-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QD9QQhT481+JX6sGmiIJJNOvQsCl35ddf1OvJjQVJ4wUwJbSVrUsESpeYjLKdyn5 F4mGZB4k01JI0JxHbykrTg== 0000081023-96-000012.txt : 19960805 0000081023-96-000012.hdr.sgml : 19960805 ACCESSION NUMBER: 0000081023-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE CO OF NEW MEXICO CENTRAL INDEX KEY: 0000081023 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 850019030 STATE OF INCORPORATION: NM FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06986 FILM NUMBER: 96603014 BUSINESS ADDRESS: STREET 1: ALVARADO SQUARE, MS2706 CITY: ALBUQUERQUE STATE: NM ZIP: 87158 BUSINESS PHONE: 5058482700 10-Q 1 TEXT OF FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6986 PUBLIC SERVICE COMPANY OF NEW MEXICO ------------------------------------ (Exact name of registrant as specified in its charter) New Mexico 85-0019030 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Alvarado Square, Albuquerque, New Mexico 87158 ---------------------------------------------- (Address of principal executive offices) (Zip Code) (505) 241-2700 -------------- (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock--$5.00 par value 41,774,083 shares - ----------------------------- ----------------- Class Outstanding at August 1, 1996 PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION: Report of Independent Public Accountants......................... 3 ITEM 1. FINANCIAL STATEMENTS Consolidated Statements of Earnings-- Three Months and Six Months Ended June 30, 1996 and 1995......... 4 Consolidated Balance Sheets-- June 30, 1996 and December 31, 1995.............................. 5 Consolidated Statements of Cash Flows-- Six Months Ended June 30, 1996 and 1995.......................... 6 Notes to Consolidated Financial Statements....................... 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 8 PART II. OTHER INFORMATION: ITEM 1. LEGAL PROCEEDINGS............................................ 12 ITEM 5. OTHER INFORMATION............................................ 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 15 Signature................................................................ 16 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Public Service Company of New Mexico: We have reviewed the accompanying condensed consolidated balance sheet of Public Service Company of New Mexico (a New Mexico corporation) and subsidiaries as of June 30, 1996, and the related condensed consolidated statements of earnings for the three-month and six-month periods ended June 30, 1996 and 1995, and the condensed consolidated statements of cash flows for the six-month periods ended June 30, 1996 and 1995. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Public Service Company of New Mexico and subsidiaries as of December 31, 1995 (not presented herein), and, in our report dated February 13, 1996, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ARTHUR ANDERSEN LLP Albuquerque, New Mexico August 2, 1996 3 ITEM 1. FINANCIAL STATEMENTS PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended Six Months Ended June 30 June 30 ------------------- --------------------- 1996 1995 1996 1995 ---- ---- ---- ---- (In thousands except per share amounts) Operating revenues: Electric $ 154,438 $ 136,698 $ 306,540 $ 278,306 Gas 43,159 51,126 132,961 137,326 Water -- 3,708 -- 6,135 --------- --------- --------- --------- Total operating revenues 197,597 191,532 439,501 421,767 --------- --------- --------- --------- Operating expenses: Fuel and purchased power 40,848 32,923 80,573 64,789 Gas purchased for resale 19,214 20,414 65,703 63,996 Other operation and maintenance 78,582 78,037 151,482 159,248 Depreciation and amortization 18,555 20,737 38,585 41,252 Taxes, other than income taxes 8,598 8,869 17,828 18,538 Income taxes 6,454 5,528 21,509 15,189 --------- --------- --------- --------- Total operating expenses 172,251 166,508 375,680 363,012 --------- --------- --------- --------- Operating income 25,346 25,024 63,821 58,755 --------- --------- --------- --------- Other income and deductions, net of taxes: 1,036 13,118 1,853 14,693 Income before interest charges 26,382 38,142 65,674 73,448 --------- --------- --------- --------- Interest charges: Interest on long-term debt 12,118 12,957 24,203 28,391 Other interest charges 722 1,766 1,481 3,454 Net interest charges 12,840 14,723 25,684 31,845 --------- --------- --------- --------- Net earnings 13,542 23,419 39,990 41,603 Preferred stock dividend requirements 146 1,534 293 3,072 --------- --------- --------- --------- Net earnings applicable to common stock $ 13,396 $ 21,885 $ 39,697 $ 38,531 ========= ========= ========= ========= Average shares of common stock outstanding 41,774 41,774 41,774 41,774 ========= ========= ========= ========= Net earnings per share of common stock $ 0.32 $ 0.52 $ 0.95 $ 0.92 ========= ========= ========= ========= Dividends paid per share of common stock $ 0.12 $ -- $ 0.12 $ -- ========= ========= ========= ========= The accompanying notes are an integral part of these financial statements.
4 PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 1996 1995 ---------- ----------- (Unaudited) (In thousands) ASSETS Utility plant $2,492,650 $2,467,161 Accumulated provision for depreciation and amortization (921,468) (892,727) ---------- ---------- Net utility plant 1,571,182 1,574,434 ---------- ---------- Other property and investments 35,390 33,433 ---------- ---------- Current assets: Cash 6,157 4,228 Temporary investments, at cost 129,131 95,972 Receivables 121,438 127,642 Income taxes receivable -- 4,792 Fuel, materials and supplies 43,696 44,660 Gas in underground storage 2,670 5,431 Other current assets 9,083 7,186 ---------- ---------- Total current assets 312,175 289,911 ---------- ---------- Deferred charges 132,927 137,891 ---------- ---------- $2,051,674 $2,035,669 ========== ========== CAPITALIZATION AND LIABILITIES Capitalization: Common stock equity: Common stock $ 208,870 $ 208,870 Additional paid-in capital 470,358 470,358 Excess pension liability, net of tax (2,101) (1,623) Retained earnings since January 1, 1989 54,914 25,243 ---------- ---------- Total common stock equity 732,041 702,848 Cumulative preferred stock without mandatory redemption requirements 12,800 12,800 Long-term debt, less current maturities 712,593 728,843 ---------- ---------- Total capitalization 1,457,434 1,444,491 ---------- ---------- Current liabilities: Short-term debt -- -- Accounts payable 84,274 93,666 Dividends payable 5,453 147 Current maturities of long-term debt 16,250 146 Accrued interest and taxes 26,716 26,856 Other current liabilities 38,523 44,552 ---------- ---------- Total current liabilities 171,216 165,367 ---------- ---------- Deferred credits 423,024 425,811 ---------- ---------- $2,051,674 $2,035,669 ========== ========== The accompanying notes are an integral part of these financial statements. 5 PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30 ------------------ 1996 1995 -------- --------- (In thousands) Cash Flows From Operating Activities: Net earnings $39,990 $ 41,603 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization 47,219 49,621 Gain on sale of plant and property -- (28,126) Accumulated deferred investment tax credit (2,332) (2,325) Accumulated deferred income tax 20 (40,113) Changes in certain assets and liabilities: Receivables 10,996 36,734 Fuel, materials and supplies 3,726 (33,050) 1,895 Deferred charges 4,515 11,418 Accounts payable (9,436) (29,723) Accrued interest and taxes (140) 46,975 9,075 Deferred credits (5,601) 22,415 Other (7,447) 5,542 Other, net 2,958 3,583 ------- --------- Net cash flows from operating activities 84,468 84,554 ------- --------- Cash Flows From Investing Activities: Utility plant additions 40,655) (49,127) Utility plant sales -- 154,087 Other property additions (3,089) (107) Temporary investments, net 33,159) (85,564) ------- --------- Net cash flows from investing activities 76,903) 19,289 ------- --------- Cash Flows From Financing Activities: Redemptions of PV lease obligation bonds -- (132,663) Redemptions and repurchases of preferred stock -- (208) Bond redemption premium and costs (196) (253) Proceeds from asset securitization -- 18,758 Repayments of other long-term debt (179) (28,007) Net increase in short-term debt -- 35,550 Dividends paid (5,261) (3,076) ------- --------- Net cash flows from financing activities (5,636) (109,899) ------- --------- Increase (decrease) in cash 1,929 (6,056) Cash at beginning of period 4,228 21,029 ------- --------- Cash at end of period $ 6,157 $ 14,973 ======= ========= Supplemental Cash Flow Disclosures: Interest paid $25,205 $ 36,972 ======= ========= Income taxes paid, net $25,500 $ 15,200 ======= ========= The accompanying notes are an integral part of these financial statements. 6 PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) General Accounting Policy In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the consolidated financial statements. The significant accounting policies followed by Public Service Company of New Mexico (the "Company") are set forth in note (1) of notes to the Company's consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K") filed with the Securities and Exchange Commission. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's 1995 Form 10-K PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" discussed management's assessment of the Company's financial condition, results of operations and other issues facing the Company. The following discussion and analysis by management focuses on those factors that had a material effect on the Company's financial condition and results of operations during the three and six months ended June 30, 1996 and 1995. It should be read in conjunction with the Company's consolidated financial statements. Trends and contingencies of a material nature are discussed to the extent known and considered relevant. Liquidity and Capital Resources The capital requirements for 1996 were originally projected at $207 million, including a discretionary cash outlay for debt retirement of $90 million. Due to the Company's proposed plan for the purchase of up to $300 million of the Palo Verde Nuclear Generation Station ("PVNGS") lease obligation bonds and Eastern Interconnection Project ("EIP") secured facility bonds over the next three years (discussed below), total capital requirements for 1996 have been revised to $317 million. The revised capital requirements contemplate the purchase of $200 million of PVNGS lease obligation bonds during the remainder of 1996, which is subject to the New Mexico Public Utility Commission ("NMPUC") approval. The Company spent approximately $41 million for its utility construction expenditures during the first half of 1996. For the second half of 1996, the Company anticipates it will spend approximately $74 million for additional utility construction expenditures. The Company expects that such cash requirements are to be met primarily through internally-generated cash. However, to cover differences in the amounts and timing of cash generation and cash requirements, the Company intends to utilize short-term borrowings under its liquidity arrangements. At June 30, 1996, the Company had available liquidity arrangements of $211 million, consisting of a $100 million secured revolving credit facility ("Facility"), a $100 million credit facility collateralized by the Company's utility customer accounts receivable and certain amounts being recovered from gas customers relating to certain gas contract settlements ("Accounts Receivable Facility") and $11 million in local lines of credit. The Accounts Receivable Facility has a five year term. The Facility will expire in June 1998 and includes a maximum allowed debt to capitalization ratio of 70%. As of June 30, 1996, such ratio was 64.2 %. In March 1996, the Company filed for the NMPUC approval to purchase up to $300 million of PVNGS lease obligation bonds and/or EIP secured facility bonds over the next three years. Although these purchases will be accounted for as investments in securities, the rating agencies will view the Company's debt leverage as having been reduced. On July 12, 1996, the Company received a recommended decision from the hearing examiner recommending that the NMPUC approve the Company's request. The Company is awaiting final decision from the NMPUC. The Company currently intends to use cash from temporary investments and liquidity arrangements to fund these purchases. 8 As of June 30, 1996, the Company had approximately $129 million in temporary investments. On July 8, 1996, the Company requested NMPUC approval to refinance $23 million of the 1984 series A Pollution Control Revenue Bonds and $77 million of the 1977 series Pollution Control Revenue Refunding Bonds. The Company continues to evaluate its investment and debt retirement options to optimize its financing strategy and earnings potential. Credit Rating and Dividends Moody's Investors Service ("Moody's") has recently revised the rating outlook on the Company to "positive" from "stable" based on planned debt repayments by the Company over the course of the next three years. Moody's also stated that "to the extent that management is able to maintain its current focus, Moody's anticipates a material improvement in the Company's financial profile". In May 1996, the Company resumed the payment of cash dividends on common stock beginning with a quarterly dividend of 12 cents per common share to stockholders of record as of May 1, 1996. On June 11, 1996, the Company's board of directors ("Board") declared a quarterly cash dividend of 12 cents per common share, payable August 23, 1996, to stockholders of record as of August 1, 1996. The Company's Board reviews the Company's dividend policy on a continuing basis. The declaration of a common dividend is dependent upon a number of factors including earnings and financial condition of the Company and market conditions. RESULTS OF OPERATIONS Net earnings applicable to common stock decreased $8.5 million ($.20 per share) for the quarter ended June 30, 1996 from the same quarter of last year due to a gain, net of tax, of $13.1 million ($.31 per share) recognized from the sale of certain of the Company's gas assets in June 1995. Net earnings applicable to common stock for the six months ended June 30, 1996 increased $1.2 million ($.03 per share) from the same period of last year. Electric gross margin (electric operating revenues less fuel and purchased power expense) increased $9.8 million and $12.5 million for the quarter and six months ended June 30, 1996, respectively, from the corresponding periods a year ago. These increases were attributable to retail load growth and warmer than normal weather in the second quarter of 1996 and increased off-system sales margin due to the Company's aggressive marketing strategies aided by the warmer than normal weather. Gas gross margin (gas operating revenues less gas purchased for resale) decreased $6.8 million and $6.1 million for the quarter and six months ended June 30, 1996, respectively, from the corresponding periods a year ago. The main contributor to these decreases was the effect of the sale of the gas assets in 1995, which was partially offset by increased off-system sales margin in the current periods. The sale of the Company's water division in July 1995 has reduced the current year operating revenues by $3.7 million and $6.1 million for the quarter and the six months ended June 30, 1996, respectively. 9 Other operation and maintenance ("O&M") expenses increased $.5 million for the quarter over the corresponding period a year ago due to increases in (i) labor expense of $2.7 million and (ii) office supplies and expense and outside services of $2.7 million. Such increases were offset by the O&M reduction of $4.3 million resulting from the sales of the water division and certain gas assets and decreased employee benefits expense of $1.2 million. Other O&M expenses for the six months ended June 30, 1996 decreased $7.8 million from the corresponding period last year due to (i) a reduction in O&M expense of $8.8 million resulting from the sales of the water division and certain gas assets in 1995, (ii) an adjustment of $3.4 million for retirees' health care costs in 1996, and (iii) decreased other employee benefits expense of $2.0 million. Offsetting such decreases were (i) increased office supplies and expense and outside service expense of $4.3 million and (ii) increased labor expense of $2.7 million. Depreciation and amortization expenses decreased $2.2 million and $2.7 million for the quarter and six months ended June 30, 1996, respectively, from the corresponding periods a year ago as a result of the sale of the Company's water division and gas assets in 1995 and an adjustment recorded in the second quarter of 1996 for the over amortization of certain intangible utility plant. Operating income taxes for the quarter and six months ended June 30, 1996 increased $.9 million and $6.3 million, respectively, over the corresponding periods a year ago due to increased pre-tax earnings for the current periods. Other income and deductions, net of taxes, for the quarter and six months ended June 30, 1996 decreased $12.1 million and $12.8 million, respectively, from the corresponding periods a year ago. Significant items, net of taxes, for the 1995 quarter included the gain of $13.1 million from the gas assets sale in June 1995 and income of $1.4 million related to adjusting reclamation reserves for certain mining operations. Offsetting such decreases was an additional 1995 regulatory reserve of $1.5 million. In addition, year-to-date 1995 included an after-tax accrual of $2.6 million of income pertaining to the carrying costs related to gas take-or-pay settlement amounts, which was offset by an after-tax write off of debt retirement costs of $.9 million. Net interest charges decreased $1.9 million and $6.2 million for the quarter and six months ended June 30, 1996, respectively, from the corresponding periods a year ago. The quarter decrease was due to the higher short term borrowings incurred for the retirement of the PVNGS lease obligation bonds of $132.7 million in 1995. The six month decrease also resulted from the retirement of the PVNGS lease obligation bonds in March 1995. Preferred stock dividend requirements decreased $1.4 million and $2.8 million for the quarter and six months ended June 30, 1996, respectively, from the corresponding periods a year ago due to the retirement of $64 million of preferred stock in August 1995. 10 OTHER ISSUES FACING THE COMPANY Gas Rate Case As previously reported, in August 1995, the Company filed a request for a $13.3 million increase for its retail natural gas sales and transportation rates. The NMPUC Staff and intervenors in the case filed their testimony in January 1996. The NMPUC Staff recommended a $2.5 million rate decrease and the New Mexico Attorney General ("AG") recommended a $13.2 million rate decrease. (See PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--OTHER ISSUES FACING THE COMPANY--GAS RATE CASE" in the 1995 Form 10-K.) In March 1996, a stipulated agreement was entered into by the Company, NMPUC Staff, the AG and the Regents of the University of New Mexico, whereby the Company agreed not to seek a rate increase in this case but would be allowed to recover certain deferred costs incurred through July 1, 1996. It also imposed certain conditions on the Company's transportation customers. Many of the transportation customers opposed the stipulation. In April 1996, the NMPUC issued an order, rejecting a hearing of the proposed settlement and adopting a procedure for hearings on the Company's originally proposed $13.3 million rate increase. The hearings which began on May 6, 1996 have been completed. The Company is currently awaiting the hearing examiner's recommended decision which is expected before mid-August and the NMPUC's final order is expected before mid-September. The Company is currently unable to predict the ultimate outcome of this proceeding. Santa Fe Station As previously reported, the New Mexico Environment Department ("NMED") was conducting an investigation of the groundwater contamination detected beneath the former Santa Fe Generating Station ("Santa Fe Station") site to determine the source of the contamination. The Company has been and is continuing to cooperate with the NMED site investigation pursuant to a settlement agreement between the Company and the NMED. In May 1995, the NMED notified the Company that the NMED had determined that the Santa Fe Station was the source of gasoline contaminated groundwater at the site and vicinity. The Company contested the NMED's determination and believes insufficient data exists to identify the sources of groundwater contamination. At the request of the NMED, the Company conducted a minimum site assessment ("MSA") of the two former underground storage tank sites at the Santa Fe Station under the settlement agreement. The MSA report, which indicated that the Santa Fe Station did not appear to have been a source of gasoline contamination, was submitted to the NMED and is currently pending NMED review. (See PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-- OTHER ISSUES FACING THE COMPANY" in the 1995 Form 10-K.) On June 24, 1996, the Company received a letter from the NMED, indicating that the NMED believes that the Company is the source of gasoline contamination in a municipal well supplying the City of Santa Fe and the groundwater underlying the Santa Fe Station. Further, the letter stated that the Company was required to proceed with interim remediation of the contamination pursuant to the New Mexico Water Quality Control Commission ("NMWQCC") regulations. The Company intends to vigorously contest and defend against this determination. In that respect, the 11 Company has invoked the dispute resolution process of the settlement agreement and filed an administrative appeal of this determination with the NMWQCC. Concurrently with this appeal, the Company and the NMED have engaged in settlement discussions for possible resolution of this dispute. These discussions are ongoing and the Company is currently unable to predict the ultimate outcome of the settlement discussions. PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Republic Savings Bank ("RSB") Litigation On July 1, 1996, in a 7-2 decision in the case of United States v. Winstar Corporation, the United States Supreme Court ruled that the federal government had breached its contractual obligations with certain thrifts in refusing to recognize the accounting practices of supervisory goodwill and capital credits. Contracts had been negotiated with certain federal agencies providing for the purchase of failing thrifts on the condition that supervisory goodwill and capital credits be recognized for purposes of determining compliance with regulatory capital requirements. When Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA") in 1989, these accounting practices were prohibited, thus driving otherwise healthy thrifts out of compliance with the capital requirements. Many, including RSB, were taken over and liquidated as a result. Meadows owns indirectly a 50% ownership interest in Republic Holding Company ("RHC"), and RSB was a wholly-owned subsidiary of RHC. Meadows and RHC have pending before the United States Court of Federal Claims, a lawsuit filed on April 13, 1992, alleging similar contractual arrangements to those at issue in the Winstar case. The federal government has filed a counterclaim alleging breach by RHC of its obligation to maintain RSB's net worth and has moved to dismiss Meadows' claim for lack of standing. RSB was the thrift organized upon the acquisition of Citizens Federal Savings and Loan Association and Fireside Federal Savings and Loan Association, both Illinois corporations, in 1985. The plaintiffs invested $17 million of new capital in the failing institutions. The federal regulators expressly promised that approximately $23 million of supervisory goodwill created by the transaction could be accounted for as an intangible asset to be counted toward regulatory capital. Additionally, the regulators promised to allow a $3 million cash contribution by the Federal Savings and Loan Insurance Corporation to be recorded as a direct credit to regulatory capital. On June 5, 1992, the Office of Thrift Supervision placed RSB in receivership and appointed the Resolution Trust Corporation ("RTC") as receiver. On November 6, 1992, RTC sold RSB as a going concern for a premium of nearly $1 million, with approximately $215.5 million in assets and $203.9 million in liabilities. The RSB case has been held in abeyance pending the ruling by the Supreme Court. The Company believes that the Winstar decision establishes the federal government's liability to Meadows and RHC in the RSB litigation and the amount of damages owed as a result will be vigorously litigated. It is premature to estimate the amount of recovery, if any, by Meadows and RHC. 12 PVNGS Property Taxes As previously reported, in November 1995, the Arizona Court of Appeals held that an Arizona state property tax law, effective December 31, 1989, is unconstitutional and a lawsuit filed by the PVNGS participants, including the Company, was returned to the Arizona Tax Court for determination of the appropriate remedy consistent with that decision. (See PART I, ITEM 3.--"LEGAL PROCEEDINGS--PVNGS PROPERTY TAXES" in the 1995 Form 10-K.) In April 1996, the participants and the Arizona Department of Revenue reached an agreement to settle the pending litigation. Pursuant to the tentative settlement, the Company will relinquish its claims for relief with respect to prior years and the defendants will not challenge the Court of Appeals' decision concerning prospective relief (for tax years 1996 and thereafter). On July 18, 1996, the Arizona legislature passed, and the Governor of Arizona subsequently signed, a property tax reduction which codifies the terms of the settlement. Final documents are currently being prepared for the signatures of the parties to this action. The result of the legislation and the settlement would be a reduction in the Company's Arizona property tax of approximately $3.5 million annually beginning in 1996 and extending at least three years, barring any subsequent changes in the applicable tax law. ITEM 5. OTHER INFORMATION Energy and Utility Related Subsidiaries As previously reported, in June 1995, the Company filed an application for authorization for the creation of three wholly-owned subsidiaries and sought approval to invest a maximum of $50 million in the three subsidiaries over time and to enter into reciprocal loan agreements for up to $30 million with these subsidiaries. In January 1996, the hearing examiner assigned to the case recommended that the NMPUC deny the Staff's motion to have the case dismissed. In February 1996, the NMPUC Staff filed a motion seeking to have the Company report on its non-regulated activities, explain why NMPUC approval is not required and why sanctions should not be considered if approval is required. The Company filed its response describing its activities and presented legal authority demonstrating its compliance with the New Mexico Public Utility Act. (See PART 1, ITEM 1.--"BUSINESS--RATES AND REGULATION--Energy and Utility Related Subsidiaries" in the 1995 10-K.) In March 1996, the NMPUC issued an order adopting the hearing examiner's recommendation and denied NMPUC Staff's motion to dismiss the case. On July 8, 1996, hearings in the case began and were concluded on July 19, 1996. The Company currently cannot predict the ultimate outcome of this proceeding but intends to vigorously defend against any allegation that it is in violation of any legal requirements. Proposed Rulemaking On June 5, 1995, the NMPUC issued a Notice of Inquiry ("NOI") seeking comments on whether and how NMPUC Rule 450, which governs affiliate transactions, should be revised. On June 3, 1996, the NMPUC issued its Notice of Proposed Rulemaking and Order on the NOI proposing certain amendments to NMPUC Rule 450 and seeking comments and suggested language changes to its proposed amendments by August 5, 13 1996. The proposed amendments would, in effect, limit the Company's non-utility business ventures. The Company will vigorously oppose these limitations and intends to file comments and suggested language changes. The Company contends that many of the proposed amendments are unwarranted or prohibited under the New Mexico Public Utility Act. Gas Transmission Pipeline As previously reported, in May 1996, the Company submitted a bid for acquiring a gas transmission pipeline from the Department of Energy ("DOE") which had issued a request for proposal for the sale of 130 miles of transmission pipeline and associated right-of-way ("DOE pipeline"). The Company currently leases the DOE pipeline from the DOE for transportation of natural gas to certain customers in northern New Mexico, including the county of Los Alamos and Los Alamos National Laboratory. (See PART I, ITEM 2.--"PROPERTIES--NATURAL GAS" in the 1995 Form 10-K.) On June 21, 1996, the DOE accepted the Company's proposal to purchase the DOE pipeline for $3.1 million, subject to the successful negotiations of the transfer and transitional transportation agreements. The acquisition by the Company is subject to the approval of the NMPUC and the DOE providing right-of-way satisfactory to the Company. The parties are working to close the transaction by September 30, 1996. Palo Verde Nuclear Generating Station On July 5, 1996, the Nuclear Regulatory Commission ("NRC") issued a Systematic Assessment of Licensee Performance ("SALP") for PVNGS. The SALP report evaluates the station's performance as it relates to safe operation of nuclear power generation for the period of December 1, 1994 through June 1, 1996. The SALP reports rate nuclear plants in four functional areas--plant operations, maintenance, engineering and plant support, and assign ratings of category 1, 2 or 3, reflecting "superior", "good" or "adequate" performance, respectively. The NRC rated PVNGS "superior" in the areas of operations, maintenance and engineering, and "good" in the area of plant support. In the previous SALP report issued in December 1994, all four areas of PVNGS were rated as "good". 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: 10.56.1 Amended and Restated Receivables Purchase Agreement dated May 20, 1996, between Public Service Company of New Mexico, Citibank and Citicorp North America, Inc., and Amended Restated Collection Agent Agreement dated May 20, 1996, between Public Service Company of New Mexico, Corporate Receivables Corporation and Citibank, N.A. 15.0 Letter Re Unaudited Interim Financial Information 27 Financial Data Schedule In addition to those exhibits listed above, the Company hereby incorporates the following exhibits pursuant to Exchange Act Rule 126-32 and Regulation S-K, section iv, paragraph (d): Description Filed as Exhibit First Restated and Amended Public Service 99.1 of the Form S-8 Registration Company of New Mexico Director Retainer Plan Statement No. 333-03303 filed May 8, 1996. First Restated and Amended Public Service 99.1 of the Form S-8 Registration Company of New Mexico Performance Stock Statement No. 333-03289 filed May Plan 8, 1996. b. Reports on Form 8-K: None. 15 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PUBLIC SERVICE COMPANY OF NEW MEXICO (Registrant) Date: August 2, 1996 /s/ Donna M. Burnett ------------------------------------ Donna M. Burnett Corporate Controller and Chief Accounting Officer (Officer duly authorized to sign this report) 16 EX-10 2 EXHIBIT 10.56.1 FOR THE JUNE 30, 1996 FORM 10-Q AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT Dated as of May 20, 1996 PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the "Seller"), CITIBANK, N.A. ("Citibank"), and CITICORP NORTH AMERICA, INC., a Delaware corporation ("CNAI"), as agent (the "Agent") for the Banks (as defined in Article I), agree as follows: PRELIMINARY STATEMENTS. The Seller, Citibank and the Agent are parties to that certain Receivables Purchase Agreement, dated as of December 21, 1993 (the "Original Agreement"), pursuant to which the Seller may from time to time sell to the Banks undivided fractional ownership interests in its Receivables (referred to herein as "Receivable Interests") on the terms set forth in the Original Agreement. The parties now desire to amend and restate the Original Agreement in accordance with the terms and conditions set forth below. Accordingly, the parties agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to the singular and plural forms of the terms defined): "APA" means the asset purchase agreement (that relates to the Investor Agreement) entered into by a Bank concurrently with the Assignment and Acceptance pursuant to which it became a party to this Agreement. DOC #1178917/6.1 1 [Parallel Purchase Commitment] "Agent's Account" means the special account (account number 4063- 4833) of the Agent maintained at the office of Citibank, at 399 Park Avenue, New York, New York. "Assignment and Acceptance" means an assignment and acceptance agreement entered into by a Bank, an Eligible Assignee and the Agent, pursuant to which such Eligible Assignee may become a party to this Agreement. "Bank Commitment" of any Bank means, (a) with respect to Citibank, $100,000,000 or such amount as reduced by any Assignment and Acceptance entered into between Citibank and other Banks; (b) with respect to a Bank that has entered into an Assignment and Acceptance, the amount set forth therein as such Bank's Bank Commitment or such amount as reduced by an Assignment and Acceptance entered into between such Bank and an Eligible Assignee, in each case as reduced (or terminated) pursuant to the next sentence. Any reduction (or termination) of the Total Commitment pursuant to the terms of this Agreement shall reduce ratably (or terminate) each Bank's Bank Commitment. "Banks" means Citibank and each Eligible Assignee that shall become a party to this Agreement pursuant to Section 7.04. "Capital" of any Receivable Interest means the original amount paid to the Seller for such Receivable Interest at the time of its purchase by the Banks, pursuant to this Agreement, or such amount divided or combined in accordance with Section 2.07, in each case reduced from time to time by Collections distributed on account of such Capital pursuant to Section 2.04(d); provided that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution, as though it had not been made. "Collection Agent" means at any time the Person then authorized pursuant to the Collection Agent Agreement to administer and collect Pool Receivables. DOC #1178917/6.1 2 [Parallel Purchase Commitment] "Collection Agent Agreement" means an agreement between the Seller and the Agent (and, if the Seller does not act as Collection Agent, consented to by the Collection Agent), in form and substance satisfactory to them, governing the appointment and responsibilities of the Collection Agent as to administration and collection of the Pool Receivables, and requiring the Collection Agent to perform its obligations set forth in this Agreement, as the same may be amended, supplemented or restated from time to time. "Commitment Termination Date" means the earliest of (a) May 15, 1997, unless, prior to such date (or the date so extended pursuant to this clause) Citibank, in its sole discretion, shall consent to an extension of the then Commitment Termination Date, (b) the Facility Termination Date under the Investor Agreement, (c) the date determined pursuant to Section 6.01, and (d) the date the Total Commitment reduces to zero. "Eligible Assignee" means CNAI, any of its Affiliates, any Person managed by Citibank, CNAI or any of their Affiliates, or any financial or other institution acceptable to the Agent. "Event of Termination" has the meaning specified in Article VI. "Fee Agreement" means the agreement, of even date herewith, between the Seller and the Agent relating to the fees payable by the Seller. "Investor Agreement" means the Amended and Restated Receivables Purchase Agreement, dated as of May 20, 1996, among the Seller, Corporate Receivables Corporation and Citicorp North America, Inc., as Agent, as the same may, from time to time, be further amended, supplemented or restated. "Original Agreement" means the Receivables Purchase Agreement among the Seller, Citibank and the Agent dated as of December 21, 1993. "Percentage" of any Bank means, (a) with respect to Citibank, the percentage set forth on the signature page to this Agreement, or such amount as reduced by any Assignment and Acceptance entered into with an Eligible Assignee, or (b) with respect to a Bank that has entered into an Assignment and Acceptance, the amount set forth therein as such Bank's Percentage, or such DOC #1178917/6.1 3 [Parallel Purchase Commitment] amount as reduced by an Assignment and Acceptance entered into between such Bank and an Eligible Assignee. "Termination Date" for any Receivable Interest means the earlier of (i) that Business Day which the Seller so designates by notice to the Agent at least one Business Day in advance for such Receivable Interest and (ii) the Commitment Termination Date. "Total Commitment" means $100,000,000, as such amount may be reduced pursuant to Section 2.01. References to the unused portion of the Total Commitment shall mean, at any time, the Total Commitment, as then reduced pursuant to Section 2.01(b) or pursuant to the next sentence, minus the sum of the then outstanding Capital of Receivable Interests under this Agreement and the then outstanding "Capital" of "Receivable Interests" under the Investor Agreement. Furthermore, on each day on which the Seller reduces the unused portion of (or terminates) the "Purchase Limit" under the Investor Agreement, the Total Commitment automatically shall reduce by the same amount (or so terminate). "Yield" means for each Receivable Interest for any Fixed Period the result of: AR x C x ED + LF -- 360 where: AR = the Assignee Rate for such Receivable Interest for such Fixed Period C = the Capital of such Receivable Interest during such Fixed Period ED = the actual number of days elapsed during such Fixed Period LF = the Liquidation Fee, if any, for such Receivable Interest for such Fixed Period; DOC #1178917/6.1 4 [Parallel Purchase Commitment] provided that no provision of this Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by applicable law; and provided, further, that Yield for any Receivable Interest shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason. Defined Terms Incorporated by Reference. Unless otherwise defined in this Agreement and subject to the modifications herein set forth, capitalized terms used in this Agreement or in any provisions of the Investor Agreement incorporated in this Agreement by reference shall have the meanings given to them in the Investor Agreement. Without limiting the foregoing, the defined terms "Credit and Collection Policy" and "Seller Report" are hereby incorporated by reference together with the related Schedule I and Annex A, respectively, of the Investor Agreement. All references to the "Agent" and "Agreement" in provisions of the Investor Agreement (including Schedules) incorporated in this Agreement by reference shall, without further reference, mean CNAI as Agent under this Agreement and this Agreement, respectively. Furthermore, all references in such incorporated provisions to "Collections", "Contract", "Net Receivables Pool Balance", "Pool Receivable", "Receivable Interest", "Receivables Pool" and "Related Security" shall mean the Collections, a Contract, the Net Receivables Pool Balance, a Pool Receivable, a Receivable Interest, the Receivables Pool and the Related Security under this Agreement, respectively. To the extent any word or phrase is defined in this Agreement, any such word or phrase appearing in provisions so incorporated by reference from the Investor Agreement shall have the meaning given to it in this Agreement. The incorporation by reference into this Agreement from the Investor Agreement is for convenience only, and this Agreement and the Investor Agreement shall at all times be, and be treated as, separate and distinct facilities. Incorporations by reference in this Agreement from the Investor Agreement shall not be affected or impaired by any subsequent expiration or termination of the Investor Agreement, nor by any amendment thereof or waiver thereunder unless the Agent, as Agent for the Banks, shall have consented to such amendment or waiver in writing. DOC #1178917/6.1 5 [Parallel Purchase Commitment] SECTION 1.02. Accounting and Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES; CONDITIONS OF PURCHASES SECTION 2.01. Commitment. (a) On the terms and conditions hereinafter set forth, the Banks shall, ratably in accordance with their respective Bank Commitments, purchase Receivable Interests from the Seller from time to time during the period from the date hereof to the Commitment Termination Date. Under no circumstances shall the Banks be obligated to make any such purchase if, after giving effect to such purchase, the aggregate outstanding Capital of Receivable Interests, together with the aggregate outstanding "Capital" of all "Receivable Interests" under the Investor Agreement, would exceed the Total Commitment. (b) The Seller may, upon at least five Business Days' notice to the Agent, terminate the facility in whole or, from time to time, reduce in part the unused portion of the Total Commitment; provided that each partial reduction shall be in the amount of at least $1,000,000 or an integral multiple thereof. (c) The Agent, on behalf of the Banks which own Receivable Interests, shall have the Collections attributable to such Receivable Interests automatically reinvested pursuant to Section 2.04 in additional undivided percentage interests in the Pool Receivables by making an appropriate readjustment of such Receivable Interests. SECTION 2.02. Making Purchases. (a) Each purchase shall be made on at least three Business Days' notice from the Seller to the Agent. Each such notice of a purchase shall specify (i) the amount requested to be paid to the Seller (such amount, which shall not be less than $5,000,000, being referred DOC #1178917/6.1 6 [Parallel Purchase Commitment] to herein as the initial "Capital" of the Receivable Interest then being purchased), (ii) the date of such purchase (which shall be a Business Day) and (iii) the desired duration of the initial Fixed Period for the Receivable Interest to be purchased. The Agent shall notify the Seller whether the desired duration of the initial Fixed Period for the Receivable Interest to be purchased is acceptable, and the Agent shall promptly notify the Banks of the proposed purchase. Such notice of purchase shall be sent by telecopier, telex or cable to all Banks concurrently and shall specify the date of such purchase, each Bank's Percentage multiplied by the aggregate amount of Capital of the Receivable Interest being purchased, the Fixed Period for such Receivable Interest and whether Yield for the Fixed Period for such Receivable Interest is calculated based on the Eurodollar Rate (which may be selected only if such notice is given at least two Business Days prior to the purchase date) or the Alternate Base Rate. (b) Prior to 2:00 P.M., New York City time, on the date of each such purchase of a Receivable Interest, the Banks, ratably in accordance with their respective Bank Commitments, shall, upon satisfaction of the applicable conditions set forth in Sections 2.11 and 2.12, make available to the Agent the amount of their respective purchases by deposit of the applicable amount in immediately available funds to the Agent's Account and, after receipt by the Agent of such funds, the Agent will cause such funds to be made available to the Seller in immediately available funds at First Security Bank of New Mexico, N.A., PNM General Fund, Account No. 651-53767-02, ABA 107000275 (or such other account as the Seller may specify by notice to the Agent from time to time). (c) Effective on the date of each purchase pursuant to this Section 2.02 and each reinvestment pursuant to Section 2.04, the Seller hereby sells and assigns to the Agent, for the benefit of the Banks, an undivided percentage ownership interest, to the extent of the Receivable Interest then being purchased, in each Pool Receivable then existing and in the Related Security and Collections with respect thereto. (d) Notwithstanding the foregoing, a Bank shall not be obligated to make purchases under this Section 2.02 at any time in an amount which would exceed such Bank's Bank Commitment less (in the case of any Bank other than Citibank) the amount of any purchases made by such Bank under the DOC #1178917/6.1 7 [Parallel Purchase Commitment] APA. Each Bank's obligation shall be several, such that the failure of any Bank to make available to the Seller any funds in connection with any purchase shall not relieve any other Bank of its obligation, if any, hereunder to make funds available on the date of such purchase, but no Bank shall be responsible for the failure of any other Bank to make funds available in connection with any purchase. SECTIONS 2.03 through 2.04. Incorporation by Reference. Each of Sections 2.03 through 2.04 of the Investor Agreement is hereby incorporated herein by this reference, except that each reference therein to the "Investor" shall be deemed to be a reference to the Banks. SECTION 2.05. Fees. The Seller shall pay to the Agent certain fees in the amounts and on the dates set forth in the Fee Agreement. SECTIONS 2.06 through 2.07. Incorporation by Reference. Each of Sections 2.06 through 2.07 of the Investor Agreement is hereby incorporated herein by this reference. SECTION 2.08. Increased Costs. (a) If CNAI, any Bank or any Affiliate thereof (each an "Affected Person") determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Affected Person and such Affected Person determines that the amount of such capital is increased by or based upon the existence of any commitment to make purchases of or otherwise to maintain the investment in Pool Receivables or interests therein related to this Agreement or to the funding thereof, other commitments of the same type or under any commitments to the Investors, then, upon demand by such Affected Person (with a copy to the Agent), the Seller shall immediately pay to the Agent, for the account of such Affected Person (as a third-party beneficiary), from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person in the light of such circumstances, to the extent that such Affected Person reasonably determines such increase in capital to be allocable to the existence of any of such commitments. A certificate as to such amounts submitted to the Seller and the Agent by such Affected Person shall be conclusive and binding for all purposes, absent manifest error. DOC #1178917/6.1 8 [Parallel Purchase Commitment] (b) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements referred to in Section 2.09) in or in the interpretation of any law or regulation or (ii) compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Bank of agreeing to purchase or purchasing, or maintaining the ownership of Receivable Interests in respect of which Yield is computed by reference to the Eurodollar Rate, then, upon demand by such Bank (with a copy to the Agent), the Seller shall immediately pay to the Agent, for the account of such Bank (as a third-party beneficiary), from time to time as specified by such Bank, additional amounts sufficient to compensate such Bank for such increased costs, to the extent that such Investor reasonably determines such increase in costs to be allocable to such agreement to purchase such Receivable Interests. A certificate as to such amounts submitted to the Seller and the Agent by such Bank shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.09. Additional Yield on Receivable Interests Bearing a Eurodollar Rate. The Seller shall pay to any Bank, so long as such Bank shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional Yield on the unpaid Capital of each Receivable Interest of such Bank during each Fixed Period in respect of which Yield is computed by reference to the Eurodollar Rate, for such Fixed Period, at a rate per annum equal at all times during such Fixed Period to the remainder obtained by subtracting (i) the Eurodollar Rate for such Fixed Period from (ii) the rate obtained by dividing such Eurodollar Rate referred to in clause (i) above by that percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Bank for such Fixed Period, payable on each date on which Yield is payable on such Receivable Interest. Such additional Yield shall be determined by such Bank and notice thereof given to the Seller through the Agent within 30 days after any Yield payment is made with respect to which such additional Yield is requested. A certificate as to such additional Yield submitted to the Seller and the Agent by such Bank shall be conclusive and binding for all purposes, absent manifest error. DOC #1178917/6.1 9 [Parallel Purchase Commitment] SECTION 2.10. Incorporation by Reference. Section 2.10 of the Investor Agreement is hereby incorporated herein by this reference, except each reference therein to the "Investor" shall be deemed to be a reference to the Banks. SECTION 2.11. Conditions Precedent. The effectiveness of the amendment and restatement of the Original Agreement is subject to the conditions precedent that the Agent shall have received the following, each in form and substance satisfactory to the Agent: (a) Certified copies of the resolutions of the Board of Directors of the Seller approving this Agreement and certified copies of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement. (b) A certificate of the Secretary or Assistant Secretary of the Seller certifying the names and true signatures of the officers of the Seller authorized to sign this Agreement and the other documents to be delivered by it hereunder. (c) Acknowledgment copies, or time-stamped receipt copies, of this Agreement, duly filed as a public utility filing with the Secretary of State of the State of New Mexico, and proper amendments to existing financing statements, duly filed on or before the date of this Agreement under the UCC of all jurisdictions that the Agent may deem necessary or desirable in order to perfect the ownership interests contemplated by this Agreement in the Receivables, Related Security and Collections. (d) Acknowledgment copies, or time-stamped receipt copies, of proper financing statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Related Security or Collections previously granted by the Seller other than pursuant to the Original Agreement. (e) Completed requests for information or reports of chattel searches, dated on or before the date of any purchase hereunder, listing the amendments to financing statements referred to in subsection (c) above and all other effective financing statements filed in the jurisdictions referred to in subsec tion (c) above that name the Seller as debtor, together with copies of such other financing statements (none of which shall cover any Receivables, Contracts or Related Security or Collections). (f) Copies of the Order, the Rate Rider, the Tariffs and the orders, if any, of the Commission in cases Nos. 2445, 2503 and 2353, certified as true and correct by an authorized officer of the Seller, together with a copy of the order of the Commission authorizing the Seller to consummate the transactions contemplated by this Agreement. (g) A favorable opinion of Keleher & McLeod, P.A., counsel for the Seller, substantially in the form of Annex B to the Investor Agreement and as to such other matters as the Agent may reasonably request. (h) The Collection Agent Agreement. (i) The Fee Agreement. (j) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler, counsel for the Agent, as to such matters as the Agent may reasonably request. SECTION 2.12. Conditions Precedent to All Purchases and Rein vestments. Each purchase and each reinvestment shall be subject to the further conditions precedent that (a) in the case of each purchase, the Collection Agent shall have delivered to the Agent on or prior to such purchase, in form and substance satisfactory to the Agent, a completed Seller Report, dated as of the last day of the preceding calendar month, together with such additional information as may reasonably be requested by the Agent, (b) on the date of such purchase or reinvestment the following statements shall be true (and acceptance of the proceeds of such purchase or reinvestment shall be deemed a representation and warranty by the Seller that such statements are then true): DOC #1178917/6.1 10 [Parallel Purchase Commitment] (i) The representations and warranties contained in Article III are correct on and as of the date of such purchase or reinvestment as though made on and as of such date, and (ii) No event has occurred and is continuing, or would result from such purchase or reinvestment, that constitutes an Event of Termination or that would constitute an Event of Termination but for the requirement that notice be given or time elapse or both, and (c) the Agent shall have received such other approvals, opinions or documents as it may reasonably request. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01. Representations and Warranties. Article III of the Investor Agreement is hereby incorporated herein by reference, except that each reference therein to the "Parallel Purchase Commitment" or to the "Investor," respectively, shall be deemed to be a reference to the Investor Agreement or to the owner of the relevant Receivable Interest, respectively. ARTICLE IV COVENANTS SECTION 4.01. Covenants. Article IV of the Investor Agreement is hereby incorporated herein by reference, except that each reference therein to the "Facility Termination Date" shall be deemed to be a reference to the Commitment Termination Date. DOC #1178917/6.1 11 [Parallel Purchase Commitment] ARTICLE V INDEMNIFICATION SECTION 5.01. Indemnities by the Seller. Without limiting any other rights that the Banks or the Agent or any of their respective Affiliates (each, an "Indemnified Party") may have hereunder or under applicable law, the Seller hereby agrees to indemnify each Indemnified Party from and against any and all claims, losses and liabilities (including reasonable attorneys' fees) (all of the foregoing being collectively referred to as "Indemnified Amounts") arising out of or resulting from this Agreement or the use of proceeds of purchases or reinvestments or the ownership of Receivable Interests or in respect of any Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Indemnified Party, (b) recourse (except as otherwise specifically provided in this Agreement) for uncollectible Receivables or (c) any income taxes incurred by such Indemnified Party arising out of or as a result of this Agreement or the ownership of Receivable Interests or in respect of any Receivable or any Contract. Without limiting or being limited by the foregoing, the Seller shall pay on demand to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party from and against any and all Indemnified Amounts relating to or resulting from any of the following: (i) failure of the Seller to receive all approvals from the Commission necessary for billing and collection of the Recoverable Amounts; any revocation, modification or challenge to or invalidity of the Order or the Rate Rider, or any other inability of the Seller to collect the Receivables (other than by reason of the financial inability of an Obligor to pay) in accordance with the provisions of the Rate Rider or any inability of the Banks to receive Collections as a result of the bankruptcy of the Seller; (ii) the creation of an undivided percentage interest in any Receivable which purports to be part of the Net Receivables Pool Balance but which is not at the date of the creation of such interest an Eligible Receivable or which thereafter ceases to be an Eligible Receivable; (iii) reliance on any representation or warranty or statement made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement which was incorrect in any material respect when made; DOC #1178917/6.1 12 [Parallel Purchase Commitment] (iv) the failure by the Seller to comply with any law, rule or regulation applicable to the Seller with respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or the related Contract to conform to any such applicable law, rule or regulation; (v) the failure to vest in any Bank or any other owner of a Receivable Interest a perfected undivided percentage ownership interest, to the extent of such Receivable Interest, in the Receivables in, or purporting to be in, the Receivables Pool and the Related Security and Collections in respect thereof, free and clear of any Adverse Claim; (vi) 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 Receivables in, or purporting to be in, the Receivables Pool and the Related Security and Collections in respect thereof, whether at the time of any purchase or reinvestment or at any subsequent time; (vii) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool (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 services related to such Receivable or the furnishing or failure to furnish such merchandise or services or relating to collection activities with respect to such Receivable (if such collection activities were performed by the Seller or any of its Affiliates acting as Collection Agent). Without in any manner limiting the Seller's indemnity obligations under this Section 5.01(vii), the Seller shall be entitled, at its election, to assume the defense of, or otherwise to contest, any such dispute, claim, offset or defense. The Indemnified Party will cooperate with the Seller, at the Seller's sole cost, in any such defense or contest undertaken by the Seller. In the event the Seller assumes such defense, or undertakes such contest, the DOC #1178917/6.1 13 [Parallel Purchase Commitment] Indemnified Party shall be permitted, at its sole cost, to participate therein; (viii) any failure of the Seller, as Collection Agent or otherwise, to perform its duties or obligations in accordance with the provisions hereof or of the Collection Agent Agreement or to perform its duties or obligations under the Contracts; (ix) any products liability or other claim arising out of or in connection with services which are the subject of any Contract; (x) the commingling of Collections of Pool Receivables at any time with other funds; or (xi) any investigation, litigation or proceeding related to this Agreement or the use of proceeds of purchases or reinvestments or the ownership of Receivable Interests or in respect of any Receivable, Related Security, Contract or Collections. ARTICLE VI EVENTS OF TERMINATION SECTION 6.01. Events of Termination. If any of the following events (each an "Event of Termination") shall occur and be continuing: (a) The Collection Agent (if the Seller or any of its Affiliates) (i) shall fail in any material respect to perform or observe any term, covenant or agreement under this Agreement or under the Collection Agent Agreement (other than as referred to in clause (ii) of this paragraph (a)) and such failure shall remain unremedied for three Business Days or (ii) shall fail to make when due any payment or deposit to be made by it under this Agreement or the Collection Agent Agreement; or (b) The Seller shall fail (i) to transfer to the Agent when requested any rights, pursuant to this Agreement or the Collection Agent Agreement, which the Seller then has as Collection Agent, or (ii) to make any payment required under Section 2.04; or DOC #1178917/6.1 14 [Parallel Purchase Commitment] (c) Any representation or warranty made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement or any information or report delivered by the Seller pursuant to this Agreement shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered; or (d) The Seller shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed and any such failure shall remain unremedied for ten days after written notice thereof shall have been given to the Seller by the Agent; or (e) The Seller or any of its Significant Subsidiaries shall fail to pay any principal of or premium or interest on any of its Debt which is outstanding in a principal amount of at least $5,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (f) Any purchase or any reinvestment pursuant to this Agreement shall for any reason (other than pursuant to the terms hereof) cease to create, or any Receivable Interest shall for any reason cease to be, a valid and perfected first priority undivided percentage interest to the extent of the pertinent Receivable Interest in each applicable Pool Receivable and the Related Security and Collections with respect thereto; or DOC #1178917/6.1 15 [Parallel Purchase Commitment] (g) The Seller or any of its Significant 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 the Seller or any of its Significant Subsidiaries seeking to adjudicate it a 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, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Seller or any of its Significant Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this paragraph (g); or (h) As of the last day of any calendar month, either the Default Ratio shall exceed 2.0% or the Delinquency Ratio shall exceed 5.0% or the Loss-to-Liquidation Ratio shall exceed 1.5%; or (i) The sum of the Receivable Interests plus the "Receivable Interests" under the Investor Agreement shall for a period of five consecutive Business Days be greater than 100%; or (j) There shall have occurred any event which may materially adversely affect the collectibility of the Receivables Pool or the ability of the Seller to collect Pool Receivables or otherwise perform its obligations under this Agreement or the Collection Agent Agreement; or (k) The Seller's long-term public senior debt securities are not rated at least B by Standard & Poor's or B2 by Moody's Investors Service, Inc. the Agent may, by notice to the Seller, take either or both of the following actions: (x) declare the Commitment Termination Date to have occurred (in which case the Commitment Termination Date shall be deemed to have oc curred), and (y) without limiting any right under the Collection Agent Agreement to replace the Collection Agent, designate another Person to succeed the Seller as the Collection Agent; provided that, automatically upon the occurrence of any event (without any requirement for the passage of time or the giving of notice) described in paragraph (g) above, the Commitment Termination Date shall occur, the Seller (if it is then serving as the Collection Agent) shall cease to be the Collection Agent, and the Agent or its designee shall become the Collection Agent. Upon any such declaration or designation or upon any such automatic termination, the Banks and the Agent shall have, in addition to the rights and remedies which they may have under this Agreement or otherwise, all other rights and remedies provided after default under the UCC and under other applicable law, which rights and remedies shall be cumulative. ARTICLE VII MISCELLANEOUS SECTION 7.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement (including, without limitation any provision of the Investor Agreement which is incorporated herein by reference) or consent to any departure by the Seller therefrom shall be effective unless in a writing signed by the Agent, as agent for the Banks (and, in the case of any amendment, also signed by the Seller), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Banks or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. SECTION 7.02. Notices, Etc. All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include facsimile communication) and faxed or delivered to each party hereto at its address set forth under its name on the signature pages hereof, and if to any Bank (other than Citibank), to such Bank at its address specified in the Assignment and Acceptance pursuant to which it became a Bank, or, as to each party, at such other address as shall be designated by such party DOC #1178917/6.1 16 [Parallel Purchase Commitment] in a written notice to the other parties hereto. Notices and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by regular mail), and notices and communications sent by other means shall be effective when received. SECTION 7.03. CNAI and Affiliates. Citibank's obligation to purchase Receivable Interests under this Agreement may be satisfied by CNAI or any of its Affiliates. With respect to any Receivable Interest or interest therein owned by it, CNAI shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not the Agent. CNAI and its Affiliates may generally engage in any kind of business with the Seller or any Obligor, any of their respective Affiliates and any Person who may do business with or own securities of the Seller or any Obligor or any of their respective Affiliates, all as if CNAI were not the Agent and without any duty to account therefor to the Banks. SECTION 7.04. Assignability. (a) Rights and Limitations of Banks. Each Bank may assign to any Eligible Assignee or to any other Bank all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Bank Commitment and any Receivable Interests or interests therein owned by it). (b) Assignment of Rights. Citibank or any of its Affiliates may assign any of its rights (including, without limitation, rights to payment of Capital and Yield) under this Agreement to any Federal Reserve Bank without notice to or consent of the Seller or the Agent. (c) The Agent. This Agreement and the rights and obligations of the Agent herein shall be assignable by the Agent and its successors and assigns. (d) The Seller. The Seller may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Agent. SECTION 7.05. Costs, Expenses and Taxes. (a) In addition to the rights of indemnification granted under Section 5.01 hereof, the Seller agrees to pay on demand all costs and expenses in connection with the preparation, execution, delivery and administration (including periodic auditing DOC #1178917/6.1 17 [Parallel Purchase Commitment] of Receivables) of this Agreement and the other documents and agreements to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent, Citibank and their respective Affiliates with respect thereto and with respect to advising the Agent, Citibank and their respective Affiliates as to their rights and remedies under this Agreement, and all costs and expenses, if any (including reasonable counsel fees and expenses), of the Agent, the Banks, or any of their respective Affiliates in connection with the enforcement of this Agreement and the other documents and agreements to be delivered hereunder. (b) In addition, the Seller shall pay any and all stamp and other taxes and fees payable in connection with the execution, delivery, filing and recording of this Agreement or the other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party harmless from and against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 7.06. Confidentiality. (a) Unless otherwise required by applicable law or regulation, the Seller agrees to maintain the confidentiality of this Agreement (and all drafts thereof) in communications with third parties and otherwise; provided that this Agreement may be disclosed to (i) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Agent, and (ii) the Seller's legal counsel and auditors if they agree (which they may do orally) to hold it confidential. (b) The Agent and the Banks agree to maintain the confidentiality of any information each receives from the Seller, its agents, affiliates or representatives in connection with this Agreement or any audit or otherwise (the "Confidential Information"); provided, however, that each may, in connection with an assignment or participation, disclose to the assignee or participant any information relating to the Seller, including the Receivables, furnished to such assignor by or on behalf of the Seller or by the Agent; provided that, prior to any such disclosure, the assignee or participant agrees, in a form reasonably satisfactory to the Seller, to preserve the confidentiality of any Confidential Information; and provided further that there shall be no obligation of confidentiality in respect of any Confidential Information which may be generally available to the public. DOC #1178917/6.1 18 [Parallel Purchase Commitment] SECTION 7.07. Execution of Documents by Agent. Promptly following request therefor by the Seller, the Agent will execute and deliver to the Seller such amendments and supplements to, and such releases with respect to, UCC financing statements, and such other instruments and documents, as the Seller may from time to time request for the purpose of (a) stating the extent of the Banks' undivided interest in the Receivables Pool as of a stated date, (b) identifying Receivables that are not included in, or have been excluded from, the Receivables Pool, or (c) releasing any Receivable referred to in the immediately preceding clause (b) hereof, or repurchased pursuant to Section 2.10, from any security interest or other lien created by or in connection with the transactions contemplated by this Agreement. SECTION 7.08. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York (without giving effect to the conflict of laws principles thereof), except to the extent that the perfection of the interests of the Banks in the Receivables or remedies hereunder, in respect thereof, are governed by the laws of a jurisdiction other than the State of New York. SECTION 7.09. Execution In Counterparts. This Agreement may be executed in any number of 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. SECTION 7.10. Survival of Termination. The provisions of Sections 2.08, 2.09, 5.01, 7.05 and 7.06 shall survive any termination of this Agreement. DOC #1178917/6.1 19 [Parallel Purchase Commitment] IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. SELLER: PUBLIC SERVICE COMPANY OF NEW MEXICO By -------------------------------------- Name: Title: Treasurer Alvarado Square Albuquerque, NM 87158 Attention: Treasurer Facsimile No. (505) 848-2369 CITIBANK: CITIBANK, N.A. By -------------------------------------- Name: Paul T. Pureka Title: Attorney-in-Fact Commitment: $100,000,000 Percentage Interest: 100% 450 Mamaroneck Avenue Harrison, NY 10528 Attention: Corporate Asset Funding Facsimile No. (914) 899-7890 DOC #1178917/6.1 20 [Parallel Purchase Commitment] AGENT: CITICORP NORTH AMERICA, INC., as Agent By -------------------------------------- Name: Kathy S. Simmons Title: Vice President 450 Mamaroneck Avenue Harrison, NY 10528 Attention: Corporate Asset Funding Facsimile No. (914) 899-7890 DOC #1178917/6.1 21 [Parallel Purchase Commitment] ACKNOWLEDGMENT STATE OF NEW MEXICO ) ) SS. COUNTY OF BERNALILLO ) This instrument was acknowledged before me on May __, 1996 by ________________ (name of officer), ________________ (title of officer) of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation. -------------------------- Notary Public My Commission Expires: - --------------------- DOC #1178917/6.1 22 [Parallel Purchase Commitment] ACKNOWLEDGMENT STATE OF NEW YORK ) ) SS. COUNTY OF NEW YORK ) This instrument was acknowledged before me on May 17, 1996 by Paul T. Pureka, as Attorney-in-Fact for CITIBANK, N.A. Notary Public Renee E. Ring Notary Public of the State of New York No. 02-R14985371 Qualified in New York County Commission Expires 8/12/97 DOC #1178917/6.1 23 [Parallel Purchase Commitment] ACKNOWLEDGMENT STATE OF NEW YORK ) ) SS. COUNTY OF NEW YORK ) This instrument was acknowledged before me on May 17, 1996 by Kathy S. Simmons, Vice President of CITICORP NORTH AMERICA, INC., a Delaware corporation. Notary Public Renee E. Ring Notary Public of the State of New York No. 02-R14985371 Qualified in New York County Commission Expires 8/12/97 DOC #1178917/6.1 24 [Parallel Purchase Commitment] U.S. $100,000,000 AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT Dated as of May 20, 1996 Among PUBLIC SERVICE COMPANY OF NEW MEXICO as the Seller, CITIBANK, N.A. as a Bank and CITICORP NORTH AMERICA, INC. as the Agent DOC #1178917/6.1 [Parallel Purchase Commitment] TABLE OF CONTENTS Section Page ------- ---- ARTICLE I DEFINITIONS.............................................................. 1 SECTION 1.01. Certain Defined Terms............................ 1 SECTION 1.02. Accounting and Other Terms....................... 6 ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES; CONDITIONS OF PURCHASES..................................................19 SECTION 2.01. Commitment....................................... 6 SECTION 2.02. Making Purchases................................. 7 SECTION 2.03. through SECTION 2.04. Incorporation by Reference....................... 8 SECTION 2.05. Fees............................................. 8 SECTION 2.06. through SECTION 2.07. Incorporation by Reference........................ 8 SECTION 2.08. Increased Costs.................................. 8 SECTION 2.09. Additional Yield on Receivable Interests Bearing a Eurodollar Rate.............................. 9 SECTION 2.10. Incorporation by Reference.......................10 SECTION 2.11. Conditions Precedent.............................10 SECTION 2.12. Conditions Precedent to All Purchases and Reinvestments........................11 ARTICLE III REPRESENTATIONS AND WARRANTIES...........................................12 SECTION 3.01. Representations and Warranties...................12 DOC #1178917/6.1 i [Parallel Purchase Commitment] ARTICLE IV COVENANTS................................................................12 SECTION 4.01. Covenants of the Seller..........................12 ARTICLE V INDEMNIFICATION..........................................................13 SECTION 5.01. Indemnities by the Seller........................13 ARTICLE VI EVENTS OF TERMINATION....................................................15 SECTION 6.01. Events of Termination............................15 ARTICLE VII MISCELLANEOUS............................................................18 SECTION 7.01. Amendments, Etc..................................18 SECTION 7.02. Notices, Etc.....................................19 SECTION 7.03. CNAI and Affiliates..............................19 SECTION 7.04. Assignability....................................19 SECTION 7.05. Costs, Expenses and Taxes........................20 SECTION 7.06. Confidentiality..................................20 SECTION 7.07. Execution of Documents by Agent..................21 SECTION 7.08. Governing Law....................................21 SECTION 7.09. Execution in Counterparts........................21 SECTION 7.10. Survival of Termination..........................22 DOC #1178917/6.1 ii AMENDED AND RESTATED COLLECTION AGENT AGREEMENT COLLECTION AGENT AGREEMENT, dated as of May 20, 1996, between Public Service Company of New Mexico, a New Mexico corporation, individually (the "Seller") and as collection agent (the "Collection Agent"), and Citicorp North America, Inc., a Delaware corporation (the "Agent"). W I T N E S S E T H: WHEREAS, the Seller and the Agent are parties to (i) the Amended and Restated Receivables Purchase Agreement, dated as of May 20, 1996, with Corporate Receivables Corporation, a California corporation (an "Investor") and (ii) the Amended and Restated Receivables Purchase Agreement, dated as of May 20, 1996, with Citibank, N.A., a national banking association ("Citibank") (collectively, the "Agreements"). WHEREAS, the Seller and the Agent are parties to that certain Collection Agent Agreement, dated as of December 21, 1993 (the "Original Collection Agent Agreement"), pursuant to which Seller agreed to serve as Collection Agent on the terms set forth in the Original Collection Agent Agreement. WHEREAS, it is a condition precedent to the execution and delivery of the Agreements that the parties hereto enter into this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1 DOC #1180048.NY SECTION 1. Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Agreements. SECTION 2. Designation of Collection Agent. The servicing, administration and collection of the Pool Receivables shall be conducted by the Collection Agent so designated hereunder from time to time. Until the Agent gives notice to the Seller of the designation of a new Collection Agent, the Seller is hereby designated as, and hereby agrees to perform the duties and obligations of, the Collection Agent pursuant to the terms hereof and of each Agreement. The Agent at any time may designate as Collection Agent any Person (including itself) to succeed the Seller or any successor Collection Agent, if such Person shall consent and agree to the terms hereof. The Collection Agent may, with the prior consent of the Agent, subcontract with any other Person for the servicing, administration or collection of the Pool Receivables. Any such subcontract shall not affect the Collection Agent's liability for performance of its duties and obligations pursuant to the terms hereof. SECTION 3. Duties of Collection Agent. (a) The Collection Agent shall take or cause to be taken all such actions as may be necessary or advisable to collect each Pool Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. The Seller and the Agent hereby appoint the Collection Agent, from time to time designated pursuant to Section 2 hereof, as agent for themselves and for the Investors and the Banks to enforce their respective rights and interests in the Pool Receivables, the Related Security and the related Contracts. (b) The Collection Agent shall administer the Collections in accordance with the procedures described in Section 2.04 of each Agreement. The Collection Agent also shall perform the other obligations of the "Collection Agent" set forth in each Agreement. 2 DOC #1180048.NY (c) If no Event of Termination or event that but for notice or lapse of time or both would constitute an Event of Termination shall have occurred and be continuing, the Seller, while it is the Collection Agent, may, in accordance with the Credit and Collection Policy, extend the maturity or adjust the Outstanding Balance of any Defaulted Receivable as the Seller deems appropriate to maximize Collections thereof. (d) The Collection Agent shall hold in trust and, upon request of the Agent, shall legend appropriately for the Seller and each Investor and each Bank, in accordance with their respective interests, all computer tapes or disks and other documents or instruments that evidence or relate to Pool Receivables. (e) The Collection Agent shall, as soon as practicable following receipt, turn over to the Seller any cash collections or other cash proceeds received with respect to Receivables not constituting Pool Receivables. (f) The Collection Agent shall, from time to time at the request of the Agent, furnish to the Agent (promptly after any such request) a calculation of the amounts set aside for the Investor and the Banks pursuant to Section 2.04 of the Agreements. (g) Prior to the 20th day of each month, the Collection Agent shall prepare and forward to the Agent a Seller Report relating to the Receivable Interests outstanding as of the last day of the immediately preceding month, together with an analysis of the aging of Pool Receivables. (h) As soon as available and in any event within 120 days after the end of each fiscal year of the Seller, the Collection Agent shall deliver to the Agent a written report describing certain agreed upon procedures conducted by the Seller's independent public accountants with respect to the Pool Receivables and the Credit and Collection Policy on a scope and in a form reasonably requested by the Agent. 3 DOC #1180048.NY SECTION 4. Certain Rights of the Agent. (a) The Agent may notify the Obligors of Receivables, at any time and at the Seller's expense, of the ownership of such Receivables under the Agreements. (b) At any time following the designation of a Collection Agent other than the Seller pursuant to Section 2: (i) The Agent may direct the Obligors of Pool Receivables that all payments thereunder be made directly to the Agent or its designee. (ii) The Seller shall, at the Agent's request and at the Seller's expense, notify each Obligor of Pool Receivables of the ownership of Receivable Interests under the Agreements and direct that payments be made directly to the Agent or its designee. (iii) The Seller shall, at the Agent's request and at the Seller's expense, (A) assemble all of the documents, instruments and other records (including, without limitation, computer tapes and disks) that evidence or relate to the Pool Receivables, and the related Contracts and Related Security, or that are otherwise necessary or desirable to collect the Pool Receivables, and shall make the same available to the Agent at a place selected by the Agent or its designee, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections of Pool Receivables in a manner acceptable to the Agent and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Agent or its designee. (iv) Subject to applicable law and regulation, the Seller authorizes the Agent to take any and all steps in the Seller's name and on behalf of the Seller that are necessary or desirable, in the determination of the Agent, to collect 4 DOC #1180048.NY amounts due under the Pool Receivables, including, without limitation, endorsing the Seller's name on checks and other instruments representing Collections of Pool Receivables and enforcing the Pool Receivables and the Related Security and related Contracts. SECTION 5. Further Assurances. (a) The Seller agrees from time to time, at its expense, promptly to execute and deliver all further instruments and documents, and to take all further actions, that may be necessary or desirable, or that the Agent may reasonably request, to perfect, protect or more fully evidence the Receivable Interests purchased under the Agreements, or to enable the Investor and the Banks or the Agent to exercise and enforce their respective rights and remedies hereunder or under the Agreements. Without limiting the foregoing, the Seller will, upon the request of the Agent, (i) execute and file such financing or continuation statements, or amendments thereto, and such other instruments and documents, that may be necessary or desirable, or that the Agent may reasonably request, to perfect, protect or evidence such Receivable Interests; (ii) mark conspicuously each invoice evidencing each Pool Receivable and the related Contract with a legend, acceptable to the Agent, evidencing that Receivable Interests therein have been sold; and (iii) mark its master data processing records evidencing such Pool Receivables and related Contracts with such a legend. (b) The Seller authorizes the Agent to file financing or continuation statements, and amendments thereto and assignments thereof, relating to the Pool Receivables and the Related Security, the related Contracts and the Collections with respect thereto without the signature of the Seller where permitted by law. A photocopy or other reproduction of the applicable Agreement and this Amended and Restated Collection Agent Agreement shall be sufficient as a financing statement where permitted by law. SECTION 6. Collection Agent Fee. The Collection Agent shall be paid a collection agent fee of 1% per annum on the average daily Capital of each Receivable Interest, from the date of purchase of such Receivable Interest until 5 DOC #1180048.NY the later of the Termination Date for such Receivable Interest or the date on which such Capital is reduced to zero, payable on the last day of each Settlement Period for such Receivable Interest. Upon three Business Days' notice to the Agent, the Collection Agent (if not the Seller or its designee) may elect to be paid, as such fee, another percentage per annum on the average daily Capital of such Receivable Interest, but in no event in excess for all Receivable Interests relating to a single Receivables Pool of 110% of the reasonable costs and expenses of the Collection Agent in administering and collecting the Receivables in such Receivables Pool. The collection agent fee shall be payable only from Collections pursuant to, and subject to the priority of payment set forth in, Section 2.04 of each Agreement. SECTION 7. Confidentiality. (a) Unless otherwise required by applicable law or regulation, the Collection Agent agrees to maintain the confidentiality of the Agreements and this Amended and Restated Collection Agent Agreement (and all drafts thereof) in communications with third parties and otherwise; provided that they may be disclosed to (i) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Agent, and (ii) the Collection Agent's legal counsel and auditors if they agree (which they may do orally) to hold it confidential. (b) The Collection Agent also agrees to maintain the confidentiality of any information it receives from the Seller, its agents, affiliates or representatives in connection with the Agreements and this Amended and Restated Collection Agent Agreement or any audit or otherwise (the "Confidential Information"); provided, however, that there shall be no obligation of confidentiality in respect of any Confidential Information which may be generally available to the public. SECTION 8. Rights and Remedies. (a) If the Collection Agent fails to perform any of its obligations hereunder or under the Agreements, the 6 DOC #1180048.NY Agent may (but shall not be required to) itself perform, or cause performance of, such obligation; and the Agent's costs and expenses incurred in connection therewith shall be payable by the Seller (if the Collection Agent that fails to perform is the Seller or its designee). (b) The exercise by the Agent on behalf of the Investor and the Banks of their rights hereunder and under the Agreements shall not release the Collection Agent or the Seller from any of their duties or obligations with respect to any Pool Receivables or under the related Contracts. Neither the Agent, the Banks nor the Investor shall have any obligation or liability with respect to any Pool Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of the Seller thereunder. (c) The Seller shall perform its obligations under the Contracts related to the Pool Receivables to the same extent as if Receivable Interests had not been sold. (d) The Investor and the Banks shall be third party beneficiaries of this Amended and Restated Collection Agent Agreement. SECTION 9. Term of Agreement. The term of this Amended and Restated Collection Agent Agreement shall be coterminous with the Agreements unless earlier terminated upon notice by any party hereto. Upon termination of this Amended and Restated Collection Agent Agreement, the Collection Agent shall remit all funds then held by it to the parties as required by Section 2.04 of the Agreements. SECTION 10. Execution in Counterparts. This Amended and Restated Collection Agent Agreement may be executed by the parties hereto in separate counterparts, each of which shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 7 DOC #1180048.NY SECTION 11. Amendments. The provisions of this Amended and Restated Collection Agent Agreement may be supplemented, modified or amended only by written instrument signed on behalf of the parties hereto by their duly authorized officers. SECTION 12. Waivers, Consents and Approvals. No party hereto shall be deemed to have consented to, approved or waived any matter under this Amended and Restated Collection Agent Agreement, unless any purported consent, approval or waiver is expressly set forth in writing and signed by the party giving the consent, approval or waiver. No failure on the part of any party hereto to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right or be construed as a waiver to or of any other breach of the same or any other covenant, condition or duty. SECTION 13. Notices, Etc. (a) Except when telephone communications are expressly authorized in this Agreement, all demands, notices and communications hereunder shall be in writing (which shall include electronic transmission), shall be personally delivered, express couriered, electronically transmitted (in which case a hard copy shall also be sent by regular mail) or mailed by registered or certified mail and shall, unless otherwise expressly provided herein, be effective when received at the address specified on the signature page hereof or at such other address as shall be specified in a notice furnished hereunder. SECTION 14. Headings. Section headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. SECTION 15. No Third Party Rights. Nothing expressed or implied herein is intended or shall be construed to confer upon or to give to any person, firm or corporation, other than the parties hereto or as specified 8 DOC #1180048.NY in Section 8(d), any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof, and all the terms, covenants, conditions, promises and agreements contained herein shall be for the sole and exclusive benefit of the parties hereto and their successors and permitted assigns. SECTION 16. Assignability. This Agreement and the rights and obligations hereunder may not be assigned by either party without the prior written consent of the other party hereto. SECTION 17. Severability. If any provision of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in effect and, if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. SECTION 18. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, without giving effect to the conflict of laws principles thereof. 9 DOC #1180048.NY IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. SELLER: PUBLIC SERVICE COMPANY OF NEW MEXICO, Individually and as Collection Agent By _______________________________ Name: Title: Alvarado Square Albuquerque, NM 87158 Attn: Treasurer Facsimile No: (505)848-2369 AGENT: CITICORP NORTH AMERICA, INC. By________________________________ Name: Kathy S. Simmons Title: Vice President 450 Mamaroneck Avenue Harrison, NY 10528 Attention: Corporate Asset Funding Facsimile No: (914) 899-7890 10 DOC #1180048.NY EX-15 3 EXHIBIT 15.0 ARTHUR ANDERSEN ARTHUR ANDERSEN LLP August 2, 1996 Arthur Andersen LLP Suite 400 6501 Americas Parkway NE Albuquerque, NM 87110-5372 (505) 889-4700 Public Service Company of New Mexico: We are aware that Public Service Company of New Mexico has incorporated by reference in its Registration Statement No. 33-65418, 333-03303 and 333-03289 its Form 10-Q for the quarter ended June 30, 1996, which includes our report dated August 2, 1996, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, Arthur Andersen LLP EX-27 4 FDS FOR 2ND QUARTER 10-Q (6-30-96)
UT This schedule contains summary financial information extracted from the Company's Consolidated Statement of Earnings, Consolidated Balance Sheets and Consolidated Statement of Cash Flows for the period ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 US DOLLARS 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 PER-BOOK 1,571,182 35,390 312,175 132,927 0 2,051,674 208,870 468,257 54,914 732,041 0 12,800 712,593 0 0 0 16,250 0 0 0 577,990 2,051,674 439,501 22,723 354,171 375,680 63,821 1,853 65,674 25,684 39,990 293 39,697 5,013 24,203 84,468 0 0
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