EXHIBIT 10.89
Execution Version
RECEIVABLES SALE AGREEMENT
Dated as of April 8, 2003
among
PUBLIC SERVICE COMPANY OF NEW MEXICO
as Originator
and
PNM RECEIVABLES CORP.,
as Buyer
RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of April 8, 2003, is
by and between PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
("Originator"), and PNM Receivables Corp., a Delaware corporation ("Buyer").
Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Article I.
PRELIMINARY STATEMENTS
Originator now owns, and from time to time hereafter will own,
Receivables. Originator wishes to sell and assign to Buyer, and Buyer wishes to
purchase from Originator, all of Originator's right, title and interest in and
to such Receivables, together with the Related Security and Collections with
respect thereto.
Originator and Buyer intend the transactions contemplated
hereby to be true sales of the Receivables from Originator to Buyer, providing
Buyer with the full benefits of ownership of the Receivables, and Originator and
Buyer do not intend these transactions to be, or for any purpose to be
characterized as, loans from Buyer to Originator.
Following the purchase of Receivables from Originator, Buyer
will sell undivided interests therein and in the associated Related Security and
Collections pursuant to that certain Receivables Purchase Agreement dated as of
April 8, 2003 (as the same may from time to time hereafter be amended,
supplemented, restated or otherwise modified, the "Purchase Agreement") among
Buyer, Public Service Company of New Mexico, as Servicer, EagleFunding Capital
Corporation ("EagleFunding") and the other financial institutions from time to
time party to thereto as "Conduit Investors", the financial institutions from
time to time party thereto as "Alternate Investors", Fleet Securities, Inc.
("FSI") and the other financial institutions from time to time party thereto as
"Managing Agents", and FSI or any successor agent appointed pursuant to the
terms of the Purchase Agreement, as Deal Agent (in such capacity, the "Deal
Agent").
ARTICLE I
DEFINITIONS
As used in this Agreement and the Exhibits, Schedules and
Annexes hereto, capitalized terms have the meanings set forth in this Article I
(such meanings to be equally applicable to the singular and plural forms
thereof). If a capitalized term is used in this Agreement, or in any Exhibit,
Schedule or Annex hereto, and not otherwise defined therein or in this Article
I, such term shall have the meaning assigned thereto in Article I to the
Purchase Agreement.
1
"Agreement" means this Receivables Sale Agreement, dated as of
April 8, 2003, among Originator and Buyer, as the same may be amended, restated
or otherwise modified.
"Authorized Officer" means, with respect to any Person, its
chief financial officer, the chief accounting officer, the senior vice
president-finance, the treasurer, or corporate controller, or any other officer
of whose primary duties are similar to the duties of any of the previously
listed officers.
"Business Day" means any day on which banks are not authorized
or required to close in New York, New York or Boston, Massachusetts.
"Buyer" has the meaning set forth in the preamble.
"Calculation Period" means each calendar month or portion
thereof which elapses during the term of this Agreement. The first Calculation
Period shall commence on the date of the initial Purchase of Receivables
hereunder and the final Calculation Period shall terminate on the Termination
Date.
"Change of Control" means PNM Resources Inc.'s failure to own,
directly or indirectly, 100% of the issued and outstanding common stock of
Originator.
"Collections" means, with respect to any Receivable, all cash
collections in respect of such Receivable, including, without limitation, all
yield, Finance Charges or other related amounts accruing in respect thereof and
all cash proceeds of Related Security with respect to such Receivable.
"Credit and Collection Policy" means Originator's credit and
collection policies and practices relating to Contracts and Receivables existing
on the date hereof and summarized in Exhibit III, as modified from time to time
in accordance with this Agreement.
"Deal Agent" has the meaning set forth in the Preliminary
Statements.
"Default Fee" means a per annum rate of interest equal to the
sum of (i) the LIBO Rate, plus (ii) 2.00% per annum.
"Dilutions" means, at any time, the aggregate amount of
reductions or cancellations described in Section 2.3(a).
"Discount Factor" means a percentage calculated to provide
Buyer with a reasonable return on its investment in the Receivables after taking
account of (i) the time value of money based upon the anticipated dates of
collection of the Receivables and the cost to Buyer of financing its investment
in the Receivables during such period and (ii) the risk of nonpayment by the
Obligors. Originator and Buyer may agree from time to time to change the
Discount Factor based on changes in one or more of the items affecting the
calculation thereof, provided that any change to the Discount Factor shall take
effect as of the commencement of a Calculation Period, shall apply only
prospectively and shall not affect the Purchase Price payment in respect of
Purchase which occurred during any Calculation Period ending prior to the
Calculation Period during which Originator and Buyer agree to make such change.
2
"EagleFunding" has the meaning set forth in the Preliminary
Statements.
"Federal Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as amended and any successor statute thereto.
"Intended Characterization" means, for income tax purposes,
the characterization of the acquisition by the Investors of Investor Interests
under the Purchase Agreement as a loan or loans by the Investors to Buyer
secured by the Receivables, the Related Security and the Collections.
"Investor" means a Conduit Investor or an Alternate Investor,
as applicable.
"Material Adverse Effect" means a material adverse effect on
(i) the ability of Originator to perform its obligations under this Agreement or
any other Transaction Document, (ii) the legality, validity or enforceability of
this Agreement or any other Transaction Document, (iii) Originator's, Buyer's,
the Deal Agent's or any Investor's interest in the Receivables generally or in
any significant portion of the Receivables, the Related Security or Collections
with respect thereto, or (v) the collectibility of the Receivables generally or
of any material portion of the Receivables.
"Net Value" means, as of any date of determination, an amount
equal to the sum of (i) the aggregate Outstanding Balance of the Receivables at
such time, minus (ii) the sum of (A) the aggregate Capital outstanding at such
time, plus (B) the Aggregate Reserves.
"Net Worth" means as of the last Business Day of each
Calculation Period preceding any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, over (b)
the sum of (i) the aggregate Capital outstanding at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).
"Original Balance" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was purchased by Buyer.
"Originator" has the meaning set forth in the preamble.
"PNM Resources, Inc." means PNM Resources, Inc. a New Mexico
corporation.
"Potential Termination Event" means an event which, with the
passage of time or the giving of notice, or both, would constitute an
Termination Event.
"Prime Rate" means a per annum rate equal to the higher of (i)
the "prime rate" announced by the Reference Bank from time to time, changing
when and as such rate changes or (ii) the Federal Funds Effective Rate plus
..50%.
"Purchase" means a purchase under this Agreement by Buyer from
Originator of the Receivables, the Related Security and the Collections related
thereto, together with all related rights in connection therewith as described
in Section 2.1.
3
"Purchase Agreement" has the meaning set forth in the
Preliminary Statements.
"Purchase Price" means, with respect to any Purchase from
Originator on any date, the aggregate price to be paid to Originator for such
Purchase in accordance with Section 2.2 for the Receivables, Related Security
and Collections being sold to Buyer on such date, which price shall equal (i)
the product of (x) the Original Balance of such Receivables, multiplied by (y)
one minus the Discount Factor then in effect, minus (ii) any Purchase Price
Credits to be credited against the Purchase Price otherwise payable in
accordance with Section 2.3.
"Purchase Price Credit" has the meaning set forth in Section
2.3.
"Receivable" means the indebtedness and other obligations owed
to Originator (without giving effect to any transfer or conveyance under this
Agreement) or Buyer (after giving effect to the transfers under this Agreement)
or in which Originator has a security interest or other interest, including,
without limitation, any indebtedness, obligation or interest constituting an
account, chattel paper, instrument or general intangible, arising in connection
with the sale of goods, gas or electricity, the transportation of gas or the
rendering of services by Originator and includes, without limitation, the
obligation to pay any Finance Charges with respect thereto, provided, however,
that the term "Receivable" shall not include any Wholesale Receivables.
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Receivable separate
from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction; provided that any indebtedness,
rights or obligations referred to in the immediately preceding sentence shall be
a Receivable regardless of whether the account debtor or Originator treats such
indebtedness, rights or obligations as a separate payment obligation.
"Related Security" means, with respect to any Receivable:
(i) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure
payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together
with all financing statements and security agreements
describing any collateral securing such Receivable,
(ii) all guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time
to time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Receivable
or otherwise,
(iii) all service contracts and other contracts and agreements
associated with such Receivable,
(iv) all Records related to such Receivable,
(v) all of Originator's right, title and interest in, to and
under any contracts or agreements providing for the
servicing of such Receivable, and
4
(vi) all proceeds of any of the foregoing.
"Required Capital Amount" means, as of any date of
determination, an amount equal to the greatest of (a) $2,000,000 and (b) 3% of
the aggregate Outstanding Balance of all Receivables.
"Subordinated Loan" has the meaning set forth in Section
2.2(a).
"Subordinated Note" means a promissory note in substantially
the form of Exhibit IV hereto as more fully described in Section 2.2, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Subsidiary" of a Person means, as to any Person, a
corporation, partnership or other entity of which more than 50% of the
outstanding shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect directors or other
managers of such corporation, partnership or other entity are at the time owned,
directly or indirectly, through one or more Subsidiaries of such Person, by such
Person.
"Termination Date" means the earliest to occur of (i) the
Amortization Date under the Purchase Agreement, (ii) the Business Day
immediately prior to the occurrence of an Termination Event set forth in Section
6.1(d), (iii) the Business Day specified in a written notice from Buyer to
Originator following the occurrence of any other Termination Event, and (iv) the
date which is three (3) Business Days after Buyer's receipt of written notice
from Originator that the Originator wishes to terminate the facility evidenced
by this Agreement.
"Termination Event" has the meaning set forth in Section 6.1.
"Wholesale Receivables" means any indebtedness and other
obligations owed to Originator (without giving effect to any transfer or
conveyance under this Agreement) or Buyer (after giving effect to the transfers
under this Agreement) or in which Originator has a security interest or other
interest, including, without limitation, any indebtedness, obligation or
interest constituting an account, chattel paper, instrument or general
intangible, arising in connection with the sale of goods, gas or electricity,
the transportation of gas or the rendering of services by the Originator to a
customer who is not either (i) a "residential customer" in accordance with the
Credit and Collection Policy or (ii) a "commercial customer." A "commercial
customer" shall include any business to whom goods, gas or electricity is
provided on a metered or measured basis for on-site commercial or industrial
uses.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
Mexico, and not specifically defined herein, are used herein as defined in such
Article 9.
5
ARTICLE II
AMOUNTS AND TERMS
Section 2.1 Purchase of Receivables.
(a) Upon the terms and subject to the conditions hereof, Buyer
hereby agrees to buy, and Originator hereby agrees to sell, all of Originator's
right, title and interest in and to all of its Receivables (each such
transaction, a "Purchase"). On the date of the initial Purchase from Originator,
Buyer shall acquire all of Originator's right, title and interest in and to all
Receivables then outstanding, together with all Related Security relating
thereto and all Collections thereof. On each Business Day thereafter until the
Termination Date with respect to Originator, Buyer shall Purchase all of
Originator's right, title and interest in and to all Receivables which were not
previously Purchased by Buyer hereunder. Prior to making the initial Purchase
hereunder, Buyer may request of Originator, and Originator shall deliver, such
approvals, opinions, information, reports or documents as Buyer may reasonably
request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables made hereunder shall constitute a "sale of accounts" (as
such term is used in Article 9 of the UCC), which sales are absolute and
irrevocable and provide Buyer with the full benefits of ownership of the
Receivables. Except for the Purchase Price Credits owed pursuant to Section 2.3,
each sale of Receivables hereunder is made without recourse to Originator;
provided, however, that (i) Originator shall be liable to Buyer for all
representations, warranties and covenants made by Originator pursuant to the
terms of the Transaction Documents to which Originator is a party, and (ii) such
sale does not constitute and is not intended to result in an assumption by Buyer
or any assignee thereof of any obligation of Originator or any other Person
arising in connection with the Receivables, the related Contracts and/or other
Related Security or any other obligations of Originator. In view of the
intention of the parties hereto that the Purchase of Receivables made hereunder
shall constitute a sale of such Receivables rather than loans secured thereby,
Originator agrees, on or prior to the Initial Cutoff Date and in accordance with
Section 5.1(e)(ii), to ▇▇▇▇ its master data processing records relating to the
Receivables with a legend acceptable to Buyer and to the Deal Agent (as Buyer's
assignee), evidencing that Buyer has purchased such Receivables as provided in
this Agreement and to note in its financial statements that its Receivables have
been sold to Buyer. Upon the request of Buyer or the Deal Agent (as Buyer's
assignee), Originator will execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate to perfect and
maintain the perfection of Buyer's ownership interest in the Receivables and the
Related Security and Collections with respect thereto, or as Buyer or the Deal
Agent (as Buyer's assignee) may reasonably request.
Section 2.2 Payment for the Purchases.
(a) The Purchase Price for each Purchase of Receivables in
existence on the close of business on April 11, 2003 (the "Initial Cutoff Date")
shall be payable in full by Buyer to Originator on April 14, 2003, and shall be
paid to Originator in the following manner:
6
(i) by delivery of immediately available funds, to the extent
of funds made available to Buyer in connection with its subsequent sale of an
interest in such Receivables to the Investors under the Purchase Agreement after
the payment of its operating costs and any amounts payable under the Purchase
Agreement; provided that a portion of such funds shall be offset by any amounts
owed by Originator to Buyer on account of the issuance to the Originator of the
capital stock of the Buyer having a total value of not less than the Required
Capital Amount, and
(ii) the balance, by delivery of the proceeds of an advance in
respect of the subordinated revolving loan from Originator to Buyer (each, a
"Subordinated Loan") in an amount not to exceed the least of (A) the remaining
unpaid portion of such Purchase Price, (B) the maximum Subordinated Loan that
could be borrowed without rendering Buyer's Net Worth less than the Required
Capital Amount and (C) the maximum Subordinated Loan that could be borrowed
without rendering the Net Value less than the aggregate outstanding principal
balance of the Subordinated Loans (including the Subordinated Loan proposed to
be made on such date). Originator is hereby authorized by Buyer to endorse on
the schedule attached to the Subordinated Note an appropriate notation
evidencing the date and amount of each advance thereunder, as well as the date
of each payment with respect thereto, provided that the failure to make such
notation shall not affect any obligation of Buyer thereunder.
The Purchase Price for each Receivable coming into existence after the Initial
Cutoff Date shall be due and owing in full by Buyer to Originator or its
designee on the date each such Receivable came into existence (except that Buyer
may, with respect to any such Purchase Price, offset against such Purchase Price
any amounts owed by Originator to Buyer hereunder and which have become due but
remain unpaid) and shall be paid to Originator in the manner provided in the
following paragraphs (b), (c) and (d).
(b) With respect to any Receivables coming into existence
after the Initial Cutoff Date, on each Settlement Date Buyer shall pay the
Purchase Price therefor in accordance with Section 2.2(d) and in the following
manner:
first, by delivery of immediately available funds, to the
extent of funds available to Buyer from its subsequent sale of an
interest in the Receivables to the Deal Agent for the benefit of the
Investors under the Purchase Agreement or other cash on hand;
second, by delivery of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject
to the provisions set forth in Section 2.2(a)(ii); and
third, unless Originator has declared the Termination Date to
have occurred pursuant to Section 6.2, by accepting a contribution to
its capital of Receivables having a Purchase Price equal to the
remaining unpaid balance of such Purchase Price.
Subject to the limitations set forth in Section 2.2(a)(ii), Originator
irrevocably agrees to advance each Subordinated Loan requested by Buyer on or
prior to the Termination Date. The Subordinated Loans shall be evidenced by, and
7
shall be payable in accordance with the terms and provisions of the Subordinated
Note and shall be payable solely from funds which Buyer is not required under
the Purchase Agreement to set aside for the benefit of, or otherwise pay over
to, the Investors.
(c) From and after the Termination Date, Originator shall not
be obligated to (but may, at Originator's option): (i) sell Receivables to
Buyer, or contribute Receivables to Buyer's capital pursuant to clause third of
Section 2.2(b) unless Originator reasonably determine that the Purchase Price
therefor will be satisfied with funds available to Buyer from sales of interests
in the Receivables pursuant to the Purchase Agreement, Collections, proceeds of
Subordinated Loans or otherwise.
(d) Although the Purchase Price for each Receivable coming
into existence after the Initial Cutoff Date shall be due and payable in full by
Buyer to Originator on the date such Receivable came into existence, settlement
of the Purchase Price between Buyer and Originator shall be effected on a
monthly basis on Settlement Dates with respect to all Receivables coming into
existence during the immediately preceding Calculation Period and based on the
information contained in the Monthly Report delivered by the Servicer pursuant
to Article IX of the Purchase Agreement for the Calculation Period then most
recently ended. Although settlement shall be effected on Settlement Dates,
increases or decreases in the amount owing under the applicable Subordinated
Note made pursuant to Section 2.2(b) and any contribution of capital by
Originator to Buyer made pursuant to Section 2.2(b) shall be deemed to have
occurred and shall be effective as of the last Business Day of the Calculation
Period to which such settlement relates.
Section 2.3 Purchase Price Credit Adjustments. If on any day:
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or
services, any discount or any adjustment (including, without limitation as a
result of billing errors, meter-reading errors, rate adjustments or allowances
for outages) or otherwise by Originator (other than cash Collections on account
of the Receivables),
(ii) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in
Article III are no longer true with respect to any Receivable,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder equal to
the Outstanding Balance of such Receivable. If such Purchase Price Credit
exceeds the Original Balance of the Receivables coming into existence on any
day, then Originator shall pay the remaining amount of such Purchase Price
Credit in cash within 5 Business Days thereafter, provided that if the
Termination Date has not occurred, Originator shall be allowed to deduct the
remaining amount of such Purchase Price Credit from any indebtedness owed to it
under the applicable Subordinated Note.
8
Section 2.4 Payments and Computations, Etc. All amounts to be
paid or deposited by Buyer to Originator hereunder shall be paid or deposited in
accordance with the terms hereof on the day when due in immediately available
funds to the account of Originator as is designated from time to time by
Originator or as otherwise directed by Originator. In the event that any payment
owed by any Person hereunder becomes due on a day that is not a Business Day,
then such payment shall be made on the next succeeding Business Day. If any
Person fails to pay any amount hereunder when due, such Person agrees to pay, on
demand, the Default Fee in respect thereof until paid in full; provided,
however, that such Default Fee shall not at any time exceed the maximum rate
permitted by applicable law. All computations of interest payable hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.
Section 2.5 Transfer of Records.
(a) In connection with the Purchase of Receivables hereunder,
Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all
of Originator's right and title to and interest in the Records relating to all
Receivables sold hereunder, without the need for any further documentation in
connection with the Purchase. In connection with such transfer, Originator
hereby grants to each of the Deal Agent and the Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by Originator to account for the Receivables, to the extent
necessary to administer the Receivables, whether such software is owned by
Originator or is owned by others and used by Originator under license agreements
with respect thereto, provided that should the consent of any licensor of
Originator to such grant of the license described herein be required, Originator
hereby agrees that upon the request of the Servicer or the Deal Agent,
Originator will use its reasonable efforts to obtain the consent of such
third-party licensor. The license granted hereby shall be irrevocable, and shall
terminate on the date this Agreement terminates in accordance with its terms.
(b) Originator (i) shall take such action requested by Buyer
and/or the Deal Agent (as Buyer's assignee), from time to time hereafter, that
may be necessary or appropriate to ensure that Buyer and its assigns under the
Purchase Agreement have an enforceable ownership interest in the Records
relating to the Receivables purchased from Originator hereunder, and (ii) shall
use its reasonable efforts to ensure that the Deal Agent and the Servicer each
has an enforceable right (whether by license or sublicense or otherwise) to use
all of the computer software used to account for the Receivables and/or to
recreate such Records.
Section 2.6 Characterization. If, notwithstanding the
intention of the parties expressed in Section 2.1(b), any sale or contribution
by Originator to Buyer of Receivables hereunder shall be characterized as a
secured loan and not a sale or such sale shall for any reason be ineffective or
unenforceable, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties' intention that the sale of Receivables
hereunder shall constitute a true sale thereof, Originator hereby grants to
Buyer a duly perfected security interest in all of Originator's right, title and
interest in, to and under all of its Receivables now existing and hereafter
arising, all Collections, Related Security and Records with respect thereto,
each Lock-Box and Blocked Account and all proceeds of the foregoing, which
security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of an Termination Event, Buyer and its assigns shall have, in
9
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under
the UCC and other applicable law, which rights and remedies shall be cumulative.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Originator.
Originator hereby represents and warrants to Buyer, as to itself, that:
(a) Corporate Existence and Power. It is a corporation duly
organized, validly existing and in good standing under the laws of its state of
organization, and is duly qualified to do business and is in good standing as a
foreign entity, and has and holds all corporate power, and all governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted except where
the failure to so qualify or so hold could not reasonably be expected to have a
Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and
Delivery. The execution and delivery by it of this Agreement and each other
Transaction Document to which it is a party, the performance of its obligations
hereunder and thereunder and its use of the proceeds of the Purchases made
hereunder, are within its powers and authority, corporate or otherwise, and have
been duly authorized by all necessary action, corporate or otherwise, on its
part. This Agreement and each other Transaction Document to which it is a party
have been duly executed and delivered by it.
(c) No Conflict. The execution and delivery by it of this
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder do not contravene or
violate (i) articles of incorporation or by-laws, (ii) any law, rule or
regulation applicable to it, including, without limitation, the Public Utility
Holding Company Act of 1935, as amended, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of it or its Subsidiaries
(except as created hereunder) except, in any case, where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect;
and no transaction contemplated hereby requires compliance with any bulk sales
act or similar law.
(d) Governmental Authorization. No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution and delivery by it of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder, except for (i) the
filing of the financing statements required hereunder and (ii) the approval of
the New Mexico Public Regulation Commission, each of which shall have been duly
made or obtained.
(e) Actions, Suits. There is no litigation, action, suit or
other legal or governmental proceeding pending, or to the best of its knowledge,
10
threatened, against or affecting it, or any of its properties, in equity, or
before or by any court, arbitrator or governmental authority relating to the
transactions under this Agreement.
(f) Binding Effect. This Agreement and each other Transaction
Document to which it is a party constitute its legal, valid and binding
obligations, enforceable against it in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All written information
heretofore furnished by it or any of its Affiliates to Buyer (or its assigns)
for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by it or any of its Affiliates to Buyer
(or its assigns) will be, when taken as a whole, true and accurate in all
material respects on the date such information is stated or certified and does
not and will not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained therein,
when taken as a whole, not misleading.
(h) Use of Proceeds. No proceeds of the Purchases hereunder
will be used (i) for a purpose that violates, or would be inconsistent with,
Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction which is subject to Section 12, 13 or 14 of the Securities Exchange
Act of 1934, as amended.
(i) Good Title. As of the time each Receivable created by it
came into existence, it shall be the legal and beneficial owner of each such
Receivable and Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents. There have been
duly filed all financing statements or other similar instruments or documents,
if any, necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect its ownership interest in each Receivable, its
Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of
the financing statements contemplated hereby, is effective to transfer to Buyer
(and Buyer shall acquire from it) legal and equitable title to, with the right
to sell and encumber each Receivable existing or hereafter arising, together
with the Related Security and Collections with respect thereto, free and clear
of any Adverse Claim, except as created by the Transactions Documents. There
have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Buyer's ownership interest in the Receivables, the
Related Security and the Collections.
(k) Places of Business. Its principal places of business,
chief executive office, jurisdiction of incorporation or formation and the
offices where it keeps all of its Records are located at the address(es) and in
the jurisdictions listed on Exhibit I or such other locations of which Buyer has
been notified in accordance with Section 5.2(a) in jurisdictions where all
action required by Section 5.2(a) has been taken and completed. Its Federal
Employer Identification Number and the organizational identification number from
its jurisdiction of incorporation are correctly set forth on Exhibit I.
11
(l) Collections. The names and addresses of all Collection
Banks in existence on the Closing Date, together with the account numbers of the
Blocked Accounts at each Collection Bank and the post office box number of each
Lock-Box, are listed on Exhibit II.
(m) Material Adverse Effect. Since December 31, 2002 no event
has occurred that would have a Material Adverse Effect on (A) its financial
condition or operations, (B), its ability to perform its obligations under this
Agreement or the other Transaction Documents, or (C) the collectibility of the
Receivables originated by it generally or any material portion of such
Receivables.
(n) Names. In the past five (5) years, it has not used any
corporate names, trade names or assumed names other than as listed on Exhibit I.
(o) Ownership of Buyer. Originator owns, directly or
indirectly, 100% of the issued and outstanding equity interests of Buyer, free
and clear of any Adverse Claim. Such equity interests are validly issued, fully
paid and nonassessable, and there are no outstanding options, warrants or other
rights to acquire equity interests or securities of Buyer.
(p) Not a Holding Company or an Investment Company. It is not
a "holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute or, if so, is in compliance with the
requirements thereof or not subject to such requirements. It is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or any successor statute.
(q) Compliance with Law. It has complied in all respects with
all applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. Each
Receivable, together with the Contract related thereto, does not contravene any
material laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy, but excluding the Federal Assignment of Claims
Act), and no part of such Contract is in violation of any such law, rule or
regulation.
(r) Compliance with Credit and Collection Policy. It has
complied in all material respects with the applicable Credit and Collection
Policy with regard to each Receivable originated by it and the related Contract,
and has not made any change to such Credit and Collection Policy other than as
permitted under Section 5.2(c) and in compliance with the notification
requirements in Section 5.1(a)(v).
(s) Payments to Originator. With respect to each of the
Receivables originated by it and transferred to Buyer hereunder, the Purchase
Price received by it constitutes reasonably equivalent value in consideration
therefor and such transfer was not made for or on account of an antecedent debt.
No transfer by it of any Receivable hereunder is or may be voidable under any
section of the Bankruptcy Reform Act of 1978 (11 U.S.C. ▇▇.▇▇. 101 et seq.), as
amended.
12
(t) Enforceability of Contracts. Each Contract with respect to
each Receivable originated by it is effective to create, and has created, a
legal, valid and binding obligation of the related Obligor to pay the
Outstanding Balance of the Receivable created thereunder and any accrued
interest thereon, enforceable against such Obligor in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date it came into existence
was an Eligible Receivable on such date.
(v) Accounting. The manner in which it accounts for the
transactions contemplated by this Agreement does not jeopardize the true sale
analysis.
(w) Compliance with Representations. On and as of the date of
each Purchase and on and as of each subsequent date each Receivable created by
it came into existence, it hereby represents and warrants that all of the other
representations and warranties set forth in this Article III are true and
correct on and as of each such date (and after giving effect to all Receivables
in existence on each such date) as though made on and as of each such date.
ARTICLE IV
CONDITIONS OF PURCHASE
Section 4.1 Conditions Precedent to Initial Purchase. The
initial Purchase under this Agreement is subject to the conditions precedent
that (a) Buyer shall have received on or before the date of such purchase those
documents listed on Schedule A and (b) all of the conditions to the initial
purchase under the Purchase Agreement shall have been satisfied or waived in
accordance with the terms thereof.
Section 4.2 Conditions Precedent to Subsequent Purchases.
Buyer's obligation to Purchase Receivables coming into existence after the
Initial Cutoff Date shall be subject to the further conditions precedent that
(a) the Amortization Date shall not have occurred; and (b) Buyer (or its
assigns) shall have received such other approvals, opinions or documents as it
may reasonably request. Originator represents and warrants that the
representations and warranties set forth in Article III are true and correct on
and as of the date each Receivable came into existence as though made on and as
of such date.
13
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of Originator. Until the
date on which this Agreement terminates in accordance with its terms, Originator
hereby covenants, as to itself, as set forth below:
(a) Financial Reporting. It will maintain, for itself and each
of its Subsidiaries, a system of accounting established and administered in
accordance with GAAP, and furnish to Buyer (or its assigns):
(i) Annual Reporting. Within 120 days after the close of each
of Originator's fiscal years, audited financial statements (which shall
include balance sheets, statements of income and retained earnings and
a statement of cash flows) for such fiscal year, all certified by a
Responsible Officer of Originator as fairly presenting in all material
respects the financial condition and results of operations of
Originator in accordance with GAAP.
(ii) Quarterly Reporting. Within 60 days after the close of
the first three (3) quarterly periods of each of Originator's fiscal
years, balance sheets of Originator as at the close of each such period
and statements of income and retained earnings and a statement of cash
flows for Originator for the period from the beginning of such fiscal
year to the end of such quarter, all certified by a Responsible Officer
of Originator as fairly presenting in all material respects the
financial condition and results of operations of Originator in
accordance with GAAP.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit V signed by Originator's Responsible
Officer and dated the date of such annual financial statement or such
quarterly financial statement, as the case may be.
(iv) Copies of Notices. Promptly upon its receipt of any
notice, request for consent, financial statements, certification,
report or other communication under or in connection with any
Transaction Document from any Person other than Buyer or the Deal
Agent, copies of the same.
(v) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or
material amendment to the Credit and Collection Policy, a copy of the
Credit and Collection Policy then in effect and (A) a notice indicating
such change or amendment, and (B) if such proposed change or amendment
would be reasonably likely to adversely affect the collectibility of
the Receivables originated by it or decrease the credit quality of any
newly created Receivables, requesting Buyer obtain any consent thereto
required under the terms of the Purchase Agreement.
(vi) Other Information. Promptly, from time to time, such
other information, documents, records or reports relating to (i) the
Receivables originated by it or (ii) its condition or operations,
14
financial or otherwise as Buyer (or its assigns) may from time to time
reasonably request in order to protect the interests of Buyer (and its
assigns) under or as contemplated by this Agreement.
(b) Notices. It will notify Buyer (or its assigns) in writing
of any of the following promptly (and in any case within two (2) Business Days)
upon learning of the occurrence thereof, describing the same and, if applicable,
the steps being taken with respect thereto:
(i) Termination Events or Potential Termination Events. The
occurrence of each Termination Event and each Potential Termination
Event, by a statement of one of its Authorized Officers.
(ii) Judgment and Proceedings. (1) The entry of any judgment
or decree against it or any of its Subsidiaries if the aggregate amount
of all judgments and decrees then outstanding against it and its
Subsidiaries exceeds $5,000,000, or (2) The institution of any
litigation, arbitration proceeding or governmental proceeding against
it which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Defaults Under Other Agreements. The occurrence of a
default or an event of default under any financing arrangement
evidencing Indebtedness in excess of $5,000,000 pursuant to which it is
a debtor or an obligor.
(c) Compliance with Laws and Preservation of Corporate
Existence. It will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. It will preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its organization, and qualify and remain qualified in good standing as a foreign
entity in each jurisdiction where its business is conducted, except where the
failure to so preserve and maintain or qualify could not reasonably be expected
to have a Material Adverse Effect.
(d) Audits. It will furnish to Buyer (and its assigns) and
their respective representatives at all times, upon reasonable prior notice,
full and reasonable access during regular business hours to all of its offices
and Records (wheresoever located, including, without limitation, any repository
used to store any such Records), as appropriate to verify its compliance with
this Agreement, and permit Buyer (and its assigns) and their representatives to
examine and audit the same, and make photocopies and/or computer tape or other
digital media replicas thereof, and it agrees to render to Buyer (and its
assigns) and their representatives, at its sole cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto. Buyer
(and its assigns) and their respective representatives shall also have the right
to discuss its affairs with its officers and independent accountants and to
verify under appropriate procedures the validity, amount, quality, quantity,
15
value and condition of, or any other matter relating to, the Receivables and the
Related Security. The number and frequency of any such audits shall be limited
to such number and frequency as shall be reasonable in the exercise of the
Buyer's (and its assigns'), reasonable commercial judgment but shall in no event
be limited to fewer than two such audits per year. Each such audit shall be at
the sole expense of Originator).
(e) Keeping and Marking of Records and Books.
(i) It will maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Receivables in the event of the destruction
of the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable). It
will give Buyer (or its assigns) notice of any material change in the
administrative and operating procedures referred to in the previous
sentence.
(ii) It will (A) on or prior to the Initial Cutoff Date, ▇▇▇▇
its master data processing records and other books and records relating
to the Receivables with a legend, acceptable to Buyer (or its assigns),
describing Buyer's ownership interests in the Receivables and further
describing the Investor Interests of the Deal Agent (on behalf of the
Investors) under the Purchase Agreement and (B) when a Termination
Event or an Amortization Event exists, upon the request of Buyer (or
its assigns), ▇▇▇▇ each Contract with a legend describing Buyer's
ownership interests in the Receivables and further describing the
Investor Interests of the Deal Agent (on behalf of the Investors).
(f) Compliance with Contracts and Credit and Collection
Policy. It will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables to the extent a failure to comply would adversely
affect the collectibility of such Receivables, and (ii) comply in all material
respects with the Credit and Collection Policy in regard to each Receivable and
the related Contract. It will pay when due any taxes payable in connection with
the Receivables, exclusive of taxes on or measured by income or gross receipts
of Buyer and its assigns.
(g) Ownership. It will take all necessary action to establish
and maintain, irrevocably in Buyer, legal and equitable title to the Receivables
originated by it, and to the Related Security and the Collections with respect
to such Receivables, free and clear of any Adverse Claims other than Adverse
Claims in favor of Buyer (and its assigns) (including, without limitation, the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Buyer's interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Buyer as Buyer (or its assigns) may reasonably request).
(h) Investors' Reliance. It acknowledges that the Deal Agent
and the Investors are entering into the transactions contemplated by the
Purchase Agreement in reliance upon Buyer's identity as a legal entity that is
separate from it and any of its Affiliates. Therefore, from and after the date
16
of execution and delivery of this Agreement, it will take all reasonable steps
including, without limitation, all steps that Buyer or any assignee of Buyer may
from time to time reasonably request to maintain Buyer's identity as a separate
legal entity and to make it manifest to third parties that Buyer is an entity
with assets and liabilities distinct from those of it and any of its Affiliates
or other Subsidiaries and not just a division of it. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, it (i) will not hold itself out to third parties as liable for the debts
of Buyer nor purport to own the Receivables and other assets acquired by Buyer,
(ii) will take all other actions necessary on its part to ensure that Buyer is
at all times in compliance with the covenants set forth in Section 8.1(i) of the
Purchase Agreement and (iii) will cause all tax liabilities arising in
connection with the transactions contemplated herein or otherwise to be
allocated between it and Buyer on an arm's-length basis and in a manner
consistent with the procedures set forth in U.S. Treasury Regulations
ss.ss.1.1502-33(d) and 1.1552-1.
(i) Collections. It will:
(i) Prior to June 9, 2003, (A) at any time neither an
Amortization Event nor a Downgrade Event exists, cause all Collections
to be remitted to a Blocked Account within two (2) Business Days of its
receipt thereof and (B) at any time either an Amortization Event or a
Downgrade Event exists, cause all Collections to be remitted directly
by the applicable Obligor to either a Lock-Box or a Blocked Account,
and, at the Buyer's or Deal Agent's (as assignee of Buyer) request,
transfer the Collections processing function to a third-party
Collections processing company,
(ii) From and after June 9, 2003, (A) at any time neither an
Amortization Event nor a Downgrade Event exists, cause all Collections
to be remitted directly by the applicable Obligor to either a Lock-Box
or Blocked Account and (B) at any time either an Amortization Event or
a Downgrade Event exists, cause all Collections to be remitted directly
by the applicable Obligor to either a Lock-Box or a Blocked Account,
and, at the Buyer's or Deal Agent's (as assignee of Buyer) request,
transfer the Collections processing function to a third-party
Collections processing company,
(iii) cause all proceeds from all Lock-Boxes to be deposited
into a Blocked Account, and
(iv) cause each Blocked Account to be subject at all times to
a control agreement or Blocked Account Agreement that is in full force
and effect.
In the event any payments relating to Receivables are remitted directly
to it or any of its Affiliates, it will remit (or will cause all such
payments to be remitted) directly to a Collection Bank and deposited
into a Blocked Account within two (2) Business Days following receipt
thereof and, at all times prior to such remittance, it will itself hold
or, if applicable, will cause such payments to be held in trust for the
exclusive benefit of Buyer and its assigns. It will transfer exclusive
ownership, dominion and control of each Lock-Box and Blocked Account to
Buyer and, will not grant the right to take dominion and control of any
17
Lock-Box or Blocked Account at a future time or upon the occurrence of
a future event to any Person, except to Buyer (or its assigns) as
contemplated by this Agreement and the Purchase Agreement.
(j) Taxes. It will file all tax returns and reports required
by law to be filed by it and promptly pay all taxes and governmental charges at
any time owing, except any such taxes which are not yet delinquent or 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
or where the failure to so file or pay could not reasonably be expected to have
a Material Adverse Effect.
(k) Insurance. It will maintain in effect, or cause to be
maintained in effect, at its own expense, such casualty and liability insurance
as it deems appropriate in its good faith business judgement. It will pay or
cause to be paid, the premiums therefor. Copies of each policy shall be
furnished to Buyer, the Deal Agent and any Investor in certificated form upon
Buyer's, the Deal Agent's or such Investor's request. The foregoing requirements
shall not be construed to negate, reduce or modify, and are in addition to, its
obligations hereunder.
Section 5.2 Negative Covenants of Originator. Until the date
on which this Agreement terminates in accordance with its terms, Originator
hereby covenants, as to itself, that:
(a) Name Change, Offices and Records. It will not change its
name, identity or corporate structure or its jurisdiction of incorporation or
formation (within the meaning of the applicable enactment of the UCC) or
relocate its chief executive office or any office where Records are kept unless
it shall have: (i) given Buyer (or its assigns) at least forty-five (45) days'
prior written notice thereof and (ii) delivered to Buyer (or its assigns) all
financing statements, instruments and other documents requested by Buyer (or its
assigns) in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. It will not
add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Blocked Account, unless Buyer (or its assigns) shall have received, at least ten
(10) days before the proposed effective date therefor, (i) written notice of
such addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Blocked Account or Lock-Box, an executed Blocked Account
Agreement with respect to the new Blocked Account or Lock-Box; provided,
however, that it may make changes in instructions to Obligors regarding payments
if such new instructions require such Obligor to make payments to another
existing Blocked Account.
(c) Modifications to Contracts and Credit and Collection
Policy. It will not make any change to the Credit and Collection Policy that
could adversely affect the collectibility of the Receivables or decrease the
credit quality of any newly created Receivables. Except as otherwise permitted
in its capacity as Servicer pursuant to Article IX of the Purchase Agreement, it
will not extend, amend or otherwise modify the terms of any Receivable or any
Contract related thereto other than in accordance with the Credit and Collection
Policy.
18
(d) Sales, Liens. It will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Blocked Account,
or assign any right to receive income with respect thereto (other than, in each
case, the creation of the interests therein in favor of Buyer provided for
herein), and it will defend the right, title and interest of Buyer in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under it.
(e) Accounting for Purchase. It will not, and will not permit
any Affiliate to, account for or treat (whether in financial statements or
otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by it to Buyer or in any other
respect account for or treat the transactions contemplated hereby in any manner
other than as a sale of the Receivables and the Related Security by it to Buyer
except to the extent that such transactions are not recognized on account of
consolidated financial reporting in accordance with GAAP.
(f) Mergers, Acquisitions etc. Originator will not merge into
or consolidate with any other Person or permit any other Person (without the
prior written consent of the Deal Agent, as assignee of the Buyer, not to be
unreasonably withheld) to merge with or into or consolidate with it, or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any other Person
(whether directly by purchase, lease or other acquisition of all or
substantially all of the assets of such Person or indirectly by purchase or
other acquisition of all or substantially all of the capital stock of such other
Person) other than acquisitions in the ordinary course of Originator's business.
ARTICLE VI
TERMINATION EVENTS
Section 6.1 Termination Events. The occurrence of any one or
more of the following events shall constitute an Termination Event:
(a) Originator shall fail (i) to make any payment or deposit
required hereunder when due and such failure continues for one (1) Business Day,
(ii) to perform or observe any term, covenant or agreement contained in Section
5.1(a)-(b) and (g)-(i), Section 5.2, Section 6.1 (other than as referred to in
clause (i) of this paragraph (a) and Section 6.1(d)) , and such failure shall
continue for three (3) consecutive Business Days after the earlier of receipt of
written notice thereof from Buyer (or its assignees) or Originator's Responsible
Officer's or other corporate officer's actual knowledge thereof or (iii) to
perform or observe any term, covenant or agreement hereunder (other than as
referred to in clause (i) or (ii) of this paragraph (a) and paragraph 5.1(d))
and such failure shall continue for twenty (20) consecutive days after the
earlier of receipt of written notice thereof from Buyer (or its assignees) or
Originator's Responsible Officer's or other corporate officer's actual knowledge
thereof.
19
(b) Any representation, warranty, certification or statement
made by Originator in this Agreement, any other Transaction Document or in any
other document delivered pursuant hereto or thereto shall prove to have been (i)
with respect to any representations warranties, certifications or statements
which contain a materiality qualifier, incorrect in any respect when made or
deemed made and (ii) with respect to any representations, warranties,
certifications or statements which do not contain a materiality qualifier,
incorrect in any material respect when made or deemed made.
(c) Failure of Originator or any of its Subsidiaries to pay
any Indebtedness when due (after giving effect to any grace period applicable
thereto) in excess of $20,000,000; or the default by Originator or any of its
Subsidiaries in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of Originator or any of its Subsidiaries
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Originator or its Subsidiaries shall generally not pay
its debts as such debts become due or shall admit in writing its inability to
pay its debts generally or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Originator or its
Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property or (ii) Originator or
its Subsidiaries shall take any corporate action to authorize any of the actions
set forth in the foregoing clause (i) of this subsection (d).
(e) A Change of Control shall occur.
(f) The entry of any judgment or decree against Originator or
any of its Subsidiaries if the amount of such judgment or decree exceeds
$20,000,000 individually or if the amount of all judgments and decrees then
outstanding against Originator and its Subsidiaries exceeds $40,000,000 in the
aggregate, and such judgment or decree shall continue unsatisfied, undischarged
and unstayed for a period ending on the first to occur of (i) the last day on
which such judgment or decree becomes final and unappealable and, where
applicable, with the status of a judicial lien or (ii) 60 days.
Section 6.2 Remedies. Upon the occurrence and during the
continuation of an Termination Event, Buyer may take any of the following
actions: (i) declare the Termination Date to have occurred, whereupon the
Termination Date shall forthwith occur, without demand, protest or further
notice of any kind, all of which are hereby expressly waived by Originator;
provided, however, that upon the occurrence of Termination Event described in
Section 6.1(d), or of an actual or deemed entry of an order for relief with
respect to Originator under the Federal Bankruptcy Code, the Termination Date
shall automatically occur, without demand, protest or any notice of any kind,
all of which are hereby expressly waived by Originator and (ii) to the fullest
extent permitted by applicable law, declare that the Default Fee shall accrue
20
with respect to any amounts then due and owing by Buyer to Originator. The
aforementioned rights and remedies shall be in addition to all other rights and
remedies of Buyer and its assigns available under this Agreement, by operation
of law, at equity or otherwise, all of which are hereby expressly preserved,
including, without limitation, all rights and remedies provided under the UCC,
all of which rights shall be cumulative.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnities by Originator. Without limiting any
other rights that Buyer may have hereunder or under applicable law, Originator
hereby agrees to indemnify Buyer and its assigns, officers, directors, agents
and employees (each an "Indemnified Party") from and against any and all
damages, losses, claims, taxes, liabilities, costs, expenses and for all other
amounts payable, including reasonable attorneys' fees (which attorneys may be
employees of Buyer) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by Buyer of an interest in the Receivables, excluding,
however:
(i) Indemnified Amounts to the extent that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the
part of the Indemnified Party seeking indemnification, provided, that
it is the intention of Originator to indemnify such Indemnified Party
against the consequences of their own negligence;
(ii) Indemnified Amounts to the extent the same includes
losses in respect of Receivables that are uncollectible on account of
the insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
(iii) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the
extent that the computation of such taxes is consistent with the
Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of Originator or limit the recourse of Buyer to Originator for amounts
otherwise specifically provided to be paid by Originator under the terms of this
Agreement. Without limiting the generality of the foregoing indemnification,
Originator shall indemnify Buyer for Indemnified Amounts (including, without
limitation, losses in respect of uncollectible receivables, regardless of
whether reimbursement therefor would constitute recourse to Originator) relating
to or resulting from:
(i) any representation or warranty made by Originator (or any
officers of any such Person) under or in connection with this
Agreement, any other Transaction Document or any other information or
report delivered by any such Person pursuant hereto or thereto, which
shall have been false or incorrect when made or deemed made;
21
(ii) the failure by Originator to comply with any applicable
law, rule or regulation with respect to any Receivable or Contract
related thereto, or the nonconformity of any Receivable or Contract
included therein with any such applicable law, rule or regulation or
any failure of Originator to keep or perform any of its obligations,
express or implied, with respect to any Contract;
(iii) any failure of Originator to perform its duties,
covenants or other obligations in accordance with the provisions of
this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit,
or other similar claim arising out of or in connection with
merchandise, insurance or services that are the subject of any Contract
or any Receivable;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or service related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to
or arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of a
Purchase, the ownership of the Receivables or any other investigation,
litigation or proceeding relating to Originator in which any
Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby;
(viii) any Termination Event described in Section 6.1(d);
(ix) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables, the Related Security and the Collections, free and clear
of any Adverse Claim (except as created by the Transaction Documents);
(x) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, the Related Security and Collections with
respect thereto, and the proceeds of any thereof, whether at the time
of a Purchase or at any subsequent time;
(xi) any action or omission by Originator which reduces or
impairs the rights of Buyer with respect to any Receivable or the value
of any such Receivable; and
(xii) any attempt by any Person to void the Purchase hereunder
under statutory provisions or common law or equitable action.
22
Section 7.2 Other Costs and Expenses. Originator shall pay to
Buyer on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder. Originator shall pay to Buyer on demand any and all costs and
expenses of Buyer, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this Agreement and the other documents
delivered hereunder and in connection with any restructuring or workout of this
Agreement or such documents (including any amendments hereto or thereto), or the
administration of this Agreement following an Termination Event.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or its assigns)
in exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by Originator and
Buyer and, to the extent required under the Purchase Agreement, the Deal Agent
and the Alternate Investors or the Required Alternate Investors.
Section 8.2 Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature page hereto or at such other address
or telecopy number as such Person may hereafter specify for the purpose of
notice to each of the other parties hereto. Each such notice or other
communication shall be effective (i) if given by telecopy, upon the receipt
thereof, (ii) if given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or (iii)
if given by any other means, when received at the address specified in this
Section 8.2.
Section 8.3 Protection of Ownership Interests of Buyer.
(a) Originator agrees that from time to time, at its expense,
it will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Buyer (or its assigns) may
request, to perfect, protect or more fully evidence the Investor Interests, or
to enable Buyer (or its assigns) to exercise and enforce their rights and
remedies hereunder. At any time, Buyer (or its assigns) may, at Originator's
sole cost and expense, direct Originator to notify the Obligors of Receivables
of the ownership interests of Buyer under this Agreement and may also direct
that payments of all amounts due or that become due under any or all Receivables
be made directly to Buyer or its designee.
23
(b) If Originator fails to perform any of its obligations
hereunder, Buyer (or its assigns) may (but shall not be required to) perform, or
cause performance of, such obligation, and Buyer's (or such assigns') costs and
expenses incurred in connection therewith shall be payable by Originator as
provided in Section 7.2. Originator irrevocably authorizes Buyer (and its
assigns) at any time and from time to time in the sole discretion of Buyer (or
its assigns), and appoints Buyer (and its assigns) as its attorney(es)-in-fact,
to act on its behalf (i) to execute on its behalf as debtor and to file
financing statements necessary or desirable in Buyer's (or its assigns') sole
discretion to perfect and to maintain the perfection and priority of the
interest of Buyer in the Receivables and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Receivables as a financing statement in such offices as Buyer (or its
assigns) in their sole discretion deem necessary or desirable to perfect and to
maintain the perfection and priority of Buyer's interests in the Receivables.
This appointment is coupled with an interest and is irrevocable.
Section 8.4 Confidentiality.
(a) Originator shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Deal Agent, the
Managing Agents, the Conduit Investors and their respective businesses obtained
by it or them in connection with the structuring, negotiating and execution of
the transactions contemplated herein, except that Originator and its respective
officers and employees may disclose such information to its external accountants
and attorneys and as required by any applicable law or order of any judicial or
administrative proceeding.
(b) Each of Buyer (and its assigns) agrees to exercise its
best efforts to keep, and to cause any third party recipient of the information
described in this Section 8.4(b) to keep, any information delivered or made
available by Originator to it, confidential from anyone other than Persons
employed or retained by such party who are or are expected to become engaged in
evaluating, approving, structuring or administering the transactions
contemplated hereunder; provided that nothing shall prevent Buyer (or its
assigns) from disclosing such information (i) to any other party to any
Transaction Document for the purpose of administering or enforcing this
Agreement or any other Transaction Document, (ii) pursuant to subpoena or upon
the order of any court or administrative agency, (iii) upon the request or
demand of any governmental authority having jurisdiction over such Person, (iv)
if such information has been publicly disclosed without the recipient's
violation of its confidentiality obligations, (v) to the extent reasonably
required in connection with any litigation to which such Person or such Person's
Affiliates may be a party, (vi) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (vii) to such Person's legal counsel,
independent auditors and other professional advisors, or (viii) to any actual or
proposed participant or assignee of such Person (each, a "Transferee") that has
agreed in writing to be bound by the provisions of this Section 8.4(b). Unless
prohibited from doing so by applicable law, in the event that Buyer (or its
assigns) is legally requested or required to disclose any confidential
information pursuant to paragraph (ii), (iii), or (v) of this Section 8.4(b),
such Person shall notify Originator(s) of such request or requirement and will
use reasonable efforts to minimize the disclosure of such information. Subject
24
to the exceptions above to disclosure of information, each of Buyer (and its
assigns) agrees that it shall not publish, publicize, or otherwise make public
any information regarding this Agreement or the transactions contemplated hereby
without the written consent of Originator in its sole discretion.
Section 8.5 Bankruptcy Petition. (a) Originator and Buyer each
hereby covenants and agrees that, prior to the date that is one year and one day
after the payment in full of all outstanding senior Indebtedness of each Conduit
Investor, it will not institute against, or join any other Person in instituting
against, such Conduit Investor any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.
(b) Originator hereby covenants and agrees that, prior to the
date that is one year and one day after the payment in full of all outstanding
Capital, Yield and all other amounts due to the Deal Agent, any Managing Agent
or any Investor under the Purchase Agreement, it will not institute against, or
join any other Person in instituting against, Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Section 8.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW MEXICO,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
Section 8.7 CONSENT TO JURISDICTION. EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY SUBMITS (A) FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW MEXICO, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE DISTRICT OF NEW MEXICO, AND APPELLATE COURTS FROM ANY THEREOF; (B)
CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (C)
AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED
BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PERSON AT THE ADDRESS SPECIFIED
PURSUANT TO SECTION 8.2 OR AT SUCH OTHER ADDRESS OF WHICH THE PARTIES HERETO
SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (D) AGREES THAT NOTHING HEREIN SHALL
AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION; AND (E) WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE OTHER TRANSACTION DOCUMENTS ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
25
Section 8.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT
EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER.
Section 8.9 Integration; Binding Effect; Survival of Terms.
(a) THIS AGREEMENT, THE SUBORDINATED NOTE AND EACH BLOCKED
ACCOUNT AGREEMENT AND ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns (including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by Originator
pursuant to Article III, (ii) the indemnification and payment provisions of
Article VII, and Section 8.5 shall be continuing and shall survive any
termination of this Agreement.
Section 8.10 Counterparts; Severability; Section References.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same Agreement. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to "Article," "Section," "Schedule"
or "Exhibit" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: V.P. and Treasurer
Address: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, MS-2702
PNM RECEIVABLES CORP.
By: /s/▇▇▇▇▇ ▇. H
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Treasurer
Address: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, MS-2702
Signature Page to
Receivables Sale Agreement
Exhibit I
---------
Places of Business; Locations of Records;
State Organizational Identification Number(s);
Federal Employer Identification Number(s); Other Names
Places of Business:
Locations of Records:
Federal Employer Identification Number:
State Organizational Identification Number:
Corporate, Partnership Trade and Assumed Names:
Exhibit II
----------
Lock-boxes; Blocked Accounts; Collection Banks
----------------------- ----------------------------- --------------------------
Company Bank Account Number
----------------------- ----------------------------- --------------------------
Bank of America #375-0940909
Bank of the West: #▇▇▇-▇▇▇-▇▇▇
Citizens Bank Clovis #0105259001
Community 1st ▇▇▇▇▇▇▇ #8750085699
First National Bank of
New Mexico #0009628
Public Service Company First State Bank Taos #103064158
of New Mexico
State National Bank T or C #4600009199
▇▇▇▇▇ Fargo Bank: #6511003433
#615320494
#▇▇▇▇▇▇▇▇▇▇
#6515320601
#1027501231
Western Commerce Carlsbad #106054
----------------------- ----------------------------- --------------------------
P.O. Box:
---------
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Exhibit III
Credit and Collection Policy
Exhibit IV
----------
Form of Subordinated Note
SUBORDINATED NOTE
April 8, 2003
1. Note. FOR VALUE RECEIVED, the undersigned, PNM Receivables
Corp., a Delaware corporation ("SPV"), hereby unconditionally promises to pay to
the order of Public Service Company of New Mexico, a New Mexico corporation
("Originator"), in lawful money of the United States of America and in
immediately available funds, on the date following the Termination Date which is
one year and one day after the date on which (i) the Outstanding Balance of all
Receivables sold under the "Sale Agreement" referred to below has been reduced
to zero and (ii) Originator has paid to Buyer all indemnities, adjustments and
other amounts which may be owed thereunder in connection with the Purchases (the
"Collection Date"), the aggregate unpaid principal sum outstanding of all
"Subordinated Loans" made from time to time by Originator to SPV pursuant to and
in accordance with the terms of that certain Receivables Sale Agreement dated as
of April 8, 2003 between Originator and SPV (as amended, restated, supplemented
or otherwise modified from time to time, the "Sale Agreement"). Reference to
Section 2.2 of the Sale Agreement is hereby made for a statement of the terms
and conditions under which the loans evidenced hereby have been and will be
made. All terms which are capitalized and used herein and which are not
otherwise specifically defined herein shall have the meanings ascribed to such
terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the LIBO Rate; provided, however, that if SPV
shall default in the payment of any principal hereof, SPV promises to pay, on
demand, interest at the rate of the LIBO Rate plus 2.00% per annum on any such
unpaid amounts, from the date such payment is due to the date of actual payment.
Interest shall be payable on the first Business Day of each month in arrears;
provided, however, that SPV may elect on the date any interest payment is due
hereunder to defer such payment and upon such election the amount of interest
due but unpaid on such date shall constitute principal under this Subordinated
Note. The outstanding principal of any loan made under this Subordinated Note
shall be due and payable on the Collection Date and may be repaid or prepaid at
any time without premium or penalty.
3. Principal Payments. Originator is authorized and directed
by SPV to enter on the grid attached hereto, or, at its option, in its books and
records, the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by SPV, and
absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of
Originator to make any such entry or any error therein shall expand, limit or
affect the obligations of SPV hereunder.
1
4. Subordination. The indebtedness evidenced by this
Subordinated Note is subordinated to the prior payment in full of all of SPV's
recourse obligations under that certain Receivables Purchase Agreement dated as
of April 8, 2003 by and among SPV, Public Service Company of New Mexico, as
Servicer, various "Investors" and "Managing Agents" from time to time party
thereto, and FSI, as the "Deal Agent" (as amended, restated, supplemented or
otherwise modified from time to time, the "Purchase Agreement"). The
subordination provisions contained herein are for the direct benefit of, and may
be enforced by, the Deal Agent and the Investors and/or any of their respective
assignees (collectively, the "Senior Claimants") under the Purchase Agreement.
Until the date on which all "Capital" outstanding under the Purchase Agreement
has been repaid in full and all other obligations of SPV and/or the Servicer
thereunder and under the "Fee Letters" referenced therein (all such obligations,
collectively, the "Senior Claim") have been indefeasibly paid and satisfied in
full, Originator shall not demand, accelerate, ▇▇▇ for, take, receive or accept
from SPV, directly or indirectly, in cash or other property or by set-off or any
other manner (including, without limitation, from or by way of collateral) any
payment or security of all or any of the indebtedness under this Subordinated
Note or exercise any remedies or take any action or proceeding to enforce the
same; provided, however, that (i) Originator hereby agrees that it will not
institute against SPV any proceeding of the type described in Section 6.1(d) of
the Sale Agreement unless and until the Collection Date has occurred and (ii)
nothing in this paragraph shall restrict SPV from paying, or Originator from
requesting, any payments under this Subordinated Note so long as SPV is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the funds used for such payments to any of the Senior
Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by Originator
in violation of the immediately preceding sentence, Originator agrees that such
payment shall be segregated, received and held in trust for the benefit of, and
deemed to be the property of, and shall be immediately paid over and delivered
to the Deal Agent for the benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any
proceeding of the type described in Section 6.1(d) of the Sale Agreement
involving SPV as debtor, then and in any such event the Senior Claimants shall
receive payment in full of all amounts due or to become due on or in respect of
Capital and the Senior Claim (including "Broken Funding Costs" and "Yield" as
defined and as accruing under the Purchase Agreement after the commencement of
any such proceeding, whether or not any or all of such Broken Funding Costs or
Yield is an allowable claim in any such proceeding) before Originator is
entitled to receive payment on account of this Subordinated Note, and to that
end, any payment or distribution of assets of SPV of any kind or character,
whether in cash, securities or other property, in any applicable insolvency
proceeding, which would otherwise be payable to or deliverable upon or with
respect to any or all indebtedness under this Subordinated Note, is hereby
assigned to and shall be paid or delivered by the Person making such payment or
delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating
trustee or otherwise) directly to the Deal Agent for application to, or as
collateral for the payment of, the Senior Claim until such Senior Claim shall
have been paid in full and satisfied.
2
6. Amendments. This Subordinated Note shall not be amended or
modified except in accordance with Section 8.1 of the Sale Agreement. The terms
of this Subordinated Note may not be amended or otherwise modified without the
prior written consent of the Deal Agent for the benefit of the Investors.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND
DELIVERED AT ALBUQUERQUE, NEW MEXICO, AND SHALL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF NEW MEXICO. WHEREVER POSSIBLE EACH PROVISION OF THIS
SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL
BE PROHIBITED BY OR INVALID UNDER APPLICABLE 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
SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers,
or otherwise, severally waive presentment for payment, demand, protest and
notice of dishonor. Originator additionally expressly waives all notice of the
acceptance by any Senior Claimant of the subordination and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant upon
the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned,
pledged or otherwise transferred to any party other than Originator without the
prior written consent of the Deal Agent, and any such attempted transfer shall
be void.
PNM RECEIVABLES CORP.
By: ___________________________________
Title:
3
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Subordinated Principal Principal Notation made
Date Loan Paid Balance by
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
---------- --------------- ----------- ----------- -------------
4
Exhibit V
---------
Form of Compliance Certificate
To: Fleet Securities, Inc.
This Compliance Certificate is furnished pursuant to that
certain Receivables Sale Agreement dated as of April 8, 2003, among PNM
Receivables Corp. (the "Servicer") and Public Service Company of New Mexico (the
"Originator") (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________ of Servicer.
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Servicer during the accounting period covered by the attached
financial statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
an Amortization Event or Potential Amortization Event, as each such term is
defined under the Agreement, existing as of the date of this Certificate, except
as set forth in paragraph 5 below.
4. Schedule I attached hereto sets forth financial data and
computations of certain covenants of the Agreement, all of which data and
computations are true, complete and correct in all material respects.
5. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
--------------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this____ day of ____,____.
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of the
Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the
Agreement.
This schedule relates to the period ended: ______________
Schedule A
----------
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE PURCHASE
[Attach Closing List]
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................................................1
ARTICLE II
AMOUNTS AND TERMS............................................................6
Section 2.1 Purchase of Receivables................................6
Section 2.2 Payment for the Purchases..............................6
Section 2.3 Purchase Price Credit Adjustments......................8
Section 2.4 Payments and Computations, Etc.........................9
Section 2.5 Transfer of Records....................................9
Section 2.6 Characterization.......................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES..............................................10
Section 3.1 Representations and Warranties of Originator..........10
ARTICLE IV
CONDITIONS OF PURCHASE......................................................13
Section 4.1 Conditions Precedent to Initial Purchase..............13
Section 4.2 Conditions Precedent to Subsequent Purchases..........13
ARTICLE V
COVENANTS...................................................................14
Section 5.1 Affirmative Covenants of Originator...................14
Section 5.2 Negative Covenants of Originator......................18
ARTICLE VI
TERMINATION EVENTS..........................................................19
Section 6.1 Termination Events....................................19
Section 6.2 Remedies..............................................20
ARTICLE VII
INDEMNIFICATION.............................................................21
Section 7.1 Indemnities by Originator.............................21
Section 7.2 Other Costs and Expenses..............................23
ARTICLE VIII
MISCELLANEOUS...............................................................23
i
TABLE OF CONTENTS
(continued)
Page
Section 8.1 Waivers and Amendments................................23
Section 8.2 Notices...............................................23
Section 8.3 Protection of Ownership Interests of Buyer............23
Section 8.4 Confidentiality.......................................24
Section 8.5 Bankruptcy Petition...................................25
Section 8.6 CHOICE OF LAW.........................................25
Section 8.7 CONSENT TO JURISDICTION...............................25
Section 8.8 WAIVER OF JURY TRIAL..................................26
Section 8.9 Integration; Binding Effect; Survival of Terms........26
Section 8.10 Counterparts; Severability; Section References........26
ii
EXHIBITS AND SCHEDULES
EXHIBIT I -- Principal Place of Business; Location(s) of Records;
Federal Employer Identification Number; Other Names
EXHIBIT II -- Lock-Boxes; Blocked Accounts; Collection Banks
EXHIBIT III -- Credit and Collection Policy
EXHIBIT IV -- Form of Subordinated Note
EXHIBIT V -- Form of Compliance Certificate
SCHEDULE A -- List of Documents to Be Delivered to Buyer Prior to
the Purchase
