaries that would result in a Material Adverse
Effect, except as disclosed in the Disclosure Documents.
(i) Taxes. The Company and each of its Subsidiaries has filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
(j) Regulations G, U and X. The Company is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock, and
no proceeds of the Letter of Credit will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as in effect from time to time, are used in
this clause (j) with such meanings.
(k) Ownership of Properties. The Company and each of its Designated
Subsidiaries owns good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except as permitted pursuant to
Section 5.02(a) of the Credit Agreement.
(l) ERISA Representations.
(i) Item 15(l) ("Plans, Multiemployer Plans and Welfare
Plans") of the Disclosure Schedule contains a complete and accurate
list of all Plans, Multiemployer Plans and Welfare Plans with respect
to any employees of the Company or any of its ERISA Affiliates as of
the date hereof.
(ii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of the Company or any of its ERISA
Affiliates.
-21-
(iii) Schedule B (Actuarial Information) to the 1996 annual
report (Form 5500 Series) for each Plan of the Company, copies of which
have been filed with the Internal Revenue Service, is complete and
accurate and fairly presents the funding status of such Plan, and since
the date of such Schedule B there has been no material adverse change
in such funding status.
(iv) Neither the Company nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan.
(v) Neither the Company nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and no Multiemployer Plan of the
Company is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
(vi) No Prohibited Transaction has occurred that has resulted
in or is reasonably likely to result in a material liability of the
Company.
(m) Environmental Representation. The operations and properties of the
Company and each of its Subsidiaries comply in all material respects with all
Environmental Laws and neither utilize nor contain nor are affected by any
Hazardous Materials that are not treated in compliance with all Environmental
Laws, and on the date hereof, neither the Company nor any of its Subsidiaries
has any material liability, contingent or otherwise, under any Environmental
Law, except as set forth in the Disclosure Documents.
(n) Accuracy of Information.
(i) Except for information contained in Annex B to the
Preliminary Official Statement and the Official Statement describing
the Bank, as to which no representation is made,
(A) as of its date, the Preliminary Official Statement
was,
(B) as of its date, the Official Statement was,
(C) as of the date of any amendment or supplement
thereto, the Official Statement as so amended or supplemented
was, is or will be,
accurate in all material respects for the purposes for which its use
is, was, or shall be, authorized; and
(D) as of its date, the Preliminary Official Statement
did not,
-22-
(E) as of its date, the Official Statement did not,
(F) as of the date of any amendment or supplement
thereto, the Official Statement as so amended or supplemented
did not, does not, or will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein, in light
of the circumstances under which they are or were made, not misleading.
(ii) All factual information furnished by or on behalf of the
Company in writing to the Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby (other than
information describing the Bank referred in clause (i)) and all other
such factual information hereafter furnished by or on behalf of the
Company to the Bank was, is or will be, as the case may be, true and
accurate in every material respect on the date as of which such
information is dated or certified, and was not, is not or shall not be,
as the case may be, incomplete by omitting to state any material fact
necessary to make such information not misleading on such date.
(o) First Mortgage Bond Indenture, etc. The First Mortgage Bond
Indenture grants to the First Mortgage Bond Trustee under the First Mortgage
Bond Indenture a security interest in the property pledged to the First Mortgage
Bond Trustee under the First Mortgage Bond Indenture. The 1997 First Mortgage
Bonds are secured by the First Mortgage Bond Indenture pari passu with all other
bonds issued and outstanding thereunder.
SECTION 16. Covenants. Unless the Bank otherwise consents in writing,
the Company agrees that during the term of this Agreement:
(a) Certain Covenants. Except as may be otherwise provided in this
Section 16, the Company will perform, comply with and be bound by, for the
benefit of the Bank, each of its agreements, covenants and obligations contained
in Article V of the Credit Agreement (other than Sections 5.01(a), 5.01(b),
5.01(c), 5.01(i) and 5.02(b) thereof), together with the related definitions not
otherwise defined herein and ancillary provisions, as in effect on the date of
execution hereof. The above-specified provisions of the Credit Agreement are
hereby incorporated herein by reference, and will be deemed to continue in
effect for the benefit of the Bank until the Letter of Credit has terminated and
all amounts due hereunder have been paid in full, without limiting the
foregoing, whether or not the Credit Agreement or any Commitment thereunder
remains in effect. For purposes of the foregoing, (i) references in the
provisions of the Credit Agreement incorporated herein by reference to the
"Borrower" shall refer to the Company, (ii) references in the provisions of the
Credit Agreement incorporated herein by reference to any of "Lender", "Lenders",
and "Majority Lenders" shall refer to the Bank, (iii) the terms "Agreement", any
"Note" or the "Notes", "hereto" and "hereof" when used in the provisions of the
Credit Agreement incorporated herein by reference shall refer to this Agreement,
(iv) the terms "Default" or "Event of Default" shall be deemed to have the
meanings given such terms herein; and (v) the terms "Advances" and "Commitment"
shall be deemed to mean "obligations of the Company under this Agreement".
-23-
(b) Financial Information, Reports, Notices, etc. The Company will
furnish, or will cause to be furnished, to the Bank copies of the following
financial statements, reports, notices and information:
(i) as soon as available and in any event within sixty (60)
days after the end of each of the first three Fiscal Quarters of each
Fiscal Year of the Company, the consolidated financial statements of
the Company and its Subsidiaries for such Fiscal Quarter, including the
consolidated balance sheet of the Company and its Subsidiaries as of
the end of such Fiscal Quarter and the related consolidated statements
of earnings (loss) and cash flows of the Company and its Subsidiaries
for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding
period of the preceding Fiscal Year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief
accounting Authorized Officer of the Company as having been prepared in
accordance with GAAP, together with (A) a certificate of the chief
financial Authorized Officer of the Company stating that no Default or
Event of Default has occurred and is continuing or, if any such Default
or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Company has taken and
proposes to take with respect thereto and (B) a schedule in form
satisfactory to the Bank of the computations used by the Company in
determining compliance with the covenants contained in Sections
5.01(h), 5.02(a), 5.02(c), 5.02(d) and 5.02(i) of the Credit Agreement;
(ii) as soon as available and in any event within one hundred
twenty (120) days after the end of each Fiscal Year of the Company, a
copy of the annual audit report for such Fiscal Year for the Company
and its Subsidiaries, including therein the consolidated financial
statements of the Company and its Subsidiaries for such Fiscal Year,
including the consolidated balance sheet of the Company and its
Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of earnings (loss) and cash flows of the
Company and its Subsidiaries for such Fiscal Year, in each case
accompanied by an opinion acceptable to the Bank of Xxxxxx Xxxxxxxx &
Co. or other independent public accountants acceptable to the Bank,
together with (A) a certificate of such accounting firm in
substantially the form of Exhibit H to the Credit Agreement (with the
schedules referred to therein attached thereto) addressed to the Bank,
and (B) a certificate of the chief financial Authorized Officer of the
Company stating that no Default or Event of Default has occurred and is
continuing or, if any such Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action that
the Company has taken and proposes to take with respect thereto;
-24-
(iii) as soon as possible and in any event within five (5)
days after the occurrence of each Default or Event of Default, a
statement of the chief financial Authorized Officer of the Company
setting forth details of such Default or Event of Default and the
action which the Company has taken and proposes to take with respect
thereto;
(iv) as soon as possible and in any event within five (5) days
after (x) the occurrence of any adverse development with respect to any
litigation, action, proceeding or labor controversy described in clause
(e) of Section 15 or (y) the commencement of any labor controversy,
litigation, action or proceeding of the type described in clause (e) of
Section 15, notice thereof and copies of all material documentation
relating thereto;
(v) promptly and in any event within fifteen (15) days after
the sending or filing thereof, copies of all reports which the Company
sends to any of its securityholders, and all reports and registration
statements which the Company or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities exchange;
(vi) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities of
the Company or of any of its Subsidiaries (A) pursuant to the terms of
the Ordinance or the First Mortgage Bond Indenture, or (B) with respect
to any pending or potential non-compliance with the terms of any other
indenture, loan or credit or similar agreement, and not otherwise
required to be furnished to the Bank pursuant to any other clause of
this clause (b);
(vii) promptly upon receipt thereof, copies of all notices,
requests and other documents received by the Company or any of its
Subsidiaries under or pursuant to the Ordinance or the First Mortgage
Bond Indenture with respect to any pending or potential noncompliance
with the terms thereof, and, from time to time upon request by the
Bank, such information and reports regarding the Ordinance and the
First Mortgage Bond Indenture as the Bank may reasonably request;
(viii) promptly, and in any event within five (5) Business
Days after any change in the information regarding Material Operating
Leases of the type contained on Schedule VIII of the Credit Agreement
is furnished by the Company to Xxxxx'x or S&P, notice of such change;
(ix) promptly and in any event within ten (10) Business Days
after the Company or any of its ERISA Affiliates knows or has reason to
know that any ERISA Event has occurred, a statement of the chief
financial Authorized Officer of the Company describing such ERISA Event
and the action, if any, that the Company or such ERISA Affiliate has
taken and proposes to take with respect thereto;
-25-
(x) promptly and in any event within five (5) Business Days
after receipt thereof by the Company or any of its ERISA Affiliates,
copies of each notice from the PBGC stating its intention to terminate
any Plan or to have a trustee appointed to administer any Plan;
(xi) promptly and in any event within thirty (30) days after
the filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Plan of the Company;
(xii) promptly and in any event within five (5) Business Days
after receipt thereof by the Company or any of its ERISA Affiliates
from the sponsor of a Multiemployer Plan, copies of each notice
received by the Company or any of its ERISA Affiliates concerning (A)
the imposition of Withdrawal Liability by any Multiemployer Plan, (B)
the reorganization or termination, within the meaning of Title IV of
ERISA, of any Multiemployer Plan or (C) the amount of liability
incurred, or that may be incurred, by the Company or any of its ERISA
Affiliates in connection with any event described in clause (A) or (B);
(xiii) promptly and in any event within ten (10) Business Days
after the Company or any of its ERISA Affiliates knows or has reason to
know that any Prohibited Transaction that is reasonably likely to
result in a material liability of the Company has occurred, a statement
of the chief financial Authorized Officer of the Company describing
such Prohibited Transaction and the action, if any, that the Company or
such ERISA Affiliate has taken and proposes to take with respect
thereto;
(xiv) promptly after the amendment of, waiver to, or any other
modification of, any Related Document, a copy of such amendment, waiver
or modification;
(xv) promptly after the Company knows of the occurrence
thereof, notice of any change in the Bond Rating assigned by either
Xxxxx'x or S&P; and
(xvi) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as the Bank may from time to time reasonably request.
(c) Modes of Bonds. Notwithstanding any provision of the Ordinance to
the contrary, the Company will not request or permit the Bonds to be partially
converted into another Mode.
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(d) Use of Proceeds. The Company agrees that, with respect to the Bonds
and the earnings thereon, no use thereof will be made which would (i) but for
the covenant contained in this Section, have been reasonably expected at the
time of the issuance of the Bonds, or (ii) if so reasonably expected, have
caused the bonds to be "arbitrage bonds" within the meaning of Section 148 (or
any successor provision thereto) of the Code, and the regulations proposed or in
effect thereunder on the date of such use and applicable to obligations issued
on the issuance date of the Bonds. The Company agrees to comply with the terms
of Section 148 (or any successor provision thereto) of the Code, and any
regulations promulgated thereunder.
(e) Repayment of Refunded Bonds. On or before the Issuance Date, the
Company shall have caused the Refunded Bonds to be defeased in full, and the
Bank shall have received (i) a reliance letter from Winthrop, Stimson, Xxxxxx &
Xxxxxxx, bond counsel, addressed to the Bank, to the effect that the Bank may
rely on their defeasance opinion relating to the Refunded Bonds, and (ii) a
reliance letter or other evidence from Xxxxxxx & XxXxxx, special counsel to the
Company, to the effect that the Bank may rely on their opinion relating to the
Escrow Agreement (as defined in the Bond Purchase Agreement), which opinions
shall in each case be in form and substance satisfactory to the Bank.
(f) Amendments, Trustee, etc. The Company will not amend or otherwise
permit to occur any amendment, modification or waiver of any of the terms of the
Bonds or any other Related Document which could in any way increase the
obligations of the Bank under the Letter of Credit or adversely affect the
rights of the Bank without the prior written consent of the Bank. The Company
will not cause the removal of the Trustee from its capacity or approve the
appointment of a successor Trustee, without the prior written consent of the
Bank in its sole discretion.
(g) Compliance with Laws, Etc. The Company will comply, and will cause
each of its Subsidiaries to comply, in all material respects with (i) all
material laws, rules, regulations and orders (including, without limitation,
ERISA and all applicable Environmental Laws) and (ii) all other laws, rules,
regulations and orders, promptly upon discovery of any non-compliance.
(h) Payment of Taxes, Etc. The Company will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien (other than a Permitted Lien (as defined in the
Credit Agreement)) upon its property; provided, however, that neither the
Company nor any of its Subsidiaries shall be required to pay or discharge any
such tax, assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which adequate reserves in accordance with GAAP
are being maintained.
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(i) Maintenance of Insurance. The Company will maintain, and will cause
each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations, or will provide self-insurance, in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Company or such Subsidiary operates.
(j) Mergers, Etc. The Company will not merge with or into or
consolidate with or into any Person, or acquire all or substantially all of the
assets of any Person, or permit any of its Designated Subsidiaries to do so,
except that (i) any Designated Subsidiary may merge or consolidate with or into
or acquire assets of, any other Designated Subsidiary, (ii) any Designated
Subsidiary may merge into the Company, and (iii) any Designated Subsidiary may
dispose of assets to the Company; provided; however, that in each case,
immediately after giving effect thereto, no Default or Event of Default would
exist, and in the case of any such merger to which the Company is a party, the
Company will be the surviving corporation.
(k) No Surrender of First Mortgage Bonds. Notwithstanding any provision
contained in Section 15.11 of the Ordinance to the contrary, the Company hereby
agrees not to request the Trustee to release to the Company or to the First
Mortgage Bond Trustee any amount of the First Mortgage Bonds (or Corresponding
Securities, as the case may be) and not to accept any amount of the First
Mortgage Bonds (or Corresponding Securities, as the case may be) so released,
without the prior written consent of the Bank.
SECTION 17. Events of Default. The following events shall be "Events of
Default" hereunder:
(a) the Company shall fail to pay any amount under Section 4(a),
Section 6, Section 7 or Section 8(a) when and as due; or shall fail to pay any
other amount due hereunder when and as due and such failure shall continue for
five (5) Business Days; or
(b) for any reason (other than the termination or release thereof by
the Collateral Agent at the direction of the Bank), the Pledge Agreement shall
cease to be in full force and effect or the Company shall repudiate its
obligations thereunder or the pledge and security interest under the Pledge
Agreement shall at any time cease to constitute in favor of the Collateral Agent
on behalf of the Bank a first priority perfected lien on the Pledged Collateral
(as therein defined); or
(c) (i) the First Mortgage Bond Indenture, including the Supplemental
First Mortgage Bond Indenture, or the 1997 First Mortgage Bonds shall cease to
be in full force and effect, or shall cease to provide the Liens, rights, powers
and privileges purported to be created thereby (other than as a result of an
exchange of the 1997 First Mortgage Bonds for Corresponding Securities in
accordance with Sections 12.02(l) and 12.09(b) of the Ordinance), (ii) any
Corresponding Securities or the Governing Instrument relating thereto shall
cease to be in full force and effect, or shall cease to provide the Liens,
rights, powers and privileges purported to be created thereby, or (iii) the
Company, or any Authorized Representative of the Company, shall deny or
disaffirm the Company's obligations under the First Mortgage Bond Indenture,
including the Supplemental First Mortgage Bond Indenture, or the 1997 First
Mortgage Bonds or under the Corresponding Securities or the applicable Governing
Instrument, as the case may be; or
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(d) any provision of this Agreement or any Related Document shall at
any time for any reason cease to be valid and binding on the Company, or shall
be declared to be null and void, or the validity or enforceability thereof shall
be denied or contested by the Company, or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over the Company seeking to
establish the invalidity or unenforceability thereof, or the Company shall deny
that it has any further liability or obligation thereunder; or
(e) (i) the Company shall default in the observance or performance of
any term, covenant or agreement incorporated in clause (a) of Section
16 by reference to Section 5.01(h) or 5.02(i) of the Credit Agreement,
or contained in clause (b)(iii) or (k) of Section 16;
(ii) the Company or any Designated Subsidiary shall default in
the observance or performance of any term, covenant or agreement (other
than those referred to in clause (e)(i) of this Section 17)
incorporated in clause (a) of Section 16 by reference to Section 5.02
of the Credit Agreement;
(iii) the Company or any Designated Subsidiary shall default
in the observance or performance of any term, covenant or agreement
(other than those referred to in clauses (e)(i) and (e)(ii) of this
Section 17) contained in this Agreement, and such default shall remain
unremedied for ten (10) days following delivery of notice from the
Bank; or
(f) any representation, warranty, certificate or statement made by the
Company in this Agreement, any of the Related Documents or in any certificate,
financial statement or other document delivered pursuant to this Agreement or
any of the Related Documents shall prove to have been incorrect in any material
respect when made or deemed made; or
(g) a default under any Related Document shall occur; or
(h) the Company or any of its Designated Subsidiaries shall
(i) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
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(ii) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for the Company
or any of its Designated Subsidiaries or any property of any thereof,
or make a general assignment for the benefit of creditors;
(iii) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Company or any of its
Designated Subsidiaries or for a substantial part of the property of
any thereof, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within thirty (30) days (in
connection therewith, the Company hereby expressly authorizes the Bank
to appear in any court conducting any relevant proceeding during such
30-day period to preserve, protect and defend its rights under the
Related Documents);
(iv) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Company or any
of its Designated Subsidiaries, and, if any such case or proceeding is
not commenced by the Company or such Designated Subsidiary, such case
or proceeding shall be consented to or acquiesced in by the Company or
such Designated Subsidiary or shall result in the entry of an order for
relief or shall remain for thirty (30) days undismissed (in connection
therewith, the Company hereby expressly authorizes the Bank to appear
in any court conducting any such case or proceeding during such 60-day
period to preserve, protect and defend its rights under the Related
Documents); or
(v) take any action authorizing any of the foregoing; or
(i) (i) any ERISA Event shall have occurred with respect to a Plan of
the Company or any of its ERISA Affiliates and the sum (determined as
of the date of occurrence of such ERISA Event) of the Insufficiency of
such Plan and the Insufficiency of any and all other Plans of the
Company or any of its ERISA Affiliates with respect to which an ERISA
Event shall have occurred and then exist (or the liability of the
Company and its ERISA Affiliates related to such ERISA Events) exceeds
$5,000,000; provided; however, that an ERISA Event described in Section
302(f) of ERISA shall constitute an Event of Default without regard to
such Insufficiency;
(ii) the Company or any of its ERISA Affiliates shall have
been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan in an amount
that, when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Company and its ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $2,000,000 or requires payments exceeding $1,000,000 per annum;
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(iii) the Company or any of its ERISA Affiliates shall have
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of the
Company and its ERISA Affiliates to all Multiemployer Plans that are
then in reorganization or being terminated have been or will be
increased over the amount contributed to such Multiemployer Plans for
the plan years of such Multiemployer Plans immediately preceding the
plan year in which such reorganization or termination occurs by an
amount exceeding $2,000,000;
(iv) a Prohibited Transaction shall have occurred and the
Company has incurred or is reasonably likely to incur liability in
connection therewith in an amount exceeding $2,000,000;
(j) a default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any Debt of
the Company or any of its Designated Subsidiaries having a principal amount,
singly or in the aggregate, in excess of $5,000,000, or a default shall occur in
the performance or observance of any obligation or condition with respect to
such Debt if the effect of such default is to accelerate the maturity of any
such Debt or such default shall continue unremedied for any applicable period of
time sufficient to permit the holder or holders of such Debt or any trustee or
agent for such holders, to cause such Debt to become due and payable prior to
its expressed maturity; or
(k) any judgments or orders against the Company or any of its
Designated Subsidiaries for the payment of money
(A) in excess of $20,000,000, or
(B) which, when added to all other such judgments or
orders rendered on or after the date of the Credit Agreement,
exceeds $40,000,000 in the aggregate,
and either
(C) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order;
(D) there shall be any period of thirty (30) consecutive days
during which a stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect.
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If any Event of Default occurs and is continuing,
(1) the Bank may, in its sole discretion, declare all Advances and all
interest accrued thereon and all other amounts due hereunder or under the Pledge
Agreement to be immediately due and payable, and upon such declaration, the same
shall become and be immediately due and payable, without presentment, protest or
other notice of any kind, all of which are hereby waived by the Company;
(provided that, if an Event of Default specified in clause (h) of this Section
17 shall occur with respect to the Company, all Advances and all interest
accrued thereon and all other amounts due hereunder or under the Pledge
Agreement as aforesaid shall automatically become immediately due and payable
without further act of the Bank);
(2) the Bank may, in its sole discretion, either
(i) notify the Trustee of such Event of Default and upon
satisfaction of the conditions set forth in the Ordinance, the
principal of all Bonds then outstanding and the interest accrued
thereon shall become immediately due and payable pursuant to Section
9.01(2) of the Ordinance; or
(ii) notify the Trustee pursuant to Section 3.01(c) of the
Ordinance of a mandatory redemption of the Bonds by delivery of a
notice substantially in the form of Exhibit 9 to the Letter of Credit;
and
(3) the Bank may, in its sole discretion, pursue all remedies available
to it at law, by contract, at equity or otherwise.
SECITON 18. Extension of the Termination Date. At least 120 days but no
more than 180 days before the third anniversary of the Issuance Date and each
subsequent anniversary of the Issuance Date, the Company may request in writing
that the Bank extend the Scheduled Termination Date for a period of one year.
Upon receipt of such request, the Bank may, in its sole discretion, agree to
extend the Scheduled Termination Date, and, if the Bank shall so agree, it
shall, within 30 days, notify the Company of any conditions precedent to the
effectiveness of such extension and upon satisfaction of such conditions (if
any) execute and deliver to the Trustee an amendment to the Letter of Credit
substantially in the form of Exhibit 10 to the Letter of Credit.
SECTION 19. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Company therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Bank. Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
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SECTION 20. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopier or
similar writing) and shall be given to such party at its address or telecopier
number set forth below or such other address or telecopier number as such party
may hereafter specify for the purpose by notice to the other party. Each such
notice, request or other communication shall be effective (a) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
below and receipt of such telecopy is acknowledged by the party to which it was
transmitted, (b) if given by mail, ten days after such communication is
deposited in the mail with first-class postage prepaid, addressed as aforesaid
or (c) if given by any other means, when delivered at the address specified in
this Section.
To the Company:
Public Service Company of Xxx Xxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
To the Bank:
Bank of America NT & SA
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
White & Case
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 9071
Attention: Xxxx X. Xxxx, Esq.
Telephone (000) 000-0000
Telecopier: (000) 000-0000
SECTION 21. No Waiver; Remedies Cumulative. No failure on the part of
the Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or otherwise.
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SECTION 22. Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Company against any and all of the
obligations of the Company now or hereafter existing under this Agreement,
irrespective of whether or not the Bank shall have made any demand hereunder
although such obligations may be contingent or unmatured.
SECTION 23. Indemnification. In consideration of the execution and
delivery of this Agreement by the Bank, the Company hereby indemnifies,
exonerates and holds the Bank and each of its officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a)any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Drawing under
the Letter of Credit;
(b)the entering into and performance of this Agreement and any
other Related Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Company as the result of any
determination by the Bank not to fund any Drawing under the Letter of
Credit);
(c)by reason of any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference
in the Preliminary Official Statement (other than in Appendix B
thereto) or in the Official Statement (other than in Appendix B
thereto), or in any amendment, modification or supplement thereto, or
the omission to state therein a material fact necessary to make such
statements, in the light of the circumstances under which they are or
were made, not misleading;
(d)any investigation, litigation or proceeding related to any
Environmental Law, any environmental cleanup, audit, compliance or
other matter relating to the protection of the environment or the
Release by the Company or any of its Subsidiaries of any Hazardous
Material; or
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(e)the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Company or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Company or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 24. Survival. The obligations of the Company under this
Agreement shall continue until the later of the Termination Date or the date
upon which all amounts due or to become due to the Bank hereunder shall have
been paid in full; provided, however, that the obligations of the Company
pursuant to Section 23 and Section 28 shall survive the termination of this
Agreement.
SECTION 25. Transfer of the Letter of Credit. The Letter of Credit may
be transferred in accordance with the provisions set forth therein.
SECTION 26. Confirmation of Lien; Trust.
(a) The Company hereby grants to the Bank, to secure payment by the
Company of sums due hereunder, a lien on moneys or instruments (at such times as
they become payable to the Company under the Ordinance) which the Company has an
interest in or title to pursuant to the Ordinance, now or hereafter held by the
Trustee under the Ordinance and in the right of the Company to receive any such
moneys or instruments.
(b) The Bank agrees to hold the proceeds of any lien or security
interest referred to in clause (a) or to take or receive any collateral (other
than the Pledged Bonds) as security for the Company's obligations under this
Agreement, in each case in trust for the equal and pro rata benefit of itself,
on the one hand, and the holders of the Bonds, on the other hand. No holder of
any Bond nor the Trustee may exercise any rights under the trust established
pursuant to this clause (b) unless and until the Trustee has drawn under the
Letter of Credit pursuant to the Ordinance, and then only to the extent that a
strictly conforming draft has not been honored by the Bank. Any right
established hereunder for the benefit of any holder of any Bond shall: (i) be
released, without any consent, waiver, notice or other action by such party, in
the amount and to the extent of the satisfaction of the obligations due the
holders of any Bond or to the extent of any payment to the Trustee pursuant to a
Drawing under the Letter of Credit and (ii) terminate if (A) such termination
would not lead to the Bank being released, prevented or restrained from or
delayed in fulfilling its obligations under the Letter of Credit or (B) the
absence of the agreement contained in this clause (b) would not result in the
lowering or suspension by S&P or Xxxxx'x of its rating of the Bonds.
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SECTION 27. Limited Liability of the Bank. The Company assumes all
risks of the acts or omissions of the Trustee and any transferee of the Letter
of Credit with respect to its use of the Letter of Credit. Neither the Bank nor
any of its officers or directors shall be liable or responsible for (a) the use
which may be made of the Letter of Credit or for any acts or omissions of the
Trustee and any beneficiary or transferee in connection therewith; (b) the
validity, or genuineness of documents, or of any endorsement(s) thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged; or (c) any other circumstances whatsoever in making or
failing to make payment under the Letter of Credit, except only that the Company
shall have a claim against the Bank, and the Bank shall be liable to the
Company, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which the Company proves were
caused by (i) the Bank's willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit comply with the terms
thereof or (ii) the Bank's willful failure to pay under the Letter of Credit
after the presentation to it by the Trustee (or a successor under the Ordinance
to whom the Letter of Credit has been transferred in accordance with its terms)
of a draft and certificate strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of the foregoing, the
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECITON 28. Costs, Expenses and Taxes.
(a) The Company agrees to pay on demand all out-of-pocket expenses of
the Bank, including reasonable fees and disbursements of counsel (including
allocated costs of in-house counsel and all disbursements of in-house counsel),
in connection with (i) the preparation of this Agreement and the Letter of
Credit and otherwise in connection with the issuance of the Bonds and the
preparation, authorization, execution and delivery of the Related Documents,
(ii) any amendments, modifications, extensions, supplements, consents or waivers
hereto or thereto, and (iii) the administration or enforcement of this
Agreement, the Bonds and the Related Documents and any other documents which may
be delivered in connection herewith or therewith.
(b) All payments by the Company of principal of, and interest on, the
Advances and all other amounts payable hereunder shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any United States taxing authority, but
excluding franchise taxes, agency profit taxes and taxes imposed on or measured
by the Bank's net income or receipts (for which excluded items the Company has
no liability) (such non-excluded items being called "Taxes"). In the event that
any withholding or deduction from any payment to be made by the Company
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Company will
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(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authority; and
(iii) pay to the Bank such additional amount or amounts as is
necessary to ensure that the net amount actually received by the Bank
will equal the full amount such Bank would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Bank with respect to
any payment received by the Bank hereunder, the Bank may pay such Taxes and the
Company will promptly pay such additional amounts (including any penalties,
interest or expenses other than penalties, interest or expenses to the extent
they arise from acts or omissions of the Bank) as is necessary in order that the
net amount received by such person after the payment of such Taxes (including
any taxes on such additional amount) shall equal the amount such person would
have received had no such Taxes been asserted.
(c) If the Company fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Bank the required receipts or other
required documentary evidence, the Company shall indemnify the Bank for any
incremental Taxes, interest or penalties that may become payable by the Bank as
a result of any such failure.
SECTION 29. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 30. Assignments and Participations.d Participations
(a) This Agreement shall be binding upon the Company and its successors
and assigns and inure to the benefit of and be enforceable by the Bank and its
successors, transferees and assigns; provided, however, that the Company may not
assign all or any part of its rights or obligations under this Agreement without
the prior written consent of the Bank.
-37-
(b) The Bank may with the prior written consent of the Company (which
consent may not be unreasonably withheld) assign to one or more financial
institutions all, or a proportional part of all (in a minimum amount of not less
than $5,000,000), of its rights and obligations under this Agreement, and such
assignee shall assume such rights and obligations. Upon any such assignment the
assignee shall become a party to this Agreement, shall be a "Bank" hereunder and
shall be entitled to all of the rights and benefits hereunder (including,
without limitation, the rights set forth in Sections 10, 22, 23 and 28).
(c) The Bank may at any time sell or grant participations to any
Participant in all or any part of, or any interest (undivided or divided) in,
the Bank's rights and benefits under this Agreement, in which event the
Participant shall not have any rights hereunder (the Participant's rights
against the Bank to be as set forth in the agreement executed by the Bank in
favor of the Participant), and all amounts payable by the Company hereunder
shall be determined as if the Bank had not sold or granted any participation.
SECTION 31. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
SECTION 32. Waiver of Jury Trial. THE COMPANY AND THE BANK HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE COMPANY OR THE BANK. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK'S ENTERING INTO THIS AGREEMENT
AND EACH SUCH RELATED DOCUMENT TO WHICH IT IS A PARTY.
SECTION 33. Headings and Table of Contents. Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
SECTION 34. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
-38-
SECTION 35. Notification Relating to First Mortgage Bonds. (a) Upon the
permanent reduction of the Principal Component (as defined in Letter of Credit)
of the Letter of Credit by any amount, and subject to the payment in full of all
of the Company's obligations under Section 4(a), Section 6, Section 7, Section 8
and Section 10 with respect to the amount of such reduction, the Bank will
notify the Trustee
(i) on any date on which the Company issues a new series of
First Mortgage Bonds or the Bonds are remarketed, that (A) such
obligations have been paid in full with respect to an aggregate
principal amount of 1997 First Mortgage Bonds equal to the lesser of
(1) the amount of such reduction, and (2) the aggregate principal
amount of such new series of First Mortgage Bonds or the aggregate
principal amount of the Bonds so remarketed, and (B) any waiting period
to which the Bank is entitled relating thereto has been waived;
(ii) on the 120th day after the later of (A) such reduction of
the Principal Component (as so defined) of the Letter of Credit or (B)
such payment in full, that such obligations have been paid in full with
respect to an aggregate principal amount of 1997 First Mortgage Bonds
equal to the amount of such reduction, to the extent not already
referred to in the notice delivered pursuant to clause (a)(i).
(b) Upon the Termination Date (as defined in Letter of Credit), and
subject to the payment in full of all of the Company's obligations under Section
4(a), Section 6, Section 7, Section 8 and Section 10, the Bank will notify the
Trustee
(i) on any date on which the Company issues a new series of
First Mortgage Bonds or the Bonds are remarketed, that (A) such
obligations have been paid in full with respect to an aggregate
principal amount of 1997 First Mortgage Bonds equal to the aggregate
principal amount of the 1997 First Mortgage Bonds or the aggregate
principal amount of the Bonds so remarketed, the (B) any waiting period
to which the Bank is entitled relating thereto has been waived;
(ii) on the 120th day after the later of (A) the Termination
Date, or (B) such payment in full, that such obligations have been paid
in full with respect to an aggregate principal amount of 1997 First
Mortgage Bonds equal to the amount of the 1997 First Mortgage Bonds not
already referred to in the notices pursuant to clause (a)(i) or clause
(b)(i).
-39-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By ___________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By ___________________________
Name:
Title:
-40-
EXHIBIT A
(to the Reimbursement
Agreement)
IRREVOCABLE LETTER OF CREDIT
NO. 3003595
February 21, 1997
First Security Bank of New Mexico, N.A.,
as Trustee
00 Xxxxx Xxxxx, X.X.
0xx Xxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Trust Services
Ladies and Gentlemen:
1. Bank of America National Trust and Savings Association (the "Bank")
hereby establishes, at the request and for the account of Public Service Company
of New Mexico (the "Company"), in the favor of First Security Bank of New
Mexico, N.A., as trustee (the "Trustee") for the benefit of the Bondholders
under Ordinance No. 97-1052 adopted January 28, 1997 (as supplemented by
Resolution No. 97-870, adopted January 28, 1997, and as amended by Ordinance No.
97-1053, adopted February 11, 1997, and as hereafter modified, altered, amended,
supplemented or confirmed by any and all ordinances and resolutions supplemental
thereto or amendatory thereof adopted from time to time pursuant thereto, the
"Ordinance") by the City of Farmington, New Mexico (the "Issuer"), pursuant to
which $40,000,000 principal amount of the Issuer's Pollution Control Revenue
Refunding Bonds, 1997 Series A (Public Service Company of New Mexico San Xxxx
Project) (the "Bonds") are being issued, its Irrevocable Letter of Credit No.
3003595 (the "Letter of Credit"), in the aggregate amount of $42,748,493.15 (as
more fully described below), effective immediately and expiring at the Bank's
close of business on the earliest of:
(a) February 21, 2000, as such date may be extended from time
to time by the Bank's issuance to the Trustee of an amendment hereto in
the form of Exhibit 8 hereto, (as so extended, the "Scheduled
Termination Date"),
(b) the date on which the Bank shall have received written
notice from the Trustee that the principal amount of and interest on
the Bonds have been paid in full,
-1-
(c) the fifth Business Day (as defined herein) following the
date on which the Bank shall have received written notice from the
Trustee of the occurrence of the effective date of the conversion of
all of the Bonds into any Multiannual Mode or into the Flexible Mode
with a Flexible Rate Period ending after the Scheduled Termination
Date,
(d) the date on which the Bank honors a Final Draft (as
defined herein) drawn hereunder,
(e) the fifth Business Day following the date the date on
which the Bank shall have received written notice from the Trustee that
an alternate letter of credit or alternate security has been
substituted for this Letter of Credit in accordance with the Ordinance,
or
(f) the date on which this Letter of Credit is surrendered to
the Bank for cancellation,
(such earliest date, the "Termination Date"). Capitalized terms used herein and
not otherwise defined shall have the meanings given thereto in the Reimbursement
Agreement, dated as of February 1, 1997, between the Company and the Bank.
2. The Bank hereby irrevocably authorizes the Trustee to draw on the
Bank in accordance with the terms and conditions, and subject to reductions in
amount and reinstatement, as hereinafter set forth, by the Trustee's drafts, an
aggregate amount not exceeding $42,748,493.15 (Forty Two Million Seven Hundred
Forty Eight Thousand Four Hundred Ninety Three and 15/100 Dollars) (the "Letter
of Credit Amount"),
(a) of which an aggregate amount not exceeding $40,000,000
(Forty Million Dollars) may be drawn upon with respect to payment of
principal or that portion of the Purchase Price of such Bonds
corresponding to principal (the "Principal Component"), and
(b) of which an aggregate amount not exceeding $2,748,493.15
(Two Million Seven Hundred Forty Eight Thousand Four Hundred Ninety
Three and 15/100 Dollars) may be drawn upon with respect to payment of
interest (the "Interest Component").
3. Only the Trustee may make Drawings under this Letter of Credit. Upon
the payment to the Trustee or the Trustee's account of the amount specified in a
draft drawn hereunder, the Bank shall be fully discharged of the Bank's
obligation under this Letter of Credit with respect to such draft, and the Bank
shall not thereafter be obligated to make any further payments under this Letter
of Credit in respect of such draft to the Trustee or to any other person who may
have made to the Trustee or who makes to the Trustee a demand for purchase of,
or payment of principal of or interest on any Bond. Bonds which constitute
"Company Bonds" within the meaning of the Ordinance are not entitled to any
benefit of this Letter of Credit.
-2-
4. Upon the honoring by the Bank of any draft drawn (each such drawing
being a "Drawing") on any day under this Letter of Credit in respect of payment
of the principal of, interest on, or Purchase Price for, any Bonds, the Letter
of Credit Amount and the amount available to be drawn hereunder by the Trustee
under any subsequent Drawing in respect of the Principal Component and/or
Interest Component, as the case may be, of such Letter of Credit Amount shall be
automatically reduced by an amount equal to the amount of principal and/or
interest, as the case may be, of such Drawing made on such day.
5. Subject to Sections 6 and 7 hereof, unless the Trustee shall have
received notice from the Bank in writing within ten calendar days from the date
of any Drawing with respect to the Interest Component to the effect that it has
not been reimbursed in respect of such Drawing, the Letter of Credit Amount and
the amount available to be drawn hereunder by the Trustee in any subsequent
Drawing in respect of such Interest Component shall be automatically reinstated
effective on the eleventh calendar day from the date of such Drawing.
6. If the Trustee shall make a Drawing hereunder in respect of the
Purchase Price of any Bonds in the form of Exhibit 3 hereto (other than pursuant
to a Final Draft), and the Bank shall have been reimbursed in full in respect of
that portion of the Purchase Price corresponding to principal or shall have
received written notice from the Trustee of its receipt of funds from the
Remarketing Agent for the account of the Bank sufficient to effect such
reimbursement, the Letter of Credit Amount and the amount available to be drawn
hereunder by the Trustee in any subsequent Drawing in respect of the Principal
Component of such Letter of Credit Amount shall be automatically reinstated in
an amount equal to the amount of such reimbursement. The Bank shall promptly
notify the Trustee upon such reimbursement.
7. The Letter of Credit Amount, and the amount available to be drawn
hereunder by the Trustee in respect of the Principal Component and/or Interest
Component, as the case may be, of such Letter of Credit Amount shall be
permanently reduced upon the Bank's receipt of the Trustee's written and
completed certificate in the form of Exhibit 6 hereto as set forth in such
certificate. Upon the honoring by the Bank of a Final Draft in the form of
Exhibit 5 hereto on any day under this Letter of Credit, neither the Letter of
Credit Amount nor the amount available to be drawn hereunder by the Trustee in
respect of the Principal Component or the Interest Component shall be reinstated
and the Letter of Credit shall expire in accordance with the terms of Section
1(d) hereof.
8. Funds under this Letter of Credit are available to the Trustee in
one or more Drawings against the Trustee's draft(s) payable, subject to Section
9 below, on the date of such draft(s) (other than a Final Draft) and drawn on
the Bank, stating on its face: "Drawn under Bank of America National Trust and
Savings Association, Irrevocable Letter of Credit Xx. 0000000" xxx,
-0-
(x) if the Drawing is being made with respect to payment of
principal of the Bonds, accompanied by a certificate signed by the Trustee in
the form of Exhibit 1 hereto appropriately completed,
(b) if the Drawing is being made with respect to payment of
interest accrued on the Bonds, accompanied by a certificate signed by
the Trustee in the form of Exhibit 2 hereto appropriately completed,
(c) if the Drawing is a Drawing being made with respect to the
portion of the purchase price of Bonds corresponding to principal of
the Bonds, accompanied by a certificate signed by the Trustee in the
form of Exhibit 3 attached hereto appropriately completed, and
(d) if the Drawing is a Drawing being made with respect to the
portion of the purchase price of Bonds corresponding to interest
accrued on the Bonds, accompanied by a certificate signed by the
Trustee in the form of Exhibit 4 hereto appropriately completed.
If the Drawing is a final Drawing being made hereunder with respect to the
payment of principal or interest on any Bonds, funds under this Letter of Credit
are available to the Trustee in a single Drawing against the Trustee's draft
(the "Final Draft") payable, subject to Section 9 below, on the date of such
draft and drawn on the Bank, stating on its face: "Drawn under Bank of America
National Trust and Savings Association, Irrevocable Letter of Credit No.
3003595" and accompanied by a certificate signed by the Trustee in the form of
Exhibit 5 hereto appropriately completed.
9. All draft(s) and certificate(s) hereunder shall be dated the date of
presentation, which shall be made at the Bank's office located at 000 Xxxxx
Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 Attention: Standby Letter of
Credit Department, or at any other office which may be designated by the Bank by
written notice delivered to the Trustee (the Bank's "Office"). At the Trustee's
option, demands for payment with respect to Drawings may be made by the Trustee
under this Letter of Credit in the following manner:
(a) If the Bank receives actual delivery of the Trustee's
original signed draft(s) and certificate(s) at the Bank's Office, all
in strict conformity with the terms and conditions of this Letter of
Credit, at or prior to 12:00 Noon (New York time) on a Business Day on
or prior to the Termination Date, the Bank will honor the same not
later than 3:00 p.m. (New York time) on the same Business Day in
accordance with the Trustee's payment instructions. If the Bank
receives the Trustee's draft(s) and certificate(s), all in strict
conformity with the terms and conditions of this Letter of Credit,
after 12:00 Noon (New York time) on a Business Day on or prior to the
Termination Date, the Bank shall honor the same not later than 12:00
Noon (New York time) on the next succeeding Business Day or such later
Business Day as the Trustee may specify in its demand.
-4-
(b) If the Trustee, by means of a telecopy of the draft(s) and
certificate(s) in the appropriate form attached hereto and
appropriately completed (to be followed promptly by delivery of an
original signed copy), makes demand to the Bank's Office at or prior to
12:00 Noon (New York time) for payment hereunder, and provided such
draft(s) and certificate(s) strictly conform to the terms and
conditions hereof, the Bank shall honor the same not later than 3:00
p.m. (New York time) on the same Business Day as the Trustee may
specify in its demand. If the Bank receives such telecopy of the
draft(s) and certificate(s), all in strict conformity with the terms
and conditions of this Letter of Credit, after the respective times set
forth in this clause (b) on a Business Day on or prior to the
Termination Date, the Bank shall honor the same not later than 12:00
Noon (New York time) on the next succeeding Business Day or such later
Business Day as the Trustee may specify in its demand.
10. In addition to the requirements of Sections 9(a) and 9(b) hereof,
the Trustee agrees to use its best efforts to give telephone notice with respect
to each such demand for any Drawing no later than the time specified for the
delivery of the relevant notice, but any failure to give or any delay in giving
such telephone notice shall not affect the validity of any demand for a Drawing.
All telephone notices shall be made to the Bank's Standby Letter of Credit
Department at (000) 000-0000, and all telecopier communications shall be made to
the Bank at (000) 000-0000 (or any other telephone or telecopier number which
may be designated by the Bank by written notice delivered to the Trustee).
11. At the request of the Trustee, payment under this Letter of Credit
may be made in immediately available funds by federal funds wire transfer to or
by deposit into such account as the Trustee may specify to the Bank in writing
for credit to the Paying Agent, the Trustee, or the securities depository with
respect to the Bonds.
12. As used herein, "Business Day" means a day of the year on which
banks located in all of the cities in which the principal offices of the
Trustee, the Paying Agent, the Remarketing Agent, and the Bank are located are
not authorized or required to remain closed and on which The New York Stock
Exchange is not closed.
13. This Letter of Credit is transferable in its entirety (but not in
part) to any transferee who has succeeded the Trustee as trustee under the
Ordinance and may be successively so transferred. Transfer of the available
balance under this Letter of Credit to such transferee shall be effective by the
presentation to the Bank of this Letter of Credit accompanied by a certificate
substantially in form of Exhibit 7 hereto.
14. All payments made by the Bank hereunder shall be made from the
Bank's own funds.
-5-
15. This Letter of Credit sets forth in full the Bank's undertaking,
and such undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds, the Ordinance and the Reimbursement
Agreement), except only the certificates and the drafts referred to herein; and
any such reference shall not be deemed to incorporate herein by reference any
document, instrument or agreement except for such certificates and such drafts.
16. If the Termination Date occurs on a date on which the Bank is
closed for reasons referred to in Article 17 of the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500, then the Termination Date shall be extended to the Bank's
close of business on the second Business Day on which the Bank is open following
written notice to the Trustee from the Bank that the Bank has reopened.
17. This Letter of Credit shall be governed by, and construed in
accordance with, the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce, Publication No. 500 and, to the
extent not inconsistent therewith, the laws of the State of New York, including,
without limitation, the Uniform Commercial Code as in effect in the State of New
York.
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
-6-
EXHIBIT 1
to the Letter
of Credit
CERTIFICATE FOR THE PAYMENT OF PRINCIPAL
OF
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of ________________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The Bonds are entitled to the benefit of the Letter of
Credit, and do not constitute Company Bonds.
(3) The Trustee is making a Drawing under the Letter of
Credit with respect to the payment of principal of the Bonds in
accordance with Section 5.01(a) of the Ordinance.
(4) The amount of principal of the Bonds which is due and
payable (or which has been declared to be due and payable) is
$_________________, and the amount of the draft accompanying this
Certificate does not exceed such amount of principal.
(5) The amount of the draft accompanying this Certificate
does not exceed the amount available to be drawn under the Letter of
Credit in respect of payment of principal of the Bonds and was
computed in accordance with the terms and conditions of the Bonds,
the Ordinance and the Letter of Credit.
(6) Payment is to be made in immediately available funds by
[federal funds wire transfer to/deposit into] account number
________________ with _________________ for credit to [the Paying
Agent/the Trustee].
(7) The draft accompanying this Certificate is not the Final
Draft.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
-2-
EXHIBIT 2
to the Letter
of Credit
CERTIFICATE FOR THE PAYMENT OF INTEREST ACCRUED
ON
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of ________________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The Bonds are in the [Flexible Mode with a Rate Period
ending on or prior to the Scheduled Termination Date] [Weekly Mode]
[Daily Mode], are entitled to the benefit of the Letter of Credit, and
do not constitute Company Bonds.
(3) The Trustee is making a Drawing under the Letter of Credit
with respect to the payment of interest accrued on the Bonds in
accordance with Section 5.01(a) of the Ordinance.
(4) The aggregate amount of interest accrued on the Bonds
which is due and payable (or which has been declared to be due and
payable) is $____________, and the amount of the draft accompanying
this Certificate does not exceed such amount of interest.
(5) Pursuant to Section 2(b) of the Letter of Credit, the
aggregate amount drawn under the Letter of Credit in respect of payment
of interest accrued on the Bonds [cannot exceed $[____________] (an
amount equal to accrued and unpaid interest on such Bonds for the
immediately preceding 209 days at an assumed interest rate of 12% per
annum (computed on the basis of a year of 365 days))]/ [cannot exceed
$[__________] (an amount equal to accrued and unpaid interest on such
Bonds for the immediately preceding 60 days at an assumed interest rate
of 12% per annum (computed on the basis of a year of 365 days))]//, and
the amount of the draft accompanying this Certificate does not exceed
such amount of interest.
----------
//This bracketed text to be used when the draw is with respect to Bonds that are
in the Flexible Mode.
(6) The amount of the draft accompanying this Certificate does
not exceed the amount available to be drawn under the Letter of Credit
in respect of payment of interest accrued on the Bonds.
(7) The amount of the draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Bonds, the
Ordinance and the Letter of Credit, and does not include any amount of
interest which is included in any other draft presented on or prior to
the date of this Certificate.
(8) Payment is to be made in immediately available funds by
[federal funds wire transfer to/deposit into] account number
________________ with _________________ for credit to [the Paying
Agent/the Trustee].
(9) The Draft accompanying this Certificate is not the Final
Draft.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
----------
// This bracketed text to be used when the draw is with respect to Bonds that
are in the Weekly or Daily Mode.
-2-
EXHIBIT 3
to the Letter
of Credit
CERTIFICATE FOR THE PAYMENT OF THAT PORTION OF
THE PURCHASE PRICE OF BONDS
CORRESPONDING TO PRINCIPAL OF
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of _______________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The Bonds are in the [Flexible Mode with a Rate Period
ending on or prior to the Scheduled Termination Date] [Weekly Mode]
[Daily Mode], are entitled to the benefit of the Letter of Credit, and
do not constitute Company Bonds.
(3) The Trustee is making a Drawing under the Letter of Credit
with respect to the Purchase Price of Bonds corresponding to principal
of Bonds required to be delivered to the Trustee pursuant to Section
5.01(b) of the Ordinance and not remarketed on the date such Bonds are
to be purchased.
(4) The amount of Purchase Price corresponding to such
principal of such unremarketed Bonds is $__________ and the amount of
the draft accompanying this Certificate does not exceed such amount of
principal.
(5) The amount of the draft accompanying this Certificate does
not exceed the amount available to be drawn under the Letter of Credit
in respect of the portion of the Purchase Price corresponding to
principal of such unremarketed Bonds and was computed in accordance
with the terms and conditions of the Bonds and the Ordinance.
(6) Payment is to be made in immediately available funds by
[federal funds wire transfer to/deposit into] account number
________________ with _________________ for credit to [the Paying
Agent/the Trustee].
(7) The draft accompanying this Certificate is not the Final
Draft.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
-2-
EXHIBIT 4
to the Letter
of Credit
CERTIFICATE FOR THE PAYMENT OF THAT PORTION OF THE
PURCHASE PRICE OF BONDS CORRESPONDING TO ACCRUED
INTEREST ON
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of _______________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The Bonds are in the [Flexible Mode with a Rate Period
ending on or prior to the Scheduled Termination Date] [Weekly Mode]
[Daily Mode], are entitled to the benefit of the Letter of Credit, and
do not constitute Company Bonds.
(3) The Trustee is making a Drawing under the Letter of Credit
with respect to the portion of the Purchase Price of Bonds
corresponding to interest accrued on the Bonds required to be delivered
to the Trustee pursuant to Section 5.01(b) of the Ordinance and not
remarketed on the date such Bonds are to be purchased.
(4) The portion of the Purchase Price of Bonds corresponding
to interest accrued on such unremarketed Bonds is $_________ and the
amount of the draft accompanying this Certificate does not exceed such
amount of accrued interest.
(5) Pursuant to Section 2(b) of the Letter of Credit, the
aggregate amount drawn under the Letter of Credit in respect of the
portion of the Purchase Price corresponding to interest accrued on such
unremarketed Bonds [cannot exceed $[____________] (an amount equal to
accrued and unpaid interest on such Bonds for the immediately preceding
209 days at an assumed interest rate of 12% per annum (computed on the
basis of a year of 365 days))]// [cannot exceed $[__________] (an
amount equal to accrued and unpaid interest on such Bonds for the
immediately preceding 60 days at an assumed interest rate of 12% per
annum (computed on the basis of a year of 365 days))]//, and the amount
of the draft accompanying this Certificate does not exceed such amount
of interest.
(6) The amount of the draft accompanying this Certificate does
not exceed the amount available to be drawn under the Letter of Credit
in respect of the portion of the Purchase Price corresponding to
interest accrued on such unremarketed Bonds and was computed in
accordance with the terms and conditions of the Bonds and the
Ordinance.
(7) Payment is to be made in immediately available funds by
[federal funds wire transfer to/deposit into] account number
________________ with _________________ for credit to [the Paying
Agent/the Trustee].
(8) The draft accompanying this Certificate is not the Final
Draft.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
----------
// This bracketed text to be used when the draw is with respect to Bonds that
are in the Flexible Mode.
// This bracketed text to be used when the draw is with respect to Bonds that
are in the Weekly or Daily Mode.
EXHIBIT 5
to the Letter
of Credit
CERTIFICATE FOR THE PAYMENT OF FINAL DRAFT
RELATING TO
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of _______________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The Bonds are in the [Flexible Mode] [Weekly Mode] [Daily
Mode], are entitled to the benefit of the Letter of Credit, and do not
constitute Company Bonds.
(3) The Trustee is making a Drawing under the Letter of Credit
in the aggregate amount of $________ with respect to
(a) the payment of principal of the Bonds in
accordance with Section [5.01(a)] [5.01(b)] of the Ordinance;
and
(b) the payment of interest accrued on the Bonds in
accordance with Section [5.01(a)] [5.01(b)] of the Ordinance.
(4) The aggregate amount which is due and payable with respect
to the Bonds (or which has been declared to be due and payable) is
$________, corresponding to
(a) principal of the Bonds in the aggregate amount
of $________, and
(b) interest on the Bonds in the aggregate amount
of $________.
(5) The amount of the draft accompanying this Certificate does
not exceed the amount available to be drawn under the Letter of Credit
in respect of payment of principal of, and interest on, the Bonds, and
was computed in accordance with the terms and conditions of the Bonds
and the Ordinance.
(6) Payment is to be made in immediately available funds by
[federal funds wire transfer to/deposit into] account number
________________ with _________________ for credit to [the Paying
Agent/the Trustee].
(7) The draft accompanying this Certificate has been presented
to the Bank following the [the occurrence of an Event of Default under
the Ordinance] [a mandatory redemption of the Bonds made pursuant to
notice from the Bank to the Trustee pursuant to clause (2)(ii) of
Section 17 of the Reimbursement Agreement, substantially in the form of
Exhibit 9 to the Letter of Credit].
(8) The draft accompanying this Certificate is the Final Draft.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
-2-
EXHIBIT 6
to the Letter
of Credit
CERTIFICATE FOR THE PERMANENT
REDUCTION OF LETTER OF CREDIT AMOUNT
OF LETTER OF CREDIT NO. 3003595
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of ______________, as
trustee (the "Trustee"), hereby certifies to Bank of America National Trust and
Savings Association (the "Bank"), with reference to Irrevocable Letter of Credit
No. 3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Ordinance for the
holders of the Bonds.
(2) The aggregate principal amount of the Outstanding Bonds
has been reduced by $_____________ to $________________.
(3) The Principal Component is hereby correspondingly reduced
by $_______________ to $____________.
(4) The Interest Component is hereby reduced, as applicable:
(a) by $______________ to $_________// to reflect the
maximum amount of interest due on each Interest Payment Date
with respect to Bonds in the Flexible Mode allocable to the
reduced amount of principal set forth in Section (3) hereof;
and
----------
// Equal to the principal amount in paragraph (2) times 12% times 209/365.
(b) by $______________ to $_________// to reflect the
maximum amount of interest due on each Interest Payment Date
with respect to Bonds in the Daily or Weekly Mode allocable to
the reduced amount of principal set forth in Section (3)
hereof.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
----------
// Equal to the principal amount in paragraph (2) times 12% times 60/365.
-2-
EXHIBIT 7
to the Letter
of Credit
INSTRUCTION TO TRANSFER
LETTER OF CREDIT NO. 3003595
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of _______________, as
trustee (the "Trustee"), hereby irrevocably instructs Bank of America National
Trust and Savings Association (the "Bank"), with reference to Irrevocable Letter
of Credit No. 3003595 (the "Letter of Credit"; any capitalized term used herein
and not defined shall have its respective meaning as set forth in the Letter of
Credit) issued by the Bank in favor of the Trustee, to transfer all rights of
the Trustee to draw under the Letter of Credit to
-------------------------------------------------------
(Name of Transferee)
-------------------------------------------------------
(Address)
The transferee has succeeded the undersigned as Trustee under Ordinance
No. 97-1052, adopted January 28, 1997 by the City of Farmington, New Mexico
relating to the Pollution Control Revenue Refunding Bonds, 1997 Series A (Public
Service Company of New Mexico San Xxxx Project).
The Letter of Credit is attached hereto and is being surrendered to the
Bank herewith.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of
---------------, ----.
---------------------------,
as Trustee
By:_________________________
Name:
Title:
EXHIBIT 8
to the Letter
of Credit
NOTICE OF AMENDMENT
OF LETTER OF CREDIT NO. 3003595
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of Bank of America National
Trust and Savings Association (the "Bank"), hereby certifies to
_________________, as trustee (the "Trustee"), with reference to Irrevocable
Letter of Credit No. 3003595 (the "Letter of Credit"; any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit) issued by the Bank in favor of the Trustee, that the Scheduled
Termination Date of the Letter of Credit has been extended to __________ __,
____.
This amendment is to be attached to the Letter of Credit and is made an
integral part thereof immediately upon the execution and delivery hereof.
IN WITNESS WHEREOF, the Bank has executed and delivered this Certificate as of
_______________, ____.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:_________________________
Name:
Title:
EXHIBIT 9
to the Letter
of Credit
NOTICE OF MANDATORY REDEMPTION
RELATING TO
LETTER OF CREDIT NO. 3003595
POLLUTION CONTROL REVENUE
REFUNDING BONDS, 1997 SERIES A
(PUBLIC SERVICE COMPANY OF NEW MEXICO SAN XXXX PROJECT)
The undersigned, a duly authorized officer of Bank of America National
Trust and Savings Association (the "Bank"), hereby notifies _________________,
as trustee (the "Trustee"), with reference to Irrevocable Letter of Credit No.
3003595 (the "Letter of Credit"; any capitalized term used herein and not
defined shall have its respective meaning as set forth in the Letter of Credit)
issued by the Bank in favor of the Trustee, that an Event of Default (as defined
in the Reimbursement Agreement) has occurred. Accordingly, pursuant to clause
(2)(ii) of Section 17 of the Reimbursement Agreement, the Bank notifies the
Trustee pursuant to Section 3.01(c) of the Ordinance of a mandatory redemption
of the Bonds.
IN WITNESS WHEREOF, the Bank has executed and delivered this Certificate as of
_______________, ____.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:_________________________
Name:
Title:
EXHIBIT B
(to the Reimbursement
Agreement)
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended or modified from time to time, this
"Pledge Agreement"), dated as of February 1, 1997, made by PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation (the "Company"), as pledgor, in
favor of FIRST SECURITY BANK OF NEW MEXICO, N.A., as collateral agent (together
with any successor(s) thereto in such capacity, the "Collateral Agent") for BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"), as pledgee,
W I T N E S S E T H:
WHEREAS, the City of Farmington, New Mexico (the "Issuer"), has agreed
with the Company to issue its Pollution Control Revenue Refunding Bonds, 1997
Series A (Public Service Company of New Mexico San Xxxx Project) (the "Bonds")
under that certain Ordinance No. 97-1052 adopted January 28, 1997 (as
supplemented by Resolution No. 97-870, adopted January 28, 1997, and as amended
by Ordinance No. 97-1053, adopted February 11, 1997, and as hereafter modified,
altered, amended, supplemented or confirmed by any and all ordinances
supplemental thereto or amendatory thereof adopted from time to time pursuant
thereto, the "Ordinance");
WHEREAS, First Security Bank of New Mexico, N.A., a national banking
association, has been appointed as trustee under the Ordinance (in such
capacity, together with its duly appointed successors, the "Trustee");
WHEREAS, the Company and the Bank have entered into that certain
Reimbursement Agreement dated as of February 1, 1997 (as amended or modified
from time to time, the "Reimbursement Agreement"), pursuant to which the Bank
has agreed to issue the Letter of Credit to the Trustee for the account of the
Company in order to support certain payments with respect to the Bonds; and
WHEREAS, it is a condition precedent under the Reimbursement Agreement
to the obligation of the Bank to issue the Letter of Credit that the Company
shall have executed and delivered this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and in order to induce the Bank to
issue the Letter of Credit, the Company agrees, for the benefit of the Bank, as
follows:
-1-
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Bank" is defined in the preamble.
"Bonds" is defined in the first recital.
"Collateral Agent" defined in the preamble.
"Company" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Issuer" defined in the first recital.
"Ordinance" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Bond" means each "Company Bond" as defined in the Ordinance.
"Pledged Property" means all Pledged Bonds, and all other pledged
bonds, all other securities, all assignments of any amounts due or to become
due, all other instruments which are now being delivered by the Company to the
Bank for the purpose of pledge under this Pledge Agreement or the Ordinance, and
all proceeds of any of the foregoing.
"Reimbursement Agreement" is defined in the third recital.
"Secured Obligations" is defined in Section 2.2.
"Trustee" is defined in the second recital.
"U.C.C." means the Uniform Commercial Code as in effect in State of New
York.
SECTION 1.2. Reimbursement Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Pledge
Agreement, including its preamble and recitals, have the meanings provided in
the Reimbursement Agreement.
-2-
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Pledge Agreement, including its preamble and recitals,
with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Company hereby pledges,
hypothecates, assigns, charges, mortgages, delivers and transfers to the
Collateral Agent, for the benefit of the Bank, and hereby grants to the
Collateral Agent, for the benefit of the Bank, a continuing security interest
in, all of the following property (the "Collateral"):
(a) each Pledged Bond from time to time outstanding under the
Ordinance;
(b) all other Pledged Property, whether now or hereafter
delivered to the Bank in connection with this Pledge Agreement, subject
to clause (b) of Section 26 of the Reimbursement Agreement;
(c) all interest and other payments and rights with respect to
any Pledged Property; and
(d) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures
the payment in full of all obligations of the Company to the Bank now or
hereafter existing under the Reimbursement Agreement and each Related Document
to which the Company is or may become a party, whether for principal, interest,
costs, fees, expenses or otherwise (all such obligations of the Company being
the "Secured Obligations"). The Company hereby consents to the Collateral Agent
acting as the agent of the Bank for the purpose of perfecting the security
interest of this Pledge Agreement and of holding the Collateral for the benefit
of the Bank pursuant to this Pledge Agreement.
SECTION 2.3. Continuing Security Interest. This Pledge Agreement
shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until payment in full of
all Secured Obligations,
(b) be binding upon the Company and its successors,
transferees and assigns, and
-3-
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Bank and its
successors, transferees and assigns.
SECTION 2.4. Payments on the Bonds. If, while this Pledge Agreement is
in effect, the Company shall become entitled to receive or shall receive any
interest or other payment in respect of the Pledged Bonds or any other Pledged
Property, the Company agrees to accept the same as the Bank's agent and to hold
the same in trust on behalf of the Bank and to deliver the same forthwith to the
Bank. The Company instructs and authorizes the Collateral Agent to hold and
receive on the Bank's behalf and to deliver forthwith to the Bank any payment
received by it in respect of the Pledged Bonds (including the proceeds of any
remarketing of the Pledged Bonds) or any other Pledged Property. All such
payments in respect of the Pledged Bonds or other Pledged Property which are
paid to the Bank shall be credited against the Secured Obligations as the Bank
may determine.
SECTION 2.5. Termination of Pledge Agreement. Upon the indefeasible
payment in full of all Secured Obligations, the security interest granted herein
shall terminate and all rights to the Collateral shall revert to the Company.
Upon any termination hereunder, the Collateral Agent will, at the Company's sole
expense, deliver to the Trustee, without representation, warranty or recourse of
any kind whatsoever, all instruments evidencing the Pledged Bonds, together with
all other Collateral held by the Collateral Agent hereunder, and execute and
deliver to the Company and any clearing corporation or financial intermediary
described in clause (b) of Section 2.6 such documents as the Company shall
reasonably request to evidence such termination.
SECTION 2.6. Delivery of Collateral to the Bank; Registration of Pledge.
(a) If an Event of Default has occurred and is continuing,
upon notice by the Bank to the Collateral Agent (which notice shall
direct the Collateral Agent to take the action referred to in this
clause (a)), the Collateral Agent shall deliver all certificates or
instruments (if any) representing or evidencing any Pledged Bonds or
other Collateral in its possession to the Bank, and the Bank may,
without notice, exercise all rights, privileges or options pertaining
to any such Pledged Bonds or other Collateral as if it were absolute
owner of such Pledged Bonds or other Collateral, upon such terms and
conditions as it may determine, all without liability except to account
for property actually received by it, but the Bank shall have no duty
to exercise any of those rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
-4-
(b) Promptly upon any Bonds becoming Pledged Bonds, the
Company shall cause the Collateral Agent to receive (i) evidence that
entries have been made on the books of a clearing corporation (as
defined in Section 8-102 of the U.C.C.) to effect the "delivery" of the
Pledged Bonds to the Collateral Agent and the pledge of the Pledged
Bonds to the Collateral Agent, for the benefit of the Bank, as provided
in, and in accordance with, Section 8-320 of the U.C.C., or (ii)
evidence that a financial intermediary has identified the Pledged Bonds
as having been pledged to the Collateral Agent and has supplied the
Collateral Agent with confirmation thereof (including, if requested by
the Collateral Agent, the delivery to the Collateral Agent of a notice
from the Company to the financial intermediary substantially in the
form of Attachment I hereto, duly acknowledged by the financial
intermediary), all as provided in, and in accordance with, Section
8-313(1)(d)(i) of the U.C.C. (including the requirement of specificity
required therein), which evidence shall have been delivered to the
Collateral Agent, all in form and substance satisfactory to the
Collateral Agent and the Bank; provided, however, that in any event,
all other necessary and appropriate action and approvals shall have
been taken or received to grant to the Collateral Agent a first
priority fully perfected security interest in the Pledged Bonds.
SECTION 2.7. No Disposition. The Company agrees that it will not sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Collateral, nor will it create, incur or permit to exist any
liens, security interests, options or other charges or encumbrances with respect
to all or any part of the Collateral, except for the security interest of this
Pledge Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Warranties, etc. The Company represents and warrants unto
the Bank, as at the date of each pledge and delivery hereunder by the Company to
the Collateral Agent of any Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Company is or will be the
legal and beneficial owner of, and has good and marketable title to (and has
full right and authority to pledge and assign) such Collateral, free and clear
of all liens, security interests, options, or other charges or encumbrances,
except any lien or security interest granted pursuant hereto in favor of the
Collateral Agent.
-5-
SECTION 3.1.2. Valid Security Interest. The execution and delivery of
this Pledge Agreement, together with the delivery of such Collateral to the
Collateral Agent (or, to the extent any Collateral is in book-entry form, upon
the making of appropriate entries in the relevant books and records of any
clearing corporation or financial intermediary, as the case may be, which
entries in the case of all relevant Collateral, will be made promptly upon any
such property becoming Collateral hereunder), are effective to create a valid,
perfected, first priority security interest in favor of the Collateral Agent for
the benefit of the Bank, in such Collateral and all proceeds thereof, securing
the Secured Obligations. No filing or other action will be necessary to perfect
or protect such security interest.
ARTICLE IV
THE COLLATERAL AGENT
SECTION 4.1. Collateral Agent Appointed Attorney-in-Fact. The Company
hereby irrevocably appoints the Collateral Agent the Company's attorney-in-fact,
with full power of substitution and full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time in the
Bank's discretion, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Pledge Agreement, including without limitation:
(a) after the occurrence and continuance of an Event of
Default, to ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral.
The Company hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 4.2. Collateral Agent May Perform. Either the Collateral Agent
or the Bank may from time to time, at its option, perform any act which the
Company agrees hereunder to perform and which the Company shall fail to perform
after being requested in writing so to perform (it being understood that no such
request need be given after the occurrence and during the continuance of an
Event of Default) and the Collateral Agent or the Bank may from time to time
take any other action which the Collateral Agent or the Bank reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein, and the expenses of the
Collateral Agent and the Bank incurred in connection therewith shall be payable
by the Company pursuant to Section 5.5.
-6-
SECTION 4.3. Collateral Agent Has No Duty. The powers and discretionary
rights conferred on the Collateral Agent hereunder are solely to protect its
interest (on behalf of the Bank) in the Collateral and shall not impose any duty
on it to exercise any such powers. Except for reasonable care of any Collateral
in its actual possession and the accounting for moneys actually received by it
hereunder, the Collateral Agent shall have no duty as to any Collateral or
responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Property, whether or not the Collateral Agent has or is
deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION 4.4. Reasonable Care. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords its own property consisting of
negotiable instruments.
ARTICLE V
REMEDIES
SECTION 5.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Bank may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Bank's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms
as the Bank may deem commercially reasonable. The Company agrees that,
to the extent notice of sale shall be required by law, at least ten
days' prior notice to the Company of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Bank shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. The Bank may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
-7-
(b) The Bank may
(i) transfer all or any part of the Collateral into
the name of the Bank or its nominee, with or without
disclosing that such Collateral is subject to the lien and
security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Bank of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in
the Company's name to allow collection of Collateral,
(v) take control of any proceeds of the Collateral,
and
(vi) execute (in the name, place and stead of the
Company) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION 5.2. Compliance with Restrictions. The Company agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Bank is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral, or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Company further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Bank be liable or accountable to the Company
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.
-8-
SECTION 5.3. Application of Proceeds. All cash proceeds received by the
Bank in respect of any sale of, collection from, or other realization upon, all
or any part of the Collateral may, in the discretion of the Bank, be held by the
Bank as additional collateral security for, or then or at any time thereafter be
applied in whole or in part by the Bank against, all or any part of the Secured
Obligations in such order as the Bank shall elect. Any surplus of such cash or
cash proceeds held by the Bank and remaining after payment in full of all the
Secured Obligations shall be paid over to the Company or to whomsoever may be
lawfully entitled to receive such surplus.
SECTION 5.4. Sale of Collateral.
(a) The Company recognizes that the Bank may resort to one or more
private sales of the Collateral which may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
(b) The Company further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of all or any
part of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, rules, regulations, orders or decrees, all at the Company's
expense. The Company further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Bank for which
the Bank would have no adequate remedy at law in respect of such breach and, as
a consequence, agrees that each and every covenant contained in this Section
shall be specifically enforceable against the Company, and the Company waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Reimbursement Agreement.
SECTION 5.5. Indemnity and Expenses. Neither the Collateral Agent nor
the Bank nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be liable for any action lawfully taken or
omitted to be taken by it or such person under or in connection with this Pledge
Agreement (except for its or such person's own gross negligence or willful
misconduct). The Company hereby indemnifies and holds harmless the Collateral
Agent and the Bank from and against any and all claims, losses and liabilities
arising out of or resulting from this Pledge Agreement (including enforcement of
this Pledge Agreement), except claims, losses or liabilities resulting from the
Collateral Agent's or the Bank's gross negligence or wilful misconduct. Upon
demand, the Company will pay to the Bank or to the Collateral Agent, as the case
may be, the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Bank or the Collateral Agent, as the case may be, may incur in connection with:
-9-
(a) the administration of this Pledge Agreement, the
Reimbursement Agreement and each other Related Document;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Bank or the Collateral Agent hereunder; or
(d) the failure by the Company to perform or observe any of
the provisions hereof.
The Collateral Agent may rely and shall be protected in acting or refraining
from acting upon any written notice, certificate, instruction or request
furnished to it hereunder and believed by it to be genuine and to have been
signed or presented by the proper party. The Collateral Agent may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Related Document. This Pledge Agreement is a Related
Document executed pursuant to the Reimbursement Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 6.2. Waivers, Amendments, etc. No waiver of any provision of
this Pledge Agreement or consent to any departure by the Company herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Collateral Agent and the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it is given. No amendment to any provision of this Pledge Agreement shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
-10-
SECTION 6.3. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopier or
similar writing) and shall be given to such party at its address or telecopier
number set forth below or such other address or telecopier number as such party
may hereafter specify for the purpose by notice to the other parties. Each such
notice, request or other communication shall be effective (a) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
below and receipt of such telecopy is acknowledged by the party to which it was
transmitted, (b) if given by mail, ten days after such communication is
deposited in the mail with first-class postage prepaid, addressed as aforesaid
or (c) if given by any other means, when delivered at the address specified in
this Section.
To the Company:
Public Service Company of New Mexico
Xxxxxxxx Xxxxxx - XX 0000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
To the Bank:
Bank of America National Trust and Savings Association
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
White & Case
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-11-
To the Collateral Agent:
First Security Bank of New Mexico, N.A.
00 Xxxxx Xxxxx, X.X.
0xx Xxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Trust Services
Telephone: 000-000-0000
Telecopier: 000-000-0000
SECTION 6.4. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 6.5. Further Assurances. The Company agrees that at any time
and from time to time upon the written request of the Bank, the Company will
execute and deliver such further documents and do such further acts and things
as the Bank may reasonably request in order to effect the purposes of this
Pledge Agreement.
SECTION 6.6. Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 6.7. Counterparts. This Pledge Agreement may be signed in any
number of counterpart copies, but all such copies shall constitute one and the
same instrument.
SECTION 6.8. Successor Collateral Agent. In the event a successor
trustee shall have been appointed under the Ordinance, the Collateral Agent may
be removed and a successor collateral agent may be appointed by the Bank.
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SECTION 6.9. Governing Law, Entire Agreement, etc. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. THIS PLEDGE AGREEMENT, THE REIMBURSEMENT AGREEMENT
AND THE OTHER RELATED DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By _________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By _________________________________
Name:
Title:
FIRST SECURITY BANK OF NEW MEXICO, N.A.
By _________________________________
Name:
Title:
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ATTACHMENT I
(to Pledge Agreement)
PUBLIC SERVICE COMPANY OF NEW MEXICO
Xxxxxxxx Xxxxxx - XX 0000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
____________ __, 19__
[Name of financial intermediary]
--------------------------------
--------------------------------
Attention: __________________
Ladies and Gentlemen:
Public Service Company of New Mexico (the "Company") is or will be from
time to time the beneficial owner of the book entry form bonds issued by the
City of Farmington, New Mexico and known as the "Pollution Control Revenue
Refunding Bonds, 1997 Series A (Public Service Company of New Mexico San Xxxx
Project) (the "Pledged Bonds") which are currently held in one of your nominee
names pursuant to custodial account arrangements between the Company and you.
Effective as of the date hereof, the Company pledges, assigns and
hypothecates to Bank of America National Trust and Savings Association (the
"Bank") and grants to the Bank a first priority security interest in, the
Pledged Bonds and all proceeds thereof, all pursuant to the Pledge Agreement
dated as of February 1, 1997 (the "Pledge Agreement") made by the Company in
favor of the Bank.
The Company hereby requests and instructs you to xxxx your books and
records to reflect the pledge of the Pledged Bonds and all proceeds thereof to
the Bank and to assure that, unless and until the Bank gives you written notice
to the contrary, the Pledged Bonds and all proceeds thereof will be held by you
subject to the terms and conditions of the Pledge Agreement and that, if such
Pledged Bonds become evidenced by certificates, such certificates will
immediately be turned over to the Bank in pledge.
Very truly yours,
PUBLIC SERVICE COMPANY OF NEW MEXICO
By ____________________________
Name:
Title:
Books and Records So Marked:
[Insert name of
Financial Intermediary]
By__________________________
Name:
Title:
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