UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 No. 2-97230
TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 75-0204070
(State of incorporation) (I.R.S. Employer Identification Number)
4100 International Plaza
P. O. Box 2943
Fort Worth, Texas
76113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 817-731-0099
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Registrant is reporting pursuant to Section 15(d) of the Act:
Title of Each Class of Securities
First Mortgage Bonds:
Series M, 8.7% due 2006, Series R, 10.0% due 2017, Series S, 9.625% due 2019,
Series T, 11.25% due 1997 and Series U, 9.25% due 2000.
Secured Debentures:
12.5% due 1999
Series A, 10.75% due 2003
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 11, 1994, all 10,705 shares of the Registrant's outstanding Common
Stock ($10 par value) were held, beneficially and of record, by the Registrant's
parent, TNP Enterprises, Inc.
<page >
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
PART 1
Item 1. BUSINESS.
General Development of Business
Texas - New Mexico Power Company
Texas-New Mexico Power Company (Utility) is a public utility engaged in
the generation, purchase, transmission, distribution and sale of
electricity to customers within the States of Texas and New Mexico. The
Utility is qualified to do business as a foreign corporation in the State
of Arizona. Business conducted in Arizona is limited to ownership as
tenant-in-common with two other electric utility corporations in a 345-KV
electric transmission line which transmits electrical energy into New
Mexico for sale to customers in New Mexico.
The Utility is the principal subsidiary of TNP Enterprises, Inc. (TNPE),
a Texas corporation which owns all of the Utility's common stock. TNPE
also files a Form 10-K. The Utility and TNPE are holding companies as
defined in the Public Utility Holding Company Act but each is exempt from
regulation as a "registered holding company" as defined in said act.
The Utility is subject to regulation by the Public Utility Commission of
Texas (PUCT) and the New Mexico Public Utility Commission (NMPUC). The
Utility is subject in some of its activities, including the issuance of
securities, to the jurisdiction of the Federal Energy Regulatory
Commission (FERC), and its accounting records are maintained in
accordance with the FERC Uniform System of Accounts.
The Utility has two wholly owned subsidiaries, Texas Generating Company
(TGC), organized in 1988, and Texas Generating Company II (TGC II),
organized in 1991. All financial information presented herein or
incorporated by reference is on a consolidated basis and all intercompany
transactions and balances have been eliminated.
TNP One
Prior to 1990, the Utility purchased virtually all of its electric
requirements, primarily from other utilities. In an effort to diversify
its energy and fuel sources, the Utility contracted with a consortium
consisting of Westinghouse Electric Corporation, Combustion Engineering,
Inc. and H. B. Zachry Company to construct TNP One. TNP One is a two-
unit lignite-fueled, circulating fluidized bed generating plant in
Robertson County, Texas. Unit 1 and Unit 2 of TNP One together provide,
on an annualized basis, approximately 30% of the Utility's electric
capacity requirements in Texas. The Utility acquired Unit 1 on July 20,
1990, and Unit 2 on July 26, 1991, through TGC and TGC II, respectively.
The Utility operates the two units and sells the output of TNP One to its
Texas customers. Unit 1 began commercial operation on September 12,
1990, and Unit 2 on October 16, 1991. As of December 31, 1993, the costs
of Unit 1 and Unit 2 were approximately $357 million and approximately
$282.9 million, respectively. Portions of the costs were funded by the
Utility, with the majority of the costs borrowed by TGC and TGC II under
separate financing facilities for the two units, which are guaranteed by
the Utility.
Regulatory Proceedings
The Utility has received rate orders from the PUCT placing the majority
of the costs of each of the two units of TNP One in rate base. The
Utility and other parties to the proceedings have appealed both orders.
For a review of the history of the two rate proceedings and the pending
judicial proceedings, see Item 3, "Legal Proceedings" and note 5 to the
consolidated financial statements. See note 2 to the consolidated
financial statements for a discussion of the financings of the two units
including, during 1993, substantial reduction of the TNP One construction
indebtedness and extension of the payment schedule for the remaining
balance of the construction debt. For a discussion of the effects of the
construction and financing of TNP One on the Utility's financial
condition, including the detrimental regulatory treatment received to
date, see Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<page 2>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Financial Information About Industry Segments
1993 1992 1991
Operating Revenues
(thousands of dollars):
Residential $193,484 175,885 176,651
Commercial 138,680 128,550 119,745
Industrial 124,474 121,027 128,356
Other 17,604 18,365 16,591
Total $474,242 443,827 441,343
Sales
(thousand kilowatt-hours):
Residential 2,047,360 1,947,593 2,017,349
Commercial 1,567,083 1,499,927 1,485,211
Industrial 2,567,552 2,508,837 2,798,369
Other 104,882 109,954 115,406
Total 6,286,877 6,066,311 6,416,335
Number of customers
(at year-end):
Residential 181,298 178,154 174,859
Commercial 30,235 30,359 30,300
Industrial 141 155 160
Other 237 229 230
Total 211,911 208,897 205,549
Kilowatt-hour (KWH) sales in 1993 were assisted by more typical weather
experienced in 1993 as compared to 1992. KWH sales declined in 1992 from
1991 due in part to milder than normal temperatures in the Utility's
service area in Texas; however, revenues were approximately the same for
the two years due primarily to an increase in the Utility's Texas
customers' rates in 1992. Also contributing to the sales decline was the
failure of new customers and revenues to materialize as expected within
the industrial class to ameliorate the loss of KWH sales to certain
industrial customers. During 1993, the number of industrial customers
decreased by 14, but that decrease included the consolidation of 10
customers into 2 customers for billing purposes and the reclassification
of 3 customers to the commercial class of customers.
See Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," for a discussion of the changes in operating
revenues, including rate increases.
It is not possible to attribute operating profit or loss and identifiable
assets to each of the classes of customers listed in the above table.
Narrative Description of Business
The Utility purchases and generates electricity for sales to its
customers wholly within the States of Texas and New Mexico. The
Utility's purchases of electricity are primarily from other utilities and
cogenerators (see "Sources of Energy" in this section). The Utility's
current generation of electricity is from TNP One.
The Utility owns and operates electric transmission and distribution
facilities in 90 municipalities and adjacent rural areas in Texas and New
Mexico. The areas served contain a population of approximately 616,000.
The Utility's service is delivered to customers in four operating
divisions in Texas and one operating division in New Mexico.
<page 3>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
The Utility's Southeast Division, on the Texas Gulf Coast, is adjacent to
the Johnson Space Center and lies between the cities of Houston and
Galveston. The economy is supported by the oil and petrochemical
industries, agriculture and the general commercial activity of the
Houston area. This division produced 49.5% of the total operating
revenues in 1993. The Utility's Northern Division is based in
Lewisville, just north of the Dallas-Fort Worth International Airport,
and extends to include municipalities along the Red River and in the
Texas Panhandle. This division serves a variety of commercial,
agricultural and petroleum industry customers and produced 19.5% of the
Utility's revenues in 1993. The economy of the Utility's New Mexico
Division is primarily dependent upon mining and agriculture. Copper
mines are the major industrial customers in the New Mexico Division.
This division produced 16.8% of the total operating revenues in 1993.
The Utility's Central Division includes municipalities and communities
located to the south and west of Fort Worth. This area's economy is
largely dependent on agriculture and to lesser degrees tourism and oil
production. In far west Texas, between Midland and El Paso, the
Utility's Western Division serves municipalities whose economies are
primarily related to oil and gas production, agriculture and food
processing.
The Utility serves and intends to continue serving members of the public
in all of its present service areas. The Utility will construct
facilities as needed to meet increasing demand for its service. The
Utility will also extend service beyond its present service territories
to the extent permitted by law and the orders of regulatory commissions.
For a description of the properties utilized to provide this service, see
Item 2, "Properties."
Operating Revenues
Revenues contributed by the Utility's operating divisions in 1993, 1992
and 1991 and the corresponding percentages of total operating revenues
are shown below:
1993 1992 1991
Operating Revenues Revenues Revenues
Division (000's) %'s (000's) %'s (000's) %'s
Central $39,460 8.3% $35,421 8.0% $34,625 7.8%
Northern 92,265 19.5 83,626 18.9 84,227 19.1
Southeast 234,895 49.5 222,460 50.1 220,581 50.0
Western 28,084 5.9 27,193 6.1 27,487 6.2
New Mexico 79,538 16.8 75,127 16.9 74,423 16.9
Total $474,242 100.0% $443,827 100.0% $441,343 100.0%
In 1993, 1992 and 1991, no single customer accounted for greater than 10%
of operating revenues, although the Utility has two affiliated industrial
customers in the New Mexico Division which, together, contributed between
8% and 10% of the Utility's revenues in each of these years.
Sources of Energy
The Utility obtained its electric energy requirements during the year
ended December 31, 1993, from sources shown in the following table.
<page 4>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Sources of Energy
<TABLE>
<CAPTION>
Year of Percent
Contract of Energy Fuel
Sources* Area Served Expiration Required Source
<S> <C> <C> <C> <C>
TEXAS
Generation
TNP One Texas Gulf Coast, - 45.2% Texas Lignite
Central & (Western Coal,
Northern Texas Petroleum Coke &
Natural Gas
Capabilities)
Purchased Power
Clear Lake Cogeneration Texas Gulf Coast 2004 23.5 Natural Gas
Limited Partnership (Oil Standby)
Texas Utilities Electric Company** Central, Northern 2006 & 22.7 Natural Gas, Lignite
(Subsidiary of Texas & West Texas2010 & Nuclear
Utilities Company) (Oil Standby)
Houston Lighting & Power Texas Gulf Coast 2001 4.0 Natural Gas, Coal,
Company (Subsidiary of Lignite, Nuclear
Houston Industries, Inc.) & Cogeneration
(Oil Standby)
West Texas Utilities West Texas 2005 2.5 Natural Gas &
Company (Subsidiary Coal
of Central and South (Oil Standby)
West Corp.)
Southwestern Public Texas Panhandle 2005 2.1 Coal & Natural Gas
Service Company (Oil Standby)
Total 100.0%
NEW MEXICO
Purchased Power
El Paso Electric Southwest 2002 47.9% Coal, Natural Gas,
Company New Mexico Oil & Nuclear
Southwestern Public South Central 2001 22.2 Coal & Natural Gas
Service Company New Mexico (Oil Standby)
Public Service South Central & 2006 16.6 Coal, Natural Gas
Company of Southwest & Nuclear
New Mexico New Mexico (Oil Standby)
Other South Central & Various 13.3 Coal, Natural Gas,
Southwest Oil &
New Mexico Cogeneration
Total 100.0%
</TABLE>
* The Utility also has a continual contract with Union Carbide to provide
energy from natural gas sources for the Texas Gulf Coast. This source did
not contribute to the percent of energy required in 1993.
** Except as to one point of delivery, a major source of supply under the
contract with an expiration date of 2010, the contract expires in 2006.
<page 5>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
The Utility's future load growth is considered by the Utility and its
suppliers in planning their future construction expenditures based on
projections or official contract notifications furnished to its
suppliers by the Utility. Currently the resources of TNP One and the
suppliers' availability of lignite-, coal-, nuclear-, and gas-fired
units are adequate to assure projected requirements for power.
To the extent the Utility's suppliers experience delays or increases in
the costs of construction of new generating facilities, additional
costs of complying with regulatory and environmental laws, or increases
in the cost of fuel or shortages in fuel supplies, the availability and
cost of energy to the Utility will likewise be affected for that
portion of supply purchased by the Utility. The Utility does not
expect that the factors discussed in this section will result in the
inability of its suppliers to provide the portions of power
requirements to be purchased by the Utility.
Terminations of service by those suppliers regulated by the FERC (El
Paso Electric Company, Southwestern Public Service Company, West Texas
Utilities Company and Public Service Company of New Mexico) would
require authorization by that commission. The Utility anticipates
renewing and amending its purchased power contracts with its suppliers
as necessary. As a result of the Utility's efforts in contracting for
lower costs of purchased power, the Utility's New Mexico customers are
expected to benefit from a scheduled decrease of approximately $7.1
million in annualized firm purchased power costs in 1994, the effect of
which will be reduced by a $400,000 increase in base rates.
In 1990 and 1991, the Utility commenced replacing portions of its Texas
purchased power requirements when Unit 1 and Unit 2, respectively,
became operational. Beginning in 1992, the full effect of the electric
generation of both units was realized. Provisions in the contracts
with Texas Utilities Electric Company and Houston Lighting & Power
Company allow for reductions in future purchased power commitments.
Power generated at TNP One is transmitted over the Utility's own
transmission line to other utilities' transmission systems for delivery
to the Utility's Texas service area systems. To aid in maintaining a
reliable supply of power for its customers and to coordinate
interconnected operations, the Utility is a member of the Electric
Reliability Council of Texas (ERCOT), the Inland Power Pool and the New
Mexico Power Pool. See Item 3, "Legal Proceedings," Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and notes 2 and 5 to the consolidated financial
statements for additional information about TNP One.
Recovery of Purchased Power and Fuel Costs
The Utility expects to refund or collect within two months or less
those amounts of total purchased power costs (including supplier fuel
costs) billed to the Utility from suppliers that are over- or under-
collected in the current month. Purchased power cost recovery
adjustment clauses in the Utility's rate schedules have been authorized
by the regulatory authorities in Texas and New Mexico. A fixed fuel
recovery factor in Texas has also been approved. Both are of
substantial benefit to the Utility in efforts to recover timely and
adequately these significant elements of operating expenses as
described in note 1(g) to the consolidated financial statements.
Franchises
The Utility holds franchises from each of the 90 municipalities in
which it renders electric service. On December 31, 1993, these
franchises had expiration dates varying from 1994 to 2039, 86 having
stated terms of 25 years or more and two having stated terms of 20
years and two having stated terms of 15 years. The Utility also holds
certificates of public convenience and necessity from the PUCT covering
all of the territories it serves in Texas. The Utility has been issued
certificates for other areas after hearings before the PUCT. These
certificates include terms which are customary in the public utility
industry. In New Mexico, the Utility operates generally under the
grandfather clause of that state's Public Utility Act which authorizes
the continuance of existing service following the date of the adoption
of such act.
Seasonality of Business
The Utility's business is seasonal in character. Summer weather causes
increased use of air-conditioning equipment which produces higher
revenues during the months of June, July, August and September. For
the year ended December 31, 1993, approximately 40% of annual revenues
were recorded in June, July, August and September, and 60% in the other
eight months.
<page 6>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Working Capital
The Utility's major demands on working capital are (1) the monthly
payments for purchased power costs from the Utility's suppliers, (2)
monthly and semi-annual interest payments on long-term debt and (3)
semi-monthly payments for the lignite fuel source for TNP One. The
purchased power and fuel costs are eventually recovered through the
Utility's customers' rates and the purchased power and fuel costs
recovery adjustment clauses and fixed fuel factors, more fully
described in note 1(g) to the consolidated financial statements.
Unlike many other generating utilities, the Utility does not have the
requirement of maintaining a large fuel inventory (lignite) due to the
proximity of TNP One with the lignite mine site.
The Utility sells customer receivables, as do many other utilities.
The Utility sells its customer receivables to a nonaffiliated company
on a nonrecourse basis.
Competitive Conditions
As a regulated public utility, the Utility operates with little direct
competition throughout most of its service territory. Pursuant to the
Texas Public Utility Regulatory Act, the PUCT has issued to all
electric utilities in the State certificates of public convenience and
necessity authorizing them to render electric service. Rural electric
cooperatives, investor-owned electric utilities and municipally owned
electric utilities are all defined in such act as public utilities. In
72 of the 81 Texas municipalities served, the Utility has been the only
electric utility issued a certificate to serve customers within the
municipal limits. The Utility is also the only electric utility
authorized to serve customers in some of the rural areas where it has
electric facilities. In other rural areas served by the Utility, other
electric utilities have also been authorized to serve customers;
however, rural electric cooperatives may, under certain circumstances,
become exempt from the PUCT's rate regulation. Where other electric
utilities have also been certificated to serve customers within the
same service area, the Utility may be subject to competition.
From time to time, industrial customers of the Utility express interest
in cogeneration as a method of reducing or eliminating reliance upon
the Utility as a source of electric service, or to lower fuel costs and
improve operating efficiency of process steam generation. During 1993,
a major industrial customer in the Utility's Southeast Division
requested proposals for a cogeneration project for evaluation by the
customer. The Utility's operating revenues from this customer during
1993 were approximately $28 million. In January 1994, a potential
developer for the proposed project was selected by the customer. The
Utility's goal is to retain this customer and to lower overall system
operating costs through coordination with the potential developer.
Although the Utility cannot predict the ultimate outcome of the
process, the current project as proposed by the customer, and as
outlined by the potential developer, appears to present a means by
which the Utility may retain electric service to this customer, at
current levels. The Utility is actively pursuing the development of
the necessary agreements with the potential developer to further define
the degree to which electric service to this customer is retained and
overall system operating costs may be lowered.
In New Mexico, a utility subject to the jurisdiction of the NMPUC may
not extend into territory served by another utility or into territory
not contiguous to its service territory without a certificate of public
convenience and necessity from the NMPUC. Investor-owned electric
utilities and rural electric cooperatives are subject to the juris-
diction of the NMPUC.
The Energy Policy Act of 1992, adopted in October 1992, significantly
changed the U.S. energy policy, including the governing of the electric
utility industry. Among the features of this act is the creation of
Exempt Wholesale Generators and the authorization of the FERC to order,
on a case-by-case basis, wholesale transmission access. It appears
that these particular features will create competition for the
generation and supply of electricity. Management continues to evaluate
the effects of this act on the Utility. Although the act may not
affect the Utility directly, the Utility believes that this increased
competition will not have an unfavorable impact on it.
<page 7>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Environmental Requirements
Environmental requirements are not expected to materially affect
capital outlays or materially affect the Utility directly. As the
Utility's electric suppliers may be affected by environmental
requirements and resulting costs, the rates charged by them to the
Utility may be increased and thus the Utility will be affected
indirectly.
The Utility's facilities in Texas and New Mexico are regulated by
federal and state environmental agencies. These agencies have
jurisdiction over air emissions, water quality, wastewater discharges,
solid wastes and hazardous substances. The Utility maintains
continuous procedures to insure compliance with all applicable
environmental laws, rules and regulations. Various Utility activities
require permits, licenses, registrations and approvals from such
agencies. The Utility has received all necessary authorizations for
the construction and continued operation of its generation,
transmission and distribution systems.
TNP One's circulating fluidized bed technology produces "clean"
emissions, without the addition of costly scrubbers. Unit 1 and Unit 2
meet the standards of the Clean Air Act of 1990. Under this act, an
entity will be given an allotted number of allowances which permit
emissions up to a specified level. The Utility believes the allowances
received to be sufficient for the level of emissions to be created by
TNP One.
The construction costs for TNP One included approximately $89 million
for environmental protection facilities. During 1993, 1992 and 1991,
as an ongoing operation of air pollution abatement, including ash
removal, TNP One incurred expenses of approximately $2.6 million, $2.7
million and $1.9 million, respectively. The Utility anticipates
additional capital expenditures of $875,000 by 1995 for air emissions
monitoring equipment for TNP One.
The operations of the Utility are subject to a number of federal, state
and local environmental laws and regulations, which govern the storage
of motor fuels, including those regulating underground storage tanks.
In September 1988, the Environmental Protection Agency (EPA) issued
regulations that required all newly installed underground storage tanks
be protected from corrosion, be equipped with devices to prevent spills
and overfills, and have a leak detection method that meets certain
minimum requirements. The effective commencement date for newly
installed tanks was December 22, 1988. Underground storage tanks in
place prior to December 22, 1988, must conform to the new standards by
December 1998. The Utility currently estimates the cost over the next
five years to bring its existing underground storage tanks into
compliance with the EPA guidelines will be $100,000. The Utility also
has the option of removing any existing underground storage tanks.
During 1993, 1992, and 1991, the Utility incurred cleanup and testing
costs on both leaking and nonleaking storage tanks of approximately
$98,000, $89,000, and $84,000, respectively, in complying with these
EPA regulations. A change in the regulations in the State of Texas
permitted the Utility to collect in 1992 from the state environmental
trust fund $65,000 of expenditures paid in prior years.
Both states in which the Utility owns or operates underground storage
tanks have state operated funds which reimburse the Utility for certain
cleanup costs and liabilities incurred as a result of leaks in
underground storage tanks. These funds, which essentially provide
insurance coverage for certain environmental liabilities, are funded by
taxes on underground storage tanks or on motor fuels purchased within
each respective state. The funds require the Utility to pay
deductibles of less than $5,000 per occurrence. During 1992, the Texas
state environmental trust fund delayed reimbursement payments after
September 30, 1992, of certain cleanup costs due to an increase in
claims. Because the state and federal government have the right, by
law, to levy additional fees on fuel purchases, the Utility believes
these cleanup costs will ultimately be reimbursed.
Employees
The number of employees on December 31, 1993, was 1,051.
<page 8>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 2. PROPERTIES.
The Utility's electric properties served a total of 211,911 customers
at year-end and consisted of the installations described in the
following sections.
(1) Electric generation, transmission and distribution facilities
located in the State of Texas are as follows:
(A) Central Division. Electric transmission and distribution
systems serving 25 municipalities and 18 unincorporated
communities in 17 counties to the south and west of Fort
Worth, Texas. The division is based at Clifton, Texas.
(B) Northern Division. Electric transmission and distribution
systems serving 36 municipalities and 19 unincorporated
communities in 14 North Texas counties and 3 counties in the
Texas Panhandle. The division is based at Lewisville, Texas.
(C) Southeast Division. Electric transmission and distribution
systems serving 14 municipalities and 2 unincorporated
communities in 3 counties on the Texas Gulf Coast. The
division is based at Texas City, Texas.
(D) Western Division. Electric transmission and distribution
systems serving 6 municipalities and 1 unincorporated
community in 5 counties in West Texas. The division is based
at Pecos, Texas.
(E) Robertson County, Texas. Two 150-megawatt lignite-fueled
generating units (Unit 1 and Unit 2, collectively referred to
as TNP One) using circulating fluidized bed technology. The
Utility also has an 18-mile long transmission line to connect
TNP One to a major transmission grid in Texas.
(2) Electric generation, transmission and distribution facilities in
the State of New Mexico serve 5 municipalities and 5 unincorporated
communities in Grant and Hidalgo Counties, and 4 municipalities and
1 unincorporated community in Otero and Lincoln Counties. The New
Mexico Division is based at Silver City, New Mexico.
(3) The facilities owned by the Utility include those normally used in
the electric utility business. The facilities are of sufficient
capacity to adequately serve existing customers, and such
facilities may be extended and expanded to serve future customer
growth of the Utility in existing service areas. The Utility
generally constructs its transmission and distribution facilities
upon real property held pursuant to easements or public rights of
way and not upon real property held in fee simple by the Utility.
(4) All real and personal property of the Utility, with certain
exceptions such as much of TNP One, is subject to the lien of the
Indenture of Mortgage and Deed of Trust (Bond Indenture) under
which the Utility's First Mortgage Bonds are issued. Certain
exceptions are set forth in the Bond Indenture. The lenders in the
Unit 2 financing facility and the holders of all secured debentures
hold a second lien on all real and personal Texas property of the
Utility.
Holders of the Utility's Secured Debentures, due 1999 and Series A,
Secured Debentures, due 2003 equally and ratably hold first liens
on approximately 59% of Unit 1. The remaining amount of Unit 1
property is subject to a first lien under the Utility's Bond
Indenture and a second lien under the secured debentures'
indentures.
The lenders under the Unit 2 financing facility and the Utility's
Secured Debentures, due 1999, equally and ratably hold first liens
on approximately 74% of Unit 2. The remaining amount of Unit 2
property is subject to a first lien under the Utility's Bond
Indenture and a second lien under the secured debentures'
indentures.
Under certain conditions, upon repayment of portions of the loans
or secured debentures under the financing facilities, the Utility
may purchase undivided interests in Unit 1 or Unit 2 from TGC or
TGC II, respectively, whereupon such undivided interests become
subject to the first lien of the Utility's Bond Indenture. See
note 2 to the consolidated financial statements for additional
information.
<page 9>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 3. LEGAL PROCEEDINGS.
Appeals of Regulatory Orders
The following summary discusses the Utility's most recent regulatory
proceedings before the PUCT and the judicial appeals. While the
ultimate outcome of these cases and of other matters discussed below
cannot be predicted, the Utility is vigorously pursuing their favorable
conclusion. Material adverse resolution of certain of the matters
discussed below would have a material adverse impact on earnings in the
period of resolution. More detailed discussions of the proceedings and
related impacts are included in note 5 to the consolidated financial
statements and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
PUCT Docket No. 9491
On April 11, 1990, the Utility filed a rate application, Docket No.
9491, with the PUCT for inclusion of the costs of Unit 1 in the
Utility's rate base and for the setting of rates to recover the costs
of that unit. On February 7, 1991, the Utility received a final order
which allowed $298.5 million of the costs of Unit 1 in rate base;
however, the PUCT disallowed from rate base $39.5 million of the
requested investment costs of $338 million for that unit. The PUCT
approved an increase in annualized revenues of approximately $36.7
million, or 67% of the Utility's original $54.9 million rate request.
The PUCT also found that the Utility failed to prove that its decision
to start construction of Unit 2 was prudent. Nevertheless, the PUCT
granted rate base treatment for Unit 2 in Docket No. 10200, as
discussed below.
On appeal by the Utility of the PUCT's order in Docket No. 9491, a
State district court in Travis County, Texas, ruled that the PUCT's
disallowance of rate base treatment for certain costs of Unit 1 was in
error and that the PUCT's "decision to deny $39,508,409 in capital
costs for TNP One Unit 1 is not supported by substantial evidence and
is arbitrary and capricious."
On appeal of the State district court's order by the Utility , the PUCT
and certain of the intervenor cities (the Cities), a Third District
Court of Appeals in Austin, Texas, rendered a judgment partially
reversing the State district court and affirming the PUCT's
disallowances for $30.4 million of the total $39.5 million. The Court
of Appeals remanded the cause to the district court with instructions
that the cause be remanded to the PUCT for proceedings not inconsistent
with the appellate opinion.
On September 9, 1993, the Utility, the Cities and the PUCT filed
motions for rehearing with the Court of Appeals. The Utility's
opponents are seeking, among other things, lower rates and greater
disallowances, and the Utility is seeking higher rates and no
disallowances. The PUCT is not expected to act upon the district
court's ordered remand, discussed above, until the appellate process,
including appeals to the Texas Supreme Court, has been completed.
Based upon the opinions of the Utility's Texas regulatory counsel,
Johnson & Gibbs, a Professional Corporation, management believes that
it will prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 9491; however, the ultimate disposition and
quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the consolidated
financial statements.
If the Utility is not successful in obtaining a final favorable
disposition in the appellate proceedings relating to the disallowances
in Docket No. 9491, a write-off of some portion of the $39.5 million
disallowances would be required, which could result in a significant
negative impact on earnings in the period of final resolution.
<page 10>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
PUCT Docket No. 10200
On April 11, 1991, the Utility filed a rate application, Docket
No. 10200, with the PUCT for inclusion of $275.2 million of capital
costs of Unit 2 in the Utility's rate base and for the setting of rates
to recover the costs of that unit.
On March 18, 1993, the Utility received a final order which allowed
$250.7 million of the Unit 2 costs in rate base; however, the PUCT
disallowed from rate base $21.1 million associated with Unit 2 and $0.8
million additional costs requested for Unit 1. The PUCT also
determined that $11.1 million of Unit 2 costs would be addressed in a
future Texas rate application. The PUCT approved an increase in
annualized revenues of approximately $19 million, or 53% of the
Utility's original $35.8 million rate request.
The order in Docket No. 10200 also reflects application to the Utility
of a new method for calculating the amount of Federal income tax
expense allowed in cost of service, which significantly reduced the
Utility's level of annualized revenue increase from $26 million to $19
million.
The Docket No. 10200 rate order has been appealed to a Texas district
court by the Utility and other parties. Because of the Court of
Appeals judgment relating to the prudence of starting construction of
Unit 2 (FF No. 84 in the docket No. 9491), the presiding judge in the
Texas district court for the Docket No. 10200 appeal has ordered that
the procedural schedule in this appeal be abated until final resolution
of the FF No. 84 issue in Docket No. 9491. The Utility will vigorously
pursue reversal of the PUCT's new position regarding Federal income tax
expenses, in addition to seeking judicial relief from the disallowances
and certain other rulings by the PUCT in Docket No. 10200. The
opposing parties are seeking a variety of relief to obtain lower rates
and greater disallowances, including overturning the basis of the
Utility's case as presented to the PUCT and sustaining the PUCT's
adverse Federal income tax position without regard to any IRS ruling on
the normalization issue.
Based upon the opinions of the Utility's Texas regulatory counsel,
Johnson & Gibbs, a Professional Corporation, management believes that
it will prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 10200; however, the ultimate disposition
and quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the consolidated
financial statements.
If the Utility is not successful in obtaining a final favorable
disposition in the appellate proceedings relating to the disallowances
in Docket No. 10200, a write-off of some portion of the $21.9 million
disallowances would be required, which could result in a significant
negative impact on earnings in the period of final resolution.
Other Legal Matters
The Utility is involved in various claims and other legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a
material adverse effect on the Utility's consolidated financial
position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders in the
fourth quarter of 1993.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
All of the Utility's issued and outstanding common stock, 10,705
shares, is privately held, beneficially and of record, by its parent,
TNPE, and is not publicly traded.
For the years ended December 31, 1993 and 1992, the Utility paid
$17,344,000, and $13,840,200, respectively, in common dividends to its
parent, TNPE. Dividends were paid on a quarterly basis. Restrictions
on the Utility's ability to pay dividends are discussed in notes 2 and
3 to the consolidated financial statements.
<page 11>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA.
<TABLE>
1993 1992 1991 1990 1989
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $474,242 443,827 441,343 397,289 378,289
Net operating income $78,240 77,003 62,565 37,069 28,534
Net earnings $11,523 10,845 19,840 15,376 15,315
Earnings available for
common stock $10,644 9,877 18,762 14,161 13,964
Total assets (1) $1,095,119 1,156,567 1,111,281 789,651 409,869
CAPITALIZATION:
Common stock equity $214,184 205,875 171,393 166,419 136,068
Redeemable cumulative
preferred stock 9,560 10,440 11,320 12,600 13,880
Long-term debt, net of
amount due within one
year (2)(3)(4) 678,994 742,087 525,060 350,301 134,893
Total capitalization $902,738 958,402 707,773 529,320 284,841
CAPITALIZATION RATIOS:
Common stock equity 23.7% 21.5 24.2 31.4 47.8
Redeemable cumulative
preferred stock 1.1 1.1 1.6 2.4 4.9
Long-term debt, net of
amount due within one
year (2)(3) 75.2 77.4 74.2 66.2 47.3
Total capitalization 100.0% 100.0 100.0 100.0 100.0
SHORT-TERM DEBT:
Long-term debt due
within one year (2)(3)(4) $1,070 10,288 201,276 78,570 516
Unsecured notes payable
to banks (3) - - 36,000 41,900 13,900
$1,070 10,288 237,276 120,470 14,416
Per common share information omitted; see Item 5.
(1) The significant increases in total assets for 1990 and 1991 reflect the
assumption of the costs of Unit 1 and Unit 2, respectively. Unit 1 and
Unit 2 are two 150-megawatt lignite-fueled generating units using
circulating fluidized bed technology. See Items 1, 2, 3 and 7 and
notes 2 and 5 to the consolidated financial statements for more
information about the units.
(2) The significant increases in long-term debt in 1990 and 1991 reflect
the assumption of the debt obligations of the financing facilities
related to Unit 1 and Unit 2, respectively. See note 2 to the
consolidated financial statements for more information about the
financing facilities.
(3) With proceeds from the issuances of long-term debt securities in
January 1992, the Utility repaid and prepaid certain amounts under the
Unit 1 and Unit 2 financing facilities and repaid a portion of
outstanding unsecured notes payable to banks.
(4) With proceeds from the issuances of long-term debt securities in
September 1993, the Utility prepaid additional amounts under the Unit 1
and Unit 2 financing facilities. See note 2 to the consolidated
financial statements for more information.
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and note 5 to the consolidated financial statements
for discussion of material uncertainties which might cause the information
above not to be indicative of future financial condition or results of
operations.
<page 12>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This discussion presents management's analysis of significant factors
in the Utility's financial condition and results of operations and
should be read in conjunction with the consolidated financial
statements and notes thereto.
The Utility currently faces challenges to its financial stability as a
result of uncertainties with respect to detrimental regulatory
treatment and the servicing of debt incurred for refinancings of both
the Unit 1 and the Unit 2 financing facilities. These matters have
arisen by reason of the acquisition and operation by the Utility of TNP
One, a two-unit, 300-megawatt, lignite-fueled, circulating fluidized
bed generating facility located in Robertson County, Texas, and the
related rate proceedings in Texas which disallowed recovery in rates of
certain costs of TNP One. While the outcome of certain of these
matters, and of other matters discussed below, cannot be predicted, the
Utility is vigorously pursuing their favorable conclusion. The adverse
resolution of certain of the matters discussed below would require a
write-off of some portion of the disallowances and could result in a
significant negative impact on earnings in the period of final
resolution. The following discussion of certain regulatory proceedings
related to TNP One is essential to an analysis of the Utility's
financial condition and results of operations.
Financial Condition
TNP One Generating Units and Related Regulatory Matters
Unit 1 and Unit 2 of TNP One each supply 150 megawatts and together are
providing, on an annualized basis, approximately 30% of the Utility's
electric capacity requirements in Texas. The Utility operates the two
units and sells the output of TNP One to its Texas customers. Unit 1
began commercial operation on September 12, 1990, and Unit 2 on October
16, 1991. As of December 31, 1993, the costs of Unit 1 and Unit 2 were
$357 million and $282.9 million, respectively. The costs of the two
units were funded principally by separate financing facilities.
PUCT Docket No. 9491
On February 7, 1991, in Docket No. 9491, the Public Utility Commission
of Texas (PUCT) approved an increase in annualized revenues of
approximately $36.7 million, or 67% of the Utility's original $54.9
million rate request, primarily related to Unit 1. The PUCT's final
order allowed $298.5 million of the costs of Unit 1 in rate base;
however, the PUCT disallowed from rate base $39.5 million of the
requested investment costs of $338 million for that unit. On appeal, a
State district court overturned the disallowances and ordered the case
remanded to the PUCT for further proceedings consistent with the
court's judgment.
The Utility, the PUCT and certain intervenor cities (Cities) appealed
the State district court's judgment to a Texas Court of Appeals. On
August 25, 1993, the Court of Appeals rendered a judgment partially
reversing the State district court and affirming the PUCT's
disallowances for $30.4 million of the total $39.5 million. The Court
of Appeals remanded the cause to the district court with instructions
that the cause be remanded to the PUCT for proceedings not inconsistent
with the appellate opinion. On September 9, 1993, the Utility, the
Cities and the PUCT filed motions for rehearing with the Court of
Appeals. The PUCT is not expected to act upon the district court's
ordered remand until the appellate process, including appeals to the
Texas Supreme Court, has been completed.
Based upon the opinions of the Utility's Texas regulatory counsel,
Johnson & Gibbs, a Professional Corporation, management believes that
it will prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 9491; however, the ultimate disposition and
quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the consolidated
financial statements.
If the Utility is not successful in obtaining a final favorable
disposition in the appellate proceedings relating to the disallowances
in Docket No. 9491, a write-off of some portion of the $39.5 million
disallowances would be required, which could result in a significant
negative impact on earnings in the period of final resolution.
For a further discussion of Docket No. 9491, see note 5 to the
consolidated financial statements.
<page 13>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
PUCT Docket No. 10200
On March 18, 1993, in Docket No. 10200, the PUCT approved an increase
in annualized revenues of $19 million, or 53% of the Utility's original
$35.8 million requested rate increase, primarily related to Unit 2.
The PUCT's order determined that the reasonable costs for Unit 2 were
$261.8 million. The PUCT allowed in rate base $250.7 million of the
$275.2 million requested for Unit 2 costs. The difference between the
$261.8 million in costs found to be prudent by the PUCT and the $282.9
million total costs of Unit 2 consisted of disallowances of
approximately $21.1 million. The PUCT also determined that $11.1
million of Unit 2 costs would be addressed in a future Texas rate
application. The PUCT also disallowed $800,000 of $16.1 million in
additional costs requested for Unit 1.
The revenue increase approved by the PUCT reflects application to the
Utility of a new method for calculating the amount of Federal income
tax expense allowed in cost of service, which had the effect of
reducing the allowed revenue increase from $26 million to $19 million.
The PUCT subsequently approved collection by the Utility of an
additional $1.6 million in annualized revenues, subject to refund, on
the condition that the Utility seek and receive from the Internal
Revenue Service (IRS) a private letter ruling supporting the Utility's
position on "normalization" rules with respect to the PUCT order
regarding Federal income tax treatment for ratemaking purposes. After
receiving PUCT approval on October 19, 1993, the Utility filed, on
October 20, 1993, a request with the IRS for a private letter ruling on
the issue of a normalization violation. The Utility expects to receive
the private letter ruling in 1994. If the private letter ruling
supports the Utility's position, the amount of revenues subject to
refund ($3.4 million at December 31, 1993) will be recognized in
operations upon receipt of the letter.
The Docket No. 10200 rate order has been appealed to a Texas district
court by the Utility and other parties. Because of the Court of
Appeals judgment relating to the prudence of starting construction of
Unit 2 (Finding of Fact No. 84 in Docket No. 9491), the presiding judge
in the Texas district court for the Docket No. 10200 appeal has ordered
that the procedural schedule in this appeal be abated until final
resolution of the Finding of Fact No. 84 issue in Docket No. 9491. The
Utility will vigorously pursue reversal of the PUCT's new position
regarding Federal income tax expenses, in addition to seeking judicial
relief from the disallowances and certain other rulings by the PUCT in
Docket No. 10200. The opposing parties are seeking a variety of relief
to obtain lower rates and greater disallowances, including overturning
the basis of the Utility's case as presented to the PUCT and sustaining
the PUCT's adverse Federal income tax position without regard to any
IRS ruling on the normalization issue.
Based upon the opinions of the Utility's Texas regulatory counsel,
Johnson & Gibbs, a Professional Corporation, management believes that
it will prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 10200; however, the ultimate disposition
and quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the consolidated
financial statements.
If the Utility is not successful in obtaining a final favorable
disposition in the appellate proceedings relating to the disallowances
in Docket No. 10200, a write-off of some portion of the $21.9 million
disallowances would be required, which could result in a significant
negative impact on earnings in the period of final resolution.
For a further discussion of Docket No. 10200, see note 5 to the
consolidated financial statements.
Other TNP One Matters
In November 1987, the Utility entered into a fuel supply agreement with
Phillips Coal Company (Phillips), owner of a 300-million-ton lignite
reserve in Robertson County in proximity to the TNP One site, to
provide a lignite fuel source for the 38-year life of TNP One.
Phillips subsequently entered into an agreement with a subsidiary of
Peter Kiewit Sons', Inc. for development of the lignite mine by a joint
venture partnership, Walnut Creek Mining Company. Unit 1 and Unit 2
are capable of utilizing Western coal, petroleum coke and natural gas
as alternative fuel sources.
New Mexico Rate Application
In August 1993, the Utility filed an application with the New Mexico
Public Utility Commission (NMPUC) to increase its base rate revenues in
New Mexico by $1.95 million, or 2.87%, and to decrease overall its
annualized revenues by $5.13 million.
<page 14>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
On January 28, 1994, a unanimous settlement was executed by all parties
involved in the Utility's New Mexico rate application. The settlement,
if approved by the NMPUC, would increase the Utility's annual base rate
revenues in New Mexico by approximately $400,000, or 0.57%. However,
when a scheduled decrease of approximately $7.1 million in firm
purchased power costs is considered with the $400,000 increase in base
rates, the Utility's customers will receive a net decrease in their
overall rates. The overall rate decrease is influenced by the fact
that a large part of the total revenue requirements in the Utility's
New Mexico operations is related to the cost of purchased power.
The settlement provides rates that have two very positive aspects.
First, it allows the Utility to recover through the increase in base
rates the current operating cost of providing service to its customers
in New Mexico including a reasonable return on the Utility's
investments. Second, it lowers the overall rates charged to the
Utility's New Mexico customers. Subject to the successful completion
of the proceedings before the NMPUC on the settlement, the proposed
rates would become effective in the spring of 1994.
Liquidity and Capital Resources
Unit 1 and Unit 2 Financing Facilities
The Unit 1 and Unit 2 financing facilities were originally entered into
by separate subsidiaries of a construction consortium for the
construction of Unit 1 and Unit 2 of TNP One. The Unit 1 financing
facility was assumed by Texas Generating Company (TGC) on July 20,
1990. The Unit 2 financing facility was assumed by Texas Generating
Company II (TGC II) on July 26, 1991. TGC and TGC II are wholly owned
subsidiaries of the Utility.
As discussed further below, the balance of the secured notes payable of
the Unit 1 financing facility and a substantial amount of loans under
the Unit 2 financing facility were purchased or prepaid on September
29, 1993 with proceeds from the issuance of new debt securities. Such
purchases and prepayments reduced the amounts remaining to be repaid
under the Unit 2 financing facility to $147.75 million. Thereafter,
the Utility made additional unscheduled prepayments of approximately
$69 million under the Unit 2 financing facility; the Utility used
existing cash and a $15 million equity contribution from the Utility's
parent, TNP Enterprises, Inc. (TNPE), to make these additional
prepayments. At December 31, 1993, the Unit 2 financing facility
balance was $78.8 million which represents secured notes payable,
consisting of a series of renewable loans from various lenders in a
financing syndicate.
In contemplation of the prepayments of the Unit 1 and Unit 2 financing
facilities, the related credit agreements between the secured lenders
and the Utility were amended as of September 21, 1993 to facilitate the
issuance of the secured debentures, due 2003, and to extend the
maturities of the remaining loans from due dates in 1994 and 1995. The
effectiveness of the amendments was contingent upon the application of
net proceeds from the sale of the secured debentures, due 2003, and the
Series U Bonds. The extension of the maturities of the remaining loans
to be outstanding under the Unit 2 financing facility has been approved
by the Federal Energy Regulatory Commission and is subject to approval
by the NMPUC. The Utility expects to receive the necessary approval
prior to June 30, 1994, as required by the amendments. Upon the
effective date of the extension, the lenders will receive an extension
fee of 1/4 of 1% on their pro-rata share of the $147.75 million
commitment. Based upon the December 31, 1993 balance and assuming the
approvals of the extensions of the maturities under the Unit 2
financing facility, $1.6 million will be due on December 31, 1995, $3.4
million will be due on December 31, 1996, with the remaining amounts
due in two equal installments of approximately $36.9 million on
December 31, 1997 and 1998.
Under the amendments to the Unit 2 credit agreement, the Utility is
permitted to prepay up to $141.5 million of the $147.75 million
commitment under the Unit 2 financing facility and reborrow thereunder
up to the amount of such prepayments, subject to scheduled reductions
of the commitment of approximately $36.9 million each in 1996, 1997 and
1998. Such reborrowings under the Unit 2 financing facility will be
subject to compliance with the EBIT test (as described in note 2 to the
consolidated financial statements) and maintenance of an equity to
total capital ratio of 20% or more as defined in the credit agreement.
As of December 31, 1993, the unused commitment available to be borrowed
under the Unit 2 financing facility was approximately $69 million. A
commitment fee of 1/4 of 1% per annum is payable on the unused portion
of the reducing commitment.
<page 15>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
The Utility expects to file, during the first half of 1994, a Texas
application requesting an increase in annualized revenues. If the
Utility receives satisfactory results from the application, the Utility
expects to be able to repay the remaining amount due under the Unit 2
financing facility through receipt of common equity from the Utility's
parent, internal cash generation and issuance of debt. See "Capital
Resources" below for a discussion of the Utility's external sources for
acquiring capital.
Issuance of New Debt Securities
On September 29, 1993, the Utility issued $100,000,000 of 9.25% First
Mortgage Bonds, Series U (New Bonds), due 2000, and $140,000,000 of
10.75% Secured Debentures, Series A, due 2003.
Net proceeds from the issuance of the new securities and existing cash
were applied as follows: (i) $21.78 million to call the aggregate
principal amount, including redemption premiums, of Series H, I, J and
K First Mortgage Bonds, (ii) $9.14 million to reimburse the Utility's
treasury for funds used to redeem Series G First Mortgage Bonds at
maturity on July 1, 1993, (iii) $146 million to prepay or purchase all
of the outstanding secured notes payable to lenders under the Unit 1
financing facility and (iv) $75.75 million to prepay secured notes
payable under the Unit 2 financing facility. Redemption of Series H,
I, J and K First Mortgage Bonds was necessary to permit the issuance of
the $100,000,000 in New Bonds because of certain restrictions under the
Utility's first mortgage bond indenture (Bond Indenture), as discussed
below.
Supplemental indentures relating to Series H, I, J and K First Mortgage
Bonds contained a requirement that Net Earnings Available for Interest
of the Utility for 12 consecutive months out of the preceding 15 months
be at least two-and-one-half (2.5) times the aggregate amount of annual
Interest Charges on Bonded Indebtedness which gives effect to the
interest on the additional Bonds to be issued (the Interest Coverage
Ratio). Under the 2.5 times Interest Coverage Ratio required for
issuance of additional First Mortgage Bonds, only a minimal amount of
additional First Mortgage Bonds could have been issued. Under the
supplemental indentures for the series of Bonds outstanding after the
deposit of proceeds from the offering of the new securities for the
redemption of Series H, I, J and K Bonds, the Interest Coverage Ratio
was reduced to two (2) times.
Capital Requirements
The Utility's 1993 capital requirements consisted of (1) additions to
utility plant and (2) bond sinking fund payments and maturities and
preferred stock redemptions. The Utility's cash flows from operations
for 1993 were reduced by an $18 million rate refund to the appropriate
Texas customers. The refund, discussed in note 5 to the consolidated
financial statements, was related to the period from October 1991
through April 1993, during which customers were billed at bonded rates
which exceeded the finally authorized rates. During 1993, the
Utility's capital requirements were funded with cash flows from
operations (after payment of cash dividends on common and preferred
stock), excluding the rate refund funded from existing cash. Due to
the seasonal nature of the Utility's business, cash flows from
operations may fluctuate between quarters, but the Utility expects
positive cash flows from operations on an annual basis.
During the period from January 1, 1994 to December 31, 1999, the
Utility currently estimates that its total debt and preferred stock
repayments will be $349.4 million. This amount includes the repayments
in 1995, 1996, 1997 and 1998 in discharge of the $78.8 million balance
outstanding under the Unit 2 financing facility at December 31, 1993.
In addition, the Utility expects its utility plant additions to be
approximately $180.9 million during the period from January 1, 1994 to
December 31, 1999. The Utility expects the requirements for utility
plant additions will be funded internally with cash flows from
operations. The amounts and types of the foregoing requirements
through 1999, after giving effect to the extensions under the Unit 2
financing facility, assuming pending regulatory approval, are estimated
as follows:
<page 16>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Capital Requirements (1)
</TABLE>
<TABLE>
1994 1995 1996 1997 1998 1999 Total
(Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Preferred stock redemptions $ 0.9 0.9 0.8 0.6 0.6 0.2 4.0
Unit 2 financing facility (2) - 1.6 3.4 36.9 36.9 - 78.8
First Mortgage Bond sinking
fund payments and retirements 1.1 1.1 1.1 131.1 1.1 1.1 136.6
Secured Debentures,
due 1999 maturity. . . . . - - - - - 130.0 130.0
Total debt and preferred
stock repayments. . . . . 2.0 3.6 5.3 168.6 38.6 131.3 349.4
Utility plant additions . . 25.9 28.3 32.7 30.4 31.5 32.1 180.9
Total capital requirements $27.9 31.9 38.0 199.0 70.1 163.4 530.3
<FN>
(1) See note 2 to the consolidated financial statements for details of
the maturities of all outstanding debt.
(2) Based upon the balance outstanding at December 31, 1993.
</TABLE>
Included in the First Mortgage Bond sinking fund payments and
retirements amount for 1997 is $130 million of First Mortgage Bonds,
Series T, which mature January 15, 1997. The Utility anticipates that
it will refinance these bonds and the Secured Debentures due in 1999
through the issuance of additional First Mortgage Bonds or other debt
securities, and/or the receipt of common equity from TNPE. The Utility
does not need additional Available Additions (described below under
"Capital Resources") in order to issue First Mortgage Bonds for the
purpose of refunding outstanding First Mortgage Bonds.
As a result of the assumption of the financing facilities for Unit 1
and Unit 2 in 1990 and 1991, respectively, and related refinancings,
the Utility's capital structure consisted of 75.2% debt, 23.7% common
equity and 1.1% preferred stock at December 31, 1993. Prior to 1990,
the Utility's capital structure contained less than 50% debt. The
Utility's long-term goal is to strive for a conservative capital
structure with a debt ratio of less than 50%.
Capital Resources
At any time, the Utility's ability to access the capital markets on a
reasonable basis or otherwise obtain needed financing for operating and
capital requirements is subject to the receipt of adequate and timely
regulatory relief and market conditions. The Utility's ability to
access the capital markets at reasonable costs will specifically be
impacted by the ultimate resolution of (1) the amount of rate relief
granted for Unit 1 and Unit 2, (2) the contested disallowances of up to
$40.3 million and $21.1 million of the costs of Unit 1 and Unit 2,
respectively, and (3) the adverse PUCT ruling concerning the treatment
of the Federal income tax component of the Utility's cost of service.
In addition to the aforementioned Unit 2 financing facility, the
Utility's external sources for acquiring capital are outlined below:
First Mortgage Bonds. Assuming an interest rate of 9.25% and
satisfactory market conditions, based upon December 31, 1993 financial
information, the Utility could have issued approximately $59 million of
additional First Mortgage Bonds under the Interest Coverage Ratio
requirement. With certain exceptions, the amount of additional First
Mortgage Bonds that may be issued is also limited by the Bond Indenture
to a certain amount of physical properties which are to be
collateralized by the first lien mortgage of the Bond Indenture
(Available Additions). Because of the issuance of the New Bonds in
September 1993, the Utility has limited ability to issue additional
First Mortgage Bonds until more Available Additions are provided upon
further repayment of amounts under the financing facilities.
Secured Debentures. The indenture, under which the Series A Secured
Debentures were issued, permits, generally, the issuance of additional
secured debentures to the extent that the proceeds from such issuance
are used to purchase an equal amount of loans under the Unit 1 and Unit
2 financing facilities.
<page 17>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Preferred Stock. Due to interest and dividend coverage tests required
for issuance of its preferred stock, the Utility cannot presently issue
any preferred stock. The Utility does not expect to have the ability
to issue preferred stock through 1996.
Receipt of Common Equity One source for repayment of the Unit 2
financing facility is anticipated to be the receipt of common equity
from TNPE. Receipt of future equity contributions by the Utility from
TNPE will be largely dependent upon TNPE's ability to issue common
stock. Since most of the assets, liabilities and earnings capability
of TNPE are those of the Utility, the ability of TNPE to issue common
stock and pay dividends will be largely dependent upon the Utility's
operations and the Utility's restrictions regarding payment of cash
dividends on its common stock.
The Utility may not pay dividends on its common stock unless all past
and current dividends on outstanding preferred stock of the Utility
have been paid or declared and set apart for payment and all requisite
sinking or purchase fund obligations for the preferred stock of the
Utility have been fulfilled. Charter provisions relating to the
preferred stock and the Bond Indenture under which First Mortgage Bonds
are issued contain restrictions regarding the retained earnings of the
Utility. At December 31, 1993, pursuant to the terms of the Bond
Indenture, approximately $12.8 million of the Utility's $38.9 million
of retained earnings was restricted. In addition, the financing
facilities place certain restrictions on the Utility's ability to pay
dividends on its common stock, unless certain threshold tests are met.
The Utility has satisfied the threshold tests since they became
effective, and the Utility does not expect that any of the
aforementioned contractual restrictions on the payment of dividends
will become operative in 1994. However, the Utility can give no
assurance that the Utility will satisfy such tests in the future.
The Utility's 1993 common stock dividends of $17.3 million exceeded
1993 earnings available for common stock of $10.6 million; however, the
Utility's retained earnings were sufficient to allow the dividends to
be paid. Contributing to the low-level of earnings in 1993 were the
lower rates from the December 1992 adverse ruling of the PUCT regarding
the Utility's Federal income tax component in its cost of service and
significant interest charges.
As discussed in "Net Earnings" under "Results of Operations",
management has implemented cost saving measures during 1993 and is
seeking equitable regulatory treatment in efforts to improve future
results of operations. Cash dividend payments are subject to approval
of the Board of Directors and are dependent, especially in the longer
term, on the Utility's and TNPE's future financial condition and
adequate and timely regulatory relief, including favorable resolution
of pending judicial appeals of rate cases.
Other Matters
Accounting for Postretirement Benefits
On January 1, 1993, the Utility implemented Statement of Financial
Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which addresses the
accounting for other postretirement employee benefits (OPEBs). For the
Utility, OPEBs are comprised primarily of health care and death
benefits for retired employees. Prior to 1993, the costs of these
OPEBs were expensed on a "pay-as-you-go" basis. Beginning in 1993,
SFAS 106 requires a change from the "pay-as-you-go" basis to the
accrual basis of recognizing the costs of OPEBs during the periods that
employees render service to earn the benefits. The 1993 accrual for
OPEBs of $2,952,000, based on adoption of SFAS 106, was $2,276,000
greater than the amount that would have been recorded under the "pay-
as-you-go" basis.
In March 1993, the PUCT issued its rules for ratemaking treatment of
OPEBs. As part of a general rate case, a utility may request OPEBs
expense in cost of service for ratemaking purposes on an accrual basis
in accordance with generally accepted accounting principles. The
PUCT's rule requires that the amounts included in rates shall be placed
in an irrevocable external trust fund dedicated to the payment of OPEBs
expenses. Based on the PUCT's rule, the Utility intends to seek
recovery of OPEBs expense attributable to its Texas jurisdiction in its
next Texas rate case.
In order to comply with the PUCT's condition for possible recovery of
OPEBs expenses, the Utility established in June 1993 a Voluntary
Employees' Beneficiary Association (VEBA) trust fund, dedicated to the
payment of OPEBs expenses. Monthly cash payments made to the VEBA,
which began in June 1993, will fund OPEBs costs for the Utility's Texas
and New Mexico operations. See note 1(j) to the consolidated financial
statements for information about the funded status of the plan.
<page 18>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
On August 23, 1993, the Utility filed a rate application with the NMPUC
which included a request for recovery of the applicable costs of OPEBs.
A stipulated agreement among the parties to the proceeding, dated
January 28, 1994, subject to approval by the NMPUC, would include such
applicable costs in the proposed New Mexico rates, beginning in 1994.
For future periods, the costs of OPEBs will be affected by changes in
the assumed interest rate and the trends in health care costs; based on
actuarial assumptions, national health care costs are expected to
increase in the future, resulting in further increases in the
Utility's costs.
Accounting for Income Taxes
On January 1, 1993, the Utility implemented Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."
The implementation of SFAS 109 did not result in any significant charge
to operations. See note 4 to the consolidated financial statements for
details relating to the implementation of SFAS 109.
Accounting for Postemployment Benefits
The FASB has issued Statement of Financial Accounting Standards No. 112
(SFAS 112), "Employers' Accounting for Postemployment Benefits" which
addresses the accounting and reporting for the estimated costs of
benefits provided by an employer to former or inactive employees after
employment but before retirement. SFAS 112 is effective for fiscal
years beginning after December 15, 1993. The Utility estimates such
costs to be immaterial.
Effects of Inflation
The Utility does not believe that the effects of inflation, as measured
by the Consumer Price Index over the last three years, have had a
material impact on the Utility's consolidated results of operations and
financial condition.
Tax Law Change
The Omnibus Budget Reconciliation Act of 1993 was signed into law on
August 10, 1993. Beginning in 1994, the act provides for the
disallowance of certain business deductions, the effect of which is not
expected to be material for the Utility. The act also provided,
effective January 1, 1993, for a corporate income tax rate increase
from 34% to 35% to be phased in for taxable income between $10 million
and $18 million.
Results of Operations
The following table sets forth the percentage relationship of items to
operating revenues in the consolidated statements of earnings:
<TABLE>
1993 1992 1991
<CAPTION>
<S> <C> <C> <C>
Operating revenues 100.0% 100.0% 100.0%
Operating expenses:
Power purchased for resale 42.2 39.3 49.1
Fuel 9.4 10.1 5.8
Other operating and general expenses 14.6 15.8 14.8
Maintenance 2.4 2.6 2.5
Depreciation of utility plant 7.6 7.9 6.4
Taxes, other than on income 6.4 6.6 5.4
Income taxes 0.9 0.4 1.8
Total operating expenses 83.5 82.7 85.8
Net operating income 16.5 17.3 14.2
Other income, net of taxes 0.2 0.5 0.2
Earnings before interest charges 16.7 17.8 14.4
Total interest charges 14.3 15.4 9.9
Net earnings 2.4% 2.4% 4.5%
</TABLE>
<page 19>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Operating Revenues
Operating revenues for 1993 and 1992 reflect increases of $30,415,000
and $2,484,000 over the respective prior years. The following table
presents the components of the changes in operating revenues:
<TABLE>
<cpation>
Increase (Decrease) From Prior Year
1993 1992
(Dollars In Thousands)
<S> <C>
Base operating revenues . . . . . . $ (1,515) (0.3)% $35,785 8.1%
Recovery of purchased power costs 25,926 5.8 (42,561) (9.6)
Recovery of fuel costs. . . . . . . (1,230) (0.3) 19,204 4.4
Customer usage. . . . . . . . . . . 8,291 1.9 (11,746) (2.7)
Other revenues. . . . . . . . . . . (1,057) (0.2) 1,802 0.4
Total . . . . . . . . . . . . . $30,415 6.9% $ 2,484 0.6%
</TABLE>
Base operating revenues are affected primarily by changes in base rates
resulting from regulatory commission orders and the effects of
variations in sales between customer classifications.
The significant increase in base operating revenues for 1992 was
primarily attributable to bonded rates for Docket No. 10200 being
placed into effect in October 1991. The PUCT's final order approving
these rates was received on October 16, 1992 and subsequently was
amended by the PUCT in an Order on Rehearing on December 22, 1992. The
result of this Order on Rehearing was to lower the previously approved
increase in annualized revenues by approximately $7 million, from $26
million to approximately $19 million. The PUCT later increased,
subject to refund, the annualized revenues by an additional $1.6
million. Because the increase continued to be subject to a possible
refund, no additional revenues were recognized in 1992 or 1993 and such
amounts were included in revenues subject to refund in the consolidated
balance sheets. For more information regarding Docket No. 10200, see
note 5 to the consolidated financial statements.
Purchased power costs are recovered through cost recovery factor
clauses in both Texas and New Mexico. Fuel costs are recovered through
a fixed fuel factor approved by the PUCT. Recoveries of purchased
power and fuel costs are discussed further in "Operating Expenses."
Customer usage increased in 1993 due to a 3.6% increase in kilowatt-
hour (KWH) sales to residential, commercial and industrial customers.
The residential usage increase related to an increase in the number of
residential customers and warmer temperatures in the Texas service
areas; in 1992, milder than normal weather was experienced in the Texas
service areas. Commercial usage increased in the Utility's Texas
service areas as the result of general retail development in the
Northern Division and Southeast Division and the addition of a
greyhound race track in the Southeast Division. During 1993, the
number of industrial customers decreased by 14, but that decrease
included the consolidation of 10 customers into 2 customers for billing
purposes and the reclassification of 3 customers to the commercial
class of customers. The industrial usage increase in the Utility's New
Mexico service area resulted from increased consumption of an existing
mining customer and the addition of a new mining customer.
The 1992 decrease in customer usage primarily reflected a 5.46% KWH
sales decline. Part of the decrease in customer usage was attributable
to the milder than normal temperatures experienced in Texas during
1992. Also contributing to the sales decline was the failure of new
customers and revenues to materialize as expected within the industrial
class to ameliorate the loss of KWH sales to certain industrial
customers.
From time to time, industrial customers of the Utility express interest
in cogeneration as a method of reducing or eliminating reliance upon
the Utility as a source of electric service, or to lower fuel costs and
improve operating efficiency of process steam generation. During 1993,
a major industrial customer in the Utility's Southeast Division
requested proposals for a cogeneration project for evaluation by the
customer. The Utility's operating revenues from this customer during
1993 were approximately $28 million. In January 1994, a potential
developer for the proposed project was selected by the customer. The
Utility's goal is to retain this customer and to lower overall system
operating costs through coordination with the potential developer.
Although the Utility cannot predict the ultimate outcome of the
process, the current project as proposed by the customer, and as
outlined by the potential developer, appears to present a means by
which the Utility may retain electric service to this customer, at
current levels. The Utility is actively pursuing the development of
the necessary agreements with the potential developer to further define
the degree to which electric service to this customer is retained and
overall system operating costs may be lowered.
<page 20>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
For information relating to actual KWH sales, number of customers, and
revenues, see Item 1, "Financial Information about Industry Segments."
Operating Expenses
As a regulated entity, the Utility must demonstrate to the regulatory
commissions in its rate filings that its requests for recovery of
operating expenses to provide service to its customers are reasonable
and necessary. In order to provide reliable service to its customers
at reasonable rates, management endeavors to control costs through
budgeting and monitoring of operating expenses.
Commencement of commercial operations of Unit 1 in September 1990 and
Unit 2 in October 1991 led to increases in certain expenses and
interest charges over prior years; however, the Utility experienced
decreases in the potential cost of power purchased for resale as a
result of the operations of Unit 1 and Unit 2. The 1993 and 1992
levels of expenses each reflect a full year's operations of both units.
Variances in expenses from 1991 to 1992 due to a partial year's
operation of Unit 2 in 1991 are noted in the following discussion.
Power Purchased for Resale
Factors affecting the expense of power purchased for resale are (1) the
number of KWH purchased from suppliers, (2) the cost per KWH purchased,
(3) the recovery or refund of prior under- or over-collections,
respectively, of purchased power costs (deferred purchased power
costs), and (4) occasional fuel cost refunds from the Utility's
suppliers. The Utility's policy regarding the accounting for deferred
purchased power costs is discussed in note 1(g) to the consolidated
financial statements.
Power purchased for resale increased $25,926,000 in 1993, and a
decrease of $42,561,000 was experienced in 1992. The increase in
purchased power expense for 1993 was mainly due to an increase in the
average cost of KWH purchased from suppliers. Information concerning
the Utility's suppliers is disclosed in Item 1 under "Sources of
Energy." Also contributing to the increase in 1993 was an increase in
the number of KWH purchased as a result of increased customer usage,
discussed under "Operating Revenues." The decrease in 1992 resulted
from a decline in the number of KWH purchased. This KWH decrease was
caused by the replacement of purchased power with a full year's
generation of Unit 2 of TNP One and the decrease in customer usage,
discussed under "Operating Revenues." Partially offsetting the effect
of this reduction in the number of KWH purchased in 1992 was an
increase in the recovery of deferred purchased power costs.
As in 1992, the 1993 level of KWH purchases reflects a full year's
generation of TNP One; therefore, KWH purchases for 1993 and 1992 are
comparable in this respect. No significant changes in KWH purchased
resulting from TNP One's operations are expected in the future.
While costs per KWH from purchased power suppliers are not directly
controllable, wholesale rates charged by various suppliers are subject
to regulatory authority. The Utility has intervened and will continue
to intervene in suppliers' rate cases for the purpose of assuring fair
and equitable costs to its customers.
Fuel
Fuel expense decreased $629,000 in 1993, as compared to an increase of
$19,204,000 in 1992.
The decrease in recovery of fuel costs for 1993 resulted from a
slightly lower fuel cost recovery factor than that utilized in 1992.
These differing fuel factors resulted from using a factor related to
bonded rates in 1992 which was adjusted downward in 1993 to comply with
the final order in Docket No. 10200. The large increase in 1992 was
related to a full year's commercial operation of both Unit 1 and Unit
2.
Fuel expense primarily represents the recovery of fuel costs through a
fixed fuel factor set by the PUCT. The fixed fuel factor is intended
to permit the Utility to recover the cost of fuel utilized to generate
electricity sold in Texas. The factor may be changed only upon
approval of the PUCT and is expected to be adjusted for any cumulative
under- or over-recovery of fuel costs. At December 31, 1993, the
Utility had under-recovered fuel costs, including interest, of
approximately $13.6 million related to both units of TNP One. Any
requests to the PUCT for recovery of fuel costs require the Utility's
demonstration that the costs were reasonable.
<page 21>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Beginning in 1993, a filing with the PUCT for a reconciliation of fuel
costs is required if for any given period of time there is an over- or
under-recovery of fuel costs of at least 4% of revenues. Under the
PUCT's rules, the months in which utilities may initiate fuel
reconciliation proceedings are specified; for the Utility, these months
are June and December. In the event of an over- or under-recovery of
fuel costs less than the 4% threshold, a filing to adjust the fuel
factor may be made at the discretion of management. The Utility
expects to file a fuel reconciliation with its next Texas rate
application during the first half of 1994. Management will continue to
monitor its fuel cost recovery to determine the need to request a
change in its fixed fuel factor. For a discussion of the fuel supply
agreement for TNP One, see "Other TNP One Matters" under "Financial
Condition."
Other Operating and General Expenses and Maintenance
Other operating and general expenses decreased $597,000 in 1993 after
an increase of $4,716,000 in 1992. The 1993 decrease represents
primarily decreases in employee pension and thrift benefits and payroll
costs which were offset somewhat by an increase in employee
postretirement medical costs resulting from implementation of SFAS 106.
The decrease in the employee benefits for 1993 was due to an amendment
to the pension plan and the curtailment of employer thrift plan
contributions on January 1, 1993. Payroll costs declined due to a 3.2%
reduction in the number of employees.
The increase in other operating and general expenses for 1992 was due
primarily to additional wheeling costs which were incurred for a full
year's transfer of power generated by Unit 2 and to amortization of
previously deferred rate case expenses. Wheeling costs are incurred
for the transfer of TNP One power over other utilities' transmission
systems for delivery to the Utility's Texas systems. The years 1993
and 1992 reflected wheeling costs for both Unit 1 and Unit 2;
therefore, any future changes in this level of expense would be the
result of changes in monthly wheeling charges. Regarding deferred rate
case expenses, a full year's amortization was reflected in both 1993
and 1992, making them comparable in this respect; in 1994, another
year's amortization remains for the deferred rate case expenses.
As previously discussed under "Financial Condition," implementation of
SFAS 106 may lead to additional costs in the future. Other operating
and general expenses will be affected in 1994 because of a 3%
cost-of-living payroll adjustment for full-time employees effective
January 10, and the restoration of employer thrift plan contributions
scheduled to resume beginning July 1. Since the last cost-of-living
payroll adjustment granted to the Utility's employees was in 1991,
these changes were made to maintain the level of experienced personnel
necessary for providing quality service to the Utility's customers.
No significant variances have occurred in maintenance expense over the
last three years. Maintenance outages are scheduled in the first and
fourth quarters of 1994 for Unit 2 and Unit 1, respectively. Since
prior years reflect expenses for past scheduled outages of the units,
no significant increase in maintenance expense is anticipated in 1994.
Depreciation of Utility Plant
Depreciation expense increased $917,000 and $7,071,000 in 1993 and
1992, respectively. The 1993 increase was related to normal additions
to utility plant while the large increase in 1992 reflects a full
year's expense for Unit 2 and Unit 1. Future increases in depreciation
would be the result of normal utility plant additions and regulatory
approvals of changes in depreciation rates as supported by required
periodic independent studies.
Taxes, Other Than On Income
Taxes, other than on income increased $1,046,000 and $5,462,000 in 1993
and 1992, respectively. The 1993 increase related primarily to an
increase in revenue-related taxes which resulted from increased
revenues upon which the taxes are based. The increase in 1992 was
primarily related to an increase in property-related taxes resulting
from (1) a full year's expense related to Unit 2 as compared to only a
partial year in 1991 and (2) increases in the property tax rates in
Texas.
Income Taxes
Income taxes increased $2,397,000 in 1993 after a decrease of
$5,963,000 in 1992. The increase in 1993 resulted from an increase in
earnings over 1992, a decline in the regulatory-ordered amortization of
excess deferred taxes, and an increase in Federal income tax rates.
Income taxes decreased in 1992 due to the decline in net earnings
compared to 1991. For the years 1993, 1992 and 1991, the Utility
incurred tax net operating losses due to accelerated tax depreciation
deductions and increased interest charges on debt related to TNP One
and subsequent refinancings; however, payments of current income taxes
were required based on minimum tax (MT) requirements. To the extent
that the Utility is subject to MT requirements and limitations on the
utilization of available credits, payments of current Federal income
taxes are expected to be required in 1994.
<page 22>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
As discussed in "Accounting for Income Taxes" under "Financial
Condition," implementation of SFAS 109 did not result in any
significant charge to earnings. For more information regarding the
Utility's income taxes, see note 4 to the consolidated financial
statements.
As with all areas of the Utility's cost of service, recovery of income
tax expenses is expected in rates charged to customers. However, as
discussed in "PUCT Docket No. 10200" under "Financial Condition,"
uncertainties exist with respect to the Utility's Federal income tax
expense component of cost of service. The Utility is pursuing reversal
of the PUCT's adverse decisions.
Other Income, Net of Taxes
Other income, net of taxes increased in 1992 by $1,290,000 primarily
because of interest earned on short-term investments, principally
repurchase agreements and government money trusts, during the year.
Considerable cash was used in 1993 to make optional payments under the
Unit 2 financing facility thereby reducing cash available for the
aforementioned investments. This contributed to the decrease of
$901,000 in 1993.
Interest Charges
Total interest charges decreased slightly by $342,000 in 1993 after an
increase of $24,723,000 in 1992.
The slight decrease in interest on long-term debt in 1993 was the net
result of several transactions. Decreases in 1993 expense resulted
from (1) redemption of Series G First Mortgage Bonds at maturity on
July 1, 1993, (2) redemption of Series H, I, J and K First Mortgage
Bonds to permit issuance of Series U First Mortgage Bonds and (3)
prepayments made under the Unit 1 and Unit 2 financing facilities.
Partially offsetting these decreases in interest on long-term debt were
the issuances of Series U First Mortgage Bonds and Series A Secured
Debentures in September 1993.
Interest on long-term debt increased in 1992 due to the issuance in
January 1992 of $130 million of 11.25% Series T First Mortgage Bonds
and $130 million of 12.50% Secured Debentures, due in 1999. The
Utility used $194 million of the proceeds from the issuance to retire a
portion of the Unit 1 and Unit 2 financing facilities, as was required
for extended payment dates under the amended terms of the financing
facilities. The notes payable under the financing facilities had lower
interest rates than the new securities. Interest charges also
increased in 1992 due to the debt for Unit 2 being outstanding for a
full year as compared to a partial year in 1991.
In 1994, the full effects of the 1993 redemptions and new issuances are
expected to result in a net increase in interest on long-term debt.
Any changes in the interest rates or balances related to the Unit 2
financing facility in 1994 will also have an effect on long-term debt
interest.
Other interest and amortization of debt discount, premium and expense
for 1993 reflects a fourth quarter amortization of debt expense
associated with the issuances of Series U Bonds and Series A Secured
Debentures and further amendments to the Unit 1 and Unit 2 financing
facilities; therefore, an increase in this expense can be expected in
1994 due to a full year's amortization. In 1993, other interest
included interest on the provision for a refund of bonded revenues
billed in excess of the amounts allowed under Docket No. 10200.
Other interest and amortization of debt discount, premium and expense
increased during 1992 primarily as the result of the issuances of the
Series T Bonds and Secured Debentures, due 1999 discussed above, as
well as the amortization of expenses related to the amendments of the
Unit 1 and Unit 2 financing facilities. Other interest expense
increased due to the accrual of interest on the provision for a refund
of bonded revenues billed in excess of the amounts allowed in Docket
No. 10200. Partially offsetting these increases was a decrease in
interest on unsecured notes payable to banks. The Utility utilized a
portion of the proceeds from the issuance of the Series T Bonds and
Secured Debentures, due 1999 to retire $26 million of unsecured notes
payable to banks. The remaining $10 million portion of such notes was
retired in August 1992.
Allowance for borrowed funds used during construction (AFUDC) decreased
in 1992 when compared to 1991 because Unit 2 was placed in commercial
operation on October 16, 1991. AFUDC for 1991 reflected primarily the
qualified capitalization of interest on the financing facility for Unit
2 from the date of assumption (July 26, 1991) until the date Unit 2
began commercial operation.
Receipt of equity contributions and proceeds from future issuances of
debt securities are anticipated to help satisfy the scheduled
repayments of the Unit 2 financing facility. Interest rates on debt
securities are expected to be greater than those interest rates under
the financing facility. Interest rates on additional debt may be
further increased if the Utility's outstanding regulatory matters are
not satisfactorily resolved.
<page 23>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Net Earnings
Net earnings increased $678,000 in 1993 after a significant decline of
$8,995,000 in 1992.
The decline of net earnings in 1992 was due primarily to (1) the
decrease in customer usage as discussed in "Operating Revenues," (2)
the PUCT's abandonment of its long-standing methodology for
determination of the Federal income tax expense component of cost of
service in the PUCT's Order on Rehearing in Docket No. 10200 and (3)
the increases in interest expense.
The slight increase in 1993 resulted from increased KWH sales, the
effect of which was reduced by increases in depreciation expense,
taxes, other than on income and income taxes and a decrease in other
income as previously discussed. The level of 1993 net earnings also
reflects the adverse tax ruling by the PUCT, discussed above in "PUCT
Docket No. 10200" under "Financial Condition."
Early in 1993, the Utility implemented cost saving measures such as (1)
suspension of the Utility's matching contributions to the employees'
thrift plan, (2) revision to the Utility's pension plan and (3)
implementation of a general employee salary and wage freeze and
limitations on hiring new employees and replacements. These cost
saving measures more than offset the increase in expenses related to
the health care and death benefits plans resulting from implementation
of SFAS 106. With the exception of the Utility's wage-step progression
increases reactivated in April 1993, these measures continued in effect
throughout 1993. The Utility reduced its labor force by 3.2% during
1993, trimming $1.1 million from operations and maintenance expenses.
Even so, the Utility's return on common equity for 1993 and 1992 was
4.97% and 4.80%, respectively, although the Utility's rate of return
granted in Docket No. 10200 authorized a return on common equity of
13.16%. Based on the Utility's earnings for 1993 and 1992 and the
expected increases in interest on long-term debt and certain other
expenses, equitable rate relief in Texas appears to be necessary for
any significant improvement in financial results to occur during 1994.
Future regulatory treatment and court decisions regarding Docket Nos.
9491 and 10200, as previously discussed, will have a direct bearing on
future earnings.
<page 24>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 8. Consolidated Financial Statements and Supplementary Data.
Independent Auditors' Report
The Board of Directors
Texas-New Mexico Power Company:
We have audited the consolidated financial statements of Texas-New Mexico
Power Company (a wholly owned subsidiary of TNP Enterprises, Inc.) and
subsidiaries as listed in the accompanying index at Part IV. In connection
with our audits of the consolidated financial statements, we also have
audited the financial statement schedules as listed in the accompanying
index. These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Texas-New
Mexico Power Company and subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
As discussed in note 5 to the consolidated financial statements,
uncertainties exist with respect to the outcome of certain regulatory
matters. The ultimate outcome of these matters cannot presently be
determined. Accordingly, no provision for any loss that may ultimately be
required upon resolution of these matters has been made in the accompanying
consolidated financial statements and financial statement schedules.
As discussed in note 4 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes.
As discussed in note 1(j), the Company also adopted the provisions of the
Financial Accounting Standards Board's SFAS No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions in 1993.
KPMG PEAT MARWICK
Fort Worth, Texas
January 28, 1994
<page 25>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF EARNINGS
Three Years Ended December 31, 1993
<TABLE>
<CAPTION>
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Operating revenues (note 5) . . . . . $ 474,242 443,827 441,343
Operating expenses:
Power purchased for resale. . . . 200,183 174,257 216,818
. Fuel. . . . . . . . . . . . . . . 44,348 44,977 25,773
Other operating and general
. expenses (note 1(j)). . . . . . 69,406 70,003 65,287
Maintenance . . . . . . . . . . . 11,460 11,342 11,225
Depreciation of utility plant 36,015 35,098 28,027
Taxes, other than on income . . . 30,296 29,250 23,788
Income taxes (note 4) . . . . . . 4,294 1,897 7,860
Total operating expenses . . . 396,002 366,824 378,778
Net operating income . . . . . 78,240 77,003 62,565
Other income, net of taxes (note 4) 1,224 2,125 835
Earnings before interest charges 79,464 79,128 63,400
Interest charges:
Interest on long-term debt. . . . 63,833 63,893 44,919
Other interest and amortization of
. debt discount, premium and expense 4,411 4,539 3,266
Allowance for borrowed funds
used during construction . . . (303) (149) (4,625)
Total interest charges . . . . 67,941 68,283 43,560
Net earnings . . . . . . . . . 11,523 10,845 19,840
Dividends on preferred stocks . . . . 879 968 1,078
Earnings available for common
stock . . . . . . . . . . . . . $ 10,644 9,877 18,762
See accompanying notes to consolidated financial statements.
</TABLE>
<page 26>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
<TABLE>
<CAPTION>
ASSETS 1993 1992
(In Thousands)
<S> <C> <C>
Utility plant, at original cost (notes 2,5):
Electric plant. . . . . . . . . . . . . . . . . 1,203,636 1,184,635
Construction work in progress . . . . . . . . . 5,282 3,922
1,208,918 1,188,557
Less accumulated depreciation . . . . . . . . . 202,923 172,848
Net utility plant . . . . . . . . . . . . . 1,005,995 1,015,709
Nonutility property, at cost. . . . . . . . . . . 541 183
Current assets:
Cash and cash equivalents . . . . . . . . . . . 2,078 63,843
Customer receivables. . . . . . . . . . . . . . 764 122
Refundable income taxes . . . . . . . . . . . . - 2,870
Inventories, at the lower of average cost
or market:
. Fuel. . . . . . . . . . . . . . . . . . . . . 1,422 1,246
. Materials and supplies. . . . . . . . . . . . 7,793 7,185
Deferred purchased power and fuel costs . . . . 15,151 17,735
Accumulated deferred taxes on income (note 4) 4,251 -
Other current assets. . . . . . . . . . . . . . 1,091 985
Total current assets . . . . . . . . . . . . 32,550 93,986
Regulatory tax assets (note 4). . . . . . . . . . 16,915 -
Deferred charges (note 4) . . . . . . . . . . . . 39,118 46,689
$ 1,095,119 1,156,567
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock, $10 par value per share.
Authorized 12,000,000 shares; issued
10,705 shares . . . . . . . . . . . . . . .$ 107 107
Capital in excess of par value. . . . . . . . 175,094 160,085
Retained earnings (note 3). . . . . . . . . . 38,983 45,683
Total common stock equity. . . . . . . . . 214,184 205,875
Redeemable cumulative preferred
stocks (note 3) . . . . . . . . . . . . . . . 9,560 10,440
Long-term debt, net of amount due within
one year (note 2) . . . . . . . . . . . . . . 678,994 742,087
Total capitalization . . . . . . . . . . . 902,738 958,402
Current liabilities:
Long-term debt due within one year. . . . . . . 1,070 10,288
Accounts payable. . . . . . . . . . . . . . . . 22,450 25,809
Accrued interest. . . . . . . . . . . . . . . . 16,115 8,869
Accrued taxes (note 4). . . . . . . . . . . . . 18,006 20,136
Customers' deposits . . . . . . . . . . . . . . 4,464 4,236
Revenues subject to refund (note 5) . . . . . . 3,400 17,515
Other current and accrued liabilities . . . . . 13,404 7,932
Total current liabilities. . . . . . . . . 78,909 94,785
Customers' advances for construction. . . . . . . 169 311
Regulatory tax liabilities (note 4) . . . . . . . 20,412 -
Accumulated deferred taxes on income
(note 4). . . . . . . . . . . . . . . . . . . . 75,809 84,917
Accumulated deferred investment tax credits
(note 4). . . . . . . . . . . . . . . . . . . . 17,082 18,152
Commitments and contingencies (note 5)
$ 1,095,119 1,156,567
See accompanying notes to consolidated financial statements.
</TABLE>
<page 27>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY
AND REDEEMABLE CUMULATIVE PREFERRED STOCKS
Three Years Ended December 31, 1993
<TABLE>
<CAPTION>
Common Stock Equity Redeemable
Capital in Cumulative
Common Stock Excess ofRetained Preferred
Shares AmountPar ValueEarnings Total Stocks
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Balance, January 1, 1991 10,705 $107 121,588 44,724 166,419 12,600
Net earnings for the year - - - 19,840 19,840 -
Dividends on preferred stocks - - - (1,078) (1,078) -
Dividends on common stock - - - (13,840) (13,840) -
Purchase and retirement of preferred
.stocks - 1,200 shares 4.65% Series B,
.600 shares 4.75% Series C, 1,200
.shares 11% Series D, 600 shares 11%
.Series E, 1,200 shares 11% Series F and
.8,000 shares 11.875% Series G - - 52 - 52 (1,280)
Balance, December 31, 1991 10,705 107 121,640 49,646 171,393 11,320
Year ended December 31, 1992:
Net earnings for the year - - - 10,845 10,845 -
Dividends on preferred stocks - - - (968) (968) -
Dividends on common stock - - - (13,840) (13,840) -
Equity contribution from parent - - 38,405 - 38,405 -
Purchase and retirement of preferred
.stocks - 1,200 shares 4.65% Series B,
.600 shares 4.75% Series C, 1,200
.shares 11% Series D, 600 shares 11%
.Series E, 1,200 shares 11% Series F and
.4,000 shares 11.875% Series G - - 40 - 40 (880)
Balance, December 31, 1992 10,705 107 160,085 45,683 205,875 10,440
Year ended December 31, 1993:
Net earnings for the year - - - 11,523 11,523 -
Dividends on preferred stocks - - - (879) (879) -
Dividends on common stock - - - (17,344) (17,344) -
Equity contribution from parent - - 15,000 - 15,000 -
Purchase and retirement of preferred
.stocks - 1,200 shares 4.65% Series B,
.600 shares 4.75% Series C, 1,200
.shares 11% Series D, 600 shares 11%
.Series E, 1,200 shares 11% Series F
.and 4,000 shares 11.875% Series G - - 9 - 9 (880)
Balance, December 31, 1993 10,705 $107 175,094 38,983 214,184 9,560
See accompanying notes to consolidated financial statements.
</TABLE>
<page 28>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1993
<TABLE>
<CAPTION>
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net earnings. . . . . . . . . . . . . . . . . . . .$ 11,523 10,845 19,840
Items not requiring cash:
Depreciation of utility plant. . . . . . . . . . 36,015 35,098 28,027
Amortization of debt expense, discount
and premium, and other deferred charges . . . . 4,939 5,667 1,227
Allowance for borrowed funds used during
construction . . . . . . . . . . . . . . . . . (303) (149) (4,625)
Deferred taxes on income. . . . . . . . . . . . . 5,515 1,347 11,540
Investment tax credit adjustments . . . . . . . . (959) (444) (2,869)
Changes in certain current assets and
` liabilities:
Customer receivables . . . . . . . . . . . . . . (642) 1,784 (1,070)
Refundable income taxes. . . . . . . . . . . . . 2,870 - 2,193
Inventories. . . . . . . . . . . . . . . . . . . (784) (451) 113
Deferred purchased power and fuel costs. . . . . 2,584 (5,493) (8,202)
Other current assets . . . . . . . . . . . . . . (106) 5,310 (4,638)
Accounts payable . . . . . . . . . . . . . . . . (3,359) (2,007) 3,271
Accrued interest . . . . . . . . . . . . . . . . 7,246 2,256 (1,865)
Accrued taxes. . . . . . . . . . . . . . . . . . (947) 3,393 7,897
Customers' deposits. . . . . . . . . . . . . . . 228 284 55
Revenues subject to refund . . . . . . . . . . . (14,115) 15,961 1,554
Other current and accrued liabilities. . . . . . 5,472 (1,642) (2,340)
Other - net . . . . . . . . . . . . . . . . . . . . (5,181) (4,048) (9,406)
TOTAL. . . . . . . . . . . . . . . . . . . . 49,996 67,711 40,702
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of
capitalized depreciation and interest. . . . . (25,998) (22,098) (29,931)
Additions to deferred charges . . . . . . . . . . . (362) (312) (12,605)
TOTAL. . . . . . . . . . . . . . . . . . . . (26,360) (22,410) (42,536)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on preferred and common stocks. . . . . . (18,223) (14,808) (14,918)
Issuances:
Equity contribution from parent. . . . . . . . . 15,000 38,405 -
Long-term debt . . . . . . . . . . . . . . . . . 240,000 271,500 32,000
Deferred expenses associated with
financings. . . . . . . . . . . . . . . . . . . (8,940) (9,124) -
Redemptions:
Preferred stocks . . . . . . . . . . . . . . . . (880) (880) (1,280)
Long-term debt . . . . . . . . . . . . . . . . . (312,358) (245,498) (574)
Short-term debt. . . . . . . . . . . . . . . . . - (36,000) (5,900)
TOTAL. . . . . . . . . . . . . . . . . . . . (85,401) 3,595 9,328
NET CHANGE IN CASH AND CASH EQUIVALENTS . . . . . . . (61,765) 48,896 7,494
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR . . . . . . . . . . . . . . . . . . . . . . 63,843 14,947 7,453
CASH AND CASH EQUIVALENTS AT END OF YEAR. . . . . . .$ 2,078 63,843 14,947
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the years for:
Interest (net of amount capitalized) . . . . . .$ 59,028 62,130 41,708
Income taxes . . . . . . . . . . . . . . . . . . 2,388 1,185 958
<FN>
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On July 26, 1991, the Utility's wholly owned subsidiary, Texas Generating
Company II, assumed ownership of TNP One, Unit 2 and assumed the related
liabilities totaling approximately $269 million. In addition, approximately
$12 million of deferred charges related to TNP One, Unit 2 was reclassified
to utility plant.
During 1992, the Utility reclassified approximately $12 million of deferred
charges to utility plant.
On January 1, 1993, the Utility recognized certain assets and liabilities
and certain reclassifications as a result of implementation of Statement of
Financial Accounting Standards No. 109 (SFAS 109). See note 4 to the
consolidated financial statements for further discussion of SFAS 109,
including amounts of these transactions.
See accompanying notes to consolidated financial statements.
</TABLE>
<page 29>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Texas-New
Mexico Power Company (Utility) and its wholly owned subsidiaries, Texas
Generating Company (TGC) and Texas Generating Company II (TGC II). All
intercompany transactions and balances have been eliminated in
consolidation.
The Utility is a wholly owned subsidiary of TNP Enterprises, Inc. (TNPE).
The Utility is a public utility engaged in the generation, purchase,
transmission, distribution and sale of electricity within the states of
Texas and New Mexico. The Utility is subject to regulation by the Public
Utility Commission of Texas (PUCT) and the New Mexico Public Utility
Commission (NMPUC). The Utility is subject in some of its activities,
including the issuance of securities, to the jurisdiction of the Federal
Energy Regulatory Commission (FERC), and its accounting records are
maintained in accordance with the FERC's Uniform System of Accounts.
TGC and TGC II were incorporated in Texas in 1988 and 1991, respectively,
as financing entities for the assumption of ownership and liabilities
related to two 150-megawatt lignite-fueled generating units, Unit 1 and
Unit 2, respectively, collectively referred to as TNP One. The units
were constructed by a nonaffiliated consortium in Robertson County,
Texas, and are operated by the Utility under the terms of operating
agreements between the Utility and its subsidiaries. Notes 2 and 5
provide additional information about the financings and regulatory
treatments of Unit 1 and Unit 2.
(b) Utility Plant
The costs of additions to utility plant and replacement of retired units of
property are capitalized. Costs include labor, materials and similar
items and indirect charges for such items as engineering, supervision and
transportation. Property repairs and replacement of minor items of
property are included in maintenance expense.
The cost of depreciable units of plant retired or disposed of in the normal
course of business is eliminated from utility plant accounts, and such
cost plus removal expenses less salvage is charged to accumulated
depreciation. When complete operating units are disposed of, appropriate
adjustments are made to accumulated depreciation, and the resulting gains
or losses, if any, are recognized.
(c) Depreciation
Depreciation is provided on a straight-line basis over the estimated
service lives of the properties. Depreciation of utility plant, other
than transportation equipment, is charged to earnings. Depreciation of
transportation equipment is charged to earnings and property accounts in
accordance with the equipment's use.
Depreciation as a percentage of average depreciable cost was 3.00%, 3.10%
and 3.17% in 1993, 1992 and 1991, respectively.
(d) Unamortized Debt Expense, Discount and Premium on Debt
Expenses incurred in connection with the issuance of outstanding long-term
debt and discount and premium related to such debt are amortized on a
straight-line basis over the lives of the respective issues.
<page 30>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies - continued
(e) Revenues and Purchased Power
Revenues are recognized on the basis of meter readings which are made on a
monthly cycle. The Utility does not accrue revenues for power sold but
not billed at the end of an accounting period.
Power purchased is recorded on the basis of billings from suppliers; no
accrual is made for power delivered to the Utility between the dates of
such billings and the end of an accounting period.
(f) Customer Receivables
The Utility sells customer receivables to a nonaffiliated company on a
nonrecourse basis.
(g) Deferred Purchased Power and Fuel Costs
The deferral method of accounting is used for the portions of purchased
power and fuel costs which are recoverable in subsequent periods under
purchased power costs recovery adjustment clauses. These clauses provide
the ability to refund or collect, in the second succeeding month, those
amounts of purchased power costs over- or under-collected in the current
month. At December 31, 1993 and 1992, the Utility had under-recovered
purchased power costs of approximately $1,520,000 and $6,640,000,
respectively.
At December 31, 1993 and 1992, the Utility also had under-recovered fuel
costs of approximately $13,631,000 and $11,095,000, respectively, related
to TNP One. A fixed fuel factor approved by the PUCT is intended to
permit the Utility to recover the cost of fuel utilized to generate
electricity sold in Texas. The factor may be changed only upon approval
of the PUCT and is expected to be adjusted for any cumulative over- or
under-recovery of fuel costs.
(h) Allowance for Borrowed Funds Used During Construction
The applicable regulatory uniform system of accounts defines allowance for
funds used during construction as including the net cost during the
period of construction of borrowed funds used for construction purposes
and a reasonable rate on other funds when so used. In that connection,
the Utility used an accrual rate of 7.53% in 1993, 5.8% in 1992 and 8.0%
in 1991 for borrowed funds used during construction, excluding
capitalized interest related to the financing facilities.
Capitalized interest related to the financing facility for Unit 2 (note 2)
was approximately $4,234,000 in 1991. Interest was capitalized from the
date of assumption of the Unit 2 indebtedness, July 26, 1991, until the
date on which Unit 2 began commercial operation, October 16, 1991.
(i) Income Taxes
The Utility and its subsidiaries account for certain income and expense
items differently for financial reporting purposes than for income tax
purposes. Provisions for deferred income taxes are made for such
differences. As discussed in note 4, the Utility changed its method of
accounting for income taxes in 1993 to adopt the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
Investment tax credits utilized are deferred and amortized to earnings
ratably over the estimated service lives of the related assets.
<page 31>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies - continued
(i) Income Taxes - continued
The consolidated Federal income tax return filed by TNPE includes the
consolidated operations of the Utility and its subsidiaries. The amounts
of income taxes and investment tax credits recognized in the accompanying
consolidated financial statements were computed as if the Utility and its
subsidiaries filed a separate consolidated Federal income tax return, and
the amounts could differ from those recognized as a member of TNPE's
consolidated group.
(j) Employee Benefit Plans
The Utility has in effect a trusteed defined benefit retirement plan
available to employees who are 21 years of age and over and have at least
one year of service with the Utility. The Utility's funding policy is to
contribute annually at least the minimum amount required by government
funding standards, but not more than that which can be deducted for
Federal income tax purposes.
The net pension costs for 1993, 1992 and 1991 included the following
components:
<TABLE>
<CAPTION>
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Service cost $ 1,472 2,148 1,914
Interest cost on projected
benefit obligation 4,191 4,504 4,197
Reduction for actual return on plan assets (6,126) (5,071) (12,276)
Other - net 300 258 7,706
$ (163) 1,839 1,541
</TABLE>
The following table is a summary of the plan's funded status at
December 31, 1993 and 1992:
<TABLE>
1993 1992
(In Thousands)
<S> <C> <C>
Plan assets (principally marketable
securities) at estimated fair value $ 69,763 66,643
Projected benefit obligation (including
accumulated benefit obligations for
1993 and 1992 of approximately
$55,509,000 and $43,894,000, respectively) (60,618) (58,190)
9,145 8,453
Unrecognized net asset (171) (198)
Unrecognized prior service cost (2,990) 3,668
Unrecognized net gain (9,554) (15,657)
Net pension liability (included in other
current and accrued liabilities in the
consolidated balance sheets) $ (3,570) (3,734)
</TABLE>
<page 32>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies - continued
(j) Employee Benefit Plans - continued
The weighted average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligation were 7.15% and 4.15%, respectively, for
1993 and 8.5% and 5.75%, respectively, for 1992. The weighted average
expected long-term rate of return on plan assets for 1993 and 1992 was
9.5%. The vested benefit obligations at December 31, 1993 and 1992, were
approximately $50,457,000 and $39,757,000, respectively.
The defined benefit retirement plan was amended to change, for all
participants retiring after December 31, 1992, the determination of
average monthly compensation used in calculating the amount of retirement
benefits from the average of the three highest consecutive calendar years
to the average of the completed calendar years of compensation after
1992.
The Utility has a voluntary thrift plan, administered by a trustee, with a
provision for the Utility to contribute to the plan amounts equal to
certain percentages of amounts contributed by employees. Employees have
the option of investing their contributions and contributions of the
Utility, if any, in either, or a combination of, certain government
securities, TNPE's common stock or, since January 1, 1992, two mutual
funds. Effective January 1, 1992, the plan calls for the Utility's
contributions to be used to purchase TNPE's common stock which the
employees may later convert into investments in one or more of the other
investing options. Effective January 1, 1993, the Utility suspended its
matching contributions to the thrift plan for an indefinite period;
however, the Utility's Board of Directors has approved restoration of the
Utility's matching contributions, to be effective for employee
contributions made after June 30, 1994. The Utility's contributions to
the thrift plan amounted to approximately $1,592,000 and $1,487,000 in
1992 and 1991, respectively. Thrift plan assets included 1,471,213
shares and 1,482,490 shares of TNPE's common stock at December 31, 1993
and 1992, respectively.
On November 9, 1993, the Board of Directors of the Utility renewed forms of
employment contracts between the Utility and its officers and its other
key personnel. The principal purpose of the contracts is to encourage
retention of management and other key personnel required for the orderly
conduct of the business of the Utility during any threatened or pending
acquisition of TNPE or the Utility and during any transition of
ownership. The terms of the contracts, from date of execution, are three
years as to certain officers and managers of the Utility and two years as
to the other key personnel. Upon the expiration date of each contract,
the Utility, at its option, may extend the contract for additional three
or two year periods, as appropriate. The contracts provide for lump sum
compensation payments and other rights to the officers and the other key
personnel in the event of termination of employment or other adverse
treatment of such persons following a "change in control" of TNPE or the
Utility, which event is defined to include, among other things,
substantial changes in the corporate structure or ownership of either
entity or in the Board of Directors of either entity.
Health care and death benefits and an excess benefit plan have been
provided at minimal or no cost to retired employees. The excess benefit
plan is provided under an insurance policy arrangement and is backed by a
letter of credit which will be funded only if a change in control
occurs.
<page 33>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies - continued
(j) Employee Benefit Plans - continued
On January 1, 1993, the Utility implemented Statement of Financial
Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which addresses the
accounting for other postretirement employee benefits (OPEBs). For the
Utility, OPEBs are comprised primarily of health care and death benefits
for retired employees. Prior to 1993, the costs of these OPEBs were
expensed on a "pay-as-you-go" basis. For 1992, these costs were
approximately $760,000. Beginning in 1993, SFAS 106 requires a change
from the "pay-as-you-go" basis to the accrual basis of recognizing the
costs of OPEBs during the periods that employees render service to earn
the benefits. SFAS 106 also requires employers to recognize the costs of
benefits already earned by active employees and retirees at the date of
adoption of SFAS 106 (the transition obligation).
For the Utility, an annual accrual for OPEBs is comprised of (1) the
portion of the expected postretirement benefit obligation attributed to
employee service during that period (the service cost), (2) amortization
of the transition obligation and (3) the interest costs associated with
the total unfunded accumulated obligation for future benefits. For 1993,
these costs amounted to approximately $508,000, $934,000 and $1,510,000,
respectively. This total cost of $2,952,000 based on adoption of SFAS
106 was $2,276,000 greater than the amount of $676,000 that would have
been recorded under the "pay-as-you-go" basis. The assumed health care
cost trend rate used to measure the expected cost of benefits was 11.5%
for 1993 and is assumed to diminish to 8.4% for 1994, then trend downward
slightly each year to a level of 6% for 2003 and thereafter. The
Utility's remaining transition obligation of $17,750,000 at December 31,
1993 is to be amortized over a remaining nineteen-year period. A 1%
increase in the assumed health care cost trend rate would result in (1)
an increase of $3,235,000 in the Utility's accumulated benefit obligation
at December 31, 1993 and (2) an increase of $538,000 for 1993 in the
aggregate service and interest costs.
In March 1993, the PUCT issued its rules for ratemaking treatment of OPEBs.
As part of a general rate case, a utility may request OPEBs expense in
cost of service for ratemaking purposes on an accrual basis in accordance
with generally accepted accounting principles. The PUCT's rule includes
recovery of the transition obligation and requires that the amounts
included in rates shall be placed in an irrevocable external trust fund
dedicated to the payment of OPEBs expenses. Based on the PUCT's rule,
the Utility intends to seek recovery of OPEBs expense attributable to its
Texas jurisdiction in its next Texas rate case.
In order to comply with the PUCT's condition for possible recovery of OPEBs
expenses, the Utility established in June 1993 a Voluntary Employees'
Beneficiary Association (VEBA) trust fund, dedicated to the payment of
OPEBs expenses. Monthly cash payments made to the VEBA, which began in
June 1993, will fund the three OPEBs expense components of the Utility's
total Texas and New Mexico operations.
On August 23, 1993, the Utility filed a rate application with the NMPUC
which included a request for recovery of the applicable costs of OPEBs.
A stipulated agreement among the parties in the application, dated
January 28, 1994, subject to approval by the NMPUC, would include such
applicable costs in the proposed New Mexico rates, beginning in 1994.
<page 34>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(1) Summary of Significant Accounting Policies - continued
(j) Employee Benefit Plans - continued
The following table presents the plan's funded status reconciled with
amounts recognized in the consolidated balance sheets at December 31,
1993 and 1992:
<TABLE>
1993 1992
(In Thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and dependents $ (15,828) (13,604)
Active employees (7,671) (5,080)
(23,499) (18,684)
Plan assets at fair value 1,297 -
Accumulated postretirement benefit
obligation in excess of plan assets (22,202) (18,684)
Unrecognized net loss 3,533 -
Unrecognized transition obligation 17,750 18,684
Accrued postretirement benefit cost
included in other current
and accrued liabilities $ (919) -
</TABLE>
The discount rate used in determining the actuarial present value of the
accumulated postretirement benefit obligation was 7.15% and 8.50% for
1993 and 1992, respectively.
(k) Fair Values of Financial Instruments
The fair value amounts of certain financial instruments included in the
accompanying consolidated balance sheets at December 31, 1993 and 1992
were as follows:
The fair value of cash and cash equivalents approximates the carrying
amount because of the short maturity of those instruments.
The total estimated fair value of long-term debt was approximately $723
million and $755 million in 1993 and 1992, respectively. The total
estimated fair value of preferred stocks was $7.6 million and $7.7
million in 1993 and 1992, respectively. The estimated fair values of
long-term debt and preferred stocks were based on quoted market prices of
the same or similar issues.
(l) Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Utility
considers temporary cash investments with original maturities of three
months or less to be cash equivalents.
<page 35>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(2) Long-term Debt
Long-term debt outstanding was as follows:
<TABLE>
1993 1992
(In Thousands)
<S> <C> <C> <C>
First mortgage bonds:
Series G, 4.700% due 1993 $ - 9,138
Series H, 4.950 due 1995 - 3,700
Series I, 6.075 due 1996 - 3,750
Series J, 9.000 due 1999 - 7,800
Series K, 8.500 due 2001 - 6,400
Series L, 10.500 due 2000 9,840 9,960
Series M, 8.700 due 2006 8,400 8,500
Series R, 10.000 due 2017 63,700 64,350
Series S, 9.625 due 2019 20,000 20,000
Series T, 11.250 due 1997 130,000 130,000
Series U, 9.250 due 2000 100,000 -
Total 331,940 263,598
Unamortized discount, net of premium (676) (723)
First mortgage bonds, net 331,264 262,875
Secured debentures:
12.50% due 1999 130,000 130,000
Series A, 10.75% due 2003 140,000 -
270,000 130,000
Secured notes payable 78,800 359,500
Total long-term debt 680,064 752,375
Less long-term debt due within one year (1,070) (10,288)
Total long-term debt, net $ 678,994 742,087
</TABLE>
Issuance of Additional First Mortgage Bonds and Secured Debentures
On September 29, 1993, the Utility issued $100 million of 9.25% First
Mortgage Bonds, Series U, due September 15, 2000 (New Bonds), and $140
million of 10.75% Secured Debentures, Series A, due September 15, 2003
(Debentures, due 2003).
After fees and expenses, combined net proceeds available to the Utility
from the issuances of the New Bonds and the Debentures, due 2003, and
existing cash were utilized as follows:
(a) $146 million was used to prepay or purchase all of the outstanding
secured notes payable to lenders under the Unit 1 financing facility,
as discussed below;
(b) $75.75 million was used to prepay secured notes payable under the Unit
2 financing facility, as discussed below;
(c) $21.78 million was deposited for the call for redemption of the
aggregate principal amount, including redemption premiums, of Series H,
I, J and K First Mortgage Bonds; and
(d) $9.14 million was used to reimburse the Utility's treasury for funds
used to redeem Series G First Mortgage Bonds at maturity on July 1,
1993.
<page 36>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(2) Long-term Debt - continued
Supplemental indentures relating to Series H, I, J and K First Mortgage
Bonds contained a requirement that Net Earnings Available for Interest of
the Utility for 12 consecutive months out of the preceding 15 months be
at least two-and-one-half (2.5) times the aggregate amount of annual
Interest Charges on Bonded Indebtedness which gives effect to the
interest on the additional Bonds to be issued (the Interest Coverage
Ratio). Under the 2.5 times Interest Coverage Ratio required for
issuance of additional First Mortgage Bonds, only a minimal amount of
additional First Mortgage Bonds could have been issued. Under the
supplemental indentures for the series of Bonds outstanding after the
deposit of proceeds from the offering for the redemption of Series H, I,
J and K Bonds, the Interest Coverage Ratio was reduced to two (2) times.
The maturity of Series G Bonds on July 1, 1993, and the call for
redemption of Series H, I, J and K Bonds permitted the issuance of
additional Bonds and consummation of the offering of $100 million of New
Bonds.
Amendments to the Financing Facilities
At December 31, 1992, secured notes payable represented loans issued under
two financing facilities, which were originally entered into by separate
subsidiaries of a construction consortium, for the construction of Unit 1
and Unit 2 of the TNP One generating plant. The Unit 1 financing
facility was assumed by TGC on July 20, 1990. The Unit 2 financing
facility was assumed by TGC II on July 26, 1991.
On September 29, 1993, the balance of the secured notes payable under the
Unit 1 financing facility was purchased or prepaid, and $75.75 million of
secured notes payable under the Unit 2 financing facility was prepaid,
reducing that outstanding commitment to $147.75 million; funds used for
these prepayments and purchases were provided from issuance of the New
Bonds and the Debentures, due 2003, and from existing cash, as discussed
above. Thereafter, the Utility made additional unscheduled prepayments
of approximately $69 million under the Unit 2 financing facility. The
$78.8 million balance at December 31, 1993 represents secured notes
payable under the Unit 2 financing facility, consisting of a series of
renewable loans from various lenders in a financing syndicate.
In contemplation of the prepayments of the Unit 1 and Unit 2 financing
facilities, the related credit agreements between the secured lenders and
the Utility were amended as of September 21, 1993 to facilitate the
issuance of the Debentures, due 2003, and to extend the maturities of the
remaining loans from due dates in 1994 and 1995. The effectiveness of
the amendments was contingent upon the application of proceeds from the
sale of the Debentures, due 2003, and the New Bonds. The extension of
the maturities of the remaining loans to be outstanding under the Unit 2
financing facility is subject to further approvals from the FERC and the
NMPUC. The Utility expects to receive the necessary approvals within the
period required by the amendments. Upon the effective date of the
extension, the lenders will receive an extension fee of 1/4 of 1% on
their pro-rata share of the $147.75 million commitment. Based upon the
December 31, 1993 balance and assuming the regulatory approvals of the
extensions of the maturities under the Unit 2 financing facility, $1.6
million will be due on December 31, 1995, $3.4 million will be due on
December 31, 1996, with the remaining amounts due in two equal
installments of approximately $36.9 million on December 31, 1997 and
1998.
Under the amendments to the Unit 2 credit agreement, the Utility is
permitted to prepay up to $141.5 million of the $147.75 million
commitment under the Unit 2 financing facility and reborrow thereunder up
to the amount of such prepayments, subject to scheduled reductions of the
commitment of approximately $36.9 million each in 1996, 1997 and 1998.
Such reborrowings under the Unit 2 financing facility will be subject to
compliance with the EBIT test (as described below) and maintenance of an
equity to total capital ratio of 20% or more as defined in the credit
agreement. As of December 31, 1993, the unused commitment available to
be borrowed under the Unit 2 financing facility was approximately $69
million. A commitment fee of 1/4 of 1% per annum is payable on the
unused portion of the reducing commitment.
<page 37>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(2) Long-term Debt - continued
The financing facilities contain certain covenants which, under specified
conditions, restrict the payment of cash dividends on common stock of the
Utility. The most restrictive of such covenants are an interest coverage
test and an equity ratio test. Under the interest coverage test, the
Utility may not pay cash dividends on its common stock unless its prior
twelve months' earnings (exclusive of any writedowns resulting from
actions of the PUCT, to the extent included in operating expenses) before
interest and income taxes equals or exceeds the sum of all of the
interest expense on indebtedness for the same period (said calculation,
the EBIT Test). This restriction becomes effective only after the third
consecutive calendar quarter during which the Utility does not meet the
EBIT Test and continues in effect until after the quarter in which the
Utility has met the twelve-month EBIT Test. The Utility has met the EBIT
Test at each quarterly date since this test became effective. Under the
recently required equity ratio test, the Utility may not pay cash
dividends on its common stock if, at the preceding quarterly date, the
Utility's ratio of equity capitalization to total capitalization is less
than 20%. As of December 31, 1993, this test was met.
Under the two financing facilities, interest rates were determined under
several alternative methods. During 1993, all rates at the time of each
borrowing were no higher than the prime lending rate plus a margin of 1-
3/8%. The effective costs of borrowing under the secured notes payable
were 7.23% and 5.61% at December 31, 1993 and 1992, respectively. Under
the amended Unit 2 financing facility, the margins will increase by 1/2
of 1% each year in 1994 and 1995 and by 1/4 of 1% each year in 1996, 1997
and 1998.
Additional Information
Substantially all utility plant owned directly by the Utility is subject to
the first lien of the Utility's first mortgage bond indenture, as
supplemented (the Bond Indenture). Until repaid, the holders of the
secured notes payable and of the secured debentures have a lien junior to
the first lien of the Bond Indenture on substantially all utility plant
in Texas owned directly by the Utility.
The Debentures, due 2003, are secured by a pledge by the Utility to the new
debenture trustee of a replacement note (1993 Unit 1 Replacement Note) in
an amount equal to the principal amount of the Debentures, due 2003,
purchased by the Utility from secured lenders under the Unit 1 financing
facility. The 1993 Unit 1 Replacement Note is secured ratably by the
original Unit 1 First Lien Mortgage of the Unit 1 financing facility on
the assets of TGC, the existing second mortgage lien on the Utility's
Bond Indenture trust estate assets in Texas and certain other collateral.
The Debentures, due 2003, rank pari passu with the outstanding secured
debentures, due 1999, in their Unit 1 mortgage lien on the assets of TGC
and other security interests.
The secured debentures, due 1999, are secured ratably by a 1992 Unit 1
replacement note and a 1992 Unit 2 replacement note ($65 million each),
which are in turn secured by first liens on the assets of TGC and TGC II,
respectively, and by the existing second mortgage lien on the Utility's
Bond Indenture trust estate assets in Texas and certain other collateral.
Under the terms of each financing facility, the secured notes payable and
the replacement notes are secured by related first liens on Unit 1 and
Unit 2 until undivided interests in Unit 1 and Unit 2 have been purchased
from TGC and TGC II, respectively, by the Utility, whereupon such
undivided interests become subject to the lien of the Bond Indenture. In
connection with the prepayments of the secured notes payable under the
Unit 1 and Unit 2 financing facilities in September 1993, the Utility
purchased from TGC and TGC II certain undivided direct interests in Unit
1 and Unit 2, respectively; accordingly, these interests were released
from the first liens of the financing facilities. These purchases were
in addition to interests in Unit 1 acquired by the Utility in 1992 and
1990.
<page 38>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(2) Long-term Debt - continued
As of December 31, 1993, TGC owns a 205/345 undivided interest in Unit 1
with the remaining fractional interest being owned directly by the
Utility. (The denominator of 345 represents the historical maximum
balance of $345 million that was originally borrowed under the Unit 1
financing facility; the numerator of 205 represents $205 million of
replacement notes secured by the Unit 1 First Lien Mortgage.) TGC's
interest in Unit 1 is subject to the lien of the Unit 1 First Lien
Mortgage, which secures equally and ratably the 1993 Unit 1 replacement
note of $140 million and the 1992 Unit 1 replacement note of $65 million.
As of December 31, 1993, TGC II owns a 212.75/288.50 undivided interest in
Unit 2 with the remaining fractional interest being owned directly by the
Utility. (The denominator of 288.50 represents the historical maximum
balance of $288.50 million that was originally borrowed under the Unit 2
financing facility; the numerator of 212.75 represents $212.75 million of
debt and available loan commitment that remains secured by the Unit 2
First Lien Mortgage.) TGC II's interest in Unit 2 is subject to the lien
of the Unit 2 First Lien Mortgage, which secures all remaining secured
notes payable outstanding under the Unit 2 financing facility and the
1992 Unit 2 replacement note of $65 million.
During the repayment periods, the Utility will operate and finance Unit 1
and Unit 2. Under the terms of each financing facility, upon or after
each repayment of construction debt or replacement notes by TGC or TGC II
through financings by the Utility, the Utility may purchase a
proportionate undivided direct interest in the respective unit from TGC
or TGC II to the extent such purchase is necessary to enable the Utility
to issue, from time to time, first mortgage bonds. Upon such purchase,
the undivided interest will be released from the lien of such unit's
financing facility. In any event, the Utility may not purchase and the
respective subsidiary may not transfer any undivided interest which would
cause the fraction of the undivided interest remaining subject to the
lien of the respective financing facility to be less than a certain
fraction. The numerator of such fraction is the sum of (a) the unused
commitment provided by lenders and the outstanding principal amounts owed
to the lenders under such financing facility and (b) the principal amount
of the respective replacement notes held as security for secured
debentures. The denominator of such fraction is (i) $345 million under
the Unit 1 financing facility and (ii) $288.5 million under the Unit 2
financing facility. The Utility guarantees the obligations of TGC and
TGC II under each respective financing facility.
The Utility expects, assuming adequate regulatory treatment, to be able to
repay the remaining amount due under the Unit 2 financing facility
primarily through the receipt of common equity from the Utility's parent,
internal cash generation and issuance of debt.
Based upon the December 31, 1993 balance and assuming the approvals of the
extensions of the maturities of secured notes payable under the Unit 2
financing facility, maturities and sinking fund requirements for the
Utility's long-term debt for the five years following 1993 are as
follows:
First mortgage bonds Secured notes payable
(In Thousands)
1994 $ 1,070 -
1995 1,070 1,600
1996 1,070 3,400
1997 131,070 36,900
1998 1,070 36,900
<page 39
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(3) Redeemable Cumulative Preferred Stocks
Redeemable cumulative preferred stocks (authorized 1,000,000 shares at $100
par value per share) issued by the Utility and outstanding at December
31, 1993 and 1992, with related redemption prices (at the Utility's
option), were as follows:
<TABLE>
<CAPTION>
Series Redemption price Shares outstanding Total par value
1993 1992 1993 1992 1993 1992
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
B 4.650% $100.000 100.000 25.2 26.4 $ 2,520 2,640
C 4.750 100.000 100.000 14.4 15.0 1,440 1,500
D 11.000 101.570 102.090 3.2 4.4 320 440
E 11.000 101.570 102.090 1.6 2.2 160 220
F 11.000 101.570 102.090 3.2 4.4 320 440
G 11.875 106.927 107.422 48.0 52.0 4,800 5,200
95.6 104.4 $ 9,560 10,440
</TABLE>
On October 1 of each year, the Utility is required to offer to purchase
from the holders of shares in Series B and Series C, at a price not
exceeding $100 per share plus accrued dividends, a number of shares equal
to 2% of the maximum number of shares of each series outstanding at any
one time prior to August 15 of such year. In addition, the Utility is
required to redeem, at a price of $100 per share plus accrued dividends,
1,200 shares each of Series D and F and 600 shares of Series E on each
March 15 through March 1, 1996. The requirement to redeem such shares is
cumulative and totals $300,000 on an annual basis. On each June 15
through June 15, 2008, the Utility is required to redeem 4,000 shares of
Series G at a price of $100 per share plus accrued dividends; the
requirement to redeem such shares is cumulative. The holders of Series G
and/or the Utility separately have the noncumulative option for
redemption of an additional 4,000 shares on each June 15 at a price of
$100 per share plus accrued dividends.
Charter provisions relating to the preferred stocks and the Bond Indenture
under which the bonds are issued contain restrictions as to the payment
of cash dividends on common stock of the Utility. At December 31, 1993,
the amount of restricted retained earnings was approximately $12,800,000.
As discussed in note 2, terms for additional restrictions as to the
payment of common dividends became effective during 1992 and 1993 as a
result of the amended terms of the Unit 1 and Unit 2 financing
facilities.
In the event of voluntary liquidation of the Utility, holders of the
preferred stocks have a preference to the extent of amounts payable on
redemption, and in the event of involuntary liquidation, to the extent of
par plus accrued dividends.
<page 40>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(4) Income Taxes
Income taxes as set forth in the consolidated statements of earnings
consisted of the following components:
<TABLE>
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Charged (credited) to operating
expenses:
Current:
Federal $ (356) 655 (2,652)
State 94 339 435
(262) 994 (2,217)
Deferred Federal income taxes 5,515 1,347 12,946
Investment tax credit adjustments:
Investment tax credits made
available through net
operating loss carrybacks - - (1,911)
Investment tax credits utilized 89 607 66
Amortization of accumulated
deferred investment tax credits (1,048) (1,051) (1,024)
(959) (444) (2,869)
Total 4,294 1,897 7,860
Charged to other income:
Current - Federal 622 1,095 432
Total income taxes $ 4,916 2,992 8,292
</TABLE>
The provisions for deferred income taxes for 1992 and 1991 resulted from the
following timing differences:
1992 1991
(In Thousands)
Charged (credited) to operating expenses:
Tax depreciation in excess of
book depreciation $13,615 19,540
Deferred charges and other costs
expensed for tax purposes, net 674 1,943
Deferred purchased power and fuel costs
expensed for tax purposes 1,765 2,049
Unbilled revenues for tax purposes 519 (1,778)
Accrual for revenues subject to refund (5,069) -
Minimum tax credit (2,608) (8,085)
Amortization of excess deferred taxes (1,153) (810)
Change in deferred taxes due to tax
net operating loss (6,256) -
Other (140) 87
$1,347 12,946
<page 41>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(4) Income Taxes - continued
Total income tax expense for 1993, 1992 and 1991 was less than the amount
computed by applying the appropriate statutory Federal income tax rate to
income before income taxes. The reasons for the differences were as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Income tax expense at statutory rate $ 5,557 4,589 9,417
Amortization of accumulated deferred
investment tax credits (1,048) (1,051) (1,024)
Amortization of excess deferred taxes (142) (1,153) (810)
State income tax 94 339 435
Effect of tax rate change 234 - -
Other - net 221 268 274
$ 4,916 2,992 8,292
</TABLE>
The Omnibus Budget Reconciliation Act of 1993 (Act) was signed into law on
August 10, 1993. Among other provisions, the Act provided, effective
January 1, 1993, for a corporate income tax rate increase from 34% to 35%
to be phased in for taxable income between $10 million and $18 million.
Adjustments have been made to deferred tax amounts to reflect the future
reversal of temporary differences at the higher tax rate.
Under transitional rules of the Tax Reform Act of 1986, certain capital
expenditures incurred after December 31, 1985 continued to qualify for
investment tax credits (ITC). Accordingly, ITC adjustments reflect
credits for the utilized portion of ITC generated in 1990 associated with
ITC applicable to transitional property. The Utility has ITC
carryforwards for Federal income tax purposes of approximately
$18,700,000 which are available to reduce future Federal income taxes
through 2005.
The Utility generated a Federal minimum tax (MT) for the year ended
December 31, 1993. The MT resulted in a net current Federal income tax
expense of approximately $266,000, after utilization of ITC.
At December 31, 1993, the Utility has net operating loss (NOL)
carryforwards for Federal income tax purposes of approximately
$44,600,000 which are available to offset future Federal taxable income
through 2008. In addition, the Utility has minimum tax credit
carryforwards of approximately $14,900,000 which are available to reduce
future Federal regular income taxes over an indefinite period.
In order to fully realize the Federal regular tax NOL carryforwards, the
Utility will need to generate future taxable income of approximately
$44,600,000 prior to expiration of the Federal regular tax NOL
carryforwards which will begin to expire in 2006. Based on the Utility's
historical and projected pretax earnings, management believes it is more
likely than not that the Utility will realize the benefit of the Federal
regular tax NOL carryforwards existing at December 31, 1993 before such
carryforwards begin to expire in 2006. In addition, the remaining
deferred tax assets, exclusive of the MT credit carryforwards, are
considered current and expected to reverse in the next twelve months.
TNPE's consolidated Federal income tax returns for the years 1987 through
1989 have been examined by the Internal Revenue Service resulting in a
revenue agent report (RAR). The Utility's carryforwards referred to
above and the accompanying consolidated financial statements reflect
adjustments resulting from the RAR. The RAR had no effect on the
Utility's results of operations.
<page 42>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(4) Income Taxes - continued
On January 1, 1993, the Utility implemented Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."
Prior to implementation of SFAS 109, the Utility accounted for income
taxes under Accounting Principles Board Opinion No. 11 (APB 11).
Implementation of SFAS 109 changed the method of accounting for income
taxes from the deferred method required under APB 11 to the asset and
liability method. Under the deferred method, annual income tax expense
was matched with pretax accounting income by providing deferred taxes at
the then current tax rates for timing differences between pretax
accounting income and taxable income. The objective of the asset and
liability method is to establish deferred tax assets and liabilities for
the temporary differences between the financial reporting basis and the
tax basis of assets and liabilities at enacted tax rates expected to be
in effect when such temporary differences are realized or settled. The
Utility elected to implement SFAS 109 on a prospective basis.
SFAS 109 provides that regulated enterprises are allowed to recognize
adjustments resulting from the adoption of SFAS 109 as regulatory tax
assets or liabilities if such amounts are probable of being recovered
from or returned to customers through future rates.
Deferred taxes recorded under APB 11 were attributable primarily to
differences associated with book and tax depreciation. Temporary
differences under SFAS 109 include all items considered timing
differences under APB 11, as well as certain new items including (1) a
reduction in the depreciable tax basis due to ITC, (2) ITC accounted for
under the deferred method and (3) prior flow-through treatment of tax
benefits.
Adoption of SFAS 109 has affected the consolidated balance sheet due to
deferred Federal income tax effects for temporary differences associated
with prior flow-through ratemaking accounting practices, treatment of tax
rate changes and unamortized ITC. Unamortized ITC represent amounts
being "shared" with customers as future revenue requirements are reduced
by the amortization of accumulated deferred ITC. This gives rise to a
corresponding regulatory liability to reflect the ratemaking treatment.
SFAS 109 requires the recognition of regulatory and deferred tax assets and
liabilities for the cumulative unrecognized temporary differences. The
result as of January 1, 1993 of implementing SFAS 109 was as follows (in
thousands):
December 31, January 1,
1992 Reclassifications 1993
Assets:
Deferred charges $46,689 (17,529) 29,160
Regulatory tax assets - 17,974 17,974
Accumulated deferred taxes on
income - current - 6,006 6,006
46,689 6,451 53,140
Liabilities:
Accrued taxes $20,136 (890) 19,246
Accumulated deferred taxes
on income - noncurrent 84,917 (15,852) 69,065
Regulatory tax liabilities - 23,193 23,193
$105,053 6,451 111,504
The above reclassifications resulted from the recognition of regulatory and
deferred tax assets and liabilities for the cumulative unrecognized
temporary differences, recognition of the 1992 Federal regular tax NOL
carryforward and reclassification of certain other balances to comply
with the provisions of SFAS 109. The implementation of SFAS 109 did not
result in any significant charge to operations.
<page 43>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(4) Income Taxes - continued
The tax effects of temporary differences that gave rise to significant
portions of net current accumulated deferred taxes on income and net
noncurrent accumulated deferred taxes on income at December 31, 1993 are
presented below (in thousands):
<TABLE>
<S> <C>
Current accumulated deferred taxes on income:
Deferred tax assets:
Unbilled revenues $ 6,914
Revenues subject to refund 1,053
Other 1,435
9,402
Deferred tax liability - Deferred purchased power and
fuel costs (5,151)
Current accumulated deferred taxes on income, net $ 4,251
Noncurrent accumulated deferred taxes on income:
Deferred tax assets:
Minimum tax credit carryforwards $ 14,890
Federal regular tax NOL carryforwards 15,679
Other 792
31,361
Deferred tax liabilities:
Utility plant, principally due to depreciation
and capitalized basis differences (101,839)
Deferred rate case expenses (2,553)
Deferred loss on reacquired debt (1,823)
Deferred accounting treatment (1,617)
Other 662
(107,170)
Noncurrent accumulated deferred taxes on income, net $ (75,809)
</TABLE>
(5) Commitments and Contingencies
In October 1991, the second unit of TNP One, the Utility's two-unit, 300-
megawatt, circulating fluidized bed generating facility, was completed
and successfully placed in operation. At December 31, 1993, the costs of
Unit 1 totalled approximately $357 million and the costs of Unit 2
totalled approximately $282.9 million.
The Utility has received rate orders (in Docket Nos. 9491 and 10200) from
the PUCT placing the majority of the costs of the two units of TNP One in
rate base, resulting in rate increases for the Utility's Texas
customers. In Docket No. 9491, the PUCT disallowed from rate base
approximately $39.5 million of the costs of Unit 1. On appeal, a State
district court overturned the disallowances; however, a Texas Court of
Appeals rendered a judgment partially reversing the State district court.
In its October 16, 1992 rate order in Docket No. 10200, the PUCT
disallowed $21.1 million of the costs of Unit 2 . On rehearing of Docket
No. 10200, the PUCT unexpectedly reversed consistent precedent to adopt a
new methodology for calculating the amount allowed in rates for Federal
income taxes. The immediate result was a reduction in the rate increase
previously granted on October 16, 1992. Each of the rate orders is the
subject of continuing appellate process in the courts. Further detailed
information of Docket Nos. 9491 and 10200 is provided below.
<page 44>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(5) Commitments and Contingencies - continued
In litigating Docket Nos. 9491 and 10200, the Utility's opponents are
seeking, among other things, lower rates and greater disallowances, and
the Utility is seeking higher rates and no disallowances. While the
ultimate outcome of these cases and of other matters discussed below
cannot be predicted, the Utility is vigorously pursuing their favorable
conclusion. Material adverse resolution of certain of the matters
discussed below would have a material adverse impact on earnings in the
period of resolution.
PUCT Docket No. 9491
On February 7, 1991, in Docket No. 9491, the PUCT approved an increase in
annualized revenues of approximately $36.7 million, or 67% of the
Utility's original $54.9 million rate request filed in 1990. The
approval allowed $298.5 million of the costs of TNP One, Unit 1 in rate
base; however, the PUCT disallowed $39.5 million of the requested
investment costs of $338 million for that unit. Additional Unit 1 costs,
not requested in Docket No. 9491, were included in the Utility's
subsequent Texas rate request, Docket No. 10200, filed on April 11, 1991.
In Docket No. 9491 in Finding of Fact No. 84 (FF No. 84), the PUCT also
found that the Utility failed to prove that its decision to start
construction of Unit 2 was prudent. Since the costs incurred for Unit 2
construction were not at issue in the Docket No. 9491 proceeding, the
quantification of a disallowance, if any, that might result from this
finding was to be determined subsequently in Docket No. 10200.
On June 5, 1991, the Utility filed a petition in a Travis County district
court which sought to overturn the PUCT's ruling regarding the
disallowances and prudence decisions in Docket No. 9491. Certain
intervenors also appealed other aspects of the PUCT's decisions in Docket
No. 9491. On July 6, 1992, the presiding judge of the district court
signed a judgment finding that the PUCT's disallowance of rate base
treatment for certain costs of Unit 1 was in error and that the PUCT's
"decision to deny $39,508,409 in capital costs for TNP One Unit 1 is not
supported by substantial evidence and is arbitrary and capricious."
The Utility, the PUCT and certain of the intervenor cities (the Cities)
appealed the district court's judgment regarding the appeal of the PUCT's
decision in Docket No. 9491 to the Third District Court of Appeals in
Austin, Texas. The Utility's appeal related to the district court's
decision which upheld the PUCT finding that the Utility failed to prove
that its decision to start construction of Unit 2 was prudent and certain
other matters. The PUCT and the Cities sought to reinstate the
disallowances, and the Cities sought, among other things, to deny rate
base treatment and to significantly lower rates granted by the PUCT.
On August 25, 1993, the Third District Court of Appeals rendered a judgment
partially reversing the district court and affirming the PUCT's
disallowances for $30.4 million of the total $39.5 million. The Court of
Appeals judgment states that the district court erred in (1) reversing
that part of the PUCT's order disallowing "the Compressed Schedule
Payment, the Force Majeure Payment, and a portion of the increased costs
for the installation of a natural gas pipeline in Change Order No. 9,
Item 2;" (2) affirming that part of the PUCT's order dealing with the
prudence of the decision to construct Unit 2 (FF No. 84); and (3)
affirming that part of the PUCT's order that failed to pass on to
ratepayers the federal income tax savings for expenses disallowed by the
PUCT. The Court of Appeals remanded the cause to the district court with
instructions that the cause be remanded to the PUCT for proceedings not
inconsistent with the appellate opinion.
On September 9, 1993, the Utility, the Cities and the PUCT filed motions
for rehearing with the Court of Appeals. The PUCT is not expected to act
upon the district court's ordered remand, discussed above, until the
appellate process, including appeals to the Texas Supreme Court, has been
completed.
<page 45>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(5) Commitments and Contingencies - continued
Based upon the opinions of the Utility's Texas regulatory counsel, Johnson
& Gibbs, a Professional Corporation, management believes that it will
prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 9491; however, the ultimate disposition and
quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the accompanying
consolidated financial statements.
If the Utility is not successful in obtaining a final favorable disposition
in the appellate proceedings relating to the disallowances in Docket No.
9491, a write-off of some portion of the $39.5 million disallowances
would be required, which could result in a significant negative impact on
earnings in the period of final resolution.
PUCT Docket No. 10200
On April 11, 1991, the Utility filed a rate application, Docket No. 10200,
with the PUCT for inclusion of $275.2 million of capital costs of Unit 2
and $16.1 million of additional capital costs of Unit 1 in the Utility's
rate base.
The Administrative Law Judge (ALJ) in Docket No. 10200 initially required
briefs of all parties on the issue of whether the inclusion of Unit 2 in
the Utility's rate base would be precluded by the PUCT finding in Docket
No. 9491, FF No. 84, that the Utility failed to prove that its decision
to start construction of Unit 2 was prudent. In its brief to the ALJ,
the Utility argued that FF No. 84 could not have the effect of barring
litigation in Docket No. 10200 of all aspects of Unit 2 costs, asserting
that evidence as to Unit 2 costs presented in Docket No. 9491 had been
presented for the purpose of discussion of facilities which were common
to both Unit 1 and Unit 2. The General Counsel of the PUCT argued that
the issue of the Utility's prudence as to Unit 2 was barred by FF No. 84
and requested that the Utility's entire prudence testimony in Docket No.
10200 be stricken, along with all associated schedules and exhibits.
The ALJ ruled on June 7, 1991 that the PUCT's finding in Docket No. 9491
could not be "relitigated" in Docket No. 10200. However, the ALJ
determined that the PUCT did not decide "what specific action by TNP,
instead of beginning construction when it did, would have been prudent"
and that the PUCT did not "quantify the disallowance resulting from its
finding that TNP had failed to prove that beginning construction of Unit
2 was prudent." Therefore, the ALJ concluded that the parties could
raise those particular issues in Docket No. 10200. The ALJ further
stated that, "The disallowance, if any, will be determined using
principles set forth in previous cases regarding prudence." The ALJ
determined that, in order for the Utility's request for inclusion of the
Unit 2 investment in rate base as plant in service to be considered, the
Utility must present a prima facie case in its direct testimony as to how
a disallowance resulting from FF No. 84 should be quantified. The
Utility appealed the ALJ's ruling to the PUCT, which voted not to hear
the appeal. On August 16, 1991, the Utility filed supplemental prudence
testimony, under protest, responding to the ALJ's order and supporting
the Utility's entitlement to rate base treatment for the costs of Unit 2.
In its supplemental testimony, the Utility contended that it prudently
could have released Unit 2 for construction in February 1989, rather than
September 1988, when the unit was actually released. The Utility argued
that this alternative would cost no less than the actual cost of Unit 2,
and thus no disallowance should result from any imprudence in releasing
Unit 2 for construction in September 1988. Two intervenors in this
proceeding objected to the Utility's presentation of a prudent
alternative, but the PUCT included such evidence in the record.
In a "final" order dated October 16, 1992, the PUCT commissioners approved
an increase in annualized revenues of $26 million, or 72% of the
Utility's original $35.8 million requested increase. The PUCT's order
determined that the reasonable costs for Unit 2 were $261.8 million. The
PUCT allowed in rate base $250.7 million of the $275.2 million requested
for Unit 2 costs. The difference between the $261.8 million in costs
found to be prudent by the PUCT and the $282.9 million total costs of
Unit 2 consisted of disallowances of approximately $21.1 million. The
PUCT also determined that $11.1 million of Unit 2 costs will be addressed
in a future Texas rate application.
<page 46>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(5) Commitments and Contingencies - continued
The order in Docket No. 10200 also allowed approximately $15.3 million of
the requested approximately $16.1 million of Unit 1 costs not sought by
the Utility in Docket No. 9491. The approximately $800,000 disallowance
was primarily related to debt service on disallowed costs determined in
Docket No. 9491.
Subsequent to the issuance of the "final" order on October 16, 1992,
motions for rehearing of certain issues were filed by parties to the
case. On December 22, 1992, the PUCT issued an Order on Rehearing which
reduced the $ 26 million increase in annualized revenues that was
originally granted by the PUCT in its order on October 16, 1992.
The primary issue in the Order on Rehearing was the PUCT's reversal of its
original Docket No. 10200 order as to the use of the "return method" for
calculating the amount allowed in cost of service for the Utility's
Federal income tax expense. The "return method" of computing Federal
income tax expense requested by the Utility followed consistent precedent
of the PUCT. The concept of the "return method" is to match a utility's
taxes with the same revenues and expenses included in rates. The new
method adopted by the PUCT in the Order on Rehearing flowed through to
ratepayers the tax benefits of expenses disallowed and not included in
rates. The net effect of this Order on Rehearing was a decrease of
approximately $7 million from the October 16, 1992 order, resulting in a
$19 million increase in annualized revenues.
On January 26, 1993, the PUCT considered motions for rehearing on the
December 22, 1992 Order on Rehearing but did not alter the $19 million
increase in annualized revenues or the disallowances. In its Order on
Rehearing, dated February 4, 1993, the PUCT ordered the Utility to seek a
private letter ruling from the Internal Revenue Service (IRS) to
determine if the Order on Rehearing resulted in violations of the
"normalization" rules concerning investment tax credits and accelerated
tax depreciation on public utility property.
The PUCT's February 4, 1993 Order on Rehearing stated that the tax method
utilized does not violate the "normalization" rules of the Internal
Revenue Code; however, a December 1992 private letter ruling of the IRS
to an unrelated utility indicates that regulatory treatment which flows
through tax benefits of investment tax credits on disallowed public
utility property violates the "normalization" rules. A "normalization"
violation ultimately results in a utility's loss of benefits from
investment tax credit and/or accelerated depreciation on public utility
property. Without the curative action of the PUCT on March 10, 1993,
discussed in the following paragraph, an IRS determination that a
"normalization" violation had occurred would subject the Utility to
paying additional income taxes for the amount of the accumulated deferred
investment tax credits as of the time of the violation and taxes on the
amount of tax depreciation in excess of book depreciation for all tax
years open for IRS review.
On March 10, 1993, the PUCT considered motions for rehearing on the
February 4, 1993 Order on Rehearing and expressed its position that its
earlier actions not create a "normalization" violation for the Utility.
As a result, in its Order on Rehearing, dated March 18, 1993, the PUCT
ordered that the Utility be granted, subject to refund, an additional
$1.6 million in annualized revenues which matches recovery in rates with
only the investment tax credits and accelerated tax depreciation related
to utility property included in rate base. Accordingly, the benefits of
investment tax credits and accelerated tax depreciation related to
disallowed public utility property would not be passed through to
ratepayers; therefore, the Utility believes that the "normalization"
rules with respect to investment tax credits and accelerated tax
depreciation would not be violated. Further, the PUCT affirmed its
February 4, 1993 Order on Rehearing directing the Utility to seek a
private letter ruling from the IRS to determine if the earlier
methodology adopted in the December 22, 1992 Order on Rehearing would
violate the "normalization" rules concerning investment tax credits and
accelerated tax depreciation on public utility property. If the IRS
determines that the PUCT's December 22, 1992 order would not constitute a
"normalization" violation, then the additional $1.6 million in annualized
revenues would be revoked by the PUCT, and the Utility would be required
to refund excess amounts collected. The PUCT did not reverse its
December 22, 1992 position to pass through to ratepayers the tax benefits
of interest charges related to disallowed public utility property. The
net resultant effect of Docket No. 10200 (by the PUCT action of March 10,
1993) is an increase in annualized revenues of $20.6 million, of which
$1.6 million is subject to refund.
<page 47>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(5) Commitments and Contingencies - continued
The March 18, 1993 Order on Rehearing was appealed by the Utility and
certain intervening parties to a State district court. Because of the
Court of Appeals judgment relating to FF No. 84 in the Docket No. 9491
appeals, the presiding judge in the State district court for the Docket
No. 10200 appeal has ordered that the procedural schedule in this appeal
be abated until final resolution of the FF No. 84 issue in Docket No.
9491. The Utility will vigorously pursue reversal of the PUCT's new
position regarding Federal income tax expense in addition to seeking
judicial relief from the disallowances and certain other rulings by the
PUCT in Docket No. 10200.
During the third quarter of 1993, the Utility refunded, to the appropriate
Texas customers, amounts collected under bonded rates in excess of the
$20.6 million in annualized revenues granted on rehearing in Docket No.
10200. The refund (approximately $18 million, including interest) was
related to the period beginning on the effective date for bonded rates
(October 16, 1991) through April 1993.
After receiving PUCT approval on October 19, 1993, the Utility filed, on
October 20, 1993, a request with the IRS for a private letter ruling on
the issue of a "normalization" violation resulting from the PUCT's
proposed treatment of investment tax credits and accelerated tax
depreciation. Revenues related to the conditionally granted $1.6 million
annualized increase will not be refunded unless the IRS determines that a
"normalization" violation would not result from flowing through benefits
of investment tax credits and accelerated tax depreciation related to
disallowed public utility property. If the IRS so determines, a refund
will be made after that determination. Accordingly, revenues associated
with the $1.6 million annualized increase have not been recognized in
results of operations as of December 31, 1993, and a provision for
revenues subject to refund, including interest, has been made for $3.4
million in the consolidated balance sheet as of December 31, 1993. The
Utility expects to receive the private letter ruling in 1994.
Based upon the opinions of the Utility's Texas regulatory counsel, Johnson
& Gibbs, a Professional Corporation, management believes that it will
prevail in obtaining a remand of a significant portion of the
disallowances in Docket No. 10200; however, the ultimate disposition and
quantification of these items cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of these matters has been made in the accompanying
consolidated financial statements.
If the Utility is not successful in obtaining a final favorable disposition
in the appellate proceedings relating to the disallowances in Docket No.
10200, a write-off of some portion of the $21.9 million disallowances
would be required, which could result in a significant negative impact on
earnings in the period of final resolution.
Other TNP One Matters
In Docket No. 9491, the Utility requested deferred accounting treatment
(DAT) for Unit 1 which would (1) defer $1.4 million and $2.8 million of
operating costs and interest costs, respectively, (2) recover such
amounts in rates through amortizations over the life of the unit and (3)
include such unamortized amounts in the Utility's rate base, thereby
recovering a carrying cost on the unamortized amount.
The PUCT granted the Utility's DAT request except the inclusion of interest
costs ($2.8 million) in rate base. In the final order meeting for Docket
No. 9491, the PUCT commissioners indicated that their decision to exclude
interest costs from the Utility's rate base was influenced by a recent
appeals court ruling. In that ruling, which involved an appeal of a
decision by the PUCT granting DAT to an unrelated electric utility, the
appeals court found that the DAT component for interest costs could not
be included in rate base. The electric utility has filed an application
for writ of error with the Texas Supreme Court regarding the appeals
court ruling. The ultimate effect of the appeals court ruling on the
order granting DAT for Unit 1 is uncertain at this time.
<page 48>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprise, Inc.)
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(5) Commitments and Contingencies - continued
The Utility entered into a fuel supply agreement dated November 18, 1987
with Phillips Coal Company (Phillips), owner of a 300-million-ton lignite
reserve in Robertson County in proximity to TNP One. The agreement
provides for a lignite fuel source for the 38-year life of TNP One.
Phillips subsequently entered into an agreement with a subsidiary of
Peter Kiewit Sons', Inc. for development of the lignite mine by a joint
venture partnership, Walnut Creek Mining Company. Unit 1 and Unit 2 are
capable of utilizing Western coal, petroleum coke and natural gas as
alternative fuel sources.
Legal Actions
The Utility is involved in various claims and other legal actions arising
in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Utility's consolidated financial position.
<page 49>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Identification of Directors and Directorships
Set forth below is certain information concerning the nominees:
NOMINEES FOR DIRECTOR
Principal occupation
Director and business experience
of the during past five years;
Name/Age Utility since and other directorships
R. Denny Alexander, 48 1989 Owner, R. Denny Alexander & Company,
since 1978 (investment management)
Managing Partner, OPNB Building Joint
Venture, since 1978 (real estate
investment)
Chairman, Overton Bank and Trust,
National Association, since May 1984
Director of: Overton Bancshares, Inc.,
since 1982
Cass O. Edwards, II, 67 1975 Managing Partner, Edwards - Geren
Limiated (ranching and farming)
Chairman, Overton Bancshares, Inc., since
1982
Chairman and President, Cassco Land
Company, Inc.
Director of: Overton Bank and Trust,
National Association
John A. Fanning, 54 1984 Executive Vice President, Snyder Oil
Corporation, since March 1990 (oil and
gas producer)
December 1987 to March 1990
Director of: Snyder Oil Company, Inc.,
since 1981
Harris L. Kempner, Jr., 54 1980 President, Kempner Capital Management,
since 1981 (investment advisor)
Trustee, H. Kempner Trust Association
Chairman Emeritus and Advisor to the
Board of United States National Bank,
since 1992
Director of: Balmorhea Ranches; Imperial
Holly Corp.; Cullen/Frost Bankers, Inc.,
since 1982; American Indemnity Company,
since 1987; American Indemnity Financial,
since 1990
<page 50>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Dr. Thomas S. Mackey, 63* 1977 President, Key Metals and
Minerals Engineering Corporation, since
1970 (consulting engineers)
President, Texas Copper
Corporation, from 1989 to 1993 (primary
copper processing)
Thomas S. Mackey, P.C., a
law firm, since 1978
President, Airtrust
International Corporation, since 1982
(logistic services to oil industry)
President, USA Offshore Industries
Corporation; USA Logestics Services
Corporation since 1982(equipment exports)
Chairman, Board of Directors,
Neomet Corporation, since 1989
(neodymium eutectic alloy production)
President and Director,
Neomet Corporation, from 1986 to 1989,
and since 1992
President and Director, Cox
Creek Refining Company, since 1990
(copper cathode and rod provider)
Director of: United States
National Bank, since 1970; Reactive
Metals and Alloys, Inc., since 1986
(mischmetal and ferro alloy producer);
Siltec Corporation and Siltec Epitaxial
Corp., since 1986 (silicon wafer
manufacturer); Malaysian Titanium
Corporation, since 1990 (titanium dioxide
pigment for paper and paint industry)
D. R. Spurlock, 61 1993 Interim President & Chief Executive
Officer of TNPE and the Utility, since
November 9, 1993
Sector Vice President -
Operations of the Utility, September 1990
through 1992 (Retired)
Vice President - Division Manager of the
Utility,
August 1979 to September 1990
Director of: TNPE, since April 1993;
Texas City National Bank, since 1976
R. D. Woofter, 70 1975 Chairman of the Board of
TNPE and the Utility, since July 2, 1988
* A member of the Board and Committees, and a nominee until the time of his
death on February 25, 1994.
Three vacancies currently exist on the Board of Directors of the Utility.
One vacancy resulted from the resignation of John Justin as a Director on
February 25, 1993 and the unexpected decision of an advisory director not to
stand for election to the position previously held by Mr. Justin. The
resignation of J. M. Tarpley from the position of President & Chief Executive
Officer and from the Board of Directors as of November 9, 1993, resulted in
the second vacancy. The third vacancy occurred as the result of the untimely
death of Dr. T. S. Mackey on February 25, 1994.
It is expected that upon selection of a successful candidate for the
position of President & Chief Executive Officer of the Utility, the Board of
Directors will appoint that person to the directorship vacated by Mr.
Tarpley's resignation.
At such time as the Board of Directors has evaluated and selected persons
who are qualified to act as directors of the Utility, the Board will make
appointments of such persons to fill the two remaining vacant director
positions. It is anticipated that appointees will stand for election at the
1995 Annual Meeting of the Shareholders of the Utility.
<page 51>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Identification of Executive Officers
Positions & Offices Held Period of
with the Utility Such Office
Name Age Within the Past 5 Years1 Years Months
D. R. Spurlock2 61 Interim President & Chief 0 1
Executive Officer and Director
Sector Vice President - 2 4
Operations
Vice President - 11 1
Division Manager
D. R. Barnard 61 Sector Vice President & 3 8
Chief Financial Officer
Vice President & 1 0
Chief Financial Officer
Vice President & 17 0
Treasurer
J. V. Chambers, Jr. 44 Sector Vice President - 3 8
Revenue Production
Vice President - Contracts 3 2
& Regulation
M. C. Davie 58 Vice President - Corporate 10 11
Affairs
A. B. Davis 56 Vice President - Chief Engineer 1 8
Chief Engineer 1 4
Assistant Chief Engineer 0 1
Manager - Engineering 5 8
L.W. Dillon 39 Vice President - Operations 0 1
Division Manager 3 6
Division Engineering Manager 4 11
R. J. Wright 46 Vice President - 0 6
Corporate Services/Generation
Vice President -
Manager - Generation 4 8
M. D. Blanchard 43 Corporate Secretary & 6 4
General Counsel
Monte W. Smith 40 Treasurer 4 8
Director - Internal Audit 2 11
1 All officers are elected annually by the Utility's Board of Directors
for a one-year term until the next annual meeting of the Board of
Directors or until their successors shall be elected and qualified. The
term of an officer elected at any other time by the Board also will run
until the next succeeding annual meeting of the Board of Directors or
until a successor shall be elected and qualified.
2 Retired as Sector Vice President effective December 31, 1992; named
Interim President & Chief Executive Officer effective November 9, 1993.
With the exception of D. R. Spurlock, each of the above-named officers
is a full-time employee of the Utility and has been for more than five
years prior to the date of the filing of this Form 10-K.
<page 52>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 11. Executive Compensation.
Compensation Committee Interlocks and Insider Participation
The Personnel, Organization & Nominating Committee is responsible for
recommending to the Board the appropriate levels of Executive Compensation.
The members of the Committee are Messrs. Edwards and Woofter. Prior to his
death, Dr. Mackey was a member of this Committee. Mr. Woofter, the Chairman
of the Board and formerly the Chief Executive Officer and President of TNPE
and the Utility, retired as an officer of both companies in 1988. Mr.
Edwards is a director of Overton Bank and Trust, National Association, with
which the Utility and TNPE maintain a banking relationship in the ordinary
course of business. To the Utility's knowledge, there were no other inter-
relationships involving members of the Committee.
The following table sets forth information regarding cash compensation paid
for services rendered to the Utility and its subsidiaries to the former CEO,
the Interim President and CEO, and each of the four most highly compensated
executive officers of the Utility whose cash compensation exceeded $100,000,
for each of the last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FISCAL OTHER ANNUAL ALL OTHER
NAME & PRINCIPAL YEAR SALARY COMPENSATION COMPENSATION
(1) (2) (3)
POSITION (a) (b) (c)
<S> <C> <C> <C> <C> <C> <C>
J. M. Tarpley (resigned 11-9-93) 1993 $284,419 $ -0- $2,581 $2,581
President and Chief . . . . . . 1992 309,776 7,526 2,514 10,040
Executive Officer of TNPE . . .1991 295,257 7,306 2,295 9,601
and the Utility
D. R. Spurlock. . . . . . . . . 1993 77,801 -0- -0- -0-
(effective 11-9-93 named. . . .1992 156,649 $24,885 8,728 704 9,432
Interim President and Chief . . 1991 148,089 25,125 8,475 682 9,157
Executive Officer of TNPE
and the Utility) (prior to
retirement effective 12-31-92
- -Sector Vice President-
Operations of the Utility)
D. R. Barnard . . . . . . . . . 1993 147,857 -0- 801 801
Vice President and Chief. . . . 1992 155,993 8,728 682 9,410
Financial Officer of TNPE . . . 1991 145,177 8,475 682 9,157
and Sector Vice President
and Chief Financial
Officer of the Utility
J. V. Chambers. . . . . . . . . 1993 148,404 -0- 801 801
Sector Vice President-. . . . . 1992 154,094 8,728 704 9,432
Revenue Production of . . . . . 1991 147,370 8,475 682 9,157
the Utility
A. B. Davis . . . . . . . . . . 1993 120,224 -0- 609 609
Vice President - Chief Engineer 1992 116,031 6,730 487 7,217f the Utility. . . . . . . . . 1991 100,
R. J. Wright. . . . . . . . . . 1993 127,921 -0- 662 662
Vice President - Corporate. . . 1992 127,058 7,545 582 8,127
Services/Generation of the Utility1991 119,306 7,071 538 7,609
(1) Salaries for the officer group are reviewed annually with any
changes in salary generally effective as of the date of the meeting
of the directors held in conjunction with the Annual Meeting of the
Holders of Common Stock. Because employee salaries are paid bi-
weekly, the actual compensation for 1992 included an extra pay
period.
(2) Housing and transportation allowance.
(3) All Other Compensation consists of the following:
(a) Amounts contributed by Utility to Thrift Plan (401k Plan).
(b) Premiums for Group Life.
(c) Total "All Other Compensation." (a) + (b) = (c).
</TABLE>
<page 53>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Utility's Pension Plan
The following table sets forth annual benefits payable to employees of the
Utility under the Utility's Pension Plan at the normal retirement age of 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Remuneration Years of credited service at retirement
15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 30,147 $ 40,196 $ 50,245 $ 60,294 $ 70,343 $78,468
*150,000 36,522 48,696 60,870 73,044 85,218 94,968
*175,000 42,897 57,196 71,495 85,794 100,093 111,468
*200,000 49,272 65,696 82,120 98,544 114,968 127,968
*225,000 55,647 74,196 92,745 111,294 129,843 144,468
*250,000 62,022 82,696 103,370 124,044 144,718 160,968
*300,000 74,772 99,696 124,620 149,544 174,468 193,968
*400,000 100,272 133,696 167,120 200,544 233,968 259,968
*450,000 113,022 150,696 188,370 226,044 263,718 292,968
*500,000 125,772 167,696 209,620 251,544 293,468 325,968
_________
<FN>
* Benefits at these levels are shown without taking into account Internal
Revenue Service (IRS) Code Section 415 limits or the $150,000 salary cap in
effect following 1993, resulting from the IRS Code Section 401a 717 limits
and, therefore, a portion of these benefits would be paid from the unfunded
Excess Benefit Plan.
</TABLE>
The Utility maintains for the benefit of all eligible employees a non-
contributory defined benefit retirement plan (the "Pension Plan") under which
contributions are actuarially determined each year. All employees who have
one year of service with the Utility and who are 21 years of age are
eligible. As a defined benefit plan, the Utility's Pension Plan
contributions, which are computed on an actuarial basis, cannot be readily
calculated on a per person basis by Plan actuaries. Benefits for each
eligible employee are based on the employee's number of years of service
computed through the month in which he or she retires multiplied by a
specified percentage of the employee's average monthly compensation for each
full calendar year completed after 1993. The average monthly compensation
for the named executive officers consists only of amounts included beneath
the Salary column of the Summary Compensation Table. Pension benefits are
not subject to deduction for Social Security benefits. Pension benefits are
subject to reduction for retirement prior to age 62. For 1993, the Utility
made no contribution to the Pension Plan.
The Utility also maintains an unfunded Excess Benefit Plan to compensate
certain highly compensated employees. Such highly compensated employees must
first have their pensions subject to being reduced below the amount which
would have been provided by the Pension Plan because of compliance with
Section 415 of the Internal Revenue Code of 1986, as amended, and must be
designated as eligible by the Board of Directors for participation in the
Excess Benefit Plan. There are three participants currently designated by
the Board of Directors. A Letter of Credit is purchased each year which will
provide sufficient funds to the Trust to make payments to all persons who are
covered by the Excess Benefit Plan if a "change in control" were to occur as
that term is defined in certain employment contracts which are discussed
hereafter. The Utility owns life insurance policies on the lives of two
employees currently eligible to receive payments under such plan upon their
retirement and one retiree who is currently receiving benefits under the
Excess Benefit Plan. The proceeds of the policies are payable to the Utility
to compensate the Utility for its payments to the eligible employees pursuant
to the terms of the Excess Benefit Plan.
<page 54>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
As of December 31, 1993, the years of credited service for calculation of
the retirement benefits for the named executive officers of the Utility were
as follows:
NAME YEARS OF CREDITED SERVICE
Mr. Tarpley 35 years, 6 months
Mr. Spurlock Retired as of 12-31-92 with
33 years, 7 months
Mr. Barnard 32 years, 6 months
Mr. Chambers 14 years, 11 months
Mr. Davis 28 years, 7 months
Mr. Wright 14 years, 10 months
Except for the Chairman, each member of the Board of Directors who is not
also an officer of the Utility receives an annual retainer fee of $4,500 from
each of TNPE and the Utility. The Chairman of the Board of Directors
receives an annual retainer fee of $36,000 from each of TNPE and the Utility.
The Chairman acts as agent for the Board of Directors and is a member of all
Committees of the Board. Each director also receives $500 for attending each
meeting of the Board of Directors of either TNPE or the Utility or Board
committees of either entity of which he is a member. In the event that
meetings of Boards of both entities or their Committees are held on the same
day, the meeting fee is limited to $500 and is allocated evenly between TNPE
and the Utility.
Utility's Employment Contracts
Employment contracts between the Utility and its officers and its other key
personnel have continued since 1988, in form and substance last reviewed and
approved by the Board of Directors of the Utility at the November, 1993 Board
meeting. The principal purpose of the contracts is to encourage retention of
management and other key personnel required for the orderly conduct of the
business of the Utility during any threatened or pending acquisition of the
Utility or TNPE and during any transition of ownership. The terms of the
contracts, from date of execution, are three years as to certain officers and
managers of the Utility and two years as to the other key personnel. Upon
the expiration of each contract, the Utility, at its option, may extend the
contract for additional three or two year periods, as appropriate. The
contracts for certain officers and managers, including the named executive
officers, provide for lump sum compensation payments equal to three times
their current annual salary, and other rights. The contracts for the other
key personnel provide for payments equal to their annual salary. The lump
sum payments for both the officers and other key personnel only become
effective in the event of termination of employment or other adverse
treatment of such persons following a "change in control" of the Utility or
TNPE, which event is defined to include, among other things, substantial
changes in the corporate structure or ownership of either entity or in the
Board of Directors of either entity.
Pursuant to an agreement between J. M. Tarpley and TNPE and its
subsidiaries, including the Utility, Mr. Tarpley resigned his positions as
officer and member of the Boards of Directors of all such companies,
including his positions as President, Chief Executive Officer and a member of
the Boards of TNPE and the Utility. The agreement provides for November 9,
1993, as the effective time of resignation of such officer and director
positions and, effective January 1, 1994, a contract of employment between
Mr. Tarpley and the Utility. The agreement also sets forth other covenants
and arrangements between the parties safeguarding confidential and
proprietary information of TNPE and its subsidiaries and prohibiting areas of
participation by Mr. Tarpley in opposition to TNPE and the Utility. Upon
attaining age 62 (August 23, 1996), Mr. Tarpley will retire as an employee
and have all rights of a retired employee of the Utility. As an employee and
in consideration of the safeguarding and restricting covenants of Mr.
Tarpley, his annual compensation until retirement, or his earlier death, will
aggregate $284,000 per year. Mr. Tarpley has the rights as an employee to
participate in the benefit plans and programs of the Utility, including such
rights as a retired employee after age 62.
Effective as of November 9, 1993, the Utility entered into an agreement
with D. R. Spurlock to serve as President and Chief Executive Officer on an
interim basis. The agreement provides for the Utility to pay Mr. Spurlock
$30,000 per month, and to reimburse him for certain expenses incurred during
the interim period. Mr. Spurlock does not receive any benefits generally
made available to employees, such as pension accrual and enhanced medical
benefits. The agreement is terminable by either party upon twenty-four hour
written notice.
<page 55>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Director, Nominee and Management Shareholding
The following table sets forth information with respect to the beneficial
ownership of the common stock of TNPE by its directors, nominees for
directors, each executive officer named in the Summary Compensation Table and
all directors and officers as a group, as of January 31, 1994.
Name of
Individual or Group Position with Company Shares Beneficially Owned
R. D. Woofter Chairman of the Board 9,893 (1)
R. Denny Alexander Director 500
Cass O. Edwards, II Director 6,737
Harris L. Kempner, Jr. Director 200 (2)
Thomas S. Mackey * Director 1,386
D. R. Spurlock Director; 1,584
Interim President and CEO
since 11-9-93
J. M. Tarpley ** President, Chief 11,347 (3)
Executive Officer and
Director
D. R. Barnard Sector Vice President 18,491
and Chief Financial
Officer
J. V. Chambers Sector Vice President - 13,964
Revenue Production
A. B. Davis Vice President - 4,002
Chief Engineer
R. J. Wright Vice President - 10,201
Corporate Services/
Generation
Directors and officers
as a group (16 persons)(4) 96,370 ***
_____________________________________
* A member of the Board and Committees until the time of his death on
February 25, 1994.
**Resigned effective November 9, 1993 as President and CEO and Director.
***Less than one (1) percent of outstanding shares of Common Stock.
(1) Does not include 66 shares owned by the wife of Mr. Woofter as her sole
and separate property. Mr. Woofter disclaims any beneficial interest in
all such shares.
(2) Does not include 200 shares owned by the wife of Mr. Kempner as her sole
and separate property. Mr. Kempner disclaims any beneficial interest in
all such shares.
(3) Subsequent to January 31, 1994, Mr. Tarpley disposed of all shares.
(4) Of the nine executive officers of subsidiaries, four are also executive
officers of TNPE. All shares held by such officers and directors are
shares of TNPE.
<page 56>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Item 13. Certain Relationships and Related Transactions.
Mr. R. Denny Alexander is Chairman of the Board and director of Overton
Bank and Trust, National Association. Mr. Cass O. Edwards, II is a director
of Overton Bank and Trust, National Association.
The Utility maintains banking relations with Overton Bank and Trust,
National Association. These banking relations are in the ordinary course of
business for general banking and short-term investments, and all banking
transactions are made on substantially the same terms, including collateral
and interest rates, as those prevailing at the time for comparable
transactions between such bank and other persons.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Items Filed as Part of This Report
Financial Statements
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . 25
Consolidated Statements of Earnings,
Three Years Ended December 31, 1993. . . . . . . . . . . . . . . 26
Consolidated Balance Sheets, December 31, 1993 and 1992 27
Consolidated Statements of Common Stock Equity
and Redeemable Cumulative Preferred Stocks,
Three Years Ended December 31, 1993. . . . . . . . . . . . . . . 28
Consolidated Statements of Cash Flows,
Three Years Ended December 31, 1993. . . . . . . . . . . . . . . 29
Notes to Consolidated Financial Statements . . . . . . . . . . .30-49
Financial Statement Schedules
V - Utility Plant, Three Years Ended December 31, 1993. . 58
VI - Accumulated Depreciation of Utility Plant,
Three Years Ended December 31, 1993. . . . . . . . . . 59
IX - Short-term Borrowings,
Three Years Ended December 31, 1993. . . . . . . . . . 60
X - Supplementary Consolidated Earnings Statement Information
Three Years Ended December 31, 1993. . . . . . . . . 61
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
Exhibits
See Exhibit Index, Pages 63-72.
(b) Reports on Form 8-K
None during the last quarter covered by this report.
<page 57>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Utility Plant Schedule V
Three Years Ended December 31, 1993
(In Thousands)
Other
Balance at changes: Balance at
beginning Additions add end of
Classification of period at cost(1) Retirements(deduct) period
Year ended
December 31, 1993:
Electric plant $1,184,635 17,587 5,436 6,850 1,203,636
Construction work
in progress 3,922 8,210 - (6,850) 5,282
$1,188,557 25,797 5,436 - 1,208,918
Year ended
December 31, 1992:
Electric plant $1,159,511 30,365 (6,683) 1,442 1,184,635
Construction work
in progress 2,279 3,085 - (1,442) 3,922
$1,161,790 33,450 (6,683) - 1,188,557
Year ended
December 31, 1991:
Electric plant $ 850,160 313,259 (6,650) 2,742 1,159,511
Construction work
in progress 2,844 2,177 - (2,742) 2,279
$ 853,004 315,436 (6,650) - 1,161,790
Note: See note 1(c) to the consolidated financial statements for
disclosure of depreciation method.
(1) On July 26, 1991, the Utility's wholly owned subsidiary, TGCII,
assumed ownership of TNP One, Unit 2 and assumed the related
liabilities totaling approximately $269 million. In addition,
approximately $12 million of deferred charges related to TNP One,
Unit 2 were reclassified to utility plant. These amounts are
included in the 1991 additions above. See note 5 to the
consolidated financial statements and Items 1, 2, and 7, for more
information about Unit 2.
During 1992, the Utility reclassified approximately $12 million of
deferred charges to utility plant.
<page 58>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Accumulated Depreciation of Utility Plant Schedule VI
<TABLE>
<CAPTION>
Three Years Ended December 31, 1993
(In Thousands)
Other
Additions changes:
Balance at charged to add Balance at
beginning costs and Net (deduct) end of
Description of period expenses retirements (See Notes) period
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993:
Electric plant $172,848 36,015 (6,268) 328 202,923
Year ended
December 31, 1992:
Electric plant $145,188 35,098 (7,687) 249 172,848
Year ended
December 31, 1991:
Electric plant $124,015 28,027 (7,444) 590 145,188
<FN>
Notes: Other additions represent depreciation of transportation equipment
charged to property accounts in accordance with the equipment's use.
See note 1(c) to the consolidated financial statements for disclosure
of depreciation method.
</TABLE>
<page 59>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Short-term Borrowings (1) Schedule IX
Three Years Ended December 31, 1993
(Dollars in Thousands)
Weighted Maximum Weighted
average amount Average amount average
Balance interest outstanding outstanding interest
Category of aggregate at end rate at end during during rate during
Period short-term borrowings of period of period the period(3) the period(2) the period(2)
<S> <C> <C> <C> <C> <C> <C>
Year ended Unsecured Notes Payable
December 31, 1993 to Banks $ -0 N/A $ -0- -0- N/A
Year ended Unsecured Notes Payable
December 31, 1992 to Banks $ -0- N/A(2) $36,000 13,004 5.70%
Year ended Unsecured Notes Payable
December 31, 1991 to Banks $36,000 7.10% $60,000 36,698 7.70%
<FN>
Notes:
(1) Unsecured notes payable to banks were issued under revolving lines of credit. Under the terms
of the revolving lines of credit, the interest rates were determined under several alternative
methods. All rates at the time of issuance were the prime lending rate plus 1/2% or lower. A
fee of 1/4 of 1% per annum of the average unused commitments was payable quarterly, with no
compensating bank balance requirements.
(2) For 1991, computation was based on days outstanding for the year. For 1992, computation was
based on the period of January 1, 1992 to August 12, 1992, when all outstanding unsecured
notes payable to banks were retired.
(3) For 1991, represents the maximum amount outstanding at any month end. For 1992, represents
the balance outstanding at January 1, 1992.
</TABLE>
<page 60>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Supplementary Consolidated Earnings Statement Information Schedule X
Three Years Ended December 31, 1993
(In Thousands)
Charged to costs and expenses
Item 1993 1992 1991
Taxes, other than payroll and income taxes:
Gross receipts and street rentals $ 11,386 10,064 9,484
Property 14,119 14,272 10,302
Other 2,448 2,431 1,689
$ 27,95 26,767 21,475
<page 61>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) TEXAS-NEW MEXICO POWER COMPANY
By \s\ D. R. Barnard
D. R. Barnard, Sector Vice President &
Date: March 22, 1994 Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Title Date
By \s\ R. D. Woofter Chairman March 22, 1994
R. D. Woofter
By \s\ Dwight R. Spurlock Interim President & March 22, 1994
D. R. Spurlock Chief Executive Officer
By \s\ D. R. Barnard Sector Vice President & March 22, 1994
D. R. Barnard Chief Financial Officer
By \s\ Monte W. Smith Treasurer (Principal March 22, 1994
Monte W. Smith Accounting Officer)
By \s\ R. Denny Alexander Director March 22, 1994
R. Denny Alexander
By \s\ Cass O. Edwards, II Director March 22, 1994
Cass O. Edwards, II
By \s\ John A. Fanning Director March 22, 1994
John A. Fanning
By \s\ Harris L. Kempner, Jr. Director March 22, 1994
Harris L. Kempner, Jr.
No annual report to security holders of the Registrant covering the
Registrant's last fiscal year and no proxy material with respect to
solicitations during such fiscal year have been sent to the Registrant's
security holders.
<page 62>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
Exhibits filed herewith are denoted by "*." The other exhibits have
heretofore been filed with the Commission and are incorporated herein by
reference.
Exhibit
No. Description
3(a) - Restated Articles of Incorporation of the Utility (Exhibit
4(a), File No. 2-86282).
3(b) - Amendment to Restated Articles of Incorporation dated October
26, 1983 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1984, File No. 1-2660-2).
3(c) - Amendment to Restated Articles of Incorporation dated April 8,
1984 (Exhibit 3(c) to Form 10-K for the year ended December 31,
1984, File No. 1-2660-2).
3(d) - Amendment to Restated Articles of Incorporation dated October
2, 1984 (Exhibit 3(d) to Form 10-K for the year ended December
31, 1984, File No. 1-2660-2).
3(e) - Articles of Merger dated October 3, 1984 (Exhibit 3(e) to Form
10-K for the year ended December 31, 1984, File No. 1-2660-2).
3(f) - Amendment to Restated Articles of Incorporation dated May 22,
1985 (Exhibit 3(a) to Form 10-K for the year ended December 31,
1985, File No. 2-97230).
3(g) - Amendment to Restated Articles of Incorporation dated August
20, 1985 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1985, File No. 2-97230).
3(h) - Amendment to Restated Articles of Incorporation dated
October 7, 1985 (Exhibit 3(c) to Form 10-K for the year ended
December 31, 1985, File No. 2-97230).
3(i) - Amendment to Restated Articles of Incorporation dated June 12,
1986 (Exhibit 3(a) to Form 10-K for the year ended December 31,
1986, File No. 2-97230).
3(j) - Amendment to Restated Articles of Incorporation dated October
17, 1986 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1986, File No. 2-97230).
3(k) - Amendment to Restated Articles of Incorporation dated July 14,
1987 (Exhibit 3(k) to Form 10-K for the year ended December 31,
1987, File No. 2-97230).
3(l) - Amendment to Restated Articles of Incorporation dated October
23, 1987 (Exhibit 3(l) to Form 10-K for the year ended December
31, 1987, File No. 2-97230).
3(m) - Amendment to Restated Articles of Incorporation dated May 4,
1988 (Exhibit 3(m) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).
3(n) - Amendment to Restated Articles of Incorporation dated May 5,
1988 (Exhibit 3(n) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).
3(o) - Amendment to Restated Articles of Incorporation dated May 5,
1988 (Exhibit 3(o) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).
<page 63>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
3(p) - Amendment to Restated Articles of Incorporation dated December
5, 1988 (Exhibit 3(p) to Form 10-K for the year ended December
31, 1988, File No. 2-97230).
3(q) - Amendment to Restated Articles of Incorporation dated April 11,
1989 (Exhibit 3(q) to Form 10-K for the year ended December 31,
1989, File No. 2-97230).
3(r) - Amendment to Restated Articles of Incorporation dated July 27,
1989 (Exhibit 3(r) to Form 10-K for the year ended December 31,
1989, File No. 2-97230).
3(s) - Amendment to Restated Articles of Incorporation dated October
23, 1989 (Exhibit 3(s) to Form 10-K for the year ended
December 31, 1989, File No. 2-97230).
3(t) - Amendment to Restated Articles of Incorporation dated May 16,
1990 (Exhibit 3(t) to Form 10-K for the year ended December 31,
1990, File No. 2-97230).
3(u) - Amendment to Restated Articles of Incorporation dated June 26,
1990 (Exhibit 3(u) to Form 10-K for the year ended December 31,
1990, File No. 2-97230).
3(v) - Amendment to Restated Articles of Incorporation dated November
27, 1990 (Exhibit 3(v) to Form 10-K for the year ended December
31, 1990, File No. 2-97230).
3(w) - Amendment to Restated Articles of Incorporation
dated May 1, 1991 (Exhibit 3(w) to Form 10-K
for the year ended December 31, 1991, File No.
2-97230).
3(x) - Amendment to Restated Articles of Incorporation dated July 18,
1991 (Exhibit 3(x) to Form 10-K for the year ended December 31,
1991, File No. 2-97230).
3(y) - Amendment to Restated Articles of Incorporation dated October
18, 1991 (Exhibit 3(y) to Form 10-K for the year ended December
31, 1991, File No. 2-97230).
3(z) - Amendment to Restated Articles of Incorporation dated April 30,
1992 (Exhibit 3(z) to Form 10-K for the year ended December 31,
1992, File No. 2-97230).
3(aa) - Amendment to Restated Articles of Incorporation dated June 19,
1992 (Exhibit 3(aa) to Form 10-K for the year ended December
31, 1992, File No. 2-97230).
3(bb) - Amendment to Restated Articles of Incorporation dated November
3, 1992 (Exhibit 3(bb) to Form 10-K for the year ended December
31, 1992, File No. 2-97230).
*3(cc) - Amendment to Restated Articles of Incorporation dated April 7,
1993.
*3(dd) - Amendment to Restated Articles of Incorporation dated July 22,
1993.
*3(ee) - Amendment to Restated Articles of Incorporation dated October
21, 1993.
3(ff) - Bylaws of the Utility, as amended February 18, 1992 (Exhibit
3(cc) to Form 10-K for the year ended December 31, 1992, File
No. 2-97230).
4(a) - Indenture of Mortgage and Deed of Trust dated as of November 1,
1944 (Exhibit 2(d), File No. 2-61323).
4(b) - Seventh Supplemental Indenture dated as of May 1, 1963 (Exhibit
2(k), File No. 2-61323).
<page 64>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
4(c) - Eighth Supplemental Indenture dated as of July 1, 1963 (Exhibit
2(1), File No. 2-61323).
4(d) - Ninth Supplemental Indenture dated as of August 1, 1965
(Exhibit 2(m), File No. 2-61323).
4(e) - Tenth Supplemental Indenture dated as of May 1, 1966 (Exhibit
2(n), File No. 2-61323).
4(f) - Eleventh Supplemental Indenture dated as of October 1, 1969
(Exhibit 2(o), File No. 2-61323).
4(g) - Twelfth Supplemental Indenture dated as of May 1, 1971 (Exhibit
2(p), File No. 2-61323).
4(h) - Thirteenth Supplemental Indenture dated as of July 1, 1974
(Exhibit 2(q), File No. 2-61323).
4(i) - Fourteenth Supplemental Indenture dated as of March 1, 1975
(Exhibit 2(r), File No. 2-61323).
4(j) - Fifteenth Supplemental Indenture dated as of September 1, 1976
(Exhibit 2(e), File No. 2-57034).
4(k) - Sixteenth Supplemental Indenture dated as of November 1, 1981
(Exhibit 4(x), File No. 2-74332).
4(l) - Seventeenth Supplemental Indenture dated as of December 1, 1982
(Exhibit 4(cc), File No. 2-80407).
4(m) - Eighteenth Supplemental Indenture dated as of September 1, 1983
(Exhibit (a) to Form 10-Q for the quarter ended September 30,
1983, File No. 1-4756).
4(n) - Nineteenth Supplemental Indenture dated as of May 1, 1985
(Exhibit 4(v), File No. 2-97230).
4(o) - Twentieth Supplemental Indenture dated as of July 1, 1987
(Exhibit 4(o) to Form 10-K for the year ended December 31,
1987, File No. 2-97230).
4(p) - Twenty-First Supplemental Indenture dated as of July 1, 1989
(Exhibit 4(p) to Form 10-Q for the quarter ended June 30, 1989,
File No. 2-97230).
4(q) - Twenty-Second Supplemental Indenture dated as of January 15,
1992 (Exhibit 4(q) to Form 10-K for the year ended December 31,
1991, File No. 2-97230).
*4(r) - Twenty-Third Supplemental Indenture dated as of September 15,
1993.
4(s) - Indenture and Security Agreement for Secured Debentures dated
as of January 15, 1992 (Exhibit 4(r) to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).
*4(t) - Indenture and Security Agreement for Secured Debentures dated
as of September 15, 1993.
<page 65>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
Material Contracts Relating to TNP One
10(a) - Fuel Supply Agreement, dated November 18, 1987, between
Phillips Coal Company and the Utility (Exhibit 10(j) to Form
10-K for the year ended December 31, 1987, File No. 2-97230).
10(b) - Unit 1 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1992 (the "Unit 1 Credit
Agreement"), among the Utility, Texas Generating Company
("TGC"), the banks named therein as Banks (the "Unit 1 Banks")
and The Chase Manhattan Bank (National Association), as Agent
for the Unit 1 Banks (the "Unit 1 Agent"), amending and
restating the Project Loan and Credit Agreement among such
parties dated as of December 1, 1987 (Exhibit 10(c) to Form 10-
K for the year ended December 31, 1991, File No. 2-97230).
10(b)1 - Participation Agreement, dated as of January 8, 1992, among the
banks named therein as Banks, the parties named therein as
Participants and the Unit 1 Agent (Exhibit 10(c)1 to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).
*10(b)2 - Amendment No. 1, dated as of September 21, 1993, to the Unit 1
Credit Agreement.
10(c) - Assignment and Security Agreement, dated as of January 8, 1992,
among TGC and the Unit 1 Agent, for the benefit of the Secured
Parties, as defined in the Unit 1 Credit Agreement, amending
and restating the Assignment and Security Agreement among such
parties dated as of December 1, 1987 (Exhibit 10(d) to Form 10-
K for the year ended December 31, 1991, File No. 2-97230).
10(d) - Assignment and Security Agreement, dated December 1, 1987,
executed by the Utility in favor of the Unit 1 Agent for the
benefit of the Secured Parties, as defined therein (Exhibit
10(u) to Form 10-K for the year ended December 31, 1987, File
No. 2-97230).
10(e) - Amended and Restated Subordination Agreement, dated as of
October 1, 1988, among the Utility, Continental Illinois
National Bank and Trust Company of Chicago and the Unit 1
Agent, amending and restating the Subordination Agreement among
such parties dated as of December 1, 1987 (Exhibit 10(uu) to
Form 10-K for the year ended December 31, 1988, File No. 2-
97230).
10(f) - Mortgage and Deed of Trust (With Security Agreement and UCC
Financing Statement for Fixture Filing), dated to be effective
as of December 1, 1987, and executed by Project Funding
Corporation ("PFC"), as Mortgagor, to Donald H. Snell, as
Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(ee) to Form 10-K for the year ended
December 31, 1987, File No. 2-97230).
10(f)1 - Supplemental Mortgage and Deed of Trust (With Security
Agreement and UCC Financing Statement for Fixture Filing),
executed by TGC, as Mortgagor, on January 27, 1992, to be
effective as of December 1, 1987, to Donald H. Snell, as
Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(g)4 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).
10(f)2 - First TGC Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)1 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).
<page 66>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(f)3 - Second TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)2 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).
10(f)4 - Third TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)3 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).
*10(f)5 - Fourth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 1 Banks, the Unit 1 Agent,
the Utility and TGC.
*10(f)6 - Fifth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 1 Banks, the Unit 1 Agent,
the Utility and TGC.
10(g) - Indemnity Agreement, made as of the 1st day of December, 1987,
by Westinghouse, CE and Zachry, as Indemnitors, for the benefit
of the Secured Parties, as defined therein (Exhibit 10(ff) to
Form 10-K for the year ended December 31, 1987, File No. 2-
97230).
10(h) - Second Lien Mortgage and Deed of Trust (With Security
Agreement) executed by the Utility, as Mortgagor, to Donald H.
Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(jj) to Form 10-K for
the year ended December 31, 1987, File No. 2-97230).
10(h)1 - Correction Second Lien Mortgage and Deed of Trust (with
Security Agreement), dated as of December 1, 1987, executed by
the Utility, as Mortgagor, to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as defined
therein (Exhibit 10(vv) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).
10(h)2 - Second Lien Mortgage and Deed of Trust (with Security
Agreement) Modification, Extension and Amendment Agreement,
dated as of January 8, 1992, executed by the Utility to Donald
H. Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(i)2 to Form 10-K for
the year ended December 31, 1991, File No. 2-97230).
*10(h)3 - TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by the Utility to Donald H. Snell,
as Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein.
10(i) - Agreement for Conveyance and Partial Release of Liens, made as
of the 1st day of December, 1987, by PFC and the Unit 1 Agent
for the benefit of the Utility (Exhibit 10(kk) to Form 10-K for
the year ended December 31, 1987, File No. 2-97230).
10(j) - Inducement and Consent Agreement, dated as of June 15, 1988,
between Phillips Coal Company, Kiewit Texas Mining Company, the
Utility, Phillips Petroleum Company and Peter Kiewit Son's,
Inc. (Exhibit 10(nn) to Form 10-K for the year ended December
31, 1988, File No. 2-97230).
10(k) - Assumption Agreement, dated as of October 1, 1988, executed by
TGC, in favor of the Issuing Bank, as defined therein, the Unit
1 Banks, the Unit 1 Agent and the Depositary, as defined
therein (Exhibit 10(ww) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).
<page 67>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(l) - Guaranty, dated as of October 1, 1988, executed by the Utility
and given in respect of the TGC obligations under the Unit 1
Credit Agreement (Exhibit 10(xx) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).
10(m) - First Amended and Restated Facility Purchase Agreement, dated
as of January 8, 1992, among the Utility, as the Purchaser, and
TGC, as the Seller, amending and restating the Facility
Purchase Agreement among such parties dated as of October 1,
1988 (Exhibit 10(n) to Form 10-K for the year ended December
31, 1991, File No. 2-97230).
10(n) - Operating Agreement, dated as of October 1, 1988, among the
Utility and TGC (Exhibit 10(zz) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).
10(o) - Unit 2 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1992 (the "Unit 2 Credit
Agreement"), among the Utility, Texas Generating Company II
("TGCII"), the banks named therein as Banks (the "Unit 2
Banks") and The Chase Manhattan Bank (National Association), as
Agent for the Unit 2 Banks (the "Unit 2 Agent"), amending and
restating the Project Loan and Credit Agreement among such
parties dated as of October 1, 1988 (Exhibit 10(q) to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).
*10(o)1 - Amendment No. 1, dated as of September 21, 1993, to the Unit 2
Credit Agreement.
10(p) - Assignment and Security Agreement, dated as of January 8, 1992,
among TGCII and the Unit 2 Agent, for the benefit of the
Secured Parties, as defined in the Unit 2 Credit Agreement,
amending and restating the Assignment and Security Agreement
among such parties dated as of October 1, 1988 (Exhibit 10(r)
to Form 10-K for the year ended December 31, 1991, File No. 2-
97230).
10(q) - Assignment and Security Agreement, dated as of October 1, 1988,
executed by the Utility in favor of the Unit 2 Agent for the
benefit of the Secured Parties, as defined therein (Exhibit
10(jjj) to Form 10-K for the year ended December 31, 1988, File
No. 2-97230).
10(r) - Subordination Agreement, dated as of October 1, 1988, among the
Utility, Continental Illinois National Bank and Trust Company
of Chicago and the Unit 2 Agent (Exhibit 10(mmm) to Form 10-K
for the year ended December 31, 1988, File No. 2-97230).
10(s) - Mortgage and Deed of Trust (With Security Agreement and UCC
Financing Statement for Fixture Filing), dated to be effective
as of October 1, 1988, and executed by Texas PFC, Inc., as
Mortgagor, to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein (Exhibit
10(uuu) to Form 10-K for the year ended December 31, 1988, File
No. 2-97230).
10(s)1 - First TGCII Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)1 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).
10(s)2 - Second TGCII Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)2 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).
<page 68>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(s)3 - Third TGCII Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)3 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).
*10(s)4 - Fourth TGCII Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 2 Banks, the Unit 2 Agent,
the Utility and TGCII.
10(t) - Release and Waiver of Liens and Indemnity Agreement, made
effective as of the 1st day of October, 1988, by a consortium
composed of Westinghouse, CE, and Zachry (Exhibit 10(vvv) to
Form 10-K for the year ended December 31, 1988, File No. 2-
97230).
10(u) - Second Lien Mortgage and Deed of Trust (With Security
Agreement), dated as of October 1, 1988, and executed by the
Utility, as Mortgagor, to Donald H. Snell, as Mortgage Trustee,
for the benefit of the Secured Parties, as defined therein
(Exhibit 10(www) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).
10(u)1 - Second Lien Mortgage and Deed of Trust (with Security
Agreement) Modification, Extension and Amendment Agreement,
dated as of January 8, 1992, executed by the Utility to Donald
H. Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(w)1 to Form 10-K for
the year ended December 31, 1991, File No. 2-97230).
*10(u)2 - TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by the Utility to Donald H. Snell,
as Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein.
10(v) - Intercreditor and Nondisturbance Agreement, dated as of October
1, 1988, among PFC, Texas PFC, Inc., the Utility, the Project
Creditors, as defined therein, and the Collateral Agent, as
defined therein (Exhibit 10(xxx) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).
10(v)1 - Amendment #1, dated as of January 8, 1992, to the Intercreditor
and Nondisturbance Agreement, dated as of October 1, 1988,
among TGC, TGCII, the Utility, the Unit 1 Banks, the Unit 2
Banks and The Chase Manhattan Bank (National Association) in
its capacity as collateral agent for the Unit 1 Banks and the
Unit 2 Banks (Exhibit 10(x)1 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).
*10(v)2 - Amendment No. 2, dated as of September 21, 1993, to the
Intercreditor and Nondisturbance Agreement, among TGC, TGCII,
the Utility, the Unit 1 Banks, the Unit 2 Banks and The Chase
Manhattan Bank (National Association) in its capacity as
collateral agent for the Unit 1 Banks and the Unit 2 Banks.
10(w) - Grant of Reciprocal Easements and Declaration of Covenants
Running with the Land, dated as of the 1st day of October, 1988
between PFC and Texas PFC, Inc. (Exhibit 10(yyy) to Form 10-K
for the year ended December 31, 1988, File No. 2-97230).
10(x) - Non-Partition Agreement, dated as of May 30, 1990, among the
Utility, TGC and The Chase Manhattan Bank (National
Association), as Agent for the Banks which are parties to the
Unit 1 Credit Agreement (Exhibit 10(ss) to Form 10-K for the
year ended December 31, 1990, File No. 2-97230).
<page 69>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(y) - Assumption Agreement, dated July 26, 1991, to be effective as
of May 31, 1991, by TGCII in favor of the Issuing Bank, the
Unit 2 Banks, the Unit 2 Agent and the Depositary, as defined
therein (Exhibit 10(kkk) to Amendment No. 1 to File No. 33-
41903).
10(z) - Guaranty, dated July 26, 1991, to be effective as of May 31,
1991, by the Utility and given in respect of the TGCII
obligations under the Unit 2 Credit Agreement (Exhibit 10(lll)
to Amendment No. 1 to File No. 33-41903).
10(aa) - First Amended and Restated Facility Purchase Agreement, dated
as of January 8, 1992, among the Utility, as the Purchaser, and
TGCII, as the Seller, amending and restating the Facility
Purchase Agreement among such parties dated July 26, 1991, to
be effective as of May 31, 1991 (Exhibit 10(dd) to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).
*10(aa)1 - Amendment No. 1 to the Unit 2 First Amended and Restated
Facility Purchase Agreement, dated as of September 21, 1993,
among the Utility, as the Purchaser, and TGCII, as the Seller.
10(bb) - Operating Agreement, dated July 26, 1991, to be effective as of
May 31, 1991, between the Utility and TGCII (Exhibit 10(nnn) to
Amendment No. 1 to File No. 33-41903).
10(cc) - Non-Partition Agreement, executed July 26, 1991, to be
effective as of May 31, 1991, among the Utility, TGCII and The
Chase Manhattan Bank (National Association) (Exhibit 10(ppp) to
Amendment No. 1 to File No. 33-41903).
Power Supply Contracts
10(dd) - Contract dated May 12, 1976 between the Utility and Houston
Lighting & Power Company (Exhibit 5(a), File No. 2-69353).
10(dd)1 - Amendment, dated January 4, 1989, to the Contract dated May 12,
1976 between the Utility and Houston Lighting & Power Company
(Exhibit 10(cccc) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).
10(ee) - Contract dated May 1, 1986 between the Utility and Texas
Electric Utilities Company, amended September 29, 1986, October
24, 1986 and February 21, 1987 (Exhibit 10(c) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).
10(ff) - Amended and Restated Agreement for Electric Service dated May
14, 1990 between the Utility and Texas Utilities Electric
Company (Exhibit 10(vv) to Form 10-K for the year ended
December 31, 1990, File No. 2-97230).
10(ff)1 - Amendment, dated April 19, 1993, to Amended and Restated
Agreement for Electric Service, dated May 14, 1990, As Amended
between the Utility and Texas Utilities Electric Company
(Exhibit 10(ii)1 to Form S-2 Registration Statement, filed on
July 19, 1993, File No. 33-66232).
10(gg) - Contract dated June 11, 1984 between the Utility and
Southwestern Public Service Company (Exhibit 10(d) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).
<page 70>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(hh) - Contract dated April 27, 1977 between the Utility and West
Texas Utilities Company amended April 14, 1982, April 19, 1983,
May 18, 1984 and October 21, 1985 (Exhibit 10(e) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).
10(ii) - Contract dated April 29, 1987 between the Utility and El Paso
Electric Company (Exhibit 10(f) of Form 8 applicable to Form
10-K for the year ended December 31, 1986, File No. 2-97230).
10(jj) - Contract dated February 28, 1974, amended May 13, 1974,
November 26, 1975, August 26, 1976 and October 7, 1980 between
the Utility and Public Service Company of New Mexico (Exhibit
10(g) of Form 8 applicable to Form 10-K for the year ended
December 31, 1986, File No. 2-97230).
10(jj)1 - Amendment, dated February 22, 1982, to the Contract dated
February 28, 1974, amended May 13, 1974, November 26, 1975,
August 26, 1976, and October 7, 1980 between the Utility and
Public Service Company of New Mexico (Exhibit 10(iiii) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).
10(jj)2 - Amendment, dated February 8, 1988, to the Contract dated
February 28, 1974, amended May 13, 1974, November 26, 1975,
August 26, 1976, and October 7, 1980 between the Utility and
Public Service Company of New Mexico (Exhibit 10(jjjj) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).
10(jj)3 - Amended and Restated Contract for Electric Service, dated April
29, 1988, between the Utility and Public Service Company of New
Mexico (Exhibit 10(zz)3 to Amendment No. 1 to File No. 33-
41903).
10(kk) - Contract dated December 8, 1981 between the Utility and
Southwestern Public Service Company amended December 12, 1984,
December 2, 1985 and December 19, 1986 (Exhibit 10(h) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).
10(kk)1 - Amendment, dated December 12, 1988, to the Contract dated
December 8, 1981 between the Utility and Southwestern Public
Service Company amended December 12, 1984, December 2, 1985 and
December 19, 1986 (Exhibit 10(llll) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).
10(kk)2 - Amendment, dated December 12, 1990, to the Contract dated
December 8, 1981 between the Utility and Southwestern Public
Service Company (Exhibit 19(t) to Form 10-K for the year ended
December 31, 1990, File No. 2-97230).
10(ll) - Contract dated August 31, 1983, between the Utility and Capitol
Cogeneration Company, Ltd. (including letter agreement dated
August 14, 1986) (Exhibit 10(i) of Form 8 applicable to Form
10-K for the year ended December 31, 1986, File No. 2-97230).
10(ll)1 - Agreement Substituting a Party, dated May 3, 1988, among
Capitol Cogeneration Company, Ltd., Clear Lake Cogeneration
Limited Partnership and the Utility (Exhibit 10(nnnn) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).
<page 71>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description
10(ll)2 - Letter Agreements, dated May 30, 1990 and August 28, 1991,
between Clear Lake Cogeneration Limited Partnership and the
Utility (Exhibit 10(oo)2 to Form 10-K for the year ended
December 31, 1992, File No. 2-97230).
10(ll)3 - Notice of Extension Letter, dated August 31, 1992, between
Clear Lake Cogeneration Limited Partnership and the Utility
(Exhibit 10(oo)3 to Form 10-K for the year ended December 31,
1992, File No. 2-97230).
10(ll)4 - Scheduling Agreement, dated September 15, 1992, between Clear
Lake Cogeneration Limited Partnership and the Utility (Exhibit
10(oo)4 to Form 10-K for the year ended December 31, 1992, File
No. 2-97230).
10(mm) - Interconnection Agreement between the Utility and Plains
Electric Generation and Transmission Cooperative, Inc. dated
July 19, 1984 (Exhibit 10(j) of Form 8 applicable to Form 10-K
for the year ended December 31, 1986, File No. 2-97230).
10(nn) - Interchange Agreement between the Utility and El Paso Electric
Company dated April 29, 1987 (Exhibit 10(l) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).
10(oo) - DC Terminal Participation Agreement between the Utility and El
Paso Electric Company dated December 8, 1981 amended April 29,
1987 (Exhibit 10(m) of Form 8 applicable to Form 10-K for the
year ended December 31, 1986, File No. 2-97230).
Employment Contracts
*10(pp) - Texas-New Mexico Power Company Executive Agreement for
Severance Compensation Upon Change in Control, executed
November 11, 1993, between Sector Vice President and Chief
Financial Officer and the Utility (Pursuant to Instruction 2 of
Reg. 229.601(a), accompanying this document is a schedule: (i)
identifying documents substantially identical to the document
which have been omitted from the Exhibits; and (ii) setting
forth the material details in which such omitted documents
differ from the document).
*10(qq) - Texas-New Mexico Power Company Key Employee Agreement for
Severance Compensation Upon Change in Control, executed
November 11, 1993, between Assistant Treasurer and the Utility
(Pursuant to Instruction 2 of Reg. 229.601(a), accompanying
this document is a schedule: (i) identifying documents
substantially identical to the document which have been omitted
from the Exhibits; and (ii) setting forth the material details
in which such omitted documents differ from the document).
*10(rr) - Agreement between James M. Tarpley and TNPE and the Utility,
effective January 1, 1994.
*10(ss) - Agreement between Dwight R. Spurlock and TNPE and the Utility,
effective November 9, 1993.
*21 - Subsidiaries of the Registrant.
<page 72>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT Exhibit 21
Name State of Incorporation
Texas Generating Company Texas
Texas Generating Company II Texas
[FILED In the Office of the Secretary of State of Texas Apr 08 1993
Corporation Section]
TEXAS-NEW MEXICO POWER COMPANY
STATEMENT OF CANCELLATION
BY PURCHASE OF REDEEMABLE SHARES
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 4.10 of the Texas
Business Corporation Act, Texas-New Mexico Power Company, the
undersigned corporation, submits the following Statement of
Cancellation by Purchase of Redeemable Shares of the corporation:
1. The name of the corporation is TEXAS-NEW
MEXICO POWER COMPANY.
2. The number of redeemable shares cancelled
through purchase is 3,000 itemized as follows:
<TABLE>
<CAPTION>
Number
Class Series of Shares
<S> <C> <C>
11.00% Cumulative Preferred Stock D 1,200
11.00% Cumulative Preferred Stock E 600
11.00% Cumulative Preferred Stock F 1,200
</TABLE>
3. The aggregate number of issued shares of the
corporation after giving effect to such
cancellation is 112,105 itemized as follows:
<TABLE>
<CAPTION>
Number
Class Series of Shares
<S> <C> <C>
Common Stock 10,705
4.65% Cumulative Preferred Stock B 13,200
(First Closing)
4.65% Cumulative Preferred Stock B 13,200
(Second Closing)
4.75% Cumulative Preferred Stock C 15,000
11.00% Cumulative Preferred Stock D 3,200
11.00% Cumulative Preferred Stock E 1,600
11.00% Cumulative Preferred Stock F 3,200
11.875% Cumulative Preferred Stock G 52,000
</TABLE>
4. The amount of stated capital of the corporation after
giving effect to such cancellation is $10,247,050.
5. The Restated Articles of Incorporation filed on August
19, 1983 (Statements of Resolution filed on August 16,
1963, October 10, 1963, August 3, 1965, April 29, 1975,
and June 10, 1983) provide that if shares of any series
of preferred stock are purchased or redeemed pursuant to
such Restated Articles of Incorporation, the shares so
purchased or redeemed shall be cancelled and shall not be
reissued as shares of the same series. The number of
shares which the corporation has authority to issue after
giving effect to the cancellation is 13,000,000, itemized
as follows:
<PAGE>
<TABLE>
<CAPTION>
Number
Class of Shares
<S> <C>
Common Stock 12,000,000
Preferred Stock 1,000,000
</TABLE>
6. The number of shares of preferred stock which the
corporation has authority to issue after giving effect to
the cancellation is itemized as to series as follows:
<TABLE>
<CAPTION>
Number
Class Series of Shares
<S> <C> <C>
4.65% Cumulative Preferred Stock B 13,200
(First Closing)
4.65% Cumulative Preferred Stock B 13,200
(Second Closing)
4.75% Cumulative Preferred Stock C 15,000
11.00% Cumulative Preferred Stock D 3,200
11.00% Cumulative Preferred Stock E 1,600
11.00% Cumulative Preferred Stock F 3,200
11.875% Cumulative Preferred Stock G 52,000
Authorized but unissued preferred stock 898,600
DATED: April 7, 1993 TEXAS-NEW MEXICO POWER COMPANY
By \s\ D. R. Barnard
Its Sector Vice President
By \s\ Michael D. Blanchard
Its Secretary
THE STATE OF TEXAS
COUNTY OF TARRANT
I, B. Jan Adkins, a notary public, do hereby certify that on
this 7th day of April, 1993, personally appeared before me D. R.
BARNARD, who being by me first duly sworn, declared that he is the
Sector Vice President of TEXAS-NEW MEXICO POWER COMPANY, that he
signed the foregoing document as Sector Vice President of the
corporation, and that statements therein contained are true.
\s\ B.Jan Adkins
Notary Public
B. JAN ADKINS
My Commission Expires:
June 30, 1996
<PAGE>
</TABLE>
TEXAS-NEW MEXICO POWER COMPANY
STATEMENT OF CANCELLATION
BY PURCHASE OF REDEEMABLE SHARES
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 4.10 of the Texas
Business Corporation Act, Texas-New Mexico Power Company, the
undersigned corporation, submits the following Statement of
Cancellation by Purchase of Redeemable Shares of the corporation:
1. The name of the corporation is TEXAS-NEW MEXICO POWER
COMPANY.
2. The number of redeemable shares cancelled through
purchase is 4,000 itemized as follows:
<TABLE>
<CAPTION>
Number
Class Series of Shares
<S> <C> <C>
11.875% Cumulative Preferred Stock G 4,000
</TABLE>
3. The aggregate number of issued shares of the corporation
after giving effect to such cancellation is 108,105
itemized as follows:
<TABLE>
<CAPTION> Number
Class Series of Shares
<S> <C> <C>
Common Stock 10,705
4.65% Cumulative Preferred Stock B 13,200
(First Closing)
4.65% Cumulative Preferred Stock B 13,200
(Second Closing)
4.75% Cumulative Preferred Stock C 15,000
11.00% Cumulative Preferred Stock D 3,200
11.00% Cumulative Preferred Stock E 1,600
11.00% Cumulative Preferred Stock F 3,200
11.875% Cumulative Preferred Stock G 48,000
</TABLE>
4. The amount of stated capital of the corporation after
giving effect to such cancellation is $9,847,050.
5. The Restated Articles of Incorporation filed on August 19,
1983 (Statements of Resolution filed on August 16, 1963,
October 10, 1963, August 3, 1965, April 29, 1975, and June
10, 1983) provide that if shares of any series of
preferred stock are purchased or redeemed pursuant to such
Restated Articles of Incorporation, the shares so
purchased or redeemed shall be cancelled and shall not be
reissued as shares of the same series. The number of
shares which the corporation has authority to issue after
giving effect to the cancellation is 13,000,000, itemized
as follows:
<PAGE>
Number
Class of Shares
Common Stock 12,000,000
Preferred Stock 1,000,000
6. The number of shares of preferred stock which the
corporation has authority to issue after giving effect to
the cancellation is itemized as to series as follows:
<TABLE>
<CAPTION>
Number
Class Series of Shares
<S> <C> <C>
4.65% Cumulative Preferred Stock B 13,200
(First Closing)
4.65% Cumulative Preferred Stock B 13,200
(Second Closing)
4.75% Cumulative Preferred Stock C 15,000
11.00% Cumulative Preferred Stock D 3,200
11.00% Cumulative Preferred Stock E 1,600
11.00% Cumulative Preferred Stock F 3,200
11.875% Cumulative Preferred Stock G 48,000
Authorized but unissued preferred stock 902,600
</TABLE>
DATED: July 22, 1993 TEXAS-NEW MEXICO POWER
COMPANY
By \s\ D. R. Barnard
Its Sector Vice President
By \s\ Michael D. Blanchard
Its Secretary
THE STATE OF TEXAS
COUNTY OF TARRANT
I, B. Jan Adkins, a notary public, do hereby certify that on
this 22nd day of July, 1993, personally appeared before me D. R.
BARNARD, who being by me first duly sworn, declared that he is the
Sector Vice President of TEXAS-NEW MEXICO POWER COMPANY, that he
signed the foregoing document as Sector Vice President of the
corporation, and that the statements therein contained are true.
\s\ B. Jan Adkins
Notary Public
B. JAN ADKINS
My Commission Expires:
June 30, 1996
<PAGE>
[CONFORMED COPY]
This Instrument Contains After-Acquired Property Provisions.
This Instrument Grants a Security Interest by a Utility.
Texas-New Mexico Power Company
(Formerly COMMUNITY PUBLIC SERVICE COMPANY)
TO
CONTINENTAL BANK, NATIONAL ASSOCIATION
(Formerly CONFIDENTIAL ILLINOIS NATIONAL BANK AND
TRUST COMPANY OF CHICAGO)
Trustee.
Twenty-Third Supplemental Indenture
Dated as of September 15, 1993
Supplemental to and Modifying
Indenture of Mortgage
and
Deed of Trust
Dated as of November 1. 1944
(as supplemented and modified)
<PAGE >
This Instrument Contains After-Acquired Property Provisions.
This Instrument Grants a Security Interest by a Utility.
This is a Security Agreement granting a Security Interest in
Chattels including Chattels affixed to Realty as well as a Mortgage
upon Real Estate and Other Property.
THIS TWENTY-THIRD SUPPLEMENTAL INDENTURE, dated as of
September 15, 1993, between Texas-New Mexico Power Company
(formerly Community Public Service Company), as debtor, a Texas
corporation (hereinafter sometimes called the "Company"), whose
mailing address and address of its principal place of business is 4100
International Plaza, P.O. Box 2943, Fort Worth, Texas 76113, party
of the first part, and Continental Bank, National Association (formerly
Continental Illinois National Bank and Trust Company of
Chicago), as Trustee and Secured Party, a national banking association
having its principal place of business and mailing address at 231
South LaSalle Street, Chicago, Illinois 60697 (hereinafter sometimes
called the "Trustee"), party of the second part:
WHEREAS, Community Public Service Company, a Delaware corporation
(hereinafter sometimes called the "Predecessor Company"), has heretofore
executed and delivered to the City National
Bank and Trust Company of Chicago (hereinafter sometimes called
the "Predecessor Trustee"), an Indenture of Mortgage and Deed of
Trust dated as of November 1, 1944 (hereinafter sometimes called
the "Original Indenture"), to secure as provided therein, its bonds
(in the Original Indenture and herein called the "Bonds") to be
designated generally as its "First Mortgage Bonds" and to be issued
in one or more series as provided in the Original Indenture; and
WHEREAS, the Predecessor Company has heretofore executed and
delivered to the Predecessor Trustee six indentures supplemental to
the Original Indenture, which supplemental indentures were dated as
of March 1, 1947, January 1, 1949, January 1, 1952, March 1, 1954,
June 1, 1957 and June 1, 1961, respectively; and
<PAGE 1>
2
WHEREAS, simultaneously with the merger of the Predecessor
Company into the Company, the Company has heretofore executed
and delivered a Seventh Supplemental Indenture, dated as of May 1,
1963, to Continental Illinois National Bank and Trust Company of
Chicago (into which on September 1, 1961, said Predecessor Trustee
was merged), as Trustee; and
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Eighth Supplemental Indenture dated as of July 1,
1963; a Ninth Supplemental Indenture dated as of August 1, 1965; a
Tenth Supplemental Indenture dated as of May 1, 1966; an Eleventh
Supplemental Indenture dated as of October 1, 1969; a Twelfth
Supplemental Indenture dated as of May 1, 1971; a Thirteenth
Supplemental Indenture dated as of July 1, 1974; a Fourteenth
Supplemental Indenture dated as of March 1, 1975; a Fifteenth
Supplemental Indenture dated as of September 1, 1976; a Sixteenth
Supplemental Indenture dated as of November 1, 1981; a Seventeenth
Supplemental Indenture dated as of December 1, 1982; an
Eighteenth Supplemental Indenture dated as of September 1, 1983; a
Nineteenth Supplemental Indenture dated as of May 1, 1985; a
Twentieth Supplemental Indenture dated as of July 1, 1987; a
Twenty-First Supplemental Indenture dated as of July 1, 1989; and a
Twenty-Second Supplemental Indenture dated as of January 15,
1992; and
WHEREAS, pursuant to the Original Indenture, as heretofore
supplemented and modified, there have been executed, authenticated,
delivered and issued and there are now outstanding First Mortgage
Bonds of series and in principal amounts as follows:
Title Issued Outstanding
Series L, 10 1/2% due 2000..... $ 12,000,000 $ 9,840,000
Series M, 8.70% due 2006..... $ 10,000,000 $ 8,400,000
Series R, 10% due 2017....... $ 65,000,000 $ 63,700,000
Series S, 9 5/8% due 2019....... $ 20,000,000 $ 20,000,000
Series T, 11 1/4% due 1997..... $130,000,000 $ 130,000,000
and
<PAGE 2>
3
WHEREAS, it is provided in the Original Indenture, among other
things, that the Company and the Trustee may, and when so required
by the Original Indenture shall, enter into such indentures supple-
mental thereto as may or shall by them be deemed necessary or
desirable and which shall thereafter form a part thereof for the
purposes, among others, of (a) subjecting to the lien of the Original
Indenture additional property acquired by the Company,
(b) providing for the creation of any new series of Bonds, designating
the series to be created and specifying the form and provisions of
the Bonds of such series, (c) providing for a sinking, amortization,
improvement or other analogous fund for the benefit of all or any of
the Bonds of any one or more series, of such character and of such
amount and upon such terms and conditions as shall be contained in
such supplemental indenture; and (d) providing for modifications in
the Original Indenture, subject to certain conditions; and
WHEREAS, the Company desires to create under the Original
Indenture a new series of Bonds to be designated First Mortgage
Bonds, Series U, 9 1/4% due 2000, to be due September 15, 2000
(hereinafter sometimes called the "Bonds of Series U") to be initially
issued in the aggregate principal amount of One Hundred
Million Dollars ($100,000,000); and
WHEREAS, the Company is required to execute this Twenty-Third
Supplemental Indenture and hereby requests the Trustee to join in
this Twenty-Third Supplemental Indenture for the purpose, among
others, of creating and describing the terms of the Bonds of Series U
and subjecting to the lien of the Original Indenture, as supplemented
and modified, additional property acquired by the Company since the
execution and delivery of the Twenty-Second Supplemental Indenture dated
as of January 15, 1992 (the Original Indenture as hereto-
fore supplemented and modified and as supplemented and modified
by this Twenty-Third Supplemental Indenture being herein some-
times called the "Indenture"); and
WHEREAS, all acts and proceedings required by law and by the
Restated Articles of Incorporation and By-Laws of the Company
necessary to make the Bonds of Series U, when executed by the
Company, authenticated and delivered by the Trustee and duly
issued, the valid, binding and legal obligations of the Company, and
<PAGE 3>
4
to constitute the Indenture a valid and binding mortgage for the
security of all of the Bonds in accordance with its and their terms,
have been done and taken; and the execution and delivery of this
Twenty-Third Supplemental Indenture have been in an respects duly
authorized.
NOW, THEREFORE, THIS TWENTY-THIRD SUPPLEMENTAL INDENTURE
WITNESSETH, that, in order to secure the payment of the principal of,
premium, if any, and interest on all Bonds at any time issued and
outstanding under the Indenture, according to their tenor, purport
and effect, to expressly subject to the lien of the Indenture additional
property acquired by the Company since the date of execution and
delivery of the Twenty-Second Supplemental Indenture dated as of
January 15, 1992, to the Original Indenture, and to secure the
performance and observance of all the covenants and conditions
contained in said Bonds and in the Indenture, and to declare the
terms and conditions upon and subject to which the Bonds of Series U are
and are to be issued and secured, and for the purpose of
confirming the lien of the Original Indenture, as heretofore supplemented
and modified, and for and in consideration of the premises
and of the mutual covenants contained in the Indenture and of the
purchase and acceptance of the Bonds of Series U by the holders
thereof, and of the sum of $1 to the Company paid by the Trustee at
or before the ensealing and delivery hereof, and for other valuable
considerations, the receipt whereof is hereby acknowledged, the
Company has executed and delivered this Twenty-Third Supplemental
Indenture, and by these presents does grant, bargain, sell, convey,
assign, transfer, mortgage, pledge, hypothecate, set over and confirm
unto the Trustee, the following property, rights, privileges and
franchises, to wit:
CLAUSE I.
All the property, real, personal or mixed, tangible or intangible
(other than Excepted Property as defined in the Granting Clauses of
the Original Indenture) of every kind, character and description
which is described in Article Eight hereof.
<PAGE 4>
5
CLAUSE II.
Without in any way limiting anything in Article Eight hereof or
hereinafter described, all and singular the lands, real estate, chattels
real, interests in lands, leaseholds, ways, rights-of-way, easements,
servitudes, permits and licenses, lands under water, riparian rights,
franchises, privileges, gas or electric generating plants, natural gas
plants, gas storage plants and facilities, gas or electric transmission
and distribution systems, gas gathering systems and tap lines, and all
apparatus and equipment appertaining thereto, offices, buildings,
warehouses and other structures, machine shops, tools, materials
and supplies and all property of any nature appertaining to any of
the plants, systems, business or operations of the Company, whether
or not affixed to the realty, used in the operation of any of the
premises or plants or systems or otherwise, which are now owned or
which may hereafter be owned or acquired by the Company, other
than Excepted Property as defined in the Granting Clauses of the
Original Indenture.
CLAUSE III.
All corporate, Federal, State, municipal and other permits, consents,
licenses, bridge licenses, bridge rights, river permits,
franchises, including those described in Article Eight hereof, grants,
privileges and immunities of every kind and description, now belonging to
or which may hereafter be owned, held, possessed or enjoyed
by the Company (other than Excepted Property as defined in the
Granting Clauses of the Original Indenture) and all renewals, extensions,
enlargements and modifications of any of them.
CLAUSE IV.
Also all other property, real, personal or mixed, tangible or
intangible (other than Excepted Property as defined in the Granting
Clauses of the Original Indenture) of every kind, character and
description and wheresoever situated, whether or not useful in the
generation, manufacture, production, transportation, distribution or
sale of gas or electricity, now owned or which may hereafter be
acquired by the Company, it being the intention hereof that all
property, rights and franchises acquired by the Company after the
<PAGE 5>
6
date hereof (other than Excepted Property as defined in the Granting
Clauses of the Original Indenture) shall be as fully embraced within
and subjected to the lien hereof as if such property were now owned
by the Company and were specifically described herein and conveyed
hereby.
CLAUSE V.
Together with all and singular the plants, buildings, improvements,
additions, tenements, hereditaments, easements, rights, privileges,
licenses and franchises and all other, appurtenances
whatsoever belonging or in anywise appertaining to any of the
property hereby mortgaged or pledged, or intended so to be, or any
part thereof, and the reversion and reversions, remainder and remainders,
and the rents, revenues, issues, earnings, income, products
and profits thereof, and of every part and parcel thereof, and all the
estate, right, title, interest, property, claim and demand of every
nature whatsoever of the Company at law, in equity or otherwise
howsoever, in, of and to such property and every part and parcel
thereof.
CLAUSE VI.
Also any and all property, real, personal, or mixed (including
Excepted Property as defined in the Granting Clauses of the Original
Indenture), that may, from time to time hereafter, by delivery or by
writing of any kind, for the purpose hereof be in anywise subjected
to the lien hereof or be expressly conveyed, mortgaged, assigned,
transferred, deposited and/or pledged by the Company or by anyone
in its behalf or with its consent, to and with the Trustee, which is
hereby authorized to receive the same at any and all times as and for
additional security and also, when and as in the Indenture provided,
as substituted security hereunder, to the extent permitted by law.
Such conveyance, mortgage, assignment, transfer, deposit and/or
pledge or other creation of lien by the Company or by anyone in its
behalf or with its consent of or upon any property as and for
additional security may be made subject to any reservations, limitations,
conditions and provisions which shall be set forth in an
instrument or agreement in writing executed by the Company or the
person or corporation conveying, assigning, mortgaging, transfer-
<PAGE 6>
7
ring, depositing and/or pledging the same and/or by the Trustee,
respecting the use, management and disposition of the property
so conveyed, assigned, mortgaged, transferred, deposited and/or
pledged, or the proceeds thereof.
EXCEPTED PROPERTY
There is, however, expressly excepted and excluded from the
lien and operation of the Indenture all property specifically excepted
under the heading "Excepted Property" of the Granting Clauses of
the Original Indenture, all property released or otherwise disposed
of pursuant to the provisions of Article Seven of the Original Indenture
and all property excepted in the descriptions contained in
Article Eight hereof.
The Company may, however, pursuant to the provisions of
Granting Clause VI above, subject to the lien and operation of the
Indenture, all or any part of the Excepted Property as defined in the
Granting Clauses of the Original Indenture.
TO HAVE AND TO HOLD the Trust Estate (as defined in Paragraph A
of Section 1.06 of the Original Indenture) and all and singular the
lands, properties, estates, rights, franchises, privileges and
appurtenances hereby mortgaged, conveyed, pledged or assigned, or in-
tended so to be, together with all the appurtenances thereto
appertaining, unto the Trustee and its successors and assigns,
forever:
SUBJECT, HOWEVER, to the exceptions, reservations, restrictions,
conditions, limitations, covenants and matters recited in Article
Eight hereof; to Permitted Encumbrances as defined in Paragraph G
of Section 1.07 of the Original Indenture; and, with respect to any
property which the Company may hereafter acquire, to all terms,
conditions, agreements, covenants, exceptions and reservations ex-
pressed or provided in the deeds or other instruments, respectively,
under and by virtue of which the Company shall hereafter acquire
the same and to any liens thereon existing, and to any liens for
unpaid portions of the purchase money placed thereon, at the time of
such acquisitions;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate use,
benefit, security and protection of those who from time to time shall
<PAGE 7>
8
hold the Bonds and coupons authenticated and delivered under the
Indenture and duly issued by the Company, without any discrimination,
preference or priority of any one Bond or coupon over any other
by reason of priority in the time of issue, sale or negotiation thereof
or otherwise, except as provided in Section 10.02 of the Original
Indenture, so that, subject to said Section 10.02 of the Original
Indenture, each and all of said Bonds and coupons shall have the
same right, lien and privilege under the Original Indenture, as
heretofore supplemented and as supplemented by this Twenty-Third
Supplemental Indenture, and shall be equally secured thereby and
hereby and shall have the same proportionate interest and share in
the Trust Estate, with the same effect as if all of the Bonds and
coupons had been issued, sold and negotiated simultaneously on the
date of the delivery hereof; and in trust for enforcing payment of the
principal of the Bonds and of the premium, if any, and interest
thereon, according to the tenor, purport and effect of the Bonds and
coupons and of the Indenture, and for enforcing the terms, provisions,
covenants and stipulations in the Indenture and in the Bonds
set forth;
UPON CONDITION that, until the happening of an Event of Default
(as defined in Section 14.01 of the Original Indenture), the Company
shall be suffered and permitted to possess, use and enjoy the Trust
Estate, except money, securities and other personal property pledged
or deposited with or required to be pledged or deposited with the
Trustee under the Indenture, and to receive and use the rents,
revenues, issues, earnings, income, products and profits therefrom:
ARTICLE ONE.
BONDS OF SERIES U AND CERTAIN PROVISIONS RELATING THERETO.
SECTION 1.01. Terms of Bonds of Series U. There shall be, and
hereby is, created a new series of Bonds, known as and entitled
"First Mortgage Bonds, Series U, 9 1/4% due 2000" (herein referred to
as the "Bonds of Series U"), and the form thereof shall be substantially
as hereinafter set forth in Section 1.02 hereof. The principal
amount of the Bonds of Series U shall not be limited except as
provided in Section 2.01 of the Original Indenture (as amended by
Section 1.01 of the Thirteenth Supplemental Indenture dated as of
<PAGE 8>
9
July 1, 1974) and except as may be provided in any indenture
supplemental thereto. The definitive Bonds of Series U shall be
issued only as registered Bonds without coupons of the denomination
of $1,000 or any multiple thereof, and of such respective amounts of
each of said denominations as may be executed by the Company and
delivered to the Trustee for authentication and delivery.
The definitive Bonds of Series U may be issued in the form of
Bonds engraved, printed or lithographed on steel engraved borders.
September 15, 1993 shall be the date of the commencement of
the first interest period for Bonds of Series U. All Bonds of Series U
shall mature September 15, 2000, and shall bear interest at the rate
of 9 1/4% per annum until the principal thereof shall have become due
and payable, such interest to be payable semiannually on March 15
and September 15 in each year commencing March 15, 1994. Both the
principal of and the interest on the Bonds of Series U shall be
payable, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public
and private debts, at the principal office of the Trustee in the City of
Chicago, State of Illinois. Interest on Bonds of Series U shall be
payable in each case to the holder of record on the record date as set
forth below.
The person in whose name any Bond of Series U is registered at
the close of business on any record date (as hereinbelow defined)
with respect to any interest payment date shall be entitled to receive
the interest payable on such interest payment date notwithstanding
the cancellation of such Bond of Series U upon any transfer or
exchange thereof (including any exchange effected as an incident to
a partial redemption thereof) subsequent to the record date and
prior to such interest payment date, except that, if and to the extent
that the Company shall default in the payment of the interest due on
such interest payment date, then the registered holders of Bonds of
Series U on such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders on such
record date, and the persons entitled to receive payment of any
defaulted interest thereafter payable or paid on any Bonds of Series U
shall be the registered holders of such Bonds of Series U on the
record date for payment of such defaulted interest. The term "record
<PAGE 9>
10
date" as used in this Section 1.01, and in the form of the Bonds of
Series U, with respect to any interest payment date applicable to the
Bonds of Series U, shall mean the March 1 next preceding a March 15
interest payment date or the September 1 next preceding a September 15
interest payment date, as the case may be (or the preceding
business day if a holiday or other day on which the office of the
Trustee is closed), or such record date established for defaulted
interest as hereinafter provided.
In case of failure by the Company, to pay any interest when due
the claim for such interest shall be deemed to have been transferred
by transfer of any Bond of Series U registered on the books of the
Company and the Company, by not less than 10 days' written notice
to bondholders, may fix a subsequent record date for determination
of holders entitled to payment of such interest. Such provision for
establishment of a subsequent record date, however, shall in no way
affect the rights of bondholders or of the Trustee consequent on any
default.
Except as provided in this Section 1.01, every Bond of Series U
shall be dated as provided in Section 2.05 of the Original Indenture.
However, so long as there is no existing default in the payment of
interest on the Bonds of Series U, all Bonds of Series U authenticated
by the Trustee between the record date for any interest payment
date and such interest payment date shall be dated such interest
payment date and shall bear interest from such interest payment
date; provided, however, that if the Company shall default in the
interest due on such interest payment date, then any such Bond of
Series U shall bear interest from the March 15 or September 15, as
the case may be, to which interest has been paid, unless such interest
payment date is March 15, 1994, in which case from September 15,
1993.
Subject to the provisions of Section 2.11 of the Original Indenture,
all definitive Bonds of Series U, upon surrender at the principal
office of the Trustee, shall be exchangeable for other Bonds of Series
U of a different denomination or denominations, as requested by the
holder surrendering the same. The Company shall execute, and the
Trustee shall authenticate and deliver, Bonds of Series U whenever
the same shall be required for any such exchange.
<PAGE 10>
11
Notwithstanding the provisions of Section 2.11 of the Original
Indenture no charge shall be made for any exchange of Bonds of
Series U for other Bonds of Series U of different authorized
denominations or for any transfer of Bonds of Series U, except that the
Company at its option may require the payment of a sum sufficient to
reimburse it for any stamp tax or other governmental charge incident
thereto.
The Trustee hereunder shall, by virtue of its office as such
Trustee, be a paying agent of the Company for the purpose of the
payment of the principal of and premium, if any, and interest on the
Bonds of Series U and the registrar and transfer agent of the
Company for the purpose of registering and transferring Bonds of
Series U. Neither the Company nor the Trustee shall be required to
make transfers or exchanges of Bonds of Series U for a period of ten
days next preceding the mailing of notice of redemption of Bonds of
Series U to be redeemed and neither the Company nor the Trustee
shall be required to make transfers or exchanges of any Bonds of
Series U designated in whole for redemption or that part of any Bond
of Series U designated in part for redemption.
SECTION 1.02. Form of Bonds of Series U. The Bonds of Series U shall
be in substantially the following form:
[FORM OF BOND OF SERIES U]
No. U $
TEXAS-NEW MEXICO POWER COMPANY
FIRST MORTGAGE BOND, SERIES U, 9 1/4% DUE 2000
DUE SEPTEMBER 15, 2000
TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation (hereinafter
sometimes called the "Company"), for value received, hereby
promises to pay to or registered
assigns, Dollars on September 15, 2000, and to pay
interest semiannually on March 15 and September 15 in each year, on
the principal hereof from the date hereof until the principal hereof
becomes due and payable, at the rate per annum specified in the title
of this Bond, and on any overdue principal and (to the extent the
payment of such interest is enforceable under applicable law) on any
<PAGE 11>
12
overdue installment of interest at the rate of 6% per annum; provided,
however, that if the Company shall default in the interest due
on Bonds of this series on any interest payment date then Bonds of
this series authenticated by the Trustee between the record date for
such interest payment date and such interest payment date shall
bear interest from the next preceding date to which interest has been
paid on the Bonds of this series, or if no interest has been paid, from
September 15, 1993.
The interest so payable upon any March 15 or September 15 will,
except as provided in the Indenture mentioned on the reverse hereof,
be paid to the person in whose name this Bond (or any bond or bonds
evidencing the same debt) is registered at the close of business on
the March 1 preceding such March 15, or the September 1 preceding
such September 15, as the case may be (or the preceding business
day if a holiday or other day on which the office of the Trustee is
closed).
The principal hereof and interest hereon shall be payable, in
such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and
private debts, at the principal office of the Trustee under the Indenture
mentioned on the reverse hereof.
This Bond shall not become or be valid or obligatory for any
purpose until the certificate of authentication hereon shall have been
signed by the Trustee.
The provisions of this Bond are continued on the reverse hereof
and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
<PAGE 12>
13
IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has
caused this Bond to be executed in its corporate name by the manual
or facsimile signature of its President or one of its Vice Presidents
and its corporate seal to be impressed or imprinted hereon, attested
by the manual or facsimile signature of its Secretary or one of its
Assistant Secretaries, and this Bond to be dated
TEXAS-NEW MEXICO POWER COMPANY,
By .................................
President
Attest:
.........................................
Secretary
(SEAL)
[FORM OF REVERSE OF BOND OF SERIES U]
This Bond is one of an authorized issue of Bonds of the Company
known as its "First Mortgage Bonds", limited as provided in the
Indenture hereinafter mentioned, issued and to be issued in one or
more series under, and all equally and ratably secured (except as
any sinking, amortization, improvement, renewal, replacement or
other analogous fund established under the Indenture hereinafter
mentioned, may afford additional security for the Bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust
dated as of November 1, 1944, executed to City National Bank and
Trust Company of Chicago, as to which Continental Illinois National
Bank and Trust Company of Chicago (now Continental Bank, National
Association) was successor by merger, as Trustee, as supplemented
by twenty-three supplemental indentures thereto, including the
Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth,
Nineteenth, Twentieth, Twenty-First and Twenty-Second Supple-
mental Indentures which also modified the Original Indenture and
the Twenty-Third Supplemental Indenture dated as of September 15,
1993 (said Indenture of Mortgage and Deed of Trust, as so supplemented
and modified, being herein called the "Indenture"), to which
<PAGE 13>
14
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the properties mortgaged and
pledged, the nature and extent of the security, the rights of the
holders of the Bonds and the appurtenant coupons and of the Trustee
and of the Company in respect of such security, and the terms and
conditions upon which the Bonds are and are to be secured.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than seventy-
five per cent in principal amount of the Bonds (exclusive of Bonds
disqualified by reason of the Company's interest therein) at the time
outstanding, including, if more than one series of Bonds shall be at
the time outstanding, not less than sixty per cent in principal amount
of each series affected, to execute supplemental indentures amending
the Indenture; provided, however, that no such supplemental indenture
shall extend the fixed maturity of this Bond or reduce the rate or
extend the time of payment of interest hereon or reduce the amount
of the principal hereof or reduce any premium payable on the
redemption hereof, without the consent of the holder hereof.
As provided in the Indenture, the Bonds are issuable in series
which may vary as in the Indenture provided or permitted. This
Bond is one of a series entitled "First Mortgage Bonds, Series U, 9 1/4%
due 2000" (hereinafter called the "Bonds of Series U").
Bonds of this series may, upon surrender thereof at the principal
office of the Trustee, be exchanged for several Bonds of the same
series for a like aggregate principal amount in authorized denominations;
and several Bonds of this series, registered in the same name,
may, upon surrender thereof at said principal office of the Trustee,
be exchanged for one Bond of the same series for a like aggregate
principal amount in an authorized denomination. This Bond may be
transferred at said principal office of the Trustee by surrendering
this Bond for cancellation, accompanied by a written instrument of
transfer, in form approved by the Company, duly executed by the
registered owner hereof or by an attorney duly authorized in writing,
and thereupon the Company shall execute in the name of the transferee or
transferees, and the Trustee shall authenticate and deliver,
in exchange therefor a new Bond of the same series for a like
aggregate principal amount in authorized denominations. No charge
<PAGE 14>
15
shall be made for any exchange of Bonds of this series for other
Bonds of different authorized denominations or for any transfer of
this Bond, except that the Company at its option may require the
payment of a sum sufficient to reimburse it for any stamp tax or
other governmental charge incidental thereto.
The Company and the Trustee may deem and treat the person in
whose name this Bond shall be registered as the absolute owner
hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Bond shall be overdue;
and all such payments shall be valid and effectual to satisfy and
discharge the liability upon this Bond to the extent of the sum or
sums so paid.
If an event of default as defined in the Indenture shall occur, the
principal of all the Bonds may become or be declared due and
payable upon the conditions and in the manner and with the effect in
the Indenture provided.
The Bonds of Series U shall not be subject to redemption at the
option of the Company prior to maturity.
The Twenty-Third Supplemental Indenture provides that in the
event of any default in payment of the interest due on any interest
payment date, such interest shall not be payable to the holder of the
bond on the original record date but shall be paid to the registered
holder of such bond on the subsequent record date established for
payment of such defaulted interest.
No recourse shall be had for the payment of the principal of or
the interest on this Bond or for any claim based hereon or otherwise
in respect hereof or based on or in respect of the Indenture, against
any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty, or other-
wise, all such liability being by the acceptance hereof and as part of
the consideration for the issue hereof expressly waived and released,
as provided in the Indenture; provided, however, that nothing herein
or in the Indenture contained shall be taken to prevent recourse to
and the enforcement of the liability, if any, of any shareholder or
<PAGE 15>
16
any stockholder or subscriber to capital stock upon or in respect of
shares of capital stock not fully paid.
ARTICLE TWO.
REDEMPTION PROVISIONS FOR BONDS OF SERIES U.
SECTION 2.01. The Bonds of Series U shall not be subject to
redemption at the option of the Company prior to maturity. The
Bonds of the Series U shall be subject to redemption, however, at any
time prior to maturity, as a whole or from time to time in part,
through the application of cash deposited with the Trustee pursuant
to Section 7.04 of the Original Indenture, upon the taking, purchase
or sale of property in the manner set forth in said Section 7.04.
ARTICLE THREE.
COVENANTS AS TO IMPROVEMENT FUND, MINIMUM PROVISION FOR
DEPRECIATION, RESTRICTIONS ON CAPITAL STOCK DIVIDENDS, CHANGE OF
CONTROL AND DURATION OF ARTICLES TWO AND THREE.
SECTION 3.01. Improvement Fund. The covenants contained
in Article Nine of the Original Indenture shall continue in full force
and effect so long as any of the Bonds of Series U shall remain
outstanding, except that the Company hereby covenants that no
Bonds of Series U shall be redeemable prior to September 15, 2000
through the application of cash deposited in the Improvement Fund.
Notwithstanding the provisions of Section 9.03 of the Original Indenture,
so long as any of the Bonds of Series L, M, R, S, T or U shall
remain outstanding, no Bond delivered or certified to the Trustee to
meet the requirements of the Improvement Fund provided for in
Section 9.01 of the Original Indenture or redeemed or otherwise
retired pursuant to the provisions of said Section 9.01, shall be made
the basis of the authentication and delivery of Bonds under Article
Six of the Original Indenture unless and until such Bond shall, in the
manner provided in said Section 9.01, be reinstated as available as
the basis for the authentication and delivery of Bonds.
SECTION 3.02. Definition of Term "Minimum Provision for
Depreciation". The term "Minimum Provision for Depreciation"
shall have the meaning set forth in Paragraph I of Section 1.07 of the
<PAGE 16>
17
Original Indenture so long as any of the Bonds of Series U shall
remain outstanding.
SECTION 3.03. Restriction on Payment of Dividends on Com-
mon Stock. Notwithstanding the provisions of Sections 4.03 and
4.04 of the Fourteenth Supplemental Indenture dated as of March 1,
1975 that the covenants contained in Section 4.03 thereof shall
continue only so long as the First Mortgage Bonds, Series L, 10 1/2%
due 2000 are outstanding, the Company hereby covenants that the
covenants made by the Company in said Section 4.03 shall also
continue so long as any Bonds of Series U shall remain outstanding.
SECTION 3.04. Tender for the Bonds of Series U upon Change of
Control Event.
The Company covenants as follows:
(a) Within 90 days after the occurrence of a Change of Control
Event, as defined below, the Company shall commence a tender offer
for all outstanding Bonds of Series U at a purchase price (the
"Purchase Price") of 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase, in accordance
with the procedures set forth in Subsections (b) and (c) of this
Section.
(b) Within 30 days following any Change of Control Event, the
Company shall send a notice by first-class mail, postage prepaid, to
the Trustee and to each holder of the Bonds of Series U, at his or her
address appearing in the registry books of the Company. The notice
shall state:
(1) that a Change of Control Event has occurred and that
the Company is obligated to tender for the Bonds of Series U as
provided herein, at the Purchase Price;
(2) the circumstances and relevant facts regarding the
Change of Control Event (including but not limited to information
with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control
Event; provided that, to the extent the above-described information
is required by Item 7 of Form 8-K, it need be sent only upon
the filing with the Securities and Exchange Commission of the
Form 8-K);
<PAGE 17>
18
(3) information concerning the business of the Company
which the Company in good faith believes will enable the holders
of the Bonds of Series U to make an informed decision, which at
a minimum will include
(i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements of the
Company), the most recent subsequently filed Quarterly
Report on Form 10-Q and any Current Report on Form 8-K of
the Company filed subsequent to such Quarterly Report (or
in the event the Company is not required to prepare any of
the foregoing Forms, the comparable information), and
(ii) a description of material developments in the
Company's business subsequent to the date of the latest of such
Reports;
(4) the latest date for tender of the Bonds of Series U,
which shall be not more than 30 days after the date of the
commencement of the tender offer;
(5) the Purchase Price;
(6) information concerning acceptance of the tender offer;
and
(7) that interest accrued to the Purchase Date will be paid
as provided in paragraph (a) of this Section and that, unless the
Company shall default in payment of the Purchase Price, after
the latest date of purchase, interest thereon will cease to accrue
with respect to any Bonds of Series U presented and surrendered
for purchase.
The Trustee shall be under no obligation to ascertain the occurrence
of a Change of Control Event or to give notice with respect
thereto, other than as provided above, upon receipt of the written
notice of Change of Control Event from the Company. The Trustee
may conclusively assume, in the absence of written notice to the
contrary from the Company, that no Change of Control Event has
occurred.
(c) Holders tendering Bonds of Series U will be required to do so
in accordance with this Section by the close of business on the latest
<PAGE 18>
19
date for tender of the Bonds of Series U. No such Bonds of Series U
shall be deemed to have been presented and surrendered until such
Bonds of Series U are received by the Company. Holders whose
Bonds of Series U are purchased only in part will receive new Bonds
of Series U equal in principal amount to the unpurchased portion of
the Bonds of the Series U surrendered.
(d) As used in this Section, a "Change of Control Event" means
an event or the last of a series of events by which
(i) any "person" or group of persons (as such term is used
in Section 13(d) and 14(d) of the Exchange Act and the rules
and regulations of the Securities and Exchange Commission
relating to such sections, as amended from time to time), other
than TNP Enterprises, Inc. ("TNPE") with respect to the shares
of the Company, is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than forty percent (40%)
of the total voting power of all outstanding Common Stock of
TNPE or of the Company;
(ii) the Company consolidates with or merges into another
corporation (other than any such transaction between the Company and
a wholly owned Subsidiary of the Company) and the
Company is not the surviving entity, or the Company conveys,
transfers or leases substantially all of its assets;
(iii) TNPE or any subsidiary of TNPE, during any period of
12 consecutive months, purchases or otherwise acquires, directly or
indirectly, beneficial ownership of 30% or more of the
outstanding Common Stock of TNPE;
(iv) during any period of 24 consecutive months, whether
commencing before or after the date hereof, but ending on or
after the date hereof,
(a) individuals who at the beginning of such 24-month
period constituted the board of directors of TNPE, and
<PAGE 19>
20
(b) any new director(s) who were elected or recommended for
election to the board of directors of TNPE by a
vote of at least a majority of the directors then still in office
who either were directors at the beginning of such 24-month
period or whose election was previously so approved or so
recommended, cease for any reason to constitute a majority
of the board of directors of TNPE; or
(v) on any day (a "Calculation Date"), the Company
makes any distribution or distributions of cash, property or
securities (other than regular quarterly dividends on common or
preferred stock) to the common stockholders, or purchases or
otherwise acquires outstanding common stock of TNPE, and the
sum of the fair market value of such distribution or purchase,
plus the fair market value of all other such distributions and
purchases which have occurred during the period of 12 consecutive
months ending on such Calculation Date, exceeds 30% of the
fair market value of the outstanding common stock of TNPE.
This percentage is calculated on each Calculation Date by deter-
mining the percentage of the fair market value of TNPE's out-
standing common stock as of such Calculation Date which is
represented by the fair market value of the distributions and
purchases which have occurred on such date, and adding to that
percentage all of the percentages which have been similarly
calculated on the dates of all such distributions and purchases
during the period of 12 consecutive months ending on such
Calculation Date.
SECTION 3.05. Duration of Effectiveness of Certain Provisions.
Article Two and Sections 3.02, 3.03 and 3.04 hereof shall be in force
and effect only so long as any of the Bonds of Series U shall remain
outstanding. Section 3.01 hereof shall be in force and effect only so
long as any of the Bonds of Series L, M, R, S, T or U shall remain
outstanding.
ARTICLE FOUR.
SECTION 4.01. Paragraph F of Section 1.05 of the Original In-
denture is hereby amended by deleting from subparagraph (3) of
Paragraph F the words "two and one-half times" and substituting in
<PAGE 20>
21
place thereof the words "two times" and the acceptance of any Bond
of Series U by the holder thereof shall be deemed to constitute a
consent to such amendment; provided, however, that such amendment shall
not become effective until (a) a further Supplemental
Indenture making it effective shall have been executed with the
consent of the holders of not less than 75% in principal amount of the
Bonds of all Series, including the holders of not less than 60% in
principal amount of the Bonds of each Series, at the time outstanding
(determined as provided in Section 1.02 of the Original Indenture)
other than Bonds of Series M, R, S, T or U and Bonds of any
subsequent Series in respect of which the Supplemental Indenture
creating the Series provides that the acceptance of any Bond of such
Series by the holder thereof shall be deemed to constitute a consent
to such amendment, or (b) none of the Bonds of any Series other
than Series M, R, S, T or U and any such subsequent Series shall be
outstanding.
SECTION 4.02. Paragraphs C, D and F of Section 1.05 of the
Original Indenture are hereby amended so that the same shall read as
follows:
"C. The term 'Net Earnings Available for Fixed Charges' of
the Company for any period shall mean the net earnings of the
Company for such period, determined in the following manner:
(a) The gross operating revenues derived from the operation of
the Public Utility Property (as defined in Paragraph A
of Section 1.07) of the Company shall be computed for such
period in accordance with sound accounting practice.
(b) From the amount of such gross operating revenues
for such period determined as provided in the preceding
Clause (a) there shall be deducted an amount equal to the
aggregate of all expenses and other proper income charges for
such period attributable to the operation of Public Utility
Property, determined in accordance with sound accounting
practice, exclusive of the following items:
(i) losses from the sale, abandonment or other disposition of
capital assets;
(ii) interest charges;
<PAGE 21>
22
(iii) provision for income and excess profits or other
taxes of the Company which are imposed on or measured by
its income after deduction of interest charges; and
(iv) 33 1/3% of rentals under leases with an initial term
of three years or more payable during such period;
provided that in any event (without in any respect limiting the
generality of the foregoing) there shall be included in such expenses
and other income charges the following items:
(v) amortization of debt discount and expense and
amortization of all other deferred charges provided that
there may be deducted from any such amortization of debt
discount any amortization of debt premium;
(vi) provisions for all taxes other than taxes of the
character described in item (iii) of this Clause (b);
(vii) provision for all contingency or other reserves,
whether general or special;
(viii) provision for depreciation, obsolescence, amortization
and/or depletion of the Public Utility Property of the
Company in amounts in the aggregate not less than those
actually deducted on its books, provided that such provision
shall be in an aggregate amount not less than the Minimum
Provision for Depreciation as defined in Paragraph I of
Section 1.07;
provided, however, that there may be included in the amount of Net
Earnings Available for Fixed Charges an additional amount (not
exceeding 18% of the amount of net earnings derived from the
operation of Public Utility Property of the Company determined as
provided above in this Paragraph C) equal to the net income of the
Company for such period derived otherwise than from the operation
of the Public Utility Property of the Company, determined in accordance
with sound accounting practice, except that in determining
such net income the following items shall be excluded:
(i) any proceeds of any life insurance policy;
<PAGE 22>
23
(ii) any gain or loss arising from any sale, abandonment or
other disposition of capital assets, and any tax adjustment in
connection therewith; and
(iii) any amount repaid, refunded or credited to the Company, in
respect of income or excess profits or other taxes of the
Company, paid or accrued for any period, which are imposed on
or measured by its income after the deduction of interest
charges.
"If within or after a particular period for which Net Earnings
Available for Fixed Charges of the Company is being determined, the
Company shall have acquired properties which within six months
prior to such acquisition were used or operated in a business similar
to that in which they were used or operated or are to be used or
operated by the Company, then, in computing Net Earnings Avail-
able for Fixed Charges of the Company, the Net Earnings Available
for Fixed Charges of such properties for the whole of such period
shall be included; provided, however, that in such event if within or
after said period, any substantial portion of the properties of the
Company shall have been disposed of by the Company, or shall have
been permanently retired from service for any reason, or shall have
permanently ceased to be used or useful in the business of the
Company, and if the Net Earnings Available for Fixed Charges of
such properties is capable of being separately determined in accordance
with sound accounting practice, then in computing Net Earnings Available
for Fixed Charges of the Company, the Net Earnings
Available for Fixed Charges of such properties shall be excluded up
to but not exceeding the amount included in the determination of Net
Earnings Available for Fixed Charges by reason of properties acquired as
provided in this sentence. The Net Earnings Available for
Fixed Charges of properties so acquired for the period preceding
such acquisition shall be ascertained and determined as provided
above in this definition as if such properties had been owned by the
Company during the whole of such period.
"D. Subject to the foregoing provisions of this Section, all
determinations of the amounts of Net Income, Net Earnings Available for
Fixed Charges and Prior Lien Indebtedness (as defined in Paragraph
E of Section 1.07) pursuant to this Indenture shall be made, and all
<PAGE 23>
24
balance sheets and other financial statements shall be prepared, in
accordance with sound accounting practice.
"F. The term 'Earnings Certificate' shall mean a Certificate of
the Company, dated not more than 30 days prior to the date upon
which is made the application for the authentication and delivery of
Bonds in connection with which such Certificate is delivered, setting
forth in reasonable detail:
(1) The amount of the Net Earnings Available for Fixed
Charges of the Company, for a period of 12 consecutive calendar
months within the 15 calendar months immediately preceding
the calendar month in which the application for the authentication
and delivery of the Bonds is made.
(2) The aggregate amount of the annual 'Interest Charges
on Bonded Indebtedness', which term shall be taken to mean and
comprise the annual interest charges on
(a) all Bonds outstanding hereunder at the date of said
Certificate (provided, however, that, in the case of any
Bonds which shall at such time be pledged as security for
any indebtedness of the Company, the amount of the annual
interest charges on such pledged Bonds shall be deemed to
be either the amount of the annual interest charges on such
indebtedness or the amount of the annual interest charges
on such pledged Bonds, whichever shall be greater);
(b) all Bonds whose authentication and delivery are
applied for in such application or in any other pending
application; and
(c) all Prior Lien Indebtedness;
provided, however, that there shall be excluded from such computation
the annual interest charges on any Bond or Prior Lien
Indebtedness which is to be paid, redeemed or otherwise retired,
or which will become Prepaid Indebtedness, prior to or concurrently
with the authentication and delivery of the Bonds then
applied for.
(3) 33 1/3% of rentals under leases with an initial term of
three years or more payable during the period for which Net
<PAGE 24>
25
Earnings Available for Fixed Charges of the Company were
computed, as set forth in Clause (1) of this Paragraph.
(4) That the amount of Net Earnings Available for Fixed
Charges of the Company, set forth as provided by Clause (1) of
this Paragraph, is at least equal to two times the sum of (a) the
aggregate amount of the annual Interest Charges on Bonded
Indebtedness, set forth as provided by Clause (2) of this
Paragraph, and (b) the amount of rentals set forth as provided
in Clause (3) of this Paragraph.
(5) That the amount of such Net Earnings Available for
Fixed Charges has been computed and ascertained as provided in
Paragraphs C and D of this Section.
"The Company covenants and agrees that if the annual Inter-
est Charges on Bonded Indebtedness shall be increased after the
date of the Earnings Certificate hereinabove in this Paragraph
described, and before the authentication and delivery of the Bonds
then applied for, the Company will file with the Trustee a new
Earnings Certificate showing the amount of said annual Interest
Charges on Bonded Indebtedness as so increased-it being the
intention hereof that no Bonds shall be authenticated and delivered
under the provisions of Article Four, Five or Six, in any case
where an Earnings Certificate is required by said Articles, unless
the ratio provided for by Clause (4) of this Paragraph shall have
been established with respect to the aggregate amount of the
annual Interest Charges on Bonded Indebtedness as constituted at
the time of the authentication and delivery of the Bonds then
applied for; but, subject to the provisions of Sections 17.02 and
17.03, the Trustee shall be entitled to assume, in the absence of
such new Earnings Certificate, that the aggregate amount of the
annual Interest Charges on Bonded Indebtedness, as constituted at
the time of the authentication and delivery of the Bonds then
applied for, is as stated in the Earnings Certificate filed with the
Trustee as aforesaid.
"In any application for the authentication and delivery of
Bonds where an Earnings Certificate is required, if the aggregate
principal amount of Bonds then applied for plus the aggregate
principal amount of Bonds authenticated and delivered since the
<PAGE 25>
26
commencement of the then current calendar year (other than
Bonds with respect to which an Earnings Certificate is not required
or with respect to which an Earnings Certificate signed by an
Independent Public Accountant appointed by a resolution of the
Board and approved by the Trustee has been previously furnished) is
10% or more of the aggregate principal amount of the
Bonds at the time outstanding hereunder, such Earnings Certificate
shall be made and signed by an Independent Public Accountant
appointed by a resolution of the Board and approved by the
Trustee, in addition to being signed by the officers of the Company
as required hereunder, but no such Earnings Certificate need be
made or signed by any such Independent Public Accountant as to
periods not covered by annual reports required to be filed by the
Company."
and the acceptance of any Bond of Series U by the holder thereof
shall be deemed to constitute a consent to such amendment; provided,
however, that such amendment shall not become effective
until (a) a further Supplemental Indenture making it effective shall
have been executed with the consent of the holders of not less than
75% in principal amount of the Bonds of all Series, including the
holders of not less than 60% in principal amount of the Bonds of each
Series, at the time outstanding (determined as provided in Section 1.02
of the Original Indenture) other than Bonds of Series L, M,
R, S, T or U and Bonds of any subsequent Series in respect of which
the Supplemental Indenture creating the Series provides that the
acceptance of any Bond of such Series by the holder thereof shall be
deemed to constitute a consent to such amendment, or (b) none of
the Bonds of any Series other than Series L, M, R, S, T or U and any
such subsequent Series shall be outstanding.
ARTICLE FIVE.
The aggregate principal amount of Bonds of the Company out-
standing and presently to be issued and outstanding under the
provisions of, and secured by the Indenture, will be $331,940,000
consisting of $9,840,000 principal amount of First Mortgage Bonds,
Series L, 10 1/2% due 2000, due March 1, 2000, now outstanding;
$8,400,000 principal amount of First Mortgage Bonds, Series M,
<PAGE 26>
27
8.70% due 2006, due September 1, 2006, now outstanding;
$63,700,000 principal amount of First Mortgage Bonds, Series R, 10%
due 2017, due July 1, 2017, now outstanding; $20,000,000 principal
amount of First Mortgage Bonds, Series S, 9 5/8% due 2019, due July 1,
2019, now outstanding; $130,000,000 principal amount of First Mort-
gage Bonds, Series T, 11 1/4% due 1997, due January 15, 1997, now
outstanding; and $100,000,000 principal amount of First Mortgage
Bonds, Series U, 9 1/4% due 2000, due September 15, 2000, to be issued
pursuant to Article Four of the Original Indenture upon the execution and
delivery of this Twenty-Third Supplemental Indenture.
Additional Bonds of Series M, R, S, T and U and of subsequent
series created after the execution and delivery of this Twenty-Third
Supplemental Indenture, may, from time to time, be authenticated,
delivered and issued pursuant to the terms of the Indenture.
ARTICLE SIX.
The Company covenants and agrees with the Trustee, for the
benefit of the Trustee and all the present and future holders of the
Bonds and of the coupons, that the Company will pay the principal
of, premium, if any, and interest on all Bonds issued or to be issued
and secured by the Indenture, as well as all Bonds which may be
hereafter issued in exchange or substitution therefor, and will per-
form and fulfill all of the terms, covenants and conditions of the
Original Indenture, with respect to the additional Bonds to be issued
under the Indenture.
ARTICLE SEVEN.
This instrument is executed and shall be construed as an indenture
supplemental to the Original Indenture as heretofore supplemented and
shall form a part thereof, and the Original Indenture as
heretofore supplemented is hereby confirmed.
The recitals in this Twenty-Third Supplemental Indenture are
made by the Company only and not by the Trustee; and all of the
provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall
<PAGE 27>
28
be applicable in respect hereof as fully and with like effect as if set
forth herein in full.
Although this Twenty-Third Supplemental Indenture is dated for
convenience and for the purpose of reference as of September 15,
1993, the actual date or dates of execution thereof by the Company
and the Trustee are as indicated by their respective acknowledgments
hereto annexed.
In order to facilitate the recording or filing of this Twenty-Third
Supplemental Indenture, the same may be simultaneously executed
in several counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute but one and
the same instrument.
ARTICLE EIGHT.
FIRST
The following described lots, pieces, or parcels of land acquired
by the Company since the execution and delivery of the Twenty-
Second Supplemental Indenture dated as of January 15, 1992, are
located in the States and in the Counties designated and hereinafter
set forth:
STATE OF TEXAS
1. Galveston County
(a) All that certain property situated in Galveston County,
Texas, described as follows, to-wit:
Being the surface estate only of a 5.000 acre (217,800 square feet)
tract of land out of a 107.486 acre tract in the W. K. WILSON
LEAGUE, ABSTRACT 208, Galveston County, Texas; said 107.486
acre tract being that same tract conveyed to Maco Stewart from
Galveston Bay Greyhound Racing Association, Ltd., by deed dated
September 24, 1991, and recorded under Film Code No. 007-78-1092
in the Official Public Records of Real Property in Galveston County,
<PAGE 28>
29
Texas, said 5.000 acre tract being more particularly described as
follows:
COMMENCING at the Southwest corner of a 5.677 acre tract of
land described in said deed recorded under Film Code
No. ###-##-####; said Southwest corner also called to be the South-
west corner of said W. K. WILSON LEAGUE, A-208; said Southwest
corner bears South 89 Deg. 33 Min. 37 Sec., East, a distance of 14.24
feet from a one-half inch iron rod found in concrete;
THENCE North 00 Deg. 48 Min. 41 Sec., East, along the West line of
said 5.677 acre tract and along the West line of said W. K. WILSON
LEAGUE, A-208, at 1,148.31 feet past the existing Southeasterly
right-of-way line of F. M. Highway 1764 (120 feet wide right-of-
way), at 1,307.39 feet past a three-eights inch iron rod found on line,
at 1,309.44 feet past the existing Northwesterly right-of-way line of
said F. M. Highway 1764, and continuing for a total distance of
1,363.14 feet to a copper coated rod with brass cap set at the
Southwest corner and POINT OF BEGINNING of the herein described 5.000
acre tract, said POINT OF BEGINNING also being on
the proposed Northwesterly right-of-way line of said F. M. Highway
1764; said POINT OF BEGINNING also being the most Southerly
corner of said 107.486 acre tract;
THENCE North 00 Deg. 48 Min. 41 Sec., East, along the Westerly line
of said 107.486 acre tract and along the Westerly line of said W. K.
WILSON LEAGUE, A-208, a distance of 860.40 feet to a copper
coated rod with brass cap set at the Northwest corner of the herein
described tract;
THENCE South 89 Deg. 11 Min. 19 Sec., East, a distance of 300.00
feet to a copper coated rod set at the Northeast corner of the herein
described tract;
THENCE South 00 Deg. 48 Min. 41 Sec., West, a distance of 591.60
feet to a copper coated rod with brass cap set at the Southeasterly
corner of the herein described tract on the Southeasterly line of said
107.486 acre tract, also being the proposed Northwesterly right-of-
way line of F.M. Highway 1764;
<PAGE 29>
30
THENCE South 48 Deg. 57 Min. 00 Sec., West, along the Southeasterly line
of said 107.486 acre tract and the proposed Northwesterly
right-of-way line of F. M. Highway 1764 (being 40.00 feet North-
westerly of and parallel with the existing Northwesterly right-of-
way line of F. M. Highway 1764) a distance of 402.81 feet to the
POINT OF BEGINNING and containing 5.000 acres (217,800 square
feet).
(b) All that certain property situated in Galveston County,
Texas, described as follows, to-wit:
THE SURFACE ONLY of part of Lot 12 in Motor Subdivision in
Galveston County, Texas, according to the map thereof recorded in
Volume 254, Page 110, in the office of the County Clerk of Galveston
County, Texas, and being more particularly described by metes and
bounds as follows:
COMMENCING at the most Northerly corner of said Lot 12;
THENCE South 50 degrees 52 minutes West, along the Northwesterly
line of said Lot 12, a distance of 37.0 feet to a set 1 inch iron pipe
for
the PLACE OF BEGINNING of this tract, said point being also on the
Southwesterly right of way line of State Highway No. 3;
THENCE South 39 degrees 08 minutes, East, along said Highway, a
distance of 247.94 feet to a found 5/8 inch iron rod with aluminum cap
for the intersection with the Northwesterly line of F. M. Highway No.
1764;
THENCE South 50 degrees 52 minutes, West, along said Highway No.
1764, a distance of 301.47 feet to a found concrete right of way
marker for corner;
THENCE continuing along said Highway, South 87 degrees 52 minutes, West,
a distance of 181.43 feet to a found concrete right of way
marker for corner;
THENCE in a Southwesterly direction along a curve concave to the
left, said curve having a radius of 284.0 feet, an arc length of 205.7
and a chord bearing of South 67 degrees 07 minutes 03 seconds West,
a distance of 201.24 feet to a 1 inch iron pipe set for corner;
<PAGE 30>
31
THENCE South 46 degrees 22 minutes West, continuing along said
Highway 1764, a distance of 85.62 feet to a set 1 inch iron pipe for
corner;
THENCE continuing along said Highway 1764, South 73 degrees 48
minutes 28 seconds, West, a distance of 228.7 feet to a set 1 inch iron
pipe for corner on the Northwesterly line of said Lot 12;
THENCE North 50 degrees 32 minutes East, along the Northwesterly
line of said Lot 12, a distance of 935.53 feet to the PLACE OF
BEGINNING and containing 3.1759 acres of land, more or less.
This conveyance is made and accepted subject to all restrictions,
easements, rights-of-way, oil, gas and mineral leases and royalty and
mineral conveyances and reservations of record, if any, in the office
of the County Clerk of said county.
2. Robertson County
UNIT 1:
The following described 65/345ths undivided interest in proper-
ties situated in Robertson County as follows:
(a) The lands described on Exhibit "A", less and except the
lands described on Exhibit "B" attached hereto and made a part
hereof (after giving effect to said exception, the "Site");
(b) The electrical generating plant known as TNP One, Unit
1, as described on Exhibit "C" attached hereto and made a part
hereof, on the Site;
(c) All right, title and interest of Grantor, to the extent
attributable to the interests described in (a) and (b) above, in
and to all facilities, equipment and personalty of every nature
(including, but not limited to, inventory) appurtenant to, used
for or in connection with the interests described in (a) and (b)
above; and
(d) All right, title and interest of Grantor, to the extent
attributable to the interests described in (a) and (b) above, in
and under all easements, permits, licenses, servitudes, rights of
way and surface waivers used for or held with respect to the
interests described in (a), (b) and (c) above.
<PAGE 31>
32
UNIT 1
Exhibit "A"
PROPERTY DESCRIPTION
The following described tracts of land in fee simple:
Tract I: Being 2,711.761 acres of land, more or less, lying and
being situated in the T. N. Mudd Survey A-229, Joseph Mathers
Survey A-261, T. J. Chambers Survey A-2, L. M. Simons Survey
A-338, A. B. Hannum Survey A-395, A. B. Hannum Survey A-192 and
Conception Charle Survey, Robertson County, Texas.
Tract II: Being 2.8175 acres of land, more or less, lying and
being situated in the T. J. Chambers Survey A-2, Robertson County,
Texas and being the same property as described in Deed from
Bernard Wilganowski to Project Funding Corporation dated Au-
gust 31, 1987 and recorded in Volume 502, Page 618, Public Records
of Robertson County, Texas.
Tract III: Being 14.487 acres of land, more or less, lying and
being situated in the Joseph Webb Survey A-51, Robertson County,
Texas and being the same property as described in Deed from Irvin
Conitz to Project Funding Corporation dated August 1, 1988 and
recorded in Volume 517, Page 718, Public Records of Robertson
County, Texas.
Tract IV:
Part A: Being 2.00 acres of land, more or less, lying and being
situated in the John Trudoe Survey A-346, Robertson County, Texas.
Part B: Being 4.998 acres of land, more or less, lying and being
situated in the John Trudoe Survey A-346, Robertson County, Texas.
And being the same property as described in Deed from C. J. Rutten
and wife, Aline M. Rutten and M. A. Bayard to Project Funding
Corporation dated July 29, 1988 and recorded in Volume 517, Page
686, Public Records of Robertson County, Texas.
Tract V: Being 2.00 acres of land, more or less, lying and being
situated in the John Trudoe Survey A-346, Robertson County, Texas
and being the same property as described in Deed from Thomas A.
Towns to Project Funding Corporation dated September 16, 1988 and
<PAGE 32>
33
recorded in Volume 520, Page 630, Public Records of Robertson
County, Texas.
Tract VI: Being 13.039 acres of land, more or less, lying and
being situated in the Joseph Webb Survey A-51, Robertson County,
Texas and being the same property as described in Deed from B. T.
Ables and wife, Maurice Ables to Project Funding Corporation dated
September 21, 1988 and recorded in Volume 521, Page 15, Public
Records of Robertson County, Texas.
Tract VII: Being 61.003 acres of land, more or less, out of the
H. Davlin Survey A-125, Robertson County, Texas, and being the
same property as described in Deed from M. Kathryn Bellis to Project
Funding Corporation, dated October 30, 1987, and recorded in Volume 505,
Page 489, Public Records of Robertson County, Texas.
All of said Tracts I through VII being more particularly described by
metes and bounds on the pages attached hereto and made a part
hereof for all purposes.
TRACT I
Field Notes for a 2,711.761 Acre Tract
T. N. MUDD SURVEY, A-229
JOSEPH MATHERS SURVEY, A-261
T. J. CHAMBERS SURVEY, A-2
L. M. SIMONS SURVEY, A-338
A. B. HANNUM SURVEY, A-395
CONCEPTION CHARLE CONFLICT
A. B. HANNUM SURVEY, A-192
Robertson County, Texas
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the T. N. Mudd
Survey, Abstract No. 229, the Joseph Mathers Survey, Abstract
No. 261, the T. J. Chambers Survey, Abstract No. 2, the L. M.
Simons Survey, Abstract No. 338, the A. B. HANNUM Survey,
Abstract No. 395,* and the Conception Charle Conflict, and
further being out of and consisting of the following tracts: *the
A. B. Hannum Survey
<PAGE 33>
34
1. out of a tract described as 170.54 acres in a Deed to M.
Kathryn Bellis recorded in Volume 455, page 383 (found
by re-survey to contain 109.677 acres),
2. consisting of a tract called 49 acres described in a Deed
to Felix Nobra and wife, Lottie Nobra recorded in Volume 435, page
130, and further consisting of a 20.00
acre tract described in a Contract of Sale from the
Veterans Land Board to Felix C. Nobra recorded in
Volume 435, page 137 (found by re-survey to contain
69.365 acres),
3. consisting of a 33.3 acre tract described in a Deed to
Marl A. Weimer, III and wife, Jill Goodwin Weimer
recorded in Volume 432, page 454, and further
consisting of two tracts described as 16.7 acres and
2.594 acres in a Contract of Sale from the Veterans Land
Board to Marl A. Weimer, III recorded in Volume 432,
page 446 (found by re-survey to contain 52.592 acres),
4. consisting of a 17.406 acre tract described in an Option
Agreement between Floyd B. Kempenski and wife, Rose
T. Kempenski and Marl A. Weimer, III and wife, Jill
Goodwin Weimer recorded in Volume 432, page 466
(found by re-survey to contain 17.406 acres),
5. consisting of a 49.1 acre tract described as the FIRST
TRACT and all of the remainder of an 82 2/3 acre tract
described as the SECOND TRACT both in a Deed to
Floyd B. Kempenski and wife, Rose T. Kempenski re-
corded in Volume 202, page 54, and further consisting of
a 50.3 acre tract described in a Deed to Floyd Kempenski
recorded in Volume 135, page 285 (found by re-survey
to contain 109.058 acres and 1.980 acres),
6. consisting of a tract called 43 1/2 acres described as
TRACT No. 2 in a Deed to Reece Yezak and wife,
Josephine Yezak recorded in Volume 500, page 183
(found by re-survey to contain 40.822 acres),
7. out of a 60 acre tract described in a Deed to Stash Calick
recorded in Volume 50, page 637 out of a 50 acre tract
<PAGE 34>
35
described in a Deed to Stash Calick recorded in Volume
52, page 111, all of a 45.9 acre tract as occupied by Stash
Calick and described in a Deed recorded in Volume 59,
page 193, and further consisting of a 101.1 acre tract
described in a Deed to Stash Calick recorded in Volume
67, page 470 (found by re-survey to contain 243.125
acres),
8. consisting of a tract called 199.992 acres described in a
Deed to Leland Beckendorff recorded in Volume 434,
page 683 (found by re-survey to contain 186.197 acres),
9. consisting of a 100 acre tract described in a Deed to Sam
Yezak and wife, Janie Yezak recorded in Volume 200,
page 204, and further consisting of a 99 2/100 acre tract
described in a Deed to Sam Yezak and wife, Janie Yezak
recorded in Volume 179, page 226 (found by re-survey
to contain 204.247 acres),
10. out of a tract called 232 acres described in a Deed to
Ruth Cottingham Sorrels recorded in Volume 140, page
439 (found by re-survey to contain 106.143 acres),
11. out of a tract called 99.8 acres described in the SECOND
TRACT in a Deed to Richard L. Hailey recorded in
Volume 262, page 677 (found by re-survey to contain
96.654 acres),
12. consisting of a tract called 165.3 acres described in a
Deed to Floyd S. Burda recorded in Volume 242, page
180 (found by re-survey to contain 165.977 acres),
13. consisting of a tract called 271.4 acres described in a
Deed to Richard Lee Hailey and wife, Imogene Hailey
recorded in Volume 197, page 461 (found by re-survey
to contain 230.169 and 43.481 acres),
14. consisting of a tract called 149 acres described in a Deed
to Martin Kozak recorded in Volume 93, page 435
(found by re-survey to contain 151.420 acres),
15. consisting of a tract called 25 acres described in a Deed
to Sandra Handot recorded in Volume 296, page 263
(found by re-survey to contain 25.0265 acres),
<PAGE 35>
36
16. consisting of a tract called 25 acres described in a Deed
to William Zeno recorded in Volume 467, page 488
(found by re-survey to contain 25.0265 acres),
17. consisting of a tract called 29 acres described in a Deed
to Johnnie Mae Edwards recorded in Volume 204, page
346 (found by re-survey to contain 28.774 acres),
18. consisting of a tract called 272.57 acres described in a
Deed to G. H. Ingram, Jr. recorded in Volume 207, page
382 (found by re-survey to contain 273.463 acres),
19. out of a tract called 20 acres described in a Deed to
Calvin Joe Boyd and wife Debra Ann Boyd recorded in
Volume 394, page 127 (found by re-survey to contain
20.015 acres),
20. consisting of a tract described in a Deed to Modern
Homes Construction Company, a Florida Corporation,
recorded in Volume 205, page 609 (found by re-survey
to contain 1.012 acres),
21. consisting of a tract described as 11.0135 acres in a Deed
to Melvin E. Wickham and wife, Carole J. Wickham
recorded in Volume 431, page 241, and further consisting of a tract
described as 22.027 acres in a Deed to
Melvin E. Wickham and wife, Carole J. Wickham re-
corded in Volume 431, page 250 (found by re-survey to
contain a total of 33.0384 acres),
22. consisting of a tract described as three tracts totalling
55.0675 acres in a Deed to Edward Kuciemba recorded
in Volume 463, page 734 (found by re-survey to contain
55.0683 acres),
23. consisting of a tract called 75.65 acres described in a
Deed to Henry Hoblinski recorded in Volume 53, page
524 (found by re-survey to contain 74.409 acres),
24. consisting of a 63 acre tract and an 87 acre tract described in a
Quit Claim Deed to W. T. Hailey recorded in
Volume 155, page 268, and a tract occupied by W. T.
Hailey called 68 acres and described in a Deed to Buck
<PAGE 36>
37
Beal recorded in Volume 32, page 34 (found by re-
survey to contain 227.147 acres),
25. consisting of a tract called 50.5 acres described in a
Deed to Dawson D. Weatherford recorded in Volume
393, page 337 (found by re-survey to contain 50.529
acres),
26. consisting of a tract called 60 acres described as TRACT
FIVE in a Deed to Southwest Agricorp Inc. recorded in
Volume 498, page 57 (found by re-survey to contain
59.837 acres).
27. consisting of a tract called 11.5 acres described as the
SECOND TRACT in a Deed to Fannie Garrett recorded in
Volume 128, page 177 (found by re-survey to contain
12.918 acres), and further
28. consisting of a tract called 6/10 of an acre described in a
Deed to J. R. Mullins and wife Pearlie Mullins recorded
in Volume 499, page 165 (found by re-survey to contain
0.61 of an acre) all of the above Deeds being in the Deed
Records of Robertson County, Texas, said tract or parcel
of land herein described as follows:
BEGINNING at a found 5/8" steel rod at a fence corner in the
South line of the Hugh Davlin Survey for the North East corner
of the T. N. Mudd Survey, said corner further being the Eastern
most North East corner of the above mentioned M. Kathryn
Bellis 170.54 acre tract;
THENCE along the East line of the T. N. Mudd Survey S 33 degrees 01'
27" E 1576.71 feet to a found 4"x4" petrified rock at a fence
corner for the South East corner of the said Bellis 170.54 acre
tract, S 33 degrees 20' 50" E 490.28 feet along a fence to a found steel
rod, and S 33 degrees 38' 22" E 30.71 feet to a found steel rod at a
fence corner for the North East corner of the above mentioned Floyd
Kempenski 49.1 acre tract, S 32 degrees 14' 34" E 3863.68 feet to a set
steel rod at a fence corner for the South East corner of the above
mentioned Floyd Kempenski 50.3 acre tract, and S 32 degrees 12'49" E
2269.45 feet to a x-tie at a fence corner for the South East corner
of the above mentioned Sam Yezak 99.02 acre tract;
<PAGE 37>
38
THENCE N 60 degrees 44' 19" E 30.42 feet to a x-tie at a fence corner
for a corner of the above mentioned Ruth Cottingham Sorrels
232 acre tract;
THENCE S 28 degrees 54' 44" E 666.77 feet along a fence on the East
side of an abandoned lane to a set steel rod for an interior corner
of the said Sorrels tract and for the South West corner of the
Sam Yezak 97 acre tract;
THENCE N 57 degrees 21' 26" E 13.09 feet along a fence for the North
line of the said Sorrels tract to a set steel rod in the East line of
the T. N. Mudd Survey;
THENCE S 32 degrees 38' 58" E 1677.06 feet along the East line of the T.
N. Mudd Survey to a point for the South East corner of the T. N.
Mudd Survey and for the South East corner of the herein described tract,
said corner further being N 32 degrees 38' 58" W 8.01 feet
from the North West corner of the Tidwell Prairie Cemetery tract;
THENCE S 56 degrees 56'17" W 1010.46 feet along the South line of the
T. N. Mudd Survey to a point of intersection in a fence line for
the occupied North line of the Richard Hailey 2.6 acre tract
described in the SECOND TRACT in the above mentioned Deed to
Hailey recorded in Volume 262, page 677 of the Deed Records of
Robertson County, Texas;
THENCE along the said fence for the occupied line between the
Hailey 2.6 acre tract and the Sorrels 232 acre tract S 63 degrees 17'46"
W 215.77 feet, S 73 degrees 21' 42" W 289.60 feet, S 56 degrees 31' 38" W
193.26 feet, and S 57 degrees 06' 58" W 287.03 feet to a 4" corner post
at a fence corner for the South West corner of the Sorrels 232
acre tract and for an angle corner of the herein described tract;
THENCE along a fence S 53 degrees 07' 17" W 872.50 feet, and S 54 degrees
36'28" W 764.72 feet to a 30' Post Oak tree at a fence corner in the
West line of the Richard Hailey 99.8 acre tract;
THENCE S 33 degrees 59' 57" E 16.11 feet along the West line of the
said Richard Hailey 99.8 acre tract to a point in the South line of
the T. N. Mudd Survey for the South West corner of the said 99.8
acre tract and for a corner of the herein described tract;
THENCE S 56 degrees 56' 17" W 2611.34 feet along the South line of the
T. N. Mudd Survey to a point in a fence line;
<PAGE 38>
39
THENCE along a fence for the occupied South line of the above
mentioned Richard Hailey 271.4 acre tract S 57 degrees 16'59" W 525.79
feet, S 54 degrees 51'52" W 370.06 feet, and S 58 degrees 27'39" W 918.69
feet to a set steel rod at a fence corner in the East line of the Joan
Lutz, et. al. 20 acre tract for a corner of the herein described
tract, said corner further being in the East line of the Conception
Charle Conflict;
THENCE N 32 degrees 12'36" W 597.55 feet along a fence to a set steel
rod at a fence corner for the North East corner of the said Lutz
20 acre tract and for an interior corner of the herein described
tract;
THENCE S 58 degrees 15' 54" W 1063.55 feet along a fence to a x-tie at
a fence corner for the North West corner of the said Lutz 20 acre
tract;
THENCE S 57 degrees 41'05" W 413.61 feet along the South line of the
above mentioned Fannie Corrett 11.5 acre tract to a set steel rod
for the South West corner of the said 11.5 acre tract, said corner
further being in the East line of the above mentioned Southwest
Agricorp, Inc. 60 acre tract;
THENCE S 30 degrees 08'30" E 23.47 feet along the East line of the said
Southwest Agricorp, Inc. 60 acre tract to a set steel rod for the
South East corner of the same;
THENCE along a fence for the occupied South line of the said
Southwest Agricorp, Inc. 60 acre tract S 58 degrees 52'44" W 1125.00
feet, S 58 degrees 08'55" W 786.90 feet, and S 56 degrees 46'13" W 271.87
feet
to a set steel rod in the East Right of Way line of the Southern
Pacific Railroad for the South West corner of the said 60 acre
tract and for the South West corner of the herein described tract;
THENCE along the East Right of Way line of the Southern Pacific
Railroad as follows:
1. N 29 degrees 06'39" W 2860.59 feet to a point for a corner,
2. N 60 degrees 53'21" E 47.50 feet to a point for a corner,
3. N 29 degrees 06'39" W 2773.90 feet to a point at the beginning
of a curve,
<PAGE 39>
40
4. along a curve to the right with a radius of 6775.55 feet
and a chord bearing N 27 degrees 51' 32" W 296.77 feet to the
end of the curve,
5. N 26 degrees 36' 04" W 2996.68 feet to a point at the beginning
of a curve,
6. along a curve to the right with a radius of 5598.34 feet
and a chord bearing N 20 degrees 50'56" W 1122.20 feet to a set,
steel rod at the North West corner of the above mentioned
G. H. Ingram, Jr. 272.57 acre tract for the North West
corner of the herein described tract;
THENCE along the center of a public road N 57 degrees 23' 58" E
4549.06 feet to a point of intersection with another public road
from the South for the North East corner of the above mentioned
Edward Kuciemba 55.0675 acre tract, said corner further being
the North West corner of the above mentioned Leland Beckendorff 199.992
acre tract, and said corner further being in the
North line of the T. N. Mudd Survey;
THENCE along the North line of the said Beckendorff tract N 57 degrees
08'57" E 1233.50 feet, and N 57 degrees 13'5" E 609.69 feet to a found
steel pipe at a fence corner for the Northern most North East
corner of the said Beckendorff tract, said corner further being
the North West corner of the above mentioned Reece Yezak 43 1/2
acre tract, said corner further being in the North line of the T. N.
Mudd Survey;
THENCE N 57 degrees 28'49" E 4369.72 feet along the North line of the
T. N. Mudd Survey to the place of BEGINNING and containing
2,711.761 acres of land, more or less.
Field Notes for a 2.8175 Acre Tract
T. J. CHAMBERS SURVEY, A-2
Robertson County, Texas
TRACT II:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the T. J. Chambers
Survey, Abstract No. 2, and further being out of a 36.445 acre
tract described in a Deed to Bernard Wilganowski and wife,
<PAGE 40>
41
Shirley Wilganowski recorded in Volume 408, page 510 of the
Deed Records of Robertson County, Texas, said tract or parcel of
land herein described as follows:
COMMENCING at a found steel pipe in the East Right of Way
line of State Highway 6 for the North West corner of the said
Wilganowski 36.445 acre tract;
THENCE along the East Right of Way line of State Highway 6 S
08 degrees 11' 44" E 774.41 feet to a concrete Right of Way monument,
and S 7 degrees 49'19" E 223.43 feet to a set steel rod for the PLACE OF
BEGINNING and for the North West corner of the herein described tract;
THENCE along the North line of the herein described tract N 54 degrees
54'53" E 8.20 feet to a set steel rod at the beginning of a curve to
the left, along the curve with a radius of 325.00 feet and a long
chord bearing N 48 degrees 25' 41" E 73.43 feet to a set steel rod at the
end of the curve, N 41 degrees 56'28" E 375.72 feet to a set steel rod at
the beginning of a curve to the right, along the curve to the right
with a radius of 1220.92 feet and a long chord bearing N 44 degrees 46'
05" E 120.43 feet to a set steel rod in the West Right of Way line
of the Southern Pacific Railroad;
THENCE S 26 degrees 36'04" E 209.52 feet along the West Right of
Way line of the Southern Pacific Railroad to a set steel rod for
the South East corner of the herein described tract;
THENCE along the South line of the herein described tract along
a curve to the left with a radius of 1020.92 feet and a long chord
bearing S 43 degrees 09'52" W 43.65 feet to a set steel rod at the end of
the curve, S 41 degrees 56'28" W 375.72 feet to a set steel rod at the
beginning of a curve to the right, along the curve to the right
with a radius of 525 feet and a long chord bearing S 48 degrees 25'41"
W 118.62 feet to a set steel rod at the end of the curve, and S 54
degrees 54'53" W 110.92 feet to a set steel rod in the East Right of Way
line of State Highway 6 for the South West corner of the herein
described tract;
THENCE N 07 degrees 54' 01" W 224.84 feet along the East Right of
Way line of State Highway 6 to the PLACE OF BEGINNING and
containing 2.8175 acres of land, more or less.
<PAGE 41>
42
Field Notes for a 14.487 Acre Tract
JOSEPH WEBB SURVEY, A-51
Robertson County, Texas
TRACT III:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the Joseph Webb
Survey, Abstract No. 51, and further being the same tract of
land described as 14.6 acres in a Deed to Irvin Conitz recorded in
Volume 171, page 224 of the Deed Records of Robertson County,
Texas, said tract or parcel of land herein described as follows:
BEGINNING at a found steel rod in the bend of a public road at a
South West interior corner of a 1,162.950 acre tract described in
a Deed to C. J. Rutten recorded in Volume 273, page 544 of the
Deed Records of Robertson County, Texas for the North East
corner of the said Conitz tract, said corner further being the
North East corner of the Joseph Webb Survey;
THENCE S 33 degrees 24'43" E 1110.97 feet along the center of the
said public road to a found steel rod at a fence corner at the
outside bend of the said road for a corner for the Southern most
South West corner of the said Rutten 1,162.95 acre tract, said corner
further being the North West corner of the A. J. Hensley Survey,
A-20;
THENCE S 32 degrees 33'12" E 632.77 feet generally along a fence for
the East line of the Conitz tract to a set steel rod in a gulley for
the South East corner of the herein described tract;
THENCE S 57 degrees 30' 24" W 367.23 feet partially along a fence on
the North side of a gulley to a set steel rod near a fence corner
for the South West corner of the herein described tract;
THENCE N 32 degrees 33' 12" W 1743.60 feet along the West line of the
said Conitz tract as marked by a fence to a point in the above
mentioned public road for the North West corner of the herein
described tract, from which a found steel pipe at a fence corner
bears S 32 degrees 33' 12" E 18.32 feet;
<PAGE 42>
43
THENCE N 57 degrees 30' 24" E 350.58 feet along the said public road
to the place of BEGINNING and containing 14.487 acres of land,
more or less.
Field Notes for a 2.000 Acre Tract
JOHN TRUDOE SURVEY, A-346
Robertson County, Texas
TRACT IV:
PART A:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of the John Trudoe Survey,
Abstract No. 346, and further being out of the South East corner
of a 48.587 acre tract described as TRACT No. 13 in a Deed to M.
A. Bayard recorded in Volume 495, page 466 of the Deed Records
of Robertson County, Texas, said tract or parcel of land herein
described as follows:
BEGINNING at a found steel rod at a fence corner in the North
line of a public road for the South East corner of the said Bayard
48.587 acre tract for the South East corner of the herein described
tract, said corner further being the South West corner of
31.307 acre tract described in a Deed to Joseph A. Smith re-
corded in Volume 413, page 289 of the Deed Records of Robert-
son County, Texas;
THENCE S 56 degrees 02'28" W 295.16 feet along the South line of the
said 48.587 acre tract and the North line of the public road to a
set steel rod for the South West corner of the herein described
tract;
THENCE N 33 degrees 55'23" W 295.16 feet to a set steel rod for the
North West corner of the herein described tract;
THENCE N 56 degrees 02'28" E 295.16 feet to a set steel rod in the
East line of the said 48.587 acre tract for the North East corner of
the herein described tract;
THENCE S 33 degrees 55'23" E 295.16 feet along a fence for a common
line between the said Bayard 48.587 acre tract and the Smith
31.307 acre tract to the place of BEGINNING and containing
2.000 acres of land, more or less.
<PAGE 43>
44
Field Notes for a 4.998 Acre Tract
JOHN TRUDOE SURVEY, A-346
Robertson County, Texas
TRACT IV:
PART B:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the John Trudoe
Survey, Abstract No. 346 and further being out of a tract called
10.00 acres described as TRACT 9 in a Deed to M. A. Bayard
recorded in Volume 495, page 456 of the Deed Records of
Robertson County, Texas, said tract or parcel of land herein
described as follows:
BEGINNING at a found steel rod in the West line of a 40' road for
the North East corner of the said 10.00 acre tract for the North
East corner of the herein described tract, said corner further
being the South East corner of a 16.312 acre tract described as
TRACT 10 in the above mentioned Deed;
THENCE S 33 degrees 09'16" E 323.02 feet along the West line of the
said 40' road to a found steel rod for the South East corner of the
herein described tract, from which a found steel rod at the
intersection of the West line of the 40' road with the North line
of a public road bears S 33 degrees 09' 16" E 326.42 feet;
THENCE S 57 degrees 30'45" W 670.49 feet to a found steel rod in the
West line of the said 10.00 acre tract for the South West corner
of the herein described tract;
THENCE N 34 degrees 27' 00" W 323.12 feet along a fence to a found
steel rod for the North West corner of the said 10.00 acre tract
and for the North West corner of the herein described tract;
THENCE N 57 degrees 30' 24" E 677.80 feet along the common line
between the said 10.00 acre tract and the 16.312 acre tract to the
place of BEGINNING and containing 4.998 acres of land, more or
less.
EXCEPTIONS OF RECORD AFFECTING THE PROPERTY CONVEYED BY THE
FOREGOING
TRACT IV, PART NOS. A AND B:
<PAGE 44>
45
1. Easement from Ben C. Love, et al to Lone Star Gas
Company, dated October 24, 1928, recorded in Volume 93, page
581, Deed Records of Robertson County, Texas.
2. Easement from Ben C. Love, et al to Humble Pipe Line
Company, dated May 15, 1946, recorded in Vol. 141, Page 489,
Deed Records of Robertson County, Texas.
3. Easement from Ben C. Love, et al to Texas Pipe Line
Company, dated October 29, 1946, recorded in Vol. 145, Page
531, Deed Records of Robertson County, Texas.
4. Easement from Ben C. Love, et al to Sinclair Pipe Line
Company, dated April 21, 1947, recorded in Vol. 149, Page 53,
Deed Records of Robertson County, Texas.
5. Easement from Clara C. Love, et al to Humble Pipe Line
Company, for Rectifier Unit, dated February 16, 1968, recorded
in Vol. 239, Page 251, Public Records of Robertson County,
Texas.
6. Easement from Alan C. Love, et al to Humble Pipe Line
Company, for Rectifier Unit, dated February 16, 1968, recorded
in Vol. 239, Page 341, Public Records of Robertson County,
Texas.
7. Subject to unrecorded Navasota Valley Electric Co-op,
Inc. power line easements.
8. Right-of-Way Agreement dated October 22, 1969, from
Alan C. Love et al to Diamond Shamrock Corporation, recorded
in Vol. 253, Page 281, Public Records of Robertson County,
Texas; assigned to Diamond Chemicals Company at Vol. 479,
Page 580, Public Records of Robertson County, Texas.
9. Right-of-Way Agreement dated October 22, 1969, from
Clara C. Love, et al to Diamond Shamrock Corporation, recorded
in Vol. 252, Page 632, Public Records of Robertson County,
Texas; assigned to Diamond Chemicals Company, at Vol. 479,
Page 580, Public Records of Robertson County, Texas.
10. Mineral Deed dated March 28, 1984, from C. J. Rutten et
ux, et al to C. Bert Dickens, et al, recorded in Vol. 431, Page 394,
Public Records of Robertson County, Texas, conveying 1/2 of the
<PAGE 45>
46
oil, gas and other minerals; Correction Mineral Deed dated Au-
gust 9, 1985, from C. J. Rutten et ux and L. M. Lowrey, Trustee
to C. Bert Dickens, et al, recorded in Vol. 464, Page 283, Public
Records of Robertson County, Texas, conveying 1/2 of oil, gas and
other minerals including, coal and lignite; Mineral Deed dated
February 17, 1986, from C. Bert Dickens to Mauriene Dickens,
recorded in Vol. 480, Page 155, Public Records of Robertson
County, Texas. Mineral Deed dated January 21, 1988, from L. M.
Lowrey, Trustee to C. J. Rutten, recorded in Vol. 509, Page 640,
Public Records of Robertson County, Texas.
11. Coal and Lignite Lease dated April 18, 1977, from C. J.
Rutten et al to Phillips Coal Company, for a primary term of
25 years, recorded in Vol. 318, Page 471, Public Records of
Robertson County, Texas.
12. Subject to a 20' Utility Easement along an roads.
13. Coal Lease dated December 5, 1977, from Elwood 0.
Jahns and Janice Kirkland to Phillips Coal Company, for a
primary term of 25 years, recorded in Vol. 332, Page 606, Public
Records of Robertson County, Texas.
Field Notes for a 2.000 Acre Tract
JOHN TRUDOE SURVEY, A-346
Robertson County, Texas
TRACT V:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of the John Trudoe Survey, Abstract No.
346, and further being out of the South West corner of
a 25.00 acre tract of land described in a Deed to Thomas A.
Towns recorded in Volume 505, page 455 of the Deed Records of
Robertson County, Texas, said tract or parcel of land herein
described as follows:
BEGINNING at a found steel rod at a fence corner in the North
line of a public road for the South West corner of the Towns
25.00 acre tract and for the South West corner of the herein
described tract;
<PAGE 46>
47
THENCE N 33 degrees 50' 22" W 417.60 feet along a fence for the West
line of the Towns 25.00 acre tract to a set steel rod for the North
West corner of the herein described tract;
THENCE N 57 degrees 57' 04" E 208.71 feet to a set steel rod for the
North East corner of the herein described tract;
THENCE S 33 degrees 50' 22" E 417.60 feet to a set steel rod in the
North line of the before mentioned public road for the South
East corner of the herein described tract;
THENCE S 57 degrees 57'04" W 208.71 feet along the North line of the
said public road to the place of BEGINNING and containing
2.000 Acres of land, more or less.
Field Notes for a 13.039 Acre Tract
JOSEPH WEBB SURVEY, A-51
Robertson County, Texas
TRACT VI:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the Joseph Webb
Survey, Abstract No. 51 and further being the same tract of land
called 14 acres described in a Deed to B. T. Ables recorded in
Volume 241, page 310 of the Deed Records of Robertson County,
Texas, said tract or parcel of land herein described as follows:
BEGINNING at a set steel rod on the South edge of a public road
at the intersection of the North line of the Joseph Webb Survey
with the East Right of Way line of the Southern Pacific Railroad
for the North West corner of the said Ables tract and for the
North West corner of the herein described tract;
THENCE N 57 degrees 30'24" E 194.44 feet along the North line of the
Ables tract to a set steel rod in the South edge of the said public
road for the North East corner of the herein described tract;
THENCE S 32 degrees 29'36" E 1775.97 feet along a common line
between this Ables tract and another B. T. Ables 14 acre tract
(241-307) to a set steel rod in a fence line for the South East
corner of the herein described tract, said corner being in the
North line of the B. T. Ables 20 acre tract;
<PAGE 47>
48
THENCE S 57 degrees 30'59" W 460.38 feet along a fence to a set steel
rod in the East Right of Way line of the Southern Pacific Railroad
for the South West corner of the herein described tract;
THENCE along the East Right of Way line of the Southern Pacific
Railroad as follows:
1. along a curve to the left with a radius of 2946.84 feet and
a chord bearing N 19 59' 02" W 361.99 feet to a point at
the end of the curve,
2. N 23 degrees 30'19" W 433.30 feet to a point for a corner,
3. S 66 degrees 29'41" W 37.00 feet to a point for a corner,
and
4. N 23 degrees 30'19" W 1001.03 feet to the place of BEGINNING
and containing 13.039 acres of land, more or less.
61.003 Acres
HUGH DAVLIN SURVEY, A-125
Robertson County, Texas
TRACT VII:
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the Hugh Davlin
Survey, Abstract No. 125, and further being out of a tract
described as 170.54 acres and consisting of a 2 acre roadway
both described in a Deed to M. Kathryn Bellis recorded in Volume
455, page 383 of the Deed Records of Robertson County, Texas,
said tract or parcel of land herein described as follows:
BEGINNING at a set steel rod in the intersection of the West line
of the said Bellis tract as marked by a fence with the South line
of the Hugh Davlin Survey for the South West corner of the
herein described tract, said corner further being the South East
corner of the Reece Yezak 40 acre tract as described in a Deed
recorded in Volume 500, page 183 of the Deed Records of
Robertson County, Texas;
THENCE along a fence for the West line of the said Bellis tract N
32 degrees 55'16" W 191.56 feet, and N 32 degrees 26'03" W 682.17
feet to a set steel rod at a fence corner for the South East corner
of the
<PAGE 48>
49
above mentioned 2 acre roadway, and for the North East corner
of the Reece Yezak tract;
THENCE S 57 degrees 32'43" W 2008.85 feet along a fence to a point in
the East line of a public road for a corner;
THENCE N 30 degrees 19'43" W 44.56 feet along the East line of the
public road to a point for a corner;
THENCE N 57 degrees 28'31" E 2005.01 feet along a fence to a found
steel rod at a fence corner for the North East corner of the 2 acre
roadway, said corner further being in the West line of the Bellis
170.54 acre tract;
THENCE N 31 degrees 54' 06" W 809.56 feet along a fence to a x-tie at a
fence corner for the North West corner of the Bellis 170.54 acre
tract;
THENCE N 56 degrees 02' 12" E 320.57 feet generally along a fence to a
point in a creek for a corner of the herein described tract;
THENCE along the meanders of the creek as follows:
S 68 degrees 48' 15" E 101.04 feet,
S 78 degrees 18' 12" E 280.96 feet,
N 77 degrees 51' 25" E 193.15 feet,
N 79 degrees 42' 23" E 156.36 feet,
N 78 degrees 48' 41" E 518.91 feet,
S 85 degrees 50' 54" E 262.44 feet, and
S 72 degrees 33' 28" E 635.17 feet to a point for a corner;
THENCE S 32 degrees 10'11" E 502.74 feet to a set steel rod in the
South line of the Hugh Davlin Survey for the South East corner
of the herein described tract, from which a found steel rod at a
fence corner for the North East corner of the T. N. Mudd Survey
bears N 57 degrees 28' 49" E 1012.00 feet;
THENCE S 57 degrees 28' 49" W 2013.98 feet along the South line of the
Hugh Davlin Survey to the place of BEGINNING and containing
61.003 acres of land, more or less.
<PAGE 49>
50
UNIT 1
Exhibit "B"
Field Notes for UNIT 2 7.466 Acre Tract
T. N. MUDD SURVEY, A-229
JOSEPH MATHERS SURVEY, A-261
Robertson County, Texas
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the T. N. Mudd
Survey, Abstract No. 229, and the Joseph Mathers Survey,
Abstract No. 261, and further being out of a 2711.761 acre tract
described in a Deed of Trust from Project Funding Corporation
to Donald H. Snell, Trustee recorded in Volume 507, page 291 of
the Deed Records of Robertson County, Texas, said tract or
parcel of land herein described as follows:
BEGINNING at a point for the Eastern most corner of the herein
described tract from which a 5/8" steel rod at the North East
corner of the T. N. Mudd Survey bears N 19 degrees 26'31" E 7957.13
feet;
THENCE S 43 degrees 04'00" W 175.00 feet to a point for a corner;
THENCE N 46 degrees 56'00" W at 470.00 feet pass the 2-W baseline
and at a total distance of 1234.83 feet to a point for a corner;
THENCE N 43 degrees 04' 00" E 20.00 feet to a point for a corner;
THENCE N 46 degrees 56' 00" W 148.03 feet to a point for an angle
corner;
THENCE S 30 degrees 04' 00" W 177.26 feet to a point for a corner;
THENCE N 09 degrees 56' 00" W 393.33 feet to a point for a corner;
THENCE N 80 degrees 04' 00" E 130.70 feet to a point for a corner;
THENCE S 09 degrees 56' 00" E 73.99 feet to a point for an angle corner;
THENCE S 46 degrees 56' 00" E 161.09 feet to a point for a corner;
THENCE W 43 degrees 04' 00" E 20.00 feet to a point for a corner;
THENCE S 46 degrees 56' 00" E 270.00 feet to a point for a corner;
THENCE S 43 degrees 04' 00" W 20.00 feet to a point for a corner;
<PAGE 50>
51
THENCE S 46 degrees 56"00" E 1234.83 feet to the place of beginning
and containing 7.466 acres of land, more or less.
UNIT 1
Exhibit "C"
The electrical generating plant which is located on the Site,
having a nominal rating of 150 MW that burns lignite, coal or natural
gas as fuel in a circulating fluidized combustion process.
Robertson County
UNIT 2:
The following described 75.75/288.5ths undivided interest in
properties situated in Robertson County as follows:
(a) The lands described on Exhibit "A" attached hereto and
made a part hereof (the "Site");
(b) The electrical generating plant known as TNP One, Unit
2, as described on Exhibit "B" attached hereto and made a part
hereof, on the Site;
(c) All right, title and interest of Grantor, to the extent
attributable to the interests described in (a) and (b) above, in
and to all facilities, equipment and personalty of every nature
(including, but not limited to, inventory) appurtenant to, used
for or in connection with the interests described in (a) and (b)
above; and
(d) All right, title and interest of Grantor, to the extent
attributable to the interests described in (a) and (b) above, in
and under all easements, permits, licenses, servitudes, rights of
way and surface waivers used for or held with respect to the
interests described in (a), (b) and (c) above.
<PAGE 51>
52
UNIT 2
Exhibit "A":
Field Notes for UNIT 2 7.466 Acre Tract
T. N. MUDD SURVEY, A-229
JOSEPH MATHERS SURVEY, A-261
Robertson County, Texas
All that certain tract or parcel of land lying and being situated in
Robertson County, Texas, out of and a part of the T. N. Mudd
Survey, Abstract No. 229, and the Joseph Mathers Survey,
Abstract No. 261, and further being out of a 2711.761 acre tract
described in a Deed of Trust from Project Funding Corporation
to Donald H. Snell, Trustee recorded in Volume 507, page 291 of
the Deed Records of Robertson County, Texas, said tract or
parcel of land herein described as follows:
BEGINNING at a point for the Eastern most corner of the herein
described tract from which a 5/8" steel rod at the North East
corner of the T. N. Mudd Survey bears N 19 degrees 26' 31" E 7957.13
feet;
THENCE S 43 degrees 04' 00" W 175.00 feet to a point for a corner;
THENCE N 46 degrees 56' 00" W at 470.00 feet pass the 2-W baseline
and at a total distance of 1234.83 feet to a point for a corner;
THENCE N 43 degrees 04' 00" E 20.00 feet to a point for a corner;
THENCE N 46 degrees 56' 00" W 148.03 feet to a point for an angle
corner;
THENCE S 30 degrees 04' 00" W 177.26 feet to a point for a corner;
THENCE N 09 degrees 56' 00" W 393.33 feet to a point for a corner;
THENCE N 80 degrees 04' 00" E 130.70 feet to a point for a corner;
THENCE S 09 degrees 56' 00" E 73.99 feet to a point for an angle corner;
THENCE S 46 degrees 56' 00" E 161.09 feet to a point for a corner;
THENCE W 43 degrees 04' 00" E 20.00 feet to a point for a corner;
THENCE S 46 degrees 56' 00" E 270.00 feet to a point for a corner;
THENCE S 43 degrees 04' 00" W 20.00 feet to a point for a corner;
<PAGE 52>
53
THENCE S 46 degrees 56' 00" E 1234.83 feet to the place of beginning
and containing 7.466 acres of land, more or less.
UNIT 2
Exhibit "B"
The electrical generating plant which is located on the Site,
having a nominal rating of 150 MW that burns lignite, coal or natural
gas as fuel in a circulating fluidized combustion process.
SECOND
ELECTRIC TRANSMISSION SYSTEM
All electric transmission lines acquired by the Company since
the execution and delivery of the Twenty-Second Supplemental In-
denture, dated as of January 15, 1992, to the Original Indenture,
including towers, poles, pole lines, wires, switch racks, switch-
boards, insulators and other appliances and equipment and all other
property forming a part thereof or pertaining thereto, and all service
lines extending therefrom; together with all real property, rights of
way, easements, permits, privileges, franchises and rights over or
relating to the construction, maintenance or operation thereof,
through, over, under, or upon any private property or in the public
streets or highways within as well as without the corporate limits of
any municipal corporation including without limitation, those situate
as follows:
A. State of New Mexico
1. Eddy County
One-third share of cost of major improvements, feed water
control, spare PT, wave trap, and filter resistors at the
HVDC Tie.
2. Grant County
(a) LCB II relaying for the #3 115 KV transmission line at
the Hidalgo Substation.
(b) LCB II relaying for the # 3 115 KV transmission line at
the Turquoise Substation.
<PAGE 53>
54
B. State of Texas
1. Bosque County
Frequency Deviation Recorder at the Olsen Substation.
2. Bosque County, Hamilton County
Re-insulate the Olsen-Jonesboro 69 KV line for 138 KV.
3. Brazoria County
Purchase material for rebuilding the West Columbia Main-
Phillips #3 69 KV line to 138 KV.
4. Clifton
Capitalize deferred FIS facilities charges.
5. League City
Purchase ROW and material to build the South Shore 138
KV transmission line.
6. Lewisville
(a) Obtain CCN for Lakepointe-TI 138 KV line.
(b) Frequency Deviation Recorder at Highlands Station.
(c) Capitalize deferred FIS facilities charges.
7. Pecos
Capitalize deferred FIS facilities charges.
8. Robertson County
TNP One Unit Two generating plant.
<PAGE 54>
55
9. Silver City
Capitalize deferred FIS facilities charges.
10. Texas City
(a) Replace static wires on 69 KV transmission lines.
(b) Capitalize deferred FIS facilities charges.
(c) Install gang switches and bus work at GAF Station.
11. Ward County
Air switch in IH-20 to Wickett 138 KV line.
THIRD
SUBSTATIONS
All the substations and the switching stations acquired by the
Company since the execution and delivery of the Twenty-Second
Supplemental Indenture, dated as of January 15, 1992, to the Original
Indenture for transforming, distributing or otherwise regulating
electric current at any of its plants, together with all buildings,
transformers, wires, insulators, appliances, equipment and all other
property, real or personal, forming a part of or pertaining to or used,
occupied or enjoyed in connection with any of such substations and
switching stations, including without limitation, those situate as
follows:
A. State of New Mexico
1. Grant County
Regulators on 23 KV distribution circuits.
2. Lincoln County
Rebuild Sierra Blanca 12.5-4 KV Substation.
B. State of Texas
1. Alvin
Replacement of two 15 KV circuit breakers.
2. Fort Stockton
(a) Install shielding and arresters in the Downtown
Substation.
(b) Installation of SEL relay at 16 St. Substation.
<PAGE 55>
56
3. Glen Rose
Build #3 69-22 KV Substation.
4. Hamilton
Replace transformer and rebuild Hamilton City 4 KV Sub-
station to 22 KV.
5. League City
(a) One UPS system for the Dispatch Center Building.
(b) Purchase material for the construction of the South
Shore Substation.
(c) Communications equipment, radios, antenna, and towers
for the Dispatch Center Building.
(d) Install one 12/16/20 MVA, 138-12.5 KV transformer at
the Magnolia Substation.
6. Lewisville
(a) Purchase two 15 KV breakers for the TI Substation.
(b) One 25/33/42/47 MVA, 138-12.5 KV transformer at the
West Substation in the West position.
(c) Install SCADA equipment and under frequency relaying
in all stations.
7. Pecos
(a) Frequency Deviation Recorder at the Pecos Main
Substation.
(b) One 69 KV breaker at the Pecos Main Substation.
(e) Install underfrequency relaying in Stafford, Kermit # 2,
and the Downtown Substations.
8. Perryton
One 9,375 KVA 115-12.5 KV rebuilt transformer at the
Perryton #2 Substation.
9. Pilot Point
Transformer, regulators, and fuses at the Pilot Point
Substation.
10. Texas City
(a) Purchase Mainland Substation site.
(b) Upgrade East 12.5 KV bus to 2000 ampere capacity at
the Heights Substation.
<PAGE 56>
57
(c) Upgrade South 12.5 KV bus to 2000 ampere capacity at
the Freeway Park Substation. Purchase and install one
25/33/452/47 MVA, 138-12.5 KV transformer and one
15 KV, 2000 ampere circuit breaker.
(d) Install one 25/33/42/47 MVA, 138-12.5 KV trans-
former at Freeway Park Substation in the North
position.
(e) Frequency Deviation Recorder at the Heights
Substation.
(f) Purchase rebuilt 12/16/20 MVA, 138-12.5 KV trans-
former at the Heights Substation.
11. Spearman
Addition of 115 KV bus work, air switch, and installation of
Circuit-Switcher at the Spearman Substation.
12. Winkler County
Two WX reclosers at the Kermit Substation.
FOURTH
FRANCHISES
All and singular, the corporate, federal, state, municipal and
other franchises, permits, consents, licenses, grants, immunities,
privileges, and rights acquired by the Company since the execution
and delivery of the Twenty-Second Supplemental Indenture dated as
of January 15, 1992, to the Original Indenture, and now held by the
Company for the construction, maintenance, and operation of electric
light, heat, and power plants and systems; for the construction,
maintenance; as well as all franchises, grants, immunities, privileges,
and rights of the Company used or useful in the operation of the
Trust Estate, including all and singular the franchises, grants,
immunities, privileges, and rights of the Company granted by the
governing authorities of the cities and towns enumerated in the schedule
below, and by all other municipalities or political subdivisions, and
all renewals, extensions, and modifications of said franchises, grants,
privileges, and rights, or any of them, including:
<PAGE 57>
58
A. STATE OF NEW MEXICO
None
B. STATE OF TEXAS
Municipality Expiration Date
Brazoria.................... March 24, 2022
Dickinson................... April 23, 2018
Pecos....................... May 13, 2023
<PAGE 58>
59
IN WITNESS WHEREOF, Texas-New Mexico Power Company has
caused this Twenty-Third Supplemental Indenture to be signed in its
corporate name by its President or a Vice President and its corporate
seal to be hereunto affixed and attested by its Secretary or an
Assistant Secretary, and, in token of its acceptance of the trust
created hereby, Continental Bank, National Association, has caused
this Twenty-Third Supplemental Indenture to be signed in its corporate
name by one of its Vice Presidents and its corporate seal to be
hereunto affixed and attested by one of its Trust Officers, all as of the
day and year first above written.
TEXAS-NEW MEXICO POWER COMPANY,
(CORPORATE SEAL)
By D. R. BARNARD
Sector Vice President and
Chief Financial Officer
Attest:
M. D. BLANCHARD
Secretary
CONTINENTAL BANK, NATIONAL ASSOCIATION,
as Trustee
(CORPORATE SEAL)
By JOHN W. PORTER
Vice President
Attest:
JOANNE M. MURPHY
Trust Officer
<PAGE 59>
60
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
On this 28th day of September, 1993, before me, Mandel Holland,
Notary Public in and for the County and State aforesaid,
personally appeared D. R. BARNARD, to me personally known, and
known to me to be the person whose name is subscribed to the
foregoing instrument and known to me to be Sector Vice President
and Chief Financial Officer of TEXAS-NEW MEXICO POWER COMPANY, a
corporation, who being by me duly sworn, did say that he resides in
Fort Worth, Texas, that he is Sector Vice President and Chief
Financial Officer of said TEXAS-NEW MEXICO POWER COMPANY and that
the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in
behalf of said corporation by authority of its Board of Directors; and
said D. R. BARNARD acknowledged said instrument to be the free act
and deed of said corporation, and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed and as the act of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office this 28th day of September, 1993.
MANDEL HOLLAND
MANDEL HOLLAND
(Notarial Seal) NOTARY PUBLIC, State of New York
No. 4980339
Qualified in Weschester County
Cert. Filed in Bronx County
Commission Expires April 16,1995
<PAGE 60>
61
STATE OF ILLINOIS )
COUNTY OF COOK ) ss.:
On this 23rd day of September, 1993, before me, Verdine Washington,
Notary Public in and for the County and State aforesaid,
personally appeared JOHN W. PORTER to me personally known, and
known to me to be the person whose name is subscribed to the
foregoing instrument and known to me to be a Vice President of
CONTINENTAL BANK, NATIONAL ASSOCIATION, a national banking association,
who, being by me duly sworn, did say that he resides in
Chicago, Illinois; that he is a Vice President of said Continental Bank,
National Association, and that the seal affixed to said instrument is
the corporate seal of said association, and that said instrument was
signed and sealed in behalf of said association by authority of its
Board of Directors; and said JOHN W. PORTER, acknowledged said
instrument to be the free act and deed of said association, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed and as the act of said
association.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office this 23rd day of September, 1993.
"OFFICIAL SEAL"
V. WASHINGTON
NOTARY PUBLIC, STATE OF ILLINOIS
(Notarial Seal) MY COMMISSION EXPIRES 9-20-96
<PAGE 61>
62
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
D. R. BARNARD, being duly sworn, deposes and says:
1. That he is Sector Vice President and Chief Financial Officer
of TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation, one of
the corporations described in, and which executed the foregoing
instrument, and is one of the officers who executed the foregoing
instrument in behalf of TEXAS-NEW MEXICO POWER COMPANY.
2. That TEXAS-NEW MEXICO POWER COMPANY, one of the corporations which
executed the aforementioned instrument, is a corporation engaged in the
States of Texas and New Mexico in the
generation, purchase, transmission, distribution and sale of electricity
to the public and, consequently, is a utility as described in Section
35.01, Texas Business and Commerce Code, Revised Civil Statutes of
Texas.
Subscribed and sworn to before me this
28th day of September, 1993.
D. R. Barnard
(Notarial Seal) Mandel Holland
MANDEL HOLLAND
NOTARY PUBLIC, State of New York
No.4980339
Qualified in Westchester County
Cert. Filed in Bronx County
Commission Expires April 16, 1995
<PAGE 62>
This Instrument Grants a Security Interest By A Utility.
UTILITY SECURITY
INSTRUMENT
TEXAS-NEW MEXICO POWER COMPANY
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
____________________
INDENTURE AND SECURITY
AGREEMENT
Dated as of
September 15, 1993
_____________________
Including issuance of
10-3/4% Secured Debentures, Series A, Due September 15, 2003
<PAGE >
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of September 15, 1993
Trust Indenture
Action Section Indenture Section
310(a)(1) . . . . . . . . . . . . . . . . . . 1009
(a)(2) . . . . . . . . . . . . . . . . . . 1009
(a)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . 1009
(b) . . . . . . . . . . . . . . . . . . 1008, 1010
311(a) . . . . . . . . . . . . . . . . . . 1013
(b) . . . . . . . . . . . . . . . . . . 1013
(b)(2) . . . . . . . . . . . . . . . . . . 1103(a)(2)
1103(b)
312(a) . . . . . . . . . . . . . . . . . . 1101
1102(a)
(b) . . . . . . . . . . . . . . . . . . 1102(b)
(c) . . . . . . . . . . . . . . . . . . 1102(c)
313(a) . . . . . . . . . . . . . . . . . . 1103(a)
(b)(1) . . . . . . . . . . . . . . . . . . 1103(d)
(b)(2) . . . . . . . . . . . . . . . . . . 1103(b)
(c) . . . . . . . . . . . . . . . . . . 1103(a), 1103(b)
(d) . . . . . . . . . . . . . . . . . . 1103(c)
314(a) . . . . . . . . . . . . . . . . . . 1104, 1407
(b) . . . . . . . . . . . . . . . . . . 1616
(c)(1) . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . 601(b)
(e) . . . . . . . . . . . . . . . . . . 102
315(a) . . . . . . . . . . . . . . . . . . 1001(a)
(b) . . . . . . . . . . . . . . . . . . 1002
1103(a)(6)
(c) . . . . . . . . . . . . . . . . . . 1001(b)
(d) . . . . . . . . . . . . . . . . . . 1001(c)
(d)(1) . . . . . . . . . . . . . . . . . . 1001(a)(1)
(d)(2) . . . . . . . . . . . . . . . . . . 1001(c)(2)
(d)(3) . . . . . . . . . . . . . . . . . . 1001(c)(3)
(e)
914
316(a)(1)(A). . . . . . . . . . . . . . . . . 902
912
(a)(1)(B). . . . . . . . . . . . . . . . . 913
(a)(2) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . 908
(c) . . . . . . . . . . . . . . . . . . 104(e)
317(a)(1) . . . . . . . . . . . . . . . . . . 903
(a)(2) . . . . . . . . . . . . . . . . . . 904
(b) . . . . . . . . . . . . . . . . . . 1403
318(a) . . . . . . . . . . . . . . . . . . 107
________________
NOTE: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture
<PAGE >
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . 2
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . 2
SECTION 102. Compliance Certificates and Opinions.. . . . . . . . 12
SECTION 103. Form of Documents Delivered to Trustee.. . . . . . . 12
SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . . 13
SECTION 105. Notices, Etc., to Trustee and Company. . . . . . . . 14
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . 15
SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . 15
SECTION 108. Effect of Headings and Table of Contents.. . . . . . 15
SECTION 109. Successors and Assigns.. . . . . . . . . . . . . . . 16
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . 16
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . 16
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . 16
SECTION 113. Legal Holidays.. . . . . . . . . . . . . . . . . . . 16
ARTICLE TWO
SECURITY FORMS . . . . . . . . . . . . . . 17
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . 17
SECTION 202. Form of Face of Security.. . . . . . . . . . . . . . 18
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . 19
SECTION 204. Form of Trustee's Certificate of
Authentication.. . . . . . . . . . . . . . . . . . . 23
ARTICLE THREE
THE SECURITIES . . . . . . . . . . . . . . 23
SECTION 301. Limitations on Issuance; Issuable in Series. . . . . 23
SECTION 302. Terms of Particular Series.. . . . . . . . . . . . . 24
SECTION 303. Denominations. . . . . . . . . . . . . . . . . . . . 26
SECTION 304. Execution, Authentication, Delivery and
Dating.. . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 305. Temporary Securities.. . . . . . . . . . . . . . . . 28
SECTION 306. Registration, Transfer and Exchange. . . . . . . . . 29
SECTION 307. Mutilated, Destroyed, Lost and Stolen
Securities.. . . . . . . . . . . . . . . . . . . . . 30
SECTION 308. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 309. Persons Deemed Owners. . . . . . . . . . . . . . . . 32
SECTION 310. Cancellation.. . . . . . . . . . . . . . . . . . . . 33
SECTION 311. Computation of Interest. . . . . . . . . . . . . . . 33
<PAGE i>
ARTICLE FOUR
TERMS AND ISSUE OF SERIES A SECURITIES . . . . . . . . 33
SECTION 401. Specific Title, Terms and Forms. . . . . . . . . . . 33
SECTION 402. Redemption.. . . . . . . . . . . . . . . . . . . . . 34
SECTION 403. Authentication and Delivery. . . . . . . . . . . . . 34
ARTICLE FIVE
AUTHENTICATION AND DELIVERY OF ADDITIONAL SECURITIES. . . . . 35
SECTION 501. Authentication and Delivery of Additional
Securities upon Basis of Available or
Additional Collateral. . . . . . . . . . . . . . . . 35
ARTICLE SIX
RELEASES. . . . . . . . . . . . . . . . 38
SECTION 601. General Provisions . . . . . . . . . . . . . . . . . 38
SECTION 602. Termination. . . . . . . . . . . . . . . . . . . . . 40
SECTION 603. Terms of Release.. . . . . . . . . . . . . . . . . . 41
ARTICLE SEVEN
[Reserved] . . . . . . . . . . . . . . . 41
ARTICLE EIGHT
DEFEASANCE . . . . . . . . . . . . . . . 41
SECTION 801. Satisfaction and Discharge of Indenture. . . . . . . 41
SECTION 802. Application of Trust Money.. . . . . . . . . . . . . 43
SECTION 803. Satisfaction, Discharge and Defeasance of
Securities of any Series.. . . . . . . . . . . . . . 44
ARTICLE NINE
REMEDIES. . . . . . . . . . . . . . . . 46
SECTION 901. Events of Default. . . . . . . . . . . . . . . . . . 46
SECTION 902. Acceleration of Maturity; Rescission
andAnnulment.. . . . . . . . . . . . . . . . . . . . 49
SECTION 903. Collection of Indebtedness and Suits for
Enforcement by Trustee.. . . . . . . . . . . . . . . 50
SECTION 904. Trustee May File Proofs of Claim.. . . . . . . . . . 51
SECTION 905. Trustee May Enforce Claims Without Possession
of Securities. . . . . . . . . . . . . . . . . . . . 52
SECTION 906. Application of Money Collected.. . . . . . . . . . . 52
SECTION 907. Limitation on Suits. . . . . . . . . . . . . . . . . 53
<PAGE ii>
SECTION 908. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . . . . . . 54
SECTION 909. Restoration of Rights and Remedies.. . . . . . . . . 54
SECTION 910. Rights and Remedies Cumulative.. . . . . . . . . . . 54
SECTION 911. Delay or Omission Not Waiver.. . . . . . . . . . . . 55
SECTION 912. Control by Holders.. . . . . . . . . . . . . . . . . 55
SECTION 913. Waiver of Past Defaults. . . . . . . . . . . . . . . 55
SECTION 914. Undertaking for Costs. . . . . . . . . . . . . . . . 56
SECTION 915. Waiver of Stay or Extension Laws.. . . . . . . . . . 56
SECTION 916. Delay in Instituting Bankruptcy Proceedings. . . . . 56
ARTICLE TEN
THE TRUSTEE. . . . . . . . . . . . . . . 57
SECTION 1001. Certain Duties and Responsibilities. . . . . . . . . 57
SECTION 1002. Notice of Defaults.. . . . . . . . . . . . . . . . . 59
SECTION 1003. Certain Rights of Trustee. . . . . . . . . . . . . . 60
SECTION 1004. Not Responsible for Recitals or Issuance of
Securities.. . . . . . . . . . . . . . . . . . . . . 61
SECTION 1005. May Hold Securities. . . . . . . . . . . . . . . . . 61
SECTION 1006. Money Held in Trust. . . . . . . . . . . . . . . . . 62
SECTION 1007. Compensation and Reimbursement.. . . . . . . . . . . 62
SECTION 1008. Disqualification; Conflicting Interests. . . . . . . 62
SECTION 1009. Corporate Trustee Required; Eligibility. . . . . . . 63
SECTION 1010. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1011. Acceptance of Appointment by Successor.. . . . . . . 65
SECTION 1012. Merger, Conversion, Consolidation or
Succession to Business.. . . . . . . . . . . . . . . 66
SECTION 1013. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1014. Authenticating Agents. . . . . . . . . . . . . . . . 67
ARTICLE ELEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . 69
SECTION 1101. Company to Furnish Trustee Names and
Addresses of Holders.. . . . . . . . . . . . . . . . 69
SECTION 1102. Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1103. Reports by Trustee.. . . . . . . . . . . . . . . . . 71
SECTION 1104. Reports by Company.. . . . . . . . . . . . . . . . . 72
<PAGE iii>
ARTICLE TWELVE
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE. . . . . . 73
SECTION 1201. Company May Consolidate, Etc., Only on
Certain Terms.. . . . . . 73
SECTION 1202. Successor Corporation to be Substituted. . . . . . . 74
ARTICLE THIRTEEN
SUPPLEMENTAL INDENTURES AND AMENDMENTS
TO CREDIT AGREEMENT AND OTHER DOCUMENTS. . . . . . . . 74
SECTION 1301. Supplemental Indentures without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1302. Supplemental Indentures with Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1303. Amendments to the Credit Agreements, etc.,
without Consent of Holders.. . . . . . . . . . . . . 77
SECTION 1304. Amendments to Credit Agreements, etc. with
Consent of Holders.. . . . . . . . . . . . . . . . . 79
SECTION 1305. Consideration for Supplements, Amendments,
etc. . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1306. Execution of Supplemental Indentures.. . . . . . . . 82
SECTION 1307. Effect of Supplemental Indentures. . . . . . . . . . 82
SECTION 1308. Conformity with Trust Indenture Act. . . . . . . . . 82
SECTION 1309. Reference in Securities to Supplemental
Indentures.. . . . . . . . . . . . . . . . . . . . . 83
ARTICLE FOURTEEN
COVENANTS . . . . . . . . . . . . . . . 83
SECTION 1401. Payment of Principal, Premium and Interest.. . . . . 83
SECTION 1402. Maintenance of Office or Agency. . . . . . . . . . . 83
SECTION 1403. Money for Securities Payments to Be Held in
Trust. . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1404. Corporate Existence. . . . . . . . . . . . . . . . . 85
SECTION 1405. Maintenance of Properties. . . . . . . . . . . . . . 86
SECTION 1406. Payment of Taxes and Other Claims. . . . . . . . . . 86
SECTION 1407. Statement by Officers as to Default. . . . . . . . . 86
SECTION 1408. Defeasance of Certain Obligations. . . . . . . . . . 87
SECTION 1409. Tender for the Securities upon Change of
Control Event. . . . . . . . . . . . . . . . . . . . 88
SECTION 1410. Waiver of Certain Covenants. . . . . . . . . . . . . 90
SECTION 1411. Deposit of Collateral. . . . . . . . . . . . . . . . 90
SECTION 1412. Ownership of Subsidiary Stock. . . . . . . . . . . . 90
SECTION 1413. Project Documents. . . . . . . . . . . . . . . . . . 91
<PAGE iv>
ARTICLE FIFTEEN
REDEMPTION OF SECURITIES. . . . . . . . . . . . 91
SECTION 1501. General Applicability of Article.. . . . . . . . . . 91
SECTION 1502. Election to Redeem; Notice to Trustee. . . . . . . . 91
SECTION 1503. Selection by Trustee of Securities to be
Redeemed.. . . . . . . . . . . . . . . . . . . . . . 91
SECTION 1504. Notice of Redemption.. . . . . . . . . . . . . . . . 92
SECTION 1505. Deposit of Redemption Price. . . . . . . . . . . . . 93
SECTION 1506. Securities Payable on Redemption Date. . . . . . . . 93
SECTION 1507. Securities Redeemed in Part. . . . . . . . . . . . . 94
ARTICLE SIXTEEN
PLEDGE OF SECURITY . . . . . . . . . . . . . 94
SECTION 1601. Pledge of Collateral.. . . . . . . . . . . . . . . . 94
SECTION 1602. Representations in Respect of the
Collateral.. . . . . . . . . . . . . . . . . . . . . 95
SECTION 1603. Further Assurances.. . . . . . . . . . . . . . . . . 96
SECTION 1604. Other Financing Statements and Liens.. . . . . . . . 97
SECTION 1605. Preservation of Rights.. . . . . . . . . . . . . . . 97
SECTION 1606. Voting, Consensual and Other Powers. . . . . . . . . 97
SECTION 1607. Payments on the Pledged Notes; Investments;
Application and Holding of Collateral. . . . . . . . 97
SECTION 1608. Additional Remedies. . . . . . . . . . . . . . . . .100
SECTION 1609. Removals.. . . . . . . . . . . . . . . . . . . . . .102
SECTION 1610. Private Sale.. . . . . . . . . . . . . . . . . . . .102
SECTION 1611. Deficiency.. . . . . . . . . . . . . . . . . . . . .102
SECTION 1612. Application of Proceeds. . . . . . . . . . . . . . .103
SECTION 1613. Attorney-in-Fact.. . . . . . . . . . . . . . . . . .103
SECTION 1614. Perfection.. . . . . . . . . . . . . . . . . . . . .103
SECTION 1615. Expenses.. . . . . . . . . . . . . . . . . . . . . .103
SECTION 1616. Opinions of Counsel as to Perfection.. . . . . . . .104
SECTION 1617. Additional Deposits of Cash Collateral.. . . . . . .104
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
ANNEX I Form of Debenture
<PAGE v>
INDENTURE AND SECURITY AGREEMENT, dated as of
September 15, 1993, between TEXAS-NEW MEXICO POWER COMPANY, a
corporation duly organized and existing under the laws of the
State of Texas (herein called the "Company"), having its
principal office at 4100 International Plaza, Fort Worth, Texas
76113, and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking
corporation, as trustee (herein called the "Trustee"), having its
corporate trust office at One State Street Plaza, New York, New
York 10004.
RECITALS OF THE COMPANY
A. The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of up to
$417.75 million aggregate principal amount of secured debentures
(herein called the "Securities") issuable from time to time in
one or more series.
B. The Company desires to create a series of
Securities in an aggregate principal amount of $140,000,000 to be
designated the "10-3/4% Secured Debentures, Series A, Due
September 15, 2003" (the "Series A Securities"), and all action
on the part of the Company necessary to authorize the issuance of
the Series A Securities under this Indenture has been duly taken.
C. Prior to the issuance of any Securities, the
Credit Agreements (such term and other capitalized terms used
herein having the meanings specified in Section 101) will be
amended to provide among other things for the issue of the
additional Pledged Notes in place of certain notes theretofore
issued thereunder.
D. The Replacement Notes issued pursuant to the Unit
1 Credit Agreement shall be secured pursuant to the Unit 1
Financing Facility Security Documents.
E. The Replacement Notes issued pursuant to the Unit
2 Credit Agreement shall be secured pursuant to the Unit 2
Financing Facility Security Documents.
F. In connection with the issuance of the Series A
Securities, the Company will deliver a Replacement Note to the
Trustee pursuant to Article Sixteen as security for the
performance of its obligations hereunder.
G. All things necessary to make this Indenture a
valid agreement of the Company, in accordance with its terms,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in
consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the
Securities or series thereof, as follows:
<PAGE 1>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles as applied in the
United States of America, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Article Ten, are
defined in that Article.
"Act," when used with respect to any Holder, has the
meaning specified in Section 104.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Application" means an application for the
authentication and delivery of Securities, the release of
property or the withdrawal of cash under any provision of this
Indenture and shall consist of, and shall not be deemed complete
<PAGE 2> until there shall have been delivered to the Trustee,
such cash, bonds, securities and documents as are required by
such provision to establish the right of the Company to the
action applied for. The date of a particular Application shall
be deemed to be the date of completion of all such deliveries to
the Trustee and not the date on any particular document so
delivered.
"Authenticating Agent" means any Person authorized to
authenticate and deliver Securities on behalf of the Trustee
pursuant to Section 1014.
"Board of Directors" means either the board of
directors of the Company or any duly authorized committee of that
Board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day," when used with respect to any office or
agency maintained by the Company pursuant to Section 1402, means
each day which is not a Saturday, a Sunday or a day on which
banking institutions in the location of such office or agency are
authorized or obligated by law to remain closed.
"Change of Control Event" means an event or the last of
a series of events by which
(i) any "person" or group of persons (as such
term is used in Section 13(d) and 14(d) of the Exchange Act
and the rules and regulations of the Securities and Exchange
Commission relating to such sections, as amended from time
to time), other than TNP Enterprises, Inc. ("TNPE") with
respect to the shares of the Company, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed
to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 40% of the total voting
power of all outstanding Common Stock of TNPE or of the
Company;
(ii) the Company consolidates with or merges into
another corporation (other than any such transaction between
the Company and a wholly owned Subsidiary of the Company)
and the Company is not the surviving entity, or the Company
conveys, transfers or leases substantially all of its
assets;
<PAGE 3>
(iii) TNPE or any subsidiary of TNPE, during any
period of 12 consecutive months, purchases or otherwise
acquires, directly or indirectly, beneficial ownership of
30% or more of the outstanding Common Stock of TNPE;
(iv) during any period of 24 consecutive months,
whether commencing before or after the date hereof, but
ending on or after the date hereof,
(a) individuals who at the beginning of such
24-month period constituted the board of directors
of TNPE, and
(b) any new director(s) who were elected or
recommended for election to the board of directors
of TNPE by a vote of at least a majority of the
directors then still in office who either were
directors at the beginning of such 24-month period
or whose election was previously so approved or so
recommended,
cease for any reason to constitute a majority of the board
of directors of TNPE; or
(v) on any day (a "Calculation Date"), the
Company makes any distribution or distributions of cash,
property or securities (other than regular quarterly
dividends on common or preferred stock) to the common
stockholders, or purchases or otherwise acquires outstanding
common stock of TNPE, and the sum of the fair market value
of such distribution or purchase, plus the fair market value
of all other such distributions and purchases which have
occurred during the period of 12 consecutive months ending
on such Calculation Date, exceeds 30% of the fair market
value of the outstanding common stock of TNPE. This
percentage is calculated on each Calculation Date by
determining the percentage of the fair market value of
TNPE's outstanding common stock as of such Calculation Date
which is represented by the fair market value of the
distributions and purchases which have occurred on such
date, and adding to that percentage all of the percentages
which have been similarly calculated on the dates of all
such distributions and purchases during the period of 12
consecutive months ending on such Calculation Date.
"Collateral" has the meaning specified in Section 1601.
"Commercial Paper" means commercial paper evidenced by
certificated securities (within the meaning of Section 8-102(1)
(a) of the Uniform Commercial Code) of corporate issuers
organized under the laws of the United States of America or any
political subdivision thereof maturing no more than 270 days from
the date of issuance thereof and having as of any date of
<PAGE 4> determination from any nationally recognized credit
rating agency the highest rating obtainable from such agency.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in
the first paragraph of this instrument until a successor
corporation shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by its
Chairman of the Board, its President or a Vice President, or, if
authorized by a power of attorney executed by any of such
officers, by such other person as may be authorized in such power
of attorney, and delivered to the Trustee.
"Corporate Trust Office" means the principal corporate
trust office of the Trustee in The Borough of Manhattan, The City
of New York, New York, at which at any particular time its
corporate trust business shall be administered, which office at
the date of execution of this Indenture is located at One State
Street Plaza, New York, New York 10004.
"Credit Agreements" means, collectively, the Unit 1
Credit Agreement and the Unit 2 Credit Agreement.
"Credit Agreement Notes" means, collectively, the
"Notes," as defined in the Unit 1 Credit Agreement, and the
"Notes," as defined in the Unit 2 Credit Agreement.
The term "corporation" includes corporations,
associations, companies and business trusts.
"Default" means any event which is, or that with the
passage of time or the giving of notice or both would become, an
Event of Default with respect to Securities of a series.
"Defaulted Interest" has the meaning specified in
Section 308.
"Event of Default" has the meaning specified in
Section 901.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
<PAGE 5>
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"IBJ" means IBJ Schroder Bank & Trust Company, a New
York banking corporation, acting in its individual capacity, and
any successor Trustee hereunder acting in its individual
capacity.
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest
on such Security.
"Lien" means, as to any Person, a mortgage, pledge,
lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance against real or personal property, or
a security interest of any kind (including any conditional sale
or other title retention agreement) any lease in the nature
thereof, any option or other agreement to sell and any filing of
or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
"Maturity," when used with respect to any Security,
means the date on which the principal of such Security becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.
"Officers' Certificate" means a certificate signed by
the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company; provided, that in respect of Section 1407(i),
Officers' Certificate means a certificate signed by the principal
executive officer, principal financial officer or principal
accounting officer, of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of
counsel, who may be an employee of or counsel for the Company, or
may be other counsel satisfactory to the Trustee.
"Outstanding," when used with respect to Securities,
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(i) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
<PAGE 6>
(ii) Securities, or portions thereof, for whose
payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities;
provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made; and
(iii) Securities which have been paid pursuant to
Section 307 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided that, in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed
not to be Outstanding, except that in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned as described in the preceding
sentence which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the
Company to pay the principal of or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment," when used with respect to the
Securities of any series, means the place or places where the
principal of and premium, if any and interest, if any, on the
Securities of that series are payable and where such Securities
may be registered or transferred as specified in or as
contemplated by Section 302(6).
<PAGE 7>
"Pledged Note" means, a Replacement Note, pledged or
required to be pledged to the Trustee pursuant to Article
Sixteen.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 307 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Project Documents" means, collectively, the "Project
Documents," as defined in the Unit 1 Credit Agreement, and the
"Project Documents," as defined in the Unit 2 Credit Agreement.
"Project Note" means, a "Project Note" as defined in
the Unit 1 Credit Agreement, and a "Project Note" as defined in
the Unit 2 Credit Agreement.
"Redemption Date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price," when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture, exclusive of accrued and
unpaid interest.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities means the date specified
for that purpose as contemplated by Section 302.
"Release Certificate" has the meaning specified in
Section 601.
"Replacement Note" means, a Replacement Note (i) as
defined in, and issued pursuant to, the Unit 1 Credit Agreement,
or (ii) as defined in, and issued pursuant to, the Unit 2 Credit
Agreement.
"Responsible Officer," when used with respect to the
Trustee, means the Chairman or Vice Chairman of the Board of
Directors, the Chairman or the Vice Chairman of the Executive
Committee of the Board of Directors, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such
<PAGE 8> matter is referred because of his knowledge of and
familiarity with the particular subject.
"Secured Obligations" means, collectively, (i) the
principal of, and premium, if any and interest on the Securities
and (ii) all obligations of the Company to the Trustee under
Sections 1007 and 1615.
"Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any
Securities authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 306.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section
308.
"Stated Maturity," when used with respect to any
Security or any installment of interest thereon, means the date
specified in such Security as the fixed date on which the
principal of such Security or such installment of interest is due
and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries,
or by the Company and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock which
ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder.
"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was
executed, except as provided in Section 1308.
"Uniform Commercial Code" means the Uniform Commercial
Code as in effect from time to time in the State of New York.
"Unit 1" means the first of two 150-megawatt,
circulating fluidized bed units which comprise TNP One, an
electrical generating facility located in Robertson County,
Texas, and all related property interests included in the term
"Mortgage Trust Estate," as defined in the Unit 1 First Lien
Mortgage.
<PAGE 9>
"Unit 1 Banks" means the banks or other holders of
Project Notes or participations therein from time to time parties
to the Unit 1 Credit Agreement.
"Unit 1 Credit Agreement" means the Unit 1 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992, among Texas-New Mexico Power Company, Texas
Generating Company, the Unit 1 Banks and The Chase Manhattan Bank
(National Association), as agent (in such capacity, together with
its successors in such capacity, the "Agent"), as the same may be
amended, corrected, supplemented, extended or restated from time
to time.
"Unit 1 Facility Purchase Agreement" shall mean the
First Amended and Restated Facility Purchase Agreement, between
TNP and TGC, dated as of January 8, 1992, as the same may be
amended, corrected, supplemented, extended or restated from time
to time.
"Unit 1 Financing Facility Security Documents" means
(i) the Unit 1 First Lien Mortgage, (ii) the Second Lien Mortgage
and Deed of Trust dated as of December 1, 1987, executed and
delivered by the Company to Donald H. Snell as Mortgage Trustee,
(iii) the Assignment and Security Agreement between the Company
and the Agent under the Unit 1 Credit Agreement dated as of
December 1, 1987 and (iv) the Assignment and Security Agreement
between Project Funding Corporation and the Agent under the Unit
1 Credit Agreement dated as of December 1, 1987, as each of the
same has been and further may be amended, corrected, supplemented
or extended.
"Unit 1 First Lien Mortgage" shall mean the Mortgage
and Deed of Trust dated to be effective December 1, 1987, between
Project Funding Corporation, as mortgagor, and Donald H. Snell,
as Mortgage Trustee, creating a first lien on Unit 1.
"Unit 2" means the second of two 150-megawatt,
circulating fluidized bed units which comprise TNP One, and all
related property interests included in the term "Mortgage Trust
Estate," as defined in the Unit 2 First Lien Mortgage.
"Unit 2 Banks" means the banks or other holders of
Project Notes or participations therein from time to time parties
to the Unit 2 Credit Agreement.
"Unit 2 Credit Agreement" means the Unit 2 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992 among Texas-New Mexico Power Company, Texas
Generating Company II, the Unit 2 Banks and The Chase Manhattan
Bank (National Association), as Agent, as the same may be
amended, corrected, supplemented, extended or restated from time
to time.
<PAGE 10>
"Unit 2 Facility Purchase Agreement" shall mean the
First Amended and Restated Facility Purchase Agreement, between
TNP and TGC II, dated as of January 8, 1992, as the same may be
amended, corrected, supplemented, extended or restated from time
to time.
"Unit 2 Financing Facility Security Documents" means
(i) the Unit 2 First Lien Mortgage, (ii) the Second Lien Mortgage
and Deed of Trust dated as of December 1, 1987, executed and
delivered by the Company to Donald H. Snell, as Mortgage Trustee,
(iii) the Assignment and Security Agreement between the Company
and the Agent under the Unit 2 Credit Agreement, dated as of
October 1, 1988, and (iv) the Assignment and Security Agreement
between Texas PFC, Inc. and the Agent under the Unit 2 Credit
Agreement, dated as of October 1, 1988, as each of the same have
been and may further be amended, corrected, supplemented or
extended.
"Unit 2 First Lien Mortgage" shall mean the Mortgage
and Deed of Trust dated to be effective as of October 1, 1988,
between Texas PFC, Inc., as mortgagor, and Donald H. Snell, as
Mortgage Trustee, creating a first lien on Unit 2.
"U.S. Government Obligations" means direct obligations
of the United States of America (denominated in such coin or
currency of the United States of America as is at the time of
payment legal tender for the payment of public and private debts)
for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as
an agency or instrumentality of the United States of America and
the payment of which is unconditionally guaranteed by the United
States of America, and shall also include a depositary receipt
issued by a bank or trust company as custodian with respect to
any such U.S. Government Obligation or a specific payment of
interest on or principal of any such U.S. Government Obligation
held by such custodian for the account of a holder of a
depositary receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such
depositary receipt.
"Vice President," when used with respect to the Company
or the Trustee, means any vice president or assistant vice
president, whether or not designated by a number or a word or
words added before or after the title "vice president" or
"assistant vice president".
<PAGE 11>
SECTION 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this
Indenture, upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture
(other than the Officers' Certificate delivered pursuant to
Section 1407(i)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or
investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such
covenant or condition has been complied with;
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with; and
(5) in the case of an Officers' Certificate, a
statement that no Event of Default exists under this
Indenture.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
<PAGE 12> Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in Person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company.
Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 1001)
conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument, writing or proxy may be proved by the
affidavit of a witness of such execution or by a certificate of a
notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing
such instrument, writing or proxy acknowledged to him the
execution thereof. Where such execution is by a signer acting in
a capacity other than his or her individual capacity, such
<PAGE 13> certificate or affidavit shall also constitute
sufficient proof of his or her authority. The fact and date of
the execution of any such instrument, writing or proxy, or the
authority of the Person executing the same, may also be proved in
any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(e) The Company may, but shall not be obligated to,
fix a record date for the purpose of determining the Holders
entitled to take any action under this Indenture by vote or
consent. Such record date shall be the later of 30 days prior to
the first solicitation of such consent or vote or the date of the
most recent list of Holders furnished to the Trustee pursuant to
Section 1101 prior to such solicitation. If a record date is
fixed, those Persons who were Holders of Securities at such
record date (or their duly designated proxies), and only those
Persons, shall be entitled to take such action by vote or consent
or to revoke any vote or consent previously given, whether or not
such Persons continue to be Holders after such record date;
provided, however, that unless such vote or consent is obtained
from the Holders (or their duly designated proxies) of the
requisite principal amount of Outstanding Securities prior to the
date which is the 90th day after such record date, any such vote
or consent previously given shall automatically and without
further action by any Holder be cancelled and of no further
effect.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust
Administration Department, or
(2) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
<PAGE 14> herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at
the address of its principal office specified in the first
paragraph of this Indenture or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event
to Holders, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his or her address as it appears in the Security
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be
filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon
such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a
sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts
with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
<PAGE 15>
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by any
party hereto shall bind such parties and its successors and
assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and the Holders, any
benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the internal laws of the State
of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security shall not be a Business
Day with respect to any office or agency maintained by the
Company pursuant to Section 1402, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of
interest or principal and premium, if any, need not be made at
such office or agency on such date, but may be made on the next
succeeding Business Day at such office or agency with the same
force and effect as if made on the Interest Payment Date,
Redemption Date or at the Stated Maturity; provided that no
interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may
be.
<PAGE 16>
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially
the form set forth in this Article, or in such other form as
shall be established by or pursuant to Article Four or in a Board
Resolution or in one or more indentures supplemental hereto, in
each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officer or officers executing such Securities,
as evidenced by the officer's or officers' execution of the
Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified
by the Secretary or Assistant Secretary of the Company, or any
other authorized officer of the Company, and delivered to the
Trustee at or prior to the delivery of the Company Order
contemplated by Section 304 for the authentication and delivery
of such Securities.
Certificates of authentication relating to the
Securities shall be in substantially the form set forth in this
Article or in Section 1014.
The definitive Securities shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officer or
officers executing such Securities, as evidenced by the officer's
or officers' execution of such Securities.
<PAGE 17>
<PAGE>
SECTION 202. Form of Face of Security.
The face of the Security shall be in substantially the
form set forth below:
TEXAS-NEW MEXICO POWER COMPANY
% Secured Debentures, Series ___, Due
No.__________ $__________
TEXAS-NEW MEXICO POWER COMPANY, a corporation
duly organized and existing under the laws of the State
of Texas (herein called the "Company," which term
includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby
promises to pay to __________________, or registered
assigns, the principal sum of _________ Dollars on
_______________, and to pay interest thereon from
_______________, or from the most recent Interest
Payment Date to which interest has been paid or duly
provided for, semi-annually on ________________ and
_____________ in each year, commencing _______________,
at the rate per annum provided in the title hereof,
until the principal hereof is paid or made available
for payment, and, subject to the terms of the
Indenture, at the rate per annum provided in the title
hereof on any overdue principal and premium, if any,
and (to the extent that the payment of such interest
shall be legally enforceable) on any overdue
installment of interest. The interest so payable, and
punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such
interest, which shall be the ___________ or ___________
(whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on
such Regular Record Date and may either (i) be paid to
the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, in
which event notice whereof shall be given to Holders
not less than 10 days prior to such Special Record
Date, or (ii) be paid at any time in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which the Securities may be
<PAGE 18> listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if
any) and interest on this Security will be made at the
office or agency of the Company maintained for that
purpose in The Borough of Manhattan, The City of New
York, in such coin or currency of the United States of
America as at the time of payment is legal tender for
the payment of public and private debts; provided that
at the option of the Company payment of interest may be
made by check mailed to the address of the Person
entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further
provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication
hereon has been executed by the Trustee referred to on
the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed under its corporate
seal.
Dated:
[Seal] TEXAS-NEW MEXICO POWER COMPANY
By_______________________
[Title]
SECTION 203. Form of Reverse of Security.
The reverse of the Security shall be in substantially
the form set forth below:
TEXAS-NEW MEXICO POWER COMPANY
______% Secured Debentures, Series ____, Due _______
This Security is one of a duly authorized
issue of securities of the Company (herein called the
"Securities"), issued and to be issued in one or more
series limited in aggregate principal amount to
$417.75 million under an Indenture and Security
<PAGE 19> Agreement, dated as of September 15, 1993 (herein
called the "Indenture"), between the Company and IBJ Schroder
Bank & Trust Company, as trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be,
authenticated and delivered.
As provided in the Indenture, the Securities are
issuable in series which may vary as in the Indenture
provided or permitted. This Security is one of the series
designated on the face hereof [, limited in aggregate
principal amount to $___________].
[If applicable, insert This security is not
subject to redemption prior to maturity.]
[If applicable, insert The Securities of
this series are subject to redemption upon not less
than 30 nor more than 60 days' notice by mail to the
Holders of such Securities at their addresses in the
Security Register for such series, as a whole or in
part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the
principal amount):
If redeemed [on or before ______________,
____%, and if redeemed] during the 12-month period
beginning __________, of the years indicated:
Year
Redemption
Price
Year
Redemption
Price
and thereafter at Redemption Price equal to ___% of the
principal amount, together in the case of any such
redemption with accrued and unpaid interest to the
Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture. If
this Security be called for redemption and payment duly
provided therefor as specified in the Indenture,
interest shall cease to accrue on the date fixed for
redemption.]
<PAGE 20>
[In the event of a redemption of this Security in
part only, a new Security or Securities of this series and
of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon cancellation
hereof.]
The Indenture contains provisions for
defeasance of (a) the entire indebtedness evidenced by
this Security and (b) certain restrictive covenants, in
either case upon compliance by the Company with certain
conditions set forth therein.
Pursuant to Article Sixteen of the Indenture,
the Company has delivered certain collateral to the
Trustee. Such collateral, and certain other collateral
that may be received by the Trustee in respect thereof,
shall secure the performance of the Company's
obligations under the Securities. Under certain
circumstances, from time to time property comprising
the Collateral may be released. Upon meeting certain
requirements, the Company may issue additional
Securities which will be secured pari passu by the
Collateral.
If an Event of Default shall occur and be
continuing, the principal of the Securities, and all
accrued and unpaid interest thereon, may be declared
due and payable in the manner and with the effect
provided in the Indenture. With limited exceptions,
the Trustee may not file or join in the filing of any
bankruptcy or similar petition for a period of six
months from the date on which an Event of Default shall
have occurred under the Indenture.
The Indenture permits, with certain
exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of
the Company and the rights of the Holders of each
series to be affected under the Indenture at any time
by the Company and the Trustee with the consent of the
Holders of 66-2/3% in principal amount of the
Securities at the time Outstanding (as defined in the
Indenture) of all series to be affected. The Indenture
also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding,
on behalf of the Holders of all Securities of such
series, by written consent to waive compliance by the
Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their
consequences. The Indenture also permits, with certain
exceptions as therein provided, the Company and the
Trustee to enter into one or more amendments,
<PAGE 21> modifications or waivers or supplements to the Credit
Agreements, the Pledged Notes and the Project Documents, as
defined in the Indenture, with the consent of the Holders of at
least 51% in principal amount of the Securities at the time
Outstanding. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no
provision of this Security or of the Indenture shall
alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of
(and premium, if any) and interest on this Security at
the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register,
upon surrender of this Security for registration of
transfer at the office or agency of the Company
maintained for that purpose, which at the date hereof,
shall be the Corporate Trust Office, duly endorsed by,
or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon
one or more new Securities of this series and of like
tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable
only in registered form without coupons in
denominations of $_____ and any integral multiple
thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate
principal amount of Securities of this series and of
like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection
therewith.
<PAGE 22>
Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice
to the contrary.
This Security shall be governed by and
construed in accordance with the laws of the State of
New York.
All terms used in this Security which are
defined in the Indenture shall have the meanings
assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
The Trustee's Certificate of Authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series
designated herein and referred to in the
within-mentioned Indenture.
___________________________________,
as Trustee
By___________________________
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 301. Limitations on Issuance; Issuable in Series.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited in
aggregate principal amount to $417.75 million.
The Securities may be issued in series as from time to
time authorized by the Board of Directors.
With respect to the Securities of any particular
series, the Company may incorporate in or add to the general
title of such Securities any words, letters or figures to
distinguish that series.
<PAGE 23
SECTION 302. Terms of Particular Series.
The Securities of each such series shall be direct,
secured obligations of the Company and rank without preference or
priority among themselves and be secured by the Collateral pari
passu with all existing and future Securities issued under this
Indenture. The Securities of any such series shall not, so long
as Series A Securities are outstanding, have a Stated Maturity or
be redeemable prior to the Stated Maturity of the Series A
Securities or be entitled to the benefit of any sinking,
amortization, improvement or other analogous fund. There shall
be established in or pursuant to a Board Resolution, and (subject
to Section 304) set forth or determined in the manner provided in
an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of
Securities of any series other than Series A Securities, the
terms of which are set forth in Article Four:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from all
other Securities);
(2) any limit upon the aggregate principal amount of
the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of
the series pursuant to Sections 305, 306, 307, 1309, or 1507
and except for any Securities which, pursuant to Section
305, are deemed never to have been authenticated and
delivered hereunder);
(3) the Person to whom any interest on a Security of
the series shall be payable, if other than the person in
whose name the Security (or one or more Predecessor
Securities) is registered at the close of business on the
regular Record Date for such interest;
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates (or the formula pursuant to
which such rate or rates shall be determined) at which the
Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be
payable and the Regular Record Date for the interest payable
on any Interest Payment Date;
(6) the place or places, if any, in addition to or in
the place of the Corporate Trust Office, where the principal
of and premium, if any, and interest, if any, on Securities
<PAGE 24> of the series shall be payable and where such
Securities may be registered or transferred;
(7) if applicable, the period or periods within which,
the price or prices at which and the terms and conditions
upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem
or purchase Securities of the series at the option of a
Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than in denominations of $1,000 and any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of
the Maturity thereof pursuant to Section 902;
(11) if the principal of (and premium, if any) or
interest, if any, on the Securities of the series are to be
payable, at the election of the Company or a Holder thereof,
in a coin or currency other than that in which the
Securities are stated to be payable, the period or periods
within which, and the terms and conditions upon which, such
election may be made;
(12) if the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of
the series may be determined with reference to an index
based on a coin or currency other than that in which the
Securities are stated to be payable, the manner in which
such amounts shall be determined;
(13) any provisions permitted by this Indenture
relating to Events of Default or covenants of the Company
with respect to such series of Securities; and
(14) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture).
The several series of Securities may differ from the
Series A Securities and as between series in any respect not in
conflict with the provisions of this Indenture.
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided in or pursuant to the Board Resolution referred to
<PAGE 25> above and (subject to Section 304) set forth in the
Officers' Certificate referred to above or in any such indenture
supplemental hereto. All Securities of any one series need not
be issued at one time and, unless otherwise provided, a series
may be reopened for issuances of additional Securities of such
series or to establish additional terms of such series of
Securities.
Payment of the principal of and interest on the
Securities will be made at the office or agency of the Company
maintained for that purpose pursuant to Section 1402, in such
coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private
debts; provided that, at the option of the Company payment of
interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security
Register.
If any of the terms of the series, including the form
of Security of such series, is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record
of such action shall be certified by the Secretary or an
Assistant Secretary or other authorized officer of the Company,
and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 304 for the authentication
and delivery of such series of Securities. If all of the
Securities of any series established by action taken pursuant to
a Board Resolution are not to be issued at one time, it shall not
be necessary to deliver a record of such action at the time of
issuance of each Security of such series, but an appropriate
record of such action shall be delivered at or before the time of
issuance of the first Security of such series.
SECTION 303. Denominations.
The Securities of each series shall be issuable in
registered form without coupons, except as otherwise expressly
provided in a supplemental indenture hereto, in such
denominations as shall be specified as contemplated by Section
302. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and in integral multiples
thereof.
SECTION 304. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its
corporate seal reproduced thereon, and which need not be
attested. The Securities of any series shall be executed by such
additional officer, if any, as shall be specified pursuant to a
<PAGE 26> Board Resolution. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signature of
any individual who was at any time the proper officer of the
Company shall bind the Company, notwithstanding that such
individual has ceased to hold such office prior to the
authentication and delivery of such Securities or did not hold
such office at the date of authentication of such Securities.
At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee
for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee
in accordance with the Company Order shall authenticate and
deliver such Securities as in this Indenture provided and not
otherwise.
If the form or terms of the Securities of the series
have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 302, in
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and
(subject to Sections 1001 and 1003) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been
established by or pursuant to Board Resolution as permitted
by Section 201, that such form has been established in
conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been
established by or pursuant to Board Resolution as permitted
by Section 302, that such terms have been established in
conformity with the provisions of this Indenture; and
(c) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such
Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties, protections or immunities under the
<PAGE 27> Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to Trustee.
Notwithstanding the provisions of Sections 302 and 501
and of the preceding paragraph, if all Securities of a series are
not to be originally issued at one time, it shall not be
necessary to deliver the Officer's Certificate otherwise required
pursuant to Section 501 or the Company Order and Opinion of
Counsel otherwise required pursuant to such preceding paragraph
at or prior to the time of authentication of each Security of
such series if such documents are delivered at or prior to the
time of authentication upon original issuance of the first
Security of such series to be issued.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to
the Trustee for cancellation as provided in Section 310 together
with a written statement (which need not comply with Section 102
and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued and sold by the Company,
for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
SECTION 305. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officer or officers
executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of
<PAGE 28> such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary
Securities of such series at any office or agency of the Company
maintained pursuant to Section 1402, without charge to the
Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of the same series
and of like tenor of authorized denominations. Until so
exchanged, the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 306. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency of the Company
maintained pursuant to Section 1402 being herein sometimes
collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
At the option of the Holder, any Security or Securities
of any series may be exchanged for other Securities of the same
series, of any authorized denominations and of a like aggregate
principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Upon surrender for registration of transfer of any
Security of any series at the office or agency of the Company
maintained for such purpose pursuant to Section 1402, the Company
shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more
new Securities of the same series of any authorized denominations
and of a like aggregate principal amount and tenor.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied
<PAGE 29>
by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his or her attorney duly
authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Sections 305, 1309 or 1507 not
involving any transfer.
The Company shall not be required (i) to issue,
register the transfer of or exchange Securities of any series
during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section
1503 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the
Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of
the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the
Trustee
(i) evidence to their satisfaction of the
destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required
by them to save each of them and any agent of either of them
harmless,
then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like
tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security,
pay such Security.
<PAGE 30>
Upon the issuance of any new Security under this
Section, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series
duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
SECTION 308. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in paragraph (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of
such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause
<PAGE 31>
provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such
series at his or her address as it appears in the Security
Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to
the paragraph (2) below.
(2) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such
Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 308) interest on such Security and
for all other purposes whatsoever, whether or not such Security
be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary. All such payments so made to any such person, or upon
such person's order, shall be valid, and, to the extent of the
sums so paid, effectual to satisfy and discharge the liability
for moneys payable upon any such Security.
<PAGE 32>
SECTION 310. Cancellation.
All Securities surrendered for payment, redemption or
registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and
shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever and may deliver to the Trustee
for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed
by a Company Order.
SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by
Section 302 for Securities of any series, interest, if any, on
the Securities of each series shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE FOUR
TERMS AND ISSUE OF SERIES A SECURITIES
SECTION 401. Specific Title, Terms and Forms.
Series A Securities shall be the initial series of
Securities issued by the Company under this Indenture. The form
thereof shall be substantially as set forth in Annex I hereto,
the terms of which are herein incorporated by reference, with
such insertions, omissions, substitutions and variations as may
be determined by the officers executing the same as evidenced by
their execution thereof to reflect the applicable terms of the
Series A Securities established by this Article.
The Stated Maturity of the Series A Securities shall be
September 15, 2003. The aggregate principal amount of the Series
A Securities which may be authenticated and delivered under this
Indenture is limited to $140,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to
Section 305, 306, 307, 1309 and 1507.
The Series A Securities shall bear interest at the rate
per annum provided in the title thereof from September 15, 1993
<PAGE 33> or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on
March 15 and September 15 in each year, commencing March 15,
1994, until the principal thereof is paid or made available for
payment, and, subject to the terms of this Indenture, at the rate
per annum provided in the title thereof on any overdue principal,
premium (if any) and (to the extent that the payment of such
interest shall be legally enforceable) on any overdue installment
of interest.
The principal of, and premium, if any and interest on
the Series A Securities shall be payable at the office or agency
of the Company maintained for that purpose, which at the date
hereof shall be the Corporate Trust Office; provided, that, at
the option of the Company payment of interest may be made by
check, mailed to the address of the Person entitled thereto at
such address as shall appear in the Security Register.
SECTION 402. Redemption.
From and after September 15, 2000, the Series A
Securities shall be redeemable, in accordance with Article
Fifteen, in whole or in part, at the option of the Company from
time to time. The Redemption Price shall be 100% of the
principal amount of each Series A Security.
SECTION 403. Authentication and Delivery.
The Series A Securities shall be executed by the
Company and delivered to the Trustee for authentication and the
same shall be authenticated and delivered by the Trustee up to
the aggregate principal amount of $140,000,000 upon receipt of:
(a) a Replacement Note issued pursuant to the Unit 1
Credit Agreement in the principal amount of $140,000,000,
and pledged to the Trustee pursuant to Article Sixteen;
(b) an Officers' Certificate dated the date of the
authentication and delivery of such Securities certifying
that (i) there has been delivered to the Trustee true and
correct copies of the Unit 1 Credit Agreement and the Unit 2
Credit Agreement and all other Project Documents, (ii) no
Default exists and (iii) all conditions precedent provided
for in this Indenture relating to authentication and
delivery of such Securities have been complied with; and
(c) an Opinion of Counsel required by Section 501(e)
of this Indenture stating, among the other opinions required
therein, that Texas Generating Company has title to a
205/345 undivided interest in Unit 1 and the property
<PAGE 34>
appurtenant thereto which comprise the "Mortgage Trust
Estate" as defined in the Unit 1 First Lien Mortgage.
ARTICLE FIVE
AUTHENTICATION AND DELIVERY OF ADDITIONAL SECURITIES
SECTION 501. Authentication and Delivery of Additional
Securities upon Basis of Available or Additional
Collateral.
In addition to the principal amount of Series A
Securities whose authentication and delivery is provided for in
Article Four, additional Securities of any one or more series
(other than Series A Securities) may from time to time be
executed by the Company and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and
delivered by the Trustee upon compliance with the conditions set
forth below and upon receipt by the Trustee of the following:
(a) A Company Order requesting the authentication and
delivery of a specified principal amount of Securities of a
designated series.
(b) An Officers' Certificate, dated the date of the
authentication and delivery of such Securities, stating that
(1) the Securities whose authentication and
delivery are then applied for shall be secured without
priority or preference among themselves by the pledge or
prior pledge of one or more Replacement Notes, which
Replacement Note or Notes shall be secured by the
"Collateral", as defined in the applicable Unit 1 Credit
Agreement or Unit 2 Credit Agreement, pari passu with all
other outstanding debt secured thereby;
(2) the aggregate principal amount of Pledged
Notes securing the Securities whose authentication and
delivery are then applied for and all other Outstanding
Securities is either (a) not less than the aggregate
principal amount of such Securities and all other
Outstanding Securities, or (b) if it is less than the
aggregate principal amount of such Securities and all other
Outstanding Securities, the Officers' Certificate shall
specify the amount by which the aggregate principal amount
of pledged Replacement Notes is so less (such amount so
specified being referred to as the "Required Additional
Collateral");
(3) if there is Required Additional Collateral
specified in (2) above, that there will be delivered to the
Trustee pursuant to Article Sixteen prior to the
<PAGE 35> authentication and delivery of the Securities then
being applied for a Replacement Note in aggregate principal
amount not less than the amount of Required Additional
Collateral;
(4) the amount of indebtedness outstanding under
the Unit 1 Credit Agreement and the Unit 2 Credit Agreement
does not exceed the dollar amount which results from
subtracting from $417,750,000 the amounts paid by the
Company since the issuance of the Series A Securities which
have resulted in further transfers of undivided interests in
Unit 1 and Unit 2 to the Company and which have been
released from the lien of either the Unit 1 First Lien
Mortgage or the Unit 2 First Lien Mortgage (such amount so
specified being referred to as the "Maximum Indebtedness
Amount"), specifying the amount of such indebtedness; and
(5) no Default exists and that all conditions
precedent provided for in this Indenture relating to the
authentication and delivery of the Securities whose
authentication and delivery are then applied for have been
complied with.
(c) If there is any Required Additional Collateral
specified in the Officers' Certificate required by (b)
above, a pledge to the Trustee of a Replacement Note
accompanied by such Replacement Note in an aggregate
principal amount equal to the amount of such Required
Additional Collateral.
(d) Such instruments of conveyance, transfer,
assignment and/or release, as the case may be, necessary to
vest in the Trustee as a part of the Collateral all right,
Title and interest of the Company in and to the Replacement
Notes so described or an Opinion of Counsel that no such
instruments are necessary for such purpose.
(e) An Opinion of Counsel (which may be based on
opinions of other counsel deemed by him reliable), dated the
date of authentication and delivery of such Securities, to
the effect that:
(1) the Company has complied with the
requirements, if any, of any tax or recording or filing
law, including any cash deposit, applicable to the
issuance of the Securities then applied for, or stating
that there is no such legal requirement;
(2) the Company has received all required
authorizations, approvals and consents of or to the
issuance by the Company of the Securities whose
authentication and delivery are then applied for by any
Federal, State or other governmental regulatory agency
at the time having jurisdiction in the premises, or
<PAGE 36>
stating that no such authorization, approval or consent
is required;
(3) none of the Collateral is subject to a Lien
prior to the Lien of this Indenture;
(4) all conditions precedent provided for in this
Indenture relating to the authentication and delivery
of such Securities have been complied with;
(5) such Securities, when executed by the Company
and authenticated and delivered by the Trustee and when
issued by the Company, will be the legal, valid and
binding obligations of the Company enforceable in
accordance with their terms and the terms of this
Indenture (subject to any applicable bankruptcy,
insolvency or other laws affecting creditors' rights
generally), and entitled to the benefits of and secured
by the Lien of this Indenture equally and ratably with
all other Outstanding Securities;
(6) Texas Generating Company has, or upon
delivery of the instruments of conveyance, transfer or
assignment, if any, specified in such Opinion will
have, Title to the specified undivided interest in and
to Unit 1 and the property appurtenant thereto which
comprise the "Mortgage Trust Estate" as defined in the
Unit 1 First Lien Mortgage subject only to Permitted
Liens under the Unit 1 Credit Agreement;
(7) Texas Generating Company II has, or upon
delivery of the instruments of conveyance, transfer or
assignment, if any, specified in such Opinion will
have, Title to the specified undivided interest in and
to Unit 2 and the property appurtenant thereto which
comprise the "Mortgage Trust Estate" as defined in the
Unit 2 First Lien Mortgage subject only to Permitted
Liens under the Unit 2 Credit Agreement;
(8) the Indenture is a lien upon the Replacement
Notes securing the Securities being authenticated and
delivered; and
(9) the documents which have been or are
therewith delivered to the Trustee conform to the
requirements of this Indenture for an application for
the action applied for and, upon the basis of such
Application, the Securities applied for may be lawfully
authenticated and delivered and all conditions
precedent herein provided for relating to such
authentication and delivery have been complied with.
<PAGE 37>
(f) The documents and any cash deposit specified in
such Opinion of Counsel, which cash deposit, if any, shall be
held by the Trustee as part of the Collateral and applied by the
Trustee for the purpose specified therein and, to the extent that
such cash deposit ultimately proves to be excessive, returned to
the Company upon Company Request.
(g) "Title," for the purpose of any provision of this
Section requiring an Opinion of Counsel that the Company has
Title to any property, means such title, which may be in an
undivided interest, whether fairly deducible of record or based
upon prescriptive rights (or as to personal property, based on
such evidence as Counsel shall determine to be sufficient), as in
the opinion of Counsel is satisfactory for the use thereof in
connection with the operations of the Company, and Counsel in
giving such opinion may disregard any irregularity or deficiency
in the record evidence of title which, in the opinion of such
Counsel, can be cured by proceedings within the power of the
Company or does not substantially impair the usefulness of such
property for the purpose of the Company and may base such opinion
upon his own investigation or upon affidavits, certificates,
abstracts of title, statements or investigations made by Persons
in whom such Counsel has confidence or upon examination of a
certificate or guaranty of title or policy of title insurance in
which he has confidence.
ARTICLE SIX
RELEASES
SECTION 601. General Provisions.
So long as no Event of Default shall have occurred and
be continuing, from time to time, the Company may withdraw
Pledged Notes comprising Collateral, to the extent of Collateral
Available for Release, as defined herein, and the Trustee shall
release such Pledged Notes from the lien of this Indenture upon
Company Request, upon compliance with the conditions set forth
below and upon receipt in each case by the Trustee of the
following:
(a) An Officers' Certificate hereafter in this Section
referred to as a "Release Certificate," dated the date of the
release, stating that:
(1) in the opinion of the signers, the release
will not impair the security under this Indenture in
contravention of the provisions herein and that all
conditions precedent herein relating to such release have
been complied with, and describing the Pledged Notes to be
released;
<PAGE 38>
(2) no Event of Default shall have occurred and
be continuing;
(3) the aggregate principal amount of Pledged
Notes securing Outstanding Securities is greater than the
aggregate principal amount of Outstanding Securities,
specifying the amount by which the aggregate principal
amount of Pledged Notes is greater than the amount of
Outstanding Securities (such amount so specified being
referred to as the "Collateral Available for Release");
(4) if there is Collateral Available for Release
specified in (3) above, the identity of the Securities,
specifying the amount, series and interest rate thereof,
which have been paid down resulting in there being
Collateral Available for Release, and the amount, series and
interest rate of the Pledged Notes the release or reduction
of which is being requested;
(5) after such release, (i) the amount of
indebtedness outstanding under the Unit 1 Credit Agreement
and the Unit 2 Credit Agreement will not exceed the Maximum
Indebtedness Amount and (ii) that the maturity and terms of
the remaining Pledged Notes will match the maturity and
terms of the Outstanding Securities; and
(6) no Default exists.
(b) Such instruments of release, including but not
limited to those instruments required pursuant to the provisions
of Section 314(d) of the Trust Indenture Act, necessary to
release that part of the Collateral the release of which is being
requested or an Opinion of Counsel that no such instruments are
necessary for such purpose.
(c) An Opinion of Counsel (which may be based on
opinions of other counsel deemed by him reliable), dated the date
of the release of Collateral to the effect that:
(1) the Company has received all required authorizations,
approvals and consents of or to the release of Collateral then
applied for by any Federal, State or other governmental
regulatory agency at the time having jurisdiction in the
premises, or stating that no such authorization, approval or
consent is required;
(2) all conditions precedent provided for in this
Indenture relating to the release of Collateral have been
complied with;
(3) Texas Generating Company has, and after the
requested release of Collateral will have, Title to the
specified undivided interest in and to Unit 1 and the
<PAGE 39>
property appurtenant thereto which comprise the
"Mortgage Trust Estate" as defined in the Unit 1 First Lien
Mortgage subject only to Permitted Liens under the Unit 1 Credit
Agreement;
(4) Texas Generating Company II has, and after
the requested release of Collateral will have, Title to the
specified undivided interest in and to Unit 2 and the
property appurtenant thereto which comprise the "Mortgage
Trust Estate" as defined in the Unit 2 First Lien Mortgage
subject only to Permitted Liens under the Unit 2 Credit
Agreement;
(5) the Indenture is a lien upon the Pledged
Notes securing the Outstanding Securities; and
(6) the documents which have been or are
therewith delivered to the Trustee conform to the
requirements of this Indenture for an application for the
action applied for and, upon the basis of such Application,
the Collateral applied to be released may be lawfully
released and all conditions precedent herein provided for
relating to such authentication and delivery have been
complied with.
(d) In lieu of a release of a Pledged Note in
accordance with this Article, upon compliance with this Section
601 the Trustee shall permit the Company to reduce the principal
amount of a Pledged Note or the principal amounts of more than
one Pledged Note, as specified in the Release Certificate and the
aggregate amount of such principal reduction or reductions shall
be deemed to be a release of Collateral for all purposes under
this Indenture.
A reduction in the principal amount of a Pledged Note
shall be effected by a notation thereon substantially as follows:
"Pursuant to Section 601 of the Indenture and Security
Agreement between Texas-New Mexico Power Company and
IBJ Schroder Bank & Trust Company, Trustee, dated as of
September 15 1993, and an Application dated
__________________, the principal amount of this note
is reduced to $ _________________________________."
Said notation shall be followed by the endorsement of
any of the Persons designated to sign the Company Request.
SECTION 602. Termination.
Notwithstanding any provisions herein to the contrary,
upon Company Request, when this Indenture shall have been
satisfied and discharged as provided in Article Eight or when no
Securities shall be outstanding and the Company shall have paid
<PAGE 40> all obligations of the Company under this Indenture,
this Indenture shall terminate, and the Trustee shall forthwith
cause to be assigned, transferred and delivered, against receipt
but without any recourse, warranty or representation whatsoever,
any remaining Collateral and money received in respect thereof,
to or on the order of the Company.
SECTION 603. Terms of Release.
Any release of Collateral or any money held hereunder
by the Trustee shall be made to or on the order of the Company by
appropriate document of assignment, transfer, and release and by
delivery against receipt but without any recourse, warranty or
representation whatsoever.
ARTICLE SEVEN
[Reserved]
ARTICLE EIGHT
DEFEASANCE
SECTION 801. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be
of further effect (except as to any surviving rights of
registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, at the expense of the
Company, shall (i) execute proper termination statements and
instruments acknowledging satisfaction and discharge of this
Indenture and (ii) pay, assign, transfer and deliver to the
Company or upon Company Order all cash, securities and other
personal property then held by it hereunder as a part of the
Collateral, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (x) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 307 and (y) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1403) have been
delivered to the Trustee for cancellation; or
<PAGE 41>
(B) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) are deemed paid and discharged pursuant
to Section 803,
and the Company, in the case of clause (1)(B)(i), (ii)
or (iii) above, has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust
for the purpose an amount of
(a) money (denominated in such coin or
currency of the United States of America as is at
the time of payment legal tender for the payment
of public and private debts), or
(b) in the case of clause (1)(B)(ii) or
(iii) above
(I) U.S. Government Obligations
(denominated in such coin or currency of the
United States of America as is at the time of
payment legal tender for the payment of
public and private debts) which through the
payment of interest and principal (and
premium, if any) in respect thereof in
accordance with their terms will provide not
later than one day before the Stated Maturity
or Redemption Date, as the case may be, of
the principal of (and premium, if any) and
each installment of interest on the
Securities, money in an amount, or
(II) a combination of money and U.S.
Government Obligations in each case as
provided above,
in any case sufficient, in the opinion of a nationally
recognized firm of independent certified public
accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge
the principal of (and premium, if any) and each
installment of interest on the Outstanding Securities
to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be, of
such principal or installment of interest;
<PAGE 42>
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 1007, the obligations of the Company to any
Authenticating Agent under Section 1014 and, if money shall have
been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section or if money or U.S. Government
Obligations shall have been deposited with or received by the
Trustee pursuant to Section 803, the obligations of the Trustee
under Section 802 and the last paragraph of Section 1403 shall
survive.
SECTION 802. Application of Trust Money.
(a) Subject to the provisions of the last paragraph of
Section 1403, all money or U.S. Government Obligations deposited
with the Trustee pursuant to Section 801, 803 or 1408 and all
money received by the Trustee in respect of U.S. Government
Obligations deposited with the Trustee pursuant to Section 801,
803 or 1408, shall be held in trust and such money and the
proceeds of such U.S. Government Obligations applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent), to
the persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited
with or received by the Trustee as contemplated by Section 801,
803 or 1408.
(b) The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations deposited pursuant
to Section 801, 803 or 1408 or the interest and principal
received in respect of such obligations other than any payable by
or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company
from time to time upon Company Request any U.S. Government
Obligations or money held by it as provided in Section 801, 803
or 1408 which, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, are then in
excess of the amount thereof which then would have been required
to be deposited for the purpose for which such U.S. Government
<PAGE 43> Obligations or money were deposited or received. This
provision shall not authorize the sale by the Trustee of any U.S.
Government Obligations held under this Indenture.
SECTION 803. Satisfaction, Discharge and Defeasance of
Securities of any Series.
The Company shall be deemed to have paid and discharged
the entire indebtedness on all the Outstanding Securities of any
series on the 91st day after the date of the deposit referred to
in subparagraph (1) below, and the provisions of this Indenture,
as they relate to such Outstanding Securities of such series,
shall no longer be in effect (and the Trustee, at the expense of
the Company, shall at Company Request execute proper instruments
acknowledging the same), except as to:
(a) the rights of Holders of Securities of such series
to receive, from the trust funds described in subparagraph
(1) below, if any, payment of the principal of (and premium,
if any) and each installment of principal of (and premium,
if any) or interest, if any, on the Outstanding Securities
of such series on the Stated Maturity of such principal or
installment of principal or interest or to and including the
Redemption Date irrevocably designated by the Company
pursuant to subparagraph (5) below;
(b) the Company's obligations with respect to such
Securities under Sections 306, 307, 1402 and 1403, if the
Company shall have irrevocably designated a Redemption Date
pursuant to subparagraph (5) below, Section 1501, 1504 and
1506 as they apply to such Redemption Date;
(c) the Company's obligations with respect to the
Trustee under Section 1007; and
(d) the rights, powers, trust and immunities of the
Trustee hereunder and the duties of the Trustee under
Section 802 and, if the Company shall have irrevocably
designated a Redemption Date pursuant to subparagraph (5)
below, Article Fifteen and the duty of the Trustee to
authenticate Securities on registration of transfer or
exchange;
provided that the following conditions shall have been satisfied:
(1) the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 802(c)
and the last paragraph of Section 1403) with the Trustee as
trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the
<PAGE 44>
Securities of such series,
(i) money (denominated in such coin or
currency of the United States of America as is at the
time of payment legal tender for the payment of public
and private debts) in an amount, or
(ii) (except as provided in a supplemental
indenture with respect to such series) if Securities of
such series are not subject to repurchase at the option
of Holders, either
(A) U.S. Government Obligations (denominated
in such coin or currency of the United States of
America as is at the time of payment legal tender
for the payment of public and private debts) which
through the payment of interest and principal in
respect thereof in accordance with their terms
will provide not later than one day before the due
date of any payment referred to in clause (a) of
this subparagraph (1) money in an amount or
(B) a combination of money and U.S.
Government obligations, in each case as provided
above
sufficient, in the opinion of a nationally recognized firm
of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, to
pay and discharge the principal of and each installment of
interest on the Outstanding Securities on the Stated
Maturity of such principal or installment of interest or to
and including the Redemption Date irrevocably designated by
the Company pursuant to subparagraph (5) below;
(2) the Company has delivered to the Trustee an
Opinion of Counsel to the effect that such provision would
not cause any Outstanding Securities then listed on any
national securities exchange to be delisted as a result
thereof;
(3) no Event of Default or event which with notice or
lapse of time would become an Event of Default (including by
reason of such deposit) shall have occurred and be
continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(4) the Company has delivered to the Trustee an
unqualified opinion, in form and substance satisfactory to
the Trustee, of independent counsel selected by the Company
and satisfactory to the Trustee to the effect that
(i) Holders of the Securities will not
recognize income, gain or loss for Federal income tax
purposes as a result of the deposit, defeasance and
<PAGE 45>
discharge and will be subject to Federal income tax on
the same amounts and in the same manner and at the same times as
would have been the case if that deposit, defeasance and
discharge had not occurred and
(ii) the defeasance trust is not, or is
registered as, an investment company under the
Investment Company Act of 1940; and
(5) if the Company has deposited or caused to be
deposited money or U.S. Government Obligations to pay or
discharge the principal of (and premium, if any) and
interest, if any, on the Outstanding Securities of a series
to and including a Redemption Date on which all of the
Outstanding Securities of such series are to be redeemed,
such Redemption Date shall be irrevocably designated by a
Board Resolution delivered to Trustee on or prior to the
date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied
by an irrevocable Company Request that the Trustee give
notice of such redemption in the name and at the expense of
the Company not less than 30 nor more than 60 days prior to
such Redemption Date in accordance with Section 1504; and
(6) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of the Securities
have been complied with.
ARTICLE NINE
REMEDIES
SECTION 901. Events of Default.
"Event of Default," wherever used herein, with respect
to Securities of any series, means any one of the following
events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be affected by operation
of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or
governmental body), unless such event is expressly made
inapplicable with respect to such series in or pursuant to a
Board Resolution or supplemental indenture under which Securities
of such series are issued, as the case may be, as contemplated by
Section 302:
(1) default in the payment of any interest upon any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or
<PAGE 46>
(2) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its
Maturity; or
(3) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance
or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities
other than that series which is in default), and continuance
of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of
Default" hereunder; or
(4) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company
or by any Subsidiary (including a default with respect to
Securities of any series other than that series) or under
any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company (including
this Indenture) or by any Subsidiary, whether such
indebtedness now exists or shall hereafter be created, which
default shall have resulted in such indebtedness in an
aggregate principal amount exceeding $5,000,000 becoming or
being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such
acceleration having been rescinded or annulled within a
period of 10 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least
10% in principal amount of the Outstanding Securities of
that series, a written notice specifying such default and
requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(5) an "Event of Default," as defined in the Unit l
Credit Agreement, or an "Event of Default," as defined in
the Unit 2 Credit Agreement, or an "Event of Default", as
defined in the Company's Indenture and Security Agreement
dated as of January 15, 1992, shall have occurred and be
continuing; or
(6) the entry by a court having jurisdiction in the
<PAGE 47>
premises of
(A) a decree or order for relief in respect of
the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or
(B) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the
Company under applicable Federal or State law,
appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for
relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the
Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action; or
(8) Article Sixteen shall cease, for any reason, to be
in full force and effect or the Company shall so assert in
writing; Article Sixteen shall cease to be effective to
grant a perfected Lien to the Trustee, for the equal and
ratable benefit of the Holders, on the Collateral described
therein with the priority purported to be granted thereby;
or the Company shall default in the observance or
performance of any of the covenants or agreements contained
in Article Sixteen; or
(9) any other Event of Default provided in the
supplemental indenture or provided in or pursuant to the
<PAGE 48> Board Resolution under which such series of Securities
is issued or in the form of Security for such series.
SECTION 902. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default with respect to Securities of
any series at the time Outstanding occurs and is continuing, then
in every such case the Trustee or the Holders of not less than
25% in aggregate principal amount of the Outstanding Securities
of that series may declare the principal amount of all of the
Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by
Holders), and upon any such declaration such principal amount,
together with all accrued and unpaid interest thereon, shall
become immediately due and payable, except that upon the
occurrence of an Event of Default specified in Section 901(5) or
901(6) all principal and interest of all Securities shall become
immediately due and payable without any such declaration.
At any time after such declaration of acceleration with
respect to Securities of any series has been made and before a
judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the
Holders of a majority in principal amount of the Outstanding
Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such acceleration and its
consequences if
(1) the Company has paid or deposited with the Trustee
a sum sufficient to pay
(A) all overdue interest on all Securities of
that series,
(B) the principal of (and premium, if any, on)
any Securities of that series which has become due
otherwise than by such acceleration and interest
thereon at the rate prescribed therefor in such
Securities,
(C) to the extent that payment of such interest
is lawful, interest upon any overdue interest at the
rate prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default with respect to Securities
of that series, other than the non-payment of the principal
<PAGE 49> of and accrued interest on Securities of that series
which have become due solely by such acceleration, have been
cured or waived as provided in Section 913.
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
SECTION 903. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at its Maturity;
the Company will, upon written demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole
amount then due and payable on such Securities for principal (and
premium, if any) and interest and, to the extent that payment of
such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue
interest, at the respective rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon such Securities, wherever situated.
If any Event of Default with respect to Securities of
any series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the Holders of the Securities of such series, including
without limitation those set forth in Article Sixteen, by such
appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights.
<PAGE 50>
SECTION 904. Trustee May File Proofs of Claim.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the
property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of
the Securities shall then be due and payable as therein expressed
or by acceleration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment
of overdue principal, premium or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest owing
and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 1007.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights
of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
<PAGE 51>
SECTION 905. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
SECTION 906. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article and/or pursuant to the exercise of any remedies pursuant
to Article Sixteen, and any moneys received pursuant to Section
6.03 of either of the Credit Agreements shall be applied in the
following order with respect to the Securities of any series, at
the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (and premium,
if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee
under Sections 1007 and 1615;
SECOND: to the payment of any amounts owing or that
may become owing under Section 6.03 or 15.05(x) of either of
the Credit Agreements or Section 3(b) of the Intercreditor
Agreement (as defined in the Credit Agreements);
THIRD: in case the principal (and premium, if any)
of the Securities of such series in respect of which moneys
have been collected shall not have become and be then due
and payable, to the payment of interest on the Securities of
such series in default in the order of the maturity of the
installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee and to
the extent permitted by law at the respective rate or rates
prescribed therefor in the Securities) upon the overdue
installments of interest at the rate prescribed therefor in
the Securities, such payments to be made ratably to the
Persons entitled thereto, without discrimination or
preference;
FOURTH: in case the principal or premium, if any of
the Securities of such series in respect of which moneys
<PAGE 52>
have been collected shall have become and shall be then
due and payable, to the payment of the whole amount then owing
and unpaid upon all the Securities of such series for principal
(and premium, if any) and interest, with interest upon the
overdue principal (and premium, if any), and (to the extent that
such interest has been collected by the Trustee and to the extent
permitted by law) upon overdue installments of interest, at the
rate prescribed therefor in the Securities; and in case such
moneys shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities of such series, then to the
payment of such principal (and premium, if any) and interest,
without preference or priority of principal over interest, or of
interest over principal or premium, or of any installment of
interest over any other installment of interest, or of any
Security of such series over any other Security of such series,
ratably to the aggregate of such principal (and premium, if any)
and accrued and unpaid interest; and
FIFTH: to the payment of the remainder, if any, to
the Company or any other Person lawfully entitled thereto.
In case any moneys to be applied pursuant to this
Section 906 in respect of Securities of more than one series
shall be insufficient to pay in full the whole amount due and
unpaid upon the Securities of all such series, then any payment
shall be made without preference or priority of any Security of
any one series over any Security of any other series, ratably
among the Securities of all such series.
SECTION 907. Limitation on Suits.
No Holder of any Security of any series shall have any
right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to
the Securities of that series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
<PAGE 53>
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the Outstanding Securities of that series;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders, or to
obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit
of all such Holders.
SECTION 908. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 308) interest on
such Security on the Stated Maturity or Maturities expressed in
such Security (or in the case of Redemption, on the Redemption
Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the
consent of such Holder.
SECTION 909. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture or
under either or both of the Credit Agreements or any of the
Unit 1 Financing Facility Security Documents or the Unit 2
Financing Facility Security Documents, and such proceeding has
been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and
in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be
restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had
<PAGE 54> been instituted.
SECTION 910. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Securities in the last paragraph of Section 307, no right or
remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 911. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Securities to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 912. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities
of such series; provided that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
SECTION 913. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of any series may
on behalf of the Holders of all the Securities of such series
waive any past default hereunder and its consequences with
respect to such series, except a default
(1) in the payment of the principal of (or premium, if
any, on) or interest on any Security of such series, or
<PAGE 55>
(2) in respect of a covenant or provision hereof which
under Article Thirteen cannot be modified or amended without
the consent of the Holder of each Outstanding Security of
such series affected.
Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 914. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his or her acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder,
or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or
to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on
any Security on or after the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).
SECTION 915. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or
the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 916. Delay in Instituting Bankruptcy Proceedings.
<PAGE 56>
Notwithstanding any other provision of this Indenture,
so long as any loans are outstanding to any Unit 2 Banks under
the Unit 2 Credit Agreement the Trustee shall not, and the
Holders shall not have the right to direct the Trustee to, file
or join in the filing of any petition under the Federal
Bankruptcy Code or any other Federal or State bankruptcy,
insolvency, reorganization or similar law seeking
(a) to have the Company adjudicated a bankrupt or
insolvent, or seeking any reorganization, arrangement,
adjustment or composition of or with respect to the Company,
(b) the appointment of a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any substantial part of its
property, or
(c) the winding up or liquidation of the affairs of
the Company,
in respect of any Event of Default for a period of six months
from the date on which such Event of Default shall have occurred,
(i) except in connection with the filing of any
such petition by the Agent under either Credit Agreement or
the Unit 1 Banks or the Unit 2 Banks in respect of an event
of default or amounts owing under a Credit Agreement, or
(ii) unless, prior to the end of such six-month
period, any such petition shall have been filed against the
Company by any other Person.
If more than one Event of Default shall at any time have occurred
and be continuing, such six-month period shall run from the date
on which the first such Event of Default shall have occurred.
This Section shall not restrict the Trustee's right to take any
action, including any action permitted under Section 904, in
respect of any proceeding relating to the filing of any such
petition by any other Person.
ARTICLE TEN
THE TRUSTEE
SECTION 1001. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of
Default with respect to the Securities of any series,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
<PAGE 57>
Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(c) Upon payment in full of certain obligations
specified in each of the Credit Agreements to the Unit l Banks or
the Unit 2 Banks, as the case may be, then automatically and
without further action on the part of any Person, the Trustee, in
the manner and to the extent provided in the applicable Credit
Agreement, shall become the successor to, be subject to and shall
perform the duties and obligations of, and be entitled to the
rights and benefits of, the Agent, as such term is defined in
such Credit Agreement, with respect to the collateral securing
the Credit Agreement Notes issued under such Credit Agreement
(including the Pledged Notes). The Company shall not, either
before or after the occurrence of any such succession, enter into
any amendment, modification or supplement to the Credit
Agreements or any of the Security Documents relating to such
duties, obligations, rights or benefits unless it shall have
obtained the prior written consent of the Trustee.
(d) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a
<PAGE 58> majority in principal amount of the Outstanding
Securities of any series, determined in accordance with Section
912, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
(f) Without limiting the other provisions hereof, in
the event that the Trustee becomes the Agent under either Credit
Agreement, the Trustee shall, in its capacity as such Agent, and
subject to the terms and conditions of such Credit Agreement,
upon the request of the Company or of Texas Generating Company or
Texas Generating Company II, as applicable, execute such
documents delivered to it to maintain the effectiveness and
priority of the Liens of the Unit 1 Financing Facility Security
Documents and the Unit 2 Financing Facility Security Documents
and promptly execute releases of liens in accordance with the
Facility Purchase Agreement (as defined in such Credit
Agreement); provided that any such release shall contain a
provision to the effect that such release is made in such Agent's
capacity as agent and (if applicable) Collateral Agent (as
defined in such Credit Agreement) pursuant to such Facility
Purchase Agreement but without warranty by, or recourse to, the
Trustee either in its capacity as Trustee or individually.
SECTION 1002. Notice of Defaults.
Within 90 days after the occurrence of any Default
hereunder with respect to the Securities of any series, the
Trustee shall transmit by mail to all Holders of Securities of
such series, as their names and addresses appear in the Security
Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; provided
that, except in the case of a Default in the payment of the
principal of (or premium, if any) or interest on any Security of
such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible
<PAGE 59> Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders
of Securities of such series; provided, further, that in the case
of any Default of the character specified in Section 901(3), no
such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
SECTION 1003. Certain Rights of Trustee.
Subject to the provisions of Section 1001:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request
or Company Order or as otherwise expressly provided herein
and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to expend
or risk its own funds or to exercise, at the request or
direction of any of the Holders, any of the rights or powers
vested in it by this Indenture pursuant to this Indenture,
unless such Holders shall have provided to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
<PAGE 60> paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled
upon reasonable request to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(h) the Trustee may enter into any participation
agreement pursuant to Section 6.03 of either of the Credit
Agreements; and
(i) the Trustee may approve the appointment of itself
or any other Person as Agent (as such term is defined in
each of the Credit Agreements) or as Collateral Agent (as
such term is defined in the Credit Agreements).
SECTION 1004. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and neither the Trustee
nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture, the Collateral, any
securities or other property received by the Trustee to be held
in Trust or of the Securities, or as to the value of any such
Collateral, securities or other property, or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of
Securities or the proceeds thereof.
SECTION 1005. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying
Agent, any Security Registrar or any other agent of the Company,
in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 1008 and 1013, may
otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
<PAGE 61>
SECTION 1006. Money Held in Trust.
Money held by the Trustee in trust hereunder need not
be segregated from other funds except to the extent required by
law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with
the Company.
SECTION 1007. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such
compensation as is agreed upon in writing, or, if no such
agreement exists, reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its
powers or duties hereunder.
Whenever the Trustee incurs any loss, liability or
expense without negligence or bad faith on its part, including
the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any
of its powers or duties hereunder, or renders services, after an
Event of Default specified in Section 901(6) or 901(7) occurs,
any such loss, liability, expense or compensation for services is
intended to constitute expenses of administration under any such
bankruptcy or similar law.
SECTION 1008. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the
Trustee shall either eliminate such interest or resign, to the
<PAGE 62> extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 1009. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the
laws of the United States of America or of any State or Territory
or of the District of Columbia or a corporation or other person
permitted to act as trustee by the Commission, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article. The Company may not, nor may any
person directly or indirectly controlling, controlled by, or
under common control with the Company, serve as Trustee.
SECTION 1010. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 1011.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 1011 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with
respect to the Securities of any series by Act of the Holders of
a majority in principal amount of the Outstanding Securities of
such series, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 1008
after written request therefor by the Company or by any
<PAGE 63> Holder who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 1009 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case,
(i) the Company by a Board Resolution may remove
the Trustee with respect to all Securities, or
(ii) subject to Section 914 unless the Trustee's
duty to resign is stayed as provided in Section 310(b) of
the Trust Indenture Act, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment
of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or
more series, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees, with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the
Securities of any particular series). If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 1011, become the successor Trustee with
respect to the Securities of any series and to that extent
supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and
shall have accepted appointment in the manner required by Section
1011, any Holder who has been a bona fide Holder of a Security of
such series for at least six months may, on behalf of himself
<PAGE 64>
and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation
and each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with
respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses
appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of
such series and the address of its Corporate Trust Office.
SECTION 1011. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a
successor Trustee with respect to all Securities, every such
successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder, subject to the extent
provided herein to the Lien of this Indenture.
(b) In case of the appointment hereunder of a
successor Trustee with respect to the Securities of one or more
(but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect
to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
<PAGE 65> or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any
other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and
each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates subject to the extent provided
herein to the lien of this Indenture.
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
SECTION 1012. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the
Trustee hereunder; provided that such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
<PAGE 66>
SECTION 1013. Preferential Collection of Claims Against Company.
The Trustee shall be subject to the provisions of
Section 311 of the Trust Indenture Act.
SECTION 1014. Authenticating Agents.
From time to time the Trustee, in its sole discretion,
may appoint one or more Authenticating Agents with respect to one
or more series of Securities with power to act on the Trustee's
behalf and subject to its direction in the authentication and
delivery of Securities of such series in connection with
transfers and exchanges under Sections 305, 306, 307 and 1507 as
fully to all intents and purposes as though the Authenticating
Agent had been expressly authorized by those Sections of this
Indenture to authenticate and deliver the Securities of such
series. For all purposes of this Indenture, the authentication
and delivery of Securities by an Authenticating Agent pursuant to
this Section shall be deemed to be authentication and delivery of
such Securities "by the Trustee". Each such Authenticating Agent
shall be acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal,
State or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law
or the requirements of such authority, then for the purposes of
this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which any Authenticating Agent may
be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation or to
which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the
Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.
An Authenticating Agent may resign at any time by
giving written notice of resignation to the Trustee and to the
Company. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to
<PAGE 67> such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent
shall cease to be eligible under this Section, the Trustee may
appoint a successor Authenticating Agent which shall be
acceptable to the Company and shall mail notice of such
appointment to all Holders of Securities with respect to which
such Authenticating Agent will serve, as the names and addresses
of such Holders appear on the Security Register. Any successor
Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under
this Section.
The Trustee shall incur no liability for the
appointment of any Authenticating Agent with respect to the
Securities of one or more series or for any misconduct or
negligence of such Authenticating Agent, including without
limitation, its authentication of the Securities upon original
issuance or pursuant to Section 306 or 307.
If an appointment with respect to one or more series of
Securities is made pursuant to this Section, the Securities of
such series may have endorsed thereon, in addition to or in lieu
of the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated
herein referred to in the within-mentioned Indenture.
By___________________________________
As Trustee
By___________________________________
As Authenticating Agent
By___________________________________
Authorized Signatory
<PAGE 68>
ARTICLE ELEVEN
HOLDERS' LISTS AND R EPORTS BY TRUSTEE AND COMPANY
SECTION 1101. Company to Furnish Trustee Names and
Addresses of
Holders.
The Company will furnish or cause to be furnished to
the Trustee with respect to the Securities of each series
(a) semi-annually, not later than 15 days after each
Regular Record Date, or, in the case of any series of
Securities on which semi-annual interest is not payable, not
more than 15 days after such semi-annual dates as may be
specified by the Trustee, a list, in such form as the
Trustee may reasonably require, of the names and addresses
of the Holders as of such Regular Record Date or semi-annual
date, as the case may be, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of
any such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is
furnished;
provided that, so long as the Trustee is the Security Registrar
for any series of Securities, no such list shall be required to
be furnished with respect to any such series.
SECTION 1102. Preservation of Information; Communications to
Holders.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 1101 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar.
The Trustee may destroy any list furnished to it as provided in
Section 1101 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a
Security for a period of at least six months preceding the date
of such application, and such application states that the
applicants desire to communicate with other Holders with respect
to their rights under this Indenture or under the Securities and
is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the
Trustee shall, within five business days after the receipt of
such application, at its election, either
<PAGE 69>
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with
Section 1102(a), or
(ii) inform such applicants as to the approximate
number of Holders whose names and addresses appear in the
information preserved at the time by the Trustee in
accordance with Section 1102(a), and as to the approximate
cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall, upon
the written request of such applicants, mail to each Holder whose
name and address appear in the information preserved at the time
by the Trustee in accordance with Section 1102(a) a copy of the
form of proxy or other communication which is specified in such
request, with reasonable promptness after a tender to the Trustee
of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such
applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be
contrary to the best interest of the Holders or would be in
violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to
sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to all
such Holders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that
neither the Company nor the Trustee nor any agent of either of
them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in
accordance with Section 1102(b), regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Section 1102(b).
<PAGE 70>
SECTION 1103. Reports by Trustee.
(a) Within 60 days after the first May 15 which occurs
not less than 60 days following the first date of issuance of the
Securities of any series under this Indenture and within 60 days
after May 15 in every year thereafter, the Trustee shall transmit
by mail to all Holders, as their names and addresses appear in
the Security Register, a brief report dated as of such May 15
with respect to any of the following events which may have
occurred in the previous twelve months (but if no such event has
occurred within such period no report need be transmitted):
(1) any change to eligibility under Section 1009 and
its qualifications under Section 1008;
(2) the creation of or any material change to a
relationship specified in paragraphs (1) through (10) of
Subsection (a) of Section 310(b) of the Trust Indenture Act;
(3) the character and amount of any advances (and if
the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as
such) which remain unpaid on the date of such report, and
for the reimbursement of which it claims or may claim a Lien
or charge, prior to that of the Securities, on any property
or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate not
more than 1/2 of 1% of the principal amount of the
Securities Outstanding on the date of such report;
(4) any change to the amount, interest rate and
maturity date of all other indebtedness owing by the Company
(or by any other obligor on the Securities) to the Trustee
in its individual capacity, on the date of such report, with
a brief description of any property held as collateral
security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in
Section 311(b)(2), (3), (4) or (6) of the Trust Indenture
Act;
(5) any change to the property and funds, if any,
physically in the possession of the Trustee as such on the
date of such report;
(6) any additional issue of Securities which the
Trustee has not previously reported; and
(7) any action taken by the Trustee in the performance
of its duties hereunder which it has not previously reported
and which in its opinion materially affects the Securities,
except action in respect of a default, notice of which has
<PAGE 71> been or is to be withheld by the Trustee in accordance
with Section 1002.
(b) The Trustee shall transmit by mail to all Holders,
as their names and addresses appear in the Security Register, a
brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee
(as such) since the date of the last report transmitted pursuant
to Subsection (a) of this Section (or if no such report has yet
been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim
a Lien or charge, prior to that of the Securities, on property or
funds held or collected by it as Trustee and which it has not
previously reported pursuant to this Subsection, except that the
Trustee shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time aggregate
10% or less of the principal amount of the Securities Outstanding
at such time, such report to be transmitted within 90 days after
such time.
(c) A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each
stock exchange upon which any Securities are listed, with the
Commission and with the Company. The Company will notify the
Trustee when any Securities are listed on any stock exchange.
(d) The Trustee shall transmit to the Holders as
hereinafter in this Subsection provided, within the times
hereinafter in this Subsection provided, a brief report with
respect to the release, or release and substitution, of property
subject to the Lien of this Indenture and the consideration
therefor, if any, unless the fair value of such property, as set
forth in the certificate or opinion required by paragraph (1) of
Subsection (d) of Section 314 of the Trust Indenture Act,
delivered by the Company to the Trustee pursuant to Section
601(b), is less than 10% of the principal amount of the
Outstanding Securities at the time of such release, or such
release and substitution, such report to be so transmitted within
90 days after such time.
SECTION 1104. Reports by Company.
The Company shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required
pursuant to Section 314 of the Trust Indenture Act at the times
and in the manner provided pursuant thereto; provided that any
such information, documents or reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Exchange
Act shall be filed with the Trustee within 15 days after the same
is so required to be filed with the Commission.
<PAGE 72>
ARTICLE TWELVE
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE
SECTION 1201. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge into any
other corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge
into the Company or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or
merge into another corporation or convey, transfer or lease
its properties and assets substantially as an entirety to
any Person, the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under
the laws of the United States of America, any State thereof
or the District of Columbia, and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of (and premium, if
any) and interest on all the Securities and the performance
of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such
transaction and treating any indebtedness which becomes an
obligation of the Company or a Subsidiary as a result of
such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have
happened and be continuing;
(3) if, as a result of any such consolidation or
merger or such conveyance, transfer or lease, properties or
assets of the Company would become subject to a Lien which
would not be permitted by this Indenture, the Company or
such successor corporation or Person, as the case may be,
shall take such steps as shall be necessary effectively to
secure the Securities equally and ratably with (or prior to)
all indebtedness secured thereby; provided that this clause
(3) shall not apply if the provisions of Section 1409 apply
as a result of the consolidation, merger or conveyance; and
<PAGE 73>
(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 1202. Successor Corporation to be Substituted.
Upon any consolidation by the Company with or merger by
the Company into any other corporation or any conveyance,
transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 1201, the
successor corporation formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture
and the Securities.
ARTICLE THIRTEEN
SUPPLEMENTAL INDENTURES AND AMENDMENTS
TO CREDIT AGREEMENT AND OTHER DOCUMENTS
SECTION 1301. Supplemental Indentures without Consent of
Holders.
Without the consent of the Holders, the Company and the
Trustee may from time to time enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any
of the following purposes:
(1) to correct or amplify the description of any
property at any time subject to the lien of this Indenture,
or better to assure, pledge, grant and confirm unto the
Trustee any property subject or required to be subjected to
the lien of this Indenture, or subject to the lien of this
Indenture additional property, or to release property from
the lien of this Indenture;
(2) to add to the conditions, limitations and
restrictions on the authorized amount, terms or purposes of
issue, authentication and delivery of the Securities or of
any series of the Securities, as herein set forth,
<PAGE 74> additional conditions, limitations and restrictions
thereafter to be observed;
(3) to create any series of Securities (other than the
Series A Securities) and make such other provisions as
provided in Article Three; or
(4) to modify or eliminate any of the terms of this
Indenture; provided, that
(a) such supplemental indenture shall expressly
provide that any such modifications or eliminations
shall become effective only (i) as to the Securities of
any series created by such supplemental indenture and
Securities of any series subsequently created to which
such change or elimination is made applicable by the
subsequent supplemental indenture creating such series;
or (ii) when there is no Security Outstanding of any
series created prior to the execution of such
supplemental indenture; and
(b) the Trustee may, in its discretion, decline
to enter into any such supplemental indenture which, in
the judgment of the Trustee, is to the prejudice of the
Trustee when the same becomes operative;
(5) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities
(and if such covenants are to be for the benefit of less
than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred
upon the Company;
(6) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
the Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 1011(b);
(7) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants of the Company herein and in the Securities;
(8) to add any additional Events of Default;
(9) to cure any ambiguity, to correct or supplement
any provision herein which may be inconsistent with any
other provision herein or to make any other provisions, with
respect to matters or questions arising under this
Indenture, provided, such action shall not adversely affect
<PAGE 75> the interests of the Holders of the Securities of any
series in any material respect;
(10) to modify, alter, amend or supplement this
Indenture in any other respect which is not materially
adverse to Holders, which does not involve a change
described in clause (1), (2), (3) or (4) of Section 1302
hereof and which, in the judgment of the Trustee, is not to
the prejudice of the Trustee; or
(11) to provide for any rights of the Holders of
Securities of any series to require the repurchase of
Securities of such series by the Company.
SECTION 1302. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of all
series affected by such supplemental indenture (voting as one
class), by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by or pursuant to a Board
Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series under this
Indenture; provided that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or
any installment of interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after
the Redemption Date);
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided
for in this Indenture or for any amendment, supplement,
modification or waiver referred to in Section 1304;
(3) modify any of the provisions of this Section,
Section 913 or Section 1410, except to increase any such
<PAGE 76> percentage or to provide that certain other provisions
of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected
thereby, provided, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this
Section, or the deletion of this proviso, in accordance with the
requirements of Section 1011(b) and 1301(6); or
(4) release any Collateral or change any provision of
this Indenture the effect of which is to impair in any
respect, directly or indirectly, the Trustee's rights with
respect to the Collateral; provided, that no consent of the
Holders shall be required for the release of Collateral
pursuant to Article Six.
A supplemental indenture which changes or eliminates any
covenants or other provision of this Indenture which has
expressly been included solely for the benefit of one or more
particular series of Securities, or which modifies the rights of
the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any
other series.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
SECTION 1303. Amendments to the Credit Agreements, etc., without
Consent of Holders.
Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may, and the Company
may permit any Subsidiary to, enter into one or more amendments,
modifications or waivers of or supplements to the Credit
Agreements, the Pledged Notes and the other Project Documents, in
accordance with the terms thereof, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to an obligor on the Pledged Notes and the assumption by any
such successor of the covenants of the Company herein and in
the Securities;
(2) to add to the covenants therein for the benefit of
the holders of the Credit Agreement Notes or to surrender
any right or power conferred upon the Company in the Credit
Agreements or the Project Documents;
<PAGE 77>
(3) to add any additional Events of Default (as
defined in the Credit Agreements);
(4) to provide additional security for the Pledged
Notes;
(5) to cure any ambiguity, to correct or supplement
any provision in the Credit Agreements, the Credit Agreement
Notes or the other Project Documents which may be
inconsistent with any other provision therein, or to make
any other provisions with respect to matters or questions
arising thereunder; provided such action shall not adversely
affect the interests of the Holders in any material respect;
(6) to amend, modify, waive or supplement the Credit
Agreements, the Credit Agreement Notes or the Project
Documents in any other respect which is not materially
adverse to Holders, which does not involve a change
described in clause (1), (2) or (3) of Section 1304; or
(7) subject to Section 1304(2), provide for the
appointment of a successor agent or other Person to act as
collateral agent in respect of the collateral security for
the Credit Agreement Notes.
The Company shall not permit any Subsidiary to enter
into any amendment, modification, or waiver of or supplement to
the Credit Agreements, the Pledged Notes or the other Project
Documents except under circumstances in which the Company could
itself enter into such amendment, modification, supplement or
waiver.
In addition to any amendments, modifications or waivers
of, or supplements to, the Credit Agreements, the Credit
Agreement Notes and the other Project Documents that the Company
may, and may permit its Subsidiaries to, enter into pursuant to
other provisions of this Section 1303 or pursuant to Section
1304, the Company may, and may permit its Subsidiaries to, at any
time and from time to time, without the consent of the Holders,
enter into one or more such amendments, modifications, waivers or
supplements for any purpose if
(x) under said documents, the consent of the Trustee
is not specifically required for such amendments,
modifications, waivers or supplements, and
(y) the consent of the Holders is not required under
clause (1), (2) or (3) of Section 1304 and does not involve
an amendment, modification, waiver or supplement in respect
of Section 10.01 of either of the Credit Agreements.
<PAGE 78>
SECTION 1304. Amendments to Credit Agreements, etc. with Consent
of Holders.
In addition to any amendments, modifications or waivers
of or supplements to the Credit Agreements, the Credit Agreement
Notes and the other Project Documents that the Company, its
Subsidiaries and the Trustee may enter into without the consent
of the Holders pursuant to Section 1303, the Company, when
authorized by or pursuant to a Board Resolution, may and the
Trustee may, and the Company may permit any Subsidiary to, at any
time and from time to time, with the consent of the Holders of
not less than 51% in principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company and
the Trustee, enter into one or more amendments, modifications or
waivers of or supplements to the Credit Agreements, the Pledged
Notes and the other Project Documents to which the Company or
such Subsidiary, as the case may be, is a party; provided that
neither the Company nor the Trustee may, nor may the Company
permit any Subsidiary to, without the consent of the Holder of
each Outstanding Security, enter into any such amendment,
modification, supplement or waiver, which shall
(1) change the stated maturity of the principal of, or
any installment of interest on, any Pledged Notes, or reduce
the principal amount thereof or the rate of interest
thereon, or impair the right to institute suit for the
enforcement of any such payment on or after the stated
maturity thereof,
(2) release any collateral security for the Pledged
Notes (other than as contemplated by the Credit Agreements
or other Project Documents, as in effect as of the date
hereof) or enter into any such amendment, modification,
waiver or supplement the effect of which is to impair in any
respect, directly or indirectly, the rights of the Trustee
(or any agent acting on its behalf) with respect to such
collateral security, or
(3) change Section 9.09, 9.21, 10.03 or 10.16 of the
Unit 1 Credit Agreement or Section 9.09, 9.22, 10.03 or
10.16 of the Unit 2 Credit Agreement in a manner adverse to
the Holders;
provided that no such consent shall be required for any such
amendment, modification, waiver or supplement the effect of
which is to permit a Lien (in addition to any Liens now
permitted under the Credit Agreements or the Project
Documents) to exist in respect of any item of property
included in collateral security for the Pledged Notes, but
only so long as
(a) such Lien does not secure any Debt (as defined in
the Credit Agreements, as in effect on the date hereof), and
<PAGE 79>
(b) such Lien, individually or together with all other
Liens permitted under this proviso, does not materially
adversely affect the value or utility of such collateral
security for the Pledged Notes.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
amendment, modification or waiver, but it shall be sufficient if
such Act shall approve the substance thereof.
SECTION 1305. Consideration for Supplements, Amendments, etc.
(a) The Company will not, and will not permit any
Subsidiary to, request or enter into any supplement, amendment,
modification or waiver (whether pursuant to this Article or
otherwise) in respect of this Indenture or the Securities unless
the Company or such Subsidiary shall have
(i) informed each Holder (whether or not affected
thereby) of such proposed waiver or amendment,
(ii) provided each Holder with
(1) a reasonably detailed statement of the
reasons why such supplement, amendment, modification or
waiver is being sought and the intended effect thereof,
and
(2) any information with respect to such
supplement, amendment, modification or waiver that
shall have been delivered to any other Holder, and
(iii) allowed each Holder reasonable opportunity to
consider such supplement, amendment, modification or waiver
prior to the date on which it is to become effective.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, pay or cause to be paid any consideration
(as supplemental or additional interest, a fee or otherwise) to
any Holder in order to induce such Holder to enter into any such
supplement, amendment, modification or waiver unless such
consideration shall have been offered, on the same terms, ratably
to each other Holder and concurrently paid or otherwise delivered
to each other Holder consenting to such supplement, amendment,
modification or waiver.
(b) The Company will not, and will not permit any
Subsidiary to, request or enter into any supplement, amendment,
modification or waiver (whether pursuant to this Article or
otherwise) in respect of this Indenture, the Securities, the
Credit Agreements, the Credit Agreement Notes or the Project
Documents unless the Company or such Subsidiary shall have
<PAGE 80>
(i) informed the Trustee (whether or not affected
thereby) of such proposed waiver or amendment,
(ii) provided the Trustee with
(1) a reasonably detailed statement of the
reasons why such supplement, amendment, modification or
waiver is being sought and the intended effect thereof,
and
(2) any information with respect to such
supplement, amendment, modification or waiver that
shall have been delivered to any other holder of Credit
Agreement Notes, and
(iii) allowed the Trustee reasonable opportunity to
consider such supplement, amendment, modification or waiver
prior to the date on which it is to become effective.
The Company will deliver to the Trustee executed or true copies
of any such supplement, amendment, modification or waiver
promptly, and in any event within 10 days, following the date on
which it shall have become effective. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, pay or
cause to be paid any consideration (as supplemental or additional
interest, a fee or otherwise) to any holder of Credit Agreement
Notes in order to induce such holder to enter into any such
supplement, amendment, modification or waiver unless such
consideration shall have been offered, on the same terms, ratably
to the Trustee and paid or otherwise delivered to the Trustee if
it shall have consented to such supplement, amendment,
modification or waiver, provided, that this paragraph shall not
apply to
(x) the payment to the Agent under either Credit
Agreement of agency, corporate finance or similar fees not
paid as an inducement to amend the Credit Agreement, the
Credit Agreement Notes or the Project Document;
(y) any increase in the interest rate applicable to
the Project Loans or the payment of any fee to the Unit 1
Banks or the Unit 2 Banks, so long as such change shall not
result in the yield-to-maturity of the Project Loans
outstanding under a Credit Agreement (computed at the time
of such increase or payment, as the case may be, and
assuming that any additional fees would be treated as
additional interest on the Project Loans) exceeding the then
current yield-to-maturity of the Securities; and
(z) any payment upon an extension of the maturity of
Credit Agreement Notes.
<PAGE 81>
Any consideration paid to the Trustee shall be deemed to have
been paid for the benefit of the Holders and shall be promptly
distributed by the Trustee ratably to the Holders that shall have
consented to the Trustee's consenting to such supplement,
amendment, modification or waiver (or, if no such consent of the
Holders shall have been required, to all Holders).
SECTION 1306. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article,
the modifications thereby of the trusts created by this
Indenture, or any amendment, supplement or waiver of or
modification to the Credit Agreements, the Credit Agreement Notes
or the Project Documents, the Trustee shall be entitled to
receive, and (subject to Section 1001) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution
of such supplemental indenture, amendment, supplement, waiver or
modification is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise. The
Trustee also may, but shall not be obligated to, enter into any
amendment, modification or waiver of or supplement to the Credit
Agreements, the Credit Agreement Notes or any of the other
Project Documents which could affect the Trustee's own rights,
duties or immunities, whether in its capacity as Trustee or in
its capacity as Agent or Collateral Agent, as defined under
either Credit Agreement, and the Company shall not, and shall not
permit any Subsidiary to, enter into any such amendment,
modification, supplement or waiver which could affect such
rights, duties or immunities, except with the consent of the
Trustee.
SECTION 1307. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 1308. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as in effect at the time of its execution.
<PAGE 82>
SECTION 1309. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article
may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental
indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE FOURTEEN
COVENANTS
SECTION 1401. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of
each series of Securities that it will duly and punctually pay
the principal of (and premium, if any) and interest on the
Securities of that series in accordance with the terms of the
Securities and this Indenture.
SECTION 1402. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for
any series of Securities, an office or agency where Securities of
that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities of that Series and this
Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and, in such
event, the Trustee shall act as the Company's agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or
more other offices or agencies where the Securities of one or
more series may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an
<PAGE 83> office or agency for Securities of any series for such
purposes pursuant to this Section 1402. The Company will give
prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
SECTION 1403. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on or
before each due date for payment of the principal of (and
premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of Persons
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Holders or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for any series of Securities, it will, prior to 11:00 a.m.
(New York City time) on, in case the payment referred to below is
made in same-day funds, or, in all other cases, prior to, each
due date of the principal of (and premium, if any) or interest on
any Securities of that series, deposit with a Paying Agent
and/or, pursuant to a Company Order, direct the Trustee to
deposit with a Paying Agent from Collateral available for the
payment of the Securities under Section 1607(c), a sum sufficient
to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act. No failure
by the Trustee to make any deposit with a Paying Agent pursuant
to the preceding sentence shall absolve the Company from its
responsibility to ensure that such sum is deposited with such
Paying Agent.
The Company will cause each Paying Agent for any series
of Securities other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
of that series in trust for the benefit of the Holders of
such Securities entitled thereto until such sums shall be
paid to such Holders or otherwise disposed of as herein
provided;
<PAGE 84>
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of that
series) in the making of any payment of principal (and
premium, if any) or interest on the Securities of that
series; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided that the Trustee
or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language,
customarily published on each Business Day and of general
circulation in the City, County and State of New York and in the
City of Fort Worth, Tarrant County, Texas, notice that such money
remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 1404. Corporate Existence.
Subject to Article Twelve, the Company will do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and will use its best
efforts to do or cause to be done all things necessary to
preserve and keep in full force and effect its rights (charter
and statutory) and franchises; provided that the Company shall
<PAGE 85> not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 1405. Maintenance of Properties.
The Company will cause all properties used or useful
in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
in compliance with all material laws and regulations at all
times; provided that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business
of any Subsidiary and not disadvantageous in any material respect
to the Holders.
SECTION 1406. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent,
(1) all taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon
the income, profits or property of the Company or any
Subsidiary, and
(2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon
the property of the Company or any Subsidiary;
provided that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate
proceedings.
SECTION 1407. Statement by Officers as to Default.
The Company will deliver to the Trustee, on or before
the 120th day after the end of each of its fiscal years,
beginning with its fiscal year ending in 1993,
<PAGE 86>
(i) an Officers' Certificate as to his or her
knowledge of the Company's compliance with all conditions
and covenants of this Indenture, such compliance to be
determined without regard to any period of grace or
requirement of notice provided under this Indenture, and
(ii) an Officers' Certificate stating that in the
course of the performance by each signer of his or her
duties as an officer of the Company he or she would normally
have knowledge of any default by the Company in the
performance and observance of any of the covenants contained
in Sections 1401 to 1406, stating whether or not he or she
has knowledge of any such default and, if so, specifying
each such default of which such signer has knowledge and the
nature thereof.
SECTION 1408. Defeasance of Certain Obligations.
The Company may omit to comply with any term, provision
or condition set forth in Sections 1201, 1404, 1405, 1406 and
1409 with respect to the Securities of any series; provided that
the following conditions shall have been satisfied:
(1) the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 802(c)
and the last paragraph of Section 1403) with the Trustee
(specifying that each deposit is pursuant to this Section)
as trust funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of
the Securities of such series,
(i) money (denominated in such coin or
currency of the United States of America as is at the
time of payment legal tender for the payment of public
and private debts) in an amount, or
(ii) U.S. Government Obligations which
through the payment of interest and principal in
respect thereof in accordance with their terms will
provide not later than one day before the Stated
Maturity of the principal of and each installment of
interest on the Securities, money in an amount, or
(iii) a combination of money and U.S.
Government Obligations, in each case as provided above,
sufficient, in the opinion of a nationally recognized firm
of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, to
pay and discharge the principal of (and premium, if any) and
each installment of principal (and premium, if any) and
interest on the Outstanding Securities of such series on the
<PAGE 87>
Stated Maturity of such principal or installment of
principal or interest or to and including the Redemption Date
irrevocably designated by the Company pursuant to subparagraph
(iv) of this Section and;
(2) No Event of Default or event which with notice or
lapse of time would become an Event of Default (including by
reason of such deposit) with respect to the Securities of
such series shall have occurred and be continuing on the
date of such deposit;
(3) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that
(i) Holders of the Securities of such series
will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and
defeasance of certain obligations;
(ii) such provision would not cause any
outstanding Securities of such series then listed on
any national securities exchange to be delisted as a
result thereof;
(iii) the defeasance trust is not, or is
registered as, an investment company under the
Investment Company Act of 1940;
(iv) if the Company has deposited or caused
to be deposited money or U.S. Government Obligations to
pay or discharge the principal of (and premium, if any)
and interest, if any, on the Outstanding Securities of
a series to and including a Redemption Date on which
all of the Outstanding Securities of such series are to
be redeemed, such Redemption Date shall be irrevocably
designated by a Board Resolution delivered to the
Trustee on or prior to the date of deposit of such
money or U.S. Government Obligations, and such Board
Resolution shall be accompanied by an irrevocable
Company Request that the Trustee give notice of such
redemption in the name and at the expense of the
Company not less than 30 nor more than 60 days prior to
such Redemption Date in accordance with Section 1504;
and
(v) the Securities will mature within one
year.
SECTION 1409. Tender for the Securities upon Change of Control
Event.
The Company covenants as follows:
<PAGE 88>
(a) Within 90 days after the occurrence of a Change of
Control Event, the Company shall commence a tender offer for all
Outstanding Securities, in whole or in any integral multiple of
$1,000 of the principal amount of the Securities, at a purchase
price (the "Purchase Price") of 101% of the principal amount
thereof plus accrued and unpaid interest to the date of purchase,
in accordance with the procedures set forth in Subsections (b)
and (c) of this Section.
(b) Within 30 days following any Change of Control
Event, the Company shall send by first-class mail, postage
prepaid, to the Trustee and to each Holder of the Securities, at
his address appearing in the Security Register, a notice stating:
(1) that a Change of Control Event has occurred and
that the Company is obligated to tender for the Securities,
as provided herein, at the Purchase Price;
(2) the circumstances and relevant facts regarding the
Change of Control Event (including but not limited to
information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such
Change of Control Event; provided that, to the extent the
above-described information is required by Item 7 of Form
8-K, it need be sent only upon the filing with the
Securities and Exchange Commission of the Form 8-K);
(3) information concerning the business of the Company
which the Company in good faith believes will enable the
Holders to make an informed decision, which at a minimum
will include
(i) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial
statements of the Company, the most recent subsequently
filed Quarterly Report on Form 10-Q and any Current
Report on Form 8-K of the Company filed subsequent to
such Quarterly Report (or in the event the Company is
not required to prepare any of the foregoing Forms, the
comparable information), and
(ii) a description of material developments
in the Company's business subsequent to the date of the
latest of such Reports;
(4) the latest date for tender of the Securities,
which shall be not more than 30 days after the date of the
commencement of the tender offer;
(5) the Purchase Price;
(6) information concerning acceptance of the tender
offer; and
<PAGE 89>
(7) that interest accrued to the Purchase Date will be
paid as provided in paragraph (a) of this Section and that,
unless the Company shall default in payment of the Purchase
Price, after the latest date of purchase, interest thereon
will cease to accrue with respect to any Securities
presented and surrendered for purchase.
(c) Holders tendering Securities will be required to
do so in accordance with this Indenture by the close of business
on the latest date for tender of the Securities. No such
Securities shall be deemed to have been presented and surrendered
until such Securities are received by the Company or its
designated agent in accordance with the registration and transfer
system of this Indenture, as applicable. Holders whose
Securities are purchased only in part will receive new Securities
equal in principal amount to the unpurchased portion of the
Securities surrendered.
SECTION 1410. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any term, provision or condition set forth in Section
1404 to 1409 with respect to the Securities of any series if
before the time for such compliance the Holders of at least 66
2/3% in principal amount of the Outstanding Securities of such
series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to
the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties
of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
SECTION 1411. Deposit of Collateral.
The Company shall, on the date of the issuance of the
Series A Securities, acquire a Replacement Note, which shall have
an aggregate principal amount at least equal to the aggregate
principal amount of the Series A Securities, and will deliver the
same to the Trustee, together with an undated instrument of
assignment executed in blank.
SECTION 1412. Ownership of Subsidiary Stock.
The Company, at all times while any Securities remain
Outstanding, will continue to hold, legally and beneficially,
free and clear of all liens, all issued and outstanding capital
stock of Texas Generating Company and Texas Generating Company
II, and of any successor to either thereof, and of any other
<PAGE 90> Subsidiary that shall become or be a party to or
otherwise liable upon either Credit Agreement, any Pledged Note
or any Project Document.
SECTION 1413. Project Documents.
Prior to the issuance of the Securities, the Company
will deliver to the Trustee a complete and correct copy of each
of the Project Documents, including all exhibits and schedules
thereto. Promptly following the amendment, modification,
supplement or waiver of any of the Project Documents, the Company
will deliver a complete and correct copy thereof to the Trustee.
ARTICLE FIFTEEN
REDEMPTION OF SECURITIES
SECTION 1501. General Applicability of Article.
Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise provided with respect to the
Securities of any particular series by the provisions of this
Indenture creating such series) in accordance with this Article.
SECTION 1502. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
shall be evidenced by an Officer's Certificate. In case of any
redemption at the election of the Company of less than all the
Outstanding Securities of any series, the Company shall, at least
60 days prior to the Redemption Date fixed by the Company (unless
a shorter notice shall be satisfactory to the Trustee) notify the
Trustee of such Redemption Date and of the principal amount of
Securities of such series to be redeemed and of the numbers of
any Outstanding Securities of such series then owned by the
Company, such notice to be accompanied by a written statement
signed by an authorized officer of the Company stating that no
defaults in the payment of interest or Events of Default with
respect to the Securities of that series have occurred (which
have not been waived or cured).
SECTION 1503. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series not
<PAGE 91> previously called for redemption, by prorating, as
nearly as may be, the principal amount of such Securities to be
redeemed among the Holders of such Securities in proportion to
the aggregate principal amount of such Securities registered in
their respective names; provided that, if there shall have been
previously filed with the Trustee an Act of all the Holders of
such Securities satisfactory to the Trustee specifying the method
of selecting the Securities to be redeemed, such selection shall
be made by the Trustee in accordance with the terms of such Act.
In any proration pursuant to this Section, the Trustee
shall make such adjustments, reallocations and eliminations as it
shall deem proper to the end that the principal amount of
Securities of such series so prorated shall be equal to the
greater of $1,000 and the smallest authorized denomination of the
Securities of such series, or a multiple thereof, by increasing
or decreasing or eliminating the amount which would be allocable
to any Holder on the basis of exact proportion by not exceeding
such prorated minimum. The Trustee in its discretion may
determine the particular Securities (if there is more than one)
registered in the name of any Holder which are to be redeemed, in
whole or in part.
Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration
and certificate number in an Officers' Certificate (which need
not comply with Section 102) delivered to the Security Registrar
at least 60 days prior to the Redemption Date as being owned of
record and beneficially by, and not pledged or hypothecated by
either (a) the Company or (b) an entity specifically identified
in such written statement which is an Affiliate of the Company.
The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed
only in part, to the portion of the principal of such Security
which has been or is to be redeemed.
SECTION 1504. Notice of Redemption.
Notice of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities
of such series to be redeemed, at his or her address appearing in
the Security Register.
All notices of redemption shall state:
<PAGE 92>
(1) the Redemption Date;
(2) the Redemption Price and accrued interest, if any;
(3) the principal amount of Securities of each series
to be redeemed, and, if less than all Outstanding Securities of a
series are to be redeemed, the identification of the Securities
of such series to be redeemed;
(4) that on the Redemption Date the Redemption Price
of each of the Securities to be redeemed and accrued interest, if
any, will become due and payable and that interest thereon shall
cease to accrue from and after said date;
(5) the place or places where the Securities of each
series to be redeemed are to be surrendered for payment of the
Redemption Price and accrued interest, if any, which shall be the
office or agency of the Company in each Place of Payment for such
series; and
(6) if it be the case, that such Securities are to be
redeemed by the application of certain specified money held by
the Trustee.
Notice of redemption of Securities to be redeemed at
the election of the Company shall be given by the Company or, at
the Company's request, by the Trustee in the name and at the
expense of the Company.
SECTION 1505. Deposit of Redemption Price.
On, in the case of same day funds, or, in all other
circumstances, at least one Business Day or before any Redemption
Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1403) an
amount of money sufficient to pay the Redemption Price of all the
Securities which are to be redeemed on that date to the extent
that such amounts are not already on deposit at such time in
accordance with Sections 801, 803 or 1408. Such money shall be
held in trust for the benefit of the Persons entitled to such
Redemption Price and shall not be deemed to be part of the
Collateral or Trust Moneys.
SECTION 1506. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid,
the Securities so redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified and
from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued and unpaid interest)
<PAGE 93> such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued and unpaid interest to
the Redemption Date. Installments of interest with a Stated
Maturity on or prior to the Redemption Date shall be payable to
the Holders of the Securities registered as such on the relevant
Record Dates according to the terms of such Securities and the
provisions of Section 308.
If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Security.
SECTION 1507. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall
be surrendered at a Place of Payment therefor (with, if the
Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing) and the Company shall
execute and the Trustee shall authenticate and deliver to the
Holder of such Securities, without service charge, a new Security
or Securities of the same series of any authorized denomination
or denominations as requested by such Holder in aggregate
principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
ARTICLE SIXTEEN
PLEDGE OF SECURITY
SECTION 1601. Pledge of Collateral.
As collateral security for the prompt payment in full
when due (whether at Stated Maturity, by acceleration or
otherwise) of the Secured Obligations, the Company hereby pledges
and grants to the Trustee, for the benefit of the Holders as
hereinafter provided (in the case of the Securities, without
priority of any Security of any series over any other Security of
that series, and without priority of the Securities of any one
Series over the Securities of any other series), a security
interest in all of the Company's right, title and interest in the
following property, whether now owned by the Company or hereafter
acquired and whether now existing or hereafter coming into
existence (all such property being collectively referred to
herein as "Collateral"):
<PAGE 94>
(a) the Pledged Notes;
(b) all principal, premium, if any, and interest
payable after the date of the delivery of the Pledged Notes
to the Trustee (including any of the same payable after such
date in respect of periods prior to such date);
(c) except as provided in Section 1607(b), all
principal, premium, if any, and interest on any investments
of cash Collateral pursuant to Section 1607(b);
(d) funds deposited with the Trustee pursuant to
Section 1617; and
(e) all proceeds of and to any of the property of the
Company described in clauses (a), (b) and (c) above.
As used in this Article, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and
distributions in kind of, Collateral, including any thereof
received under any reorganization, liquidation or adjustment of
debt of the Company or any issuer of or obligor on any of the
Collateral.
SECTION 1602. Representations in Respect of the Collateral.
The Company represents and warrants that:
(a) At the time of
(i) its acquisition of the Pledged Notes and
its deposit thereof with the Trustee, and
(ii) the deposit of any other Collateral with
the Trustee pursuant to this Article Sixteen,
it will be, and so long as any Securities remain Outstanding
it will continue to be, the sole beneficial owner of such
Collateral.
(b) No Lien shall exist upon any Collateral at any
time while any Securities remain Outstanding, except for the
Lien of this Indenture.
(c) The Lien of this Indenture,
(i) insofar as it applies to the Pledged
Notes, upon the delivery thereof by the Company to the
Trustee, and
<PAGE 95>
(ii) insofar as it applies to any other
Collateral, upon the Lien of this Indenture attaching
thereto as herein provided,
shall constitute a first-priority perfected Lien in and to
such Collateral.
SECTION 1603. Further Assurances.
In furtherance of the grant of the pledge and security
interest pursuant to Section 1601, the Company will:
(a) if any of the above-described Collateral required
to be pledged by the Company under Section 1601 is received
by the Company, forthwith either
(i) transfer and deliver to the Trustee such
Collateral so received by the Company, all of which
thereafter shall be held by the Trustee pursuant to the
terms of this Indenture as part of the Collateral, or
(ii) take such other action as the Trustee
shall deem necessary or appropriate duly to record the
Lien created hereunder in such shares, securities,
monies or property referred to in said Section 1601;
(b) give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement
or other papers that may be necessary or desirable (in the
judgment of the Trustee) to create, preserve, perfect or
validate the security interest granted pursuant hereto or to
enable the Trustee to exercise and enforce its rights
hereunder with respect to such pledge and security interest,
including, without limitation, causing any or all of the
Collateral to be transferred of record into the name of the
Trustee or its nominee (and the Trustee agrees that if any
Collateral is transferred into its name or the name of its
nominee, the Trustee will thereafter promptly give to the
Company copies of any notices and communications received by
it with respect to the Collateral); and
(c) permit representatives of the Trustee, upon
reasonable notice, at any time during normal business hours
to inspect and make abstracts from its books and records
pertaining to the Collateral, and permit representatives of
the Trustee to be present at the Company's place of business
to receive copies of all communications and remittances
relating to the Collateral, and forward copies of any
notices or communications received by the Company with
respect to the Collateral, all in such manner as the Trustee
may require.
<PAGE 96>
SECTION 1604. Other Financing Statements and Liens.
Without the prior written consent of the Trustee, the
Company shall not file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the
Collateral in which the Trustee is not named as the sole secured
party for the benefit of the Holders.
SECTION 1605. Preservation of Rights.
The Trustee shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
SECTION 1606. Voting, Consensual and Other Powers.
Whether or not an Event of Default or a Default shall
have occurred and be continuing, the Trustee, to the exclusion of
the Company, shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the
Collateral for all purposes. The Company shall execute and
deliver to the Trustee or cause to be executed and delivered to
the Company all such proxies, powers of attorney and other
orders, and all such instruments, without recourse, as the
Trustee may reasonably request for the purpose of enabling the
Trustee to exercise the rights and powers which it is entitled to
exercise pursuant to this Section. In so voting and exercising
the powers of an owner with respect to any Pledged Notes, the
Trustee shall not be required to attend any meeting, but the
Trustee may vote or act by power of attorney or proxy and such
power of attorney or proxy may be granted to any person selected
by the Trustee, including any officer of the Company. The
Trustee may so vote and exercise the powers of an owner with
respect to any Pledged Notes for any purpose or purposes which
the Trustee, in its discretion, shall deem advisable and in the
interest of the Holders, whether or not such action may involve a
change in the character of any Pledged Notes or in the corporate
identify or business of the issuer thereof or in the
proportionate interest or voting power represented by such
security. The Trustee shall not be required to exercise any such
voting, consensual or other powers except in accordance with the
provisions of this Indenture.
SECTION 1607. Payments on the Pledged Notes; Investments;
Application and Holding of Collateral.
(a) Whether or not an Event of Default or a Default
has occurred and is continuing, the Trustee shall be entitled to
receive and retain any payments of principal of and premium, if
<PAGE 97> any, and interest on the Pledged Notes or any other
Collateral, and the same shall constitute a part of the
Collateral. All such payments shall be paid directly to the
Trustee and retained by it as part of the Collateral, subject to
the terms of this Indenture, and, if the Trustee shall so request
in writing, the Company agrees to execute and deliver to the
Trustee appropriate additional orders and documents to that end.
(b) On any date, when so directed by the Company
pursuant to a Company Order (which Company Order shall contain a
certification to the Trustee that any investments that the
Trustee is directed to make therein constitute investments of
Collateral that are permitted under this Indenture), if the
Trustee shall not have theretofore received notice that an Event
of Default or a Default has occurred and is continuing on such
date, the Trustee shall invest such Collateral held by it in
interest-bearing U.S. Government Obligations and/or Commercial
Paper, in either case maturing not later than the day prior to
the next-following Interest Payment Date. The Trustee shall not
sell any such investments except upon the exercise of remedies
pursuant to Section 1608. At any time when an Event of Default
or Default has occurred and is continuing, the Trustee may, but
shall have no obligation to, invest cash Collateral held by it in
U.S. Government Obligations and/or Commercial Paper selected by
it. Any determination as to whether an investment constitutes
Commercial Paper shall be made as of the date on which such
investment is made. Any losses on any investments shall be for
the account of the Company.
For so long as no Default or Event of Default shall
have occurred and be continuing, any amounts received by the
Trustee representing interest earned on such investments shall be
held by the Trustee for the benefit of the Company, and not as
Collateral securing the Secured Obligations, and applied as
provided in Subsection (d) below. At any time when a Default or
an Event of Default shall have occurred and be continuing, such
amounts shall be held as Collateral securing the Secured
Obligations.
With respect to all investments of Collateral in
certificated securities (as defined in Section 8-102(1)(a) of the
Uniform Commercial Code), the Trustee will do one of the
following:
(i) take and thereafter continuously retain (or
cause its designee to take and thereafter continuously
retain) possession of the certificates evidencing such
securities; or
(ii) cause
(x) such certificated securities to be held in
the custody of a clearing corporation (as defined in
<PAGE 98> Section 8-102(3) of the Uniform Commercial Code) or of
a custodian bank (as defined in Section 8-102(4) of the Uniform
Commercial Code) or a nominee of either subject to the control of
the clearing corporation, and to be in bearer form, endorsed in
blank, or registered in the name of such clearing corporation,
custodian bank or nominee,
(y) an appropriate entry to a custodial or
similar account of the Trustee in its individual
capacity to be made on the books of such clearing
corporation, and
(z) the Trustee in its individual capacity to
send the Trustee confirmation of its interest in such
certificated securities and, by book entry or
otherwise, to identify the interest of the Trustee in
and to such uncertificated securities; or
(iii) cause a financial intermediary (as defined in
Section 8-313(4) of the Uniform Commercial Code) (including
without limitation the Trustee in its individual capacity)
to acquire possession of such securities and to cause such
securities to be specially endorsed to or issued in the name
of the Trustee.
With respect to investments of the Collateral in
uncertificated securities (as defined in Section 8-102(1)(b) of
the Uniform Commercial Code) constituting U.S. Government
Obligations in which the Trustee acquires an interest through
book entry transfer pursuant to the rules and procedures of the
Federal Reserve/Treasury book entry system ("Book Entry Treasury
Securities"), the Trustee will do one of the following:
(i) if the Trustee in its individual capacity has
a custodial account with the Federal Reserve Bank of New
York (the "FRBNY"), cause
(x) such Book Entry Treasury Securities to be
credited to such account, and
(y) the Trustee in its individual capacity to
send the Trustee confirmation of its interest in such
Book Entry Treasury Securities and, by book entry or
otherwise, to identify the interest of the Trustee in
and to such uncertificated securities, or
(ii) if the Trustee in its individual capacity
does not have a custodial account with the FRBNY, cause
(x) such Book Entry Treasury Securities to be
credited to the custodial account of a financial
intermediary at the FRBNY, and
<PAGE 99>
(y) such financial intermediary to send the
Trustee confirmation of its interest in such Book Entry
Treasury Securities and, by book entry or otherwise, to
identify the interest of the Debenture Trustee in and
to such Book Entry Treasury Securities.
The Trustee appoints IBJ as its designee for the
purpose of holding or being the account party for any Collateral
from time to time held by IBJ or for its account pursuant to the
preceding two paragraphs, and IBJ accepts such appointment.
(c) At the Stated Maturity of the principal of and
each installment of interest on the Securities, the Trustee shall
apply, first, any cash Collateral then held by it and, second,
any amounts representing interest earned on investments of
Collateral pursuant to Subsection (b) above, to the payment of
principal and interest then due and owing under the Securities
or, to the extent required by Section 1403, shall deliver such
Collateral and other amounts, to the extent necessary, to a
Paying Agent for such application.
(d) Promptly, and in any event within three Business
Days, after
(i) each Interest Payment Date, if the Trustee
shall not have received notice that an Event of Default or a
Default has occurred and is continuing on such date, or
(ii) if on such Interest Payment Date the Trustee
shall have received notice that an Event of Default or a
Default shall have occurred and be continuing, the date on
which the Trustee shall have received an Officers'
Certificate certifying that such Event of Default or Default
does not exist or has been cured,
the Trustee shall pay to the Company or as it may direct, by wire
transfer of immediately available funds, all amounts received by
it after the Interest Payment Date next preceding such Interest
Payment Date and on or before such Interest Payment Date
representing interest earned on investments of Collateral
pursuant to Subsection (b) above, to the extent not theretofore
applied by the Trustee pursuant to Subsection (c) above.
(e) All funds delivered to the Trustee as Collateral
under this Article shall be deposited in and stand to the credit
of deposit accounts in the Trustee's name.
SECTION 1608. Additional Remedies.
In addition to any other rights and powers otherwise
granted to the Trustee pursuant to Article Nine and this Article,
<PAGE 100> during the period during which an Event of Default
shall have occurred and be continuing:
(a) the Trustee shall have all of the rights and
remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code (whether or not said Code
is in effect in the jurisdiction where the rights and
remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the laws
in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation,
the right, to the maximum extent permitted by law, to
exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Trustee
were the sole and absolute owner thereof (and the Company
agrees to take all such action as may be appropriate to give
effect to such right);
(ii) the Trustee in its discretion may, in its
name or in the name of the Company or otherwise, demand, sue
for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do
so; and
(iii) the Trustee may, upon 10 Business Days' prior
written notice to the Company of the time and place, with
respect to the Collateral or any part thereof which shall
then be or shall thereafter come into the possession,
custody or control of the Trustee or any of its agents,
sell, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Trustee deems
best, and for cash or on credit or for future delivery
(without thereby assuming any credit risk), at public or
private sale, without demand of performance or notice of
intention to effect any such disposition or of time or place
thereof (except such notice as is required above or by
applicable statute and cannot be waived) and the Trustee or
anyone else may be the purchaser, assignee or recipient of
any or all of the Collateral so disposed of at any public
sale (or, to the extent permitted by law, at any private
sale), and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right
or equity of redemption (statutory or otherwise), of the
Company, any such demand, notice or right and equity being
hereby expressly waived and released. The Trustee may,
without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same
may be so adjourned.
<PAGE 101>
The Company recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended,
and applicable state securities laws, the Trustee may be
compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account,
for investment and not with a view to the distribution or resale
thereof. The Company acknowledges that any such private sales
may be at prices and on terms less favorable to the Trustee than
those obtainable through a public sale with such restrictions,
and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Trustee shall have no obligation
to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit the
issuer thereof to register it for public sale.
SECTION 1609. Removals.
Without at least 30 days' prior written notice to the
Trustee, the Company shall not maintain any of its books and
records with respect to the Collateral at any office or maintain
its principal place of business at any other place other than at
the address specified in the first paragraph of this Indenture.
SECTION 1610. Private Sale.
The Trustee shall incur no liability as a result of the
sale of the Collateral, or any part thereof, at any private sale
pursuant to Section 1608 conducted in a commercially reasonable
manner. The Company hereby waives any claims against the Trustee
arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Secured Obligations,
even if the Trustee accepts the first offer received and does not
offer the Collateral to more than one offeree.
SECTION 1611. Deficiency.
If the proceeds of sale, collection or other realiza-
tion of or upon the Collateral pursuant to Section 1608 hereof
are insufficient to cover the costs and expenses of such realiza-
tion and the payment in full of the Secured Obligations, the
Company shall remain liable for any deficiency.
<PAGE 102>
SECTION 1612. Application of Proceeds.
The proceeds of any collection, sale or other realiza-
tion of all or any part of the Collateral pursuant hereto, and
any other cash at the time held by the Trustee under this Arti-
cle, shall be applied by the Trustee as provided in Section 906.
SECTION 1613. Attorney-in-Fact.
Without limiting any rights or powers granted by this
Indenture to the Trustee while no Event of Default has occurred
and is continuing, the Trustee is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out
the provisions of this Article and taking any action and
executing any instruments which the Trustee may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the
Trustee shall be entitled under this Article to make collections
in respect of the Collateral, the Trustee shall have the right
and power to receive, endorse and collect all checks made payable
to the order of the Company representing any dividend, payment,
or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
SECTION 1614. Perfection.
Substantially concurrently with the authentication and
delivery of the Series A Securities, the Company shall deliver to
the Trustee the Replacement Note acquired by it pursuant to
Section 1411 and shall cause the Trustee to be named therein as
the registered owner thereof.
SECTION 1615. Expenses.
The Company will pay to the Trustee all out-of-pocket
expenses (including reasonable expenses for legal services of
every kind) of, or incident to, the enforcement of any of the
provisions of this Article, or performance by the Trustee of any
obligations of the Company in respect of the Collateral which the
Company has failed or refused to perform, or any actual or
attempted sale, or any exchange, enforcement, collection,
compromise or settlement in respect of any of the Collateral, and
for the care of the Collateral and defending or asserting rights
and claims of the Trustee in respect thereof, by litigation or
otherwise and all such expenses shall be Secured Obligations to
the Trustee secured under Section 1601.
<PAGE 103>
SECTION 1616. Opinions of Counsel as to Perfection.
(a) Promptly after the execution and delivery of this
Indenture, the Company will deliver to the Trustee an Opinion of
Counsel either stating that in the opinion of such counsel this
Indenture has been properly recorded and filed so as to make
effective the Lien intended to be created hereby, and reciting
the details of such action, or stating that in the opinion of
such counsel no such action is necessary to make such Lien
effective.
(b) Not later than the 120th day after the end of each
of its fiscal years, beginning with its fiscal year ending in
1993, the Company will deliver to the Trustee an Opinion of
Counsel either stating that in the opinion of such counsel such
action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture as is necessary to
maintain the Lien of this Indenture, and reciting the details of
such action, or stating that in the opinion of such counsel no
such action is necessary to maintain such Lien.
SECTION 1617. Additional Deposits of Cash Collateral.
The Company will deposit with the Trustee as additional
cash Collateral, prior to 11:00 a.m. (New York City time) on the
day in each month that is the counterpart of the day in the
calendar month on which interest on the Secured Debentures is
next payable, in cash in immediately available funds an amount
equal to all interest accrued and unpaid through such date on the
Pledged Notes, provided that the Company shall not be required to
make such deposit on any date on which an Event of Default shall
have occurred and be continuing if TGC and TGC II on such date
shall have paid all amounts owing by them under their respective
Pledged Notes. Whenever any payment due hereunder shall be
stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, provided that,
if such extension shall cause such payment to be made on a date
that is after the next-following date on which interest is
required to be paid on the Secured Debentures, such payment shall
be made on the next preceding Business Day. In all cases for
purposes of determining the amount payable hereunder, interest on
the Pledged Notes shall be deemed to have accrued through the
date on which an amount would be payable hereunder, without
giving effect to the next-preceding sentence and whether or not
such day is a Business Day.
<PAGE 104>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
[Seal] TEXAS-NEW MEXICO POWER COMPANY
By: /s/ D. R. Barnard
D. R. Barnard
Its: Sector Vice President
and Chief Financial Officer
Attest:
Michael D. Blanchard
Its: Secretary and General Counsel
[Seal] ,
as Trustee
By: /s/ Thomas J. Bogert
Its: Vice President
Attest:
/s/ Barbara McCluskey
Its: Assistant Secretary
<PAGE 105>
STATE OF NEW YORK
COUNTY OF NEW YORK
On the 27th day of September, 1993, before me
personally came D. R. Barnard, to me known, who, being duly
sworn, did depose and say that he is a Sector Vice President of
Texas-New Mexico Power Company, the corporation described in and
which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his
name thereto by like authority.
Dean A. Tetirick
Notary Public,
State of New York
STATE OF NEW YORK
COUNTY OF New York
On the 27th day of September, 1993, before me personally
came Thomas Bogert, to me known, who, being by me duly sworn, did
depose and say that he is an Assistant Vice President of IBJ
Schroder Bank & Turst Company, the New York State banking
corporation described in and which executed the foregoing
instrument; that he knows the seal of said association; that the
seal affixed to said instrument is such association seal; that it
was so affixed by authority of the Board of Directors of said
association, and that he signed his name thereto by like
authority.
/s/ Elizabeth A. Sullivan
Notary Public,
State of New York
<PAGE 106>
ANNEX I
[Form of Face of Debenture]
TEXAS-NEW MEXICO POWER COMPANY
10-3/4% Secured Debentures, Series A, Due September 15, 2003
No.__________ $__________
TEXAS-NEW MEXICO POWER COMPANY, a corporation duly
organized and existing under the laws of the State of Texas
(herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
__________________, or registered assigns, the principal sum
of _________ Dollars on September 15, 2003, and to pay
interest thereon from September 15, 1993, or from the most
recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on March 15 and
September 15 in each year, commencing March 15, 1994, at the
rate per annum provided in the title hereof, until the
principal hereof is paid or made available for payment, and,
subject to the terms of the Indenture, at the rate per annum
provided in the title hereof on any overdue principal (and
premium, if any) and (to the extent that the payment of such
interest shall be legally enforceable) on any overdue
installment of interest. The interest so payable, and
punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to
the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which
shall be the March 1 or September 1 (whether or not a
Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either (i)
be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, in which
event notice whereof shall be given to Holders not less than
10 days prior to such Special Record Date, or (ii) be paid
at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in
said Indenture.
<PAGE 1>
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or
agency of the Company maintained for that purpose in The
Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of
payment is legal tender for the payment of public and
private debts; provided that at the option of the Company
payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further
provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication
hereon has been executed by the Trustee referred to on
the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
<PAGE 2>
IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed under its corporate
seal.
Dated:
[Seal] TEXAS-NEW MEXICO POWER
COMPANY
By_______________________
[Title]
[Form of Trustee's Certificate of Authentication]
The Trustee's Certificate of Authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series
designated herein and referred to in the within-
mentioned Indenture.
__________________________________,
as Trustee
By________________________________
Authorized Signatory
<PAGE 3>
[Form of Reverse of Debenture]
TEXAS-NEW MEXICO POWER COMPANY
10-3/4% Secured Debentures, Series A, Due September 15, 2003
This Security is one of a duly authorized
issue of securities of the Company (herein called the
"Securities"), issued and to be issued in one or more
series limited in aggregate principal amount to
$417.75 million under an Indenture and Security
Agreement, dated as of September 15, 1993 (herein
called the "Indenture"), between the Company and IBJ
Schroder Bank & Trust Company, as trustee (herein
called the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby
made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities
are, and are to be, authenticated and delivered.
As provided in the Indenture, the Securities are
issuable in series which may vary as in the Indenture
provided or permitted. This Security is one of the series
designated on the face hereof, limited in aggregate
principal amount to $140,000,000.
From and after September 15, 2000, the
Securities of this series are subject to redemption
upon not less than 30 nor more than 60 days' notice by
mail to the Holders of such Securities at their
addresses in the Security Register for such series, as
a whole or in part, at the election of the Company from
time to time at a Redemption Price equal to 100% of the
principal amount, together in the case of any such
redemption with accrued and unpaid interest to the
Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture. If
this Security be called for redemption and payment duly
provided therefor as specified in the Indenture,
interest shall cease to accrue on the date fixed for
redemption.
In the event of a redemption of this Security in
part only, a new Security or Securities of this series and
<PAGE 4> of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon cancellation hereof.
The Indenture contains provisions for
defeasance of (a) the entire indebtedness evidenced by
this Security and (b) certain restrictive covenants, in
either case upon compliance by the Company with certain
conditions set forth therein.
Pursuant to Article Sixteen of the Indenture,
the Company has delivered certain collateral to the
Trustee. Such collateral, and certain other collateral
that may be received by the Trustee in respect thereof,
shall secure the performance of the Company's
obligations under the Securities. Under certain
circumstances, from time to time property comprising
the Collateral may be released. Upon meeting certain
requirements, the Company may issue additional
Securities which will be secured pari passu by the
Collateral.
If an Event of Default shall occur and be
continuing, the principal of the Securities, and all
accrued and unpaid interest thereon, may be declared
due and payable in the manner and with the effect
provided in the Indenture. With limited exceptions,
the Trustee may not file or join in the filing of any
bankruptcy or similar petition for a period of six
months from the date on which an Event of Default shall
have occurred under the Indenture.
The Indenture permits, with certain
exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of
the Company and the rights of the Holders of each
series to be affected under the Indenture at any time
by the Company and the Trustee with the consent of the
Holders of 66-2/3% in principal amount of the
Securities at the time Outstanding (as defined in the
Indenture) of all series to be affected. The Indenture
also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding,
on behalf of the Holders of all Securities of such
series, by written consent to waive compliance by the
Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their
consequences. The Indenture also permits, with certain
exceptions as therein provided, the Company and the
Trustee to enter into one or more amendments, modifica-
tions or waivers or supplements to the Credit Agree-
ments, the Pledged Note and the Project Documents, as
<PAGE 5> defined in the Indenture, with the consent of the
Holders of at least 51% in principal amount of the Securities at
the time Outstanding. Any such consent or waiver by the Holder
of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no
provision of this Security or of the Indenture shall
alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of
(and premium, if any) and interest on this Security at
the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register,
upon surrender of this Security for registration of
transfer at the office or agency of the Company
maintained for that purpose, which at the date hereof,
shall be the Corporate Trust Office, duly endorsed by,
or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon
one or more new Securities of this series and of like
tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable
only in registered form without coupons in
denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate
principal amount of Securities of this series and of
like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and
<PAGE 6> any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
This Security shall be governed by and
construed in accordance with the laws of the State of
New York.
All terms used in this Security which are
defined in the Indenture shall have the meanings
assigned to them in the Indenture.
<PAGE 7>
EXECUTION
COUNTERPART
=======================================
AMENDMENT NO. 1
Dated as of September 21, 1993
to the
UNIT 1
FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
Dated as of January 8, 1992
among
TEXAS-NEW MEXICO POWER COMPANY
and
TEXAS GENERATING COMPANY
and
THE BANKS NAMED HEREIN
as Banks
and
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
as Agent
=======================================
<PAGE0>
AMENDMENT NO. 1 (this "Amendment") dated as of September 21,
1993 to the UNIT 1 FIRST AMENDED AND RESTATED PROJECT LOAN AND
CREDIT AGREEMENT dated as of January 8, 1992 (the "Credit
Agreement"), among TEXAS-NEW MEXICO POWER COMPANY ("TNP"), TEXAS
GENERATING COMPANY ("TGC"), each of the lenders that is a
signatory hereto identified under the caption "BANKS" on the
signature pages hereof or which, pursuant to Section 16.01
hereof, shall become a "Bank" hereunder, the Voting Participants
and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for
the Banks (in such capacity, the "Agent").
RECITALS
1. The parties hereto have previously entered into the
Credit Agreement which became effective on the Effective Date,
January 24, 1992, upon the satisfaction of the conditions
precedent thereto as set out in Section 8.01 of the Credit
Agreement.
2. On January 27, 1992, TNP and TGC satisfied the
conditions in Section 8.02 of the Credit Agreement to cause the
occurrence of the Extension Date. Among other things, TNP issued
its Series T Bonds and its First Secured Debentures, due January
15, 1999, and applied the net proceeds thereof to, among other
things, purchase pro rata from the Banks $65,000,000 of the
Project Loans outstanding under the Credit Agreement. The
Project Loans acquired by TNP were, automatically upon their
purchase by TNP, converted into the First Replacement Loan,
evidenced by the First Replacement Note that is secured pursuant
to the Security Documents pari passu with the other Obligations
under the Credit Agreement and the other Project Documents. The
First Secured Debentures are secured by TNP's pledge of the First
Replacement Note to the First Debenture Trustee under the First
Secured Debenture Indenture. As a result of the pledge of the
First Replacement Note, the First Secured Debentures indirectly
share pari passu in the Banks' Collateral.
3. TNP and TGC have the right to secure additional debt
securities with the Collateral, subject to the terms and
conditions of Section 9.32 of the Credit Agreement. Other than
with respect to the January 27, 1992 transactions described in
Recital 2 hereof, however, no specific procedures were
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 1>
established in the Credit Agreement for TNP or TGC to secure
additional debt securities with the Collateral.
4. The parties desire to amend the Credit Agreement as
provided for in this Amendment to facilitate TNP's or TGC's
securing certain additional debt securities and, upon the
payment, prepayment or purchase in full of the Project Loans
outstanding on the First Amendment Effective Date, all interest
due and payable thereon and all other amounts due and payable by
TNP and TGC to the Banks under the Credit Agreement and the other
Project Documents, debt with the Collateral from time to time in
furtherance of and as necessary for the parties to achieve the
purposes and objectives, to perform the obligations and to
exercise the rights, all as set forth in or contemplated by the
Credit Agreement and as modified by this Amendment.
5. On July 2, 1993, TNP requested certain amendments to
the Credit Agreement to provide, among other things, for the
purchase by TNP, of $140,000,000 of Project Loans. On July 2,
1993, TNP requested certain amendments to the Unit 2 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992 among TNP, TGC II, the banks and the other
parties thereto and Chase, as Agent (as amended, modified and
supplemented and in effect from time to time, the "Unit 2 Credit
Agreement") and simultaneously with the entering into of this
Amendment the parties to the Unit 2 Credit Agreement are entering
into Amendment No. 1 to the Unit 2 Credit Agreement in order to
effect such amendments to the Unit 2 Credit Agreement.
6. The funds necessary for the payments, prepayments and
purchase of Project Loans are expected to be provided by the
issuance by TNP of new first mortgage bonds (the "New Bonds") in
an aggregate principal amount of up to $100,000,000 under the TNP
Bond Indenture and the issuance by TNP of Second Secured
Debentures in an aggregate principal amount of up to $140,000,000
under the Second Secured Debenture Indenture. The $140,000,000
of Project Loans acquired by TNP will, automatically upon their
purchase by TNP, be converted to the Second Replacement Loan,
which Loan will be evidenced by the Second Replacement Note which
Note will be secured pursuant to the Security Documents pari
passu with the other Obligations under the Credit Agreement, the
other Project Documents and the First Replacement Loan. The
Second Secured Debentures will be secured by TNP's pledge of the
Second Replacement Note to the Second Debenture Trustee under the
Second Secured Debenture Indenture. As a result of the pledge of
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 2>
the Second Replacement Note, the Second Secured Debentures will
indirectly share pari passu in the Collateral securing the
remaining Project Loans and the First Replacement Loan and,
indirectly, the First Secured Debentures.
7. Certain provisions of this Amendment will become
effective only upon the payment, prepayment and purchase of a
portion of the Project Loans and the prepayment of certain of the
indebtedness under the Unit 2 Credit Agreement and the
satisfaction of certain other conditions.
8. By virtue of the First Debenture Trustee Consent, the
Replacement Note Holder has consented to the extent required to
the provisions of this Amendment.
NOW, THEREFORE, for and in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions.
Unless otherwise defined herein, the capitalized terms
utilized herein (including the Recitals hereinabove set forth)
which are defined in the Credit Agreement shall have the meanings
ascribed to them in the Credit Agreement. The capitalized terms
defined herein, in the context of amending the Credit Agreement,
shall, when used herein (including the Recitals hereinabove set
forth), have the meanings ascribed to them in such amending
language.
SECTION 2. Conditions Precedent.
(a) The effectiveness of this Amendment shall be subject to
the condition precedent that, on or before September
30, 1993, this Amendment shall have been executed and
delivered by TNP, TGC, the Banks, the Voting
Participants (if any), the Agent and the Collateral
Agent, and to the satisfaction of the following
additional conditions precedent, in each case for the
benefit of the parties hereto and the other Secured
Parties:
(i) TNP and TGC each shall deliver to the Agent
certified copies of the resolutions of their
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 3>
respective boards of directors authorizing the execution,
delivery and performance of this Amendment and each of the other
First Amendment Documents to which such Person is or is intended
to be a party and the transactions contemplated by the issuance
by TNP of New Bonds in an aggregate principal amount of up to
$100,000,000 under the TNP Bond Indenture and the issuance by TNP
of Second Secured Debentures in an aggregate principal amount of
up to $140,000,000 under the Second Secured Debenture Indenture
and all other documents evidencing other necessary action with
respect thereto;
(ii) TNP and TGC each shall deliver to the Agent a
certificate, in form and substance satisfactory
to the Agent, signed by an Authorized Officer of
TNP or TGC, as applicable, certifying that,
except as disclosed in such certificate, there
shall be no injunction, writ, preliminary
restraining order or any order of any nature
issued by any arbitrator, court or other
governmental authority directing that this
Amendment not be consummated as herein provided
and certifying further that, except as disclosed
in such certificate, there shall be no material
litigation, investigation or proceeding of or
before any arbitrator, court or other
governmental authority pending or (to the best
of such Authorized Officer's knowledge,
threatened) against TNP or TGC or affecting in
any material respect any of its respective
properties, revenues or assets;
(iii) TNP and TGC each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC, as applicable, certifying that (A)
the representations and warranties of each of
TNP and TGC, as applicable, contained in Section
2 of the Credit Agreement, as amended by this
Amendment and in each of the other Project
Documents to which such Person is a party shall
be true and correct on and as of such date as if
made on and as of such date (or, if stated to
have been made solely as of an earlier date,
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 4>
were true and correct as of such earlier date), (B) no Default
under the Credit Agreement, as amended by this Amendment, and no
default by either TNP or TGC under any of the other Project
Documents to which either TNP or TGC is a party, has occurred and
is continuing on such date and (C) to the best of such Authorized
Officer's knowledge, no default by any other Person to any other
Project Document has occurred and is continuing on such date;
(iv) TNP and TGC each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC, as applicable, certifying that (A)
it has obtained all Government Approvals
necessary under applicable laws and regulations
in connection with the due execution, delivery
and performance of this Amendment and
transactions contemplated hereby and (B) all
such Government Approvals have been duly
obtained, were validly issued and are held by
and in the name of TNP or TGC, as applicable,
and are final, in full force and effect and not
subject to appeal;
(v) TNP and TGC each shall deliver to the Agent
legal opinions from counsel to TNP and TGC in
form and substance satisfactory to the Agent;
(vi) the Intercreditor Amendment No. 2 shall have
been duly executed and delivered by the intended
parties thereto;
(vii) the First Debenture Trustee Consent shall have
been duly executed by the First Indenture
Trustee and delivered to the Agent;
(viii) the Fourth TGC Modification and Extension
Agreement shall have been duly executed and
delivered by the intended parties thereto and,
at the sole cost of TNP and TGC, the Title
Company shall have issued to the Agent (A) a
T-38 endorsement to Stewart Title Guaranty
Mortgage Policy No. M-5802-482888 and a T-38
endorsement to Stewart Title Guaranty Mortgage
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 5>
Policy No. M-5832-25812, each with respect to such Fourth TGC
Mortgage Modification and Extension Agreement and (B) a title
information report in form and substance satisfactory to and
approved by the Agent, showing good and indefeasible title to the
TGC Mortgage Trust Estate is vested in TGC and that the TGC
Mortgage constitutes a valid first mortgage lien on the TGC
Mortgage Trust Estate and showing that there are no intervening
liens which would adversely affect the priority of the liens
securing the Loans, subject only to Permitted Liens;
(ix) the TNP Second Lien Mortgage Modification No. 2
shall have been duly executed and delivered by
the intended parties thereto;
(x) evidence that the First Amendment Documents and
all other instruments to be recorded or filed in
connection with the effectiveness of this
Amendment have been duly recorded and filed in
all places wherein such recording and filing are
necessary to perfect the interests of the Agent
in and to the Collateral covered thereby;
(xi) TNP and TGC shall each deliver to the Agent such
other certificates, documents or other
information with respect to the matters
contemplated by this Amendment as the Agent may
reasonably determine are necessary to effect the
transactions contemplated by this Amendment; and
(xii) Amendment No. 1 to the Unit 2 Credit Agreement
shall have been duly executed and delivered by
TNP, TGC II, the Banks (under and as defined in
the Unit 2 Credit Agreement), the Agent (under
and as defined in the Unit 2 Credit Agreement)
and the Collateral Agent (under and as defined
in the Intercreditor Agreement) and each of the
conditions precedent described in Sections
2(a)(i) through (xii) of Amendment No. 1 to the
Unit 2 Credit Agreement shall have been
satisfied.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 6>
(b) The effectiveness of Section 3 of this Amendment shall
be subject to the further conditions precedent that, on
or before December 21, 1993, each of the following
additional conditions precedent, in each case for the
benefit of the parties hereto and the other Secured
Parties, shall have been fulfilled:
(i) TNP and TGC each shall have effected a Section
4.05 Closing (provided that, if such Section
4.05 Closing shall occur on or before
November 15, 1993 the parties hereto hereby
waive all notices required under Sections
4.05(c) and 4.05(d) of the Credit Agreement (as
amended by this First Amendment) and evidence
that there is no objection to the terms and
conditions of the Second Secured Debentures, due
2003) with respect to Second Secured Debentures
in an aggregate principal amount of $140,000,000
and TNP shall have contemporaneously issued New
Bonds in the amount of up to $100,000,000 and
(A) TNP shall have applied the proceeds from
newly issued Second Secured Debentures (which
meet the terms and conditions of Section 4.05 of
the Credit Agreement as amended by this
Amendment) to purchase Project Notes in the
amount of $140,000,000 and (B) TNP or TGC shall
have prepaid the Project Loans in the amount of
$6,000,000 and TNP or TGC II shall have applied
the proceeds of the New Bonds plus existing cash
to prepay the "Project Loans," under and as
defined in the Unit 2 Credit Agreement, as
amended by Amendment No. 1 thereto, in the
amount of $75,750,000;
(ii) The Banks (excluding the New Participants) shall
have received payment in full of all accrued
interest on the Project Loans purchased, and
simultaneously prepaid, at the Section 4.05
Closing referred to in clause (i) of this
subsection (b). The New Participants shall have
received payment in full of all principal of and
accrued interest on the participations in the
Project Loans acquired by each such New
Participant from the Banks (excluding the New
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 7>
Participants) under the New Participation Agreement.
(iii) TNP and TGC each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC, as applicable, certifying that (A)
it has obtained all Government Approvals
necessary under applicable laws and regulations
in connection with the provisions of, and the
transactions contemplated by, Section 3 hereof
and (B) all such Government Approvals have been
duly obtained, were validly issued and are held
by and in the name of the proper party (either
directly or by transfer from the original
applicant therefor) and are final, in full force
and effect and not subject to appeal;
(iv) TNP and TGC each shall deliver to the Agent a
certificate, in form and substance satisfactory
to the Agent, signed by an Authorized Officer of
TNP or TGC, as applicable, certifying that,
except as disclosed in such certificate, there
shall be no injunction, writ, preliminary
restraining order or any order of any nature
issued by any arbitrator, court or other
governmental authority directing that this
Amendment not be consummated as herein provided
and certifying further that, except as disclosed
in such certificate, there shall be no material
litigation, investigation or proceeding of or
before any arbitrator, court or other
governmental authority pending or (to the best
of such Authorized Officer's knowledge,
threatened) against TNP or TGC or affecting in
any material respect any of its respective
properties, revenues or assets;
(v) TNP and TGC each shall deliver to the Agent
legal opinions of counsel to TNP and TGC (which
may take the form of bring-down letters with
respect to legal opinions delivered on the First
Amendment Effective Date) in form and substance
satisfactory to the Agent;
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 8>
(vi) the Fifth TGC Modification and Extension
Agreement shall have been duly executed and
delivered by the intended parties thereto and,
at the sole cost of TNP and TGC, the Title
Company shall have issued to the Agent (A) a
T-38 endorsement to Stewart Title Guaranty
Mortgage Policy No. M-5832-25812, a T-38
endorsement to the Stewart Title Guaranty
Mortgage Policy issued pursuant to Section 17.21
of the Credit Agreement, as amended by this
Amendment and T-38 endorsement to Stewart Title
Guaranty Mortgage Policy No. M-5802-482888, each
with respect to such Fifth TGC Mortgage
Modification and Extension Agreement and (B) a
title information report in form and substance
satisfactory to and approved by the Agent,
showing good and in defeasible title to the TGC
Mortgage Trust Estate is vested in TGC and that
the TGC Mortgage constitutes a valid first
mortgage lien on the TGC Mortgage Trust Estate
and showing that there are no intervening liens
which would adversely affect the priority of the
liens securing the Loans, subject only to
Permitted Liens;
(vii) evidence that the First Amendment Documents and
all other instruments to be recorded or filed in
connection with the effectiveness of Section 3
of this Amendment have been duly recorded and
filed in all places wherein such recording and
filing are necessary to perfect the interests of
the Agent in and to the Collateral covered
thereby; and
(viii) TNP and TGC shall each deliver to the Agent such
other certificates, documents or other
information with respect to the matters
contemplated by Section 3 of this Amendment as
the Agent may reasonably determine are necessary
to effect the transactions contemplated by
Section 3 of this Amendment.
(c) Promptly upon the satisfaction of the conditions
precedent to the effectiveness of this Amendment, as
described in Section 2(a) of this Amendment, the Agent
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 9>
shall confirm in writing delivered to TNP and TGC that the
provisions of this Amendment (except Section 3 hereof) have
become effective. Promptly upon the satisfaction of the
conditions precedent described in Section 2(b) of this Amendment
the Agent shall confirm in writing delivered to TNP and TGC that
the provisions of Section 3 of this Amendment have become
effective.
SECTION 3.
SECTION 3.01 Additional Amendments.
(a) Section 5.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 5.01. Outstanding Loans.
As of the Section 3 Effective Date, the parties hereto
hereby acknowledge the payment, prepayment or purchase
in full of the Project Loans, all interest due and
payable thereon and all other amounts due and payable
by TNP and TGC to the Banks under this Agreement and
the other Project Documents. TNP and TGC hereby
acknowledge and agree that as of the Section 3
Effective Date there are outstanding $65,000,000 in
First Replacement Loans and $140,000,000 in Second
Replacement Loans.".
(b) Section 5.02(b)(iii) of the Credit Agreement shall be
deleted in its entirety and replaced with the
following:
"(iii) [INTENTIONALLY OMITTED].".
SECTION 3.02. Joinder of Guarantor.
TNP, as the Guarantor, hereby confirms and consents to
each and every of the terms and conditions of Section 3 of this
Amendment and the Credit Agreement as amended by Section 3 of
this Amendment (including, without limitation Section 17.13 of
the Credit Agreement), and agrees that the terms and conditions
of the Guaranty are in full force and effect and unaffected by
the effectiveness of Section 3 of this Amendment and acknowledges
that there are no claims or offsets against, or defenses or
counterclaims to, the Guaranty.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 10>
SECTION 4. Conforming Changes to the Credit Agreement.
(a) The introductory paragraph of the Credit Agreement
shall be amended by adding an "s" to the end of the
term "Replacement Note Holder" in both occurrences of
such term.
(b) Recital 9 of the Credit Agreement shall be amended by
inserting the word "First" before each occurrence of
the following terms: "Secured Debentures", "Secured
Debenture Indenture", "Replacement Loans", "Replacement
Note" and "Debenture Trustee".
(c) Recital 10 of the Credit Agreement shall be amended by
inserting the word "First" before the term "Secured
Debentures".
(d) Section 1.01 of the Credit Agreement shall be further
amended as follows:
(i) Delete the following terms and their definitions
in their entirety: "Debenture Trustee",
"Replacement Loan", "Replacement Note",
"Replacement Note Holder", "Replacement Note
Maturity Date", "Scheduled Reduction Dates",
"Secured Debenture Indenture", "Secured
Debentures", "Security Documents" and "TGC
Mortgage Modifications";
(ii) Insert the following new terms and their
definitions in the appropriate alphabetical order:
""4.05 Notice" shall have the meaning
ascribed to such term in Section 4.05(c) hereof.
"Collateral Coverage Maximum Amount" shall
mean, as of any date of determination on or after
the First Amendment Effective Date, (a)
$270,000,000 minus (b) the amount of payments made
by TNP resulting in transfers made by TGC (on or
after the First Amendment Effective Date) which,
in accordance with the terms and conditions of the
Facility Purchase Agreement, have resulted in
transfers of Interests (as defined in the Facility
Purchase Agreement) in Unit 1 from TGC to TNP
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 11>
which Interests (as so defined) have been released from the lien
of the TGC Mortgage. On the First Section 4.05 Closing Date
(after giving effect to the transactions contemplated to occur on
or prior to the First Section 4.05 Closing Date), the Collateral
Coverage Maximum Amount shall be $205,000,000 subject to
reduction thereafter by virtue of transactions described in
clause (b) of the preceding sentence occurring after the First
Section 4.05 Closing Date.
"Debenture Trustees" shall mean the First
Debenture Trustee, the Second Debenture Trustee
and any Subsequent Debenture Trustee, and
"Debenture Trustee" shall mean any of them.
"Fifth TGC Modification and Extension
Agreement" shall mean the Fifth TGC Modification
and Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC, substantially in
the form of Exhibit D to the First Amendment.
"First Amendment" shall mean the Amendment
No. 1 dated as of September 21, 1993 to this
Agreement among TNP, TGC, the Banks, the Voting
Participants and the Agent.
"First Amendment Documents" shall mean the
First Amendment, the Second Replacement Note, the
Intercreditor Amendment No. 2, the First Debenture
Trustee Consent and the First Amendment Security
Documents.
"First Amendment Effective Date" shall mean
the date on which all of the conditions set forth
in Section 2(a) of the First Amendment shall have
been satisfied.
"First Amendment Security Documents" shall
mean the First Amendment TGC Mortgage
Modifications and the TNP Second Lien Mortgage
Modification No. 2.
"First Amendment TGC Mortgage Modifications"
shall mean the Fourth TGC Mortgage Modification
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 12>
and Extension Agreement and the Fifth TGC Mortgage Modification
and Extension Agreement.
"First Debenture Trustee" shall mean IBJ, as
trustee under, or any successor trustee under, the
First Secured Debenture Indenture.
"First Debenture Trustee Consent" shall mean
a First Debenture Trustee Consent duly executed
and delivered by the First Debenture Trustee,
substantially in the form of Exhibit I to the
First Amendment.
"First Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(a)
hereof.
"First Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(a)
hereof.
"First Replacement Note Maturity Date" shall
mean, subject to Section 4.05(g) hereof, the
stated maturity date of the First Secured
Debentures.
"First Section 4.05 Closing Date" shall mean
the date on which the first Section 4.05 Closing
hereunder with respect to the first series of
Second Secured Debentures shall occur.
"First Secured Debenture Indenture" shall
mean the Indenture and Security Agreement dated as
of January 15, 1992 between TNP and IBJ, as
trustee, as the same may from time to time be
amended, modified or supplemented or its
provisions waived.
"First Secured Debentures" shall mean the
debentures, due January 15, 1999, issued by TNP on
January 27, 1992 under the First Secured Debenture
Indenture.
"Fourth TGC Modification and Extension
Agreement" shall mean the Fourth TGC Modification
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 13>
and Extension Agreement among the Agent, the Collateral Agent,
TNP and TGC, substantially in the form of Exhibit C to the First
Amendment.
"IBJ" shall mean IBJ Schroder Bank & Trust
Company, a New York banking corporation.
"Intercreditor Amendment No. 2" shall mean
Amendment No. 2 to the Intercreditor Agreement
dated as of September 21, 1993 among TNP, TGC, TGC
II, the banks and the other parties thereto and
Chase in its several capacities as the Agent, the
Collateral Agent and the Agent under the Unit 2
Credit Agreement, substantially in the form of
Exhibit B to the First Amendment.
"Permitted Collateralized Indebtedness" shall
have the meaning ascribed to such term in Section
4.05(b)(i) hereof.
"Permitted Demand Date" shall mean, at any
time, with respect to any Replacement Loan or any
Replacement Note (subject to Section 4.05(g)
hereof, other than the First Replacement Loan and
the First Replacement Note), the stated maturity
date of the Secured Debentures issued on the basis
of (and at such time collateralized by) such
Replacement Loan and Replacement Note.
"Permitted Section 4.05(b)(ii) Collateralized
Indebtedness" shall have the meaning ascribed to
such term in Section 4.05(b)(ii) hereof.
"Register" shall have the meaning ascribed to
such term in Section 4.05(f) hereof.
"Relevant Instruments" shall have the meaning
ascribed to such term in Section 4.05(c) hereof.
"Replacement Agent" shall have the meaning
ascribed to such term in Section 15.08 hereof.
"Replacement Loans" shall mean the First
Replacement Loan, the Second Replacement Loan and
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 14>
any Subsequent Replacement Loans, and "Replacement Loan" shall
mean any of them.
"Replacement Note Holders" shall mean:
(a) (i) with respect to the First
Replacement Note, on the Extension Date and
prior to the pledge of the First Replacement
Note by TNP to the First Debenture Trustee
pursuant to the First Secured Debenture
Indenture, TNP; and
(ii) with respect to the Second
Replacement Note, any Subsequent Replacement
Note or any other Replacement Note (other
than a Released Replacement Note) available
at such time for pledge in conjunction with a
future Section 4.05 Closing, prior to the
pledge of such Second Replacement Note, such
Subsequent Replacement Note or such other
Replacement Note by TNP to a Second Debenture
Trustee pursuant to a Second Secured
Debenture Indenture or a Subsequent Debenture
Trustee pursuant to a Subsequent Secured
Debenture Indenture in conjunction with such
future Section 4.05 Closing, TNP;
(b) immediately upon any such pledge of
any such Replacement Note referred to in
subclause (i) or (ii) of the preceding
subsection (a), but only with respect to such
Replacement Note so pledged (a "Pledged
Replacement Note"):
(i) with respect to any benefits
(including, without limitation, rights to
vote on amendments or defaults and to attend
bank meetings) accruing to, and any
obligations pursuant to Sections 6.03, 15.05,
17.16 and 17.18 hereunder of, the holder of
such Pledged Replacement Note, the Debenture
Trustee to which such Pledged Replacement
Note was pledged (whether or not it shall
have become the legal and beneficial owner of
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 15>
such Pledged Replacement Note for all purposes); and
(ii) with respect to any other
obligations of the holder of such Pledged
Replacement Note, TNP;
(c) following the release of any such
pledge of any such Pledged Replacement Note,
but only with respect to such Pledged
Replacement Note so released (a "Released
Replacement Note") and prior to the pledge of
such Released Replacement Note in conjunction
with a future Section 4.05 Closing, TNP; and
(d) following the transfer of any
Replacement Note upon the exercise of
remedies by a Debenture Trustee under the
applicable Secured Debenture Indenture, any
transferee of such Replacement Note (other
than such Debenture Trustee in its capacity
as trustee);
provided that each of TNP, each Debenture Trustee
and any transferee shall have signed (as a
condition to becoming a Replacement Note Holder)
an instrument of adoption, substantially in the
form of Exhibit G hereto, agreeing to be bound by
and (in the case of each Debenture Trustee,
subject to the provisions of clause (b) above)
comply with terms and conditions of (x) this
Agreement applicable to Replacement Note Holders
and (y) the Intercreditor Agreement applicable to
the "Unit 1 Banks" (as defined in the
Intercreditor Agreement); and "Replacement Note
Holder" shall mean any of them. Anything in the
foregoing to the contrary notwithstanding, TNP, as
Replacement Note Holder of any Replacement Note,
shall have no voting rights under this Agreement
and shall not be considered in the determination
of "Majority Banks" for purposes of this
Agreement.
"Replacement Note Maturity Dates" shall mean
the First Replacement Note Maturity Date and with
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 16>
respect to any other Replacement Note, such Replacement Note's
Permitted Demand Date or if no demand is made on or within 90
days after such Permitted Demand Date, on January 1, 2050.
"Replacement Notes" shall mean the First
Replacement Note, the Second Replacement Note and
any Subsequent Replacement Notes, and "Replacement
Note" shall mean any of them.
"Scheduled Reduction Dates" shall mean, the
First Scheduled Reduction Date, the Second
Scheduled Reduction Date, the Third Scheduled
Reduction Date (if applicable), the Final Maturity
Date and each Replacement Note Maturity Date.
"Second Debenture Trustee" shall mean the
trustee under, or any successor trustee under, the
Second Secured Debenture Indenture.
"Second Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
"Second Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
"Second Secured Debenture Indenture" shall
mean the Indenture and Security Agreement between
TNP and the Second Debenture Trustee, as trustee,
as the same may from time to time be amended,
modified or supplemented or its provisions waived.
"Second Secured Debentures" shall mean the
debentures issued by TNP under the Second Secured
Debenture Indenture.
"Section 3 Effective Date" shall mean the
date on which all of the conditions set forth in
Section 2(b) of the First Amendment shall have
been satisfied.
"Section 4.05 Closing" shall have the meaning
ascribed to such term in Section 4.05(d) hereof.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 17>
"Section 4.05 Closing Date" shall have the
meaning ascribed to such term in Section 4.05(d)
hereof.
"Secured Debenture Indentures" shall mean the
First Secured Debenture Indenture, the Second
Secured Debenture Indenture and any Subsequent
Secured Debenture Indentures, and "Secured
Debenture Indenture" shall mean any of them.
"Secured Debentures" shall mean the First
Secured Debentures, the Second Secured Debentures
and any Subsequent Secured Debentures (which may
include subsequent series of debentures issued
under any indenture supplemental to the Second
Secured Debenture Indenture or any Subsequent
Secured Debenture Indenture), and may refer to the
Secured Debentures of any one or more such series,
as the context may require.
"Security Documents" shall mean,
collectively, the TNP Security Agreement, the
Subordination Agreement, the TGC Mortgage, the TNP
Second Lien Mortgage, the Amendment Security
Documents and the First Amendment Security
Documents.
"Subsequent Debenture Trustee" shall mean,
with respect to any Subsequent Secured Debenture
Indenture, the trustee, or any successor trustee,
under such Subsequent Secured Debenture Indenture
or, if there shall be no "trustee," per se, any
person serving in a capacity or performing
functions, in each case, similar to those of a
trustee under an indenture, regardless of the name
or legal characterization of said capacity or
functions and, in each case, any successor in such
capacity or performing such functions under such
Subsequent Secured Debenture Indenture.
"Subsequent Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
"Subsequent Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 18>
"Subsequent Secured Debenture Indentures"
shall mean any indenture or agreement, other than
the First Secured Debenture Indenture and the
Second Secured Debenture Indenture but including
any indenture supplemental to the Second Secured
Debenture Indenture, which provides for the
issuance of and sets out the terms and conditions
of any TNP debt which is to be directly or
indirectly secured by the Collateral pursuant to
and in accordance with Section 4.05 hereof,
whether or not said agreement shall be denominated
an "indenture" and whether or not said debt shall
be denominated "debentures," in each case, as the
same may from time to time be amended, modified or
supplemented or its provisions waived.
"Subsequent Secured Debentures" shall mean
any TNP debt, other than the First Secured
Debentures and the Second Secured Debentures,
which is to be directly or indirectly secured by
the Collateral pursuant to and in accordance with
Section 4.05 hereof, whether or not said debt
shall be denominated "debentures". Said term may
refer to Subsequent Secured Debentures of any one
or more such series, as the context may require.
"Subsequent TGC Modification and Extension
Agreement" shall mean a TGC Modification and
Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC, substantially in
the form of Exhibit E to the First Amendment, and
otherwise duly completed.
"Ten Acre Releases" shall have the meaning
ascribed to such term in Section 17.20(c) hereof.
"TGC Mortgage Modifications" shall mean
(a) the First TGC Modification and Extension
Agreement among the Agent, the Collateral Agent,
Donald H. Snell as mortgage trustee, TNP and TGC,
(b) the Second TGC Modification and Extension
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 19>
Agreement among the Agent, the Collateral Agent, TNP and TGC,
(c) the Third TGC Modification and Extension Agreement among the
Agent, the Collateral Agent, TNP and TGC, (d) the Fourth TGC
Modification and Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC, substantially in the form of
Exhibit C to the First Amendment, (e) the Fifth TGC Modification
and Extension Agreement among the Agent, the Collateral Agent,
TNP and TGC, substantially in the form of Exhibit D to the First
Amendment, (f) each Subsequent TGC Modification and Extension
Agreement among the Agent, the Collateral Agent, TNP and TGC,
substantially in the form of Exhibit E to the First Amendment and
(g) any other modification and extension agreement among the
Agent, the Collateral Agent, TNP and TGC, which shall evidence of
record that Replacement Loans and the Replacement Notes, issued
in accordance with Section 4.05 hereof, are secured by the
Collateral.
"TNP Second Lien Mortgage Modification No. 2"
shall mean the Second Lien Mortgage and Deed of
Trust (with Security Agreement) Modification,
Extension and Amendment Agreement No. 2 among the
Agent and TNP, substantially in the form of
Exhibit F to the First Amendment.";
(iii) The definition of "Amendment Documents" shall be
amended by inserting the word "First" before the
term "Replacement Note";
(iv) Delete clause (c) in the definition of "Interest
Payment Date" and substitute in its place the
following:
"(c) as to (i) the First Replacement Loan,
each date on which TNP is obligated to make a
deposit of cash collateral in respect of interest
on the First Secured Debentures pursuant to
Section 1119 of the First Secured Debenture
Indenture and (ii) the Second Replacement Loan and
any Subsequent Replacement Loan, each date on
which TNP is obligated to make a deposit of cash
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 20>
collateral in respect of interest on the Second Secured
Debentures or any Subsequent Secured Debentures, as applicable,
pursuant to provisions of the applicable Second Secured Debenture
Indenture or Subsequent Secured Debenture Indenture similar to
the provisions referred to in subclause (i) of this clause (c)
and providing for the deposit of cash collateral in respect of
payment of interest.";
(v) The definition of "Loans" shall be amended by
adding an "s" to the end of the term "Replacement
Loan";
(vi) The definition of "Majority Banks" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder";
(vii) The definition of "Net Proceeds" shall be amended
by inserting the phrase "when used in Section
8.02(c) hereof," after the term "Net Proceeds";
(viii) The definition of "New Debt Securities" shall be
amended by inserting the word "First" before the
term "Secured Debentures";
(ix) The definition of "Notes" shall be amended by
adding an "s" to the end of term "Replacement
Note";
(x) Delete clause (b) in the definition of "Post-
Default Rate" and substitute in its place the
following:
"(b) subject to Section 4.05(g) hereof, in
respect of any principal of any Replacement Loan
or Replacement Note, a rate per annum, as of any
date of determination, equal to the interest rate
applicable to (x) the Secured Debentures to which
such Replacement Loan relates as of such date of
determination as specified in the applicable
Secured Debenture Indenture pursuant to which such
Secured Debentures were issued or (y) if such
Replacement Loan does not as of such date of
determination serve as the basis for the issuance
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 21>
of any outstanding Secured Debentures, a rate per annum equal to
the Prime Rate.";
(xi) The definition of "Principal Office" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder";
(xii) The definition of "Project Creditors" shall be
amended by (A) deleting the phrase ", after the
Extension Date," and (B) adding an "s" to the end
of the term "Replacement Note Holder";
(xiii) The definition of "Project Documents" shall be
amended by (A) adding an "s" to the end of the
term "Replacement Note" and (B) inserting the term
"the First Amendment Documents," after the term
"this Agreement,";
(xiv) The definition of "Secured Parties" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder"; and
(xv) The definition of "Voting Participant Notice"
shall be amended by (A) substituting the word "a"
for "the" before the first occurrence of the term
"Replacement Note Holder" and (B) substituting the
word "such" for "the" before the second occurrence
of such term.
(e) Section 1.02 of the Credit Agreement shall be amended
by (A) deleting the phrase "the Replacement Note
Holder" in the second sentence thereof and inserting in
lieu thereof the phrase "any of the Replacement Note
Holders" and (B) deleting the phrase "the Secured
Debenture Indenture" in the third sentence thereof and
inserting in lieu thereof the phrase "any of the
Secured Debenture Indentures".
(f) Section 2 of the Credit Agreement shall be amended by
inserting the phrase "and, with respect to a Section
4.05 Closing (in each case, assuming the due execution
and delivery of documents required to be delivered in
connection therewith and the performance of the other
conditions precedent thereto by the parties (other than
TNP or TGC) thereto), the applicable Section 4.05
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 22>
Closing Date" after each occurrence of the term "Extension Date"
therein.
(g) Section 2.10 of the Credit Agreement shall be amended
by inserting after the word "Except" the following:
"(i) for the replacement of Project Notes by
Replacement Notes, and (ii)".
(h) Section 2.22 of the Credit Agreement shall be amended
by inserting after the word "Except" the following:
"(i) for the replacement of Project Notes by
Replacement Notes, and (ii)".
(i) Section 4.01 of the Credit Agreement shall be amended
by deleting the phrase "none of the Banks and the
Replacement Note Holder" in the fourth sentence thereof
and inserting in lieu thereof the phrase "neither any
of the Banks nor any of the Replacement Note Holders".
(j) Section 4.05 of the Credit Agreement shall be amended
as follows:
(i) Subsection (a) shall be amended by inserting, with
or without underscoring as appropriate, the word
"First" before each occurrence of the following
terms: "Secured Debentures", "Replacement Loan"
and "Replacement Note";
(ii) Delete subsection (b) in its entirety; and
(iii) Add new subsections (b), (c), (d), (e), (f) and
(g) as follows:
"(b) (i) Subject to the provisions of
Section 4.05(b)(ii) hereof, additional or
replacement (A) indebtedness of TNP consisting of
Secured Debentures issued on the basis of (and
collateralized by) Replacement Notes issued
hereunder which are in turn secured by the
Collateral and/or (B) indebtedness of TGC
consisting of (1) Project Loans and/or (2)
Replacement Loans (the indebtedness referred to in
the foregoing clauses (A) and (B) hereinafter
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 23>
referred to as "Permitted Collateralized Indebtedness") may be
secured, directly or indirectly, by the Collateral, provided that
in any such case the liens and security interests on the
Collateral directly or indirectly securing Permitted
Collateralized Indebtedness are provided on substantially the
same terms and conditions as the liens and security interests
securing the Loans outstanding on the First Amendment Effective
Date and (B) the aggregate principal amount of Loans outstanding
hereunder may not at any time be greater than the Collateral
Coverage Maximum Amount at such time.
(ii) Until the payment, prepayment or
purchase in full of the Project Loans outstanding
on the First Amendment Effective Date, all
interest due and payable thereon and all other
amounts due and payable by TNP and TGC to the
Banks under this Agreement and the other Project
Documents and so long as any of the First Secured
Debentures remain outstanding, only additional or
replacement Permitted Collateralized Indebtedness
constituting debt securities (and not bank debt)
or Loans ("Section 4.05(b)(ii) Permitted
Collateralized Indebtedness") may be secured,
directly or indirectly, by the Collateral and only
if (A) the terms, conditions and limitations of
Section 4.05(b)(i) hereof are satisfied and
complied with, (B) the proceeds of any such
additional Permitted Section 4.05(b)(ii) Permitted
Collateralized Indebtedness of TNP are applied to
purchase Project Loans outstanding on the First
Amendment Effective Date, (C) any such additional
or replacement Permitted Section 4.05(b)(ii)
Collateralized Indebtedness of TNP (and the
related Section 4.05(b)(ii) Collateralized
Indebtedness of TGC constituting Replacement
Loans) has maturities longer than the Project
Notes outstanding on the First Amendment Effective
Date and then outstanding and not shorter than the
maturity of the First Secured Debentures then
outstanding, (D) any such additional or
replacement Permitted Section 4.05(b)(ii)
Collateralized Indebtedness of TNP (and the
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 24>
related Section 4.05(b)(ii) Collateralized Indebtedness of TGC
constituting Replacement Loans) is not subject to prepayment
(except on the same terms and conditions of prepayment applicable
to the First Secured Debentures) prior to the maturity date of
the First Secured Debentures then outstanding and (E) any such
additional or replacement Permitted Section 4.05(b)(ii)
Collateralized Indebtedness of TNP (and the related
Section 4.05(b)(ii) Collateralized Indebtedness of TGC
constituting Replacement Loans) is subject to other covenants,
terms, conditions and restrictions for the benefit of the Secured
Parties substantially the same as those herein with respect to
the First Secured Debentures.
(c) Upon each occasion that TNP or TGC
desires to issue additional or replacement
Permitted Collateralized Indebtedness (other than
Permitted Collateralized Indebtedness constituting
Project Loans):
(i) TNP and TGC shall deliver, not less
than 30 days prior to the anticipated date of the
applicable Section 4.05 Closing, to the Agent (A)
an initial notice (a "4.05 Notice") of its
intention to issue such Permitted Collateralized
Indebtedness containing the proposed terms of such
Permitted Collateralized Indebtedness and the
terms of the security therefor in sufficient
detail to enable the Agent, the Banks (if any
Project Loans are outstanding) and the Replacement
Note Holders to determine whether such terms
comply with the terms and conditions of Section
4.05(b) hereof, (B) substantially final forms of
each document, certificate, title information
report, Uniform Commercial Code financing
statement and other instrument (the "Relevant
Instruments") required to be delivered by TNP or
TGC to the Agent under this Section 4.05 in
connection with the applicable Section 4.05
Closing, (C) a certificate signed by an Authorized
Officer of each of TNP and TGC to the effect that
such terms comply with the terms and conditions of
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 25>
Section 4.05(b) hereof and (D) an opinion of counsel for each of
TNP and TGC substantially in the form of Exhibit G to the First
Amendment. TNP and TGC shall deliver promptly to the Agent such
additional information as the Agent may reasonably request
concerning the proposed transaction;
(ii) the Agent shall within five days of
receipt of a 4.05 Notice forward to each Bank (if
any Project Loans are outstanding) and each
Replacement Note Holder a copy of such 4.05 Notice
and a copy of each of the Relevant Instruments
received by the Agent in connection with such 4.05
Notice. Not later than ten days after receipt of
such 4.05 Notice from the Agent, the Majority
Banks or the Banks (if any Project Loans are
outstanding) holding at least 66-2/3% of the
outstanding principal amount of the Project Loans,
or the Agent acting with the consent of such
Banks, may forward to each of TNP and TGC a notice
stating that, the terms and conditions of the
proposed Section 4.05 Closing do not meet the
terms and conditions set forth in Section 4.05
hereof and stating with reasonable specificity why
said terms and conditions do not meet the terms
and conditions of Section 4.05 hereof; and
(iii) TNP or TGC shall (A) revise the
terms and conditions of the proposed transaction
such that the terms and conditions of Section 4.05
hereof are in fact satisfied by the terms and
conditions of the proposed transaction or (B)
cancel the proposed transaction.
(d) TNP shall designate a date that is a
Business Day for the closing of the proposed
transactions. The designation shall be made by
notice received by the Agent not less than 20 days
after the notice under Section 4.05(c)(i) and not
less than six days prior to such designated date.
The proposed transaction shall be effected at a
closing (a "Section 4.05 Closing") on such
designated date or such other date (a
"Section 4.05 Closing Date") as may be agreed upon
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 26>
by TNP, TGC and the Agent. Prior to or at each Section 4.05
Closing:
(i) TNP, TGC, the Agent and, as
applicable, the Collateral Agent each shall sign
and deliver, in recordable form to the Agent and,
as applicable, the Collateral Agent, such
financing statements under the Uniform Commercial
Code as are necessary to protect, preserve and
maintain the priority of the liens contemplated by
the Security Documents and TNP and TGC shall
provide (A) copies of Uniform Commercial Code
search reports with respect to each of TGC and
TNP, as "debtor", in each jurisdiction in which
such financing statements are to be filed and (B)
all other instruments to be recorded or filed or
delivered in connection with such Section 4.05
Closing;
(ii) TGC shall deliver to the Agent a
Subsequent TGC Modification and Extension
Agreement and, at the sole cost of TNP and TGC,
the Title Company shall have issued to the Agent,
a T-38 endorsement (or if a T-38 endorsement is no
longer available, such other endorsement as shall
have the same scope and purpose as a T-38
endorsement on the First Amendment Effective Date)
to the title policy or policies which insure the
lien of the TGC Mortgage securing the Loans
outstanding hereunder and evidenced by Project
Notes or Replacement Notes on such date, each with
respect to such TGC Mortgage Modification and
Extension Agreement;
(iii) At the sole cost of TNP and TGC,
the Title Company shall deliver to the Agent a
title information report, showing that good and
indefeasible title to the TGC Mortgage Trust
Estate is vested in TGC and that the TGC Mortgage
constitutes a valid first mortgage lien on the TGC
Mortgage Trust Estate and showing that there are
no intervening liens which would adversely affect
the priority of the liens securing Loans, subject
only to the Permitted Liens;
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 27>
(iv) TNP and TGC each shall deliver to
the Agent legal opinions of counsel to TNP and TGC
dated the applicable Section 4.05 Closing Date and
substantially in the forms of Exhibit H hereto;
(v) TNP and TGC each shall deliver to
the Agent (A) certified copies of the resolutions
of its board of directors authorizing the issuance
of such Permitted Collateralized Indebtedness and
the collateral therefor furnished pursuant to the
terms and conditions of this Section 4.05 and
authorizing the execution, delivery and
performance of the documentation necessary
therefor and (B) certified copies of its charter,
bylaws, good standing certificates and franchise
tax certificates from the State of Texas and all
other places where necessary in light of the
business and properties it conducts and owns and
intends to conduct and own;
(vi) TNP and TGC each shall deliver to
the Agent a certificate signed by an Authorized
Officer of TNP or TGC, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying the name, incumbency and signature of
each individual authorized to execute any
documents or certificates in connection with such
Section 4.05 Closing, upon which certificates and
documents the Secured Parties may conclusively
rely;
(vii) TNP and TGC each shall deliver to
the Agent a certificate signed by an Authorized
Officer of TNP or TGC, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying that there shall be no injunction,
writ, preliminary restraining order or any other
order of any nature issued by any arbitrator,
court or other governmental authority directing
that the transactions conducted, or the
transactions contemplated in the documentation
executed and/or delivered, at such Section 4.05
Closing not be consummated as herein or therein
provided and certifying further, except as
disclosed herein, there shall be no material
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 28>
litigation, investigation or proceeding of or before any
arbitrator, court or other governmental authority pending or (to
the best of such Authorized Officer's knowledge, threatened)
against TNP or TGC or affecting any of their respective
properties, rights, revenues or assets, or the Project or any of
the transactions to be effected at such Section 4.05 Closing;
(viii) TNP and TGC each shall deliver to
the Agent a certificate signed by an Authorized
Officer of TNP or TGC, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying that (A) the representations and
warranties of each of TNP and TGC, as applicable,
contained in Section 2 hereof and in each of the
other Project Documents to which such Person is a
party shall be true and correct on and as of such
Section 4.05 Closing Date as if made on and as of
such date (or, if stated to have been made solely
as of an earlier date, were true and correct as of
such earlier date), (B) no Default hereunder, and
no default by either TNP or TGC under any of the
other Project Documents to which either TNP or TGC
is a party, has occurred and is continuing on such
date and (C) to the best of such Authorized
Officer's knowledge, no default by any other
Person to any other Project Document has occurred
and is continuing on such date;
(ix) TNP and TGC each shall deliver to
the Agent a certificate signed by an Authorized
Officer of TNP or TGC, as applicable, certifying
that (A) it has obtained all Government Approvals
necessary under applicable laws and regulations in
connection with each of the transactions
contemplated by the applicable Section 4.05
Closing and (B) all such Government Approvals have
been duly obtained, were validly issued and are
held by and in the name of TNP or TGC, as
applicable, and are final, in full force and
effect and not subject to appeal; and
(x) TNP and TGC shall (A) if the
transactions then consummated involve a refunding
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 29>
of existing Secured Debentures already secured by the
Collateral, pay to the relevant Debenture Trustee in Dollars, in
immediately available funds, all amounts due and payable under
the applicable Secured Debenture Indenture and (B) if the
transactions then consummated involve the purchase by TNP or TGC
of Project Loans, pay to the Agent in Dollars, in immediately
available funds, the purchase price for the Project Loans then
being purchased pro rata from the Banks.
After the payment, prepayment or purchase in full
of the Project Loans outstanding on the First
Amendment Effective Date, all interest due and
payable thereon and all other amounts due and
payable by TNP and TGC to the Banks under this
Agreement and the other Project Documents, the
Agent shall be entitled to rely solely upon the
certificates and opinions of counsel delivered
hereunder in making any determinations required to
be made by the Agent in this Section 4.05.
(e) If the transactions then consummated
involve the purchase by TNP of Project Loans, then
on each such Section 4.05 Closing Date (and, if
such Section 4.05 Closing Date is prior to the
Section 3 Effective Date, subject to Section
5.02(b)(iii) hereof) TNP shall purchase from each
of the Banks (pro rata according to the aggregate
outstanding principal amount of each Bank's
Project Loans) a portion of such Bank's Project
Loans and each Bank shall sell to TNP (without
recourse and without any representation or
warranty whatsoever other than as to title and
absence of liens) such pro rata portion of such
Bank's Project Loans such that the aggregate
principal amount of Project Loans so purchased is
equal to the amount of the proceeds (at the
election of TNP, net of any offering or similar
transaction costs) from the Second Secured
Debentures or Subsequent Secured Debentures, as
applicable, issued on such Section 4.05 Closing
Date. The purchase price for the Project Loans so
purchased by TNP shall be equal to the principal
amount thereof. Simultaneously with the sale of
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 30>
each Bank's Project Loans to TNP, TGC shall pay to the Agent,
for the account of each Bank, all accrued and unpaid interest on
such portion of such Bank's Project Loans to be sold to TNP plus
(except with respect to the Project Loans purchased with the
proceeds of Second Secured Debentures on the First Section 4.05
Closing Date) the aggregate amount (if any) which would have been
payable to each Bank under Section 7.05 hereof had such portion
of the Project Loans then been prepaid rather than purchased.
TNP shall pay the aggregate amount of such purchase price at such
Section 4.05 Closing to the Agent, for the account of each
respective Bank, in Dollars in immediately available funds.
Effective immediately upon the payment by TNP of such purchase
price, the aggregate principal amount of the outstanding Project
Loans so purchased by TNP shall be converted into a loan or loans
(with respect to such purchase of Project Loans from proceeds of
the Second Secured Debentures, whether one or more, the "Second
Replacement Loan" and with respect to each such purchase of
Project Loans from the proceeds of any Subsequent Secured
Debentures, in each case, whether one or more, each a "Subsequent
Replacement Loan") of equal principal amount. TGC shall execute
and deliver to TNP at such Section 4.05 Closing a promissory note
or notes (with respect to the purchase of the Second Replacement
Loan, whether one or more, the "Second Replacement Note" and with
respect to the purchase of each Subsequent Replacement Loan, in
each case, whether one or more, each a "Subsequent Replacement
Note") payable to TNP or its registered assigns in an aggregate
principal amount equal to the aggregate principal amount of such
Second Replacement Loan or such Subsequent Replacement Loan, as
applicable, and, in each case, substantially in the form of
Exhibit A to the First Amendment and otherwise duly completed.
The Second Replacement Note and any such Subsequent Replacement
Notes shall be dated, and shall bear interest from, the Section
4.05 Closing Date on which such Second Replacement Note or any
such Subsequent Replacement Notes, as applicable,
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 31>
are issued. No Replacement Note Holder shall be entitled to
have its Replacement Note subdivided, by exchange for promissory
notes of lesser denominations or otherwise, except in connection
with a Section 4.05 Closing or in connection with an assignment
to TNP of a portion of a Replacement Loan and Replacement Note in
conjunction with a release of a Pledged Replacement Note (as
defined in the definition of "Replacement Note Holder" in Section
1.01 hereof) expressly contemplated by the related Secured
Debenture Indenture. The indebtedness evidenced by the Second
Replacement Note and any Subsequent Replacement Notes, together
with the indebtedness evidenced by the First Replacement Note and
by the Project Notes, shall be secured by the Security Documents.
Each Bank shall, prior to any transfer of such Bank's Project
Note, place on such Project Note a notation to the effect that a
portion of the indebtedness evidenced thereby has been
transferred to TNP pursuant to this Section 4.05; provided, that,
if TNP purchases the entire outstanding principal amount of a
Bank's Project Loans and TNP pays to such Bank all interest due
and payable on such Project Loans and all other amounts due and
payable by TNP and TGC to such Bank under this Agreement and the
other Project Documents, such Bank shall endorse and deliver its
Project Note to the Agent so that such Project Note to TNP and,
upon endorsement to TNP of all such Project Notes (x) such
Project Notes shall automatically, without further action by any
Person, become Subsequent Replacement Notes (and the indebtedness
evidenced thereby shall automatically, without further action by
any Person, become Subsequent Replacement Loans) having an
outstanding principal amount equal to the outstanding principal
amount of the Project Loans at the time of such purchase and
shall automatically, without further action by any Person, have
the Replacement Note Maturity Date, the interest rate (including
without limitation the Post-Default Rate) and all other terms and
conditions contemplated by this Agreement to be applicable to a
Subsequent Replacement Loan and a
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 32>
Subsequent Replacement Note that do not at such time serve as
the basis for the issuance of outstanding Secured Debentures and
(y) such Project Notes (and the indebtedness evidenced thereby)
as so recharacterized as Subsequent Replacement Notes and
Subsequent Replacement Loans shall be available to TNP and TGC
for use in conjunction with a future Section 4.05 Closing (and in
connection therewith, such Project Note as so recharacterized as
a Subsequent Replacement Note may, at the option of TNP and TGC,
be replaced by a Replacement Note in the form of Exhibit A to the
First Amendment).
(f) The Agent will keep at its principal
office in New York, New York, or such other office
as the Agent may designate in writing to the
Replacement Note Holders, a register (the
"Register") in which the Agent will provide for
the registration of Replacement Loans and
Replacement Notes and the registration of
transfers of Replacement Loans and Replacement
Notes. In the event that any Replacement Loan or
any Replacement Note is held by TNP or serves as
the basis for the issuance of any outstanding
Secured Debentures in accordance with Section 4.05
hereof, the applicable Replacement Note Holder
shall notify the Agent for notation in the
Register of the Permitted Demand Date, the
interest rate and the Post-Default Rate applicable
to such Replacement Loan or Replacement Note. The
Agent may treat the Person in whose name any
Replacement Loan or Replacement Note is registered
in such Register as the owner thereof for the
purpose of receiving payment of the principal of
and the premium, if any, and interest on such
Replacement Loan or Replacement Note and for all
other purposes under this Agreement. The Agent
may rely upon the information set forth in the
Register for any determination of the Permitted
Demand Date, the interest rate and the Post-
Default Rate applicable to any Replacement Loan or
Replacement Note required under or in connection
with this Agreement.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 33>
(g) If, on or before any date on which TGC
is obligated to make any payment of any principal
of or interest under a Replacement Note, no Event
of Default (as defined in the Secured Debenture
Indenture the lien of which attaches to such
Replacement Note) shall have occurred and be
continuing and TNP shall have delivered (i) if
such Replacement Note is the First Replacement
Note, to the First Debenture Trustee pursuant to
Section 1119 of the First Secured Debenture
Indenture and (ii) if such Replacement Note is the
Second Replacement Note or a Subsequent
Replacement Note, to the applicable Debenture
Trustee pursuant to a provision in the applicable
Secured Debenture Indenture similar to the
provision referred to in subclause (i) of this
clause (g), cash to be held as collateral security
under the applicable Secured Debenture Indenture
that is at least equal in amount to the payment
owing on such date by TGC under such Replacement
Note, then TGC shall not be required to make such
payment under such Replacement Note; provided,
that, if at any time and for any reason any such
payment by TNP is rescinded or otherwise required
to be restored by the applicable Debenture Trustee
or any holder of the applicable Secured
Debentures, whether as a result of bankruptcy or
reorganization proceedings or otherwise,
immediately upon such rescission or restoration
being imposed or required
(A) an amount equal to the amount that has been
rescinded or is required to be restored shall
become immediately due and payable by TGC
under such Replacement Note, and
(B) TGC shall pay to such Replacement Note Holder
an amount equal to all reasonable costs and
expenses (including, without limitation,
attorney's fees and any interest payable by
the applicable Debenture Trustee in
connection with such rescission or
restoration).
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 34>
In the event that any Secured Debenture is paid in
full by TNP and, by operation of this clause (i)
TGC is not obligated to make further payments of
principal and interest under or with respect to
the related Replacement Loan and Replacement Note,
(x) the indebtedness of TGC under this Agreement
with respect to such Replacement Loan and
Replacement Note shall not be discharged but shall
be continued, (y) such Replacement Loan and
Replacement Note, shall automatically, without
further action by any Person, have the Replacement
Note Maturity Date, the interest rate (including
without limitation the Post-Default Rate) and all
other terms and conditions contemplated by this
Agreement to be applicable to a Subsequent
Replacement Loan and a Subsequent Replacement Note
that do not at such time serve as the basis for
the issuance of outstanding Secured Debentures and
(z) such Replacement Loan and Replacement Note
shall be available to TNP and TGC for use in
conjunction with a future Section 4.05 Closing
(and in connection therewith, such Replacement
Note may, at the option of TNP and TGC, be
replaced by a Replacement Note in the form of
Exhibit A to the First Amendment).
Notwithstanding any other provision in this
Section 4.05 to the contrary, until the payment,
prepayment or purchase in full of the Project
Loans outstanding on the First Amendment Effective
Date, all interest due and payable thereon and all
other amounts due and payable by TNP and TGC to
the Banks under this Agreement and the other
Project Documents, no Section 4.05 Closing shall
occur unless TNP and TGC shall each have delivered
to the Agent such other certificates, documents or
other information in connection with the
applicable Section 4.05 Closing as the Agent may
reasonably determine are necessary to effect the
transactions contemplated by Section 4.05 hereof
at such Section 4.05 Closing.".
(k) Section 5.02 of the Credit Agreement shall be amended
as follows:
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 35>
(A) in subsection (a) delete the last sentence in its
entirety and substitute in its place the
following: "Upon the payment, prepayment or
purchase in full of the Project Loans outstanding
on the First Amendment Effective Date, all
interest due and payable thereon and any other
amounts due and payable by TNP and TGC to the
Banks under this Agreement and the other Project
Documents, and subject to the terms and conditions
of Section 4.05(b) hereof, TNP and TGC may prepay
or otherwise reduce or cancel the Replacement
Loans in accordance with the terms and conditions
of the applicable Secured Debenture Indenture.";
(B) in subsection (b)(i) insert, after the words "TGC
shall repay", the words "or TNP shall purchase in
accordance with the terms and conditions of
Section 4.05 hereof,";
(C) delete the word "and" at the end of subsection
(b)(i)(D) thereof;
(D) in subsection (b)(i)(E), substitute the word
"each" for the word "the" before the term
"Replacement Note" and substitute the word
"maturing" for the word "outstanding";
(E) delete the preface of subsection (b)(iii) in its
entirety and substitute in its place the
following:
"On each date upon which TNP receives the proceeds
of any Permanent Financing (other than the
proceeds from the issuance of the New Debt
Securities which have been applied in accordance
with Section 8.02(c) hereof and the proceeds from
the issuance of the Second Secured Debentures and
the first mortgage bonds issued in connection
therewith which have been applied in accordance
with Section 2(b)(i) of the First Amendment), TNP
or TGC shall prepay or purchase the Project Loans
in an amount equal to (a) 100% (except as provided
in subparagraph (C) hereof) of the net proceeds of
such Permanent Financing less (b) all amounts
prepaid or purchased since the date of the
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 36>
previous prepayment or purchase under this Section 5.02(b)(iii),
except to the extent such proceeds:";
(F) in subsection (b)(iii)(B)(aa) delete the
parenthetical expression "(other than the Secured
Debentures)" in its entirety;
(G) delete subsection (b)(iii)(D) in its entirety,
substitute a "." for the phrase "; or" at the end
of subsection (b)(iii)(C) and insert the word "or"
after the ";" at the end of subsection
(b)(iii)(B);
(H) in subsection (g) add an "s" to the end of the
term "Replacement Note Holder"; and
(I) in subsection (h) substitute the word "a" for
"the" before the term "Replacement Loan" and
insert after the term "Replacement Note" the
phrase "evidencing such Replacement Loan".
(l) Section 5.04 of the Credit Agreement shall be amended
by (A) substituting the word "any" for "the" before the
term "Replacement Loan" in the second sentence thereof;
(B) adding an "s" to the end of the term "Replacement
Note Holder" in the third sentence thereof and (C)
substituting the word "any" for "the" before both
occurrences of the term "Replacement Note Holder" in
the fourth sentence thereof.
(m) Section 5.05 of the Credit Agreement shall be amended
as follows:
(A) substitute the word "each" for "the" before the
term "Replacement Note Holder" in the first
sentence of subsection (a) thereof; and
(B) delete subsection (a)(iv) in its entirety and
substitute in its place the following:
"(iv) Replacement Loan and Replacement Note Rate.
Subject to Section 4.05(g) hereof, if such
Loan is a Replacement Loan, a rate per annum
at all times equal to (A) the rate of
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 37>
interest payable on the Secured Debentures the proceeds of which
were used to purchase the Project Loans that were converted into
such Replacement Loan and as specified in the Secured Debenture
Indenture pursuant to which such Secured Debentures were issued,
as in effect on (x) with respect to the First Secured Debenture
Indenture, the Extension Date and (y) with respect to the Second
Secured Debenture Indenture or any Subsequent Secured Debenture
Indenture, the applicable Section 4.05 Closing Date, as the case
may be, (B) the rate of interest payable on the Secured
Debentures, the proceeds of which were used to refund the Secured
Debentures to which such Replacement Loan theretofore related and
as specified in the Second Secured Debenture Indenture or the
Subsequent Secured Debenture Indenture, pursuant to which such
refunding Secured Debentures were issued, as in effect on the
applicable Section 4.05 Closing Date or (C) if such Replacement
Loan does not serve as the basis for the issuance of any
outstanding Secured Debentures, a rate per annum equal to the
Prime Rate.".
(n) Delete Section 5.10 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 5.10. [INTENTIONALLY OMITTED].".
(o) Section 6.02 of the Credit Agreement shall be amended
as follows:
(A) in the last sentence of subsection (a) add an "s"
to the end of the terms "Replacement Note" and
"Replacement Note Holder" and insert the word
"applicable" before the term "Replacement Note
Holders" (as so amended);
(B) in the second sentence of subsection (b) add an
"s" to the end of the term "Replacement Loan"; and
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 38>
(C) in subsection (c) substitute the word "any" for
"the" before both occurrences of the term
"Replacement Note" and insert the word "related"
before the term "Secured Debentures".
(p) Delete Section 6.03 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 6.03. Sharing of Payments, Etc. If any
Bank or any Replacement Note Holder shall obtain any
payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on
account of the Loans made or acquired by it (other than
pursuant to Section 7 hereof) in excess of its ratable
share of payments on account of the Loans obtained by
all the Banks and all the Replacement Note Holders,
such Bank or such Replacement Note Holder shall
forthwith purchase from the other Banks and the other
Replacement Note Holders such participations in the
Loans held by them as shall be necessary to cause such
purchasing Bank or such purchasing Replacement Note
Holder to share the excess payment ratably with each of
them; provided, that, if all or any portion of such
excess payment is thereafter recovered from such
purchasing Bank or such purchasing Replacement Note
Holder, such purchase from such Bank or such
Replacement Note Holder shall be rescinded and such
Bank or such Replacement Note Holder shall repay to the
purchasing Bank or the purchasing Replacement Note
Holder the purchase price to the extent of such
recovery together with an amount equal to such Bank's
or such Replacement Note Holder's ratable share
(according to the proportion of (a) the amount of such
Bank's or such Replacement Note Holder's required
repayment to (b) the total amount so recovered from the
purchasing Bank or the Replacement Note Holder) of any
interest or other amount paid or payable by the
purchasing Bank or the purchasing Replacement Note
Holder in respect of the total amount so recovered.
TGC agrees that any Bank or Replacement Note Holder so
purchasing a participation from another Bank or
Replacement Note Holder pursuant to this Section 6.03
may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of
set-off) with respect to such participation as fully as
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 39>
if such Bank or such Replacement Note Holder were the direct
creditor of TGC in the amount of such participation.".
(q) Section 9.32(a) of the Credit Agreement shall be
amended by deleting the last sentence thereof.
(r) Section 10.03 of the Credit Agreement shall be amended
by deleting the reference to "Section 9.32(a) and
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 40>
substituting in its place a reference to "Section 4.05(b)".
(s) Section 10.06 of the Credit Agreement shall be amended
by deleting the "." and substituting in its place the
following:
"provided, that TGC may advance to TNP funds obtained
as proceeds of Project Loans.".
(t) Section 10.08(e) of the Credit Agreement shall be
amended by deleting the phrase "the last sentence of
Section 9.32(a)" and substituting in its place "Section
4.05".
(u) Delete Section 10.09 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.09. TGC shall not permit the
aggregate principal amount of Loans outstanding
hereunder to exceed at any time the Collateral Coverage
Maximum Amount at such time.".
(v) Delete Section 10.13 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.13. TNP shall not permit the
aggregate principal amount of Loans outstanding
hereunder to exceed at any time the Collateral Coverage
Maximum Amount at such time.".
(w) Section 10.16 of the Credit Agreement shall be amended
by (A) adding an "s" to the end of the term "Secured
Debenture Indenture" in clause (d) thereof and (B)
deleting the reference to "Section 9.32(a)" and
substituting in its place a reference to "Section
4.05(b)".
(x) Delete Section 10.21 (b) of the Credit Agreement in its
entirety and substitute in its place the following:
"(b) TNP will provide the Banks and the
Replacement Note Holders, as soon as available and in
any event within 60 Business Days after each Quarterly
Date, a certificate of an Authorized Officer of TNP
showing, in reasonable detail, the calculation of
Interest Coverage, Cumulative Common Dividends,
Cumulative Net Income Available for Common, Equity
Capital and Total Capitalization, and for the period
from January 1, 1993 until the provisions of Section
9.32 hereof have terminated, Available Amount
(including the components thereof); in each case,
determined as of such Quarterly Date.".
(y) Delete Section 10.22 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.22. Equity Capital. TNP will not
pay or declare any Common Dividend if the ratio of
Equity Capital to Total Capitalization, determined from
time to time as of the next preceding Quarterly Date,
is less than 20%.".
(z) Delete Section 10.23 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.23. Amendment or Modification of
Secured Debenture Indentures. Until the payment,
prepayment or purchase in full of the Project Loans
outstanding on the First Amendment Effective Date, all
interest due and payable thereon and all other amounts
due and payable by TNP and TGC to the Banks under this
Agreement and the other Project Documents and so long
as any of the First Secured Debentures remain
outstanding, without the consent of the Majority Banks
(excluding for such purpose the Replacement Note Holder
with respect to the affected Secured Debenture
Indenture, or supplement thereto, referred to below),
neither TNP nor any of its Affiliates may enter into
any amendment, modification, supplement or waiver of a
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 41>
Secured Debenture Indenture which shall (1) shorten the stated
maturity of the principal of, or any installment of interest on,
any Secured Debenture then outstanding, or increase the principal
amount thereof or the rate of interest thereon, (2) grant any
additional collateral security for any Secured Debenture or (3)
have the effect of impairing in any material respect, directly or
indirectly, the rights or interests of the Banks or the
Replacement Note Holders in the Collateral or under this
Agreement or any other Project Document; provided, that, nothing
in this Section 10.23 shall prohibit (i) the pledge of the First
Replacement Note under the First Secured Debenture Indenture as
in effect on the Extension Date, (ii) the pledge of the Second
Replacement Note under the Second Secured Debenture Indenture as
in effect on the applicable Section 4.05 Closing Date and (iii)
securing Secured Debentures in accordance with Section 4.05
hereof under Subsequent Secured Debenture Indentures (including
provisions for substitution of collateral) in each case as in
effect on the applicable Section 4.05 Closing Date.".
(aa) Section 11 of the Credit Agreement shall be amended by
(A) substituting the word "any" for "the" before the
term "Secured Debenture Indenture" in subsection (m)
thereof and (B) substituting the word "each" for "the"
before the term "Replacement Note Holder" in the last
sentence of said Section.
(bb) Delete Section 11(n) of the Credit Agreement in its
entirety and substitute in its place the following:
"(n) Except in accordance with the terms and
conditions of Section 4.05 hereof, prior to the
payment, prepayment or purchase in full of the
Project Loans outstanding on the First Amendment
Effective Date, all interest due and payable
thereon and all other amounts due and payable by
TNP and TGC to the Banks under this Agreement and
the other Project Documents and so long as the
First Secured Debentures remain outstanding, TNP
shall have, or shall have permitted any of its
Affiliates to, prepay, repay or make any other
payments (except the payment of interest and the
reimbursement of costs and expenses of a Secured
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 42>
Debenture Trustee or holders of Secured Debentures or payments
pursuant to indemnification of a Secured Debenture Trustee) or
distributions on account of, or the setting apart of money for a
sinking fund or other analogous fund for, the purchase,
redemption, refund or other acquisition of, any Secured
Debentures, but excluding any payments with respect to interest
payable thereon; provided, that, so long as TNP shall be
complying with the provisions of Section 9.33 hereof in the same
manner and at the same time that TNP is complying with the
provisions of Section 1009 of the First Secured Debenture
Indenture (as in effect on the Extension Date), similar
provisions of the Second Secured Debenture Indenture (as in
effect on the applicable Section 4.05 Closing Date) or any
Subsequent Secured Debenture Indenture (in each case, as in
effect on the applicable Section 4.05 Closing Date), it shall not
be a default if TNP purchases or otherwise acquires First Secured
Debentures, Second Secured Debentures or Subsequent Secured
Debentures, as applicable, after the occurrence of a Change of
Control Event pursuant to Section 1009 of the First Secured
Debenture Indenture, or such similar provisions of the Second
Secured Debenture Indenture or any Subsequent Secured Debenture
Indenture pursuant to which such Subsequent Secured Debentures
were issued.".
(cc) Section 12.01 of the Credit Agreement shall be amended
by adding at the beginning of the text thereof, prior
to the term "TGC", the following:
"Prior to the payment in full of the Project Loans
outstanding on the First Amendment Effect Date, all
interest payable thereon and all other amounts due and
payable by TNP and TGC to the Banks under this
Agreement and the other Project Documents,".
(dd) Section 12.03 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 12.03. Payment of New Participants. Upon
payment, prepayment or purchase in full of the Project
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 43>
Loans held by each Bank (excluding the New Participants), such
Bank shall remit to each of the New Participants, in Dollars in
immediately available funds, such New Participant's pro rata
share of the participations purchased by such New Participant
under the New Participation Agreement.".
(ee) Section 15.01 of the Credit Agreement shall be amended
as follows:
(A) in the first sentence substitute the word "each"
for "the" before the term "Replacement Note
Holder";
(B) in the second sentence substitute the word "any"
for "the" before the term "Replacement Note
Holder";
(C) in the third sentence delete clause (b) in its
entirety and substitute in its place the
following:
"(b) in the event that any Debenture Trustee
shall at any time become the Agent hereunder, its
duties and obligations in its capacity as Agent
shall be subject to the same qualifications,
conditions and limitations as are set forth in (i)
with respect to the First Debenture Trustee,
Article Six and Sections 904 and 1106 of the First
Secured Debenture Indenture with respect to its
duties and obligations as the First Debenture
Trustee and (ii) with respect to the Second
Debenture Trustee or any Subsequent Debenture
Trustee, provisions in the Second Secured
Debenture Indenture or any applicable Subsequent
Secured Debenture Indenture similar to the
provisions referred to in subclause (i) of this
clause (b) with respect to such applicable
Debenture Trustee's duties and obligations as
Debenture Trustee thereunder, and any such
Debenture Trustee shall be under no obligation to
take any action as Agent except under
circumstances in which it would be required to
take action in its capacity as First Debenture
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 44>
Trustee, Second Debenture Trustee or Subsequent Debenture
Trustee, as applicable."; and
(D) in the fourth sentence substitute the word "any"
for "the" before the first occurrence of the term
"Replacement Note Holder" and substitute the words
"any other" for "the" before the second occurrence
of such term.
(ff) Section 15.02 of the Credit Agreement shall be amended
as follows:
(A) in the second sentence delete the phrase "the
Replacement Note Holder" and insert in lieu
thereof the phrase "all of the Replacement Note
Holders"; and
(B) in the third sentence (i) delete the phrase "the
Replacement Note Holder shall not" and insert in
lieu thereof the phrase "no Replacement Note
Holder shall", (ii) substitute the word "such" for
"the" before the second and third occurrences of
the term "Replacement Note Holder" and (iii)
insert the word "applicable" before the term
"Secured Debentures".
(gg) Section 15.03 of the Credit Agreement shall be amended
as follows:
(A) substitute the word "a" for "the" before the first
occurrence of the term "Replacement Note Holder";
and
(B) delete the proviso in the last sentence in its
entirety and substitute in its place the
following: "provided, that, unless and until the
Agent shall have received such direction, the
Agent may (but shall not be obligated to) take
such action, or refrain from taking such action,
with respect to such Default as it shall deem
advisable in the best interest of the Secured
Parties.".
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 45>
(hh) Section 15.04 of the Credit Agreement shall be amended
by substituting the word "any" for "the" before the
term "Replacement Note Holder".
(ii) Section 15.05 of the Credit Agreement shall be amended
as follows:
(A) substitute the word "each" for "the" before the
first occurrence of the term "Replacement Note
Holder";
(B) in the first proviso, delete the phrase "no Bank
or the Replacement Note Holder" and insert in lieu
thereof the phrase "neither any Bank nor any
Replacement Note Holder";
(C) delete clauses (x) and (y) of the second proviso
in their entirety and substitute in their place
the following:
"(x) so long as any Debenture Trustee shall
be a Replacement Note Holder (whether as the
pledgee of a Replacement Note or as the legal and
beneficial owner thereof following a foreclosure
or other exercise of remedies by such Debenture
Trustee with respect thereto), the obligations of
such Replacement Note Holder under this Section
15.05 shall be limited to, and solely payable out
of, amounts paid by TNP and/or TGC and/or the
holders of the applicable Secured Debentures to
such Debenture Trustee under this Agreement or any
other Project Document that such Debenture Trustee
shall not have theretofore applied pursuant to the
applicable Secured Debenture Indenture for any
purpose other than the payment of amounts owing
under this clause (x), and
(y) in the case of any Replacement Note
Holder (other than a Debenture Trustee in its
capacity as trustee) acquiring a Replacement Note
upon a foreclosure or other exercise of remedies
by a Debenture Trustee with respect thereto, the
obligations of such Replacement Note Holder under
this Section 15.05 shall be limited to obligations
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 46>
arising from and after the date on which it shall have acquired
such Replacement Note."; and
(D) in the last sentence, add an "s" to the end of the
term "Replacement Note Holder".
(jj) Section 15.06 of the Credit Agreement shall be amended
by (A) substituting the word "each" for "the" before
the first occurrence of the term "Replacement Note
Holder" and (B) substituting the word "such" for "the"
before the second occurrence of such term.
(kk) Section 15.07 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.07. Non-Reliance on Agent and Other
Banks and Other Replacement Note Holders. Each Bank
and TNP, as the initial Replacement Note Holder of each
Replacement Note, represents that it has, independently
and without reliance on the Agent or any other Bank or
any other Replacement Note Holder, and based on such
documents and information as it has deemed appropriate,
made its own appraisal of the financial condition and
affairs of TNP and TGC and decision to enter into this
Agreement, and agrees that it will, independently and
without reliance upon the Agent or any other Bank or
any other Replacement Note Holder, and based on such
documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and
decisions in taking or not taking action under this
Agreement. Neither the Agent nor any Bank nor any
Replacement Note Holder shall be required to keep
informed as to the performance or observance by TNP or
TGC under this Agreement or any other document referred
to or provided for herein or to make inquiry of, or to
inspect the properties or books of, TNP or TGC. Except
for notices, reports and other documents and
information expressly required to be furnished to the
Banks and the Replacement Note Holders by the Agent
hereunder, neither the Agent nor any Bank nor any
Replacement Note Holder shall have any duty or
responsibility to provide any Bank or any Replacement
Note Holder with any credit or other information
concerning TNP and TGC, or any Affiliate of either of
them, which may come into the possession of the Agent
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 47>
or such Bank or such Replacement Note Holder or any of its or
their affiliates.".
(ll) Section 15.08 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.08. Resignation or Removal of Agent.
Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign
at any time by giving notice thereof to the Banks and
the Replacement Note Holders, TNP and TGC, and the
Agent may be removed at any time with or without cause
by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to
appoint a successor Agent, which Agent shall be
reasonably acceptable to TNP and TGC (unless an Event
of Default has occurred and is continuing). If no
successor Agent shall have been appointed by the
Majority Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of
notice of resignation or the Majority Banks' removal of
the retiring Agent, then the retiring Agent may, on
behalf of the Banks and the Replacement Note Holders,
appoint a successor Agent, which shall be either a bank
with an office (or an affiliate with an office) in New
York, New York, having a combined capital and surplus
of not less than U.S. $500,000,000 and which shall be
reasonably acceptable to TNP. Upon the acceptance of
any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the
provisions of this Section 15 shall continue in effect
for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
Notwithstanding any other provision in this Agreement
to the contrary (i) upon the payment, prepayment or
purchase in full of the Project Loans outstanding on
the First Amendment Effective Date, all interest due
and payable thereon and all other amounts due and
payable by TNP and TGC to the Banks under this
Agreement and the other Project Documents, Chase shall
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 48>
resign as Agent hereunder at which time, the Debenture Trustee
for the earliest maturing Secured Debentures then outstanding (if
any), or its designee, (a "Replacement Agent") automatically
shall be appointed as successor Agent effective upon the
acceptance of such appointment by such Replacement Agent and (ii)
upon the payment in full of the principal of (and premium, if
any, on) the Secured Debentures for which a Replacement Agent is
Debenture Trustee, all interest thereon and all other amounts due
and payable by TNP and TGC pursuant to the applicable Secured
Debenture Indenture, such Replacement Agent shall resign as Agent
hereunder at which time, the Debenture Trustee for the earliest
maturing Secured Debentures then outstanding (if any), or its
designee, (also a "Replacement Agent") automatically shall be
appointed as successor Agent effective upon the acceptance of
such appointment by such Replacement Agent. Until the payment,
prepayment or purchase in full of the Project Loans outstanding
on the First Amendment Effective Date, all interest due and
payable thereon and all other amounts due and payable by TNP and
TGC to the Banks under this Agreement and the other Project
Documents, the Replacement Note Holders shall not be considered
in the determination of "Majority Banks" for purposes of this
Section 15.08. Notwithstanding any provision herein or in any
Secured Debenture Indenture to the contrary, in the event a
Debenture Trustee becomes Agent hereunder, it shall promptly upon
the request of TNP and TGC from time to time execute releases of
liens in accordance with the Facility Purchase Agreement;
provided, that, any such release shall contain a provision to the
effect that such release is made in its capacity as Agent and
Collateral Agent, if applicable, pursuant to the Facility
Purchase Agreement but without warranty by, or recourse to, such
Debenture Trustee either in its capacity as trustee or
individually.".
(mm) Section 15.09 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.09. Authorization. The Agent is
hereby authorized by the Banks (so long as any Project
Loans are outstanding), and the Replacement Note
Holders (each by its acceptance of the pledge of the
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 49>
applicable Replacement Note), to execute, deliver and perform,
each of the Project Documents to which the Agent is or is
intended to be a party and each Bank (so long as any Project
Loans are outstanding), and each Replacement Note Holder (each by
its acceptance of the pledge of the applicable Replacement Note),
agrees to be bound by all of the agreements of the Agent
contained in the Project Documents.".
(nn) Section 16.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 16.01. Participation and Assignment.
Each Bank and each Replacement Note Holder may sell,
assign or transfer all or any portion of its Loans or
Notes to any other Person. Each Bank and each
Replacement Note Holder shall pay to the Agent (for its
own account) a non-refundable assignment fee of $5,000
at the time of each permitted sale, assignment or
transfer made by such Bank or such Replacement Note
Holder. Nothing herein provided shall prevent any Bank
or any Replacement Note Holder from selling at any time
a participation in its Loans, any fees payable to it
hereunder or any other rights hereunder (the purchaser
of any such participation being hereinafter sometimes
referred to as a "Participant"); provided, that,
(except as provided in Section 16.02 hereof): (a) no
such sale or participation shall alter such Bank's or
such Replacement Note Holder's obligations hereunder
and (b) any agreement pursuant to which any Bank or any
Replacement Note Holder may grant any such
participation shall provide that such Bank or such
Replacement Note Holder shall retain the sole right and
responsibility and exercise the rights of such Bank or
such Replacement Note Holder, and enforce the
obligations of TNP or TGC relating to the Loans, the
fees payable hereunder and any other right of such Bank
or such Replacement Note Holder, including, without
limitation, the right to approve any amendment,
modification or waiver of any provision of this
Agreement or any other Project Document and the right
to take action to have the Loans declared due and
payable. Except as provided in Section 16.02 hereof,
no Participant shall have any rights under this
Agreement or in respect of a Bank's or a Replacement
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 50>
Note Holder's Loans, fees payable to it hereunder or any other
rights hereunder other than to receive payments in respect of
such Participant's participation from such Bank or such
Replacement Note Holder. Notwithstanding the foregoing, a
Debenture Trustee, in its capacity as pledgee of a Replacement
Note, shall have no right to sell, assign or otherwise transfer
any participation in, all or any portion of the Replacement Loan
evidenced by such Replacement Note or such Replacement Note to
any Person except TNP in accordance with the terms of the Secured
Debenture Indenture pursuant to which such Debenture Trustee is
acting as trustee unless a default shall have occurred and be
continuing under such Secured Debenture Indenture. TNP shall
have no right to sell, assign or otherwise transfer all or any
portion of the Replacement Loans or the Replacement Notes except
under a Secured Debenture Indenture, provided, that such
prohibition shall not apply to the Debenture Trustee under such
Secured Debenture Indenture or any permitted assignee or
transferee thereof.".
(oo) Section 16.02 of the Credit Agreement shall be amended
by substituting the word "a" for "the" before the term
"Replacement Note Holder".
(pp) Section 17.03 of the Credit Agreement shall be amended
by (A) inserting the word "a" before the first
occurrence of the term "Replacement Note Holder", (B)
inserting the word "applicable" before the phrase
"instrument of adoption" and (C) deleting the term
""Replacement Note Holder"" and inserting in lieu
thereof the term ""Replacement Note Holders"".
(qq) Section 17.04 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 17.04. Successors and Assigns. This
Agreement shall be binding upon and inure to the
benefit of TNP, TGC, the Secured Parties and their
respective successors and permitted assigns (including
each Debenture Trustee, as the prospective pledgee or
pledgee of a Replacement Note), except that neither TGC
nor TNP (except as contemplated in the Project
Documents) may assign or otherwise transfer all or any
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 51>
part of its rights or obligations hereunder (other than its
rights in respect of the Replacement Loans and the Replacement
Notes as permitted hereunder) without the prior written consent
of each Secured Party. The Agent and each of the Banks (so long
as any Project Loans are outstanding) consents to the pledge of
the Replacement Notes to the applicable Debenture Trustees.".
(rr) Section 17.08 of the Credit Agreement shall be amended
by (A) adding an "s" to the end of the terms
"Replacement Note Maturity Date" and "Replacement Note
Holder" in subsection (a) thereof, (B) adding an "s" to
the end of the term "Replacement Note Holder" both
times it occurs in the last paragraph thereof, (C) in
subclause (iii) in the last paragraph thereof, deleting
the phrase "provided that such change does not result"
and inserting in lieu thereof the phrase "provided,
that, if such change would result" and (D) at the end
of subclause (iii) in the last paragraph thereof,
deleting the term "the Replacement Loans" and
substituting in lieu thereof the phrase "any
Replacement Loan, then the consent of the Replacement
Note Holder in respect of such Replacement Loans shall
be required.".
(ss) Section 17.12(b) of the Credit Agreement shall be
amended by deleting the phrase "OR THE PROPERTY OF TNP
OR TNP" and inserting in substitution in its place the
phrase "OR THE PROPERTY OF TGC OR TNP.".
(tt) Section 17.16 of the Credit Agreement shall be amended
by substituting the word "each" for "the" before the
term "Replacement Note Holder".
(uu) Section 17.18 of the Credit Agreement shall be amended
by (A) substituting the word "each" for "the" before
the first occurrence of the term "Replacement Note
Holder", (B) substituting the word "such" for "the"
before the second and third occurrences of the term
"Replacement Note Holder", (C) inserting the words "any
of" before the fourth occurrence of the term "the
Replacement Note Holder" and adding an "s" to the end
of such occurrence of such term, (D) substituting the
word "any" for "the" before the fifth and seventh
occurrences of the term "Replacement Note Holder" and
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 52>
(E) adding an "s" to the end of the sixth occurrence of the term
"Replacement Note Holder".
(vv) Section 17.20 of the Credit Agreement shall be
redesignated as "SECTION 17.22", and new Sections 17.20
and 17.21 shall be inserted as follows:
"SECTION 17.20. Further Releases and Consents.
(a) Notwithstanding any provisions to the
contrary in this Agreement or in any other Project
Document, each of the Secured Parties hereunder other
than the Replacement Note Holder holding the First
Replacement Note hereby consents and each of the future
Replacement Note Holders (each by acceptance of the
pledge of the applicable Replacement Note) is deemed to
have consented to the transfer by TNP of up to six ten-
acre tracts of real property located in the Site after
such time as (i) there has been payment, prepayment or
purchase in full of the Project Loans (evidenced by the
Project Notes outstanding, all interest due and payable
thereon and all other amounts due and payable by TNP
and TGC to the Banks under this Agreement and the other
Project Documents and (ii) no First Secured Debentures
and no Second Secured Debentures remain outstanding.
(b) As a condition precedent to each transfer
under this Section 17.20, TNP, TGC and TGC II each
shall deliver to the Agent a certificate signed by an
Authorized Officer of TNP, TGC or TGC II, as
applicable, which certificate represents and warrants
that (i) such transfer will not materially adversely
affect TNP, TGC or TGC II's financial condition or
ability to perform their respective obligations under
this Agreement or any other Project Document and,
except as contemplated by the Ten Acre Releases, has
not and will not adversely affect the Collateral and
(ii) the ten-acre tract(s) to be conveyed are not
necessary to the use or operation of Unit 1 or Unit 2,
and TNP's transfers of said ten-acre tract(s) and the
resulting loss of access to and across and the loss of
the use of said ten-acre tract(s) would neither
adversely affect or interfere with the use or operation
of Unit 1 or Unit 2 or the value of either thereof nor
impair commercial acceptability of the security granted
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 53>
to the Secured Parties pursuant to the Security Documents.
(c) In connection with each transfer permitted by
Section 17.20 (a) hereof and subject to the terms and
conditions of this Section 17.20, each Secured Party
hereby consents to the execution and delivery by the
Agent, the Collateral Agent and, if required, the
Mortgage Trustee, of one or more partial releases of
liens (collectively, the "Ten Acre Releases") to effect
the releases hereinabove described in this Section
17.20.
(d) The consents contained in this Section 17.20
shall be effective only in the specific instances and
for the specific purposes for which they are given and
shall not be deemed to be a waiver of any past or a
consent to any future action, other event or condition
in connection with this Agreement.
SECTION 17.21. New Title Insurance Policy. On
the First Section 4.05 Closing Date, TNP shall pledge
to the Second Debenture Trustee a Replacement Note in
the form of Exhibit A hereto as contemplated by Section
4.05(e) hereof. On the First Section 4.05 Closing
Date, and at the sole cost of TNP and TGC, TNP and TGC
shall furnish to the Agent (A) a policy or policies of
title insurance, together with evidence of the payment
of all premiums due thereon and expenses payable in
connection therewith and together with such reinsurance
on such forms and in such amounts as the Agent may
require, on forms of and issued by the Title Company,
in form and substance satisfactory to the Agent, (x)
insuring the Agent for the benefit of the Second
Replacement Note Holder in the amount of $140,000,000
that good and indefeasible title to the Site is vested
in TGC and the TGC Mortgage constitutes a valid first
mortgage lien on the TGC Mortgage Trust Estate subject
only to Permitted Liens and (y) providing full coverage
against all mechanics' and materialmen's liens and (B)
a title information report in form and substance
satisfactory to and approved by the Agent, showing good
and indefeasible title to the TGC Mortgage Trust Estate
is vested in TGC and that the TGC Mortgage constitutes
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 54>
a valid first mortgage lien on the TGC Mortgage Trust Estate
subject only to Permitted Liens.".
SECTION 5. Counterparts.
This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart.
SECTION 6. Project Documents.
Except as expressly amended hereby, the Credit
Agreement shall continue in full force and effect in accordance
with the terms and conditions thereof. All references in any
Project Document to the Credit Agreement and any Schedule or
Exhibit thereto shall be deemed to be references to the Credit
Agreement and any Schedule or Exhibit thereto as amended.
SECTION 7. Joinder of Guarantor.
Contemporaneously with the execution and delivery of
this Amendment, and as consideration therefor, TNP, as the
Guarantor, hereby confirms and consents to each and every of the
terms and conditions of this Amendment and the Credit Agreement
as amended by this Amendment (including, without limitation
Section 17.13 of the Credit Agreement), and agrees that the terms
and conditions of the Guaranty are in full force and effect and
unaffected by the execution by TGC and TNP of this Amendment and
acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the Guaranty.
SECTION 8. Headings.
The headings of the various sections of this Amendment
are for convenience of reference only, do not constitute a part
hereof and shall not be interpreted or construed to affect the
meanings or construction of any provision hereof.
SECTION 9. GOVERNING LAW.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 55>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and
year first above written.
TEXAS-NEW MEXICO POWER COMPANY
By: \s\ D. R. Barnard
Title:
D. R. Barnard
Vice President
and Chief Financial Officer
TEXAS GENERATING COMPANY
By: \s\ D. R. Barnard
Title:
D. R. BARNARD
PRESIDENT
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 56>
BANKS
ABN AMRO BANK N.V.,
HOUSTON AGENCY
By:\s\ Michael Tribolet
Title:
V. P.
By:\s\ C. Lipshutz
Title:
V. P.
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 57>
BANK OF AMERICA NT & SA
By: \s\ Mark F. Milner
Title:
Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 58>
THE BANK OF NEW YORK
By: \s\ Michael F. Donohue, Jr.
Title:
Michael F. Donohue, Jr.
SENIOR VICE PRESIDENT
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 59>
THE BANK OF NOVA SCOTIA
By: \s\ A. S. Norsworthy
Title:
A. S. Norsworthy
Assistant Agent
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 60>
BANKERS TRUST COMPANY
By:
Title:
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 61>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: \s\ James T. Beale Jr.
Title:
Managing Director
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 62>
CREDIT SUISSE
By: \s\ Guy R. Cirincione
Title:
Guy R. Cirincione
Member of Senior Management
By: \s\ P. P. Leon
Title:
Associate
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 63>
FLEET BANK OF MASSACHUSETTS, N.A.
By: \s\ Fred McManning
Title:
Senior Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 64>
NATIONSBANK OF TEXAS, N.A.
By: \s\ Vincent Liberio
Title:
Senior Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 65>
LEHMAN COMMERCIAL PAPER INC.
By: \s\ Lisa Raggi
Title:
Authorized Signatory
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 66>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: \s\ Mary C. Arnold
Title:
Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 67>
UNION BANK
By: \s\ Peter R. Saggau
Title:
Peter R. Saggau
Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 68>
WESTPAC BANKING CORPORATION
By: \s\ WESTPAC BANKING CORPORATION
Title:
Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 69>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By \s\ James T. Beale, Jr.
Title:
Managing Director
THE CHASE MANHATTAN BANK,
(NATIONAL ASSOCIATION), as
Collateral Agent
By \s\ James T. Beale, Jr.
Title:
Managing Director
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 70>
VOTING PARTICIPANT
The following Voting Participant
consents and agrees to the foregoing
Amendment No. 1 to the Unit 1
First Amended and Restated Project
Loan and Credit Agreement:
THE HONG KONG AND SHANGHAI
BANKING CORPORATION LIMITED
By \s\ John A. Van Slyke
Title:
Assistant Vice President
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 71>
VOTING PARTICIPANT
The following Voting Participant
Consents and agrees to the foregoing
Amendment No. 1 to the Unit 1
First Amended and Restated Project
Loan and Credit Agreement:
Z-LANDERBANK BANK AUSTRIA A.G.
By \s\ Kevin McGinn
Title:
SVP
By \s\ Peter Scharf
Title:
AVP
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 72>
EXHIBIT A
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF REPLACEMENT NOTE]
EXHIBIT A TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT B
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF INTERCREDITOR AMENDMENT NO. 2]
EXHIBIT B TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT C
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT]
EXHIBIT C TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT D
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FIFTH TGC MODIFICATION AND EXTENSION AGREEMENT]
EXHIBIT D
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT E
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF SUBSEQUENT TGC MODIFICATION AND EXTENSION
AGREEMENT]
EXHIBIT E TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT F
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF TNP SECOND LIEN MORTGAGE MODIFICATION NO. 2]
EXHIBIT F
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT G
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF SECTION 4.05 LEGAL OPINION]
EXHIBIT G TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT H
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF SECTION 4.05 CLOSING LEGAL OPINIONS]
EXHIBIT H TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT I
TO AMENDMENT NO. 1 TO
UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FIRST DEBENTURE TRUSTEE CONSENT]
EXHIBIT I TO
AMENDMENT NO. 1 TO UNIT 1 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT C to
Unit 1 First Amendment
[FORM OF FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT]
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
ATTENTION ROBERTSON COUNTY, TEXAS RECORDER:
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
c/o DONALD H. SNELL
O'Neill, Snell, Banowsky & McClure
200 Crescent Court, Suite 1030
Dallas, Texas 75201
THE STATE OF TEXAS
COUNTY OF ROBERTSON
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
THIS FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT (this
"Agreement") is made as of September 29, 1993 among the banks
(the "Banks") which are parties to that certain Unit 1 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992 (as amended by the First Amendment (as defined
below), and as further amended, supplemented or modified and in
effect from time to time, the "Credit Agreement"), THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for the Banks and
the Replacement Note Holder (in such capacity, together with its
successors in such capacity, the "Agent") (the Banks, the
Replacement Note Holder and the Agent collectively herein
referred to as the "Secured Parties"), TEXAS-NEW MEXICO POWER
COMPANY, a Texas corporation ("TNP") and TEXAS GENERATING
COMPANY, a Texas corporation ("TGC" or the "Borrower"). Unless
otherwise defined herein, the capitalized terms used herein shall
have the meanings given to those terms in the Credit Agreement.
W I T N E S S E T H:
Recitals:
A. The Banks, the Agent, Project Funding Corporation, a
Delaware corporation ("PFC") and TNP have heretofore entered into
the Project Loan and Credit Agreement dated as of December 1,
1987 (the "Project Credit Agreement") pursuant to the terms of
which the Banks made Loans, prior to the Alternative Assumption
Date, to PFC and, thereafter, to the Borrower in an aggregate
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 1>
principal amount of THREE HUNDRED FORTY-FIVE MILLION DOLLARS
($345,000,000).
B. The Alternative Assumption Date occurred as of June 8,
1990. Certain of the obligations of PFC under the terms of the
Project Credit Agreement were assumed by the Borrower pursuant to
that certain Assumption Agreement recorded in Volume 549 at Page
83 of the Public Records of Robertson County, Texas. The
Mortgage Trust Estate was conveyed by PFC to the Borrower
pursuant to that certain Conveyance and Bill of Sale dated
effective as of June 8, 1990, recorded in Volume 550 at Page 103
of the Public Records of Robertson County, Texas.
C. The Obligations under the terms of the Credit Agreement
are secured, in part, by the terms, provisions, liens and
security interests of that certain Mortgage and Deed of Trust
(with Security Agreement and UCC Financing Statement for Fixture
Filing), dated as of December 1, 1987 (the "Mortgage") which was
filed of record on December 3, 1987, in Volume 507 at Page 291 of
the Public Records of Robertson County, Texas, as supplemented by
the Supplemental Mortgage and Deed of Trust (with Security
Agreement and UCC Financing Statement for Fixture Filing) filed
of record on January 27, 1992, in Volume 573 at Page 603 of the
Public Records of Robertson County, Texas. The Mortgage covers
certain property as more particularly described therein less and
except certain lands subsequently released from the Mortgage by
the partial release of liens, dated as of October 1, 1988 and
recorded in Volume 521 at Page 528 of the Public Records of
Robertson County, Texas.
D. TGC conveyed a 30/345 undivided interest in the
Mortgage Trust Estate to TNP pursuant to that certain Conveyance
and Bill of Sale dated as of December 27, 1990, and recorded in
Volume 556 at Page 653 of the Public Records of Robertson County,
Texas. By the partial release of liens, recorded in Volume 572
at Page 372 of the Public Records of Robertson County, Texas, and
filed with the Secretary of State of the State of Texas, the
Agent released from the Mortgage the undivided interest which was
purchased by TNP.
E. TGC conveyed a 45/345 undivided interest in the
Mortgage Trust Estate to TNP pursuant to that certain Conveyance
and Bill of Sale dated as of January 27, 1992 and recorded in
Volume 573 at Page 552 of the Public Records of Robertson County,
Texas. By the partial release of liens, recorded in Volume 573
at Page 589 of the Public Records of Robertson County, Texas, and
filed with the Secretary of State of the State of Texas, the
Agent released from the Mortgage the undivided interest which was
purchased by TNP.
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 2>
F. TNP, the Borrower and the Secured Parties entered into
the Credit Agreement and executed and delivered the (i) First TGC
Modification and Extension Agreement dated as of January 24, 1992
and caused it to be recorded in Volume 573 at Page 477 of the
Public Records of Robertson County, Texas, (ii) the Second TGC
Modification and Extension Agreement dated as of January 27,
1992 and caused it to be recorded in Volume 573 at Page 504 of
the Public Records of Robertson County, Texas and (iii) the Third
TGC Modification and Extension Agreement dated as of January 27,
1992 and caused it to be recorded in Volume 573 at Page 518 of
the Public Records of Robertson County, Texas, in each case as a
memorial of certain modifications of, amendments to or occurrence
of events under the Credit Agreement and to confirm the validity
and priority of the liens, security interests and assignments of
the Mortgage securing the Obligations.
G. TNP, the Borrower and the Secured Parties have modified
the terms of the Credit Agreement as set forth in the First
Amendment (as defined below) and have executed, delivered and
caused this Agreement to be filed of record as a memorial of the
occurrence of such modifications and to confirm the validity and
priority of the liens, security interests and assignments of the
Mortgage securing the Obligations.
H. The Agent is authorized by Section 15.01 of the Credit
Agreement to execute and deliver this Agreement.
Agreements
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, TNP, the
Borrower and the Agent, on behalf of the Secured Parties, agree
as follows:
1. Modification of Terms of the Credit Agreement. The
terms and provisions of the Credit Agreement are amended and
modified pursuant to that certain Amendment No. 1 dated as of
September 21, 1993 to the Unit 1 First Amended and Restated
Project Loan and Credit Agreement of even date herewith, executed
and delivered by TNP, the Borrower and the Banks and other
parties thereto (the "First Amendment"). The First Amendment,
among other things, facilitates TNP's or TGC's issuing Permitted
Collateralized Indebtedness that, upon the fulfillment of certain
terms and conditions of the Credit Agreement, shall be
Obligations secured by the liens, security interests and
assignments of the Mortgage from time to time. As of the date
hereof, the aggregate principal amount of Loans outstanding under
the Credit Agreement is $211,000,000, of which $146,000,000 is
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 3>
Project Loans evidenced by Project Notes and $65,000,000 is a
Replacement Loan evidenced by the First Replacement Note.
2. Effect of Modification. The Obligations as described
in the Credit Agreement are secured by the liens, security
interests and assignments of the Mortgage and the other Security
Documents. The validity and priority of the liens, security
interests and assignments of the Mortgage shall not be
extinguished, impaired, reduced, released, or adversely affected
by the terms of this Agreement or the First Amendment.
3. Extension of Rights and Liens. The Borrower hereby
extends all rights, titles, liens, security interests,
assignments, powers and privileges securing the Obligations as
described in the Credit Agreement by virtue of the Mortgage until
all of such Obligations have been paid in full and agrees that
the execution of this Agreement shall in no manner impair the
rights, titles, liens, security interests, assignments, powers
and privileges existing by virtue of the Mortgage, as they are
extended and modified hereby.
4. Joinder of Guarantor. TNP, as guarantor under the TNP
Guaranty, hereby (i) consents to the execution, delivery and
performance by TGC of this Agreement and any other Amendment
Document to which TGC is or is intended to be a party and the
consummation of the transactions contemplated hereby and thereby,
(ii) agrees that the TNP Guaranty shall remain in full force and
effect after giving effect to such transactions and (iii)
acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the TNP Guaranty.
5. Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the successors and
assigns of TNP, the Borrower and the Agent, for the benefit of
the Secured Parties; provided, however, nothing contained in this
Section is intended to authorize TNP or the Borrower to assign
any of the Obligations or to sell any of the Mortgage Trust
Estate except in accordance with the Credit Agreement and the
Facility Purchase Agreement.
6. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 4>
EXECUTED as of the date first hereinabove written.
SECURED PARTIES:
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent
By: \s\ Betty Lou Robert
Title: Vice President
BORROWER:
TEXAS GENERATING COMPANY,
a Texas corporation
By: \s\ D. R. Barnard
Title: President
The undersigned hereby
consents and agrees to
the foregoing pursuant
to Section 1(c) of the
Intercreditor Agreement
as defined in the Credit
Agreement.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Collateral Agent
By: \s\ Betty Lou Robert
Title: Vice President
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 5>
The undersigned is a party to
this Agreement for the sole
purpose of agreeing to the
provisions of Section 4 to
this Agreement.
TNP:
TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation
By: \s\ D. R. Barnard
Title: Vice President and Chief Financial Officer
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 6>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Betty Lou Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent.
\s\ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
2/1/95
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 7>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Betty Lou J. Robert, Vice President, of
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Collateral
Agent.
\s\ Elizabeith A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
2/1/95
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 8>
STATE OF New York
COUNTY OF New York
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, Vice President of TEXAS-
NEW MEXICO POWER COMPANY, a Texas corporation, on behalf of said
corporation.
\s\ Aisha Piracha
NOTARY PUBLIC in and for
the State of New York
My Commission Expires:
November 16, 1994
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 9>
STATE OF New York
COUNTY OF New York
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, President of TEXAS
GENERATING COMPANY, a Texas corporation, on behalf of said
corporation.
\s\ Aisha Piracha
NOTARY PUBLIC in and for
the State of New York
My Commission Expires:
11/16/94
FOURTH TGC MODIFICATION AND EXTENSION AGREEMENT
<page 10>
EXHIBIT D to
Unit 1 First Amendment
[FORM OF FIFTH TGC MODIFICATION AND EXTENSION AGREEMENT]
FIFTH TGC MODIFICATION AND EXTENSION AGREEMENT
ATTENTION ROBERTSON COUNTY, TEXAS RECORDER:
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
c/o DONALD H. SNELL
O'Neill, Snell, Banowsky & McClure
200 Crescent Court, Suite 1030
Dallas, Texas 75201
THE STATE OF TEXAS
COUNTY OF ROBERTSON
FIFTH TGC MODIFICATION AND EXTENSION AGREEMENT
THIS FIFTH TGC MODIFICATION AND EXTENSION AGREEMENT (this
"Agreement") is made as of September 29, 1993 among the banks
(the "Banks") which are parties to that certain Unit 1 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992 (as amended by the Amendment No. 1 dated as of
September 21, 1993 among the Borrower, TNP and the Banks and
other parties thereto (the "First Amendment"), and as further
amended, supplemented or modified and in effect from time to
time, the "Credit Agreement"), THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as agent for the Banks and the Replacement Note
Holders (in such capacity, together with its successors in such
capacity, the "Agent") (the Banks, the Replacement Note Holders
and the Agent collectively herein called the "Secured Parties"),
TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation ("TNP"), and
TEXAS GENERATING COMPANY, a Texas corporation ("TGC" or the
"Borrower"). Unless otherwise defined herein, the capitalized
terms used herein shall have the meanings given to those terms in
the Credit Agreement.
W I T N E S S E T H:
Recitals:
A. The Banks, the Agent, Project Funding Corporation, a
Delaware corporation ("PFC") and TNP have heretofore entered into
the Project Loan and Credit Agreement dated as of December 1,
1987 (the "Project Credit Agreement") pursuant to the terms of
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 1>
which the Banks made Loans, prior to the Alternative Assumption
Date, to PFC and, thereafter, to the Borrower in an aggregate
principal amount of THREE HUNDRED FORTY-FIVE MILLION DOLLARS
($345,000,000).
B. The Alternative Assumption Date occurred as of June 8,
1990. Certain of the obligations of PFC under the terms of the
Project Credit Agreement were assumed by the Borrower pursuant to
that certain Assumption Agreement recorded in Volume 549 at Page
83 of the Public Records of Robertson County, Texas. The
Mortgage Trust Estate was conveyed by PFC to the Borrower
pursuant to that certain Conveyance and Bill of Sale dated
effective as of June 8, 1990, recorded in Volume 550 at Page 103
of the Public Records of Robertson County, Texas.
C. The Obligations under the terms of the Credit Agreement
are secured, in part, by the terms, provisions, liens and
security interests of that certain Mortgage and Deed of Trust
(with Security Agreement and UCC Financing Statement for Fixture
Filing), dated as of December 1, 1987 (the "Mortgage") which was
filed of record on December 3, 1987, in Volume 507 at Page 291 of
the Public Records of Robertson County, Texas, as supplemented by
the Supplemental Mortgage and Deed of Trust (with Security
Agreement and UCC Financing Statement for Fixture Filing) filed
of record on January 27, 1992, in Volume 573 at Page 603 of the
Public Records of Robertson County, Texas. The Mortgage covers
certain property as more particularly described therein less and
except certain lands subsequently released from the Mortgage by
the partial release of liens, dated as of October 1, 1988 and
recorded in Volume 521 at Page 528 of the Public Records of
Robertson County, Texas.
D. TGC conveyed a 30/345 undivided interest in the
Mortgage Trust Estate to TNP pursuant to that certain Conveyance
and Bill of Sale dated as of December 27, 1990, and recorded in
Volume 556 at Page 653 of the Public Records of Robertson County,
Texas. By the partial release of liens, recorded in Volume 572
at Page 372 of the Public Records of Robertson County, Texas, and
filed with the Secretary of State of the State of Texas, the
Agent released from the Mortgage the undivided interest which was
purchased by TNP.
E. TGC conveyed a 45/345 undivided interest in the
Mortgage Trust Estate to TNP pursuant to that certain Conveyance
and Bill of Sale dated as of January 27, 1992 and recorded in
Volume 573 at Page 552 of the Public Records of Robertson County,
Texas. By the partial release of liens, recorded in Volume 573
at Page 589 of the Public Records of Robertson County, Texas, and
filed with the Secretary of State of the State of Texas, the
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 2>
Agent released from the Mortgage the undivided interest which
was purchased by TNP.
F. TNP, the Borrower and the Secured Parties entered into
the Credit Agreement and executed and delivered the (i) First TGC
Modification and Extension Agreement dated as of January 24, 1992
and caused it to be recorded in Volume 573 at Page 477 of the
Public Records of Robertson County, Texas, (ii) the Second TGC
Modification and Extension Agreement dated as of January 27,
1992 and caused it to be recorded in Volume 573 at Page 504 of
the Public Records of Robertson County, Texas, (iii) the Third
TGC Modification and Extension Agreement dated as of January 27,
1992 and caused it to be recorded in Volume 573 at Page 518 of
the Public Records of Robertson County, Texas and (iv) the Fourth
TGC Modification and Extension Agreement dated as of September
__, 1993 and caused it to be recorded in Volume ___ at Page ___
of the Public Records of Robertson County, Texas, in each case as
a memorial of certain modifications of, amendments to or
occurrence of events under the Credit Agreement and to confirm
the validity and priority of the liens, security interests and
assignments of the Mortgage securing the Obligations.
G. TNP, the Borrower and the Secured Parties have modified
the terms of the Credit Agreement as set forth in Section 3 of
the First Amendment (as defined below) and have executed,
delivered and caused this Agreement to be filed of record as a
memorial of (1) the occurrence of such modifications and to
confirm the validity and priority of the liens, security
interests and assignments of the Mortgage securing the
Obligations and (2) the issuance of the Second Replacement Note
(as defined below) and as evidence of the fact that the
indebtedness evidenced by the Second Replacement Note shall
become a part of the Obligations and shall also be secured by the
liens, security interests and assignments of the Mortgage.
H. The Agent is authorized by Section 15.01 of the Credit
Agreement to execute and deliver this Agreement.
Agreements
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, TNP, the
Borrower and the Agent, on behalf of the Secured Parties, agree
as follows:
1. Issuance of the Second Replacement Note. Under the
Project Credit Agreement, the Loans made originally to PFC and
assumed by TGC on the Alternative Assumption Date and the Loans
made to TGC after the Alternative Assumption Date were evidenced
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 3>
by Project Notes held by each of the Banks. Under the terms of
the Credit Agreement, on the date hereof, TNP purchased an
aggregate principal amount of $140,000,000 of the Project Loans
together with the rights of such Banks under the terms of the
Security Documents relating to such portion of the Project Loans.
The purchase was made pro rata from the Banks and the Banks have
endorsed and delivered their respective Project Notes to TNP. In
connection therewith, TGC issued a substitution and replacement
promissory note (the "Second Replacement Note") to TNP to
evidence the aggregate principal amount of the Project Loans
purchased by TNP and now owed by TGC to TNP which now constitute
a part of the Obligations. In addition to TNP's purchase of the
Project Loans, TNP made prepayments on the Project Loans in an
aggregate principal amount of $6,000,000. As a result of such
purchase and such prepayments the Project Loans have been paid in
full and the only Loans outstanding under the Credit Agreement
are the Replacement Loans. The aggregate of the outstanding
principal amounts of all the Loans under the Credit Agreement, as
evidenced by the Replacement Notes, has not changed as a result
of the issuance of the Second Replacement Note. As of the date
hereof, the aggregate principal amount of Loans outstanding under
the Credit Agreement is $205,000,000, of which $65,000,000 is a
Replacement Loan evidenced by the previously issued First
Replacement Note and $140,000,000 is a Replacement Loan evidenced
by the Second Replacement Note issued on the date hereof.
2. Effectiveness of Certain Modification of the Credit
Agreement. Certain provisions of the First Amendment were to
become effective upon the occurrence of certain conditions
precedent as set out therein. Said provisions include
acknowledgement by the Banks of the prepayment in full of the
Project Loans under the Credit Agreement and the acknowledgement
by TNP and TGC that there are outstanding $65,000,000 in First
Replacement Loans and $140,000,000 in Second Replacement Loans
(collectively, the "Subject Provisions"). The conditions
precedent have been satisfied and the Subject Provisions are
effective.
3. Effect of Modification. The Loans, evidenced by the
Replacement Notes, and the other Obligations as described in the
Credit Agreement are secured by the liens, security interests and
assignments of the Mortgage and the other Security Documents.
The validity and priority of the liens, security interests and
assignments of the Mortgage shall not be extinguished, impaired,
reduced, released, or adversely affected by the terms of this
Agreement or the First Amendment.
4. Extension of Rights and Liens. The Borrower hereby
extends all rights, titles, liens, security interests,
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 4>
assignments, powers and privileges securing the Obligations as
described in the Credit Agreement by virtue of the Mortgage until
all of such Obligations have been paid in full and agrees that
the execution of this Agreement shall in no manner impair the
rights, titles, liens, security interests, assignments, powers
and privileges existing by virtue of the Mortgage, as they are
extended and modified hereby.
5. Joinder of Guarantor. TNP, as guarantor under the TNP
Guaranty, hereby (i) consents to the execution, delivery and
performance by TGC of this Agreement and any other Amendment
Document to which TGC is or is intended to be a party and the
consummation of the transactions contemplated hereby and thereby,
(ii) agrees that the TNP Guaranty shall remain in full force and
effect after giving effect to such transactions and (iii)
acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the TNP Guaranty.
6. Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the successors and
assigns of TNP, the Borrower, and the Agent, for the benefit of
the Secured Parties; provided, however, nothing contained in this
Section is intended to authorize TNP or the Borrower to assign
any of the Obligations or to sell any of the Mortgage Trust
Estate except in accordance with the Credit Agreement and the
Facility Purchase Agreement.
7. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 5>
EXECUTED as of the date first hereinabove written.
SECURED PARTIES:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By:/s/ Bettylou J. Robert
Title: Vice President
BORROWER:
TEXAS GENERATING COMPANY,
a Texas corporation
By:/s/ D. R. Barnard
Title: President
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 6>
The undersigned hereby consents
and agrees to the foregoing
pursuant to Section 1(c) of
the Intercreditor Agreement
as defined in the Credit
Agreement.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Collateral Agent
By:/s/ Bettylou J. Robert
Title: Vice President
The undersigned is a party
to this Agreement for the
sole purpose of agreeing to
the provisions of Section 4
to this Agreement.
TNP:
TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation
By:/s/ D. R. Barnard
Title: Vice president &
Chief Financial Officer
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 7>
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
February 1, 1995
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 8>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Collateral Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
February 1, 1995
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 9>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, President of TEXAS-NEW
MEXICO POWER COMPANY, a Texas corporation, on behalf of said
corporation.
/s/ Aisha Piracha
NOTARY PUBLIC in and for
the State of TEXAS
My Commission Expires:
November 16, 1994
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 10>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, President of TEXAS
GENERATING COMPANY, a Texas corporation, on behalf of said
corporation.
/s/ Aisha Piracha
NOTARY PUBLIC in and for
the State of TEXAS
My Commission Expires:
November 16, 1994
FIFTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 11>
THIS EXHIBIT IS FILED IN THIS DOCUMENT AS EXHIBIT 10(h)3
>
EXHIBIT G to
Unit 2 First Amendment
TNP SECOND LIEN MORTGAGE MODIFICATION NO. 2
THIS INSTRUMENT MODIFIES AND AMENDS AN INSTRUMENT WHICH
GRANTED A
SECURITY INTEREST BY A UTILITY AND WHICH CONTAINED
AFTER-ACQUIRED PROPERTY PROVISIONS PURSUANT TO
SUBCHAPTER 35A OF THE TEXAS BUSINESS AND COMMERCE CODE
SECOND LIEN MORTGAGE AND
DEED OF TRUST (WITH SECURITY AGREEMENT)
MODIFICATION, EXTENSION AND AMENDMENT AGREEMENT NO. 2
THIS SECOND LIEN MORTGAGE AND DEED OF TRUST (WITH SECURITY
AGREEMENT) MODIFICATION, EXTENSION AND AMENDMENT AGREEMENT NO.
2
("TNP Second Lien Mortgage Modification No. 2") dated as of
September 21, 1993, is executed and delivered by TEXAS-NEW MEXICO
POWER COMPANY, a Texas corporation ("Mortgagor"), having an
office at 4100 International Plaza, 820 Hulen Towers, Fort Worth,
Texas 76109, Attention: D. R. Barnard, to DONALD H. SNELL, having
an office at Suite 1030, 200 Crescent Court, Dallas, Texas 75201,
as mortgage trustee ("Mortgage Trustee"), for the benefit of the
Secured Parties, as described in the Credit Agreement
(hereinafter defined). Unless otherwise described or defined
herein, all terms used in this TNP Second Lien Mortgage
Modification No. 2 shall have the same meanings herein as are
assigned to such terms in that certain Unit 2 First Amended and
Restated Project Loan and Credit Agreement dated as of January 8,
1992 as amended by the First Amendment (hereinafter defined) (as
so amended, and as further amended, "Credit Agreement") among
Mortgagor, TEXAS GENERATING COMPANY II ("Borrower"), the banks
party thereto ("Banks"), and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION) as agent for the Banks and the Replacement Note
Holders (the "Agent").
W I T N E S S E T H:
Recitals
A. As of October 1, 1988, Mortgagor executed and delivered
to Mortgage Trustee, for the benefit of the Secured Parties, a
certain Second Lien Mortgage and Deed of Trust (with Security
Agreement) ("TNP Second Lien Mortgage"), granting to Mortgage
Trustee, for the benefit of the Secured Parties, a second lien
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 1>
against property of Mortgagor located in the State of Texas
("Second Lien Mortgage Trust Estate") and more particularly
described in the TNP Indenture (as defined in the TNP Second Lien
Mortgage), which TNP Second Lien Mortgage was filed with the
Secretary of State of Texas on October 4, 1988, as Utility
Security Instrument Number 229147. The lien created by the TNP
Second Lien Mortgage is subordinate by its own terms to the lien
of the TNP Indenture.
B. By its terms, the TNP Second Lien Mortgage excluded
from the Second Lien Mortgage Trust Estate certain real property
located in Robertson County, Texas (the "Property") since no
portion thereof was then owned by Mortgagor.
C. Pursuant to a certain Warranty Deed dated as of
October 1, 1988 and recorded in Volume 521 at Page 532 of the
Public Records of Robertson County, Texas, Project Funding
Corporation conveyed 7.466 acres of the Property ("Unit 2
Property") to Texas TPFC, Inc. (the Property less and except the
Unit 2 Property, hereinafter called the "Robertson County
Property").
D. On December 27, 1990, pursuant to the Facility Purchase
Agreement, Mortgagor purchased an undivided 30/345 interest in
the Robertson County Property (including Unit 1 located thereon)
which interest was conveyed to Mortgagor by that certain
Conveyance and Bill of Sale recorded in Volume 556 at Page 653 of
the Public Records of Robertson County, Texas.
E. The Alternative Assumption Date occurred as of May 31,
1991. Effective as of that date, the Unit 2 Property was
conveyed to the Borrower pursuant to a certain Conveyance and
Bill of Sale dated effective May 31, 1991, recorded on July 26,
1991 in Volume 566 at Page 283 of the Public Records of Robertson
County, Texas. Contemporaneously therewith, all of the
Obligations under the terms of the Credit Agreement were assumed
by the Borrower pursuant to a certain Assumption Agreement
recorded on July 26, 1991 in Volume 566 at Page 252 of the Public
Records of Robertson County, Texas. Also contemporaneously
therewith, the obligations of Mortgagor under that certain
Guaranty dated as of May 31, 1991 ("Guaranty") became effective
and pursuant thereto, Mortgagor (sometimes hereinafter called
"Guarantor") guarantees the Obligations that were assumed by the
Borrower.
F. On January 8, 1992, Mortgagor and the Agent, on behalf
of the Secured Parties, executed that certain Second Lien
Mortgage and Deed of Trust (With Security Agreement)
Modification, Extension and Amendment Agreement (the "Second Lien
Mortgage Modification No. 1"), to among other things, further
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 2>
modify the TNP Second Lien Mortgage to clarify and confirm that
any portion of the Trust Estate under the TNP Indenture (as
defined in the TNP Second Lien Mortgage) located in Robertson
County, Texas then owned or thereafter acquired by the Mortgagor
would be included as a part of the Second Lien Trust Estate.
G. On January 27, 1992, pursuant to the Facility Purchase
Agreement (as defined in the Unit 1 Credit Agreement), Mortgagor
purchased an additional undivided 45/345 interest in the
Robertson County Property (including Unit 1 located thereon).
H. On the date hereof, pursuant to the Facility Purchase
Agreement (as defined in the Unit 1 Credit Agreement), Mortgagor
has purchased an additional undivided 65/345 interest in the
Robertson County Property (including Unit 1 located thereon).
I. On the date hereof, pursuant to the Facility Purchase
Agreement, Mortgagor purchased an undivided 75.75/288.5 interest
in the Unit 2 Property (including Unit 2 located thereon).
J. Although all of the undivided interests described in
Recitals G, H and I are presently subject to the liens of the TNP
Second Lien Mortgage by reason of provision to that effect
therein, the parties desire to reflect this fact of record.
K. Mortgagor and the Agent, on behalf of the Secured
Parties, have modified the TNP Second Lien Mortgage to clarify
and confirm that, any portion of the Robertson County Trust
Estate Property owned by or acquired by the Mortgagor shall be
included as a part of the Second Lien Mortgage Trust Estate. The
Mortgagor and the Agent, on behalf of the Secured Parties, have
executed and delivered the TNP Second Lien Mortgage Modification
dated as of January 8, 1992 and caused it to be filed with the
Secretary of State of the State of Texas.
L. Borrower, Mortgagor and the Agent, on behalf of the
Secured Parties, have agreed, as set forth in the First Amendment
(defined below), to modify the terms of the Credit Agreement in
order to permit Mortgagor and Borrower to secure Permitted
Collateralized Indebtedness with the Collateral, adjust the terms
of payment thereunder and to extend the dates for payments
required thereby, and to make other modifications all as set
forth in and subject to the terms and conditions of the Credit
Agreement.
M. The Agent is authorized by Section 15.01 of the Credit
Agreement to execute and deliver this Agreement.
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 3>
Agreements
NOW, THEREFORE, in consideration of the premises and of the
sum of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of all of
which are hereby acknowledged, the TNP Second Lien Mortgage, as
previously modified by the TNP Second Lien Mortgage Modification,
is hereby modified, extended and amended as follows:
1. Amendment to TNP Second Lien Mortgage. The Mortgagor,
to further secure the Obligations in the manner and to the extent
provided in the TNP Second Lien Mortgage as modified by the
Second Lien Mortgage Modification No. 1 and this TNP Second Lien
Mortgage Modification No. 2, and the performance and observance
by the Mortgagor of all of the covenants, warranties,
representations and other obligations contained in the Project
Documents which are to be performed by it and to expressly
subject to the liens and security interests of the TNP Second
Lien Mortgage additional property acquired by Mortgagor since the
date of execution and delivery of the TNP Second Lien Mortgage,
Mortgagor does hereby BARGAIN, SELL, GRANT, CONVEY, TRANSFER,
MORTGAGE, PLEDGE AND ASSIGN to the Mortgage Trustee and his
successors and substitutes in trust hereunder for the benefit of
the Secured Parties, the following property:
(a) that certain 45/345 undivided interest in and to those
certain lands, Unit 1 and certain property rights
appurtenant to said lands and Unit 1, all as described
and conveyed by that certain Conveyance and Bill of
Sale from Texas Generating Company to Mortgagor
recorded in Volume 573 at Page 552 of the Public
Records of Robertson County, Texas; and
(b) that certain 65/345 undivided interest in and to those
certain lands, Unit 1 and certain property rights
appurtenant to said lands and Unit 1, all as described
and conveyed by that certain Conveyance and Bill of
Sale of even date herewith from Texas Generating
Company to Mortgagor recorded on the date hereof in
Volume [__] at Page [__] of the Public Records of
Robertson County, Texas; and
(c) that certain 75.75/288.5 undivided interest in and to
those certain lands, Unit 2 and certain property rights
appurtenant to said lands and Unit 2, all as described
and conveyed by that certain Conveyance and Bill of
Sale of even date herewith from Texas Generating
Company II to Mortgagor recorded in Volume [__] at Page
[__] of the Public Records of Robertson County, Texas
(the undivided interests referred to in clauses (a) and
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 4>
(b) above and this clause (c), collectively referred to herein
as, the "Additional Trust Estate Property").
TO HAVE AND TO HOLD the said Additional Trust Estate Property
unto the Mortgage Trustee, his successors and assigns, forever,
and Mortgagor does hereby bind itself, its successors and assigns
to warrant and forever defend the title to the Additional Trust
Estate Property unto the Mortgage Trustee for the benefit of the
Secured Parties, against the claims and demands of all persons
whomsoever, except those claiming under Permitted Encumbrances,
and second and subordinate in all respects to the lien and
security interest of, and other rights and benefits granted to
the trustee in the TNP Indenture.
2. Modification of Terms of the Credit Agreement. The
terms of the Credit Agreement are amended and modified pursuant
to the Amendment No. 1 (the "First Amendment") dated as of
September 21, 1993 among the Mortgagor, the Borrower, the Banks
and the other parties thereto. The First Amendment, among other
things, and subject to certain conditions precedent, provides for
(i) rescheduling the amounts and dates of certain repayments,
including extension of the Final Maturity Date to December 31,
1998; (ii) increasing interest rates on the Project Loans; (iii)
adding certain fees payable to the Agent and the Banks; (iv)
providing the Borrower with a revolving credit facility; and (v)
providing for the issuance of Subsequent Replacement Notes
(hereinafter described). Under the Credit Agreement, the Loans
made originally to TPFC and assumed by TGC II on the Alternative
Assumption Date and the Loans made to TGC II after the
Alternative Assumption Date were evidenced by a Project Note held
by each Bank. Under the terms of the Credit Agreement, subject
to certain conditions precedent, TNP may purchase a portion of
the Loans. Such purchase is to be made pro rata from the Banks
which shall make an entry on their respective Project Notes of
the amount so purchased and correspondingly reduce the amount of
the principal due on said Project Notes. Simultaneously, TGC II
shall issue a substitution and replacement promissory note (a
"Subsequent Replacement Note") to TNP to evidence the aggregate
principal amount of the Loans purchased by TNP which now
constitute a part of the Obligations as described in the Credit
Agreement. Therefore, the aggregate of the principal amount of
all the Loans under the Credit Agreement, as evidenced by the
Project Notes and the Replacement Note, shall not be changed as a
result of the issuance of any Subsequent Replacement Note.
3. Effect of Modification. The Loans, whether evidenced
by Project Notes or the Replacement Notes, and all other
Obligations as described in the Credit Agreement are secured by
the liens, security interests and assignments of the TNP Second
Lien Mortgage and the other Security Documents. The validity and
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 5>
priority of the liens, security interests and assignments of the
TNP Second Lien Mortgage shall not be extinguished, impaired,
reduced, released or adversely affected by the terms of this TNP
Second Lien Mortgage Modification No. 2 or the First Amendment.
4. Extension of Rights and Liens. The Mortgagor hereby
extends all rights, titles, liens, security interests,
assignments, powers and privileges securing the Obligations as
described in the Credit Agreement by virtue of the TNP Second
Lien Mortgage until all of such Obligations have been paid in
full and agrees that the execution of this TNP Second Lien
Mortgage Modification No. 2 shall in no manner impair the rights,
titles, liens, security interests, assignments, powers and
privileges existing by virtue of the TNP Second Lien Mortgage, as
they are extended and modified hereby.
5. Joinder of Guarantor. Contemporaneously with the
execution and delivery of this TNP Second Lien Mortgage
Modification No. 2, and as consideration therefor, Mortgagor, as
the Guarantor, hereby confirms and consents to each and every of
the terms and conditions of this TNP Second Lien Mortgage
Modification No. 2 and the First Amendment, and agrees that the
terms and conditions of the Guaranty are in full force and effect
and unaffected by the execution by Borrower and Mortgagor of the
First Amendment and this TNP Second Lien Mortgage Modification
No. 2, and acknowledges that there are no claims or offsets
against, or defenses or counterclaims to, the Guaranty.
6. Successors and Assigns. This TNP Second Lien Mortgage
Modification No. 2 shall be binding upon the successors and
assigns of Mortgagor, the Secured Parties and the Collateral
Agent, and shall inure to the benefit of the successors and
assigns of the Secured Parties; provided, however, nothing
contained in this Section 6 is intended to authorize TNP or the
Borrower to assign any of the Obligations or to sell any of the
Second Lien Mortgage Trust Estate except in accordance with the
Credit Agreement and the Facility Purchase Agreement.
7. Counterparts. This TNP Second Lien Mortgage
Modification No. 2 may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
instrument, and any of the parties hereto many execute this TNP
Second Lien Mortgage Modification No. 2 by signing any such
counterpart.
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 6>
EXECUTED as of the date first hereinabove written.
SECURED PARTIES:
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent
By:/s/ Bettylou J. Robert
Title: Vice President
MORTGAGOR:
TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation
By:/s/ D. R. Barnard
Title: Sector Vice President &
Chief Financial Officer
The undersigned hereby
consents and agrees to the
foregoing pursuant to
Section 1(c) of the
Intercreditor Agreement
as defined in the
Credit Agreement.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Collateral Agent
By:/s/ Bettylou J. Robert
Title: Vice President
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 7>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
/s/ Elizabeth A. Sullivan
February 1, 1995 Typed or Printed Name of Notary
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 8>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Collateral Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
/s/ Elizabeth A. Sullivan
February 1, 1995 Typed or Printed Name of Notary
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 9>
THE STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, Sector Vice President & CFO
of TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation, on behalf
of said corporation.
/s/ Aisha Piracha
NOTARY PUBLIC in and for
the State of TEXAS
My Commission Expires:
/s/ Aisha Piracha
November 16, 1994 Typed or Printed Name of Notary
TNP SECOND LIEN MORTGAGE MODIFICATION NO.2
<PAGE 10>
EXECUTION
COUNTERPART
=======================================
AMENDMENT NO. 1
Dated as of September 21, 1993
to the
UNIT 2
FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
Dated as of January 8, 1992
among
TEXAS-NEW MEXICO POWER COMPANY
and
TEXAS GENERATING COMPANY II
and
THE BANKS NAMED HEREIN
as Banks
and
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
as Agent
=======================================
AMENDMENT NO. 1 (this "Amendment") dated as of
September 21, 1993 to the UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT dated as of January 8, 1992
(the "Credit Agreement"), among TEXAS-NEW MEXICO POWER COMPANY
("TNP"), TEXAS GENERATING COMPANY II ("TGC II"), each of the
lenders that is a signatory hereto identified under the caption
"BANKS" on the signature pages hereto or which, pursuant to
Section 4.05(g) or 16.01 hereof, shall become a "Bank" hereunder,
the Voting Participants and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as agent for the Banks (in such capacity, the
"Agent").
RECITALS
1. The parties hereto have previously entered into the
Credit Agreement which became effective on the Effective Date,
January 24, 1992, upon the satisfaction of the conditions
precedent thereto as set out in Section 8.01 of the Credit
Agreement.
2. On January 27, 1992, TNP and TGC II satisfied the
conditions in Section 8.02 of the Credit Agreement to cause the
occurrence of the Extension Date. Among other things, TNP issued
its Series T Bonds and its First Secured Debentures, due January
15, 1999, and applied the net proceeds thereof to, among other
things, purchase pro rata from the Banks $65,000,000 of the
Existing Loans outstanding under the Credit Agreement. The
Existing Loans acquired by TNP were, automatically upon their
purchase by TNP, converted into the First Replacement Loan,
evidenced by the First Replacement Note that is secured pursuant
to the Security Documents pari passu with the other Obligations
under the Credit Agreement and the other Project Documents. The
First Secured Debentures are secured by TNP's pledge of the First
Replacement Note to the First Debenture Trustee under the First
Secured Debenture Indenture. As a result of the pledge of the
First Replacement Note, the First Secured Debentures indirectly
share pari passu in the Banks' Collateral.
3. TNP and TGC II have the right to secure additional debt
securities with the Collateral, subject to the terms and
conditions of Section 9.33 of the Credit Agreement. Other than
with respect to the January 27, 1992 transactions described in
Recital 2 hereof, however, no specific procedures were
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 1>
established in the Credit Agreement for TNP or TGC II to
secure additional debt securities with the Collateral.
4. The parties desire to amend the Credit Agreement as
provided for in this Amendment to facilitate TNP's or TGC II's
securing certain additional debt securities and, upon the
payment, prepayment or purchase in full of the Project Loans
outstanding on the First Amendment Effective Date, all interest
due and payable thereon and all other amounts due and payable by
TNP and TGC II to the Banks under the Credit Agreement
(including, without limitation, all Supplemental Advances) and
the other Project Documents, debt with the Collateral from time
to time in furtherance of and as necessary for the parties to
achieve the purposes and objectives, to perform the obligations
and to exercise the rights, all as set forth in or contemplated
by the Credit Agreement and as modified by this Amendment.
5. On July 2, 1993, TNP requested certain amendments to
the Credit Agreement to provide, among other things, for the
extension of certain scheduled repayment dates and the prepayment
by TGC II of $75,750,000 of Existing Project Loans. On July 2,
1993, TNP requested certain amendments to the Unit 1 First
Amended and Restated Project Loan and Credit Agreement dated as
of January 8, 1992 among TNP, TGC, the banks and the other
parties thereto and Chase, as Agent (as amended, modified and
supplemented and in effect from time to time, the "Unit 1 Credit
Agreement") and simultaneously with the entering into of this
Amendment the parties to the Unit 1 Credit Agreement are entering
into Amendment No. 1 to the Unit 1 Credit Agreement in order to
effect such amendments to the Unit 1 Credit Agreement.
6. The funds necessary for the payments and prepayments of
Existing Project Loans are expected to be provided by the
issuance by TNP of new first mortgage bonds (the "New Bonds") in
an aggregate principal amount of up to $100,000,000 under the TNP
Bond Indenture and available cash.
7. Certain provisions of this Amendment will become
effective only upon the prepayment of a portion of the Existing
Project Loans and the prepayment and purchase of certain of the
indebtedness under the Unit 1 Credit Agreement and the
satisfaction of certain other conditions.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 2>
8. By virtue of the First Debenture Trustee Consent, the
Replacement Note Holder has consented to the extent required to
the provisions of this Amendment.
NOW, THEREFORE, for and in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions.
Unless otherwise defined herein, the capitalized terms
utilized herein (including the Recitals hereinabove set forth)
which are defined in the Credit Agreement shall have the meanings
ascribed to them in the Credit Agreement. The capitalized terms
defined herein, in the context of amending the Credit Agreement,
shall, when used herein (including the Recitals hereinabove set
forth), have the meanings ascribed to them in such amending
language.
SECTION 2. Conditions Precedent.
(a) The effectiveness of this Amendment shall be subject to
the condition precedent that, on or before September
30, 1993, this Amendment shall have been executed and
delivered by TNP, TGC II, the Banks, the Voting
Participants (if any), the Agent and the Collateral
Agent, and to the satisfaction of the following
additional conditions precedent, in each case for the
benefit of the parties hereto and the other Secured
Parties:
(i) TNP and TGC II each shall deliver to the Agent
certified copies of the resolutions of their
respective boards of directors authorizing the
execution, delivery and performance of this
Amendment and each of the other First Amendment
Documents to which such Person is or is intended
to be a party and the transactions contemplated
by the issuance by TNP of New Bonds in an
aggregate principal amount of up to $100,000,000
under the TNP Bond Indenture and all other
documents evidencing other necessary action with
respect thereto;
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 3>
(ii) TNP and TGC II each shall deliver to the Agent a
certificate, in form and substance satisfactory
to the Agent, signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that,
except as disclosed in such certificate, there
shall be no injunction, writ, preliminary
restraining order or any order of any nature
issued by any arbitrator, court or other
governmental authority directing that this
Amendment not be consummated as herein provided
and certifying further that, except as disclosed
in such certificate, there shall be no material
litigation, investigation or proceeding of or
before any arbitrator, court or other
governmental authority pending or (to the best
of such Authorized Officer's knowledge,
threatened) against TNP or TGC II or affecting
in any material respect any of its respective
properties, revenues or assets;
(iii) TNP and TGC II each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that
(A) the representations and warranties of each
of TNP and TGC II, as applicable, contained in
Section 2 of the Credit Agreement, as amended by
this Amendment, and in each of the other Project
Documents to which such Person is a party shall
be true and correct on and as of such date as if
made on and as of such date (or, if stated to
have been made solely as of an earlier date,
were true and correct as of such earlier date),
(B) no Default under the Credit Agreement, as
amended by this Amendment, and no default by
either TNP or TGC II under any of the other
Project Documents to which either TNP or TGC II
is a party, has occurred and is continuing on
such date and (C) to the best of such Authorized
Officer's knowledge, no default by any other
Person to any other Project Document has
occurred and is continuing on such date;
(iv) TNP and TGC II each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 4>
(A) it has obtained all Government Approvals necessary
under applicable laws and regulations in connection with the due
execution, delivery and performance of this Amendment and
transactions contemplated hereby (except Section 3 hereof) and
(B) all such Government Approvals have been duly obtained, were
validly issued and are held by and in the name of TNP or TGC II,
as applicable, and are final, in full force and effect and not
subject to appeal;
(v) TNP and TGC II each shall deliver to the Agent
legal opinions from counsel to TNP and TGC II in
form and substance satisfactory to the Agent;
(vi) the Intercreditor Amendment No. 2 shall have
been duly executed and delivered by the intended
parties thereto;
(vii) the First Debenture Trustee Consent shall have
been duly executed by the First Indenture
Trustee and delivered to the Agent;
(viii) the Fourth TGC II Modification and Extension
Agreement shall have been duly executed and
delivered by the intended parties thereto and,
at the sole cost of TNP and TGC II, the Title
Company shall have issued to the Agent (A) a
T-38 endorsement to Stewart Title Guaranty
Mortgage Policy No. M-5802-561740 and a T-38
endorsement to Stewart Title Guaranty Mortgage
Policy No. M-5832-25812, each with respect to
such Fourth TGC II Mortgage Modification and
Extension Agreement and (B) a title information
report in form and substance satisfactory to and
approved by the Agent, showing good and
indefeasible title to the TGC II Mortgage Trust
Estate is vested in TGC II and that the TGC II
Mortgage constitutes a valid first mortgage lien
on the TGC II Mortgage Trust Estate and showing
that there are no intervening liens which would
adversely affect the priority of the liens
securing the Loans, subject only to Permitted
Liens;
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 5>
(ix) the TNP Second Lien Mortgage Modification No. 2
shall have been duly executed and delivered by
the intended parties thereto;
(x) the Facility Purchase Agreement Amendment No. 1,
in form and substance satisfactory to the Agent,
shall have been duly executed and delivered by
the intended parties thereto;
(xi) evidence that the First Amendment Documents and
all other instruments to be recorded or filed in
connection with the effectiveness of this
Amendment have been duly recorded and filed in
all places wherein such recording and filing are
necessary to perfect the interests of the Agent
in and to the Collateral covered thereby;
(xii) TNP and TGC II shall each deliver to the Agent
such other certificates, documents or other
information with respect to the matters
contemplated by this Amendment as the Agent may
reasonably determine are necessary to effect the
transactions contemplated by this Amendment; and
(xiii) Amendment No. 1 to the Unit 1 Credit Agreement
shall have been duly executed and delivered by
TNP, TGC, the Banks (under and as defined in the
Unit 1 Credit Agreement), the Agent (under and
as defined in the Unit 1 Credit Agreement) and
the Collateral Agent (under and as defined in
the Intercreditor Agreement) and each of the
conditions precedent described in Sections
2(a)(i) through (xi) of Amendment No. 1 to the
Unit 1 Credit Agreement shall have been
satisfied.
(b) The effectiveness of Section 3 of this Amendment
shall be subject to the further conditions precedent
that, on or before June 30, 1994, each of the
following additional conditions precedent, in each
case for the benefit of the parties hereto and the
other Secured Parties, shall have been fulfilled:
(i) TNP and TGC each shall have effected a Section
4.05 Closing, under and as defined in the Unit 1
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 6>
Credit Agreement, as amended by Amendment No. 1 thereto,
with respect to Second Secured Debentures, as defined in, and
issued in accordance with the terms and conditions of Section
4.05 of, the Unit 1 Credit Agreement, as amended by
Amendment No. 1 thereto (the "Second Secured Debentures"),
in an aggregate principal amount of $140,000,000 and TNP
shall have contemporaneously issued New Bonds in an
aggregate principal amount of up to $100,000,000 and (A) TNP
shall have applied the proceeds from the Second Secured
Debentures to purchase "Project Notes," under and as defined
in the Unit 1 Credit Agreement, as amended by Amendment No.
1 thereto, in the amount of $140,000,000 and (B) TNP and
TGC II shall have applied a portion of the proceeds of the New
Bonds and available cash to prepay the Existing Project Loans in
the amount of $75,750,000 and TNP or TGC shall have prepaid
the "Project Loans," under and as defined in the Unit 1 Credit
Agreement, as amended by Amendment No. 1 thereto, in the
amount of $6,000,000;
(ii) TNP and TGC II each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that
(A) the representations and warranties of each
of TNP and TGC II, as applicable, contained in
Section 2 of the Credit Agreement, as amended by
this Amendment, and in each of the other Project
Documents to which such Person is a party shall
be true and correct on and as of such date as if
made on and as of such date (or, if stated to
have been made solely as of an earlier date,
were true and correct as of such earlier date),
(B) no Default under the Credit Agreement, as
amended by this Amendment, and no default by
either TNP or TGC II under any of the other
Project Documents to which either TNP or TGC II
is a party, has occurred and is continuing on
such date and (C) to the best of such Authorized
Officer's knowledge, no default by any other
Person to any other Project Document has
occurred and is continuing on such date;
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 7>
(iii) TNP and TGC II each shall deliver to the Agent a
certificate signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that
(A) it has obtained all Government Approvals
necessary under applicable laws and regulations
in connection with the provisions of, and the
transactions contemplated by, Section 3 hereof
(and the transactions contemplated by Section 4
hereof that are contemplated to occur as a
consequence of the occurrence of the Section 3
Effective Date) and (B) all such Government
Approvals have been duly obtained, were validly
issued and are held by and in the name of the
proper party (either directly or by transfer
from the original applicant therefor) and are
final, in full force and effect and not subject
to appeal;
(iv) TNP and TGC II each shall deliver to the Agent a
certificate, in form and substance satisfactory
to the Agent, signed by an Authorized Officer of
TNP or TGC II, as applicable, certifying that,
except as disclosed in such certificate, there
shall be no injunction, writ, preliminary
restraining order or any order of any nature
issued by any arbitrator, court or other
governmental authority directing that this
Amendment not be consummated as herein provided
and certifying further that, except as disclosed
in such certificate, there shall be no material
litigation, investigation or proceeding of or
before any arbitrator, court or other
governmental authority pending or (to the best
of such Authorized Officer's knowledge,
threatened) against TNP or TGC II or affecting
in any material respect any of its respective
properties, revenues or assets;
(v) TNP and TGC II each shall deliver to the Agent
legal opinions of counsel to TNP and TGC II
(which may take the form of bring-down letters
with respect to legal opinions delivered on the
First Amendment Effective Date) in form and
substance satisfactory to the Agent;
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 8>
(vi) the Fifth TGC II Modification and Extension
Agreement shall have been duly executed and
delivered by the intended parties thereto and,
at the sole cost of TNP and TGC II, the Title
Company shall have issued to the Agent (A) a
T-38 endorsement to the Stewart Title Guaranty
Mortgage Policy issued pursuant to Section 17.22
of the Credit Agreement, as amended by this
Amendment, and a T-38 endorsement to Stewart
Title Guaranty Mortgage Policy No. M-5832-25812,
each with respect to such Fifth TGC II Mortgage
Modification and Extension Agreement and (B) a
title information report in form and substance
satisfactory to and approved by the Agent,
showing good and indefeasible title to the TGC
II Mortgage Trust Estate is vested in TGC II and
that the TGC II Mortgage constitutes a valid
first mortgage lien on the TGC II Mortgage Trust
Estate and showing that there are no intervening
liens which would adversely affect the priority
of the liens securing the Loans, subject only to
Permitted Liens;
(vii) evidence that the First Amendment Documents and
all other instruments to be recorded or filed in
connection with the effectiveness of Section 3
of this Amendment have been duly recorded and
filed in all places wherein such recording and
filing are necessary to perfect the interests of
the Agent in and to the Collateral covered
thereby; and
(viii) TNP and TGC II shall each deliver to the Agent
such other certificates, documents or other
information with respect to the matters
contemplated by Section 3 of this Amendment as
the Agent may reasonably determine are necessary
to effect the transactions contemplated by
Section 3 of this Amendment.
(c) Promptly upon the satisfaction of the conditions
precedent to the effectiveness of this Amendment, as
described in Section 2(a) of this Amendment, the Agent
shall confirm in writing delivered to TNP and TGC II
that the provisions of this Amendment (except Section 3
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 9>
hereof) have become effective. Promptly upon the
satisfaction of the conditions precedent described in Section
2(b) of this Amendment (i) TNP or TGC II shall pay to the Agent
for the ratable benefit of the Banks a non-refundable extension
fee in the amount of 1/4 of 1% of the aggregate principal amount
of Existing Project Loans outstanding on the Bond Proceeds
Payment Date after giving effect to the prepayments on such date
and (ii) the Agent shall confirm in writing delivered to TNP and
TGC II that the provisions of Section 3 of this Amendment have
become effective.
SECTION 3. Extension of Maturities and Changes to
"Applicable Margins".
SECTION 3.01. Extension of Maturities; Changes to
"Applicable Margins".
(a) Section 1.01 of the Credit Agreement shall be amended
as follows:
(i) Delete the following terms and their definitions
in their entirety: "Final Maturity Date", "First
Scheduled Reduction Date", "Scheduled Reduction
Dates" and "Second Scheduled Reduction Date";
(ii) Insert the following new terms and their
definitions in the appropriate alphabetical order:
""Final Maturity Date" shall mean December
31, 1998.
"First Prospect Purchase Carryforward Amount"
shall mean the excess (if any) of (a) Period 1
Prospect Purchases over (b) $1,567,992.42.
"First Scheduled Reduction Date" shall mean
December 31, 1995.
"First Supplemental Advance Bank Purchase
Carryforward Amount" shall mean the excess (if
any) of (a) Period 1 Supplemental Advance Bank
Purchases over (b) the excess (if any) of (i)
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 10>
$35,369,507.58 over (ii) Period 1 Section 5.02(a)
Prepayments.
"Period 1 Prospect Purchases" shall have the
meaning ascribed to such term in Section
5.02(b)(i)(A)(2)(y)(II) hereof.
"Period 1 Section 5.02(a) Prepayments" shall
have the meaning ascribed to such term in Section
5.02(b)(i)(A)(1)(y)(I) hereof.
"Period 1 Supplemental Advance Bank
Purchases" shall have the meaning ascribed to such
term in Section 5.02(b)(i)(A)(1)(y)(II) hereof.
"Period 2 Prospect Purchases" shall have the
meaning ascribed to such term in Section
5.02(b)(i)(B)(2)(y)(I)(bb) hereof.
"Period 2 Section 5.02(a) Prepayments" shall
have the meaning ascribed to such term in Section
5.02(b)(i)(B)(1)(y)(I)(aa) hereof.
"Period 2 Supplemental Advance Bank
Purchases" shall have the meaning ascribed to such
term in Section 5.02(b)(i)(B)(1)(y)(I)(bb) hereof.
"Period 3 Section 5.02(a) Prepayments" shall
have the meaning ascribed to such term in Section
5.02(b)(i)(C)(1)(y)(I)(aa) hereof.
"Period 3 Supplemental Advance Bank
Purchases" shall have the meaning ascribed to such
term in Section 5.02(b)(i)(C)(1)(y)(I)(bb) hereof.
"Scheduled Reduction Dates" shall mean the
First Scheduled Reduction Date, the Second
Scheduled Reduction Date, the Third Scheduled
Reduction Date, the Final Maturity Date and each
Replacement Note Maturity Date.
"Second Prospect Purchase Carryforward
Amount" shall mean the excess (if any) of (a) the
sum of (i) the First Prospect Purchase
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 11>
Carryforward Amount plus (ii) Period 2 Prospect
Purchases over (b) $1,567,992.42.
"Second Scheduled Reduction Date" shall mean
December 31, 1996.
"Second Supplemental Advance Bank Purchase
Carryforward Amount" shall mean the excess (if
any) of (a) the sum of (i) the First Supplemental
Advance Bank Purchase Carryforward Amount plus
(ii) Period 2 Supplemental Advance Bank Purchases
over (b) the excess (if any) of (i) $35,369,507.58
over (ii) Period 2 Section 5.02(a) Prepayments.
"Third Scheduled Reduction Date" shall mean
December 31, 1997."; and
(iii) Delete the term "Applicable Margin" and the
definition thereof and substitute in its place the
following:
""Applicable Margins" shall mean:
(i) with respect to Prime Rate Loans,
(a) for the period from September 23, 1991
through and including December 31, 1992,
1-1/8%,
(b) for the period from but excluding
December 31, 1992 through and including
December 31, 1993, 1-3/8%,
(c) for the period from but excluding
December 31, 1993 through and including
December 31, 1994, 1-7/8%,
(d) for the period from but excluding
December 31, 1994 through and including
December 31, 1995, 2-3/8%,
(e) for the period from but excluding
December 31, 1995 through and including
December 31, 1996, 2-5/8%,
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 12>
(f) for the period from but excluding
December 31, 1996 through and including
December 31, 1997, 2-7/8%, and
(g) thereafter, 3-1/8%;
(ii) with respect to CD Rate Loans,
(a) for the period from September 23, 1991
through and including December 31, 1992,
1-5/8%,
(b) for the period from but excluding
December 31, 1992 through and including
December 31, 1993, 1-7/8%,
(c) for the period from but excluding
December 31, 1993 through and including
December 31, 1994, 2-3/8%,
(d) for the period from but excluding
December 31, 1994 through and including
December 31, 1995, 2-7/8%,
(e) for the period from but excluding
December 31, 1995 through and including
December 31, 1996, 3-1/8%,
(f) for the period from but excluding
December 31, 1996 through and including
December 31, 1997, 3-3/8%, and
(g) thereafter, 3-5/8%; and
(iii) with respect to Eurodollar Rate Loans,
(a) for the period from September 23, 1991
through and including December 31, 1992,
1-1/2%,
(b) for the period from but excluding
December 31, 1992 through and including
December 31, 1993, 1-3/4%,
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 13>
(c) for the period from but excluding
December 31, 1993 through and including
December 31, 1994, 2-1/4%,
(d) for the period from but excluding
December 31, 1994 through and including
December 31, 1995, 2-3/4%,
(e) for the period from but excluding
December 31, 1995 through and including
December 31, 1996, 3%,
(f) for the period from but excluding
December 31, 1996 through and including
December 31, 1997, 3-1/4%, and
(g) thereafter, 3-1/2%.".
(b) Section 5.02(b)(iii) of the Credit Agreement shall be
deleted in its entirety and replaced with the
following:
"(iii) [INTENTIONALLY OMITTED].".
(c) Section 5.02(b)(i) of the Credit Agreement shall be
deleted in its entirety and replaced with the
following:
"(i) TGC II shall prepay, or TNP shall purchase in
accordance with the terms and conditions of Section
4.05 hereof, the Project Loans and in the case of
clause (E), the applicable Replacement Loans, in the
following amounts:
(A) On the First Scheduled Reduction Date (1) the
Existing Project Loans held by the Supplemental
Advance Banks shall be repaid pro rata to the
Supplemental Advance Banks in an aggregate
principal amount equal to the excess (if any) of
(x) $35,369,507.58 over (y) the sum of, in each
case for the period after the Bond Proceeds
Payment Date and before the First Scheduled
Reduction Date (I) the aggregate principal amount
of Existing Project Loans prepaid pursuant to
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 14>
Section 5.02(a) hereof ("Period 1 Section 5.02(a)
Prepayments") plus (II) the aggregate principal amount of
Existing Project Loans purchased at Section 4.05 Closings, on TNP
Purchase Dates or on the Designee Purchase Date ("Period 1
Supplemental Advance Bank Purchases") and (2) the Existing
Project Loans held by Prospect shall be repaid in an aggregate
principal amount equal to the excess (if any) of (x)
$1,567,992.42 over (y) the sum of, in each case from the period
after the Bond Proceeds Payment Date and before the First
Scheduled Reduction Date (I) the aggregate principal amount of
proceeds received by Prospect in respect of the aggregate
principal amount of Existing Project Loans prepaid pursuant to
the provisions of this Agreement (except for prepayments made
pursuant to Section 5.02(a) hereof) plus (II) the aggregate
principal amount of proceeds received by Prospect in respect of
the aggregate principal amount of Existing Project Loans
purchased at Section 4.05 Closings, on TNP Purchase Dates or on
the Designee Purchase Date ("Period 1 Prospect Purchases");
(B) On the Second Scheduled Reduction Date (1) the
Existing Project Loans held by the Supplemental
Advance Banks shall be repaid pro rata to the
Supplemental Advance Banks in an aggregate
principal amount equal to the excess (if any) of
(x) $35,369,507.58 over (y) the sum of (I) in each
case for the period after the First Scheduled
Reduction Date and before the Second Scheduled
Reduction Date (aa) the aggregate principal amount
of Existing Project Loans prepaid pursuant to
Section 5.02(a) hereof ("Period 2 Section 5.02(a)
Prepayments") plus (bb) the aggregate principal
amount of Existing Project Loans purchased at
Section 4.05 Closings, on TNP Purchase Dates or on
the Designee Purchase Date ("Period 2 Supplemental
Advance Bank Purchases") plus (II) the First
Supplemental Advance Bank Purchase Carryforward
Amount and (2) the Existing Project Loans held by
Prospect shall be repaid in an aggregate principal
amount equal to the excess (if any) of (x)
$1,567,992.42 over (y) the sum of (I) in each case
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 15>
from the period after the First Scheduled Reduction
Date and before the Second Scheduled Reduction Date (aa) the
aggregate principal amount of proceeds received by Prospect in
respect of the aggregate principal amount of Existing Project
Loans prepaid pursuant to the provisions of this Agreement
(except for prepayments made pursuant to Section 5.02(a) hereof)
plus (bb) the aggregate principal amount of proceeds received by
Prospect in respect of the aggregate principal amount of Existing
Project Loans purchased at Section 4.05 Closings, on TNP Purchase
Dates or on the Designee Purchase Date ("Period 2 Prospect
Purchases") plus (II) the First Prospect Purchase Carryforward
Amount;
(C) On the Third Scheduled Reduction Date (1) the
Existing Project Loans held by the Supplemental
Advance Banks shall be repaid pro rata to the
Supplemental Advance Banks in an aggregate
principal amount equal to the excess (if any) of
(x) $35,369,507.58 over (y) the sum of (I) in each
case for the period after the Second Scheduled
Reduction Date and before the Third Scheduled
Reduction Date (aa) the aggregate principal amount
of Existing Project Loans prepaid pursuant to
Section 5.02(a) hereof ("Period 3 Section 5.02(a)
Prepayments") plus (bb) the aggregate principal
amount of Existing Project Loans purchased at
Section 4.05 Closings, on TNP Purchase Dates or on
the Designee Purchase Date ("Period 3 Supplemental
Advance Bank Purchases") plus (II) the Second
Supplemental Advance Bank Purchase Carryforward
Amount and (2) the Existing Project Loans held by
Prospect shall be repaid in an aggregate principal
amount equal to the excess (if any) of (x)
$1,567,992.42 over (y) the sum of (I) in each case
from the period after the Second Scheduled
Reduction Date and before the Third Scheduled
Reduction Date (aa) the aggregate principal amount
of proceeds received by Prospect in respect of the
aggregate principal amount of Existing Project
Loans prepaid pursuant to the provisions of this
Agreement (except for prepayments made pursuant to
Section 5.02(a) hereof) plus (bb) the aggregate
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 16>
principal amount of proceeds received by Prospect in
respect of the aggregate principal amount of Existing Project
Loans purchased at Section 4.05 Closings, on TNP Purchase Dates
or on the Designee Purchase Date plus (II) the Second Prospect
Purchase Carryforward Amount;
(D) on the Final Maturity Date, the Existing Project
Loans shall be repaid in an aggregate principal
amount equal to 100% of the outstanding Existing
Project Loans; and
(E) on each Replacement Note Maturity Date and subject
to Section 4.05(i) hereof, the aggregate principal
amount of Replacement Loans maturing on such
date;".
SECTION 3.02. Joinder of Guarantor.
TNP, as the Guarantor, hereby confirms and consents to
each and every of the terms and conditions of Section 3 of this
Amendment and the Credit Agreement as amended by Section 3 of
this Amendment (including, without limitation Section 17.13 of
the Credit Agreement), and agrees that the terms and conditions
of the Guaranty are in full force and effect and unaffected by
the effectiveness of Section 3 of this Amendment and acknowledges
that there are no claims or offsets against, or defenses or
counterclaims to, the Guaranty.
SECTION 4. Conforming Changes to the Credit Agreement.
SECTION 4.01. Future Issuances of Secured Debentures.
(a) The introductory paragraph of the Credit Agreement
shall be amended by adding an "s" to the end of the
term "Replacement Note Holder" in both occurrences of
such term.
(b) Recital 7 of the Credit Agreement shall be amended by
inserting the word "First" before each occurrence of
the following terms: "Secured Debentures", "Secured
Debenture Indenture", "Replacement Loans", "Replacement
Note" and "Debenture Trustee".
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 17>
(c) Recital 8 of the Credit Agreement shall be amended by
inserting the word "First" before the term "Secured
Debentures".
(d) Section 1.01 of the Credit Agreement shall be further
amended as follows:
(i) Delete the following terms and their definitions
in their entirety: "Banks", "Debenture Trustee",
"Project Loans", "Project Notes", "Replacement
Loan", "Replacement Note", "Replacement Note
Holder", "Replacement Note Maturity Date",
"Secured Debenture Indenture", "Secured
Debentures", "Security Documents" and "TGC II
Mortgage Modifications";
(ii) Insert the following new terms and their
definitions in the appropriate alphabetical order:
""4.05 Notice" shall have the meaning
ascribed to such term in Section 4.05(c) hereof.
"Aggregate Commitment" shall mean, for each
Bank, the amount set forth opposite the name of
such Bank on the signature pages of the First
Amendment under the caption "Aggregate
Commitment".
"Bond Proceeds Payment Date" shall mean the
date on which (a) TNP or TGC II prepays the
Existing Loans in an aggregate principal amount of
$75,750,000, (b) TNP purchases $140,000,000 of
"Project Loans," under and as defined in the Unit
1 Credit Agreement, as amended by Amendment No. 1
thereto and (c) TNP or TGC prepays $6,000,000 of
"Project Loans," under and as defined in the Unit
1 Credit Agreement, as amended by Amendment No. 1
thereto.
"Banks" shall mean the Existing Project Banks
and the Supplemental Advance Banks.
"Class" shall mean, with respect to each
Loan, whether such Loan is an Existing Project
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 18>
Loan, a Supplemental Advance or a Replacement Loan,
each of which constitutes a Class.
"Collateral Coverage Maximum Amount" shall
mean, as of any date of determination on or after
the First Amendment Effective Date, (a)
$288,500,000 minus (b) the amount of payments made
by TNP resulting in transfers made by TGC II (on
or after the First Amendment Effective Date)
which, in accordance with the terms and conditions
of the Facility Purchase Agreement, have resulted
in transfers of Interests (as defined in the
Facility Purchase Agreement) in Unit 2 from TGC II
to TNP which Interests (as so defined) have been
released from the lien of the TGC II Mortgage. On
the Bond Proceeds Payment Date (after giving
effect to the transactions contemplated to occur
on or prior to the Bond Proceeds Payment Date),
the Collateral Coverage Maximum Amount shall be
$212,750,000 subject to reduction thereafter by
virtue of transactions described in clause (b) of
the preceding sentence occurring after the Bond
Proceeds Payment Date.
"Debenture Trustees" shall mean the First
Debenture Trustee and any Subsequent Debenture
Trustee, and "Debenture Trustee" shall mean any of
them.
"Designee" shall have the meaning ascribed
to such term in Section 4.05(g) hereof.
"Designee Purchase Date" shall have the
meaning ascribed to such term in Section 4.05(g)
hereof.
"Designee Purchase Notice" shall have the
meaning ascribed to such term in Section 4.05(g)
hereof.
"Existing Banks" shall have the meaning
ascribed to such term in Section 4.01(a) hereof.
"Existing Loans" shall have the meaning
ascribed to such term in Section 4.01(a) hereof.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 19>
"Existing Notes" shall have the meaning
ascribed to such term in Section 4.01(a) hereof.
"Existing Project Banks" shall mean the
Existing Banks and the New Advance Banks.
"Existing Project Loans" shall mean the
Existing Loans and the New Advances.
"Facility Purchase Agreement Amendment No. 1"
shall mean Amendment No. 1 dated as of September
21, 1993 to the Unit 2 First Amended and Restated
Facility Purchase Agreement among TNP, TGC II, the
Agent and the Collateral Agent entered into to
correct an inaccurate numerical reference therein.
"Fifth TGC II Modification and Extension
Agreement" shall mean the Fifth TGC II
Modification and Extension Agreement among the
Agent, the Collateral Agent, TNP and TGC II,
substantially in the form of Exhibit E to the
First Amendment.
"First Amendment" shall mean the Amendment
No. 1 dated as of September 21, 1993 to this
Agreement among TNP, TGC II, the Banks, the Voting
Participants and the Agent.
"First Amendment Documents" shall mean the
First Amendment, the Intercreditor Amendment No.
2, the First Debenture Trustee Consent and the
First Amendment Security Documents.
"First Amendment Effective Date" shall mean
the date on which all of the conditions set forth
in Section 2(a) of the First Amendment shall have
been satisfied.
"First Amendment Security Documents" shall
mean the First Amendment TGC II Mortgage
Modifications, the TNP Second Lien Mortgage
Modification No. 2 and the Facility Purchase
Agreement Amendment No. 1.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 20>
"First Amendment TGC II Mortgage
Modifications" shall mean the Fourth TGC II
Mortgage Modification and Extension Agreement and
the Fifth TGC II Mortgage Modification and
Extension Agreement.
"First Debenture Trustee" shall mean IBJ, as
trustee under, or any successor trustee under, the
First Secured Debenture Indenture.
"First Debenture Trustee Consent" shall mean
a First Debenture Trustee Consent duly executed
and delivered by the First Debenture Trustee,
substantially in the form of Exhibit J to the
First Amendment.
"First Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(a)
hereof.
"First Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(a)
hereof.
"First Replacement Note Maturity Date" shall
mean, subject to Section 4.05(i) hereof, the
stated maturity date of the First Secured
Debentures.
"First Secured Debenture Indenture" shall
mean the Indenture and Security Agreement dated as
of January 15, 1992 between TNP and IBJ, as
trustee, as the same may from time to time be
amended, modified or supplemented or its
provisions waived.
"First Secured Debentures" shall mean the
debentures, due January 15, 1999, issued by TNP on
January 27, 1992 under the First Secured Debenture
Indenture.
"Fourth TGC II Modification and Extension
Agreement" shall mean the Fourth TGC II
Modification and Extension Agreement among the
Agent, the Collateral Agent, TNP and TGC II,
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 21>
substantially in the form of Exhibit D to the First
Amendment.
"IBJ" shall mean IBJ Schroder Bank & Trust
Company, a New York banking corporation.
"Intercreditor Amendment No. 2" shall mean
Amendment No. 2 to the Intercreditor Agreement
dated as of September 21, 1993 among TNP, TGC,
TGC II, the banks and the other parties party
thereto and Chase in its several capacities as the
Agent, the Collateral Agent and the Agent under
the Unit 1 Credit Agreement, substantially in the
form of Exhibit C to the First Amendment.
"New Advance Banks" shall mean Chase and
NationsBank of Texas, N.A ("NationsBank").
"New Advance Closing Date" shall mean the
Bond Proceeds Payment Date.
"New Advance Commitment" shall mean (a) for
Chase, the obligation of Chase to make New
Advances in an aggregate amount up to but not
exceeding $10,000,000 and (b) for NationsBank, the
obligation of NationsBank to make New Advances in
an aggregate amount up to but not exceeding
$16,000,000. The original aggregate principal
amount of the New Advance Commitments is
$26,000,000.
"New Advance Commitment Termination Date"
shall mean 4:00 p.m. New York time on the Bond
Proceeds Payment Date.
"New Advances" shall have the meaning
ascribed to such term in Section 4.01(b) hereof.
"New Project Notes" shall mean the promissory
notes provided for by Section 4.06 hereof and all
promissory notes delivered to the Banks in
substitution or exchange therefor, in each case as
the same may be amended, modified and supplemented
and in effect from time to time.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 22>
"Permitted Collateralized Indebtedness" shall
have the meaning ascribed to such term in Section
4.05(b)(i) hereof.
"Permitted Demand Date" shall mean, at any
time, with respect to any Replacement Loan or any
Replacement Note (subject to Section 4.05(i)
hereof, other than the First Replacement Loan and
the First Replacement Note), the stated maturity
date of the Secured Debentures issued on the basis
of (and at such time collateralized by) such
Replacement Loan and Replacement Note.
"Permitted Section 4.05(b)(ii) Collateralized
Indebtedness" shall have the meaning ascribed to
such term in Section 4.05(b)(ii) hereof.
"Project Loans" shall mean the Existing
Project Loans and the Supplemental Advances.
"Project Notes" shall mean the Existing Notes
and the New Project Notes.
"Register" shall have the meaning ascribed to
such term in Section 4.05(h) hereof.
"Relevant Instruments" shall have the meaning
ascribed to such term in Section 4.05(c) hereof.
"Replacement Agent" shall have the meaning
ascribed to such term in Section 15.08 hereof.
"Replacement Loans" shall mean the First
Replacement Loan, any Subsequent Replacement Loans
and any Temporary Replacement Loans, and
"Replacement Loan" shall mean any of them.
"Replacement Note Holders" shall mean:
(a) (i) with respect to the First
Replacement Note, on the Extension Date and
prior to the pledge of the First Replacement
Note by TNP to the First Debenture Trustee
pursuant to the First Secured Debenture
Indenture, TNP; and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 23>
(ii) with respect to any Subsequent
Replacement Note or any other Replacement
Note (other than a Released Replacement Note)
available at such time for pledge in
conjunction with a future Section 4.05
Closing, prior to the pledge of such
Subsequent Replacement Note or such other
Replacement Note by TNP to a Subsequent
Debenture Trustee pursuant to a Subsequent
Secured Debenture Indenture in conjunction
with such future Section 4.05 Closing, TNP;
(b) immediately upon any such pledge of
any such Replacement Note referred to in
subclause (i) or (ii) of the preceding
subsection (a), but only with respect to such
Replacement Note so pledged (a "Pledged
Replacement Note"):
(i) with respect to any benefits
(including, without limitation, rights to
vote on amendments or defaults and to attend
bank meetings) accruing to, and any
obligations pursuant to Sections 6.03, 15.05,
17.16 and 17.18 hereunder of, the holder of
such Pledged Replacement Note, the Debenture
Trustee to which such Pledged Replacement
Note was pledged (whether or not it shall
have become the legal and beneficial owner of
such Pledged Replacement Note for all
purposes); and
(ii) with respect to any other
obligations of the holder of such Pledged
Replacement Note, TNP;
(c) following the release of any such
pledge of any such Pledged Replacement Note,
but only with respect to such Pledged
Replacement Note so released (a "Released
Replacement Note") and prior to the pledge of
such Released Replacement Note in conjunction
with a future Section 4.05 Closing, TNP; and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 24>
(d) following the transfer of any
Replacement Note upon the exercise of
remedies by a Debenture Trustee under the
applicable Secured Debenture Indenture, any
transferee of such Replacement Note (other
than such Debenture Trustee in its capacity
as trustee);
provided that each of TNP, each Debenture Trustee
and any transferee shall have signed (as a
condition to becoming a Replacement Note Holder)
an instrument of adoption, substantially in the
form of Exhibit G hereto, agreeing to be bound by
and (in the case of each Debenture Trustee,
subject to the provisions of clause (b) above)
comply with terms and conditions of (x) this
Agreement applicable to Replacement Note Holders
and (y) the Intercreditor Agreement applicable to
the "Unit 2 Banks" (as defined in the
Intercreditor Agreement); and "Replacement Note
Holder" shall mean any of them. Anything in the
foregoing to the contrary notwithstanding, TNP, as
Replacement Note Holder of any Replacement Note,
shall have no voting rights under this Agreement
and shall not be considered in the determination
of "Majority Banks" for purposes of this
Agreement.
"Replacement Note Maturity Dates" shall mean
the First Replacement Note Maturity Date and with
respect to any other Replacement Note, such
Replacement Note's Permitted Demand Date or if no
demand is made on or within 90 days after such
Permitted Demand Date, January 1, 2050.
"Replacement Notes" shall mean the First
Replacement Note, any Subsequent Replacement Notes
and any Temporary Replacement Notes, and
"Replacement Note" shall mean any of them.
"Section 3 Effective Date" shall mean the
date on which all of the conditions set forth in
Section 2(b) of the First Amendment shall have
been satisfied.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 25>
"Section 4.05 Closing" shall have the meaning
ascribed to such term in Section 4.05(d) hereof.
"Section 4.05 Closing Date" shall have the
meaning ascribed to such term in Section 4.05(d)
hereof.
"Secured Debenture Indentures" shall mean the
First Secured Debenture Indenture and any
Subsequent Secured Debenture Indentures, and
"Secured Debenture Indenture" shall mean any of
them.
"Secured Debentures" shall mean the First
Secured Debentures and any Subsequent Secured
Debentures (which may include subsequent series of
debentures issued under any indenture supplemental
to any Subsequent Secured Debenture Indenture),
and may refer to the Secured Debentures of any one
or more such series, as the context may require.
"Security Documents" shall mean,
collectively, the TNP Security Agreement, the
Subordination Agreement, the TGC II Mortgage, the
TNP Second Lien Mortgage, the Amendment Security
Documents and the First Amendment Security
Documents.
"Subject Date" shall have the meaning
ascribed to such term in Section 17.21(a) hereof.
"Subsequent Debenture Trustee" shall mean,
with respect to any Subsequent Secured Debenture
Indenture, the trustee, or any successor trustee,
under such Subsequent Secured Debenture Indenture
or, if there shall be no "trustee," per se, any
person serving in a capacity or performing
functions, in each case, similar to those of a
trustee under an indenture, regardless of the name
or legal characterization of said capacity or
functions and, in each case, any successor in such
capacity or performing such functions under such
Subsequent Secured Debenture Indenture.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 26>
"Subsequent Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
"Subsequent Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(e)
hereof.
"Subsequent Secured Debenture Indentures"
shall mean any indenture or agreement, other than
the First Secured Debenture Indenture, which
provides for the issuance of and sets out the
terms and conditions of any TNP debt which is to
be directly or indirectly secured by the
Collateral pursuant to and in accordance with
Section 4.05 hereof, whether or not said agreement
shall be denominated an "indenture" and whether or
not said debt shall be denominated "debentures,"
in each case, as the same may from time to time be
amended, modified or supplemented or its
provisions waived.
"Subsequent Secured Debentures" shall mean
any TNP debt, other than the First Secured
Debentures, which is to be directly or indirectly
secured by the Collateral pursuant to and in
accordance with Section 4.05 hereof, whether or
not said debt shall be denominated "debentures".
Said term may refer to Subsequent Secured
Debentures of any one or more such series, as the
context may require.
"Subsequent TGC II Modification and Extension
Agreement" shall mean a TGC II Modification and
Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC II, substantially in
the form of Exhibit F to the First Amendment, and
otherwise duly completed.
"Temporary Replacement Loan" shall have the
meaning ascribed to such term in Section 4.05(f)
hereof.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 27>
"Temporary Replacement Note" shall have the
meaning ascribed to such term in Section 4.05(f)
hereof.
"Ten Acre Releases" shall have the meaning
ascribed to such term in Section 17.20(c) hereof.
"TGC II Mortgage Modifications" shall mean
(a) the First TGC II Modification and Extension
Agreement among the Agent, the Collateral Agent,
Donald H. Snell as mortgage trustee, TNP and
TGC II, (b) the Second TGC II Modification and
Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC II, (c) the Third
TGC II Modification and Extension Agreement among
the Agent, the Collateral Agent, TNP and TGC II,
(d) the Fourth TGC II Modification and Extension
Agreement, among the Agent, the Collateral Agent,
TNP and TGC II, (e) the Fifth TGC II Modification
and Extension Agreement among the Agent, the
Collateral Agent, TNP and TGC II, (f) each
Subsequent TGC II Modification and Extension
Agreement among the Agent, the Collateral Agent,
TNP and TGC II and (g) any other modification and
extension agreement among the Agent, the
Collateral Agent, TNP and TGC II, which shall
evidence of record that Replacement Loans and the
Replacement Notes, issued in accordance with
Section 4.05 hereof, are secured by the
Collateral.
"TNP Purchase Date" shall have the meaning
ascribed to such term in Section 4.05(f) hereof.
"TNP Purchase Notice" shall have the meaning
ascribed to such term in Section 4.05(f) hereof.
"TNP Second Lien Mortgage Modification No. 2"
shall mean the Second Lien Mortgage and Deed of
Trust (with Security Agreement) Modification,
Extension and Amendment Agreement No. 2 among the
Agent and TNP, substantially in the form of
Exhibit G to the First Amendment.";
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 28>
(iii) The definition of "Amendment Documents" shall be
amended by inserting the word "First" before the
term "Replacement Note";
(iv) Delete clause (c) in the definition of "Interest
Payment Date" and substitute in its place the
following:
"(c) as to (i) the First Replacement Loan,
each date on which TNP is obligated to make a
deposit of cash collateral in respect of interest
on the First Secured Debentures pursuant to
Section 1119 of the First Secured Debenture
Indenture and (ii) any Subsequent Replacement
Loan, each date on which TNP is obligated to make
a deposit of cash collateral in respect of
interest on any Subsequent Secured Debentures
pursuant to provisions of the applicable
Subsequent Secured Debenture Indenture similar to
the provisions referred to in subclause (i) of
this clause (c) and providing for the deposit of
cash collateral in respect of payment of
interest.";
(v) The definition of "Loans" shall be amended by
adding an "s" to the end of the term "Replacement
Loan";
(vi) The definition of "Majority Banks" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder";
(vii) The definition of "Net Proceeds" shall be amended
by inserting the phrase "when used in Section
8.02(c) hereof," after the term "Net Proceeds";
(viii) The definition of "New Debt Securities" shall be
amended by inserting the word "First" before the
term "Secured Debentures";
(ix) The definition of "Notes" shall be amended by
adding an "s" to the end of term "Replacement
Note";
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 29>
(x) Delete clause (b) in the definition of "Post-
Default Rate" and substitute in its place the
following:
"(b) Subject to Section 4.05(i) hereof, in
respect of any principal of any Replacement Loan
or Replacement Note, a rate per annum, as of any
date of determination, equal to the interest rate
applicable to (x) the Secured Debentures to which
such Replacement Loan relates as of such date of
determination as specified in the applicable
Secured Debenture Indenture pursuant to which such
Secured Debentures were issued or (y) if such
Replacement Loan does not as of such date of
determination serve as the basis for the issuance
of any outstanding Secured Debentures, a rate per
annum, as of any date of determination, equal to
the Prime Rate.";
(xi) The definition of "Principal Office" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder";
(xii) The definition of "Project Creditors" shall be
amended by (A) deleting the phrase ", after the
Extension Date," and (B) adding an "s" to the end
of the term "Replacement Note Holder";
(xiii) The definition of "Project Documents" shall be
amended by (A) adding an "s" to the end of the
term "Replacement Note" and (B) inserting the term
"the First Amendment Documents," after the term
"this Agreement,";
(xiv) The definition of "Secured Parties" shall be
amended by adding an "s" to the end of the term
"Replacement Note Holder"; and
(xv) The definition of "Voting Participant Notice"
shall be amended by (A) substituting the word "a"
for "the" before the first occurrence of the term
"Replacement Note Holder" and (B) substituting the
word "such" for "the" before the second occurrence
of such term.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 30>
(e) Section 1.02 of the Credit Agreement shall be amended
by (A) deleting the phrase "the Replacement Note
Holder" in the second sentence thereof and inserting in
lieu thereof the phrase "any of the Replacement Note
Holders" and (B) deleting the phrase "the Secured
Debenture Indenture" in the third sentence thereof and
inserting in lieu thereof the phrase "any of the
Secured Debenture Indentures".
(f) Section 2 of the Credit Agreement shall be amended by
inserting the phrase "and, with respect to a Section
4.05 Closing, the purchase by TNP of Project Loans on a
TNP Purchase Date or the purchase by the Designee of
Project Loans on the Designee Purchase Date (in each
case, assuming the due execution and delivery of
documents required to be delivered in connection
therewith and the performance of other conditions
precedent thereto by the parties (other than TNP or TGC
II) thereto), the applicable Section 4.05 Closing Date,
TNP Purchase Date or Designee Purchase Date" after each
occurrence of the term "Extension Date" therein.
(g) Section 2.10 of the Credit Agreement shall be amended
by inserting after the word "Except" the following:
"(i) for the replacement of Project Notes by
Replacement Notes, and (ii)".
(h) Section 2.22 of the Credit Agreement shall be amended
by inserting after the word "Except" the following:
"(i) for the replacement of Project Notes by
Replacement Notes, and (ii)".
(i) Section 4.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 4.01. Existing Loans; New Advance
Commitments and New Advances.
(a) Existing Loans. The parties hereto
acknowledge, confirm and agree that there are
outstanding on the First Amendment Effective Date loans
(the "Existing Loans") under the Credit Agreement in an
aggregate principal amount of $223,500,000, the
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 31>
principal amount of such Existing Loans held by banks
(the "Existing Banks") on the First Amendment Effective Date
being the amount set forth opposite the name of such Existing
Bank's name on the signature pages of the First Amendment under
the caption "Existing Loan". Prior to the Bond Proceeds Payment
Date, the Existing Loans shall be evidenced by notes (the
"Existing Notes") held by the Existing Banks and on and after the
Bond Proceeds Payment Date, the Existing Loans shall be evidenced
by the New Project Notes held by the Existing Banks. The
Existing Loans may be continued or Converted pursuant to Section
4.04 hereof. TGC II hereby agrees to repay the principal of, and
to pay interest on, the Existing Loans as set forth in this
Agreement. No Existing Bank shall be entitled to have its
Existing Note subdivided, by exchange or otherwise, except in
connection with a sale, assignment or transfer of all or any
portion of such Existing Bank's Loans and Notes pursuant to
Section 16.01 hereof. Each Bank hereby waives the aggregate
amount (if any) payable to such Bank under Section 7.05 hereof as
a result of TGC II's prepayments of Existing Project Loans made
on the Bond Proceeds Payment Date.
(b) New Advances.
(i) New Advances. Each New Advance Bank
severally agrees, on the terms and conditions of this
Agreement, to make a single loan to TGC II in Dollars
on the New Advance Closing Date in an aggregate
principal amount up to but not exceeding the amount of
the New Advance Commitment of such New Advance Bank
(such loans being herein called "New Advances"). Any
portion of the New Advance Commitments not used on the
New Advance Closing Date shall be automatically
terminated on the New Advance Closing Date. The New
Advance Commitments once terminated may not be
reinstated. The New Advances may be continued or
Converted pursuant to Section 4.04 hereof. TGC II
hereby agrees to repay the principal of, and to pay
interest on, the New Advances as set forth in this
Agreement. The New Advances made by each New Advance
Bank shall be evidenced by the New Project Note of such
New Advance Bank.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 32>
(ii) Borrowings and Notices.
(A) If TGC II shall have given the Agent
notice of borrowing in accordance with clause (C)
of this Subsection 4.01(b)(ii), not later than
1:00 p.m. New York time on the New Advance Closing
Date, each New Advance Bank shall make available
the amount of the New Advance or New Advances to
be made by it on such date to the Agent, at
account number NYAO-DI-900-9-000002 maintained by
the Agent with Chase at the Principal Office, in
immediately available funds, for account of TGC
II.
(B) TGC II hereby irrevocably instructs the
Agent to apply the proceeds of the New Advances to
the immediate prepayment of a like principal
amount of Existing Loans of the Existing Banks.
Notwithstanding anything contained herein to the
contrary, such prepayment shall not result in an
increase in the Available Supplemental Advance
Commitment.
(C) A notice by TGC II to the Agent of
borrowings of New Advances shall be irrevocable
and shall be effective only if received by the
Agent not later than 11:00 a.m. New York time one
Business Day (with respect to a Prime Rate Loan),
two Business Days (with respect to a CD Rate Loan)
and three Business Day (with respect to a
Eurodollar Rate Loan) prior to the New Advance
Closing Date, and the Agent shall give each New
Advance Bank prompt notice thereof. Such notice
shall specify the amount of New Advances to be
borrowed and the Type of New Advances to be
borrowed. Such notice shall specify the duration
of an Interest Period (if any) and the New Advance
to which such Interest Period is to relate. In
the event that TGC II fails to select the Type of
New Advance, or the duration of any Interest
Period for a Eurodollar Rate Loan or CD Rate Loan,
as provided in this subsection (ii), such New
Advance shall be made as a Prime Rate Loan.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 33>
(D) Unless the Agent shall have received
notice from a New Advance Bank prior to the date
of any borrowing that such New Advance Bank will
not make available to the Agent the amount of such
New Advance Bank's New Advance Commitment, the
Agent may assume that such New Advance Bank has
made such portion available to the Agent on the
date of such borrowing in accordance with clause
(A) of Subsection 4.01(b)(ii) hereof and the Agent
may, in reliance upon such assumption, make
available to TGC II on such date a corresponding
amount. If the amount of such New Advance Bank's
New Advance Commitment is made available to the
Agent on a date after the date of such borrowing,
such New Advance Bank shall pay to the Agent on
demand an amount equal to the product of (A) the
daily average Federal Funds Rate during such
period as quoted by the Agent times (B) the amount
of such New Advance Bank's New Advance Commitment
times (C) the number of days that elapse from and
including the date of such borrowing to the date
on which such New Advance Bank's ratable portion
of such borrowing shall have been made available
to the Agent. A certificate of the Agent
submitted to any New Advance Bank with respect to
any amounts owing under this Section 4.01 shall be
conclusive absent manifest error. If the amount
of such New Advance Bank's New Advance Commitment
is not in fact made available to the Agent by such
New Advance Bank within three Business Days after
the date of such borrowing, TGC II agrees to pay
to the Agent, on demand, an amount equal to the
amount of such New Advance Bank's New Advance
Commitment together with interest thereon, for
each day from the date such amount was made
available to TGC II until the date such amount is
repaid to the Agent, at the interest rate
applicable at the time to the Loans comprising
such borrowing.
(iii) Several Obligations; Remedies Independent.
The failure of any New Advance Bank to make the New
Advance to be made by it on the date specified therefor
shall not relieve any other New Advance Bank of its
obligation to make its New Advance on such date, but
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 34>
neither any New Advance Bank nor the Agent shall be
responsible for the failure of any other New Advance Bank to make
a New Advance to be made by such other New Advance Bank, and no
New Advance Bank shall have any obligation to the Agent or any
other New Advance Bank for the failure by such New Advance Bank
to make any New Advance required to be made by such New Advance
Bank. The amounts payable by TGC II at any time hereunder and
under the New Project Notes to each New Advance Bank shall be a
separate and independent debt and each New Advance Bank shall be
entitled to protect and enforce its rights arising out of this
Agreement and the New Project Notes, and it shall not be
necessary for any other Bank or the Agent to consent to, or be
joined as an additional party in, any proceedings for such
purposes.".
(j) Section 4.05 of the Credit Agreement shall be amended
as follows:
(i) Subsection (a) shall be amended by inserting, with
or without underscoring as appropriate, the word
"First" before each occurrence of the following
terms: "Secured Debentures", "Replacement Loan"
and "Replacement Note";
(ii) Delete subsection (b) in its entirety; and
(iii) Add new subsections (b), (c), (d), (e), (f), (g),
(h) and (i) as follows:
"(b) (i) Subject to the provisions of
Section 4.05(b)(ii) hereof, additional or
replacement (A) indebtedness of TNP consisting of
Secured Debentures issued on the basis of (and
collateralized by) Replacement Notes issued
hereunder which are in turn secured by the
Collateral and/or (B) indebtedness of TGC II
consisting of (1) Project Loans and/or (2)
Replacement Loans (the indebtedness referred to in
the foregoing clauses (A) and (B) hereinafter
referred to as "Permitted Collateralized
Indebtedness") may be secured, directly or
indirectly, by the Collateral, provided that in
any such case the liens and security interests on
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 35>
the Collateral directly or indirectly securing
Permitted Collateralized Indebtedness are provided on
substantially the same terms and conditions as the liens and
security interests securing the Loans outstanding on the First
Amendment Effective Date and (B) the aggregate principal amount
of Loans outstanding hereunder may not at any time be greater
than the Collateral Coverage Maximum Amount at such time.
(ii) Until the payment, prepayment or
purchase in full of the Project Loans outstanding
on the First Amendment Effective Date, all
interest due and payable thereon and all other
amounts due and payable by TNP and TGC II to the
Banks under this Agreement (including, without
limitation, all Supplemental Advances) and the
other Project Documents and so long as any of the
First Secured Debentures remain outstanding, only
additional or replacement Permitted Collateralized
Indebtedness constituting debt securities (and not
bank debt) or Loans ("Section 4.05(b)(ii)
Permitted Collateralized Indebtedness") may be
secured, directly or indirectly, by the Collateral
and only if (A) the terms, conditions and
limitations of Section 4.05(b)(i) hereof are
satisfied and complied with, (B) the proceeds of
any such additional Permitted Section 4.05(b)(ii)
Permitted Collateralized Indebtedness of TNP are
applied to purchase Project Loans outstanding on
the First Amendment Effective Date or Supplemental
Advances, (C) any such additional or replacement
Permitted Section 4.05(b)(ii) Collateralized
Indebtedness of TNP (and the related Section
4.05(b)(ii) Collateralized Indebtedness of TGC II
constituting Replacement Loans) has maturities
longer than the Project Notes outstanding on the
First Amendment Effective Date and then
outstanding and not shorter than the maturity of
the First Secured Debentures then outstanding, (D)
any such additional or replacement Permitted
Section 4.05(b)(ii) Collateralized Indebtedness of
TNP (and the related Section 4.05(b)(ii)
Collateralized Indebtedness of TGC II constituting
Replacement Loans) is not subject to prepayment
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 36>
(except on the same terms and conditions of prepayment
applicable to the First Secured Debentures) prior to the maturity
date of the First Secured Debentures then outstanding and (E) any
such additional or replacement Permitted Section 4.05(b)(ii)
Collateralized Indebtedness of TNP (and the related Section
4.05(b)(ii) Collateralized Indebtedness of TGC II constituting
Replacement Loans) is subject to other covenants, terms,
conditions and restrictions for the benefit of the Secured
Parties substantially the same as those herein with respect to
the First Secured Debentures.
(c) Upon each occasion that TNP or TGC II
desires to issue additional or replacement
Permitted Collateralized Indebtedness (other than
Permitted Collateralized Indebtedness constituting
Project Loans):
(i) TNP and TGC II shall deliver, not
less than 30 days prior to the anticipated date of
the applicable Section 4.05 Closing (which shall
be a Business Day other than a Scheduled Reduction
Date), to the Agent (A) an initial notice (a "4.05
Notice") of its intention to issue such Permitted
Collateralized Indebtedness containing the
proposed terms of such Permitted Collateralized
Indebtedness and the terms of the security
therefor in sufficient detail to enable the Agent,
the Banks (if any Project Loans are outstanding)
and the Replacement Note Holders to determine
whether such terms comply with the terms and
conditions of Section 4.05(b) hereof, (B)
substantially final forms of each document,
certificate, title information report, Uniform
Commercial Code financing statement and other
instrument (the "Relevant Instruments") required
to be delivered by TNP or TGC II to the Agent
under this Section 4.05 in connection with the
applicable Section 4.05 Closing, (C) a certificate
signed by an Authorized Officer of each of TNP and
TGC II to the effect that such terms comply with
the terms and conditions of Section 4.05(b) hereof
and (D) an opinion of counsel for each of TNP and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 37>
TGC II substantially in the form of Exhibit H to the
First Amendment. TNP and TGC II shall deliver promptly to the
Agent such additional information as the Agent may reasonably
request concerning the proposed transaction;
(ii) the Agent shall within five days of
receipt of a 4.05 Notice forward to each Bank (if
any Project Loans are outstanding) and each
Replacement Note Holder a copy of such 4.05 Notice
and a copy of each of the Relevant Instruments
received by the Agent in connection with such 4.05
Notice. Not later than ten days after receipt of
such 4.05 Notice from the Agent, the Majority
Banks or the Banks (if any Project Loans are
outstanding) holding at least 66-2/3% of the
outstanding principal amount of the Project Loans,
or the Agent acting with the consent of such
Banks, may forward to each of TNP and TGC II a
notice stating that, the terms and conditions of
the proposed Section 4.05 Closing do not meet the
terms and conditions set forth in Section 4.05
hereof and stating with reasonable specificity why
said terms and conditions do not meet the terms
and conditions of Section 4.05 hereof; and
(iii) TNP or TGC II shall (A) revise the
terms and conditions of the proposed transaction
such that the terms and conditions of Section 4.05
hereof are in fact satisfied by the terms and
conditions of the proposed transaction or (B)
cancel the proposed transaction.
(d) TNP shall designate a date that is a
Business Day for the closing of the proposed
transactions. The designation shall be made by
notice received by the Agent not less than 20 days
after the notice under Section 4.05(c)(i) and not
less than six days prior to such designated date.
The proposed transaction shall be effected at a
closing (a "Section 4.05 Closing") on such
designated date or such other date (a
"Section 4.05 Closing Date") as may be agreed upon
by TNP, TGC II and the Agent. Prior to or at each
Section 4.05 Closing:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 38>
(i) TNP, TGC II, the Agent and, as
applicable, the Collateral Agent each shall sign
and deliver, in recordable form to the Agent and,
as applicable, the Collateral Agent, such
financing statements under the Uniform Commercial
Code as are necessary to protect, preserve and
maintain the priority of the liens contemplated by
the Security Documents and TNP and TGC II shall
provide (A) copies of Uniform Commercial Code
search reports with respect to each of TGC II and
TNP, as "debtor", in each jurisdiction in which
such financing statements are to be filed and (B)
all other instruments to be recorded or filed or
delivered in connection with such Section 4.05
Closing;
(ii) TGC II shall deliver to the Agent a
Subsequent TGC II Modification and Extension
Agreement and, at the sole cost of TNP and TGC II,
the Title Company shall have issued to the Agent,
a T-38 endorsement (or if a T-38 endorsement is no
longer available, such other endorsement as shall
have the same scope and purpose as a T-38
endorsement on the First Amendment Effective Date)
to the title policy or policies which insure the
lien of the TGC II Mortgage securing the Loans
outstanding hereunder and evidenced by Project
Notes or Replacement Notes on such date, each with
respect to such Subsequent TGC II Mortgage
Modification and Extension Agreement;
(iii) At the sole cost of TNP and TGC II,
the Title Company shall deliver to the Agent a
title information report, showing that good and
indefeasible title to the TGC II Mortgage Trust
Estate is vested in TGC II and that the TGC II
Mortgage constitutes a valid first mortgage lien
on the TGC II Mortgage Trust Estate and showing
that there are no intervening liens which would
adversely affect the priority of the liens
securing the Loans, subject only to the Permitted
Liens;
(iv) TNP and TGC II each shall deliver
to the Agent legal opinions of counsel to TNP and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 39>
TGC II dated the applicable Section 4.05 Closing Date
and substantially in the forms of Exhibit I hereto;
(v) TNP and TGC II each shall deliver
to the Agent (A) certified copies of the
resolutions of its board of directors authorizing
the issuance of such Permitted Collateralized
Indebtedness and the collateral therefor furnished
pursuant to the terms and conditions of this
Section 4.05 and authorizing the execution,
delivery and performance of the documentation
necessary therefor and (B) certified copies of its
charter, bylaws, good standing certificates and
franchise tax certificates from the State of Texas
and all other places where necessary in light of
the business and properties it conducts and owns
and intends to conduct and own;
(vi) TNP and TGC II each shall deliver
to the Agent a certificate signed by an Authorized
Officer of TNP or TGC II, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying the name, incumbency and signature of
each individual authorized to execute any
documents or certificates in connection with such
Section 4.05 Closing, upon which certificates and
documents the Secured Parties may conclusively
rely;
(vii) TNP and TGC II each shall deliver
to the Agent a certificate signed by an Authorized
Officer of TNP or TGC II, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying that there shall be no injunction,
writ, preliminary restraining order or any other
order of any nature issued by any arbitrator,
court or other governmental authority directing
that the transactions conducted, or the
transactions contemplated in the documentation
executed and/or delivered, at such Section 4.05
Closing not be consummated as herein or therein
provided and certifying further, except as
disclosed herein, there shall be no material
litigation, investigation or proceeding of or
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 40>
before any arbitrator, court or other governmental
authority pending or (to the best of such Authorized Officer's
knowledge, threatened) against TNP or TGC II or affecting any of
their respective properties, rights, revenues or assets, or the
Project or any of the transactions to be effected at such Section
4.05 Closing;
(viii) TNP and TGC II each shall deliver
to the Agent a certificate signed by an Authorized
Officer of TNP or TGC II, as applicable, and dated
the applicable Section 4.05 Closing Date
certifying that (A) the representations and
warranties of each of TNP and TGC II, as
applicable, contained in Section 2 hereof and in
each of the other Project Documents to which such
Person is a party shall be true and correct on and
as of such Section 4.05 Closing Date as if made on
and as of such date (or, if stated to have been
made solely as of an earlier date, were true and
correct as of such earlier date), (B) no Default
hereunder, and no default by either TNP or TGC II
under any of the other Project Documents to which
either TNP or TGC II is a party, has occurred and
is continuing on such date and (C) to the best of
such Authorized Officer's knowledge, no default by
any other Person to any other Project Document has
occurred and is continuing on such date;
(ix) TNP and TGC II each shall deliver
to the Agent a certificate signed by an Authorized
Officer of TNP or TGC II, as applicable,
certifying that (A) it has obtained all Government
Approvals necessary under applicable laws and
regulations in connection with each of the
transactions contemplated by the applicable
Section 4.05 Closing and (B) all such Government
Approvals have been duly obtained, were validly
issued and are held by and in the name of TNP or
TGC II, as applicable, and are final, in full
force and effect and not subject to appeal; and
(x) TNP and TGC II shall (A) if the
transactions then consummated involve a refunding
of existing Secured Debentures already secured by
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 41>
the Collateral, pay to the relevant Debenture Trustee
in Dollars, in immediately available funds, all amounts due and
payable under the applicable Secured Debenture Indenture, (B) if
the transactions then consummated involve the purchase by TNP or
TGC II of Existing Project Loans, pay to the Agent in Dollars, in
immediately available funds, the purchase price for the Existing
Project Loans then being purchased pro rata from the Existing
Project Banks and (C) if the transactions then consummated
involve the purchase by TNP or TGC II of Supplemental Advances,
pay to the Agent in Dollars, in immediately available funds, the
purchase price for the Supplemental Advances then being purchased
pro rata from the Supplemental Advance Banks.
After the payment, prepayment or purchase in full
of the Project Loans outstanding on the First
Amendment Effective Date, all interest due and
payable thereon and all other amounts due and
payable by TNP and TGC II to the Banks under this
Agreement (including, without limitation, all
Supplemental Advances) and the other Project
Documents, the Agent shall be entitled to rely
solely upon the certificates and opinions of
counsel delivered hereunder in making any
determinations required to be made by the Agent in
this Section 4.05.
(e) If the transactions then consummated
involve the purchase by TNP of Existing Project
Loans or Supplemental Advances, then on each such
Section 4.05 Closing Date (and, if such Section
4.05 Closing Date is prior to the Section 3
Effective Date, subject to Section 5.02(b)(iii)
hereof) TNP shall purchase from each of the Banks
holding Project Loans of the applicable Class (pro
rata according to the aggregate outstanding
principal amount of each such Bank's Project Loans
of such Class held by such Bank) a portion of such
Bank's Project Loans of the applicable Class and
each Bank shall sell to TNP (without recourse and
without any representation or warranty whatsoever
other than as to title and absence of liens) such
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 42>
pro rata portion of such Bank's Project Loans of the
applicable Class such that the aggregate principal amount of
Project Loans of the applicable Class so purchased is equal to
the amount of the proceeds (at the election of TNP, net of any
offering or similar transaction costs) from any Subsequent
Secured Debentures issued on such Section 4.05 Closing Date. The
purchase price for the Project Loans of the applicable Class so
purchased by TNP shall be equal to the principal amount thereof.
Simultaneously with the sale of each Bank's Project Loans of the
applicable Class to TNP, TGC II shall pay to the Agent, for the
account of each Bank holding Project Loans of applicable Class,
all accrued and unpaid interest on such portion of such Bank's
Project Loans of the applicable Class to be sold to TNP plus the
aggregate amount (if any) which would have been payable to each
Bank holding Project Loans of applicable Class under Section 7.05
hereof had such portion of the Project Loans of the applicable
Class then been prepaid rather than purchased. TNP shall pay the
aggregate amount of such purchase price at such Section 4.05
Closing to the Agent, for the account of each respective Bank
holding Project Loans of the applicable Class, in Dollars in
immediately available funds. Effective immediately upon the
payment by TNP of such purchase price, the aggregate principal
amount of the outstanding Project Loans of the applicable Class
so purchased by TNP shall be converted into a loan or loans (with
respect to such purchase of Project Loans of the applicable Class
from the proceeds of any Subsequent Secured Debentures, in each
case, whether one or more, each a "Subsequent Replacement Loan")
of equal principal amount. TGC II shall execute and deliver to
TNP at such Section 4.05 Closing a promissory note or notes (with
respect to the purchase of each Subsequent Replacement Loan, in
each case, whether one or more, each a "Subsequent Replacement
Note") payable to TNP or its registered assigns in an aggregate
principal amount equal to the aggregate principal amount of such
Subsequent Replacement
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 43>
Loan, as applicable, and, in each case, substantially
in the form of Exhibit B to the First Amendment and otherwise
duly completed. Any such Subsequent Replacement Notes shall be
dated, and shall bear interest from, the Section 4.05 Closing
Date on which any such Subsequent Replacement Notes, as
applicable, are issued. No Replacement Note Holder shall be
entitled to have its Replacement Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise, except in
connection with a Section 4.05 Closing or in connection with an
assignment to TNP of a portion of a Replacement Loan and
Replacement Note in conjunction with a release of a Pledged
Replacement Note (as defined in the definition of "Replacement
Note Holder" in Section 1.01 hereof) expressly contemplated by
the related Secured Debenture Indenture. The indebtedness
evidenced by any Subsequent Replacement Notes, together with the
indebtedness evidenced by the First Replacement Note and by the
Project Notes, shall be secured by the Security Documents. Each
Bank shall, prior to any transfer of such Bank's Project Note,
place on such Project Note a notation to the effect that a
portion of the indebtedness evidenced thereby has been
transferred to TNP pursuant to this Section 4.05; provided, that,
if TNP purchases the entire outstanding principal amount of a
Bank's Project Loans and TNP pays to such Bank all interest due
and payable on such Project Loans and all other amounts due and
payable by TNP and TGC II to such Bank under this Agreement and
the other Project Documents, such Bank shall endorse and deliver
its Project Note to TNP and, upon endorsement to TNP of all such
Project Notes (x) such Project Notes shall automatically, without
further action by any Person, become Subsequent Replacement Notes
(and the indebtedness evidenced thereby shall automatically,
without further action by any Person, become Subsequent
Replacement Loans) having an outstanding principal amount equal
to the outstanding principal amount of the Project Loans at the
time of such purchase and shall automatically, without further
action by any
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 44>
Person, have the Replacement Note Maturity Date, the
interest rate (including without limitation the Post-Default
Rate) and all other terms and conditions contemplated by this
Agreement to be applicable to a Subsequent Replacement Loan and a
Subsequent Replacement Note that do not at such time serve as the
basis for the issuance of outstanding Secured Debentures and (y)
such Project Notes (and the indebtedness evidenced thereby) as so
recharacterized as Subsequent Replacement Notes and Subsequent
Replacement Loans shall be available to TNP and TGC II for use in
conjunction with a future Section 4.05 Closing (and in connection
therewith, such Project Note as so recharacterized as a
Subsequent Replacement Note may, at the option of TNP and TGC II,
be replaced by a replacement Replacement Note in the form of
Exhibit B to the First Amendment).
(f) (i) Subject to the provisions of this
clause (f), TNP shall have the right to purchase
Project Loans of any Class from the Banks at any
time or from time to time provided that: (A) TNP
shall give the Agent notice of each such purchase
which notice shall be irrevocable, shall be
effective only if received by the Agent not later
than 12:00 noon New York time five Business Days
prior to the date of the purchase and shall
specify the aggregate principal amount and Class
of the Project Loans to be purchased and the date
of purchase (which shall be a Business Day) (each
such notice, a "TNP Purchase Notice" and each such
date of purchase, a "TNP Purchase Date"), (B) TNP
shall not be entitled to designate a Scheduled
Reduction Date as a TNP Purchase Date and (C) TNP
shall satisfy the conditions precedent to such
purchase set forth in clause (ii) below. The
Agent shall promptly notify the Banks and each
Replacement Note Holder of the contents of each
TNP Purchase Notice. On each TNP Purchase Date,
TNP shall purchase from each of the Banks holding
Project Loans of the applicable Class (pro rata
according to the aggregate outstanding principal
amount of each such Bank's Project Loans of such
Class held by such Bank) a portion of such Bank's
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 45>
Project Loans of the applicable Class and each Bank
shall sell to TNP (without recourse and without any
representation or warranty whatsoever other than as to title and
absence of liens) such pro rata portion of such Bank's Project
Loans of the applicable Class such that the aggregate principal
amount of Project Loans of the applicable Class so purchased is
equal to the amount of Project Loans of the applicable Class
specified for purchase in the TNP Purchase Notice related to such
TNP Purchase Date. The purchase price for the Project Loans of
the applicable Class so purchased by TNP shall be equal to the
principal amount thereof. Simultaneously with the sale of each
Bank's Project Loans of the applicable Class to TNP, TGC II shall
pay to the Agent, for the account of each Bank holding Project
Loans of applicable Class, all accrued and unpaid interest on
such portion of such Bank's Project Loans of the applicable Class
to be sold to TNP plus the aggregate amount (if any) which would
have been payable to each Bank holding Project Loans of
applicable Class under Section 7.05 hereof had such portion of
the Project Loans of the applicable Class then been prepaid
rather than purchased. TNP shall pay the aggregate amount of
such purchase price on such TNP Purchase Date to the Agent, for
the account of each respective Bank holding Project Loans of the
applicable Class, in Dollars in immediately available funds.
Effective immediately upon the payment by TNP of such purchase
price, the aggregate principal amount of the outstanding Project
Loans of the applicable Class so purchased by TNP shall be
converted into a loan or loans (with respect to each such
purchase of Project Loans of the applicable Class, each a
"Temporary Replacement Loan") of equal principal amount. TGC II
shall execute and deliver to TNP on such TNP Purchase Date a
promissory note or notes (with respect to the purchase of each
Temporary Replacement Loan, whether one or more, the "Temporary
Replacement Note") payable to TNP or its registered assigns in an
aggregate principal amount equal to the aggregate principal
amount of
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 46>
such Temporary Replacement Loan and, in each case,
substantially in the form of Exhibit B hereto and otherwise duly
completed. Each Temporary Replacement Note shall be dated, and
shall bear interest from, the TNP Purchase Date on which such
Temporary Replacement Note is issued. The indebtedness evidenced
by any Temporary Replacement Notes, together with the
indebtedness evidenced by the other Replacement Notes and by the
Project Notes, shall be secured by the Security Documents. Each
Bank shall, prior to any transfer of such Bank's Project Note,
place on such Project Note a notation to the effect that a
portion of the indebtedness evidenced thereby has been
transferred to TNP pursuant to this clause (f); provided, that,
if TNP purchases the entire outstanding principal amount of a
Bank's Project Loans and TNP pays to such Bank all interest due
and payable on such Project Loans and all other amounts due and
payable by TNP and TGC II to such Bank under this Agreement and
the other Project Documents, such Bank shall endorse and deliver
its Project Note to TNP and, upon endorsement to TNP of all such
Project Notes (x) such Project Notes shall automatically, without
further action by any Person, become Subsequent Replacement Notes
(and the indebtedness evidenced thereby shall automatically,
without further action by any Person, become Subsequent
Replacement Loans) having an outstanding principal amount equal
to the outstanding principal amount of the Project Loans at the
time of such purchase and shall automatically, without further
action by any Person, have the Replacement Note Maturity Date,
the interest rate (including without limitation the Post-Default
Rate) and all other terms and conditions contemplated by this
Agreement to be applicable to a Subsequent Replacement Loan and a
Subsequent Replacement Note that do not at such time serve as the
basis for the issuance of outstanding Secured Debentures and (y)
such Project Notes (and the indebtedness evidenced thereby) as so
recharacterized as Subsequent Replacement Notes and Subsequent
Replacement Loans shall be available to TNP and TGC II for use in
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 47>
conjunction with a future Section 4.05 Closing (and in
connection therewith, such Project Note as so recharacterized as
a Subsequent Replacement Note may, at the option of TNP and TGC
II, be replaced by a replacement Replacement Note in the form of
Exhibit B to the First Amendment). Temporary Replacement Loans
and Temporary Replacement Notes shall be held by TNP and may not
be assigned in whole or in part, and TNP shall not be entitled to
have any Temporary Replacement Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise, except in
conjunction with a future Section 4.05 Closing in which event the
portion of such Temporary Replacement Loans and Temporary
Replacement Notes assigned to a Replacement Note Holder or
Replacement Note Holders shall be and become Subsequent
Replacement Loans and Subsequent Replacement Notes for all
purposes under this Agreement.
(ii) Prior to or on each TNP Purchase
Date:
(A) TNP, TGC II, the Agent and, as
applicable, the Collateral Agent each shall
sign and deliver, in recordable form to the
Agent and, as applicable, the Collateral
Agent, financing statements under the Uniform
Commercial Code as are necessary to protect,
preserve and maintain the priority of liens
contemplated by the Security Documents and
TNP and TGC II shall provide (A) copies of
Uniform Commercial Code search reports with
respect to each of TGC II and TNP, as
"debtor", in each jurisdiction in which such
financing statements are to be filed and (B)
all other instruments to be recorded or filed
or delivered in connection with the purchases
of Project Loans to be made on such TNP
Purchase Date;
(B) TGC II shall deliver to the Agent a
Subsequent TGC II Modification and Extension
Agreement and, at the sole cost of TNP and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 48>
TGC II, the Title Company shall have issued to the
Agent, a T-38 endorsement (or if a T-38 endorsement is no longer
available, such other endorsement as shall have the same scope
and purpose as a T-38 endorsement on the First Amendment
Effective Date) to the title policy or policies which insure the
lien of the TGC II Mortgage securing the Loans outstanding
hereunder and evidenced by Project Notes or Replacement Notes on
such date, each with respect to such Subsequent TGC II Mortgage
Modification and Extension Agreement;
(C) At the sole cost of TNP and TGC II,
the Title Company shall deliver to the Agent
a title information report, showing that good
and indefeasible title to the TGC II Mortgage
Trust Estate is vested in TGC II and that the
TGC II Mortgage constitutes a valid first
mortgage lien on the TGC II Mortgage Trust
Estate and showing that there are no
intervening liens which would adversely
affect the priority of the liens securing the
Loans, subject only to the Permitted Liens;
and
(D) TNP or TGC II shall deliver to the
Agent such other certificates, documents or
other information in connection with the
purchases of Project Loans to be made on such
TNP Purchase Date as the Agent may reasonably
determine are necessary to effect the
transactions contemplated on such TNP
Purchase Date.
(g) (i) Subject to the provisions of this
clause (g), TNP shall have the right to cause a
purchase by one or more banks or other financial
institutions (or an agent on behalf of one or more
banks or other financial institutions) designated
by TNP (such banks or financial institutions or
such agent herein being collectively referred to
as the "Designee") of all (but not part) of the
outstanding Project Loans from the Banks at any
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 49>
time or from time to time provided that: (A) TNP shall
give the Agent notice of each such purchase which notice shall be
irrevocable, shall be effective only if received by the Agent not
later than 12:00 noon New York time five Business Days prior to
the date of the purchase (which shall be a Business Day) (each
such notice, a "Designee Purchase Notice" and each such date of
purchase, a "Designee Purchase Date"), (B) TNP shall not be
entitled to designate a Scheduled Reduction Date as a Designee
Purchase Date and (C) TNP shall satisfy the conditions precedent
to such purchase set forth in clause (ii) below. The Agent shall
promptly notify the Banks and each Replacement Note Holder of the
contents of each Designee Purchase Notice. On each Designee
Purchase Date, the Designee shall purchase from each of the Banks
all of such Bank's Project Loans and each Bank shall sell to the
Designee (without recourse and without any representation or
warranty whatsoever other than as to title and absence of liens)
all of such Bank's Project Loans. The purchase price for the
Project Loans so purchased by the Designee shall be equal to the
principal amount thereof. Simultaneously with the sale of each
Bank's Project Loans to the Designee, TGC II shall pay to the
Agent, for the account of each Bank all accrued and unpaid
interest on such Bank's Project Loans plus the aggregate amount
(if any) which would have been payable to each Bank under Section
7.05 hereof had such Project Loans then been prepaid rather than
purchased. The Designee shall pay the aggregate amount of such
purchase price on such Designee Purchase Date to the Agent, for
the account of the Banks, in Dollars in immediately available
funds. Each Bank shall, prior to any transfer of such Bank's
Project Note, place on such Project Note a notation to the effect
that the indebtedness evidenced thereby has been transferred to
the Designee pursuant to this clause (g).
(ii) Prior to or on each Designee
Purchase Date:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 50>
(A) TNP, TGC II, the Agent and, as
applicable, the Collateral Agent each shall
sign and deliver, in recordable form to the
Agent and, as applicable, the Collateral
Agent, financing statements under the Uniform
Commercial Code as are necessary to protect,
preserve and maintain the priority of the
liens contemplated by the Security Documents
and TNP and TGC II shall provide (A) copies
of Uniform Commercial Code search reports
with respect to each of TGC II and TNP, as
"debtor", in each jurisdiction in which such
financing statements are to be filed and (B)
all other instruments to be recorded or filed
or delivered in connection with the purchases
of Project Loans to be made on such Designee
Purchase Date;
(B) TGC II shall deliver to the Agent a
Subsequent TGC II Modification and Extension
Agreement and, at the sole cost of TNP and
TGC II, the Title Company shall have issued
to the Agent, a T-38 endorsement (or if a
T-38 endorsement is no longer available, such
other endorsement as shall have the same
scope and purpose as a T-38 endorsement on
the First Amendment Effective Date) to the
title policy or policies which insure the
lien of the TGC II Mortgage securing the
Loans outstanding hereunder and evidenced by
Project Notes or Replacement Notes on such
date, each with respect to such Subsequent
TGC II Mortgage Modification and Extension
Agreement;
(C) At the sole cost of TNP and TGC II,
the Title Company shall deliver to the Agent
a title information report, showing that good
and indefeasible title to the TGC II Mortgage
Trust Estate is vested in TGC II and that the
TGC II Mortgage constitutes a valid first
mortgage lien on the TGC II Mortgage Trust
Estate and showing that there are no
intervening liens which would adversely
affect the priority of the liens securing the
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 51>
Loans, subject only to the Permitted Liens; and
(D) TNP or TGC II shall deliver to the
Agent such other certificates, documents or
other information in connection with the
purchases of Project Loans to be made on such
Designee Purchase Date as the Agent may
reasonably determine are necessary to effect
the transactions contemplated on such
Designee Purchase Date.
(h) The Agent will keep at its principal
office in New York, New York, or such other office
as the Agent may designate in writing to the
Replacement Note Holders, a register (the
"Register") in which the Agent will provide for
the registration of Replacement Loans and
Replacement Notes and the registration of
transfers of Replacement Loans and Replacement
Notes. In the event that any Replacement Loan or
any Replacement Note is held by TNP or serves as
the basis for the issuance of any outstanding
Secured Debentures in accordance with Section 4.05
hereof, the applicable Replacement Note Holder
shall notify the Agent for notation in the
Register of the Permitted Demand Date, the
interest rate and the Post-Default Rate applicable
to such Replacement Loan or Replacement Note. The
Agent may treat the Person in whose name any
Replacement Loan or Replacement Note is registered
in such Register as the owner thereof for the
purpose of receiving payment of the principal of
and the premium, if any, and interest on such
Replacement Loan or Replacement Note and for all
other purposes under this Agreement. The Agent
may rely upon the information set forth in the
Register for any determination of the Permitted
Demand Date, the interest rate and the Post-
Default Rate applicable to any Replacement Loan or
Replacement Note required under or in connection
with this Agreement.
(i) If, on or before any date on which
TGC II is obligated to make any payment of any
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 52>
principal of or interest under a Replacement Note, no
Event of Default (as defined in the Secured Debenture Indenture
the lien of which attaches to such Replacement Note) shall have
occurred and be continuing and TNP shall have delivered (i) if
such Replacement Note is the First Replacement Note, to the First
Debenture Trustee pursuant to Section 1119 of the First Secured
Debenture Indenture and (ii) if such Replacement Note is a
Subsequent Replacement Note, to the applicable Debenture Trustee
pursuant to a provision in the applicable Secured Debenture
Indenture similar to the provision referred to in subclause (i)
of this clause (i), cash to be held as collateral security under
the applicable Secured Debenture Indenture that is at least equal
in amount to the payment owing on such date by TGC II under such
Replacement Note, then TGC II shall not be required to make such
payment under such Replacement Note; provided, that, if at any
time and for any reason any such payment by TNP is rescinded or
otherwise required to be restored by the applicable Debenture
Trustee or any holder of the applicable Secured Debentures,
whether as a result of bankruptcy or reorganization proceedings
or otherwise, immediately upon such rescission or restoration
being imposed or required
(A) an amount equal to the amount that has been
rescinded or is required to be restored shall
become immediately due and payable by TGC II
under such Replacement Note, and
(B) TGC II shall pay to such Replacement Note
Holder an amount equal to all reasonable
costs and expenses (including, without
limitation, attorney's fees and any interest
payable by the applicable Debenture Trustee
in connection with such rescission or
restoration).
In the event that any Secured Debenture is paid in
full by TNP and, by operation of this clause (i),
TGC II is not obligated to make further payments
of principal and interest under or with respect to
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 53>
the related Replacement Loan and Replacement Note, (x)
the indebtedness of TGC II under this Agreement with respect to
such Replacement Loan and Replacement Note shall not be
discharged but shall be continued, (y) such Replacement Loan and
Replacement Note, shall automatically, without further action by
any Person, have the Replacement Note Maturity Date, the interest
rate (including without limitation the Post-Default Rate) and all
other terms and conditions contemplated by this Agreement to be
applicable to a Subsequent Replacement Loan and a Subsequent
Replacement Note that do not at such time serve as the basis for
the issuance of outstanding Secured Debentures and (z) such
Replacement Loan and Replacement Note shall be available to TNP
and TGC II for use in conjunction with a future Section 4.05
Closing (and in connection therewith, such Replacement Note may,
at the option of TNP and TGC II, be replaced by a replacement
Replacement Note in the form of Exhibit B to the First
Amendment).
Notwithstanding any other provision in this
Section 4.05 to the contrary, until the payment,
prepayment or purchase in full of the Project
Loans outstanding on the First Amendment Effective
Date, all interest due and payable thereon and all
other amounts due and payable by TNP and TGC II to
the Banks under this Agreement (including, without
limitation, all Supplemental Advances) and the
other Project Documents, no Section 4.05 Closing,
closing contemplated by Section 4.50(f) hereof or
closing contemplated by Section 4.05(g) hereof
shall occur unless TNP and TGC II shall each have
delivered to the Agent such other certificates,
documents or other information in connection
therewith as the Agent may reasonably determine
are necessary to effect the transactions
contemplated thereby.".
(k) Add Section 4.06 of the Credit Agreement as follows:
"SECTION 4.06. New Project Notes.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 54>
(i) On and after the Bond Proceeds Payment Date,
the Existing Loans, the New Advances and the
Supplemental Advances made by each Bank shall be
evidenced by a single promissory note of TGC II
substantially in the form of Exhibit A to the First
Amendment, dated the Bond Proceeds Payment Date,
payable to such Bank in a principal amount equal to the
amount of its Aggregate Commitment as originally in
effect and otherwise duly completed.
(ii) The date, amount, Type, interest rate and
duration of Interest Period (if applicable) of each
Existing Loan, New Advance (if any) or Supplemental
Advance (if any) made by each Bank to TGC II, and each
payment made on account of the principal thereof, shall
be recorded by such Bank on its books and, prior to any
transfer of the New Project Note held by it, endorsed
by such Bank on the schedule attached to such New
Project Note or any continuation thereof; provided that
the failure of such Bank to make any such recordation
or endorsement shall not affect the obligations of TGC
II to make a payment when due of any amount owing
hereunder or under such New Project Note in respect of
the Existing Loans, the New Advances (if any) or
Supplemental Advances (if any).
(iii) No Bank shall be entitled to have its New
Project Note subdivided, by exchange for promissory
notes of lesser denominations or otherwise, except in
connection with a sale, assignment or transfer of all
or any portion of such Bank's Aggregate Commitment,
Project Loans and New Project Note pursuant to
Section 16.01 hereof.".
(l) Section 5.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 5.01. [INTENTIONALLY OMITTED].".
(m) Section 5.02 of the Credit Agreement shall be amended
as follows:
(A) in subsection (b)(i) insert, after the words
"TGC II shall repay", the words "or TNP shall
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 55>
purchase in accordance with the terms and conditions of
Section 4.05 hereof,";
(B) in subsections (b)(i)(C) insert the word
"Existing" before each occurrence of the term
"Project Loan";
(C) delete the word "and" at the end of subsection
(b)(i)(C) thereof;
(D) in subsection (b)(i)(D), substitute the word
"each" for the word "the" before the term
"Replacement Note" and substitute the word
"maturing" for the word "outstanding";
(E) delete the preface of subsection (b)(iii) in its
entirety and substitute in its place the
following:
"If all of the Project Loans under, and as defined
in, the Unit 1 Credit Agreement have been paid,
prepaid or purchased by TGC or TNP, then on each
date upon which TNP receives the proceeds of any
Permanent Financing (other than the proceeds from
the issuance of the New Debt Securities which have
been applied in accordance with Section 8.02(c)
hereof and the proceeds from the issuance of the
Second Secured Debentures, as defined in the
Unit 1 Credit Agreement, as amended by Amendment
No. 1 thereto, and the first mortgage bonds issued
in connection therewith which have been applied in
accordance with Section 2(b)(i) of the First
Amendment), TNP or TGC II shall prepay or purchase
the Existing Project Loans in an amount equal to
(a) 100% (except as provided in subparagraph (C)
hereof) of the net proceeds of such Permanent
Financing less (b) all amounts prepaid since the
date of the previous prepayment under this Section
5.02(b)(iii), except to the extent such
proceeds:";
(F) in subsection (b)(iii)(B)(aa) delete the
parenthetical expression "(other than the Secured
Debentures)" in its entirety;
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 56>
(G) delete subsection (b)(iii)(D) in its entirety,
substitute a "." for the phrase "; or" at the end
of subsection (b)(iii)(C) and insert the word "or"
after the ";" at the end of subsection
(b)(iii)(B);
(H) in subsection (g) add an "s" to the end of the
term "Replacement Note Holder"; and
(I) in subsection (h) substitute the word "a" for
"the" before the term "Replacement Loan" and
insert after the term "Replacement Note" the
phrase "evidencing such Replacement Loan".
(n) Delete Section 5.04 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 5.04. Pro Rata Treatment. Subject to
Section 5.02(a) hereof, each payment or prepayment of
principal of Existing Project Loans or Supplemental
Advances by TNP or TGC II shall be made for account of
the relevant Banks pro rata in accordance with the
respective unpaid principal amounts of the Project
Loans of such Class held by such Banks. In the event
that, by reason of the acceleration thereof or
otherwise, the principal amount of any Replacement Loan
shall become due and payable at a time when the
principal amount of the Project Loans shall be due and
payable, each payment of principal of Loans shall be
made pro rata among the Secured Parties holding Loans
according to the respective unpaid principal amounts of
the Loans held by the Secured Parties. Each payment of
interest on the Loans shall be made pro rata among the
Banks and the Replacement Note Holders according to the
respective accrued and unpaid amounts of interest then
due and owing to such Persons. Any Replacement Note
Holder or any Bank receiving a disproportionate share
of any such payment shall, on demand by the Agent,
return the same to the Agent, which shall pay the same
to any Bank or any Replacement Note Holder which had
not received its proportionate share of any such
payment.".
(o) Section 5.05 of the Credit Agreement shall be amended
as follows:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 57>
(A) substitute the word "each" for "the" before the
term "Replacement Note Holder" in the first
sentence of subsection (a) thereof; and
(B) delete subsection (a)(iv) in its entirety and
substitute in its place the following:
"(iv) Replacement Loan and Replacement Note Rate.
Subject to Section 4.05(i) hereof, if such
Loan is a Replacement Loan, a rate per annum
at all times equal to (A) the rate of
interest payable on the Secured Debentures
the proceeds of which were used to purchase
the Project Loans that were converted into
such Replacement Loan and as specified in the
Secured Debenture Indenture pursuant to which
such Secured Debentures were issued, as in
effect on (x) with respect to the First
Secured Debenture Indenture, the Extension
Date and (y) with respect to any Subsequent
Secured Debenture Indenture, the applicable
Section 4.05 Closing Date, as the case may
be, (B) the rate of interest payable on the
Secured Debentures, the proceeds of which
were used to refund the Secured Debentures to
which such Replacement Loan theretofore
related and as specified in the Subsequent
Secured Debenture Indenture, pursuant to
which such refunding Secured Debentures were
issued, as in effect on the applicable
Section 4.05 Closing Date or (C) if such
Replacement Loan does not serve as the basis
for the issuance of any outstanding Secured
Debentures, a rate per annum equal to the
Prime Rate.".
(p) Delete Section 5.10 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 5.10. [INTENTIONALLY OMITTED].".
(q) Section 6.02 of the Credit Agreement shall be amended
as follows:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 58>
(A) in the last sentence of subsection (a) add an "s"
to the end of the terms "Replacement Note" and
"Replacement Note Holder" and insert the word
"applicable" before the term "Replacement Note
Holders" (as so amended);
(B) in the second sentence of subsection (b) add an
"s" to the end of the term "Replacement Loan"; and
(C) in subsection (c) substitute the word "any" for
"the" before both occurrences of the term
"Replacement Note" and insert the word "related"
before the term "Secured Debentures".
(r) Delete Section 6.03 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 6.03. Sharing of Payments, Etc. If any
Bank or any Replacement Note Holder shall obtain any
payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on
account of the Loans made or acquired by it (other than
pursuant to Section 7 hereof) in excess of its ratable
share of payments on account of the Loans of any Class
obtained by all the Banks and all the Replacement Note
Holders holding Loans of such Class, such Bank or such
Replacement Note Holder shall forthwith purchase from
the other Banks and the other Replacement Note Holders
such participations in the Loans of such Class held by
them as shall be necessary to cause such purchasing
Bank or such purchasing Replacement Note Holder to
share the excess payment ratably with each of them;
provided, that, if all or any portion of such excess
payment is thereafter recovered from such purchasing
Bank or such purchasing Replacement Note Holder, such
purchase from such Bank or such Replacement Note Holder
shall be rescinded and such Bank or such Replacement
Note Holder shall repay to the purchasing Bank or the
purchasing Replacement Note Holder the purchase price
to the extent of such recovery together with an amount
equal to such Bank's or such Replacement Note Holder's
ratable share (according to the proportion of (a) the
amount of such Bank's or such Replacement Note Holder's
required repayment to (b) the total amount so recovered
from the purchasing Bank or the Replacement Note
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 59>
Holder) of any interest or other amount paid or payable
by the purchasing Bank or the purchasing Replacement Note Holder
in respect of the total amount so recovered. TGC II agrees that
any Bank or Replacement Note Holder so purchasing a participation
from another Bank or Replacement Note Holder pursuant to this
Section 6.03 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of
set-off) with respect to such participation as fully as if such
Bank or such Replacement Note Holder were the direct creditor of
TGC II in the amount of such participation.".
(s) Section 9.11 of the Credit Agreement shall be amended
as follows:
(A) inserting, immediately preceding the first
sentence, the phrase "Prior to the First Amendment
Effective Date,"; and
(B) inserting the following new sentence at the end of
such Section:
"TGC II shall use the proceeds of Supplemental
Advances solely for working capital and other
lawful purposes not prohibited by this
Agreement.".
(t) Section 9.33(a) of the Credit Agreement shall be
amended by deleting the last sentence thereof.
(u) Section 10.03 of the Credit Agreement shall be amended
by deleting the reference to "Section 9.32(a)" and
substituting in its place a reference to "Section
4.05(b)".
(v) Section 10.06 of the Credit Agreement shall be amended
by deleting the "." and substituting in its place the
following:
"provided, that TGC II may advance to TNP funds
obtained as proceeds of Project Loans.".
(w) Section 10.08(e) of the Credit Agreement shall be
amended by deleting the phrase "the last sentence of
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 60>
Section 9.33(a)" and substituting in its place "Section
4.05".
(x) Delete Section 10.09 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.09. TGC II shall not permit the
aggregate principal amount of Loans outstanding
hereunder to exceed at any time the Collateral Coverage
Maximum Amount at such time.".
(y) Delete Section 10.13 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.13. TNP shall not permit the
aggregate principal amount of Loans outstanding
hereunder to exceed at any time the Collateral Coverage
Maximum Amount at such time.".
(z) Section 10.16 of the Credit Agreement shall be amended
by (A) adding an "s" to the end of the term "Secured
Debenture Indenture" in clause (d) thereof and (B)
deleting the reference to "Section 9.33(a)" and
substituting in its place a reference to "Section
4.05(b)".
(aa) Delete Section 10.21(b) of the Credit Agreement in its
entirety and substitute in its place the following:
"(b) TNP will provide the Banks and the
Replacement Note Holders, as soon as available and in
any event within 60 Business Days after each Quarterly
Date, a certificate of an Authorized Officer of TNP
showing, in reasonable detail, the calculation of
Interest Coverage, Cumulative Common Dividends,
Cumulative Net Income Available for Common, Equity
Capital and Total Capitalization, and for the period
from January 1, 1993 until the provisions of Section
9.33 hereof have terminated, Available Amount
(including the components thereof); in each case
determined as of such Quarterly Date.".
(bb) Delete Section 10.22 of the Credit Agreement in its
entirety and substitute in its place the following:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 61>
"SECTION 10.22. Equity Capital. TNP will not pay
or declare any Common Dividend if the ratio of Equity
Capital to Total Capitalization, determined from time
to time as of the next preceding Quarterly Date, is
less than 20%.".
(cc) Delete Section 10.23 of the Credit Agreement in its
entirety and substitute in its place the following:
"SECTION 10.23. Amendment or Modification of
Secured Debenture Indentures. Until the payment,
prepayment or purchase in full of the Project Loans
outstanding on the First Amendment Effective Date, all
interest due and payable thereon and all other amounts
due and payable by TNP and TGC II to the Banks under
this Agreement (including, without limitation, all
Supplemental Advances) and the other Project Documents
and so long as any of the First Secured Debentures
remain outstanding, without the consent of the Majority
Banks (excluding for such purpose the Replacement Note
Holder with respect to the affected Secured Debenture
Indenture, or supplement thereto, referred to below),
neither TNP nor any of its Affiliates may enter into
any amendment, modification, supplement or waiver of a
Secured Debenture Indenture which shall (1) shorten the
stated maturity of the principal of, or any installment
of interest on, any Secured Debenture then outstanding,
or increase the principal amount thereof or the rate of
interest thereon, (2) grant any additional collateral
security for any Secured Debenture or (3) have the
effect of impairing in any material respect, directly
or indirectly, the rights or interests of the Banks or
the Replacement Note Holders in the Collateral or under
this Agreement or any other Project Document; provided,
that nothing in this Section 10.23 shall prohibit (i)
the pledge of the First Replacement Note under the
First Secured Debenture Indenture as in effect on the
Extension Date and (ii) securing Secured Debentures in
accordance with Section 4.05 hereof under Subsequent
Secured Debenture Indentures (including provisions for
substitution of collateral) in each case as in effect
on the applicable Section 4.05 Closing Date.".
(dd) Section 11 of the Credit Agreement shall be amended by
(A) substituting the word "any" for "the" before the
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 62>
term "Secured Debenture Indenture" in subsection (m)
thereof and (B) substituting the word "each" for "the" before the
term "Replacement Note Holder" in the last sentence of said
Section.
(ee) Delete Section 11(n) of the Credit Agreement in its
entirety and substitute in its place the following:
"(n) Except in accordance with the terms and
conditions of Section 4.05 hereof, prior to the
payment, prepayment or purchase in full of the
Project Loans outstanding on the First Amendment
Effective Date, all interest due and payable
thereon and all other amounts due and payable by
TNP and TGC II to the Banks under this Agreement
(including, without limitation, all Supplemental
Advances) and the other Project Documents and so
long as the First Secured Debentures remain
outstanding, TNP shall have, or shall have
permitted any of its Affiliates to, prepay,
repay or make any other payments (except the
payment of interest and the reimbursement of
costs and expenses of a Secured Debenture
Trustee or holders of Secured Debentures or
payments pursuant to indemnification of a
Secured Debenture Trustee) or distributions
on account of, or the setting apart of money
for a sinking fund or other analogous fund
for, the purchase, redemption, refund or
other acquisition of, any Secured Debentures,
but excluding any payments with respect to
interest payable thereon; provided, that, so
long as TNP shall be complying with the
provisions of Section 9.34 hereof in the same
manner and at the same time that TNP is
complying with the provisions of Section 1009
of the First Secured Debenture Indenture (as
in effect on the Extension Date) or any
Subsequent Secured Debenture Indenture (in
each case, as in effect on the applicable
Section 4.05 Closing Date), it shall not be a
default if TNP purchases or otherwise
acquires First Secured Debentures or
Subsequent Secured Debentures, as applicable,
after the occurrence of a Change of Control
Event pursuant to Section 1009 of the First
Secured Debenture Indenture, or such similar
provisions of any Subsequent Secured
Debenture
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 63>
Indenture pursuant to which such Subsequent Secured
Debentures were issued.".
(ff) Section 12.01 of the Credit Agreement shall be amended
by adding at the beginning of the text thereof, prior
to the term "TGC II", the following:
"Prior to the payment, prepayment or purchase in full
of the Project Loans outstanding on the First Amendment
Effective Date, all interest payable thereon and all
other amounts due and payable by TNP and TGC II to the
Banks under this Agreement (including, without
limitation, all Supplemental Advances) and the other
Project Documents,".
(gg) Section 12.04 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 12.04. [INTENTIONALLY OMITTED].".
(hh) Section 15.01 of the Credit Agreement shall be amended
as follows:
(A) in the first sentence substitute the word "each"
for "the" before the term "Replacement Note
Holder";
(B) in the second sentence substitute the word "any"
for "the" before the term "Replacement Note
Holder";
(C) in the third sentence delete clause (b) in its
entirety and substitute in its place the
following:
"(b) in the event that any Debenture Trustee
shall at any time become the Agent hereunder, its
duties and obligations in its capacity as Agent
shall be subject to the same qualifications,
conditions and limitations as are set forth in (i)
with respect to the First Debenture Trustee,
Article Six and Sections 904 and 1106 of the First
Secured Debenture Indenture with respect to its
duties and obligations as the First Debenture
Trustee and (ii) with respect to any applicable
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 64>
Subsequent Debenture Trustee, provisions in any
Subsequent Secured Debenture Indenture similar to the provisions
referred to in subclause (i) of this clause (b) with respect to
such applicable Debenture Trustee's duties and obligations as
Debenture Trustee thereunder, and any such Debenture Trustee
shall be under no obligation to take any action as Agent except
under circumstances in which it would be required to take action
in its capacity as First Debenture Trustee or Subsequent
Debenture Trustee, as applicable."; and
(D) in the fourth sentence substitute the word "any"
for "the" before the first occurrence of the term
"Replacement Note Holder" and substitute the words
"any other" for "the" before the second occurrence
of such term.
(ii) Section 15.02 of the Credit Agreement shall be amended
as follows:
(A) in the second sentence delete the phrase "the
Replacement Note Holder" and insert in lieu
thereof the phrase "all of the Replacement Note
Holders"; and
(B) in the third sentence (i) delete the phrase "the
Replacement Note Holder shall not" and insert in
lieu thereof the phrase "no Replacement Note
Holder shall", (ii) substitute the word "such" for
"the" before the second and third occurrences of
the term "Replacement Note Holder" and (iii)
insert the word "applicable" before the term
"Secured Debentures".
(jj) Section 15.03 of the Credit Agreement shall be amended
as follows:
(A) substitute the word "a" for "the" before the first
occurrence of the term "Replacement Note Holder";
and
(B) delete the proviso in the last sentence in its
entirety and substitute in its place the
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 65>
following: "provided, that, unless and until the Agent
shall have received such direction, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable
in the best interest of the Secured Parties.".
(kk) Section 15.04 of the Credit Agreement shall be amended
by substituting the word "any" for "the" before the
term "Replacement Note Holder".
(ll) Section 15.05 of the Credit Agreement shall be amended
as follows:
(A) substitute the word "each" for "the" before the
first occurrence of the term "Replacement Note
Holder";
(B) in the first proviso, delete the phrase "no Bank
or the Replacement Note Holder" and insert in lieu
thereof the phrase "neither any Bank nor any
Replacement Note Holder";
(C) delete clauses (x) and (y) of the second proviso
in their entirety and substitute in their place
the following:
"(x) so long as any Debenture Trustee shall
be a Replacement Note Holder (whether as the
pledgee of a Replacement Note or as the legal and
beneficial owner thereof following a foreclosure
or other exercise of remedies by such Debenture
Trustee with respect thereto), the obligations of
such Replacement Note Holder under this Section
15.05 shall be limited to, and solely payable out
of, amounts paid by TNP and/or TGC II and/or the
holders of the applicable Secured Debentures to
such Debenture Trustee under this Agreement or any
other Project Document that such Debenture Trustee
shall not have theretofore applied pursuant to the
applicable Secured Debenture Indenture for any
purpose other than the payment of amounts owing
under this clause (x), and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 66>
(y) in the case of any Replacement Note
Holder (other than a Debenture Trustee in its
capacity as trustee) acquiring a Replacement Note
upon a foreclosure or other exercise of remedies
by a Debenture Trustee with respect thereto, the
obligations of such Replacement Note Holder under
this Section 15.05 shall be limited to obligations
arising from and after the date on which it shall
have acquired such Replacement Note."; and
(D) in the last sentence, add an "s" to the end of the
term "Replacement Note Holder".
(mm) Section 15.06 of the Credit Agreement shall be amended
by (A) substituting the word "each" for "the" before
the first occurrence of the term "Replacement Note
Holder" and (B) substituting the word "such" for "the"
before the second occurrence of such term.
(nn) Section 15.07 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.07. Non-Reliance on Agent and Other
Banks and Other Replacement Note Holders. Each Bank
and TNP, as the initial Replacement Note Holder of each
Replacement Note, represents that it has, independently
and without reliance on the Agent or any other Bank or
any other Replacement Note Holder, and based on such
documents and information as it has deemed appropriate,
made its own appraisal of the financial condition and
affairs of TNP and TGC II and decision to enter into
this Agreement, and agrees that it will, independently
and without reliance upon the Agent or any other Bank
or any other Replacement Note Holder, and based on such
documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and
decisions in taking or not taking action under this
Agreement. Neither the Agent nor any Bank nor any
Replacement Note Holder shall be required to keep
informed as to the performance or observance by TNP or
TGC II under this Agreement or any other document
referred to or provided for herein or to make inquiry
of, or to inspect the properties or books of, TNP or
TGC II. Except for notices, reports and other
documents and information expressly required to be
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 67>
furnished to the Banks and the Replacement Note Holders
by the Agent hereunder, neither the Agent nor any Bank nor any
Replacement Note Holder shall have any duty or responsibility to
provide any Bank or any Replacement Note Holder with any credit
or other information concerning TNP and TGC II, or any Affiliate
of either of them, which may come into the possession of the
Agent or such Bank or such Replacement Note Holder or any of its
or their affiliates.".
(oo) Section 15.08 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.08. Resignation or Removal of Agent.
Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign
at any time by giving notice thereof to the Banks and
the Replacement Note Holders, TNP and TGC II, and the
Agent may be removed at any time with or without cause
by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to
appoint a successor Agent, which Agent shall be
reasonably acceptable to TNP and TGC II (unless an
Event of Default has occurred and is continuing). If
no successor Agent shall have been appointed by the
Majority Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of
notice of resignation or the Majority Banks' removal of
the retiring Agent, then the retiring Agent may, on
behalf of the Banks and the Replacement Note Holders,
appoint a successor Agent, which shall be either a bank
with an office (or an affiliate with an office) in New
York, New York, having a combined capital and surplus
of not less than U.S. $500,000,000 and which shall be
reasonably acceptable to TNP. Upon the acceptance of
any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the
provisions of this Section 15 shall continue in effect
for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 68>
Notwithstanding any other provision in this Agreement
to the contrary (i) upon the payment, prepayment or purchase in
full of the Project Loans outstanding on the First Amendment
Effective Date, all interest due and payable thereon and all
other amounts due and payable by TNP and TGC II to the Banks
under this Agreement (including, without limitation, all
Supplemental Advances) and the other Project Documents, Chase
shall resign as Agent hereunder at which time, the Debenture
Trustee for the earliest maturing Secured Debentures then
outstanding (if any), or its designee, (a "Replacement Agent")
automatically shall be appointed as successor Agent effective
upon the acceptance of such appointment by such Replacement Agent
and (ii) upon the payment in full of the principal of (and
premium, if any, on) the Secured Debentures for which a
Replacement Agent is Debenture Trustee, all interest thereon and
all other amounts due and payable by TNP and TGC II pursuant to
the applicable Secured Debenture Indenture, such Replacement
Agent shall resign as Agent hereunder at which time, the
Debenture Trustee for the earliest maturing Secured Debentures
then outstanding (if any), or its designee, (also a "Replacement
Agent") automatically shall be appointed as successor Agent
effective upon the acceptance of such appointment by such
Replacement Agent. Until the payment, prepayment or purchase in
full of the Project Loans outstanding on the First Amendment
Effective Date, all interest due and payable thereon and all
other amounts due and payable by TNP and TGC II to the Banks
under this Agreement (including, without limitation, all
Supplemental Advances) and the other Project Documents, the
Replacement Note Holders shall not be considered in the
determination of "Majority Banks" for purposes of this Section
15.08. Notwithstanding any provision herein or in any Secured
Debenture Indenture to the contrary, in the event a Debenture
Trustee becomes Agent hereunder, it shall promptly upon the
request of TNP and TGC II from time to time execute releases of
liens in accordance with the Facility Purchase Agreement;
provided, that, any such release shall contain a provision to the
effect that such release is made in its capacity as Agent and
Collateral Agent, if applicable, pursuant to the Facility
Purchase Agreement
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 69>
but without warranty by, or recourse to, such Debenture
Trustee either in its capacity as trustee or individually.".
(pp) Section 15.09 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 15.09. Authorization. The Agent is
hereby authorized by the Banks (so long as any Project
Loans are outstanding), and the Replacement Note
Holders (each by its acceptance of the pledge of the
applicable Replacement Note), to execute, deliver and
perform, each of the Project Documents to which the
Agent is or is intended to be a party and each Bank (so
long as any Project Loans are outstanding), and each
Replacement Note Holder (each by its acceptance of the
pledge of the applicable Replacement Note), agrees to
be bound by all of the agreements of the Agent
contained in the Project Documents.".
(qq) Section 16.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 16.01. Participation and Assignment.
Each Bank and each Replacement Note Holder may sell,
assign or transfer all or any portion of its Loans or
Notes to any other Person provided that no Bank shall
sell, assign or transfer all or any portion of its
Loans or Notes to Prospect. Each Bank and each
Replacement Note Holder shall pay to the Agent (for its
own account) a non-refundable assignment fee of $5,000
at the time of each permitted sale, assignment or
transfer made by such Bank or such Replacement Note
Holder. If any Supplemental Advance Bank sells,
assigns or transfers all or any portion of its Project
Loans, the purchaser, assignee or transferee thereof
shall assume all of the obligations (including, without
limitation, the obligations set forth in Section 17.21
hereof) of such Supplemental Advance Bank. Nothing
herein provided shall prevent any Bank or any
Replacement Note Holder from selling at any time a
participation in its Loans, any fees payable to it
hereunder or any other rights hereunder (the purchaser
of any such participation being hereinafter sometimes
referred to as a "Participant"); provided, that,
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 70>
(except as provided in Section 16.02 hereof): (a) no
such sale or participation shall alter such Bank's or such
Replacement Note Holder's obligations hereunder and (b) any
agreement pursuant to which any Bank or any Replacement Note
Holder may grant any such participation shall provide that such
Bank or such Replacement Note Holder shall retain the sole right
and responsibility and exercise the rights of such Bank or such
Replacement Note Holder, and enforce the obligations of TNP or
TGC II relating to the Loans, the fees payable hereunder and any
other right of such Bank or such Replacement Note Holder,
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement or any other Project Document and the right to take
action to have the Loans declared due and payable. Except as
provided in Section 16.02 hereof, no Participant shall have any
rights under this Agreement or in respect of a Bank's or a
Replacement Note Holder's Loans, fees payable to it hereunder or
any other rights hereunder other than to receive payments in
respect of such Participant's participation from such Bank or
such Replacement Note Holder. Notwithstanding the foregoing, a
Debenture Trustee, in its capacity as pledgee of a Replacement
Note, shall have no right to sell, assign or otherwise transfer
any participation in, all or any portion of the Replacement Loan
evidenced by such Replacement Note or such Replacement Note to
any Person except TNP in accordance with the terms of the Secured
Debenture Indenture pursuant to which such Debenture Trustee is
acting as trustee unless a default shall have occurred and be
continuing under such Secured Debenture Indenture. TNP shall
have no right to sell, assign or otherwise transfer all or any
portion of the Replacement Loans or the Replacement Notes except
under a Secured Debenture Indenture, provided, that such
prohibition shall not apply to the Debenture Trustee under such
Secured Debenture Indenture or any permitted assignee or
transferee thereof.".
(rr) Section 16.02 of the Credit Agreement shall be amended
by substituting the word "a" for "the" before the term
"Replacement Note Holder".
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 71>
(ss) Section 17.03 of the Credit Agreement shall be amended
by (A) inserting the word "a" before the first
occurrence of the term "Replacement Note Holder", (B)
inserting the word "applicable" before the phrase
"instrument of adoption" and (C) deleting the term
""Replacement Note Holder"" and inserting in lieu
thereof the term ""Replacement Note Holders"".
(tt) Section 17.04 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 17.04. Successors and Assigns. This
Agreement shall be binding upon and inure to the
benefit of TNP, TGC II, the Secured Parties and their
respective successors and permitted assigns (including
each Debenture Trustee, as the prospective pledgee or
pledgee of a Replacement Note), except that neither
TGC II nor TNP (except as contemplated in the Project
Documents) may assign or otherwise transfer all or any
part of its rights or obligations hereunder (other than
its rights in respect of the Replacement Loans and the
Replacement Notes as permitted hereunder) without the
prior written consent of each Secured Party. The Agent
and each of the Banks (so long as any Project Loans are
outstanding) consents to the pledge of the Replacement
Notes to the applicable Debenture Trustees.".
(uu) Section 17.08 of the Credit Agreement shall be amended
as follows:
(A) adding an "s" to the end of the terms "Replacement
Note Maturity Date" and "Replacement Note Holder"
in subsection (a) thereof; and
(B) in the last paragraph thereof:
(1) inserting "(1)" immediately after the phrase
"Notwithstanding the above,";
(2) adding an "s" to the end of both occurrences
of the term "Replacement Note Holder";
(3) in subclause (v), deleting the phrase
"provided that such change does not result"
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 72>
and inserting in lieu thereof the phrase "provided
that, if such change would result";
(4) at the end of subclause (v), deleting the
term "the Replacement Loans" and substituting
in lieu thereof the phrase "any Replacement
Loan, then the consent of the Replacement
Note Holder in respect of such Replacement
Loans shall be required"; and
(5) immediately before the "." inserting the
following:
"and (2) until the payment, prepayment or
purchase in full of the Project Loans
outstanding on the First Amendment Effective
Date, all interest payable thereon and all
other amounts due and payable by TNP and TGC
II to the Banks under this Agreement
(including, without limitation, all
Supplemental Advances) and the other Project
Documents (and notwithstanding whether the
Total Supplemental Advance Commitments, the
Available Supplemental Advance Commitment or
the any portion of either thereof is then
available to TGC II hereunder) Banks holding
at least 66-2/3% of the outstanding principal
amount of the Project Loans, or the Agent
acting with the consent of such Banks, shall
have consented in writing to any amendment,
supplement, modification or waiver of Section
8 of this Agreement, or any provisions of
this Agreement or any other instrument,
document or agreement, directly or indirectly
referred to in or ancillary to, Section 8 of
this Agreement, that could have an adverse
effect on the interests of the Banks, the
value of the security provided to the Agent,
as agent for the Banks and the other Secured
Parties, under the Security Documents or the
ability of TNP or TGC II to perform its
obligations under this Agreement or any of
the other Project Documents".
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 73>
(vv) Section 17.16 of the Credit Agreement shall be amended
by substituting the word "each" for "the" before the
term "Replacement Note Holder".
(ww) Section 17.18 of the Credit Agreement shall be amended
by (A) substituting the word "each" for "the" before
the first occurrence of the term "Replacement Note
Holder", (B) substituting the word "such" for "the"
before the second and third occurrences of the term
"Replacement Note Holder", (C) inserting the words "any
of" before the fourth occurrence of the term "the
Replacement Note Holder" and adding an "s" to the end
of such occurrence of such term, (D) substituting the
word "any" for "the" before the fifth and seventh
occurrences of the term "Replacement Note Holder" and
(E) adding an "s" to the end of the sixth occurrence of
the term "Replacement Note Holder".
(xx) Section 17.20 of the Credit Agreement shall be
redesignated as "SECTION 17.23", and new
Sections 17.20, 17.21 and 17.22 shall be inserted as
follows:
"SECTION 17.20. Further Releases and Consents.
(a) Notwithstanding any provisions to the
contrary in this Agreement or in any other Project
Document, each of the Secured Parties hereunder other
than the Replacement Note Holder holding the First
Replacement Note hereby consents and each of the future
Replacement Note Holders (each by acceptance of the
pledge of the applicable Replacement Note) is deemed to
have consented to the transfer by TNP of up to six ten-
acre tracts of real property located in the Site after
such time as (i) there has been payment, prepayment or
purchase in full of the Project Loans evidenced by the
New Project Notes outstanding, all interest due and
payable thereon and all other amounts due and payable
by TNP and TGC II to the Banks under this Agreement and
the other Project Documents and (ii) no First Secured
Debentures and no Second Secured Debentures, as defined
in the Unit 1 Credit Agreement, as amended by Amendment
No. 1 thereto, remain outstanding.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 74>
(b) As a condition precedent to each transfer
under this Section 17.20, TNP, TGC and TGC II each
shall deliver to the Agent a certificate signed by an
Authorized Officer of TNP, TGC or TGC II, as
applicable, which certificate represents and warrants
that (i) such transfer will not materially adversely
affect TNP, TGC or TGC II's financial condition or
ability to perform their respective obligations under
this Agreement or any other Project Document and,
except as contemplated by the Ten Acre Releases, has
not and will not adversely affect the Collateral and
(ii) the ten-acre tract(s) to be conveyed are not
necessary to the use or operation of Unit 1 or Unit 2,
and TNP's transfers of said ten-acre tract(s) and the
resulting loss of access to and across and the loss of
the use of said ten-acre tract(s) would neither
adversely affect or interfere with the use or operation
of Unit 1 or Unit 2 or the value of either thereof nor
impair commercial acceptability of the security granted
to the Secured Parties pursuant to the Security
Documents.
(c) In connection with each transfer permitted by
Section 17.20 (a) hereof and subject to the terms and
conditions of this Section 17.20, each Secured Party
hereby consents to the execution and delivery by the
Agent, the Collateral Agent and, if required, the
Mortgage Trustee, of one or more partial releases of
liens (collectively, the "Ten Acre Releases") to effect
the releases hereinabove described in this
Section 17.20.
(d) The consents contained in this Section 17.20
shall be effective only in the specific instances and
for the specific purposes for which they are given and
shall not be deemed to be a waiver of any past or a
consent to any future action, other event or condition
in connection with this Agreement.
SECTION 17.21. Supplemental Advance Sharing
Provisions.
(a) If at such time as any of the events set
forth in Section 11(e) or Section 11(f) hereof shall
occur (a "Subject Date"), any Supplemental Advance
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 75>
Bank's percentage of the aggregate principal amount of
outstanding Project Loans is less than such Supplemental Advance
Bank's percentage of the aggregate principal amount of the
Project Loans outstanding on the Bond Proceeds Payment Date after
giving effect to the transactions contemplated to be effected on
such date by this Agreement (as adjusted by virtue of sales,
assignments and transfers of all or any portion of its Project
Loans in accordance with Section 16.01 hereof and except for any
amount received by such Supplemental Advance Bank in accordance
with Section 7.01 hereof), such Supplemental Advance Bank shall
promptly purchase from Prospect participations in (or, if and to
the extent specified by Prospect, direct interests in) the
Project Loans owing to Prospect in such amounts, and make such
other adjustments from time to time as shall be equitable, to the
end that (except for any amounts received by a Bank in accordance
with Section 7.01 hereof) each Bank's percentage of the aggregate
principal amount of Project Loans outstanding on such Subject
Date shall be equal to such Bank's percentage of the aggregate
principal amount of Project Loans outstanding on the Bond
Proceeds Payment Date after giving effect to the transactions
contemplated on such date (as so adjusted); provided that if any
Supplemental Advance Bank sells, assigns or transfers all or any
portion of its Project Loans in accordance with Section 16.01
hereof, the purchaser, assignee or transferee of such Project
Loans shall (unless otherwise expressed in the relevant
instrument of sale, assignment or transfer) be subject to the
provisions of this Section 17.21.
(b) TGC II and TNP agree that, notwithstanding
the provisions of Section 16.01 hereof, any
Supplemental Advance Bank so purchasing such a
participation (or direct interest) may exercise all
rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as
fully as if such Supplemental Advance Bank were a
direct holder of Project Loans owing to such
Supplemental Advance Bank in the amount of such
participation.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 76>
(c) If, under any applicable bankruptcy,
insolvency or other similar law, any Supplemental
Advance Bank receives a secured claim in lieu of a
set-off to which this Section 17.21 applies, such
Supplemental Advance Bank shall, to the extent
practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of
Prospect to share in the benefits of any recovery on
such secured claim.
SECTION 17.22. New Title Insurance Policy. On
the Bond Proceeds Payment Date, and at the sole cost of
TNP and TGC II, TNP and TGC II shall furnish to the
Agent (A) a policy or policies of title insurance,
together with evidence of the payment of all premiums
due thereon and expenses payable in connection
therewith and together with such reinsurance on such
forms and in such amounts as the Banks may require, on
forms of and issued by the Title Company, in form and
substance satisfactory to the Banks, (x) insuring the
Agent for the benefit of the Banks in the amount of
$147,750,000 that good and indefeasible title to the
Site is vested in TGC II and the TGC II Mortgage
constitutes a valid first mortgage lien on the TGC II
Mortgage Trust Estate subject only to Permitted Liens,
(y) providing full coverage against all mechanics' and
materialmen's liens and (z) providing a T-35 revolving
credit endorsement and a T-33 adjustable mortgage loan
endorsement and (B) a title information report in form
and substance satisfactory to and approved by the
Agent, showing good and indefeasible title to the TGC
II Mortgage Trust Estate is vested in TGC II and that
the TGC II Mortgage constitutes a valid first mortgage
lien on the TGC II Mortgage Trust Estate subject only
to Permitted Liens.".
SECTION 4.02. Supplemental Advance Facility.
SECTION 4.02A. Conforming changes to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended
as follows:
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 77>
(i) Delete the term "Proportionate Share" and its
definition in its entirety; and
(ii) Insert the following new terms and their
definitions in the appropriate alphabetical order:
""Available Supplemental Advance Commitment"
shall mean (a) prior to the date that the Section
3 Effective Date occurs, as of any date of
determination after the Bond Proceeds Payment Date
and on or before the Final Maturity Date, the sum
of (A) the aggregate principal amount of Existing
Project Loans prepaid pursuant to Section 5.02(a)
hereof after the Bond Proceeds Payment Date minus
(B) the aggregate principal amount of Supplemental
Advances outstanding on the date of determination
and (b) on and after the date that the Section 3
Effective Date occurs (i) as of any date of
determination after the First Amendment Effective
Date and on or before the First Scheduled
Reduction Date, the sum of (A) the aggregate
principal amount of Existing Project Loans prepaid
pursuant to Section 5.02(a) hereof after the Bond
Proceeds Payment Date minus (B) the aggregate
principal amount of Supplemental Advances
outstanding on such date of determination and (ii)
as of any date of determination after the First
Scheduled Reduction Date and before the
Supplemental Advance Commitment Termination Date,
the sum of (A) the aggregate principal amount of
Existing Project Loans prepaid pursuant to Section
5.02(a) hereof after the immediately preceding
Scheduled Reduction Date plus (B) the excess (if
any) of (1) the applicable Carryforward Amount (if
any) minus (2) the aggregate principal amount of
Supplemental Advances outstanding on such date of
determination. Anything in the foregoing to the
contrary notwithstanding in the event that the
Available Supplemental Advance Commitment as
computed in the foregoing sentence would on any
date of determination exceed the aggregate amount
of the Total Supplemental Advance Commitments, the
Available Supplemental Advance Commitment shall be
deemed to equal the aggregate amount of the Total
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 78>
Supplemental Advance Commitments on such date of
determination.
"Carryforward Amount" shall mean (i) with
respect to the period commencing on the First
Scheduled Reduction Date and ending on the Second
Scheduled Reduction Date, the excess (if any) of
(a) Period 1 Section 5.02(a) Prepayments over (b)
the excess (if any) of (1) $35,369,507.58 over (2)
Period 1 Supplemental Advance Bank Purchases (the
"First Carryforward Amount"); (ii) with respect to
the period commencing on the Second Scheduled
Reduction Date and ending on the Third Scheduled
Reduction Date, the excess (if any) of (a) the sum
of (1) the First Carryforward Amount plus (2)
Period 2 Section 5.02(a) Prepayments over (b) the
excess (if any) of (1) $70,739,015.16 over (2)
Period 2 Supplemental Advance Bank Purchases (the
"Second Carryforward Amount"); and (iii) with
respect to the period commencing on the Third
Scheduled Reduction Date and ending on the Final
Maturity Date, the excess (if any) of (a) the sum
of (1) the Second Carryforward Amount plus (2)
Period 3 Section 5.02(a) Prepayments over (b) the
excess (if any) of $106,108,522.74 over (3) Period
3 Supplemental Advance Bank Purchases.
"Proportionate Share" shall mean, with
respect to each Supplemental Advance Bank, the
percentage set out under the caption
"Proportionate Share" opposite such Supplemental
Advance Bank's name on the signature pages of the
First Amendment.
"Prospect" shall mean Prospect Street Senior
Portfolio, L.P.
"Supplemental Advance Banks" shall mean (a)
on the Bond Proceeds Payment Date, the Banks
having Total Supplemental Advance Commitments on
the signature pages of the First Amendment and (b)
thereafter, the Banks from time to time holding
Supplemental Advances and Total Supplemental
Advance Commitments after giving effect to any
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 79> sales, assignments or transfers thereof in accordance
with Section 4.05(g) or 16.01 hereof.
"Supplemental Advance Commitment Termination
Date" shall mean the Business Day preceding the
Final Maturity Date.
"Supplemental Advances" shall have the
meaning ascribed to such term in Section 4.02(a)
hereof.
"Total Supplemental Advance Commitment" shall
mean, for each Supplemental Advance Bank, the
obligation of such Supplemental Advance Bank to
make Supplemental Advances in an aggregate amount
at any one time outstanding up to but not
exceeding the amount set opposite the name of such
Supplemental Advance Bank on the signature pages
of the First Amendment under the caption "Total
Supplemental Advance Commitment" (as the same may
be reduced from time to time pursuant to Section
4.02(b) hereof). The original aggregate amount of
the Total Supplemental Advance Commitments is
$141,478,030.31.".
(b) Section 5.02(a) of the Credit Agreement shall be
deleted in its entirety and replaced with the
following:
"(a) Prepayments. (i) TGC II may, subject to
Section 7.05 hereof and subject to the prior payment in
full of all interest on, and principal of (i) the
"Project Loans" under and as defined in the Unit 1
Credit Agreement and (ii) the Supplemental Advances
then outstanding, prepay the Existing Project Loans
held by the Supplemental Advance Banks in whole or in
part, without premium (except as provided in Section
9.34 hereof) or penalty, upon at least three Business
Days' prior notice by TGC II to the Agent in the case
of Eurodollar Rate Loans, at least two Business Days'
prior notice to the Agent in the case of CD Rate Loans
and at least one Business Day's prior notice to the
Agent in the case of Prime Rate Loans (in each case,
each such notice to the Agent to be irrevocable),
specifying the date and amount of such prepayment and
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 80>
whether the prepayment is of Eurodollar Rate Loans,
Prime Rate Loans or CD Rate Loans or a combination thereof. If
such notice is given, TGC II shall make such prepayment and the
payment amount specified in such notice shall be due and payable
on the date specified therein. Partial prepayments shall be in
an aggregate principal amount of at least $1,000,000 or an
integral multiple of $500,000 in excess thereof. Any prepayments
of Existing Project Loans made pursuant to this Section 5.02(a)
shall be made pro rata among the Supplemental Advance Banks
according to their Proportionate Share. Upon the payment,
prepayment or purchase in full of the Project Loans outstanding
on the First Amendment Effective Date, all interest due and
payable thereon and any other amounts due and payable by TNP and
TGC II to the Banks under this Agreement (including, without
limitation, all Supplemental Advances) and the other Project
Documents, and subject to the terms and conditions of Section
4.05 hereof, TNP and TGC II may prepay or otherwise reduce or
cancel the Replacement Loans in accordance with the terms and
conditions of the applicable Secured Debenture Indenture.".
(c) Section 5.02(b)(i)(B) of the Credit Agreement shall be
deleted in its entirety and replaced with the
following:
"(B) on the Second Scheduled Reduction Date, an
amount equal to the sum of (1) the excess of (x) 50% of
the sum of (I) the aggregate outstanding principal
amount of Project Loans (other than Supplemental
Advances) of the Supplemental Advance Banks on such
date plus (II) the Supplemental Advance Banks' ratable
share (computed on the basis of Existing Project Loans
outstanding on the Bond Proceeds Payment Date) of
$75,750,000 plus (III) the aggregate principal amount
of Project Loans (other than Supplemental Advances)
prepaid after the Bond Proceeds Payment Date and before
the Second Scheduled Reduction Date over (y) the sum of
(I) the Supplemental Advance Banks' ratable share
(computed on the basis of Existing Project Loans
outstanding on the Bond Proceeds Payment Date) of
$75,750,000 plus (II) the aggregate principal amount of
Project Loans (other than Supplemental Advances)
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 81>
prepaid after the Bond Proceeds Payment Date and before
the Second Scheduled Reduction Date plus (2) the excess of (x)
50% of the sum of (I) the aggregate outstanding principal amount
of Project Loans of Prospect on such date plus (II) Prospect's
ratable share (computed on the basis of Existing Project Loans
outstanding on the Bond Proceeds Payment Date) of $75,750,000
plus (III) the aggregate principal amount of Prospect's Project
Loans prepaid after the Bond Proceeds Payment Date and before the
Second Scheduled Reduction Date over (y) the sum of (I)
Prospect's ratable share (computed on the basis of Existing
Project Loans outstanding on the Bond Proceeds Payment Date) of
$75,750,000 plus (II) the aggregate principal amount of
Prospect's Project Loans prepaid after the Bond Proceeds Payment
Date and before the Second Scheduled Reduction Date.".
SECTION 4.02B. Supplemental Advances.
(a) Section 4.02 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 4.02. Total Supplemental Advance
Commitments, Available Supplemental Advance Commitment
and Supplemental Advances.
(a) Supplemental Advances. Each Supplemental
Advance Bank severally agrees, on the terms and
conditions of this Agreement, to make loans to TGC II
in Dollars during the period from and including the
Bond Proceeds Payment Date to but not including the
Supplemental Advance Commitment Termination Date in an
aggregate principal amount at any one time outstanding
up to but not exceeding the amount of such Supplemental
Advance Bank's Proportionate Share of the Available
Supplemental Advance Commitment as in effect from time
to time (such loans being herein called "Supplemental
Advances"); provided that no additional Supplemental
Advances shall be made on, and TGC II hereby agrees not
to request any borrowings of Supplemental Advances on,
a Scheduled Reduction Date. Subject to the terms and
conditions of this Agreement, during such period TGC II
may borrow, repay and reborrow up to the amount of the
Available Supplemental Advance Commitment by means of
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 82>
Prime Rate Loans, CD Rate Loans and Eurodollar Rate
Loans and may Convert Supplemental Advances of one Type into
Supplemental Advances of another Type (as provided in
Section 4.04 hereof) or continue Supplemental Advances of one
Type as Supplemental Advances of the same Type (as provided in
Section 4.04 hereof); provided that no more than six separate
Interest Periods in respect of CD Rate Loans and Eurodollar Rate
Loans from each Supplemental Advance Bank may be outstanding at
any one time. TGC II shall give the Agent (which shall promptly
notify the Supplemental Advance Banks) notice of each borrowing
hereunder as provided in Section 6.01 hereof. TGC II hereby
agrees to repay the principal of, and to pay interest on, the
Supplemental Advances as set forth in this Agreement. TGC II
hereby promises to pay to the Agent for account of each
Supplemental Advance Bank the entire outstanding principal amount
of such Supplemental Advance Bank's Supplemental Advances, and
each Supplemental Advance shall mature, on the Final Maturity
Date. The Supplemental Advances made by each Supplemental
Advance Bank shall be evidenced by the New Project Note of such
Supplemental Advance Bank.
(b) Changes of Total Supplemental Advance
Commitments.
(i) The aggregate amount of the Total
Supplemental Advance Commitments shall be automatically
reduced to zero on the Supplemental Advance Commitment
Termination Date.
(ii) In the event that the Section 3 Effective
Date does not occur, the aggregate amount of the Total
Supplemental Advance Commitments shall be automatically
reduced on the Second Scheduled Reduction Date by an
amount equal to the amount of the prepayment referred
to in Section 5.02(b)(i)(B)(1) and shall be
automatically reduced to zero on the Final Maturity
Date.
(iii) The aggregate amount of the Total
Supplemental Advance Commitments shall be automatically
reduced on each Scheduled Reduction Date set forth in
column (A) below to the amount (subject to reduction
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 83>
pursuant to subclause (iii) below) set forth in column
(B) below opposite such Scheduled Reduction Date:
(A) (B)
Total Supplemental
Advance Commitments
Reduced to the Following
Scheduled Reduction Date: Amounts ($):
First Scheduled Reduction
Date $106,108,522.73
Second Schedule Reduction
Date $ 70,739,015.15
Third Scheduled Reduction
Date $ 35,369,507.57
Final Maturity Date $ -0-
(iv) TGC II shall have the right at any time or
from time to time (A) so long as no Supplemental
Advances are outstanding, to terminate the Total
Supplemental Advance Commitments and (B) to reduce the
aggregate unused amount of the Total Supplemental
Advance Commitments; provided that TGC II shall give
notice of each such termination or reduction as
provided in, and comply with the terms and conditions
of, Section 6.01 hereof.
(v) The Total Supplemental Advance Commitments
once terminated or reduced may not be reinstated.
(c) Available Supplemental Advance Commitment
Fee. TGC II shall pay to the Agent for account of each
Supplemental Advance Bank a commitment fee on the daily
average unused amount of such Supplemental Advance
Bank's Proportionate Share of the Available
Supplemental Advance Commitment, for the period from
and including the Bond Proceeds Payment Date to but not
including the earlier of the date the Total
Supplemental Advance Commitments are terminated and the
Supplemental Advance Commitment Termination Date, at a
rate per annum equal to 1/4 of 1%. Accrued commitment
fee shall be payable on each Quarterly Date and on the
earlier of the date the Total Supplemental Advance
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 84>
Commitments are terminated and the Supplemental Advance
Commitment Termination Date.
(d) Prepayments of Supplemental Advances. (i)
TGC II may, subject to Section 7.05 hereof, prepay the
Supplemental Advances in whole or in part, without
premium (except as provided in Section 9.34 hereof) or
penalty, upon at least three Business Days' prior
notice by TGC II to the Agent in the case of Eurodollar
Rate Loans, at least two Business Days' prior notice to
the Agent in the case of CD Rate Loans and at least one
Business Day's prior notice to the Agent in the case of
Prime Rate Loans (in each case, each such notice to the
Agent to be irrevocable), specifying the date and
amount of such prepayment and whether the prepayment is
of Eurodollar Rate Loans, Prime Rate Loans or CD Rate
Loans or a combination thereof. If such notice is
given, TGC II shall make such prepayment and the
payment amount specified in such notice shall be due
and payable on the date specified therein. Partial
prepayments shall be in an aggregate principal amount
of at least $1,000,000 or an integral multiple of
$500,000 in excess thereof. Until the Supplemental
Advance Commitment Termination Date, from time to time
TGC II shall prepay, or TNP shall purchase in
accordance with the terms and conditions of Section
4.05 hereof, the Supplemental Advances in such
principal amounts and on such dates as shall be
necessary so that (x) the aggregate amount outstanding
principal amount of the Supplemental Advances shall at
no time exceed the aggregate amount of the Total
Supplemental Advance Commitments and (y) the aggregate
principal amount of Loans outstanding hereunder shall
not exceed the Collateral Coverage Maximum Amount at
such time.".
(b) Section 6.01 of the Credit Agreement shall be deleted
in its entirety and replaced with the following:
"SECTION 6.01. Making the Supplemental Advances.
(a) Each termination or reduction of the Total
Supplemental Advance Commitments and each borrowing of
Supplemental Advances shall be made upon notice to the
Agent given by TGC II. Each notice of borrowing of
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 85>
Supplemental Advances shall be given not later than
11:00 a.m. (New York City time) one Business Day (with respect to
each Prime Rate Loan), two Business Days (with respect to each CD
Rate Loan) and three Business Days (with respect to each
Eurodollar Rate Loan) prior to the date of the proposed borrowing
of Supplemental Advances, and the Agent shall give to each
Supplemental Advance Bank prompt notice thereof and of each other
notice received from TGC II hereunder. Each notice of
termination or reduction of Total Supplemental Advance
Commitments shall be given to the Agent not later than five
Business Days prior to the proposed termination or reduction and
such notice shall specify the amount of Total Supplemental
Advance Commitments to be terminated or reduced (which amount
shall be $1,000,000 or an integral multiple of $500,000 in excess
thereof). Each such notice of a borrowing (a "Notice of
Borrowing") shall be in the form of Exhibit O hereto, may be
delivered by telex, telecopy or cable, in any case confirmed
immediately in writing, shall specify therein (i) the date of
such borrowing, (ii) the Type of Supplemental Advances comprising
such borrowing, (iii) the aggregate amount of such borrowing
(which shall be $1,000,000 or an integral multiple of $500,000 in
excess thereof), and (iv) in the case of a borrowing comprised of
Eurodollar Rate Loans or CD Rate Loans, the initial Interest
Period for each such Loan, and shall be otherwise duly completed.
In the case of a proposed borrowing comprised of Eurodollar Rate
Loans or CD Rate Loans, the Agent shall promptly notify each
Supplemental Advance Bank of the applicable interest rate
pursuant to Section 5.05 hereof. Each Supplemental Advance Bank
shall, before 11:00 a.m. (New York City time) on the date of such
borrowing, make available for the account of its Applicable
Lending Office to the Agent at its Principal Office, in same day
funds, such Supplemental Advance Bank's Proportionate Share of
such borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Sections
8.03 and 8.04 hereof, the Agent will make such funds available to
TGC II, by depositing the proceeds thereof, in immediately
available funds, in the TGC II Receipt Account. For purposes of
determining whether the applicable conditions set forth in
Sections 8.03
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 86>
and 8.04 hereof have been fulfilled, the Agent may (but
is not obligated to) assume the truth of the statements contained
in certificates delivered pursuant to said Section.
(b) Each Notice of Borrowing shall be irrevocable
and binding on TGC II. TGC II shall advise the Agent
by telephone of its intention to deliver a Notice of
Borrowing prior to the delivery thereof.
(c) Unless the Agent shall have received notice
from a Supplemental Advance Bank prior to the date of
any borrowing pursuant to Section 6.01(a) hereof that
such Supplemental Advance Bank will not make available
to the Agent such Supplemental Advance Bank's
Proportionate Share of such borrowing, the Agent may
assume that such Supplemental Advance Bank has made
such portion available to the Agent on the date of such
borrowing in accordance with Section 6.01(a) hereof and
the Agent may, in reliance upon such assumption, make
available to TGC II on such date a corresponding
amount. If such Supplemental Advance Bank's
Proportionate Share of such borrowing is made available
to the Agent on a date after the date of such
borrowing, such Supplemental Advance Bank shall pay to
the Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate during such
period as quoted by the Agent times (ii) the amount of
such Supplemental Advance Bank's Proportionate Share of
such borrowing times (iii) the number of days that
elapse from and including the date of such borrowing to
the date on which such Supplemental Advance Bank's
ratable portion of such borrowing shall have been made
available to the Agent. A certificate of the Agent
submitted to any Supplemental Advance Bank with respect
to any amounts owing under this Section 6.01(c) shall
be conclusive absent manifest error. If such
Supplemental Advance Bank's Proportionate Share of such
borrowing is not in fact made available to the Agent by
such Supplemental Advance Bank within three Business
Days after the date of such borrowing, TGC II agrees to
pay to the Agent, on demand, an amount equal to such
Proportionate Share of such borrowing together with
interest thereon, for each day from the date such
amount was made available to TGC II until the date such
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 87>
amount is repaid to the Agent, at the interest rate
applicable at the time to the Loans comprising such borrowing.
(d) The failure of any Supplemental Advance Bank
to make the Supplemental Advance to be made by it as
part of any borrowing shall not relieve any other
Supplemental Advance Bank of its obligation hereunder
to make its Supplemental Advance on the date of such
borrowing, but no Supplemental Advance Bank shall be
responsible for the failure of any other Supplemental
Advance Bank to make the Supplemental Advance to be
made by such other Supplemental Advance Bank on the
date of any borrowing.".
(c) Section 8.04 of the Credit Agreement shall be
redesignated as "SECTION 8.05" and Section 8.03 of the
Credit Agreement shall be deleted in its entirety and
replaced with the following:
"SECTION 8.03 Supplemental Advances. The
obligation of the Supplemental Advance Banks to make
any Supplemental Advance to TGC II upon the occasion of
each borrowing hereunder (including the initial
borrowing) is subject to the conditions precedent that,
both immediately prior to the making of such
Supplemental Advance and also after giving effect
thereto and to the intended use thereof:
(a) no Default shall have occurred and be
continuing;
(b) the representations and warranties made
by TGC II and TNP in Section 2 hereof, and in each
of the other Project Documents, shall be true and
complete on and as of the date of the making of
such Supplemental Advance in all material respects
with the same force and effect as if made on and
as of such date (or, if any such representation or
warranty is expressly stated to have been made as
of a specific date, as of such specific date);
(c) all Government Approvals set forth in
Schedule 1 hereto shall be in full force and
effect or are reasonably expected to be obtained
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 88>
such that there will not be a material adverse effect
on the construction or operation of the Project;
(d) the amount of such borrowing shall not
cause the aggregate principal amount of the
Supplemental Advances outstanding to exceed the
aggregate amount of the Available Supplemental
Advance Commitment (before giving effect to such
borrowing) on such date;
(e) no default shall have occurred and be
continuing under any Secured Debenture Indenture;
and
(f) the aggregate principal amount of Loans
(including the amount of such borrowing) shall not
exceed the Collateral Coverage Maximum Amount at
such time.
Each notice of borrowing by TGC II hereunder shall
constitute a certification by TGC II to the effect set
forth in clauses (a) through (f) above (both as of the
date of such notice and, unless TGC II otherwise
notifies the Agent prior to the date of such borrowing,
as of the date of such borrowing).
SECTION 8.04 Financial Tests for Supplemental
Advances. The obligation of the Supplemental Advance
Banks to make any Supplemental Advance to TGC II upon
the occasion of each borrowing hereunder (including the
initial borrowing) is subject to the further conditions
precedent that (a) Interest Coverage, as determined on
and as of the Quarterly Date most recently falling
prior to the date 60 Business Days prior to the date of
borrowing, shall not be less than 1.0 and (b) the ratio
of Equity Capital to Total Capitalization, as
determined on and as of the Quarterly Date most
recently falling prior to the date 60 Business Days
prior to the date of borrowing, is greater than or
equal to 20%.".
SECTION 5. Counterparts.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 89>
This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart.
SECTION 6. Project Documents.
Except as expressly amended hereby, the Credit
Agreement shall continue in full force and effect in accordance
with the terms and conditions thereof. All references in any
Project Document to the Credit Agreement and any Schedule or
Exhibit thereto shall be deemed to be references to the Credit
Agreement and any Schedule or Exhibit thereto as amended.
SECTION 7. Joinder of Guarantor.
Contemporaneously with the execution and delivery of
this Amendment, and as consideration therefor, TNP, as the
Guarantor, hereby confirms and consents to each and every of the
terms and conditions of this Amendment and the Credit Agreement
as amended by this Amendment (including, without limitation
Section 17.13 of the Credit Agreement), and agrees that the terms
and conditions of the Guaranty are in full force and effect and
unaffected by the execution by TGC II and TNP of this Amendment
and acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the Guaranty.
SECTION 8. Headings.
The headings of the various sections of this Amendment
are for convenience of reference only, do not constitute a part
hereof and shall not be interpreted or construed to affect the
meanings or construction of any provision hereof.
SECTION 9. GOVERNING LAW.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 90>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and
year first above written.
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ D. R. Barnard
Title:
D.R. Barnard
Vice President
and Chief Financial Officer
TEXAS GENERATING COMPANY II
By: /s/ D. R. Barnard
Title:
D. R. Barnard
President
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 91> BANKS
Existing Loans: ABN AMRO BANK N.V.,
$8,127,272.71 HOUSTON AGENCY
Aggregate Commitment:
$4,427,272.72
Total Supplemental Advance By: /s/Michael A. Tribolet
Commitment: Title: Vice President
$4,427,272.72
Proportionate Share: By: /s/ C. Lipchutz
3.13% Title: Vice President
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 92>
Existing Loans: BANK OF AMERICA NT & SA
$20,318,181.84
Aggregate Commitment:
$11,068,181.83 By: /s/ Mark F. Milner
Title: Vice President
Total Supplemental Advance
Commitment:
$11,068,181.83
Proportionate Share:
7.82%
<PAGE 93>
Existing Loans: THE BANK OF NEW YORK
$35,218,181.82
Aggregate Commitment:
$19,184,848.48 By:/s/ Michael F. Donohue, Jr.
Title: Senior Vice President
Total Supplemental Advance
Commitment:
$19,184,848.48
Proportionate Share:
13.56%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
PAGE 94
<PAGE>
Existing Loans: THE BANK OF NOVA SCOTIA
$23,704,545.46
Aggregate Commitment:
$12,912,878.79 By: /s/ A. S. Norsworthy
Title: Assistant Agent
Total Supplemental Advance
Commitment:
$12,912,878.79
Proportionate Share:
9.13%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
PAGE 95
<PAGE>
Existing Loans: THE CHASE MANHATTAN BANK
$16,931,819.00 (NATIONAL ASSOCIATION)
Aggregate Commitment:
$19,223,485.29
By: James T. Beal, Jr.
Total Supplemental Advance Title: Managing Director
Commitment:
$19,223,485.29
Proportionate Share:
13.59%
** Existing Loans:
$23,704,545.41
** Aggregate Commitment:
$22,912,878.76
** Total Supplemental Advance
Commitment:
$22,912,878.76
** Proportionate Share:
16.20%
* Net of participation of Christiana Bank.
** Without regard to participation of Christiana
Bank. These are the amounts or
definitions of "Aggregate Commitment",
"Proportionate Share" and "Total Supplemental
Advance Commitment" and Section Credit
Agreement, as amended by the First Amendment.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 96>
Existing Loans: CREDIT SUISSE
$13,545,454.54
Aggregate Commitment:
$7,378,787.88 By:/s/ Guy R. Cirincione
Title: Member of Senior Management
Total Supplemental Advance
Commitment:
$7,378,787.88
Proportionate Share:
5.22%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
PAGE 97
<PAGE>
Existing Loans: FLEET BANK OF MASSACHUSETTS, N.A.
$10,159,090.92
Aggregate Commitment:
$5,534,090.91 By: /s/ Fred M. Manning
Title: Senior Vice President
Total Supplemental Advance
Commitment:
$5,534,090.91
Proportionate Share:
3.91%
** Existing Loans:
$20,318,181.84
** Aggregate Commitment:
$11,068,181.82
** Total Supplemental Advance
Commitment:
$11,068,181.82
** Proportionate Share:
7.82%
* Net of participation of The Nippon Credit Bank, Ltd.
** Without regard to participation of The Nippon
Credit Bank, Ltd.
These are the amounts or entries referred to in the
definitions of "Aggregate Commitment",
"Proportionate Share" and "Total
Supplemental Advance Commitment" and Section 4.01 of
the Credit Agreement, as amended by the First
Amendment.
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 98>
Existing Loans: NATIONSBANK OF TEXAS, N.A.
$11,513,636.36
Aggregate Commitment:
$22,271,969.69 By: /s/ Vincent Liberio
Title: Senior Vice President
Total Supplemental Advance
Commitment:
$22,271,969.69
Proportionate Share:
15.74%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 99>
Existing Loans: PROSPECT STREET SENIOR PORTFOLIO,
$11,513,636.36 L.P.
By: PROSPECT STREET SENIOR LOAN
Aggregate Commitment: CORP., as general partner
$6,271,969.69
By: /s/ Preston I. Carnes, Jr.
Title: Vice President
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 100>
Existing Loans: UNION BANK
$11,513,636.36
Aggregate Commitment:
$6,271,969.69 By: /s/ Peter R. Saggau
Title: Vice President
Total Supplemental Advance
Commitment:
$6,271,969.69
Proportionate Share:
4.43%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 101>
<PAGE>
Existing Loans: WESTPAC BANKING CORPORATION
$23,704,545.46
Aggregate Commitment:
$12,912,878.79 By: /s/ Officer of Westpac
Title: Vice President
Total Supplemental Advance
Commitment:
$12,912,878.79
Proportionate Share:
9.13%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 102>
Existing Loans: Z-LANDERBANK BANK AUSTRIA A.G.
$20,318,181.84
Aggregate Commitment:
$11,068,181.83 By: /s/ Kevin McGinn
Title: Senior Vice President
Total Supplemental Advance
Commitment:
$11,068,181.83
By: /s/ Peter Scharf
Proportionate Share: Title: Assistant Vice President
7.82%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 102>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ James T. Beale, Jr.
Title: Managing Director
Acknowledged and Agreed to:
THE CHASE MANHATTAN BANK,
(NATIONAL ASSOCIATION), as
Collateral Agent
By /s/ James T. Beale, Jr.
Title: Managing Director
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 104>
VOTING PARTICIPANT
Existing Loans: The following Voting Participant
$6,772,726.41 consents and agrees to the foregoing
Amendment No. 1 to the Unit 2
Aggregate Commitment: First Amended and Restated Project
$3,689,393.47 Loan and Credit Agreement:
Total Supplemental Advance CHRISTIANA BANK
Commitment:
$3,689,393.47
By:/s/Jahn O. Roising Peter M. Dodge
Proportionate Share: Title:
2.61% First Vice President Vice President
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 105>
VOTING PARTICIPANT
Existing Loans: The following Voting Participant
$10,159,090.92 consents and agrees to the foregoing
Amendment No. 1 to the Unit 2
Aggregate Commitment: First Amended and Restated Project
$5,534,090.91 Loan and Credit Agreement:
Total Supplemental Advance THE NIPPON CREDIT BANK, LTD.
Commitment:
$5,534,090.91
By:/s/ Peter Capitelli
Proportionate Share: Title: Vice President & Manager
3.91%
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE 106> EXHIBIT A
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF NEW PROJECT NOTE]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT B
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF REPLACEMENT NOTE]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT C
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF INTERCREDITOR AMENDMENT NO. 2]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT D
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FOURTH TGC II MODIFICATION
AND EXTENSION AGREEMENT]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT E
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FIFTH TGC II MODIFICATION
AND EXTENSION AGREEMENT]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT F
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF SUBSEQUENT TGC II MODIFICATION
AND EXTENSION AGREEMENT]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT G
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF TNP SECOND LIEN MORTGAGE MODIFICATION NO. 2]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT H
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF SECTION 4.05 LEGAL OPINION]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT I
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORMS OF SECTION 4.05 CLOSING DATE LEGAL OPINIONS]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
EXHIBIT J
TO AMENDMENT NO. 1 TO
UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
[FORM OF FIRST DEBENTURE TRUSTEE CONSENT]
AMENDMENT NO. 1 TO UNIT 2 FIRST AMENDED AND RESTATED
PROJECT LOAN AND CREDIT AGREEMENT
<PAGE >
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
ATTENTION ROBERTSON COUNTY, TEXAS RECORDER:
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
c/o DONALD H. SNELL
O'Neill, Snell, Banowsky & McClure
200 Crescent Court, Suite 1030
Dallas, Texas 75201
THE STATE OF TEXAS
COUNTY OF ROBERTSON
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
THIS FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
(this "Agreement") is made as of September 29, 1993 among the
banks (the "Banks") which are parties to that certain Unit 2
First Amended and Restated Project Loan and Credit Agreement
dated as of January 8, 1992 (as amended by the First Amendment
(as defined below), and as further amended, supplemented or
modified and in effect from time to time, the "Credit
Agreement"), THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as
agent for the Banks and the Replacement Note Holder (in such
capacity, together with its successors in such capacity, the
"Agent") (the Banks, the Replacement Note Holder and the Agent
collectively herein referred to as the "Secured Parties"), TEXAS-
NEW MEXICO POWER COMPANY, a Texas corporation ("TNP") and TEXAS
GENERATING COMPANY II, a Texas corporation ("TGC II" or the
"Borrower"). Unless otherwise defined herein, the capitalized
terms used herein shall have the meanings given to those terms in
the Credit Agreement.
W I T N E S S E T H:
Recitals:
A. The Banks, the Agent, Texas PFC, Inc., a Delaware
corporation ("TPFC") and TNP have heretofore entered into the
Project Loan and Credit Agreement dated as of October 1, 1988
(the "Project Credit Agreement") pursuant to the terms of which
the Banks made Loans, prior to the Alternative Assumption Date,
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 1>
to TPFC and, thereafter, to the Borrower in a maximum
outstanding aggregate principal amount of TWO HUNDRED EIGHTY
EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($288,500,000).
B. The Alternative Assumption Date occurred as of May 31,
1991. Certain of the obligations of TPFC under the terms of the
Project Credit Agreement were assumed by the Borrower pursuant to
that certain Assumption Agreement recorded in Volume 566 at Page
252 of the Public Records of Robertson County, Texas. The
Mortgage Trust Estate was conveyed by TPFC to the Borrower
pursuant to that certain Conveyance and Bill of Sale dated
effective as of May 31, 1991, recorded in Volume 566 at Page 283
of the Public Records of Robertson County, Texas.
C. The Obligations under the terms of the Credit Agreement
are secured, in part, by the terms, provisions, liens and
security interests of that certain Mortgage and Deed of Trust
(with Security Agreement and UCC Financing Statement for Fixture
Filing), dated as of October 1, 1988 (the "Mortgage") which was
filed of record on October 4, 1988 in Volume 521 at Page 601 of
the Public Records of Robertson County, Texas. The Mortgage
covers certain property as more particularly described therein.
D. TNP, the Borrower and the Secured Parties entered into
the Credit Agreement and executed and delivered the (i) First TGC
II Modification and Extension Agreement dated as of January 24,
1992 and caused it to be recorded in Volume 573 at Page 484 of
the Public Records of Robertson County, Texas, (ii) the Second
TGC II Modification and Extension Agreement dated as of January
27, 1992 and caused it to be recorded in Volume 573 at Page 511
of the Public Records of Robertson County, Texas and (iii) the
Third TGC II Modification and Extension Agreement dated as of
January 27, 1992 and caused it to be recorded in Volume 573 at
Page 525 of the Public Records of Robertson County, Texas, in
each case as a memorial of certain modifications of, amendments
to or occurrence of events under the Credit Agreement and to
confirm the validity and priority of the liens, security
interests and assignments of the Mortgage securing the
Obligations.
E. TNP, the Borrower and the Secured Parties have modified
the terms of the Credit Agreement as set forth in the First
Amendment (as defined below) and have executed, delivered and
caused this Agreement to be filed of record as a memorial of the
occurrence of such modifications and to confirm the validity and
priority of the liens, security interests and assignments of the
Mortgage securing the Obligations.
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 2>
F. The Agent is authorized by Section 15.01 of the Credit
Agreement to execute and deliver this Agreement.
Agreements
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, TNP, the
Borrower and the Agent, on behalf of the Secured Parties, agree
as follows:
1. Modification of Terms of the Credit Agreement. The
terms and provisions of the Credit Agreement are amended and
modified pursuant to that certain Amendment No. 1 dated as of
September 21, 1993 to the Unit 2 First Amended and Restated
Project Loan and Credit Agreement of even date herewith, executed
and delivered by TNP, the Borrower and the Banks and other
parties thereto (the "First Amendment"). The First Amendment,
among other things (A) facilitates TNP's or TGC II's issuing
Permitted Collateralized Indebtedness that, upon the fulfillment
of certain terms and conditions of the Credit Agreement, shall be
Obligations secured by the liens, security interests and
assignments of the Mortgage from time to time, (B) provides for
the issuance of new promissory notes (referred to as New Project
Notes) to evidence the aggregate principal amount of all
outstanding indebtedness ("Project Loans") owed to the Banks
(including amounts under the revolving loan facility referred to
in clause (C) of this Section 1), (C) provides for TGC II to
borrow under a revolving loan facility and (D) provides that the
current aggregate principal amount of Project Loans outstanding,
$147,750,000, is the maximum aggregate principal amount that may
be outstanding as Project Loans (of which up to an aggregate
principal amount of $141,478,030.31 may be outstanding as
revolving loans). In addition, there remains outstanding under
the Credit Agreement $65,000,000 of Replacement Loans evidenced
by the First Replacement Note.
2. Effect of Modification. The Obligations as described
in the Credit Agreement are secured by the liens, security
interests and assignments of the Mortgage and the other Security
Documents. The validity and priority of the liens, security
interests and assignments of the Mortgage shall not be
extinguished, impaired, reduced, released, or adversely affected
by the terms of this Agreement or the First Amendment.
3. Extension of Rights and Liens. The Borrower hereby
extends all rights, titles, liens, security interests,
assignments, powers and privileges securing the Obligations as
described in the Credit Agreement by virtue of the Mortgage until
all of such Obligations have been paid in full and agrees that
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 3>
the execution of this Agreement shall in no manner impair the
rights, titles, liens, security interests, assignments, powers
and privileges existing by virtue of the Mortgage, as they are
extended and modified hereby.
4. Joinder of Guarantor. TNP, as guarantor under the TNP
Guaranty, hereby (i) consents to the execution, delivery and
performance by TGC II of this Agreement and any other Amendment
Document to which TGC II is or is intended to be a party and the
consummation of the transactions contemplated hereby and thereby,
(ii) agrees that the TNP Guaranty shall remain in full force and
effect after giving effect to such transactions and (iii)
acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the TNP Guaranty.
5. Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the successors and
assigns of TNP, the Borrower and the Agent, for the benefit of
the Secured Parties; provided, however, nothing contained in this
Section is intended to authorize TNP or the Borrower to assign
any of the Obligations or to sell any of the Mortgage Trust
Estate except in accordance with the Credit Agreement and the
Facility Purchase Agreement.
6. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 4>
EXECUTED as of the date first hereinabove written.
SECURED PARTIES:
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent
By:/s/Bettylou J. Robert
Title: Vice President
BORROWER:
TEXAS GENERATING COMPANY II,
a Texas corporation
By:/s/ D. R. Barnard
Title: President
The undersigned hereby
consents and agrees to
the foregoing pursuant
to Section 1(c) of the
Intercreditor Agreement
as defined in the Credit
Agreement.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Collateral Agent
By:/s/ Bettylou J. Robert
Title: Vice President
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 5>
The undersigned is a party to
this Agreement for the sole
purpose of agreeing to the
provisions of Section 4 to
this Agreement.
TNP:
TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation
By:/s/ D. R. Barnard
Title: Sector Vice President
& Chief Financial Officer
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 6>
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
February 1, 1995
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 7>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by Bettylou J. Robert, Vice President of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Collateral Agent.
/s/ Elizabeth A. Sullivan
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
February 1, 1995
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 8>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, Sector Vice President &
CFO of TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation, on
behalf of said corporation.
/s/ Aisha Piracha
NOTARY PUBLIC in and for
the State of NEW YORK
My Commission Expires:
November 16, 1994
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 9>
STATE OF NEW YORK
COUNTY OF NEW YORK
This instrument was acknowledged before me on the 27th day
of September, 1993, by D. R. Barnard, President of TEXAS
GENERATING COMPANY II, a Texas corporation, on behalf of said
corporation.
/s/ Aisha Piracha
NOTARY PUBLIC in and for
the State of TEXAS
My Commission Expires:
November 16, 1994
FOURTH TGC II MODIFICATION AND EXTENSION AGREEMENT
<PAGE 10>
EXECUTION COUNTERPART
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
AMENDMENT NO. 2 (this "Amendment") dated as of
September 21, 1993 among TEXAS GENERATING COMPANY, a Texas
corporation ("TGC"), TEXAS GENERATING COMPANY II, a Texas
corporation ("TGC II"), TEXAS-NEW MEXICO POWER COMPANY, a Texas
corporation ("TNP"), the financial institutions listed on the
signature pages hereto under the caption "Unit 1 Banks" (the
"Unit 1 Banks") and the financial institutions listed on the
signature pages hereto under the caption "Unit 2 Banks" (the
"Unit 2 Banks") and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION) ("Chase"), in its several capacities as agent for
the Unit 1 Banks (in such capacity, together with its successors
in such capacity, the "Unit 1 Credit Agent"), as agent for the
Unit 2 Banks (in such capacity, together with its successors in
such capacity, the "Unit 2 Credit Agent") and as collateral agent
for the Unit 1 Banks and the Unit 2 Banks (the "Collateral
Agent").
Recitals
A. Certain of the parties hereto are parties to the
Intercreditor and Nondisturbance Agreement dated as of October 1,
1988 (as amended by Amendment No. 1 referred to below, the
"Intercreditor Agreement") recorded in Volume 521 at Page 458 of
the Public Records of Robertson County, Texas, as amended by
Amendment No. 1 to the Intercreditor and Nondistribution
Agreement dated as of January 8, 1992 ("Amendment No. 1")
recorded in Volume 573 at Page 423 of the Public Records of
Robertson County, Texas.
B. Unless otherwise defined herein, capitalized terms
used herein but not otherwise defined herein shall have the
meanings ascribed to such terms in the Intercreditor Agreement.
C. TNP, TGC, the Unit 1 Banks and the Unit 1 Credit
Agent have entered into Amendment No. 1 dated as of September 21,
1993 (the "Unit 1 First Amendment") to the Unit 1 Credit
Agreement (as amended by the Unit 1 First Amendment, the "Unit 1
Credit Agreement").
D. TNP, TGC II, the Unit 2 Banks and the Unit 2
Credit Agent have entered into Amendment No. 1 dated as of
September 21, 1993 (the "Unit 2 First Amendment") to the Unit 2
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 1>
Credit Agreement (as amended by the Unit 2 First Amendment, the
"Unit 2 Credit Agreement" and, together with the Unit 1 Credit
Agreement, the "Credit Agreements" or, individually, a "Credit
Agreement").
E. On January 27, 1992, TNP purchased certain loans
under the Credit Agreements as then in effect, from the Project
Creditors. Upon such purchase, the loans so purchased under each
Credit Agreement as then in effect automatically were converted
into the Replacement Loans (as defined in each Credit Agreement
as then in effect) evidenced by the Replacement Notes (such
Replacement Notes as defined in and issued under each Credit
Agreement as then in effect; as used herein such Replacement
Loans and Replacement Notes are referred to as the "First
Replacement Loans" and the "First Replacement Notes",
respectively). TNP pledged the First Replacement Notes to IBJ
Schroder Bank & Trust Company, as trustee (in such capacity,
together with its successors in such capacity, the "First
Debenture Trustee") under the Indenture and Security Agreement
dated as of January 15, 1992 between the First Debenture Trustee
and TNP. In connection with such pledge, the First Debenture
Trustee signed the Instrument of Adoption attached as Exhibit G
to each of the Credit Agreements as then in effect agreeing,
among things, to be bound by the provisions of the Intercreditor
Agreement.
F. Under the Unit 1 Credit Agreement, TNP will
purchase certain loans from the Unit 1 Banks. Upon such
purchase, the loans so purchased under the Unit 1 Credit
Agreement automatically will be converted into a Second
Replacement Loan evidenced by a Second Replacement Note (such
Second Replacement Note as defined in and issued under the Unit 1
Credit Agreement, the "Second Replacement Note").
G. TNP will pledge the Second Replacement Note to IBJ
Schroder Bank & Trust Company, as trustee (in such capacity,
together with its successors in such capacity, the "Second
Debenture Trustee") under the Indenture and Security Agreement
dated as of September 15, 1993 (the "Second Secured Debenture
Indenture") between the Second Debenture Trustee and TNP. In
connection with such pledge, the Second Debenture Trustee will
sign an Instrument of Adoption, substantially in the form of
Exhibit G to the Unit 1 Credit Agreement agreeing, among other
things, to be bound by the provisions of the Intercreditor
Agreement.
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 2>
H. Under the Unit 1 Credit Agreement TNP may purchase
additional loans. Upon such purchase, the loans so purchased
will be automatically converted into Subsequent Replacement Loans
(as defined in the Unit 1 Credit Agreement) evidenced by
Subsequent Replacement Notes (as defined in and as contemplated
by the Unit 1 Credit Agreement; as used herein such Subsequent
Replacement Notes are referred to as the "Unit 1 Subsequent
Replacement Notes").
I. Under the Unit 2 Credit Agreement TNP may purchase
additional loans. Upon such purchase, the loans so purchased
will be automatically converted into Subsequent Replacement Loans
(as defined in the Unit 2 Credit Agreement) evidenced by
Subsequent Replacement Notes (as defined in and as contemplated
by the Unit 2 Credit Agreement; as used herein such Subsequent
Replacement Notes are referred to as the "Unit 2 Subsequent
Replacement Notes" (the First Replacement Notes, the Second
Replacement Note, the Unit 1 Subsequent Replacement Notes and the
Unit 2 Subsequent Replacement Notes are referred to herein as the
"Replacement Notes" and each is referred to herein as a
"Replacement Note")).
J. TNP may pledge Unit 1 Subsequent Replacement Notes
or Unit 2 Subsequent Replacement Notes to a Subsequent Debenture
Trustee (as defined in each Credit Agreement; as referred to
herein, a "Subsequent Debenture Trustee"). In connection with,
and as a condition of, such pledge, the Subsequent Debenture
Trustee will sign an Instrument of Adoption, substantially in the
form of Exhibit G to the Unit 1 Credit Agreement or the Unit 2
Credit Agreement, as applicable.
K. The parties hereto desire to amend the
Intercreditor Agreement, among other things, in respect of
certain rights and obligations of the Second Debenture Trustee,
as the pledgee of the Second Replacement Note, thereunder and in
respect of certain rights and obligations of any Subsequent
Debenture Trustee (as defined in each Credit Agreement and which
for purposes of the Unit 1 Credit Agreement or the Unit 2 Credit
Agreement could include the Second Debenture Trustee, as the
pledgee of Unit 1 Subsequent Replacement Notes or Unit 2
Subsequent Replacement Notes), as the pledgee of any Subsequent
Replacement Note (as defined in each Credit Agreement),
thereunder.
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 3>
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendments.
(a) The word "First" will be added before each
occurrence of the phrases "Debenture Trustee" and "Replacement
Note Holder" in the definition of the "Unit 1 Banks".
(b) The Second Debenture Trustee, as a Replacement
Note Holder of the Second Replacement Note (under and as defined
in the Unit 1 Credit Agreement), and any Subsequent Debenture
Trustee (under and as defined in Unit 1 Credit Agreement), as a
Replacement Note Holder of a Subsequent Replacement Note (under
and as defined in the Unit 1 Credit Agreement and which for
purposes of the Unit 1 Credit Agreement could include the Second
Debenture Trustee, as pledgee of the Unit 1 Subsequent
Replacement Notes) shall be included in the definition of the
"Unit 1 Banks". Any Subsequent Debenture Trustee (under and as
defined in the Unit 2 Credit Agreement), as a Replacement Note
Holder of a Subsequent Replacement Note (under and as defined in
the Unit 2 Credit Agreement and which for purposes of the Unit 2
Credit Agreement could include the Second Debenture Trustee, as
pledgee of the Unit 2 Subsequent Replacement Notes) shall be
included in the definition of "Unit 2 Banks".
(c) Section 1(a) of the Intercreditor Agreement is
amended by deleting in its entirety the last sentence thereof and
inserting in lieu thereof the following:
"This Section 1(a) shall not, however, in any way limit
the right of a Debenture Trustee (as defined in either
Credit Agreement) who is an 'indenture trustee' as
defined in Section 303 of the Trust Indenture Act of
1939, as amended (a "Qualified Trustee") and, following
the transfer of a Replacement Note upon the exercise of
remedies by such Qualified Trustee, any transferee of
such Replacement Note, to file or join in the filing of
any petition or commence any proceeding or case seeking
reorganization, bankruptcy, receivership, trusteeship,
liquidation or insolvency of TNP in respect of any
obligation of TNP other than its failure to pay amounts
owing or perform other obligations under the Credit
Agreements, the Replacement Notes (as defined in either
Credit
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 4>
Agreement) or any Project Document (as defined in either Credit
Agreement).".
(d) Section 2(b) of the Intercreditor Agreement is
amended by deleting in its entirety the last sentence thereof and
inserting in lieu thereof the following:
"Notwithstanding anything to the contrary contained
herein, in the event that a Qualified Trustee shall at
any time become the Collateral Agent hereunder, its
duties and obligations in its capacity as Collateral
Agent (except its obligation to consent to the partial
release granted by the Unit 1 Credit Agreement or the
Unit 2 Credit Agent in accordance with the Facility
Purchase Agreements (as defined in each Credit
Agreement)) shall be subject to qualifications,
conditions and limitations to the same effect as those
set forth in Article Six and Sections 904 and 1106 of
the First Secured Debenture Indenture with respect to
the duties and obligations of the First Debenture
Trustee, and any of such Qualified Trustees shall be
under no obligation to take any action as Collateral
Agent except under circumstances in which it would be
required to take action in its capacity as a Qualified
Trustee.".
(e) Section 2(g) of the Intercreditor Agreement is
amended by inserting at the end of the second sentence the
following:
"; provided, that, in the event that the Collateral
Agent shall receive from any transferee or assignee of
any such promissory note a certified copy of the
instrument of transfer, (in the case of a Replacement
Note) evidence of the registry of such Replacement Note
in the Register (as defined in each Credit Agreement)
and such other evidence of effective transfer of such
promissory note in accordance with the terms and
conditions of the Credit Agreements as the Collateral
Agent shall reasonably request, then such assignee or
transferee shall be treated as the owner of such
promissory note for all purposes hereunder.".
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 5>
(f) Section 2(h) of the Intercreditor Agreement is
amended by deleting such Section in its entirety and inserting in
lieu thereof the following:
"(h) Rights as Project Creditor. With respect to its
Commitments and Loans (as defined in either Credit
Agreement) the Collateral Agent shall have the same
rights and powers hereunder as any other Project
Creditor and may exercise the same as though it were
not the Collateral Agent, the Unit 1 Credit Agent, the
Unit 2 Credit Agent or Agent under any of the other
Collateral Documents, and the terms "Unit 1 Banks,"
"Unit 2 Banks" and "Project Creditors" shall, unless
the context otherwise indicates, include the Collateral
Agent in its capacity in which it holds its Commitments
and Loans (as so defined), so long as the Collateral
Agent holds Commitments or Loans (as so defined).".
(g) Section 3(b) of the Intercreditor Agreement is
amended by (i) inserting the phrase "(as defined in either Credit
Agreement)" after the word "Loans" and (ii) deleting the proviso
in the second sentence thereof and inserting in lieu thereof the
following:
"provided, that, (i) so long as a Qualified Trustee
shall be a Replacement Note Holder (as defined in
either Credit Agreement), whether as pledgee of a
Replacement Note or as the legal and beneficial owner
thereof following a foreclosure or other exercise of
remedies by such Qualified Trustee with respect
thereto, the obligations of such Qualified Trustee as a
Project Creditor under this Section 3(b) shall be
limited to, and solely payable out of, amounts paid by
TNP, TGC and/or TGC II to such Qualified Trustee under
the Credit Agreements or any other Project Document (as
defined in either Credit Agreement) that such Qualified
Trustee shall not have theretofore applied pursuant to
the applicable Secured Debenture Indenture (as defined
in the Credit Agreements) for any purpose other than
the payment of amounts owing under this Section 3(b)
and (ii) in the case of any Replacement Note Holder
(other than a Qualified Trustee in its capacity as
trustee) acquiring a Replacement Note upon a
foreclosure or exercise of remedies by a Qualified
Trustee with respect thereto, the obligations of such
AMENDMENT NO. 2 TO INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 6>
Replacement Note Holder under this Section 3(b) shall be limited
to obligations arising from and after the date on which it shall
have acquired such Replacement Note.".
(h) Section 4(a)(i) of the Intercreditor Agreement is
amended by inserting the word "First" before the term "Debenture
Trustee" each time it appears.
2. Title Insurance. Section 5 of the Intercreditor
Agreement is amended by adding a new Section 5(m) to read as
follows:
"The Banks (under and as defined in each Credit
Agreement) waive any rights they may have under any
Project Document (as defined in either Credit
Agreement) to receive any title insurance proceeds from
any title insurance policy then in effect for the
benefit of any Replacement Note Holder (as defined in
either Credit Agreement) and each Replacement Note
Holder waives any rights it may have under any Project
Document (as defined in either Credit Agreement) to
receive any title insurance proceeds from any title
insurance policy then in effect for the benefit of the
Banks (as so defined).".
3. Pledge of Replacement Notes. Each of the
undersigned consents to the pledge of the Second Replacement Note
by TNP to the Second Debenture Trustee and acknowledges that,
upon such pledge, such Second Debenture Trustee shall be entitled
to all of the rights and benefits of a Project Creditor under the
Intercreditor Agreement. Each of the undersigned consents to the
pledge of each Replacement Note (as defined in each Credit
Agreement) by TNP to a Subsequent Debenture Trustee (as defined
in each Credit Agreement) and acknowledges that upon such pledge,
such Subsequent Debenture Trustee shall be entitled to all of the
rights and benefits of a Project Creditor under the Intercreditor
Agreement, as amended.
4. Transaction Consent. Each of the undersigned
consents to the execution, delivery and performance by the Unit 1
Agent, the Unit 2 Agent and the Collateral Agent of this
Agreement, the Unit 1 First Amendment, the Unit 2 First
Amendment, the Facility Purchase Agreement Amendment No. 1 (as
defined in the Unit 2 Credit Agreement), the TNP Second Lien
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 7>
Mortgage Modification No. 2 (as defined in each Credit
Agreement), the First Amendment TGC Mortgage Modifications (as
defined in the Unit 1 Credit Agreement), the First Amendment
TGC II Mortgage Modifications (as defined in the Unit 2 Credit
Agreement) and each other Project Document to which such Person
is or is intended to be a party; provided, that, each of the
undersigned accepts for all purposes under this Intercreditor
Amendment and the Project Documents (as defined in each Credit
Agreement), the First Debenture Trustee Consent (as defined in
each Credit Agreement) as evidence of the approval of the First
Debenture Trustee of the First Amendment (as defined in each
Credit Agreement) and, without limiting the foregoing acceptance,
agrees that a consent to substantially the same effect, mutatis
mutandis, as the First Debenture Trustee Consent (as so defined)
or a consent of a Qualified Trustee to substantially the same
effect, mutatis mutandis, as the First Debenture Trustee Consent
(as so defined) with respect to any amendment, modification or
supplement to either Credit Agreement shall be effective for all
purposes under this Intercreditor Agreement and the Project
Documents (as so defined) to evidence the approval of the First
Debenture Trustee or any other Qualified Trustee of such
amendment, modification or supplement.
5. Headings. The headings of the various sections of
this Amendment for convenience of reference only, do not
constitute a part hereof and shall not be interpreted or
construed to affect the meanings or construction of any
provisions hereof.
6. Counterparts. This Amendment may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Amendment by signing any such
counterpart.
7. Effectiveness. This Amendment shall become
effective upon the Section 3 Effective Date (as defined in the
Unit 1 Credit Agreement) if signed by each of the parties hereto
on or before such date. Except as expressly amended hereby, the
Intercreditor Agreement shall continue in full force and effect
in accordance with the terms thereof.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 8>
IN WITNESS WHEREOF, each of the undersigned has caused
this Amendment to be duly executed and delivered as of the date
first above written.
TEXAS GENERATING COMPANY
By: \s\ D. R. Barnard
Title:
President
TEXAS GENERATING COMPANY II
By: \s\ D. R. Barnard
Title:
President
TEXAS-NEW MEXICO POWER COMPANY
By: \s\ D. R. Barnard
Title:
D. R. Barnard
Vice President
and Chief Financial Officer
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), in its
several capacities as
Collateral Agent, the Unit 1
Credit Agent and the Unit 2
Credit Agent
By: \s\ Bettylou J. Robert
Title:
Vice President
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 9>
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared \s\ D. R. Barnard ,
President of TEXAS GENERATING COMPANY, a Texas corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September , 1993.
\s\ Aisha Piracha
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires: 11/16/94
Aisha Piracha
Notary Public, State of New York
No. 5004499
Qualified in New York county
Certificated Filed in New York City
Commission Expires November 16, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 10>
<PAGE>
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared D. R. Barnard ,
President of TEXAS GENERATING COMPANY II, a Texas
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September , 1993.
\s\ Aisha Piracha
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:11/16/94
Aisha Piracha
Notary Public, State of New York
No. 5004499
Qualified in New York county
Certificated Filed in New York City
Commission Expires November 16, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 11>
<PAGE>
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared D. R. Barnard ,
Sector Vice President of TEXAS-NEW MEXICO POWER COMPANY, a Texas
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September , 1993.
\s\ Aisha Piracha
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:11/16/94
Aisha Piracha
Notary Public, State of New York
No. 5004499
Qualified in New York county
Certificated Filed in New York City
Commission Expires November 16, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 12>
<PAGE>
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Bettylou J. Robert ,
Vice President of THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association, as Collateral
Agent, as Unit 1 Credit Agent and as Unit 2 Credit Agent, known
to me to be the person and officer whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed
the same for the purposes and consideration therein expressed,
and in the capacity or capacities therein stated, and as the act
and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ Patricia E. Martin
Notary Public, State of _________
(NOTARIAL SEAL)
My Commission Expires:___________
Patricia E. Martin
Notary Public, State of New York
No. 52-01MA4995914
Qualified in Suffolk County
Commission Expires May 5, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 13>
UNIT 1 BANKS:
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)
By:\s\ Bettylou J. Robert
Title: BETTYLOU J. ROBERT
VICE PRESIDENT
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Bettylou J. Robert ,
Vice President of THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association, known to me to be
the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, and in the
capacity or capacities therein stated, and as the act and deed of
said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ Patricia E. Martin
Notary Public, State of _________
(NOTARIAL SEAL)
My Commission Expires:___________
Patricia E. Martin
Notary Public, State of New York
No. 52-01MA4995914
Qualified in Suffolk County
Commission Expires May 5, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 14>
ABN AMRO BANK N.V., HOUSTON AGENCY
By: \s\ Michael A. Tribolet
Title: Vice President
By:__________________________
Title:
STATE OF Texas )
)
COUNTY OF Harris )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Michael A. Tribolet ,
V. P. of ABN AMRO BANK N.V., HOUSTON AGENCY, a
______________ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ Deborah B. Hall
Notary Public, State of Texas
(NOTARIAL SEAL)
Deborah B. Hall
My Commission Expires
January 26, 1996
My Commission Expires:___________
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 15>
ABN AMRO BANK N.V., HOUSTON AGENCY
By: \s\ C. Lipshutz
Title: Vice President
By:__________________________
Title:
STATE OF Texas )
)
COUNTY OF Harris )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Cheryl Lipshutz ,
Vice President of ABN AMRO BANK N.V., HOUSTON AGENCY, a
______________ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ Deborah B. Hall
Notary Public, State of Texas
(NOTARIAL SEAL)
My Commission Expires: 1/26/96
Deborah B. Hall
My Commission Expires
January 26, 1996
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 16>
BANK OF AMERICA NT & SA
By: \s\ Mark F. Milner
Title: Vice President
STATE OF California )
)
COUNTY OF Los Angeles)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mark F. Milner ,
Vice President of BANK OF AMERICA NT & SA, a national baking
association known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ David Miller
Notary Public, State of California
(NOTARIAL SEAL)
My Commission Expires:Sept. 2, 1995
Davis H. Miller
Notory Public California
Los Angeles County
My Comm Expires Sept. 2, 1995
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 17>
THE BANK OF NEW YORK
By:\s\ Michael F. Donohue, Jr.
Title: Senior Vice President
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Michael F. Donohue, Jr. ,
Sr. V.P.________ of THE BANK OF NEW YORK, a New York
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September , 1993.
\s\ Diane M. Castoria
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:6/10/96
Diane M. Castoria
Notory Public, State of New York
No. 41-4982708
Qualified in Queens County
Commission Expires June 10, 1996
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 18>
THE BANK OF NOVA SCOTIA
By:\s\ A. S. Norsworthy______
Title : Assistant Agent
STATE OF Georgia____)
)
COUNTY OF Fulton____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared A. S. Norsworthy_______________,
Assistant Agent__ of THE BANK OF NOVA SCOTIA, a Canadian______
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 30th day of
September, 1993.
\s\ S. Miolla ___________________
Notary Public, State of Georgia
(NOTARIAL SEAL)
My Commission Expires:Feb. 15, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 19>
CREDIT SUISSE
By:\s\ Cirincione____________
Title: Guy R. Cirincione
Member of Senior Management
By:\s\ A. Leon_______________
Title: A. Leon, Associate
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mr. Guy Cirincione and ________,
Mr. Andrew Leon of CREDIT SUISSE, a banking corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ____, 1993.
\s\ Donna A. Singer______________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:___________
Donna A. Singer
Notary Public, State of New York
No. 4898345
Qualified in New York County
Commission Expires June 15, 1995
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 20>
CREDIT SUISSE
By:\s\ Cirincione
Title: Guy R. Cirincione
Member of Senior Management
By:\s\ PP Leon_______________
Title: A. Leon, Associate
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mr. Guy Cirincione and ________,
Mr. Andrew Leon__ of CREDIT SUISSE, a banking_______ corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Donna A Singer_______________
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:June 15, 1995
Donna A. Singer
Notary Public, State of New York
No. 4898345
Qualified in New York County
Commission Expires June 15, 1995
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 21>
FLEET BANK OF MASSACHUSETTS, N.A.
By:\s\ Christopher Sotir______
Title: Assistant Vice President
STATE OF Massachusetts)
)
COUNTY OF ____________)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Christopher Sotir______________,
Assistant Vice President of FLEET BANK OF MASSACHUSETTS, N.A., a
national banking association, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September , 1993.
\s\ Notary
Notary Public, State of Massachusetts
(NOTARIAL SEAL)
My Commission Expires:Nov. 20, 1998
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 22>
NATIONSBANK OF TEXAS, N.A.
By:\s\ Vincent Liberio________
Title: SVP
STATE OF Texas______)
)
COUNTY OF Tarrant___)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Vincent Liberio________________,
SVP______________ of NATIONSBANK OF TEXAS, N.A., a national
banking association, known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Janet Luedtke________________
Notary Public, State of Texas
(NOTARIAL SEAL)
My Commission Expires:May 5, 1996
Janet Luedtke
Notary Public
State of Texas
My comm. Exp. 05-05-96
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 23>
LEHMAN COMMERCIAL PAPER INC.
By:\s\ Christopher R. Ryan
Title: Authorized Signatory
STATE OF New York )
)
COUNTY OF New York )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Christopher R. Ryan __________,
Authorized Signatory of LEHMAN COMMERCIAL PAPER INC., a New
York__________ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September ______, 1993.
\s\ Lisa Raggi___________________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:12-16-93___
Lisa Raggi
Notary Public, State of New York
No. 60-4989831
Qualified in Westchester County
Commission Expires 12-16-93
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 24>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:\s\ Mary C. Arnold_________
Title: Vice President
STATE OF Texas_____)
)
COUNTY OF Harris____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mary C. Arnold_________________,
Vice President___ of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Carole Lott__________________
Notary Public, State of Texas____
(NOTARIAL SEAL)
My Commission Expires:11/30/96___
Carole Lott
Notary Public, State of Texas
My commission Expires 11-30-96
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 25>
UNION BANK
By:\s\ Peter R. Saggau________
Title: Vice President
STATE OF California_)
)
COUNTY OF Los Angeles)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Peter R. Saggau________________,
Vice President___ of UNION BANK, a California____ corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Bednahrin Badal______________
Notary Public, State of California
(NOTARIAL SEAL)
My Commission Expires:May 9, 1994
Official Seal
Bednahrin Badal
Notary Public - California
Principal Office in
Los Angeles County
My Commission Expired May 9, 1994.
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 26>
WESTPAC BANKING CORPORATION
By:\s\ Joseph Rubino_______
Title: VP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Joseph Rubino__________________,
Vice President___ of WESTPAC BANKING CORPORATION, a
Australia_____ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Patricia A. Steigerwald______
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:6/30/94____
Patricia A. Steigerwald
Notary Public, State of New York
No. 30-4714250
Qualified in Nassau County
Commission Expires June 30, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 27>
UNIT 1 VOTING PARTICIPANTS:
THE HONGKONG AND SHANGHAI
BANKING CORPORATION LIMITED
By:\s\ John A. Van Slyke______
Title: Assistant Vice Pres.
STATE OF Texas______)
)
COUNTY OF Harris____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared John A. Van Slyke______________,
Asst. Vice President of THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, a Hong Kong_____ corporation, known to me to
be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the
same for the purposes and consideration therein expressed, and in
the capacity or capacities therein stated, and as the act and
deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Celeta L. Carr_______________
Notary Public, State of Texas____
(NOTARIAL SEAL)
My Commission Expires:9-12-94
Celeta L. Carr
Notary Public, State of Texas
My commission Expires 9-12-94
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 28>
Z-LANDERBANK BANK AUSTRIA A.G.
By:\s\ Kevin McGinn___________
Title: SVP
By:\s\ Peter Scharf___________
Title: AVP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Kevin B. McGinn________________,
Senior Vice Pres. of Z-LANDERBANK BANK AUSTRIA A.G., a
Austrian____ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Maria F. Cicirelli___________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:4/30/95
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 29>
Z-LANDERBANK BANK AUSTRIA A.G.
By:\s\ Kevin McGinn
Title: SVP
By:\s\ Peter Scharf
Title: AVP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Peter Scharf ,
Asst. Vice Pres. of Z-LANDERBANK BANK AUSTRIA A.G., a Austrian
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Maria F. Cicinelli___________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:4/30/95____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 30>
UNIT 2 BANKS:
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)
By:\s\ Bettylou J. Robert
Title: Vice President
STATE OF New York )
)
COUNTY OF New York)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Bettylou J. Robert_____________,
Vice President___ of THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association, known to me to be
the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, and in the
capacity or capacities therein stated, and as the act and deed of
said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Patricia E. Martin___________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:_May 5, 1994
Patricia E. Martin
Notary Public, State of New York
No. 52-01ma4995914
Qualified in Suffolk County
Commission Expires May 5, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 31>
ABN AMRO BANK N.V., HOUSTON AGENCY
By:\s\ Michael A. Tribolet____
Title: Vice President
By:___________________________
Title:
STATE OF Texas______)
)
COUNTY OF Harris____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Michael A. Tribolet____________,
Vice President___ of ABN AMRO BANK N.V., HOUSTON AGENCY, a
______________ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Deborah B. Hall______________
Notary Public, State of Texas____
(NOTARIAL SEAL)
My Commission Expires:1/26/96____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 32>
ABN AMRO BANK N.V., HOUSTON AGENCY
By:\s\ C. Lipshutz____________
Title:V P
By:___________________________
Title:
STATE OF Texas______)
)
COUNTY OF Harris____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Cheryl Lipshutz________________,
V.P._____________ of ABN AMRO BANK N.V., HOUSTON AGENCY, a
______________ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Deborah B. Hall______________
Notary Public, State of Texas____
(NOTARIAL SEAL)
My Commission Expires:_1/26/96___
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 33>
BANK OF AMERICA NT & SA
By:\s\ Mark F. Milner________
Title: Vice President
STATE OF California_)
)
COUNTY OF Los Angeles)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mark F. Milner_________________,
a Vice President_ of BANK OF AMERICA NT & SA, a ______________
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ David H. Miller______________
Notary Public, State of California
(NOTARIAL SEAL)
My Commission Expires:Sept. 2, 1995
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 34>
THE BANK OF NEW YORK
By:\s\ Michael F. Donohue, Jr.
Title: Senior Vice President
STATE OF New York___)
)
COUNTY OF Queens____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Michael F. Donohue, Jr.________,
Sr. VP___________ of THE BANK OF NEW YORK, a New York______
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Diane M. Castoria____________
Notary Public, State of N.Y._____
(NOTARIAL SEAL)
My Commission Expires:6/10/96____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 35>
THE BANK OF NOVA SCOTIA
By:\s\ A.S. Norsworthy_______
Title: Assistant Agent
STATE OF Georgia____)
)
COUNTY OF Fulton____)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared A. S. Norsworthy_______________,
Assistant Agent__ of THE BANK OF NOVA SCOTIA, a Canadian______
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ S. Miolla____________________
Notary Public, State of Georgia__
(NOTARIAL SEAL)
My Commission Expires: 02-15-94
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 36>
CREDIT SUISSE
By:\s\ Cirincione_________
Title: Guy R. Cirincione
Member of Senior Management
By:\s\ PP Leon_______________
Title: A. Leon, Associate
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mr. Guy Cirincione and_________,
Mr. Andrew Leon__ of CREDIT SUISSE, a banking_______ corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Donna A. Singer______________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:June 15, 95
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 37>
CREDIT SUISSE
By:\s\ Cirincione____________
Title: Guy R. Cirincione
Member of Senior Management
By:\s\ PP Leon_______________
Title: A. Leon, Associate
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mr. Guy Cirincione and_________,
Mr. Andrew Leon__ of CREDIT SUISSE, a banking_______ corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Donna A. Singer______________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:06/15/95___
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 38>
FLEET BANK OF MASSACHUSETTS, N.A.
By:\s\ Christopher Sotir____
Title: Assistant Vice President
STATE OF Massachussetts)
)
COUNTY OF Saffolk___)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Christopher Sotir______________,
Asst. Vice Pres__ of FLEET BANK OF MASSACHUSETTS, N.A., a
national banking association, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September ______, 1993.
\s\ Notary_______________________
Notary Public, State of Masschusetts
(NOTARIAL SEAL)
My Commission Expires:Nov 20, 1998
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 39>
NATIONSBANK OF TEXAS, N.A.
By:\s\ Vincent Liberio______
Title: SVP
STATE OF Texas______)
)
COUNTY OF Tarrant___)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Vincent Liberio________________,
SVP______________ of NATIONSBANK OF TEXAS, N.A., a national
banking association, known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Janet Luedtke________________
Notary Public, State of Texas____
(NOTARIAL SEAL)
My Commission Expires:05-05-96
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 40>
PROSPECT STREET SENIOR PORTFOLIO,
L.P.
By: PROSPECT STREET SENIOR LOAN
CORP., as general partner
By:\s\ Dana E. Erikson______
Title: Assistant Vice President
STATE OF Massachusetts)
)
COUNTY OF Suffolk___)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Mr. Dana E. Erikson____________,
Assistant VP_____ of PROSPECT STREET SENIOR LOAN CORP., a
MA______ corporation, known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Laura A. Hawes_______________
Notary Public, State of Massachusetts
(NOTARIAL SEAL)
My Commission Expires:_07/03/98__
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 41>
UNION BANK
By:\s\ P. Saggau____________
Title: Peter R. Saggau
Vice President
STATE OF California_)
)
COUNTY OF Los Angeles)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Peter R. Saggau________________,
Vice President___ of UNION BANK, a California____ corporation,
known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein
expressed, and in the capacity or capacities therein stated, and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Bednahrin Badal______________
Notary Public, State of California
(NOTARIAL SEAL)
My Commission Expires:May 9, 1994
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 42>
WESTPAC BANKING CORPORATION
By:\s\ Joseph Rubino________
Title: VP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Joseph Rubino__________________,
Vice President___ of WESTPAC BANKING CORPORATION, a New South
Wales, Austrlia__ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Patricia A. Steigerwald______
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:06/30/94___
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 43>
Z-LANDERBANK BANK AUSTRIA A.G.
By:\s\ Kevin B. McGinn______
Title:Senior Vice President
By:\s\ Peter Scharf_________
Title:AVP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Kevin B. McGinn _______________,
Senior Vice Pres_ of Z-LANDERBANK BANK AUSTRIA A.G.,
an_Austrian_____ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September_______, 1993.
\s\ Michael C. Kaiser____________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:9-30-93____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 44>
Z-LANDERBANK BANK AUSTRIA A.G.
By:\s\ Kevin B. McGinn______
Title:SVP
By:\s\ Peter Scharf_________
Title:AVP
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Peter Scharf___________________,
Ass. Vice Pres___ of Z-LANDERBANK BANK AUSTRIA A.G.,
an_Austrian_____ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September ______, 1993.
\s\ Michael C. Kaiser____________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:9-30-93____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 45>
UNIT 2 VOTING PARTICIPANTS:
CHRISTIANA BANK
By:\s\ Jahn O. Roising
Title:First Vice President
By:\s\ P.M. Dodge
Title:Peter M. Dodge Vice Pres.
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Jahn O. Roising & Peter M. Dodge,
FVP & VP________ of CHRISTIANA BANK, a New York______
corporation, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me
that he executed the same for the purposes and consideration
therein expressed, and in the capacity or capacities therein
stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September_______, 1993.
\s\ Carole Chapman_____________
Notary Public, State of New York
(NOTARIAL SEAL)
My Commission Expires:4/30/94____
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 46>
THE NIPPON CREDIT BANK, LTD.
By:\s\ Peter Capitelli________
Title: Vice President&Manager
STATE OF New York___)
)
COUNTY OF New York__)
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Peter Capitelli________________,
Vice Pres & Mgr__ of THE NIPPON CREDIT BANK, LTD., a
Japanese______ corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of
September_______, 1993.
\s\ Yasuko Noguchi_______________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:10-11-94___
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 47>
FIRST DEBENTURE TRUSTEE:
IBJ SCHRODER BANK & TRUST COMPANY,
as First Debenture Trustee
By:\s\ Thomas J. Bogert__________
Title: Assistant Vice President
STATE OF New York___)
)
COUNTY OF Keregs )
BEFORE ME, the undersigned authority, a Notary Public,
on this day personally appeared Thomas J. Bogert_______________,
Assistant Vice President of IBJ SCHRODER BANK & TRUST COMPANY, a
Texas corporation, known to me to be the person and officer whose
name is subscribed to the foregoing instrument, and acknowledged
to me that he executed the same for the purposes and
consideration therein expressed, and in the capacity or
capacities therein stated, and as the act and deed of said
corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 27th day of
September, 1993.
\s\ Jane Shaheen_________________
Notary Public, State of New York_
(NOTARIAL SEAL)
My Commission Expires:03-30-95
AMENDMENT NO. 2 TO THE INTERCREDITOR
AND NONDISTURBANCE AGREEMENT
<PAGE 48>
AMENDMENT NO. 1 TO THE UNIT 2
FIRST AMENDED AND RESTATED FACILITY PURCHASE AGREEMENT
Amendment No. 1 (this 'Amendment') dated as of September 21,
1993, to the Unit 2 First Amended and Restated Facility Purchase
Agreement is entered into by and between Texas-New Mexico Power
Company, a Texas corporation (the "Purchaser') and Texas Generating
Company II, a Texas corporation (the "Seller"). Unless otherwise
defined herein, capitalized terms used herein in the Credit
Agreement referred to below.
RECITALS
1. Pursuant to that certain Project Loan and Credit
Agreement dated as of October 1, 1988 (as amended, the "Prior
Credit Agreement"), among Texas PFC, Inc., a Delaware corporation
("TPFC"), the Purchaser, Algemene Bank Nederland N.V., as issuing
bank, the banks named therein (the "Banks") and The Chase Manhattan
Bank (National Association), as agent for the Banks (in such
capacity, together with its successors in such capacity, the
"Agent"), the Banks agreed to make certain extensions of credit to
TPFC.
2. By that certain Conveyance and Bill of Sale, dated to
be effective as of May 31, 1991 (such date being the "Alternative
Assumption Date"), and filed of record in Volume 566 at Page 283 of
the Public Records of Robertson County, Texas, TPFC conveyed to the
Seller complete ownership of the Project.
3. As of the Alternative Assumption Date, the Seller
assumed certain of the rights and obligations of TPFC under the
Prior Credit Agreement and all of the rights and obligations of
TPFC as the "Assignor" and the "Mortgagor' under the Security
Documents.
4. The Seller, the Banks and the Agent have amended and
restated the Prior Credit Agreement by executing and delivering the
Unit 2 First Amended and Restated Project Loan and Credit Agreement
dated as of January 8, 1992 (the "Restated Credit Amendment"). The
Seller, the Banks and the Agent have further amended the Restated
Credit Agreement by executing and delivering the Amendment No. 1 to
the Restated Credit Agreement, dated as of the date hereof (the
Restated Credit Agreement as so amended and as further amended,
modified and supplemented and in effect from time to time is
referred to herein as the "Credit Agreement").
5. In connection with the Restated Credit Agreement, the
Purchaser and Seller entered into the First Amended and Restated
Facility Purchase Agreement dated as of January 8, 1992 (the
"Facility Purchase Agreement").
6. It is a condition precedent to the effectiveness of
Amendment No. 1 that the Purchaser and Seller wish to enter into
<PAGE>
this Amendment to correct an inaccurate numerical reference in the
Facility Purchase Agreement.
THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Purchaser and the Seller hereby amend
the Facility Purchase Agreement as follows:
1. Amendments
(a) Section 1.02(b) of the Facility Purchase Agreement is
amended by deleting the numerical reference "1/345th" appearing in
the second line thereof and substituting in its place "1/288.5th".
(b) Section 1.03(b) of the Prior Facility Purchase Agreement
is amended by deleting the numerical reference "1/345th" appearing
in the fourth line thereof and substituting in its place
"1/288.5th".
2. Headings. The headings of the various sections of this
Amendment are for convenience of reference only, do not constitute
a part hereof and shall not be interpreted or construed to affect
the meanings or construction of any provisions hereof.
3. Counterparts. This Amendment may be executed in any
number of counterparts, all of which taken together constitute one
and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart.
4. Governing Law. This Amendment shall be governed by and
construed and enforced in accordance with the laws of the State of
Texas.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed as of the date first written above.
PURCHASER
TEXAS-NEW MEXICO POWER COMPANY
By/s/ D. R. Barnard
D. R. Barnard, Sector Vice
President and Chief Financial
Officer
SELLER
TEXAS GENERATING COMPANY II
By/s/ Monte W. Smith
Monte W. Smith
Treasurer
<PAGE>
AGENT
For purposes of Sections
1.2(C) and 1.04 (a) (ii)
hereof:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
BY:/s/ Bettylou J. Robert
Title: Vice president
For purposes of Section
1.04(a) (ii) hereof:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Collateral Agent
BY:/s/ Bettylou J. Robert
Title: Vice President
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY EXECUTIVE AGREEMENT FOR
SEVERANCE COMPENSATION UPON CHANGE IN CONTROL
This Texas-New Mexico Power Company Executive Agreement
for Severance Compensation Upon Change in Control ("Agreement")
dated November 11, 1993, is by and between Texas-New Mexico Power
Company ("Company") and D. R. BARNARD ("Executive").
Witnesseth That:
WHEREAS, the Company considers the establishment and
maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its
shareholders; and
WHEREAS, the Company has determined that in order to best
establish and maintain such sound and vital management it is
appropriate to establish certain means for reinforcing and
encouraging the continued attention and dedication of the Executive
as a part of the management of the Company such that they may
continue their assigned duties in a proper and efficient manner
without distraction because of the possibility of a Change in
Control of the Company; and
WHEREAS, the Executive is willing to continue to serve the
Company but is concerned about the possible effects any Change in
Control might have on his duties and responsibility and status as
an Executive:
page 1
<PAGE>
NOW, THEREFORE, in consideration of the promises and the
mutual agreements herein contained, the Company and Executive
hereby enter into this Agreement setting forth the severance
compensation and extended benefits which the Company agrees it will
pay to the Executive if the Executive's employment with the Company
terminates under the circumstances described herein:
1) Company's Right to Terminate
Prior to a Change in Control of the Company as herein
defined, this Agreement shall terminate if Executive shall
resign or retire voluntarily, become disabled, or die.
Except as provided in paragraph 3)a)(vi) hereof, this
Agreement shall also terminate if Executive's employment by
the Company shall be terminated, with or without Cause, as
herein defined, prior to any Change in Control of the
Company by action of either the Board of Directors or Chief
Executive Officer of the Company, as applicable.
2) Term
a) The term of this Agreement (the "Term") shall commence as
of the date of this Agreement and shall expire as of the
earliest of (i) the third annual anniversary of the date
hereof; provided that the Board of Directors, by
resolution duly adopted, may extend the Term of this
Agreement from time to time, or (ii) termination of the
Executive's employment because of death, Disability,
<page 2>
voluntary termination or retirement by the Executive for other
than Good Reason, or Cause (as those terms may be herein defined);
b) Any obligation which has vested under the terms of the
Agreement and remains unpaid as of the date the Agreement
expires or is terminated shall survive such expiration or
termination and be enforceable under the terms of the
Agreement.
3) Change in Control of the Company
a) For the purposes of this Agreement, a Change in Control
of the Company is defined as the occurrence of any one of
the following events: (i) there shall be consummated any
consolidation or merger of the Company into or with
another corporation or other legal person, and as a
result of such consolidation or merger less than a
majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such transactions are held in the
aggregate by holders of Voting Stock, as herein defined,
of the Company immediately prior to such transactions;
or (ii) any sale, lease, exchange or other transfer,
whether in one transaction or any series of related
transactions, of all or significant portions of the
assets of the Company to any other corporation or other
<page 3>
legal person, less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such sale, lease, exchange, or transfer is held
in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale, lease, exchange, or transfer; or
(iii) the shareholders of the Company approve any plan for the
liquidation or dissolution of the Company; or (iv) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), becomes,
either directly or indirectly, the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of securities
representing 15% or more of the combined voting power of the then-
outstanding securities entitled to vote generally in the election
of directors of the Company ("Voting Stock"); provided that the
Trustee of the Thrift Plan shall not be deemed such a person for
the purposes of this Section 3(iv); or (v) if at any time during a
fiscal year a majority of the Board of Directors of the Company
shall be replaced by persons who were not recommended for those
positions by at least two-thirds of the directors of the Company
who were directors of the Company at the beginning of the fiscal
year; or (vi) the
<page 4>
Executive's employment is terminated for other than Cause or
the Executive is removed from office or position with the Company
in either case following commencement by one or more
representatives of the Company of discussions (authorized by the
Board of Directors or Chief Executive Officer of the Company) with
a third party that ultimately results in the occurrence of an event
described in clauses (i), (ii), (iii), (iv), or (v) herein,
regardless of whether such third party is a party to such
occurrence, in which event, for the purposes of this Agreement, the
date of the authorization of such discussions is deemed to be the
date of the Change in Control of the Company;
b) For all purposes of this paragraph 3), the term Company,
as previously defined herein, shall include TNP
Enterprises, Inc., the parent of Texas-New Mexico Power
Company.
4) Termination Following Change in Control of the Company
a) Termination
If a Change in Control of the Company shall have occurred
while the Executive is still an employee of the Company,
the Executive shall be entitled to the compensation
provided in paragraph 5 upon the subsequent termination
of the Executive's employment with the Company by the
<page 5> Executive or by the Company unless such termination is the
result of (i) the Executive's death, (ii) the Executive's
Disability, (iii) the Executive's decision voluntarily to terminate
his employment or retire, but only if Good Reason does not exist,
or (iv) the Executive's termination for Cause. Notwithstanding
anything in this Agreement to the contrary, termination of the
Executive shall not have been for Cause if termination occurred
because of (i) bad judgement or negligence on the part of the
Executive unless it is demonstrable from historical events that the
Executive's bad judgement or negligence shall have been of such an
extensive and ongoing nature that it rendered the Executive unable
adequately to perform his duties; or (ii) an act or omission
believed by the Executive in good faith to have been in, or at
least not opposed to, the Company's best interests.
For the purposes of this paragraph a), no act, or
failure to act, shall be considered "willful" unless
done, or omitted to be done, by the Executive without
good faith. Good faith shall be based upon a reasonable
belief that the action or omission was in, or at least
not opposed to, the best interests of the Company.
b) Disability
<page 6>
For the purposes of this Agreement, Disability shall mean
that the Executive is incapacitated due to physical or
mental illness or injury and shall have been unable to
perform his duties for the Company on a full time basis
for six months and, within 30 days after written Notice
of Termination is thereafter given by the Company, the
Executive shall not have returned to the full time
performance of his duties.
c) Cause
For the purposes of this Agreement, Cause shall mean (i)
the willful and continued failure by the Executive
substantially to perform his duties with the Company
(excluding any failure resulting from Disability), after
a written demand for substantial performance is delivered
to the Executive by the Chief Executive Officer of the
Company setting forth the manner in which the Executive
has not been substantially performing his duties and
providing the Executive an opportunity to appear before
the Board of Directors of the Company with counsel in
order to respond to such notice; (ii) the performance by
the Executive of any act or acts constituting a felony
involving moral turpitude and which results or is
<page 7>
intended to result in damage or harm to the Company, whether
monetary or otherwise, or which results in or is intended to result
in improper gain or personal enrichment; and (iii) violations of
the Company's Personnel Policy Manual, as constituted at any time
prior to a Change in Control, concerning personal conduct;
provided, that the Company must follow its disciplinary procedures
as set forth therein.
d) Good Reason
The Executive may terminate the Executive's employment
with the Company and retain his rights to benefits
hereunder if Good Reason exists at any time following a
Change in Control of the Company. For the purposes of
this Agreement, Good Reason shall mean any of the
following, unless the Executive has expressly consented
in writing otherwise:
(i) within six months after a Change in Control of
the Company occurs, the Executive, at his
discretion, determines that he will not be able
to work in a harmonious and effective manner in
the performance of his duties on behalf of the
Company; provided that, notwithstanding anything
in this Agreement to the contrary, the six month
period set forth above does not commence until
the satisfaction of all conditions precedent to
and the closing of the transactions contemplated
<page 8>
in paragraph 3)a) (i), (ii), (iii), (iv), or (v)
of this Agreement;
(ii) the Executive is assigned by the Company to a
position or duties which are inconsistent with or
materially different from the Executive's duties
or position with the Company immediately prior to
the Change in Control of the Company;
(iii) the Company removes the Executive from or fails
to re-elect the Executive to any positions or
offices held by the Executive immediately prior
to the Change in Control of the Company, unless
such action is for Disability, Cause, the
Executive's death or the Executive's voluntary
termination or retirement if Good Reason does not
exist prior to such termination or retirement;
(iv) the Executive's base salary or total compensation
in effect immediately prior to the Change in
Control of the Company is reduced by the Company;
(v) the Company fails to increase the Executive's
base salary and total compensation after the
Change in Control of the Company by the average
percentage increase in base salary and total
compensation of other persons holding similar
positions and titles within the Company;
<page 9>
(vi) any failure by the Company to continue in effect
any benefit plan or arrangement, or related
trust, in which the Executive is participating or
in which he may participate at the time of a
Change in Control of the Company. Such plans,
arrangements, or related trusts (collectively
"Plans"), include, but are not limited to, Texas-
New Mexico Power Company's Thrift Plan for
Employees and Trust Agreement ("Thrift Plan"),
Texas-New Mexico Power Company's Pension Plan
("Pension Plan"), Excess Benefit Plan, group life
insurance plan, medical, dental, accident and
disability plans and any other plans and related
trusts which might exist at the time of a Change
in Control of the Company; the Company's
obligation hereunder to continue in effect any
benefit plan or arrangement includes the
obligation to irrevocably fund such Plans to the
fullest extent allowed by any applicable rules
and regulations, within 90 days of the occurrence
of a Change in Control of the Company, and to
maintain such funding thereafter;
(vii) any action taken by the Company which would
adversely affect the Executive's participation in
<page 10>
or reduce the Executive's benefits received from
any Plan;
(viii) any action requiring the Executive to relocate
outside the county in which he was officed prior
to the Change in Control of the Company, except
for travel required in the performance of his
duties for the Company to an extent substantially
consistent with the Executive's travel
obligations immediately prior to a Change in
Control of the Company;
(ix) any failure by the Company to provide an
automobile of similar style, class and size which
was provided to the Executive by the Company
immediately prior to a Change in Control of the
Company;
(x) any failure by the Company to provide the
Executive with the number of paid vacation days
to which the Executive was entitled immediately
prior to a Change in Control of the Company;
(xi) any material breach by the Company of any
provision of this Agreement following a Change in
Control of the Company;
<page 11>
(xii) any failure by the Company to obtain the
assumption of this Agreement by any successor or
assign of the Company;
(xiii) any purported termination by the Company not in
compliance with the Notice of Termination
provision in paragraph 4)e) below following a
Change in Control of the Company; and
(xiv) after a Change in Control of the Company, the
Company gives notice to the Executive that the
term of this Agreement shall not be extended as
provided in paragraph 2)a)(i).
e) Notice of Termination
Any termination of the Executive by the Company pursuant
to paragraphs 4)b) or 4)c) for Disability or Cause shall
be communicated by a Notice of Termination in substantial
compliance with the provisions of paragraph 8). For the
purpose of this Agreement, a Notice of Termination shall
mean a written notice which shall indicate the specific
provisions in this Agreement relied upon for termination
of Executive's employment and which sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for such termination. For the purposes
of this Agreement, no purported termination by the
<page 12>
Company shall be effective without such Notice of
Termination.
f) Effective Date of Termination
Any termination of the Executive for Disability or Cause
pursuant to paragraphs 4)b) or 4)c) shall be effective 30
calendar days after the Notice of Termination is
delivered to the Executive; provided that, in the event
the termination is for Disability as set out in paragraph
4)b), the Executive has not returned to full time
performance of his duties within the 30-day period. All
other terminations subject to the terms of this
Agreement, whether by the Company or the Executive, shall
be effective immediately upon the giving of the Notice of
Termination.
5) Severance Compensation upon Termination of Employment
If, during the period commencing upon a Change in Control of
the Company and ending two years following the satisfaction
of all conditions precedent to and consummation of an event
described in clauses (i), (ii), (iii), (iv), or (v) of
paragraph 3), the Company shall terminate the Executive's
employment for any reason other than as a result of the
Executive's death or the reasons set out in paragraphs 4)b)
or 4)c) in full compliance of the requirements for notice
set out in paragraph 4)e) or if the Executive shall
<page 13>
terminate his employment with the Company when Good Reason
exists, then the Company shall provide for and pay to the
Executive the following compensation:
a) severance pay in a lump sum, in cash, no later than the
fifth calendar day following the date of termination, an
amount equal to three times the annual salary as
calculated by reference to the Executive's rate of pay
set forth in the Company's payroll records and in effect
for the Executive immediately prior to a Change in
Control of the Company;
b) medical, dental, disability and life insurance and other
employee benefits upon the same terms and conditions and
at the same cost to the Executive that existed
immediately prior to the Change in Control of the Company
for the lesser of three years or until substantially
similar employee benefits are available through other
employment;
c) if the Executive is fifty years of age or older and has
at least twenty years of service with the Company, the
Company, in addition to the foregoing benefits, shall pay
to the Executive, as an early retirement incentive, an
amount, on a monthly basis for the remainder of his life,
that is equal to what the Executive's retirement pay
would be, calculated using the formula set forth in the
<page 14>
Company's Pension Plan as supplemented by the Excess
Benefit Plan based upon the base salary earned by the
Executive for the necessary number of years immediately
prior to the Change in Control of the Company and the
number of service credits that the Executive would
accumulate if he continued his employment until age 62;
provided that to the extent that the Executive would be
entitled to retire on the date of termination or upon his
achieving an age upon which the Executive could retire
pursuant to the Company's Pension Plan as supplemented by
the Excess Benefit Plan, and receive payments pursuant to
said Pension Plan and Excess Benefit Plan, the Company's
obligation to make monthly payments shall be equal to the
difference between the amount actually received by the
Executive under the Pension Plan as supplemented by the
Excess Benefit Plan and the amount required to be paid by
the Company as set forth above; provided further that if
the Executive becomes entitled to any of the benefits set
forth in paragraph 5)b) as a retiree under the Company's
Pension Plan on or after the date of termination, then
the benefits provided under said Pension Plan and Excess
Benefit Plan shall be substituted for and take the place
of the benefits that the Company would otherwise be
required to provide; and further provided that to the
<page 15>
extent any payment or obligation to pay under this
paragraph 5)c) is determined by the Internal Revenue
Service to be subject to taxation upon the net present
value of the stream of payments for which the Company is
obligated to pay, then the Company shall pay to the
Executive within 30 days of such determination, a lump
sum equal to the amount determined by the Internal
Revenue Service to be subject to taxation;
d) without limiting the generality or effect of any other
provision hereof, employee benefit plan, arrangement, or
related trust referred to in paragraph 4)d)(vi), the
Company shall fully fund each Plan in which the Executive
is a participant or is otherwise entitled to payments or
benefits within 5 calendar days of the termination of the
Executive's employment;
e) any excise tax payable pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
as a result of the payment of the amounts described in
subparagraphs a), b), and c); and
f) any additional federal, state, or local income tax
liability (calculated at the highest effective rate
applicable to individuals) and excise tax liability
(under Section 4999 of the Code) attributable to payments
made pursuant to this paragraph 5) hereof.
<page 16>
6) No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights
a) The Company hereby acknowledges that it will be
difficult, and may be impossible, for the Executive to
find reasonably comparable employment following the date
of termination. In addition, the Company acknowledges
that its severance pay plans applicable in general to its
salaried employees do not provide for mitigation, offset,
or reduction of any severance payment received
thereunder. Accordingly, the parties hereto expressly
agree that the payment of the severance compensation by
the Company to the Executive in accordance with the terms
of this Agreement will be liquidated damages, and that
the Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by
seeking other employment or otherwise, nor shall any
profits, income, earnings, or other benefits from any
source whatsoever create any mitigation, offset,
reduction, or any other obligation on the part of the
Executive hereunder or otherwise;
b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Executive's
existing rights, or rights which would accrue solely as
<page 17>
a result of the passage of time, under any benefit plan, incentive
plan or securities plan, employment agreement or other contract,
plan or arrangement.
7) Successor to the Company
a) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it
if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to
the effectiveness of any such succession or assignment
shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's
employment for Good Reason. As used in this paragraph 7,
Company shall have the same meaning as hereinbefore
defined and shall include any successor or assign to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 7
or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. If at
<page 18>
any time during the term of this Agreement, the Executive
is employed by any corporation a majority of the voting
securities of which is then owned by the Company, the
Company as used in paragraphs 3, 4, 5, 12, and 13 hereof
shall in addition include such employer. In such event,
the Company shall pay or shall cause such employer to pay
any amount owed to the Executive pursuant to paragraph 5
hereof;
b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such
designee, to the Executive's estate;
c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer, or delegate this Agreement or any
rights or obligations hereunder except as expressly
provided in paragraph 7)a) above. Without limiting the
generality of the foregoing, the Executive's right to
<page 19>
receive payments hereunder shall not be assignable,
transferable, or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a
transfer by his or her will or by the laws of descent and
distribution and, in the event of any attempted
assignment or transfer contrary to this paragraph 7)c),
the Company shall have no liability to pay any amount so
attempted to be assigned, transferred, or delegated;
d) The Company and the Executive recognize that each party
will have no adequate remedy at law for breach by the
other of any of the agreements contained herein and, in
the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall
be entitled to a decree of specific performance,
mandamus, or other appropriate remedy to enforce
performance of this Agreement.
8) Notice
For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, as follows:
If to the Company:
Texas-New Mexico Power Company
<page 20>
4100 International Plaza, Tower II
Fort Worth, Texas 76109
If to the Executive:
4361 Westdale Dr.
Fortworth, Texas 76109
or such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
9) Miscellaneous
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the
Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This
Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
<page 21>
10) Validity
The invalidity or unenforceability of any provision or any
part of a provision of this Agreement shall not affect the
validity or enforceability of the remaining provisions of
this Agreement, which shall remain in full force and effect.
11) Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
12) Legal Fees and Expenses
The Company is aware that the Board of Directors or a
shareholder of the Company or the Company's parent may then
cause or attempt to cause the Company to refuse to comply
with its obligations under this Agreement, or may cause or
attempt to cause the Company or the Company's parent to
institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to
take other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the
purpose of this Agreement could be frustrated. It is the
intent of the Company that the Executive not be required to
incur the expenses associated with the enforcement of his
rights under this Agreement by litigation or other legal
action because the cost and expense thereof would
<page 22>
substantially detract from the benefits intended to be extended to
the Executive hereunder, nor be bound to negotiate any settlement
of his rights hereunder under threat of incurring such expenses.
Accordingly, if it should appear to the Executive that the Company
has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes any action to declare this Agreement void or unenforceable,
or institutes any litigation or other legal action designed to
deny, diminish or to recover from the Executive the benefits
intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain
counsel of his choice at the expense of the Company as provided in
this paragraph 12, to represent the Executive in connection with
the initiation or defense of any litigation or other legal action,
whether by or against the Company or any Director, officer,
shareholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-
client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive entering into an
attorney-client relationship with such counsel, and in that
connection the Company and Executive agree that a confidential
relationship shall exist between
<page 23>
the Executive and such counsel. The Company shall pay or cause to
be paid and shall be solely responsible for any and all attorneys'
and related fees and expenses incurred by the Executive as a result
of the Company's failure to perform this Agreement or any provision
hereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision
hereof. Such fees and expenses shall be paid or reimbursed to the
Executive by the Company on a regular, periodic basis, within
thirty days following receipt by the Company of statements of such
counsel in accordance with such counsel's customary practice. In
no event shall the Executive be required to reimburse the Company
for attorneys' fees or expenses previously paid on behalf of the
Executive or reimbursed to the Executive, or for any attorneys'
fees or expenses incurred by the Company in connection with any
contest of validity or enforceability of this Agreement or any
provisions hereof; provided, however, that any litigation by the
Executive, whether as plaintiff or defendant, shall be in good
faith.
13) Confidentiality
The Executive shall retain in confidence any and all
confidential information known to the Executive concerning
<page 24>
the Company and its business so long as such information is not
otherwise publicly disclosed.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TEXAS-NEW MEXICO POWER COMPANY
By \s\ Dwight Spurlock
Name: D. R. Spurlock
Title: Interim President &
Chief Executive
Officer
\s\ D. R. Barnard
Name: D. R. BARNARD
Title: Sector Vice President
& Chief Officer
ATTEST:
B. Jan Adkins
Asst.Secretary
<page 25>
EXECUTIVE POSITIONS*
EXECUTION DATE
TERM
Sector Vice President & Chief
Financial Officer
November 11, 1993
3 years
Sector Vice President - Revenue
Production
November 11, 1993
3 years
Vice President - Chief Engineer
November 11,
1993
3 years
Vice President - Corporate
Affairs
November 11, 1993
3 years
Vice President - Corporate
Services/Generation
November 11, 1993
3 years
Corporate Secretary & General
Counsel
November 11, 1993
3 years
Treasurer
November 11, 1993
3 years
Assistant Vice President/Manager
- - Contracts & Regulatory Projects
November 11, 1993
3 years
Assistant Corporate Secretary
November 11, 1993
3 years
Division Manager - Central
November 11, 1993
3 years
Division Manager - New Mexico
November 11, 1993
3 years
Division Manager - Northern
November 11, 1993
3 years
Division Manager - Southeast
November 11, 1993
3 years
Division Manager - Western
November 11, 1993
3 years
Plant Manager - TNP One
November 11, 1993
3 years
* Names of the individuals who are parties to the listed
Agreements have been omitted. Each Agreement inures to the
benefit of the person holding the position indicated above at
any point in time.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY KEY EMPLOYEE AGREEMENT
FOR SEVERANCE COMPENSATION UPON CHANGE IN CONTROL
This Texas-New Mexico Power Company Key Employee Agreement
for Severance Compensation Upon Change in Control ("Agreement")
dated November 11, 1993, is by and between Texas-New Mexico Power
Company ("Company") and PATRICK BRIDGES ("Employee").
Witnesseth That:
WHEREAS, the Company considers the establishment and
maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its
shareholders; and
WHEREAS, the Company has determined that in order to best
establish and maintain such sound and vital management it is
appropriate to establish certain means for reinforcing and
encouraging the continued attention and dedication of the Employee
as a part of the management of the Company such that they may
continue their assigned duties in a proper and efficient manner
without distraction because of the possibility of a Change in
Control of the Company; and
WHEREAS, the Employee is willing to continue to serve the
Company but is concerned about the possible effects any Change in
Control might have on his duties and responsibility and status as
an Employee:
<PAGE 1>
NOW, THEREFORE, in consideration of the promises and the
mutual agreements herein contained, the Company and Employee hereby
enter into this Agreement setting forth the severance compensation
and extended benefits which the Company agrees it will pay to the
Employee if the Employee's employment with the Company terminates
under the circumstances described herein:
1) Company's Right to Terminate
Prior to a Change in Control of the Company as herein
defined, this Agreement shall terminate if Employee shall
resign voluntarily, retire, become disabled, or die. Except
as provided in paragraph 3)a)(vi) hereof, this Agreement
shall terminate if Employee's employment by the Company
shall be terminated, with or without cause, prior to any
Change in Control.
2) Term
a) The term of this Agreement (the "Term") shall commence as
of the date of this Agreement and shall expire as of the
earliest of (i) the second annual anniversary of the
date hereof; provided that the Board of Directors by
resolution duly adopted may extend the Term of this
Agreement from time to time, or (ii) termination of the
Employee's employment because of death, Disability,
voluntary termination or retirement by the Employee for
other than Good Reason, or Cause (as those terms may be
herein defined);
<PAGE 2>
b) Any obligation which has vested under the terms of the
Agreement and remains unpaid as of the date the Agreement
expires or is terminated shall survive such expiration or
termination and be enforceable under the terms of the
Agreement.
3) Change in Control of the Company
a) For the purposes of this Agreement, a Change in Control
of the Company is defined as the occurrence of any one of
the following events: (i) there shall be consummated any
consolidation or merger of the Company into or with
another corporation or other legal person, and as a
result of such consolidation or merger less than a
majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such transactions are held in the
aggregate by holders of Voting Stock, as herein defined,
of the Company immediately prior to such transactions; or
(ii) any sale, lease, exchange or other transfer, whether
in one transaction or any series of related transactions,
of all or significant portions of the assets of the
Company to any other corporation or other legal person,
less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such sale, lease, exchange, or transfer
is held in the aggregate by the holders of Voting Stock
<page 3>
of the Company immediately prior to such sale, lease,
exchange, or transfer; or (iii) the shareholders of the
Company approve any plan for the liquidation or
dissolution of the Company or; (iv) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")), becomes, either directly or indirectly,
the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities representing 15%
or more of the combined voting power of the then-
outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock");
provided that the Trustee of the Thrift Plan shall not be
deemed such a person for the purposes of this Section
3(iv); or (v) if at any time during a fiscal year a
majority of the Board of Directors shall be replaced by
persons who were not recommended for those positions by
at least two-thirds of the directors of the Company who
were directors of the Company at the beginning of the
fiscal year; or (vi) the Employee's employment is
terminated for other than Cause or the Employee is
removed from office or position with the Company in
either case following commencement by one or more
representatives of the Company of discussions (authorized
by the Board of Directors or Chief Executive Officer of
<page 4>
the Company) with a third party that ultimately results
in the occurrence of an event described in clauses (i),
(ii), (iii), (iv), or (v) herein, regardless of whether
such third party is a party to such occurrence, in which
event, for the purposes of this Agreement, the date of
the authorization of such discussions is deemed to be the
date of the Change in Control of the Company;
<page 5>
b) For all purposes of this paragraph 3), the term Company,
as previously defined herein, shall include TNP
Enterprises, Inc., the parent of Texas-New Mexico Power
Company.
4) Termination Following Change in Control of the Company
a) Termination
If a Change in Control of the Company shall have occurred
while the Employee is still an employee of the Company,
the Employee shall be entitled to the compensation
provided in paragraph 5 upon the subsequent termination
of the Employee's employment with the Company by the
Employee or by the Company unless such termination is the
result of (i) the Employee's death, (ii) the Employee's
Disability, (iii) the Employee's decision voluntarily to
terminate his employment or retire, but only if Good
Reason does not exist; or (iv) the Employee's termination
for Cause. Notwithstanding anything in this Agreement to
the contrary, termination of the Employee shall not have
<page 6>
been for Cause if termination occurred because of (i) bad
judgement or negligence on the part of the Employee
unless it is demonstrable from historical events that the
Employee's bad judgement or negligence shall have been of
such an extensive and ongoing nature that it rendered the
Employee unable adequately to perform his duties; or (ii)
an act or omission believed by the Employee in good faith
to have been in, or at least not opposed to, the
Company's best interests.
For the purposes of this paragraph a), no act, or
failure to act, shall be considered "willful" unless
done, or omitted to be done, by the Employee without good
faith. Good faith shall be based upon a reasonable
belief that the action or omission was, or at least not
opposed to, in the best interests of the Company.
b) Disability
For the purposes of this Agreement, Disability shall mean
that the Employee is incapacitated due to physical or
mental illness or injury and shall have been unable to
perform his duties for the Company on a full time basis
for six months and, within 30 days after written Notice
of Termination is thereafter given by the Company, the
Employee shall not have returned to the full time
performance of his duties.
<page 7>
c) Cause
For the purposes of this Agreement, Cause shall mean (i)
the willful and continued failure by the Employee
substantially to perform his duties with the Company
(excluding any failure resulting from Disability),
subject to any appeal or grievance procedure set forth in
the Company's Personnel Policy Manual; (ii) the
performance by the Employee of any act or acts
constituting a felony involving moral turpitude and which
results or is intended to result in damage or harm to the
Company, whether monetary or otherwise, or which results
in or is intended to result in improper gain or personal
enrichment; and (iii) violations of the Company's
Personnel Policy Manual, as constituted at any time prior
to a Change in Control, concerning personal conduct;
provided, that the Company must follow its disciplinary
procedures as set forth therein.
d) Good Reason
The Employee may terminate the Employee's employment with
the Company and retain his rights to benefits hereunder
if Good Reason exists at any time following a Change in
Control of the Company. For the purposes of this
Agreement, Good Reason shall mean any of the following,
unless the Employee has expressly consented in writing
otherwise:
<page 8>
(i) the Employee is assigned by the Company to a
position or duties which are inconsistent with
or materially different from the Employee's
duties, or position with the Company immediately
prior to the Change in Control of the Company;
(ii) the Employee's base salary or total compensation
in effect immediately prior to the Change in
Control of the Company is reduced by the
Company;
(iii) the Company fails to increase the Employee's
base salary and total compensation after the
Change in Control of the Company by the average
percentage increase in base salary and total
compensation of other persons holding similar
positions and titles within the Company;
(iv) any failure by the Company to continue in effect
any benefit plan or arrangement, or related
trust, in which the Employee is participating or
in which he may participate at or after the time
of a Change in Control of the Company. Such
plans, arrangements, or related trusts
(collectively "Plans"), include, but are not
limited to, Texas-New Mexico Power Company's
Thrift Plan for Employees and Trust Agreement
("Thrift Plan"), Texas-New Mexico Power
<page 9>
Company's Pension Plan ("Pension Plan"), group life insurance
plan, medical, dental, accident and disability plans and any other
plans and related trusts which might exist at the time of a Change
in Control of the Company; the Company's obligation hereunder to
continue in effect any benefit plan or arrangement includes the
obligation to irrevocably fund such Plans, to the fullest extent
allowed by any applicable rules and regulations, within 90 days of
the occurrence of a Change in Control of the Company, and to
maintain such funding thereafter;
(v) any action taken by the Company which would
adversely affect the Employee's participation in
or reduce the Employee's benefits received from
any plan set forth in paragraph 4)d) (iv) above;
(vi) any action requiring the Employee to relocate
outside the county in which he was officed prior
to the Change in Control of the Company, except
for travel required in the performance of his
duties for the Company to an extent
substantially consistent with the Employee's
travel obligations immediately prior to the
Change in Control of the Company;
<page 10>
(vii) any failure by the Company to provide an
automobile of similar style, class and size
which was provided to the Employee by the
Company immediately prior to the Change in
Control of the Company;
(viii) any failure by the Company to provide the
Employee with the number of paid vacation days
to which the Employee was entitled at the time
of a Change in Control of the Company;
(ix) any material breach by the Company of any
provision of this Agreement following a Change
in Control of the Company;
(x) any failure by the Company to obtain the
assumption of this Agreement by any successor or
assign of the Company;
(xi) any purported termination by the Company not in
compliance with the Notice of Termination
provision in paragraph 4)e) below following a
Change in Control of the Company; and
(xii) after a Change in Control of the Company, the
Company gives notice to the Employee that the
term of this Agreement shall not be extended as
provided in paragraph 2)a)(i).
e) Notice of Termination
Any termination of the Employee by the Company pursuant
<page 11>
to paragraphs 4)b) or 4)c) for Disability or Cause shall be
communicated by a Notice of Termination in substantial compliance
with the provisions of paragraph 8). For the purpose of this
Agreement, a Notice of Termination shall mean a written notice
which shall indicate the specific provisions in this Agreement
relied upon for termination of Employee's employment and which sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination. For the purposes of this
Agreement, no purported termination by the Company shall be
effective without such Notice of Termination.
<page 12>
f) Effective Date of Termination
Any termination of the Employee for Disability or Cause
pursuant to paragraphs 4)b) or 4)c) shall be effective 30
calendar days after the Notice of Termination is
delivered to the Employee; provided that, in the event
the termination is for Disability as set out in paragraph
4)b), the Employee has not returned to full time
performance of his duties within the 30-day period. All
other terminations subject to the terms of this
Agreement, whether by the Company or the Employee, shall
be effective immediately upon the giving of Notice of
such Termination.
5) Severance Compensation upon Termination of Employment
If, during the period commencing upon a Change in Control of
the Company and ending two years following the satisfaction
of all conditions precedent to and consummation of an event
described in clauses (i), (ii), (iii), (iv), or (v) of
paragraph 3), the Company shall terminate the Employee's
employment for any reason other than as a result of the
Employee's death or the reasons set out in paragraphs 4)b)
or 4)c) in full compliance of the requirements for notice
set out in paragraph 4)e) or if the Employee shall terminate
his employment with the Company when Good Reason exists,
then the Company shall provide for and pay to the Employee
the following compensation:
a) severance pay in a lump sum, in cash, no later than the
fifth calendar day following the date of termination, an
amount equal to the annual salary in effect for the
Employee immediately prior to the Change in Control of
the Company; and
b) medical, dental, disability and life insurance and other
employee benefits upon the same terms and conditions and
at the same cost to the Employee that existed immediately
prior to the Change in Control of the Company for the
lesser of one year or until substantially similar
employee benefits are available through other employment.
<page 13>
6) No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights
a) The Company hereby acknowledges that it will be
difficult, and may be impossible, for the Employee to
find reasonably comparable employment following the date
of termination. In addition, the Company acknowledges
that its severance pay plans applicable in general to its
salaried employees do not provide for mitigation, offset,
or reduction of any severance payment received
thereunder. Accordingly, the parties hereto expressly
agree that the payment of the severance compensation by
the Company to the Employee in accordance with the terms
of this Agreement will be liquidated damages, and that
the Employee shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall any profits,
income, earnings, or other benefits from any source
whatsoever create any mitigation, offset, reduction, or
any other obligation on the part of the Executive
hereunder or otherwise;
b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Employee's
existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan,
<page 14>
incentive plan or securities plan, employment agreement
or other contract, plan or arrangement.
7) Successor to the Company
a) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and
substance satisfactory to the Employee, expressly,
absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it
if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to
the effectiveness of any such succession or assignment
shall be a material breach of this Agreement and shall
entitle the Employee to terminate the Employee's
employment for Good Reason. As used in this paragraph 7,
Company shall have the same meaning as hereinbefore
defined and shall include any successor or assign to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 7
or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. If at
any time during the term of this Agreement, the Employee
is employed by any corporation a majority of the voting
<page 14>
securities of which is then owned by the Company, the
Company as used in paragraphs 3, 4, 5, 12, and 13 hereof
shall in addition include such employer. In such event,
the Company agrees that it shall pay or shall cause such
employer to pay any amount owed to the Employee pursuant
to paragraph 5 hereof;
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Employee should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee,
legatee, or other designee or, if there be no such
designee, to the Employee's estate;
c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer, or delegate this Agreement or any
rights or obligations hereunder except as expressly
provided in paragraph 7)a) above. Without limiting the
generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable,
transferable, or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a
<page 15>
transfer by his or her will or by the laws of descent and
distribution and, in the event of any attempted
assignment or transfer contrary to this paragraph 7)c),
the Company shall have no liability to pay any amount so
attempted to be assigned, transferred, or delegated;
d) The Company and the Employee recognize that each party
will have no adequate remedy at law for breach by the
other of any of the agreements contained herein and, in
the event of any such breach, the Company and the
Employee hereby agree and consent that the other shall be
entitled to a decree of specific performance, mandamus,
or other appropriate remedy to enforce performance of
this Agreement.
8) Notice
For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, as follows:
If to the Company:
Texas-New Mexico Power Company
4100 International Plaza, Tower II
Fort Worth, Texas 76109
<page 16>
If to the Employee:
2509 Willing Ave.
Fort Worth, Texas 76110
or such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
9) Miscellaneous
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company.
No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This
Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
10) Validity
The invalidity or unenforceability of any provision or any
part of a provision of this Agreement shall not affect the
<page 17>
validity or enforceability of the remaining provisions of
this Agreement, which shall remain in full force and effect.
11) Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
12) Legal Fees and Expenses
The Company is aware that the Board of Directors or a
shareholder of the Company or the Company's parent may then
cause or attempt to cause the Company to refuse to comply
with its obligations under this Agreement, or may cause or
attempt to cause the Company or the Company's parent to
institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to
take other action to deny the Employee the benefits intended
under this Agreement. In these circumstances, the purpose
of this Agreement could be frustrated. It is the intent of
the Company that the Employee not be required to incur the
expenses associated with the enforcement of his rights under
this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Employee
hereunder, nor be bound to negotiate any settlement of his
rights hereunder under threat of incurring such expenses.
Accordingly, if it should appear to the Employee that the
<page 18>
Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any
other person takes any action to declare this Agreement void
or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from
the Employee the benefits intended to be provided to the
Employee hereunder, the Company irrevocably authorizes the
Employee from time to time to retain counsel of his choice
at the expense of the Company as provided in this paragraph
12, to represent the Employee in connection with the
initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director,
officer, shareholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company
and such counsel, the Company irrevocably consents to the
Employee entering into an attorney-client relationship with
such counsel, and in that connection the Company and
Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall
pay or cause to be paid and shall be solely responsible for
any and all attorneys' and related fees and expenses
incurred by the Employee as a result of the Company's
failure to perform this Agreement or any provision hereof or
as a result of the Company or any person contesting the
<page 19>
validity or enforceability of this Agreement or any
provision hereof. Such fees and expenses shall be paid or
reimbursed to the Employee by the Company on a regular,
periodic basis, within thirty days following receipt by the
Company of statements of such counsel in accordance with
such counsel's customary practice. In no event shall the
Employee be required to reimburse the Company for attorneys'
fees or expenses previously paid on behalf of the Employee
or reimbursed to the Employee, or for any attorneys' fees or
expenses incurred by the Company in connection with any
contest of validity or enforceability of this Agreement or
any provisions hereof; provided, however, that any
litigation by the Employee, whether as plaintiff or
defendant, shall be in good faith.
13) Confidentiality
The Employee shall retain in confidence any and all
confidential information known to the Employee concerning
the Company and its business so long as such information is
not otherwise publicly disclosed.
<page 20>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TEXAS-NEW MEXICO POWER COMPANY
By \s\ Dwight Spurlock
Name: D. R. Spurlock
Title: Interim President &
Chief Executive
Officer
\s\ Patrick L. Bridges
Name: PATRICK L. BRIDGES
Title: Assistant Treasurer
ATTEST:
B. Jan Adkins
Asst. Secretary
<PAGE>
KEY EMPLOYEE POSITIONS*
EXECUTION DATE
TERM
Assistant Treasurer
November 11, 1993
2 years
Assistant Treasurer
November 11, 1993
2 years
General Manager - Human Resources
November 11, 1993
2 years
Manager - Internal Audit
November 11, 1993
2 years
General Manager - Information
Services
November 11, 1993
2 years
Manager - Accounting
November 11, 1993
2 years
Manager - Customer Accounting
November 11, 1993
2 years
Manager - Electric Operations
November 11, 1993
2 years
Manager - Engineering
November 11, 1993
2 years
Manager - Financial Accounting
November 11, 1993
2 years
Manager - General Office
November 11, 1993
2 years
Manager -
Generation/Environmental Services
November 11, 1993
2 years
Manager - Rates
November 11, 1993
2 years
Manager - Resource Planning
November 11, 1993
2 years
Manager - Wholesale Rates &
Regulatory Affairs
November 11, 1993
2 years
Administrative Assistant
November 11, 1993
2 years
* Names of the individuals who are parties to the listed
Agreements have been omitted. Each Agreement inures to the
benefit of the person holding the position indicated above at
any point in time.
AGREEMENT
This Agreement is made by and between Texas-New Mexico Power
Company ("TNP"), TNP Enterprises, Inc. ("TNPE"), and the
subsidiaries of TNP and TNPE not specifically named as parties
hereto, but collectively made parties hereto and referred to as
the "Subsidiaries", and James M. Tarpley (hereinafter referred to
as the "Executive"), an employee, executive officer and member of
the Board of Directors of TNP, TNPE and the Subsidiaries
immediately prior to the Effective Time of Resignation (as
hereinafter defined).
PREAMBLE
WHEREAS, it is the stated intent of the Boards of Directors
of TNP and TNPE that in consideration of the resignation by the
Executive of all officer and director positions with TNP, TNPE
and the Subsidiaries and in consideration of certain services and
agreements as set forth below, from and after the Effective Time
of Resignation the Executive shall continue as an employee until
age 62 at the same level of compensation and with all the other
rights of remuneration and benefits,, of every nature, as he
enjoyed immediately prior to the Effective Time of Resignation
and, upon attainment of age 62, the Executive shall retire from
the service of TNP, TNPE and the Subsidiaries and shall be
entitled to the benefits and other payments due an employee on
retirement at such age.
NOW, THEREFORE, upon the terms and subject to the conditions
set forth herein the parties hereto agree as follow:
1. For and in consideration of the compensation and rights
of the Executive set forth in paragraph 2 below, the Executive
has resigned, and does hereby confirm resignation of, all
positions as an officer and director of TNP, TNPE and the
Subsidiaries, in all manner effective as of noon, central
standard time, on November 9, 1993 (the "Effective Time of
Resignation").
2. (A) From the Effective Date (as hereinafter defined)
until the earlier of the death of the Executive and his attaining
age 62, he shall remain an employee of TNP and shall receive the
following payments and enjoy the following rights and benefits:
(1) Payment by TNP to the Executive of an annual
compensation of $184,000, payable bi-weekly and with
deductions and withholdings therefrom for FICA-OASDI,
Federal M-03, FICA-Hl, Group Medical, Basic Thrift and
Additional Thrift.
(2) Payment by TNP to the Executive of the sum of $100,000
per year, payable bi-weekly, in consideration for the
covenants made by the Executive pursuant to paragraph 3
of this Agreement.
<PAGE>
(3) (i) The uninterrupted continuation of the Executive as
a "Participant" in the Thrift Plan, the Pension Plan
and the Excess Benef it Plan of TNP,, including rights
of designation and selection of options under such
Plans as are available to participants in those Plans
(and specifically including any rights and options
resulting from the reinstatement of employer
contributions to the Thrift Plan after June 30, 1994),
subject to limitations imposed by the Department of
Labor guidelines or by law applicable to an employee
under such Plans, (ii) all rights of the Executive and
his vife under the Medical Plan and the Group Life
Insurance Plan of TNP, including rights to designate
beneficiaries and the full amount of life insurance
coverage to which he vould be entitled if he had
continued to be an officer and director of TNP, TNPE
and the Subsidiaries at the compensation level he
enjoyed immediately prior to the Effective Time of
Resignation and (iii) continued coverage under
officers' and directors I professional liability
insurance to be maintained by TNP and TNPE for any
claims or causes of action heretofore or hereafter
inade against, or affecting the liability of, the
Executive as an off icer or director of TNP, TNPE or
any of the Subsidiaries. It is understood that the
Executive I o benef its under the Excess Benefit Plan
shall take into account all cash amounts payable to
Executive under paragraph 2 (A) (1) and (2) above.
Additionally,, to the extent provided by the Board of
Directors of TNP as to any other Participant, the
Executive shall continue to receive the "Company
Matching Contribution" as current compensation as
selected by the Executive and his wife by Election Of
Compensation Portions Pursuant to Article III of the
Thrift Plan, dated June 15, 1989, until such time as
another available election as to such rights is made by
the Executive.
(B) Upon attaining the age of 62, the Executive shall
retire and have all the rights of a retired employee, who retired
from the offices from which he resigned as set forth in paragraph
1 above, including (without limitation) all rights of payment and
other rights under the Pension Plan, the Thrift Plan, the Medical
Plan, the Group Life Insurance Plan and the Excess Benefit Plan
of TNP. His rights under the Pension Plan, the Thrift Plan,
the Medical Plan, the Group Life Insurance Plan and the Excess
Benefit Plan of TNP upon retirement at age 62 shall take into
account any amendments to the Plans after the Effective Time of
Resignation. It is understood and agreed that in calculating
service for determining benefits under the Pension Plan of TNP
(and the Excess Benefit Plan of TNP, if applicable) service shall
commence with the Executive's hire date of July 1, 1958 and end
on his attainment of age 62 or death, whichever first occurs.
AGREEMENT <PAGE 2>
(C) Notwithstanding the foregoing, it is understood and
agreed that: (i) the Executive shall not be a participant in, or
beneficiary under, the Disability Plan of TNP, in respect of the
understanding and agreement of the parties hereto that no
"disability" suffered by the Executive during his life shall in
any manner restrict, limit or reduce the payments and other
rights of Executive under paragraph 2 above and (ii) that the
special liability insurance coverage and "flight" life insurance
coverage carried by TNP in respect of the Executive's private
aircraft operation shall not continue in effect after the
Effective Time of Resignation (but the parties agree that the
basic insurance coverage rights set forth in paragraph 2 (A) (3)
above are not affected hereby).
(D) It is understood and agreed that: (i) the Executive
shall be entitled to payment or reimbursement of travel and other
business expenses incurred by him in accordance with applicable
employer policy through the Effective Date,, (ii) the Executive
shall be entitled, both before and after age 62, subject to TNP's
reservations policy, to use of the lake recreation facilities of
TNP (so long as the same or similar facilities exist), and (iii)
the Executive shall be entitled to retain the use of a Petroleum
Club of Fort Worth corporate membership through his attainment of
age 62, but the Executive shall be responsible for dues and
charges related to his use of such membership.
3. In consideration of the payment set forth in paragraph
2(A)(2) above, the Executive shall maintain confidential and not
utilize in any future positions with other entities or otherwise
for his own personal gain, or publish, any confidential or
proprietary information of TNP, TNPE or the Subsidiaries, nor
shall he utilize any such confidential or proprietary information
in competition with, or to the detriment of, TNP, TNPE and the
Subsidiaries. The Executive also agrees that he will not
participate in opposition to TNP or TNPE (i) in any regulatory
proceeding, either in his individual behalf or in support of
others, (ii) in any acquisition of the common stock or
substantially all of the assets of TNP or TNPE which is opposed
by TNP or TNPE or (iii) in any action of a utility or other
entity to obtain a then existing customer or customers of TNP
which is opposed by TNP. The foregoing agreements shall not
prohibit the Executive's employment by any entity which may be
involved in any such opposition to TNP or TNPE from time to time
provided that the Executive complies with the foregoing
restrictions on his personal actions.
4. In consideration of the compensation set forth in
paragraph 2 (A) (1) above, the Executive shall assist TNP with
respect to general administrative and management functions for
the operation of TNP. Executive shall make himself available to
the officers and Board of Directors of TNP on an as needed basis.
TNP and TNPE acknowledge and agree that while Executive is
employed hereunder, he may represent; perform services for, or be
employed by such third parties as the Executive may elect in his
discretion,
AGREEMENT <PAGE 3>
and that he may pursue his personal business interests
unrestricted by his employment hereunder, in each case subject to
paragraph 3 above. The parties hereto mutually agree and conf
irm that Ira Butler, Jr. is fully acquainted with the
understandings and positions of TNP and TNPE and of the Executive
vith respect to such contemplated services of the Executive and
should there ever arise any dispute between the parties as to a
request for such services or the undertaking or declining to
undertake such requested services, a final and binding decision
shall be made as to any such matter by Ira Butler, Jr. In the
event of the death or failure to perform the service herein
contemplated by Ira Butler, Jr., the parties hereto agree that W.
Douglas Bailey shall make any such decision, it being understood
that W. Douglas Bailey possesses the same understandings as to
this provision as does Ira Butler, Jr. Reasonable billings for
time and expenses of Messrs. Butler or Bailey serving in the
foregoing capacity shall be paid by TNP.
5. (A) The Executive does hereby release and forever
discharge TNP, TNPE and the Subsidiaries and their past and
present board members, off icers, employees, agents, attorneys
and other representatives from all claims, demands and causes of
action, including but not limi 'ted to those under the Texas
State Constitution, the United States Constitution, the Equal
opportunity commission, the Texas commission on Human Rights, the
Employee Retirement Income Security Act, the Fair Labor Standards
Act, the Workers' Compensation Act of the State of Texas, the
Texas Unemployment Compensation Act, all civil rights and
anti-discrimination laws, all state and federal laws pertaining
to declaratory judgments, claims for defamation, libel, slander,
invasion of privacy, negligence, intentional or negligent inf
liction of mental anguish, breach of covenant of good faith and
fair dealing, breach of implied contract or claims for quantum
meruit, all laws concerning wrongful discharge, personal injury
or occupational disease or injury and claims for breach of an
oral or written contract, including without restricting the
foregoing generality, any and all claims f or reinstatement, back
pay, front pay, overtime pay, holiday pay, furnishing of a home,
unpaid wages, salary continuation benef its, health insurance,
vacation pay, or other fringe benefits, and including actual
damages, liquidated damages, exemplary damages, consequential
damages, damages for mental anguish,, damages f or loss of
employment prospects, damages for injury to reputation,, lost
compensation, incurred liabilities, attorney's fees of any kind,
injunctive or declaratory relief, costs, and any other causes of
action now existing, whether known or not known. It is
understood and agreed that this release provision extends to any
act, cause, matter or thing claimed or alleged or which could
have been claimed or alleged by the Executive or based upon or
connected therewith, during the entirety of the Executivers
employment with TNP, TNPE and the Subsidiaries prior to January
1. 1994, the effective date of this Agreement (the "Effective
Date"). The Executive has read this release provision and fully
understands it to be a release of all claims arising out of -his
prior employment and his resignation therefrom set forth in
AGREEMENT <PAGE 4>
paragraph 1 above. The Executive represents and warrants that he
is legally competent to &Me this release and enter into this
Agreement, and does so of his own free will and accord without
reliance on any representation of any kind or character not
expressly set forth herein; that he has been advised that he is
free to employ an attorney to advise him of the propriety in
entering into this Agreement, including the release in this
paragraph 5 (A) , and that he has been advised that he may take
up to 21 days to consider this Agreement, if he so chooses; and
that he has also been advised and that he understands that when
he chooses to sign this Agreement that he has 7 days to revoke
this Agreement, and that any such revocation must be in writing
and delivered in person to TNP, TNPE and the subsidiaries.
(B) TNP, TNPE and the Subsidiaries do hereby release and
forever discharge the Executive from all claims, demands, causes
of action and liabilities, and all damages of every nature
therefore, now existing, whether known or not known, based upon
any conduct of the Executive during the entirety of the
Executive's employment with TNP, TNPE and the Subsidiaries prior
to the Effective Date, with the exception of any undisclosed act
amounting to willful misconduct or undisclosed criminal conduct
in breach and default of the Executive's duties and
responsibilities to TNP, TNPE or the Subsidiaries. With respect
to any claims, demands or causes of action made by third parties
against the Executive for alleged misconduct during the entirety
of the Executive's employment with TNP, TNPE and the Subsidiaries
prior to the Effective Date, the indemnification and
reimbursement provisions of such companies' Articles of
Incorporation and Bylaws, in addition to officers' and
directors' liability insurance referenced above, shall be
available to the Executive for the indemnification and
reimbursement set forth therein.
6. TNP and TNPE (including their current and future
officers and directors) shall assure that this Agreement and all
rights of the Executive hereunder shall be fully assumed by any
successor to them, by merger, reorganization, asset purchase or
otherwise. This Agreement shall be binding upon and inure to the
benefit of any such successors in interest to TNP and TNPE, but
shall not otherwise be assignable, transferable or delegable
without the prior written consent of the Executive.
7. TNP and TNPE (in their behalf and in behalf of the
subsidiaries) represent and warrant that: (i) they have all
requisite power and authority to execute and deliver this
Agreement and perform their duties and obligations hereunder,,
(ii) all necessary corporate proceedings of each of them have
been duly taken to authorize the execution, delivery and
performance of this Agreement by each of such entities, (iii)
this Agreement has been duly executed and delivered by such
entities, is a legal, valid and binding obligation of each of
them and is enforceable as to each of them in accordance with its
terms, and (iv) from the Effective Time of Resignation through
December 31, 1993, all rights to compensa
AGREEMENT <PAGE 5>
tion (including the continuation of the Executive as a "Partici-
pant" as described in paragraph 2 (A) (3) above) have continued
uninterrupted as contemplated in the Preamble of this Agreement.
8. The parties hereto agree and confirm that: (i) the
Executive has left at the offices of TNP all company records and
property heretofore utilized by him or under his control, (ii)
the personal property of the Executive located at the offices of
TNP prior to the resignation described in paragraph 1 above has
either been packed and currently remains on the premises of the
offices of TNP with the full rights of removal thereof by the
Executive upon reasonable notice or has been removed by the
Executive and (iii) the legal and accounting expenses incurred in
the preparation of this Agreement and the opinion letters to TNP
and the Executive, delivered contemporaneously vith the execution
and delivery of this Agreement, shall be borne solely by TNP.
9. It is understood and agreed that the releases and
discharges by the Executive set forth in paragraph 5(A) above and
by TNP, TNPE and the Subsidiaries set forth in paragraph 5(B)
above do not extend to any claims, demands or causes of action
arising after the Effective Date as to any duty, right,
representation or warranty made to or for the benefit of a
releasing and discharging party.
10. This Agreement shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees and/or legatees, including enforcement rights to
obtain all payments, and to enforce all rights, in behalf of the
Executive, as may be remaining or continuing hereunder. Without
the written consent of TNP, the Executive may not assign,
transfer or delegate and of his rights or obligations hereunder,
except as contemplated by the terms hereof and the terms of the
referenced compensatory plans and programs in which rights are
granted to the Executive and his wife (and others following the
death of the Executive).
11. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be by: (i)
United States of America Certified Mail, Return Receipt
Requested, postage prepaid, or (ii) Federal Express, United
States of America Express mail or similar overnight delivery or
courier services, all expenses prepaid,, or (iii) delivery in
person to the offices of TNP to the attention of the President of
TNP (in behalf of TNP, TNPE and the Subsidiaries) or to the
Executive, or (iv) telecopy, telex or similar telecommunications
equipment, as applicable to a party hereto. Set forth below are
the mailing, delivery and telecommunications points of delivery
(if applicable) of each of the initial parties hereto. Any party
hereto may change or supplement points and methods of delivery
hereunder, by notice as provided herein. The legally designated
representatives of the Estate of the Executive (or his heirs,
distributees and/or legatees following his death) shall have the
right to set forth pursuant to this provision
AGREEMENT <PAGE 6>
the point and method of delivery hereunder. Any notice or
communication given by Certified Mail shall be deemed given at
the time of certification of delivery thereof; any notice given
to a designated point of delivery by other means permitted by
this provision shall be deemed given at the time of confirmed
delivery thereof to the address or telecommunication or other
receptacle therefor and may include electronic confirmation of
the date and time of receipt at such designated point of
delivery; and deliveries in person to the President of TNP (as
contemplated herein in behalf of TNP, TNPE and the Subsidiaries)
or to the Executive may be by any means and shall be deemed given
when personally delivered. For the purposes hereof, notices and
other communications contemplated herein shall be delivered to
TNP, TNPE and the Subsidiaries:
President, Texas-New Mexico Power Company
4100 International Plaza
Fort Worth, Texas 76109
Telecopy: (817) 737-1343, Attention: President
For the purposes hereof, notices and other communications contem-
plated herein shall be delivered to the Executive:
Mr. James M. Tarpley
4424 Riveridge
Fort Worth, Texas 76109
12. Any waiver, amendment or modif ication of any provision
of this Agreement must be in writing and executed and delivered
by the Executive and by TNP (in behalf of itself and TNPE and the
Subsidiaries). If any provision of this Agreement or the
application of any provision hereof to any person or circumstance
is held invalid or unenforceable, to the extent held invalid or
unenforceable such provision shall be reformed to the extent
necessary to make it enforceable and valid and the other
provisions or other application of this Agreement shall not be
affected; provided, however, that any such invalidity or
unenforceability and such reformation of a provision shall not,
overall, materially adversely affect the rights of TNP and TNPE
hereunder or of the Executive hereunder. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas, without
giving effect to conflict of laws.
AGREEMENT <PAGE 7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in all manner
effective as of the 1st day of January, 1994, the Ef fective Date
of this Agreement.
TEXAS-NEW MEXICO POWER COMPANY
(In its behalf and in behalf of
its Subsidiaries)
By: \s\ R. D. Woofter
[Name and Office]
Chairman of the Board
TNP ENTERPRISES, INC. (In its
behalf and in behalf of its
Subsidiaries)
By: \s\ R. D. Woofter
[Name and Office]
Chairman of the Board
JAMES M. TARPLEY, EXECUTIVE
\s\ James M. Tarpley
AGREEMENT <PAGE 8>
AGREEMENT
WHEREAS, the then current President & Chief Executive
Officer of Texas-New Mexico Power Company and TNP Enterprises,
Inc. (the "Companies") resigned as of November 9, 1993;
WHEREAS, the Board of Directors of each of the Companies
has determined that an interim President should be elected and
named Chief Executive Officer to act on behalf of the Companies
until such time as a permanent replacement may be determined and
retained; and
WHEREAS, the Board of Directors of each of the Companies
has determined that Dwight R. Spurlock, a director of the
Companies, should be elected as Interim President and act as
Chief Executive Officer, to perform the functions of the
President & Chief Executive Officer during such interim period:
It is, therefore, agreed by Texas-New Mexico Power
Company and TNP Enterprises, Inc. and Dwight R. Spurlock that he
shall act on behalf of the Board of Directors of each of the
Companies as the Interim President & Chief Executive Officer of
the Companies, subject to and upon the following terms:
Article I
Term
Dwight R. Spurlock agrees to perform the duties of his
offices for and until such time as the Board of Directors of
each of the Companies elects a person to serve as President or
Chief Executive Officer on a regular and ongoing basis.
Article II
Compensation
As compensation to Dwight R. Spurlock for the performance
of his duties as Interim President & Chief Executive Officer,
Dwight R. Spurlock shall be paid the sum of $30,000 per month or
any part thereof payable at the end of any month in which such
duties are performed.
Compensation payable for the performance of the duties of
Interim President & Chief Executive Officer shall be in addition
to any such sums to which Dwight R. Spurlock may be entitled as
a director or retiree of the Companies.
Article III
Duties
Dwight R. Spurlock shall perform the duties of the
offices to which he has been appointed as such duties are set
forth in the Bylaws of the Companies. Dwight R. Spurlock shall
<page 1>
devote such time and effort to the performance of his duties as
may be necessary to fully and competently achieve such duties.
Article IV
Benefits
It is expressly agreed that benefits generally made
available to an employee of either of the Companies shall not be
made available to Dwight R. Spurlock, and Dwight R. Spurlock
expressly waives any right to participate in such benefits other
than as may be expressly set forth herein.
Neither this agreement nor the waiver contained herein
shall affect the benefits to which Dwight R. Spurlock is
entitled as either a director or retiree of the Companies.
Article V
Expense Reimbursement
Dwight R. Spurlock is authorized to incur, and the
Companies shall either advance or reimburse, reasonable expenses
suitable to and in performance of the duties of his office,
including entertainment, travel, and housing expenses during the
duration of the performance of his duties. Travel expenses
shall include the reasonable cost of commuting between his
principal residence in Galveston County, Texas, and the General
Office of the Companies in Tarrant County, Texas. Housing
expenses shall include the cost of a temporary residence in
Tarrant County, Texas, and all related expenses.
Article VI
Termination
Either party to this agreement may terminate such
agreement at any time upon twenty-four hour written notice
delivered to the other party.
TEXAS-NEW MEXICO POWER COMPANY
\s\ Dwight Spurlock \s\ R. D. Woofter
DWIGHT R. SPURLOCK R. D. WOOFTER, Chairman and
Agent of the Board of Directors
TNP ENTERPRISES, INC.
\s\ R. D. Woofter
R. D. WOOFTER, Chairman and
Agent of the Board of Directors
<page 2>
