UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MarkOne)
(X) COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
- --------------------------------------------------------------------------------
Commission File Number: 1-8847
TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1907501
(State of incorporation) (I.R.S. employer identification number)
4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
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 \ \
TNP Enterprises, Inc. had 12,990,982 shares of common stock outstanding as of
October 24, 1996.
- --------------------------------------------------------------------------------
Commission File Number: 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 and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
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 \ \
TNP Enterprises, Inc. holds all 10,705 outstanding common shares of Texas-New
Mexico Power Company.
<PAGE>
TNP Enterprises, Inc. And Subsidiaries
Texas New-Mexico Power Company And Subsidiaries
Combined Quarterly Report on Form 10-Q for the period ended September 30, 1996
This Combined Quarterly Report on Form 10-Q is filed separately by TNP
Enterprises, Inc., and Texas-New Mexico Power Company. Texas-New Mexico Power
Company makes no representation as to information relating to TNP Enterprises,
Inc., except as it may relate to Texas-New Mexico Power Company, or to any other
affiliate or subsidiary of TNP Enterprises, Inc. <TABLE> <CAPTION>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements.
(Unaudited for Periods Ended September 30, 1996, and 1995)
TNP Enterprises, Inc. ("TNPE") and Subsidiaries:
Consolidated Statements of Operations
Three- and Nine-Month Periods Ended September 30, 1996, and 1995 3
Consolidated Statements of Cash Flows
Nine-Month Periods Ended September 30, 1996, and 1995 4
Consolidated Balance Sheets
September 30, 1996, and December 31, 1995 5
Texas-New Mexico Power Company ("TNP") and Subsidiaries:
Consolidated Statements of Operations
Three- and Nine-Month Periods Ended September 30, 1996, and 1995 6
Consolidated Statements of Cash Flows
Nine-Month Periods Ended September 30, 1996, and 1995 7
Consolidated Balance Sheets
September 30, 1996, and December 31, 1995 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 13
Item 6. Exhibits and Reports on Form 8-K. 14
(a) Exhibit Index 14
(b) Reports on Form 8-K 14
Signature page (TNPE and TNP) 14
</TABLE>
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C>
OPERATING REVENUES .............................................. $ 157,453 $ 151,586 $ 379,300 $ 378,470
--------- --------- --------- ---------
OPERATING EXPENSES:
Purchased power ............................................... 63,904 52,060 137,865 138,715
Fuel .......................................................... 15,167 15,815 38,404 38,040
Other operating and general expenses .......................... 17,517 18,172 54,886 53,985
Maintenance ................................................... 2,622 2,843 7,771 8,567
Depreciation of utility plant ................................. 9,562 9,544 28,566 28,458
Taxes other than income taxes ................................. 9,195 8,158 24,670 21,866
Income taxes .................................................. 8,249 9,847 12,788 11,548
--------- --------- --------- ---------
Total operating expenses ................................. 126,216 116,439 304,950 301,179
--------- --------- --------- ---------
NET OPERATING INCOME ............................................ 31,237 35,147 74,350 77,291
--------- --------- --------- ---------
OTHER INCOME :
Gain on sale of Texas Panhandle properties .................... -- 14,583 -- 14,583
Other income and deductions, net .............................. (994) 572 (1,046) 1,097
Income taxes .................................................. 1,263 (5,299) 1,308 (5,697)
--------- --------- --------- ---------
Other income, net of taxes ............................... 269 9,856 262 9,983
--------- --------- --------- ---------
EARNINGS BEFORE INTEREST CHARGES
AND CHANGE IN ACCOUNTING ...................................... 31,506 45,003 74,612 87,274
--------- --------- --------- ---------
INTEREST CHARGES:
Interest on long-term debt .................................... 16,256 17,638 49,380 54,227
Other interest and amortization of debt-related costs ......... 958 637 2,547 2,509
--------- --------- --------- ---------
Total interest charges .............................. 17,214 18,275 51,927 56,736
--------- --------- --------- ---------
EARNINGS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING ....................................... 14,292 26,728 22,685 30,538
Cumulative effect of change in accounting for
unbilled revenues, net of taxes (note 4) .................... -- -- -- 8,445
--------- --------- --------- ---------
NET EARNINGS .................................................... 14,292 26,728 22,685 38,983
Dividends on preferred stock .................................... 42 152 126 520
--------- --------- --------- ---------
EARNINGS APPLICABLE TO COMMON STOCK ............................. $ 14,250 $ 26,576 $ 22,559 $ 38,463
========= ========= ========= =========
EARNINGS PER SHARE OF COMMON STOCK:
Earnings before cumulative effect of change in accounting ..... $ 1.29 $ 2.44 $ 2.05 $ 2.75
Cumulative effect of change in accounting for unbilled revenues -- -- -- 0.78
--------- --------- --------- ---------
Earnings per share ............................................ $ 1.29 $ 2.44 $ 2.05 $ 3.53
========= ========= ========= =========
DIVIDENDS PER SHARE OF COMMON STOCK ............................. $ 0.245 $ 0.20 $ 0.685 $ 0.60
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING .......................... 11,080 10,909 11,029 10,896
========= ========= ========= =========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1996 1995
-------------- -----------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers ...................................................... $ 374,529 $ 373,127
Purchased power ................................................................... (138,326) (138,838)
Fuel costs paid ................................................................... (37,292) (32,434)
Cash paid for payroll and to other suppliers ...................................... (63,226) (52,551)
Interest paid, net of amounts capitalized ......................................... (62,137) (58,929)
Income taxes paid ................................................................. (11,596) (781)
Other taxes paid, net of amounts capitalized ...................................... (23,777) (24,652)
Other operating cash receipts and payments, net ................................... 2,579 916
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................... 40,754 65,858
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of capitalized depreciation and interest .......... (20,563) (19,956)
Net proceeds from sale of Texas Panhandle properties .............................. -- 29,009
Purchases of temporary investments ................................................ -- (11,171)
Maturities of temporary investments ............................................... -- 10,612
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ................................. (20,563) 8,494
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks ..................................... (7,644) (7,062)
Issuances:
Common stock ................................................................... 1,410 743
Borrowings under revolving credit facility ..................................... 93,000 28,000
Other long-term debt ........................................................... 835
Redemptions:
Preferred stock ................................................................ -- (1,100)
Repayments under revolving credit facility ..................................... (103,000) (64,000)
First mortgage bonds ........................................................... (10,550) (1,070)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES ............................................... (25,949) (44,489)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS ............................................. (5,758) 29,863
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................................... 21,105 15,297
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................................... $ 15,347 $ 45,160
========= =========
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings ...................................................................... $ 22,685 $ 38,983
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cumulative effect of change in accounting for unbilled revenues, net of taxes .. -- (8,445)
Recognition of deferred revenues ............................................... -- (4,782)
Gain on sale of Texas Panhandle properties ..................................... -- (14,583)
Depreciation of utility plant .................................................. 28,566 28,458
Amortization of debt-related costs and other deferred charges .................. 3,390 3,634
Allowance for borrowed funds used during construction .......................... (78) (126)
Deferred income taxes (excluding effect of change in accounting) ............... 4,711 4,138
Investment tax credits ......................................................... 926 2,263
Cash flows impacted by changes in current assets and liabilities:
Customer receivables ........................................................... (4,754) 3
Deferred purchased power and fuel costs ........................................ (1,171) 5,959
Accounts payable ............................................................... 8,893 7,195
Accrued interest ............................................................... (7,739) (4,454)
Accrued taxes .................................................................. (4,468) 7,615
Purchased power costs subject to refund ........................................ (5,688) --
Changes in other current assets and liabilities ................................ (3,967) 1,232
Other, net .......................................................................... (552) (1,232)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................... $ 40,754 $ 65,858
========= =========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES (a wholly owned
subsidiary of TNP Enterprises, Inc.)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Sept 30 1996 December 31,
(Unaudited) 1995
-------------- --------------
(In Thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT:
Electric plant ............................................. $1,211,000 $1,193,538
Construction work in progress .............................. 1,755 3,334
---------- ----------
Total ............................................ 1,212,755 1,196,872
Less accumulated depreciation .............................. 276,676 252,868
---------- ----------
Net utility plant ................................ 936,079 944,004
---------- ----------
NONUTILITY PROPERTY, at cost ................................. 213 175
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents .................................. 8,713 14,450
Customer receivables ....................................... 18,616 15,569
Inventories, at lower of average cost or market:
Fuel .................................................. 383 492
Materials and supplies ................................ 6,983 7,287
Deferred purchased power and fuel costs .................... 10,432 9,261
Accumulated deferred income taxes .......................... 2,276 144
Other current assets ....................................... 2,898 1,274
---------- ----------
Total current assets ............................. 50,301 48,477
---------- ----------
DEFERRED CHARGES ............................................. 30,300 32,287
---------- ----------
$1,016,893 $1,024,943
========== ==========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stockholder's 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 ........................ 174,931 174,931
Retained earnings ..................................... 65,604 49,313
---------- ----------
Total common stockholder's equity ................ 240,642 224,351
Redeemable cumulative preferred stock ...................... 3,600 3,600
Long-term debt, less current maturities .................... 490,601 611,925
---------- ----------
Total capitalization ............................. 734,843 839,876
---------- ----------
CURRENT LIABILITIES:
Current maturities of long-term debt ....................... 101,870 1,070
Accounts payable ........................................... 30,117 22,040
Accrued interest ........................................... 6,243 13,982
Accrued taxes .............................................. 20,915 25,330
Customers' deposits ........................................ 2,475 2,493
Purchased power costs subject to refund .................... -- 5,688
Other current liabilities .................................. 9,333 12,472
---------- ----------
Total current liabilities ........................ 170,953 83,075
---------- ----------
REGULATORY TAX LIABILITIES ................................... 24,253 26,826
ACCUMULATED DEFERRED INCOME TAXES ............................ 56,363 47,066
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS .................. 18,345 17,398
DEFERRED CREDITS ............................................. 12,136 10,702
COMMITMENTS AND CONTINGENCIES (Notes 2 and 3)
---------- ----------
$1,016,893 $1,024,943
========== ==========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30,
1996 December 31,
(Unaudited) 1995
------------ ----------
(In Thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT:
Electric plant .......................................................... $1,211,000 $1,193,538
Construction work in progress ........................................... 1,755 3,334
---------- ----------
Total ......................................................... 1,212,755 1,196,872
Less accumulated depreciation ........................................... 276,676 252,868
---------- ----------
Net utility plant ............................................. 936,079 944,004
---------- ----------
NONUTILITY PROPERTY, at cost .............................................. 1,525 1,156
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents ............................................... 15,347 21,105
Customer receivables .................................................... 20,323 15,569
Inventories, at lower of average cost or market:
Fuel ............................................................... 383 492
Materials and supplies ............................................. 7,052 7,287
Deferred purchased power and fuel costs ................................. 10,432 9,261
Accumulated deferred income taxes ....................................... 2,276 144
Other current assets .................................................... 2,115 960
---------- ----------
Total current assets .......................................... 57,928 54,818
---------- ----------
DEFERRED CHARGES .......................................................... 28,480 30,455
---------- ----------
$1,024,012 $1,030,433
========== ==========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stockholders' equity:
Common stock - no par value per share. Authorized 50,000,000
shares; issued 10,986,397 shares in 1996 and 10,920,060 in 1995 $ 136,383 $ 134,973
Retained earnings .................................................. 97,525 82,484
---------- ----------
Total common stockholders' equity ............................. 233,908 217,457
Preferred stock ......................................................... 3,600 3,600
Long-term debt, less current maturities ................................. 491,399 611,925
---------- ----------
Total capitalization .......................................... 728,907 832,982
---------- ----------
CURRENT LIABILITIES:
Current maturities of long-term debt .................................... 101,907 1,070
Accounts payable ........................................................ 30,933 22,040
Accrued interest ........................................................ 6,243 13,982
Accrued taxes ........................................................... 21,737 26,205
Customers' deposits ..................................................... 2,476 2,493
Purchased power costs subject to refund ................................. -- 5,688
Other current liabilities ............................................... 9,333 12,472
---------- ----------
Total current liabilities ..................................... 172,629 83,950
---------- ----------
REGULATORY TAX LIABILITIES ................................................ 24,253 26,826
ACCUMULATED DEFERRED INCOME TAXES ......................................... 66,405 57,381
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS ............................... 19,518 18,592
DEFERRED CREDITS .......................................................... 12,300 10,702
COMMITMENTS AND CONTINGENCIES (Notes 2 and 3)
---------- ----------
$1,024,012 $1,030,433
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES (a wholly owned
subsidiary of TNP Enterprises, Inc.)
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES .................................... $ 157,453 $ 151,586 $ 379,300 $ 378,470
--------- --------- --------- ---------
OPERATING EXPENSES:
Purchased power ..................................... 63,904 52,060 137,865 138,715
Fuel ................................................ 15,167 15,815 38,404 38,040
Other operating and general expenses ................ 17,517 18,172 54,886 53,985
Maintenance ......................................... 2,622 2,843 7,771 8,567
Depreciation of utility plant ....................... 9,562 9,544 28,566 28,458
Taxes other than income taxes ....................... 9,195 8,158 24,670 21,866
Income taxes ........................................ 8,249 9,847 12,788 11,548
--------- --------- --------- ---------
Total operating expenses ....................... 126,216 116,439 304,950 301,179
--------- --------- --------- ---------
NET OPERATING INCOME .................................. 31,237 35,147 74,350 77,291
--------- --------- --------- ---------
OTHER INCOME :
Gain on sale of Texas Panhandle properties .......... -- 14,583 -- 14,583
Other income and deductions, net .................... 226 657 584 1,252
Income taxes ........................................ 1,008 (5,329) 910 (5,593)
--------- --------- --------- ---------
Other income, net of taxes ..................... 1,234 9,911 1,494 10,242
--------- --------- --------- ---------
EARNINGS BEFORE INTEREST CHARGES
AND CHANGE IN ACCOUNTING ............................ 32,471 45,058 75,844 87,533
--------- --------- --------- ---------
INTEREST CHARGES:
Interest on long-term debt .......................... 16,256 17,638 49,380 54,227
Other interest and amortization of debt-related costs 958 637 2,547 2,509
--------- --------- --------- ---------
Total interest charges .................... 17,214 18,275 51,927 56,736
--------- --------- --------- ---------
EARNINGS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING ............................. 15,257 26,783 23,917 30,797
Cumulative effect of change in accounting for
unbilled revenues, net of taxes (note 4) ............ -- -- -- 8,445
--------- --------- --------- ---------
NET EARNINGS .......................................... 15,257 26,783 23,917 39,242
Dividends on preferred stock .......................... 42 152 126 520
--------- --------- --------- ---------
EARNINGS APPLICABLE TO COMMON STOCK ................... $ 15,215 $ 26,631 $ 23,791 $ 38,722
========= ========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES (a wholly owned
subsidiary of TNP Enterprises, Inc.)
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1996 1995
---------- ----------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers ...................................................... $ 376,235 $ 373,127
Purchased power ................................................................... (138,326) (138,838)
Fuel costs paid ................................................................... (37,292) (32,434)
Cash paid for payroll and to other suppliers ...................................... (64,594) (52,327)
Interest paid, net of amounts capitalized ......................................... (62,137) (58,929)
Income taxes paid ................................................................. (10,538) (1,037)
Other taxes paid, net of amounts capitalized ...................................... (24,887) (24,301)
Other operating cash receipts and payments, net ................................... 4,541 595
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................... 43,002 65,856
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of capitalized depreciation and interest .......... (20,563) (19,956)
Net proceeds from sale of Texas Panhandle properties .............................. -- 29,009
--------- ---------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES ............................... (20,563) 9,053
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks ..................................... (7,626) (525)
Issuances:
Borrowings under revolving credit facility ..................................... 93,000 28,000
Redemptions:
Preferred stock ................................................................ -- (1,100)
Repayments under revolving credit facility ..................................... (103,000) (64,000)
First mortgage bonds ........................................................... (10,550) (1,070)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES ............................................... (28,176) (38,695)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS ............................................. (5,737) 36,214
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................................... 14,450 8,614
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................................... $ 8,713 $ 44,828
========= =========
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings ...................................................................... $ 23,917 $ 39,242
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cumulative effect of change in accounting for unbilled revenues, net of taxes .. -- (8,445)
Recognition of deferred revenues ............................................... -- (4,782)
Gain on sale of Texas Panhandle properties ..................................... -- (14,583)
Depreciation of utility plant .................................................. 28,566 28,458
Amortization of debt-related costs and other deferred charges .................. 3,390 3,634
Allowance for borrowed funds used during construction .......................... (78) (126)
Deferred income taxes (excluding effect of change in accounting) ............... 4,787 4,003
Investment tax credits ......................................................... 947 2,271
Cash flows impacted by changes in current assets and liabilities:
Customer receivables ........................................................... (3,047) 3
Deferred purchased power and fuel costs ........................................ (1,171) 5,959
Accounts payable ............................................................... 8,077 7,195
Accrued interest ............................................................... (7,739) (4,454)
Accrued taxes .................................................................. (4,415) 7,398
Purchased power costs subject to refund ........................................ (5,688) --
Changes in other current assets and liabilities ................................ (4,368) 1,493
Other, net .......................................................................... (176) (1,410)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................... $ 43,002 $ 65,856
========= =========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
TNP Enterprises Inc. and Subsidiaries
Texas-New Mexico Power Company and Subsidiaries
Notes to Consolidated Financial Statements
(1) Interim Financial Statements
The interim consolidated financial statements of TNPE and subsidiaries, and
TNP and subsidiaries are unaudited. The 1996 financial statements include a net
loss from the start-up operations of Community Public Service Company ("CPS"), a
wholly owned subsidiary of TNPE. The 1995 financial statements reflect one-time
items consisting of the sale of the Texas Panhandle properties, a change in
accounting for unbilled revenues, and recognition of certain deferred revenues.
In management's opinion, the financial statements reflect all other adjustments
(consisting only of normal recurring accruals) necessary to state fairly results
for the interim periods presented. Results for interim periods are not
necessarily indicative of results to be expected for a full year or for
previously reported periods, due in part to seasonal revenue fluctuations, CPS'
start-up operations, and the 1995 one-time items. Amounts shown for TNPE and TNP
at December 31, 1995, are based on audited consolidated financial statements
appearing in TNPE's and TNP's 1995 Combined Annual Report on Form 10-K.
(2) Income Taxes
As indicated in the 1995 Combined Annual Report on Form 10-K, an Internal
Revenue Service revenue agent involved in auditing TNPE's 1990 and 1991
consolidated federal income tax returns recommended, in March 1995, that a
private letter ruling concerning eligibility of the TNP One generating plant for
Investment Tax Credits ("ITC") be revoked retroactively. Management believes
that TNP's claim for ITC is valid and is contesting the agent's recommendation.
Of the $22.5 million of ITC at issue, TNPE and its subsidiaries have utilized
$8.2 million in the consolidated returns through 1995; TNP's portion is $7.0
million. However, since 1990, TNPE and TNP have only recognized $1.5 million of
the ITC in results of operations.
(3) Accounting for the Effects of Regulation
TNPE's and TNP's consolidated financial statements reflect the application
of certain accounting standards, including Statement of Financial Accounting
Standard ("SFAS") 71, "Accounting for the Effects of Certain Types of
Regulation," which provide for recognition of the economic effects of rate
regulation. On May 2, 1996, TNP filed a request with the Public Utility
Commission of Texas ("PUCT") seeking approval of a proposal designed to better
position TNP for a competitive future. On June 21, 1996, TNP made a similar
filing with the New Mexico Public Utility Commission ("NMPUC"). Additional
information regarding these two filings is provided under "MD&A--Regulatory
Matters." Continued applicability of SFAS 71 to TNPE's and TNP's financial
statements requires that rates set by an independent regulator on a
cost-of-service basis can actually be charged to and collected from customers.
Management believes that as of September 30, 1996, and for the foreseeable
future, TNPE and TNP satisfy the criteria for accounting in accordance with SFAS
71.
(4) Change in Accounting for Unbilled Revenues
Effective January 1, 1995, TNP changed its method of accounting for
operating revenues from cycle billing to accrual. This change required the
recognition on January 1, 1995 of $12,993,000 ($8,445,000, net of taxes) of
additional revenues. Accruing unbilled revenues more closely matches revenues
and expenses and conforms to common utility industry practice.
(5) Issuance of Common Stock
In October 1996 TNPE issued 2 million shares of common stock in a public
offering, with net proceeds of approximately $47 million. The net proceeds were
transferred to TNP where a portion was used to repay the outstanding balance of
its revolving credit facility.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A").
The following discussion should be read in conjunction with the related
consolidated financial statements and notes. References to "Note(s)" will mean
Notes to Consolidated Financial Statements.
Results Of Operations
Overall Results
TNPE's earnings applicable to common stock were $14.3 million for the
quarter ended September 30, 1996. Excluding the net loss from the start-up
operations of CPS and 1995 one-time items, earnings were $15.1 million, an
increase of $1.0 million as compared to the corresponding 1995 quarter,
primarily due to a reduction in interest expense. The 1995 items consist of the
gain on sale of its Texas Panhandle properties of $9.5 million and the
recognition of deferred revenues of $3.0 million.
CPS, a wholly owned subsidiary of TNPE, began operations early in 1996, and
provides energy-related services and products to residential and commercial
customers. For the quarter and nine months ended September 30, 1996, CPS had net
losses of $0.8 million and $1.0 million, respectively.
Earnings were $22.6 million for the nine-month period ended September 30,
1996. Excluding one-time items and CPS operating results, earnings were $23.6
million, a $6.0 million increase as compared to the corresponding 1995 period.
The $6.0 million earnings improvement resulted from increased base revenues and
lower interest expense partially offset by higher income and other tax expenses
and other operating expenses. The one-time items consist of those items
previously listed and the $8.4 million change in accounting for unbilled
revenues described in Note 4.
Since the operations of TNP (the principal subsidiary) currently represent
most of TNPE's operations, the following discussion focuses on TNP's operations.
Operating Revenues
The components of operating revenues are summarized in the following table
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- ------------------------------
Increase Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
------ ------ -------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 157,453 $ 151,586 $ 5,867 $ 379,300 $ 378,470 $ 830
Effect of recognizing deferred
revenue from private letter ruling - (4,128) (4,128) - (4,128) (4,128)
--------- --------- ------- --------- --------- -----
Subtotal 157,453 147,458 9,995 379,300 374,342 4,958
Less pass-through items 78,372 68,150 10,222 176,577 178,063 (1,486)
--------- --------- ------- --------- --------- -----
Base revenues $ 79,081 $ 79,308 $ (227) $ 202,723 $ 196,279 $ 6,444
========= ========== ========= ========== ========== ========
</TABLE>
Pass-through items are the portion of operating revenues that recover from
customers the costs of purchased power, fuel, and standby power. These items
affect customer rates but do not affect operating income. Explanations for the
three- and nine-month period variances are discussed under "Results of
Operations -- Operating Expenses."
Current quarter base revenues were comparable to the corresponding 1995
period. Although current quarter sales increased by 13.6%, the increase was
attributed to economy rate sales to industrial customers which are low margin
and high volume. Base revenues from the increase in economy sales was offset by
a slight decrease in residential sales, which resulted from milder than normal
weather in September 1996.
Current nine-month period base revenues exceeded the corresponding 1995
period by $6.4 million. The base revenue increase is attributed to increased
sales to residential and commercial customers due to weather-related conditions,
higher usage by certain industrial customers, and the addition of new customers.
The components of gigawatt-hours ("GWH") sales are summarized in the
following table:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
Increase Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
---- ---- -------- ---- ---- --------
GWH sales:
<S> <C> <C> <C> <C> <C> <C>
Residential 749 766 (17) 1,764 1,689 75
Commercial 516 515 1 1,315 1,281 34
Industrial:
Firm 309 388 (79) 1,010 1,111 (101)
Economy 696 321 375 1,475 895 580
Other 28 33 (5) 87 87 -
------ ------ ----- ----- ----- ---
Total GWH sales 2,298 2,023 275 5,651 5,063 588
====== ====== ===== ===== ===== ===
</TABLE>
Current quarter sales of 2,298 GWH increased over the corresponding 1995
quarter sales of 2,023 GWH due to increased industrial economy sales and the
addition of new customers. Contributing to the 41.8% industrial sales increase
were new contractual agreements with two existing cogeneration customers. Also,
approximately 4,000 customers have been added to TNP's system since the sale of
the Texas Panhandle properties in September 1995.
Current nine-month period sales of 5,651 GWH represented an 11.6%
improvement over the corresponding 1995 period due to the reasons stated above.
In addition, TNP's Texas customers experienced colder than normal weather during
the first quarter of 1996 and warmer than normal weather in the second quarter
of 1996 causing increased consumption among the residential customers.
Operating Expenses
The components of operating expenses are summarized in the following table
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------- -------------------------------
Increase Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Pass-through expenses:
Purchased power $ 64,240 $ 53,406 $ 10,834 $ 140,973 $ 143,091 $ (2,118)
Fuel 14,132 14,744 (612) 35,604 34,972 632
-------- --------- --------- ---------- ---------- --------
Total pass-through items 78,372 68,150 10,222 176,577 178,063 (1,486)
Other operating expenses 30,400 30,284 116 90,915 89,702 1,213
Income and other tax expenses 17,444 18,005 (561) 37,458 33,414 4,044
-------- --------- --------- ---------- ---------- --------
Total operating expenses $126,216 $ 116,439 $ 9,777 $ 304,950 $ 301,179 $ 3,771
======== ========= ========= ========== ========== ========
</TABLE>
Total operating expenses for the current quarter increased by $9.8 million
as compared to the same quarter last year primarily due to an increase in
pass-through expenses (as discussed below).
Current nine-month period operating expenses increased by $3.8 million as
compared to the corresponding 1995 period primarily due to increases in income
and other tax expenses of $4.0 million and other operating expenses of $1.2
million offset by decreased pass-through expenses of $1.5 million (as discussed
below).
Pass-through Expenses
Pass-through expenses consist of purchased power and certain fuel costs.
Current quarter pass-through expenses increased due to higher purchased power
costs offset in part by reduced fuel costs. Current nine-month period
pass-through expenses decreased slightly as lower purchased power costs were
partially offset by increased fuel costs.
Purchased Power. Purchased power costs increased by $11.8 million in the
current quarter due to increased GWH sales primarily to industrial customers.
These industrial sales are at lower costs and resulted from the implementation
of TNP's control area. The control area, which became operational on July 31,
1996, is an electrical system which enables TNP to instantaneously balance its
system resources with loads. TNP had previously contracted with another utility
for these services. Purchased power costs decreased slightly by $0.9 million for
the current nine-month period primarily due to cost reductions, offset by the
increased GWH sales. Contributing to the cost reductions were (1) lower prices
obtained from existing suppliers, (2) shifting purchases to new, lower cost
suppliers, and (3) TNP passing through to its Texas customers refunds from two
suppliers of $6.7 million.
Fuel. The decrease in the current quarter fuel costs of $0.6 million is
attributed to decreased sales to residential and firm rate industrial customers.
No fuel cost is recovered as part of industrial economy sales. The increase in
the current nine-month period is attributed to increased firm residential and
commercial sales. The majority of TNP's monthly fuel costs are recovered in
revenues through a fixed fuel factor per kilowatt-hour approved by the PUCT. TNP
records as fuel expense the amount collected through this fixed fuel factor. Any
difference between the amount collected and actual cost is deferred for
collection/refund in future periods. TNP has under-recovered fuel costs at
September 30, 1996 of $4.2 million.
Other Operating Expenses, Income and Other Tax Expenses
Other operating expenses for the current quarter approximated the prior
year quarter. Other operating expenses for the current nine-month period
increased by $1.2 million due to increased labor and employee benefits costs,
and severance payments in June 1996 related to workforce reductions.
Income and other tax-related expenses consist primarily of income,
franchise, property, and payroll taxes. Current quarter income and other tax
expenses approximated the prior year quarter. The increase for the current
nine-month period is due to higher pre-tax income and increased property taxes.
Other Income and Deductions, net
TNPE's other income and deductions-net decreased in the current three-and
nine-month periods due to the inclusion of CPS' start-up operations.
Interest Expense
Interest charges during the current three- and nine-month periods decreased
by $1.1 million and $4.8 million, respectively. The decreases are attributed to
reduced long-term debt levels and decreased interest rates associated with the
revolving credit facility. Contributing to the long-term debt reduction were the
retirement of $29.2 million of Series T First Mortgage Bonds in October 1995 and
reductions in the amount of borrowings under the revolving credit facility.
Financial Condition
Liquidity
As of September 30, 1996, available unused credit under the existing credit
facility ("1995 Facility") was $117 million, subject to interest coverage and
capitalization tests. TNP can borrow up to $67 million of the unused commitment
with no additional collateral and borrow the remainder of the unused commitment
($50 million) by pledging first mortgage bonds ("FMBs") equal to the principal
amount of such borrowings. The 1995 Facility was used during September 1996 to
retire $8.9 million of 10.5% Series L FMBs.
TNP entered into a new credit facility ("1996 Facility") effective
September 10, 1996. The 1996 Facility provides for a total commitment of $100
million and supplements the 1995 Facility. The interest rate margins under the
1996 Facility are linked to the London Interbank Offered Rate ("LIBOR") and are
lower than those for the 1995 Facility. The interest rate margins on both
facilities will decrease as the ratings on TNP's FMBs improve. At the time of
the common stock issuance described in Note 5, Moody's raised the long-term debt
ratings for TNP by one ratings level which will reduce interest costs associated
with both facilities. The collateral securing the 1996 Facility are non-interest
bearing FMBs. The 1996 Facility expires September 2001 and TNP has the ability
to draw on it to redeem other outstanding debt. As of September 30, 1996, there
were no borrowings under the new revolving credit facility.
In addition to the new credit facility, TNP purchased a $50 million
interest rate collar to mitigate exposure to variable interest rates. The collar
sets a floor and ceiling on the 90-day LIBOR rate at 5.25 percent and 7.50
percent, respectively. The term of the interest rate collar is September 1997
through September 2000.
TNP has sufficient liquidity to satisfy the possibility of any known
contingencies. Management believes cash flow from operations and periodic
borrowings under its two revolving credit facilities should be sufficient to
meet working capital requirements and planned capital expenditures at least
through 1998.
During October 1996, TNPE issued 2 million shares of common stock which
provided net proceeds of $47 million. The proceeds were used as a capital
contribution to TNP for repayment of certain indebtedness, to provide working
capital, and for other general corporate purposes. Initially, TNP used the
proceeds to pay down the $33 million outstanding on the 1995 Facility at
September 30, 1996. TNP intends to use borrowings from its credit facilities to
retire the $100.8 million of 11.25% Series T FMBs due January 1997.
Regulatory Matters
Community ChoiceSM
On May 2, 1996, TNP filed an application with the PUCT requesting approval
of a program known as Community Choice that would apply to electric services
provided by TNP in Texas. On June 21, 1996, TNP filed an application with the
NMPUC requesting approval of a similar Community Choice program that would apply
to electric services provided by TNP in New Mexico. Community Choice is a
transition plan designed to address the opportunities and challenges presented
by the increasingly deregulated and competitive environment of the electric
services industry. Each of these filings requests that TNP be allowed to
implement the Community Choice program beginning in January 1997.
As proposed by TNP, Community Choice provides for transition periods of
four years in New Mexico and five years in Texas. During these transition
periods, TNP's rates for electric service in New Mexico and Texas would be
structured to provide TNP a reasonable opportunity to reduce its so-called
potential "stranded costs." "Stranded costs" is the difference between what it
currently costs TNP to provide electric service and what a customer would be
willing to pay in a competitive retail electric services market. In Texas, TNP's
potential stranded cost relates to TNP One, its 300 MW generating unit, and
could potentially be more than $250 million. In New Mexico, TNP's potential
stranded cost relates to its purchased power contracts and could potentially be
more than $30 million. At the end of the transition periods, TNP would
aggregate, or combine, its customers at the community level and permit these
aggregated electrical loads to choose the types and nature of electric services
that will be available to individual customers within each aggregated load.
There can be no assurance that Community Choice will be approved by the
PUCT or the NMPUC, or that Community Choice, if approved, will be successful.
The success of Community Choice and its impact on the financial performance of
TNP depends on many factors, including regulatory approval, customer interest
and satisfaction, and its ability to develop and implement programs tailored for
its customers individually. TNP is actively seeking the resolution of a number
of issues with the PUCT, NMPUC, and the various intervenors. TNP continues to
evaluate the effect of these and other issues on the likelihood of approval of
its application by the PUCT and NMPUC.
Texas Transmission Access Filing
The PUCT recently passed a wholesale transmission access rule which
establishes a regional method of transmission pricing, terms, and conditions.
The purpose is to increase competition in wholesale energy sales within Texas
and establish an Independent System Operator for the Electric Reliability
Council of Texas ("ERCOT") transmission system. As a direct result, filings of
cost data from all Texas utilities were made with the PUCT in May 1996. These
filings will be used by the PUCT to set the transmission pricing rules for the
ERCOT region. TNP believes it should benefit from the new rules as competition
should increase in the wholesale power market and result in reduced purchased
power and wheeling costs. TNP expects the PUCT to finalize the transmission fee
structure by the end of 1996.
Statement Regarding Forward-Looking Information
The discussions in this document that are not historical facts, including,
but not limited to, statements regarding TNP's and TNPE's current business
strategy, projected sources and uses of cash, and projected operations, are
based upon current expectations. Actual results may differ materially. Among the
facts that could cause the results to differ materially are the following:
changes in regulations; results of regulatory proceedings; future acquisitions
or strategic partnerships; general business and economic conditions; and other
factors described from time to time in TNP's and TNPE's reports filed with the
Securities and Exchange Commission. TNP and TNPE wish to caution readers not to
place undue reliance on any such forward-looking statements, which are made
pursuant to the Private Litigation Reform Act of 1995 and, as such, speak only
as of the date made.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Wholesale Purchase Power Agreement
As set forth in TNPE's and TNP's 1995 Combined Annual Report on Form 10-K
and the Form 10-Qs for the quarters ended March 31 and June 30, 1996, TNP filed
a complaint with the PUCT and in a Texas state district court to declare TNP's
wholesale purchased power agreement ("TU Agreement") with Texas Utilities
Electric Company ("TU") null and void. TNP requested a declaration that certain
provisions of the TU agreement are against public policy and violate Texas law.
On August 29, 1996, the PUCT entered an order declaring two of the terms of
the TU Agreement void, but upholding the validity of the remainder of the
contract. The PUCT order also orders the parties to reform the transmission
services portion of the TU Agreement. The PUCT order became administratively
final and appealable by operation of law on October 18, 1996. Appeals of the
PUCT order must be filed, if at all, on or before November 17, 1996. TNP is
currently assessing whether it will appeal the PUCT order. TNP cannot predict
whether TU will appeal the PUCT order.
Early Redemption of Series T FMBs
The discussions in TNPE's and TNP's 1995 Combined Annual Report of Form
10-K on page 31, and in Part II, Item 1 of the Form 10-Q for the quarter ended
March 31, 1996, concerning litigation in the matter of the early redemption of
$29.2 million of Series T FMBs, is incorporated in this report by reference.
This litigation, styled Texas-New Mexico Power Company v. John Hancock Life
Insurance Co. et. al., is pending in the United States District Court for the
Northern District of Texas, Fort Worth Division. TNP continues to vigorously
contest this matter.
On August 20, 1996, the court granted a motion by Jackson National Life
Insurance Company ("Jackson") to certify the treatment of its counterclaim as a
class action on behalf of all parties who were holders of Series T FMBs when the
partial redemption was announced. The court also named Jackson and John Hancock
Life Insurance Company as co-class representatives.
<PAGE>
Both parties to the litigation have filed motions for summary judgment that
are currently pending. In June 1996, TNP filed a motion for summary judgment
regarding Jackson's counterclaim under the Texas Securities Act. In October
1996, Jackson filed a motion for summary judgment regarding liability on the
breach of contract claim. Also in October 1996, TNP filed a response to
Jackson's motion for summary judgment, a cross-motion for partial summary
judgment that the partial early redemption of the Series T FMBs complied with
the terms of the indenture governing the FMBs, and a motion for summary judgment
regarding the remaining claims asserted under the Trust Indenture Act of 1939,
federal securities laws and the Federal Declaratory Judgment Act.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits are filed with this report:
4(t) Twenty-Fifth Supplemental Indenture dated as of
September 10, 1996.
10 Revolving Credit Facility Agreement, dated as of
September 10, 1996, among TNP, certain lenders, The First
National Bank of Chicago, as Administrative Agent and The
First National Bank of Chicago and Union Bank of California,
N.A., as Co-Agents.
10(a) Form of Bond Agreement, dated as of September 10, 1996,
between TNP, certain lenders, The First
National Bank of Chicago, as Collateral Agent, and The First
National Bank of Chicago and Union Bank of California, N.A.
as Co -Agents (Exhibit E to Revolving Credit Facility
Agreement)
27(a) Financial Data Schedule for TNPE
27(b) Financial Data Schedule for TNP
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated September 27,
1996, in which the Company provided pricing information
relating to its Common Stock offering conducted pursuant to
a registration statement on Form S-3. The underwriting
agreement between the Company and the underwriters relating
to the offering was attached as an exhibit to the Form 8-K.
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(Registrant) TNP ENTERPRISES, INC.
By \s\ MANJIT S. CHEEMA
---------------------------------
Manjit S. Cheema
Date: November 4, 1996 Vice President and as Chief Financial Officer
(Registrant) TEXAS-NEW MEXICO POWER COMPANY
By \s\ MELISSA D. DAVIS
--------------------------------
Melissa D. Davis
Date: November 4, 1996 Controller and as Chief Accounting Officer
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
First Trust of Illinois, National Association Trustee.
-----------------------
Twenty-Fifth Supplemental Indenture
Dated as of September 10, 1996
--------------------
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 and Deed of Trust upon Real Estate and Other Property
THIS TWENTY-FIFTH SUPPLEMENTAL INDENTURE, dated as of September 10, 1996,
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 First Trust of Illinois, National Association (hereinafter
sometimes called the "Trustee"), (which is successor trustee to Bank of America
Illinois, a banking corporation organized under the laws of Illinois, which was
formerly known, at various times, as Continental Bank, a banking corporation
organized under the laws of Illinois, Continental Bank, National Association,
and Continental Illinois National Bank and Trust Company of Chicago (sometimes
referred to as "Predecessor Trustee")), as Trustee and secured party, and having
its principal place of business and mailing address at 400 North Michigan
Avenue, Chicago, Illinois 60611, 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 "Old Trustee"), an Indenture of Mortgage and
Deed of Trust dated as of November 1, 1944 (hereinafter sometimes called the
"Original Indenture," capitalized terms used herein and not otherwise defined
herein shall have the same meaning as set forth in 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 Old 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>
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, the
Old Trustee was merged) as Predecessor Trustee; and
WHEREAS, the Company has heretofore executed and delivered to the
Predecessor 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; a Twenty-Second Supplemental Indenture dated
as of January 15, 1992; a Twenty-Third Supplemental Indenture dated as of
September 15, 1993; and a Twenty-Fourth Supplemental Indenture dated as of
November 3, 1995; 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 1/2due 2000 $ 12,000,000 $ 8,888,000
Series M, 8.70 percent due 2006 $ 10,000,000 $ 8,100,000
Series R, 10 percent due 2017 $ 65,000,000 $ 61,750,000
Series S, 9N percent due 2019 $ 20,000,000 $ 19,400,000
Series T, 11 1/4percent due 1997 $130,000,000 $100,800,000
Series U, 9 1/4percent due 2000 $100,000,000 $100,000,000
Series V, due 2000 $ 30,000,000 $ 30,000,000
and
WHEREAS, Continental Illinois National Bank and Trust Company of
Chicago changed its name to Continental Bank, National Association, effective
December 12, 1988; Continental Bank, National Association changed its name to
Continental Bank, effective June 29, 1994; and Continental Bank changed its name
to Bank of America Illinois effective September 1, 1994; and
WHEREAS, on August 21, 1995 Bank of America Illinois and certain of its
affiliates and First Bank National Association (the parent of First Trust of
Illinois, National Association) and certain of its affiliates, entered into a
Purchase and Assumption Agreement, as supplemented, which provided for the
purchase by the Trustee (or an affiliate) of substantially all of the Illinois
trust and agency appointments of the Predecessor Trustee, including the
appointment under the Original Indenture, as supplemented and modified; and
WHEREAS, pursuant to Section 3-3 of the Illinois Corporate Fiduciary
Act (the "Act") and the No-Objection letter No. 95-1021 dated July 21, 1995 from
the Illinois Commissioner of Banks and Trust Companies, the sale of the
Predecessor Trustee's corporate trust business to another corporate fiduciary
will result in automatic succession of the transferred accounts pursuant to the
provisions of the Act, provided such succession is not prohibited by the trust
instrument's provisions; and
WHEREAS, the Trustee is qualified and eligible to act as trustee
pursuant to the Original Indenture, as supplemented and modified, and the
automatic succession is not prohibited by the Original Indenture; and
WHEREAS, to complete the transfer under the Act, the Trustee and the
Predecessor Trustee entered into an Instrument of Transfer and Assignment of
Certain Illinois Appointments dated December 8, 1995 whereby the Trustee became
the trustee under the Original Indenture, as supplemented and modified; and
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 supplemental 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 funds 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 is entering into that certain Credit Agreement
dated as of September 10, 1996 (as the same may be amended from time to time,
the "Credit Agreement"), among the Company, certain lenders (the "Lenders"), The
First National Bank of Chicago ("First Chicago"), as administrative agent (in
such capacity, together with its successors and assigns in such capacity, the
"Administrative Agent"), and collateral agent (in such capacity, together with
its successors and assigns in such capacity, the "Collateral Agent," and
together with the Administrative Agent, the "Agents") for the Lenders, and First
Chicago and Union Bank of California, N.A., as co-agents for the Lenders; and
WHEREAS, the Credit Agreement requires, as a condition precedent to the
effectiveness of the Commitments (as defined in the Credit Agreement) of the
Lenders, that the Company issue a new series of First Mortgage Bonds to First
Chicago, as Collateral Agent (the "Collateral Agent") for the Agents and the
Lenders under a Bond Agreement, dated as of September 10, 1996 (as the same may
be amended from time to time, the "Bond Agreement"), in an aggregate principal
amount of up to $100,000,000 to secure the payment when due of the Obligations
(as defined in the Bond Agreement); and
WHEREAS, the agreements of the parties to the Credit Agreement
constitute consideration for the issuance of such First Mortgage Bonds to the
Collateral Agent; and
WHEREAS, the Company, as required by the Credit Agreement, proposes to
create under the Original Indenture a new issue of First Mortgage Bonds, to be
designated as First Mortgage Bonds, Series W (the "Bonds of Series W") to be due
on September 10, 2001, in an aggregate principal amount of up to $100,000,000
and proposes to issue the same from time to time as provided for herein; and
WHEREAS, it is the intent of the Company and the Lenders that any
payment made in respect to the Company's obligations under the Credit Agreement
shall be deemed a payment in respect of the Bonds of Series W, but such payment
shall not reduce the principal amount of the Bonds of Series W unless, and then
only to the extent, the aggregate amount of the Total Commitment (as such term
is defined in the Credit Agreement) is irrevocably reduced concurrently with
such payment; and
WHEREAS, it is the intent of the Company and the Lenders that there be
no duplication in the obligations paid by the Company under the Credit Agreement
and the Bonds of Series W, but the payments, if any, of principal of or interest
on the Bonds of Series W be applied to payment of the Obligations and that the
benefits and security of the lien of the Original Indenture, as supplemented and
amended, be extended to the Obligations by means of the issuance and delivery of
the Bonds of Series W to the Collateral Agent for the benefit of the Agents and
the Lenders; and
WHEREAS, the Company is required to execute this Twenty-Fifth
Supplemental Indenture and hereby requests the Trustee to join in this
Twenty-Fifth Supplemental Indenture for the purpose, among others, of creating
and describing the terms of the Bonds of Series W (the Original Indenture as
heretofore supplemented and modified and as supplemented and modified by this
Twenty-Fifth Supplemental Indenture being herein sometimes 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 W, when executed by the Company, authenticated and delivered by the
Trustee and duly issued, the valid, binding and legal obligations of the
Company, and to constitute the Indenture a valid and binding mortgage and deed
of trust 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-Fifth Supplemental Indenture have been in all respects duly authorized.
NOW, THEREFORE, THIS TWENTY-FIFTH 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, 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 W 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 acceptance of the Bonds of
Series W by the holders thereof, and of the sum of $1 to the Company paid by the
Trustee at or before the execution and delivery hereof, and for other valuable
considerations, the receipt whereof is hereby acknowledged, the Company has
executed and delivered this Twenty-Fifth 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 that Excepted Property as defined in the Granting Clauses of the
Original Indenture) of every kind, character and description which is described
in Article Five hereof.
CLAUSE II.
Without in any way limiting anything in Article Five 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, 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 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, transferring, 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 and all
property released or otherwise disposed of pursuant to the provisions of Article
Seven of the Original Indenture.
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 intended so to be, together with
all the appurtenances thereto appertaining, unto the Trustee and its successors
and assigns, forever:
SUBJECT, HOWEVER, 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 expressed 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 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-Fifth 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; 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 W AND CERTAIN PROVISIONS RELATING THERETO.
SECTION 1.01. Terms of Bonds of Series W. There shall be, and hereby
is, created a new series of Bonds, known as and entitled "First Mortgage Bonds,
Series W, due 2001" (herein referred to as the "Bonds of Series W"), and the
form thereof shall be substantially as hereinafter set forth in Section 1.02
hereof. The principal amount of the Bonds of Series W 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 July 1, 1974)
and except as may be provided in any indenture supplemental thereto. The
definitive Bonds of Series W 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 Bonds of Series W shall be registered in the name of the Collateral
Agent for the Agents and the Lenders who are parties to the Credit Agreement.
The Bonds of Series W are to be issued to the Collateral Agent to
secure the payment when due of the Obligations (as defined in the Bond
Agreement), including, without limitation, the Loans (as defined in the Credit
Agreement).
The Bonds of Series W are to be issued in various amounts on multiple
dates to coincide with the Borrowings as defined in and pursuant to the Credit
Agreement and shall be limited to an aggregate principal amount of $100,000,000,
but the aggregate principal amount thereof outstanding at any one time shall not
exceed the amount as is equal to the Total Commitment (as defined in the Credit
Agreement) or, if the Total Commitment shall have been terminated, the aggregate
outstanding principal amount of the Loans, as defined in the Credit Agreement.
The principal of the Bonds of Series W shall be payable in whole or in
installments on such date or dates as the Company has any obligation to make any
payment under the Credit Agreement, but not later than the Maturity Date (as
defined in the Credit Agreement). Bonds of Series W may be issued hereunder by
the Company's submitting a Written Order of the Company to the Trustee at least
three (3) business days prior to the date Bonds of Series W are to be issued
("Issue Date").
The Bonds of Series W will bear interest at a rate per annum on each
date (an "interest payment date") as interest or fees are payable from time to
time pursuant to the Credit Agreement as shall cause the amount of interest
payable on such date on the Bonds of Series W to equal the amount of interest
and fees payable on such date under the Credit Agreement. The amount of interest
and fees payable from time to time under the Credit Agreement, the basis on
which such interest and fees are computed and the dates on which they are
payable are set forth in the Credit Agreement.
Any payment made in respect to the Company's obligations under the
Credit Agreement shall be deemed a payment in respect of the Bonds of Series W,
but such payment shall not reduce the principal amount of the Bonds of Series W
unless, and then only to the extent, the aggregate amount of the Total
Commitment is irrevocably reduced concurrently with such payment. The obligation
of the Company to make payments with respect to the principal of and interest on
the Bonds of Series W shall be fully satisfied and discharged to the extent
that, at any time that any such payment shall be due, the Company shall have
paid fully the then due principal of and interest on, and fees with respect to,
the Loans. Until such time as the Trustee shall have received notice from the
Collateral Agent that an "Event of Default" under the Credit Agreement has
occurred and is continuing, the Trustee shall be entitled to assume that all
such payments have been made. Any such notice shall provide the Trustee with
information on the principal and interest payments due thereafter on the Bonds
of Series W.
Upon the satisfaction of the conditions precedent contained in Section
9.17 of the Credit Agreement, the Bonds of Series W shall be surrendered to the
Company and the Company's obligations thereunder shall be discharged and deemed
satisfied.
The definitive Bonds of Series W may be issued in the form of Bonds
engraved, printed, lithographed on steel engraved borders or typed on safety
paper.
The person in whose name any Bond of Series W 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 W 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 W 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 W shall be the registered holders of such Bonds of Series
W on the record date for payment of such defaulted interest. The term "record
date" as used in this Section 1.01, and in the form of the Bonds of Series W,
with respect to any interest payment date applicable to the Bonds of Series W,
shall mean the date five days prior to such interest payment date (or the
preceding business day if a holiday or other day on which the office of the
Trustee is closed).
Subject to the provisions of Section 2.11 of the Original Indenture,
all definitive Bonds of Series W, upon surrender at the principal office of the
Trustee, shall be exchangeable for other Bonds of Series W 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 W whenever the same shall be required for any such exchange.
Notwithstanding the provisions of Section 2.11 of the Original
Indenture, no charge shall be made for any exchange of Bonds of Series W for
other Bonds of Series W of different authorized denominations or for any
transfer of Bonds of Series W, 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 Bonds of Series W shall be redeemed by the Company in whole at any
time prior to maturity at a redemption price of 100 percent of the principal
amount to be redeemed, plus any accrued and unpaid interest to the redemption
date, but only if the Trustee shall receive a written demand from the Collateral
Agent for redemption of all Bonds of Series W held by the Collateral Agent
stating that an "Event of Default" under the Credit Agreement has occurred and
is continuing and that payment of the principal amount outstanding under the
Credit Agreement, all interest thereon and all other amounts payable thereunder
are immediately due and payable and demanding payment thereof; provided,
however, that the Bonds of Series W shall not be redeemed in the event that
prior to the date of such redemption the Trustee shall have received a
certificate of the Collateral Agent (a) stating that there has been a waiver of
such Event of Default, or (b) withdrawing said written demand. The redemption of
the Bonds of Series W shall be made forthwith upon receipt of such demand by the
Company from the Required Lenders (as defined in the Credit Agreement), the
Administrative Agent or the Collateral Agent on behalf of the Required Lenders,
or the Trustee.
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 W and the registrar
and transfer agent of the Company for the purpose of registering and
transferring Bonds of Series W. Neither the Company nor the Trustee shall be
required to make transfers or exchanges of Bonds of Series W for a period of ten
days next preceding the mailing of notice of redemption of Bonds of Series W to
be redeemed and neither the Company nor the Trustee shall be required to make
transfers or exchanges of any Bonds of Series W designated in whole for
redemption or that part of any Bond of Series W designated in part for
redemption.
SECTION 1.02. Form of Bonds of Series W. The Bonds of Series W shall be in
substantially the following form:
[FORM OF BOND OF SERIES W]
No. W $
TEXAS-NEW MEXICO POWER COMPANY
First Mortgage Bond, Series W, Due 2001
Due September 10, 2001
Texas-New Mexico Power Company, a Texas corporation (hereinafter called
the "Company"), for value received, hereby promises to pay to , as Collateral
Agent (as hereinafter defined) under the Credit Agreement hereinafter described,
or registered assigns, ___________ Million Dollars ($_________) or such lesser
amount as is equal to the aggregate principal amount of the outstanding Loans
(as defined in the Credit Agreement hereinafter defined), in whole or
installments on such date or dates as the Company has any obligation to make
payments under the Credit Agreement, but not later than the Maturity Date (as
defined in the Credit Agreement), and to pay interest on the unpaid principal
amount hereof to the registered owner hereof at such rate per annum on each
interest payment date (as hereinafter defined) as shall cause the amount of
interest payable on such interest payment date (as hereinafter defined) on this
Bond to equal the amount of interest and fees payable on such interest payment
date (as hereinafter defined) under the Credit Agreement as provided below.
The principal of and interest on this Bond are payable at the principal
corporate trust office of First Trust of Illinois, National Association (the
"Trustee"), or its successor in trust under the Indenture (as hereinafter
defined), in the City of Chicago, Illinois, in any coin or currency of the
United States of America which at the time of payment shall be legal tender for
payment of public and private debts.
The Bonds of Series W have been issued to the Collateral Agent for the
lenders (the "Lenders") and the Agents (as hereinafter defined) party to the
Credit Agreement (hereinafter defined), to secure the payment when due of the
Obligations (as defined in that certain Bond Agreement, dated as of September
10, 1996, by the Company in favor of the Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time), including,
without limitation, the Loans (as defined in the Credit Agreement), made by the
Lenders, which Loans were made pursuant to that certain Credit Agreement, dated
as of September ___, 1996 (as amended, supplemented and otherwise modified and
in effect from time to time, the "Credit Agreement"), among the Company, the
Lenders, the First National Bank of Chicago ("First Chicago"), as administrative
agent (in such capacity, together with its successors and assigns in such
capacity, the "Administrative Agent") and as collateral agent (in such capacity,
together with its successors and assigns in such capacity, the "Collateral
Agent," and together with the Administrative Agent, the "Agents") for the
Lenders, and First Chicago and Union Bank of California, N.A. as co-agents for
the Lenders, which provides for a revolving credit facility (the "Credit
Facility").
The interest on this Bond shall be payable on the same dates (each, an
"interest payment date") as interest or fees are payable from time to time
pursuant to the Credit Agreement until maturity of this Bond, or upon the
satisfaction of the conditions in Section 9.17 of the Credit Agreement, or, in
the case the Collateral Agent shall demand redemption of this Bond, until the
redemption date, or, if the Company shall default in the payment of principal
due on this Bond, until such principal and interest shall have been paid in full
and the Company's obligations with respect thereto discharged as provided in the
Indenture (as hereinafter defined). The amount of interest and fees payable from
time to time under the Credit Agreement, the basis on which such interest and
fees are computed and the dates on which such interest and fees are payable are
set forth in the Credit Agreement.
Any payment made in respect of the Company's obligations under the
Credit Agreement shall be deemed a payment in respect of the Bonds of Series W,
but such payment shall not reduce the principal amount of the Bonds of Series W
unless, and then only to the extent, the aggregate amount of the Total
Commitment (as defined in the Credit Agreement) is irrevocably reduced
concurrently with such payment. The obligation of the Company to make payments
with respect to the principal of and interest on the Bonds of Series W shall be
fully satisfied and discharged to the extent that, at any time that any such
payment shall be due, the Company shall have paid fully the then due principal
of and interest on, and fees with respect to, the Loans.
Upon the satisfaction of the conditions precedent contained in Section
9.17 of the Credit Agreement, this Bond shall be surrendered to the Company and
the Company's obligations hereunder shall be discharged and deemed satisfied.
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.
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)
Date of Authentication: _______________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within-mentioned
Indenture.
FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, as
Trustee
Authorized Officer
<PAGE>
[FORM OF REVERSE OF BOND OF SERIES W]
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 (which later
changed its name to Continental Bank, National Association, then to Continental
Bank, a banking corporation organized under the laws of Illinois, and then to
Bank of America Illinois, a banking corporation organized under the laws of
Illinois, who was succeeded by First Trust of Illinois, National Association),
as successor trustee, as Trustee, as supplemented by twenty-four supplemental
indentures thereto, including the Thirteenth, Fourteenth, Fifteenth, Sixteenth,
Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second,
Twenty-Third, and Twenty-Fourth Supplemental Indentures which also modified the
Original Indenture and the Twenty-Fifth Supplemental Indenture (the
"Twenty-Fifth Supplemental Indenture") dated as of September ___, 1996 (said
Indenture of Mortgage and Deed of Trust, as so supplemented and modified, being
herein called the "Indenture"), to which 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 W, due 2001" (hereinafter called the
"Bonds of Series W").
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 authorized denominations. No charge
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 of Series W may become or be declared due and payable
upon the conditions and in the manner and with the effect provided in the
Indenture and the Credit Agreement.
The Bonds of Series W are subject to redemption prior to maturity as
provided in the Twenty-Fifth Supplemental Indenture at a redemption price of 100
percent of the principal amount to be redeemed plus any accrued and unpaid
interest to the redemption date.
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 otherwise, 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 any stockholder or subscriber to
capital stock upon or in respect of shares of capital stock not fully paid.
This Bond is nontransferable except to effect transfer to any successor
to the Collateral Agent under the Credit Agreement, but is exchangeable by the
registered holder hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, any such permitted transfer or exchange
to be made in the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this Bond and the payment of any
applicable taxes and fees required by law, and upon any such transfer or
exchange a new registered bond or bonds or the same series and tenor, will be
issued to the authorized transferee, or the registered holder, as the case may
be.
ARTICLE TWO
AMOUNT OF BONDS OUTSTANDING
The aggregate principal amount of Bonds of the Company outstanding and
presently to be issued and outstanding under the provisions of, and secured by
the Indenture, will be $___________ consisting of $8,888,000 principal amount of
First Mortgage Bonds, Series L, 10 1/2 percent due 2000, due March 1, 2000, now
outstanding; $8,100,000 principal amount of First Mortgage Bonds, Series M, 8.70
percent due 2006, due September 1, 2006, now outstanding; $61,750,000 principal
amount of First Mortgage Bonds, Series R, 10 percent due 2017, due July 1, 2017,
now outstanding; $19,400,000 principal amount of First Mortgage Bonds, Series S,
9 5/8 percent due 2019, due July 1, 2019, now outstanding; $100,800,000
principal amount of First Mortgage Bonds, Series T, 11 1/4 percent due 1997, due
January 15, 1997, now outstanding; $100,000,000 principal amount of First
Mortgage Bonds, Series U, 9 1/4 percent due 2000, due September 15, 2000;
$30,000,000 principal amount of First Mortgage Bonds, Series V, due 2000, due
November 3, 2000, now outstanding and up to $100,000,000 principal amount of
First Mortgage Bonds, Series W, due 2001, due September 10, 2001, to be issued
pursuant to Article Four of the Original Indenture as provided for in this
Twenty-Fifth Supplemental Indenture.
Additional Bonds of Series M, R, S, T, U, V and W and of subsequent
series created after the execution and delivery of this Twenty-Fifth
Supplemental Indenture, may, from time to time, be authenticated, delivered and
issued pursuant to the terms of the Indenture.
ARTICLE THREE
ADDITIONAL COVENANTS OF COMPANY
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 perform 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 FOUR
MISCELLANEOUS
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-Fifth 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 be applicable in respect hereof as fully and
with like effect as if set forth herein in full.
Although this Twenty-Fifth Supplemental Indenture is dated for
convenience and for the purpose of reference as of September 10, 1996, 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-Fifth
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 FIVE
FIRST
Land
The following described lots, pieces, or parcels of land owned by the
Company and located in the States and in the Counties designated and hereinafter
set forth:
<PAGE>
State Of Texas
County Of Denton
All that certain property situated in Denton County, Texas, described
as follows, to wit:
Lot 3, in Block A, of VISTA RIDGE SQUARE ADDITION, PHASE THREE, an
Addition to the CITY OF LEWISVILLE, Texas, according to the Map thereof
recorded in Cabinet L, Page 327, of the PLAT Records of DENTON County,
Texas.
SECOND
Electric Transmission Systems
All of the following electric transmission lines owned by the Company,
including towers, poles, pole lines, wires, switch racks, switchboards,
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. Otero County. Install 115KV H-Frame in the Amrad line, west of
Alamogordo.
2. Eddy County. Replace 1-2 pole tangent structure with 1-3 pole
tubular steel structure on the Amrad to Eddy County 115KV line.
3. Chavez County.
(a) Replace 1-3 pole wood angle structure with
1-3 pole tubular steel angle structure on
the Amrad to Eddy County 115KV line.
(b) Replace an existing wood structure with 1-3
pole tubular steel angle structure on the
Amrad to Eddy County 115KV line.
4. Grant County.
(a) Install a 69 KV, gang operated air break
switch on the Bullfrog Substation tap off of
the MD#1 to Cobre Mine 69 KV line.
(b) Install a 69 KV metering position for Cobre
Mine. This includes CT's, PT's, metering
equipment, cabinet, and wood platform
structure.
(c) Purchase and install transfer trip scheme
equipment in the Turquoise
Substation.
5. Hidalgo County.
(a) Purchase and install a second 345-115 KV
auto-transformer at the Hidalgo Substation.
This includes the transformer pad and a
short section of 115 KV bus inside the
substation.
(b) Purchase and install transfer trip scheme
equipment in the Hidalgo Substation.
B. State of Texas
1. Angleton. Replace 138KV tangent structure #50,
Line #138-15.
2. Alvin.
(a) Replace 138KV tangent structure #2,
Line #138-12.
(b) Replace 138KV tangent structure #91,
Line #138-11B.
3. Bosque County.
(a) Install concrete overhead guy pole for new
69 KV single pole transmission line out of
Clifton #2 69/22 KV Substation.
(b) Change out a 75' pole on 69 KV line from
Clifton to Meridian.
(c) Replace 10 poles in the 69 KV line from
Walnut Springs to Clifton.
4. Brazoria County.
(a) Replace 138KV tangent structures #8, 50, 59,
69, 94, 95, 12, & 113, Line #138-15.
(b) Replace 138KV tangent structures #52, 53,
85, 89, 90, 111, 113, 120, 124, Line
#138-17.
5. Clay County.
Install air flow spoilers on 16 spans of 69
KV line.
6. Clifton.
Construct 2822' 69 KV single pole
transmission line - Clifton #2 69/22 KV
Substation.
7. Dickinson.
Replace 138KV tangent structures #50 & 51,
Line #138-14.
8. Fannin County.
Install 69 KV air switch and pole for
Trenton transmission line.
9. Friendswood.
(a) Replace 138KV tangent structure #31, Line
#138-11A.
(b) Replace 138KV tangent structures #87, 97,
99, Line #138-10B.
10. Galveston County.
Replace 138KV tangent structure #67, Line
#138-12.
11. La Marque.
Replace static wire on 3 lines.
12. Lewisville.
(a) Purchase and install three concrete poles
between Highlands and West Stations.
(b) Purchase 138 KV easement from E Systems
from Lakepointe to FM 3040.
(c) Purchase transmission easement from E
Systems for 138 KV line.
(d) Design, survey, and plan 138 KV transmission
line, Lakepointe and TI.
(e) Purchase material and construct 138 KV
transmission line, Lakepointe and TI
Substation.
13. Pecos County.
Purchase and install arresters on the
Sanderson 69KV line. Replace 69KV tangent
structures; replace crossarm assemblies on
existing single pole 69KV tangent
structures; replace bolted type jumpers at
six-two pole 69KV double dead-end
structures; replace 69KV switch structure
with a single pole 69KV tangent structure.
14. Reeves County.
Purchase and install a 138 KV airbreak switch at the Worsham Field Station.
15. Terrell County. Replace 69KV tangent structures.
Replace crossarm assemblies on 69KV tangent structures;
purchase and install arresters at selected locations.
16. Texas City.
(a) Purchase right-of-way 138-4A, 4B, 138-19 line.
(b) Build fiber optic circuit on Line #138-4B
between Caddo and Apache Switching Stations
for relaying, SCADA and communications
required to interconnect UCC Cogeneration
facility with 138KV transmission system.
(c) Replace 138KV tangent structure #32, Line
#138-7.
(d) Replace 138KV tangent structures #100, 119,
126, & 173, Line #138-12.
(e) Replace 69KV tangent structure #6/5, Line
#69-D.
(f) Replace 69KV tangent structure #5/5,
Line #69-E.
(g) Replace 69KV tangent structure #5/1,
Line #69-F.
(h) Replace 69KV tangent structures #3/5, 3/12,
Line #69-G.
(i) Replace static wire on 4 lines.
(j) Replace static wire -- line 69G.
17. West Columbia. Purchase and install Digital Fault
Record. Replace 138KV tangent structure #7, Line
#138-18.
THIRD
Substations
All the substations and the switching stations owned by the Company 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 situated
as follows:
A. State of New Mexico
1. Alamogordo.
(a) Upgrade the 12.5KV bus in the Alamogordo Substation on
the north transformer.
(b) Replace 6-Station Class Arresters and 3-bus support
insulators in the Alamogordo Substation on the South
and Middle Bays.
(c) Replace the wall mounted heating and cooling unit in
the Alamogordo Substation control house.
2. Hidalgo County. Purchase and install 2-SEL 221G Fault
Locating Relays and Goes clock (1 on the Hidalgo-Greenlee
terminal and 1 on the Greenlee-Luna terminal).
3. Otero County. Purchase and install 2-Siemens Accu/Stat MJ-X
Voltage Regulator Controls in the Hollywood Substation.
4. Silver City. Purchase and install bus differential relays
(Westinghouse type KAB) for a differential protection scheme
on the Silver City 69-12 KV Substation bus.
B. State of Texas
1. Angleton. Angleton Substation-Replace 1-138KV Outdoor
Potential Transformer. Replace 150' 3 phase 336 MCM AAC
primary and neutral with 795 MCM AAC.
2. Bosque County.
(a) Install conduit and wiring from TU fence to control
house in Walnut Springs 66 KV Station.
(b) Build circuit getaway from OCR 22-820 out of Handley
Substation.
(c) Purchase necessary equipment and convert RV recloser to
remote control at Walnut Springs Substation.
3. Brazoria County.
(a) West Columbia Main Substation-Purchase and install
Mehta Tech Transcan Digital Fault Recorder. Replace
station batteries.
(b) Old Ocean Substation-Install 3-Voltage Regulators and
5-12KV post insulators.
(c) Phillips #5 Switching Station-Install 2-Outdoor Current
Transformers and 2-Outdoor Potential Transformers.
(d) Amoco-Pan Am Substation-Replace 2-Magnetic tape
recorders with Data Star pulse recorders.
(e) Phillips #2 Switching Station-Replace 1-Magnetic tape
recorder with Data Star pulse recorder.
(f) Phillips #3 Switching Station-Replace 1-Magnetic tape
recorder with Data Star pulse recorder.
4. Brazoria. Brazoria Substation-Replace 3-69KV disconnect
switches and 36-Bus support insulators.
5. Clifton. Purchase new keyboard for SCADA system. Replace
3750 KVA 66/22 KVA transformer in Clifton #2 66/22 KV
Substation.
6. Collin County.
Purchase and install SCADA RTU for Climax Substation.
7. Coryell County.
(a) Build 69/22KV Sycamore Substation.
(b) Build 1000 MCM URD circuit getaway out of
Sycamore Substation.
(c) Install 1108' of pasture fence around
Coryell County Switching Station Site.
8. Denton County.
Purchase and install 3750 KVA transformer and fuses at
Pilot Point Substation.
9. Erath County.
Purchase and install new recording voltmeter in Thurber
66/22/12.5 KV Substation.
10. Fort Stockton. 16th Street Substation-Replace oil circuit
breaker.
11. Franklin County.
Purchase and install SCADA RTU for Talco West
Substation.
12. Galveston County. Purchase and install 1-Remote Terminal
Unit (R.T.U.) at the P.H. Robinson Switchyard to provide
operational information to the League City Dispatch Center.
13. Gatesville.
(a) Purchase and install replacement
transformer cooling fan in
Gatesville #1 66/4 KV Substation.
(b) Purchase and install 69 KV 600A gas
circuit breaker in Coryell County
66 KV Station.
(c) Install three - 300 KVAR Capacitor
banks in TDC - Hilltop 22/4 KV
Substation.
(d) Purchase necessary equipment to
install new conduit system from
control house to 69 KV breaker in
Coryell County Substation.
14. Glen Rose.
Purchase and install replacement transformer
cooling fan in Glen Rose 66/4 KV Substation.
Change out RV100 OCR to WVE in Glen Rose #2
Substation.
15. Hamilton.
Purchase and install three transformer
cooling fans for Hamilton City 66/22 KV
Station.
16. Hamilton County.
(a) Install two down guys on 69 KV line
between the Hamilton Co 66/22 KV
Station to Hamilton City #1 66/22 KV
Station.
(b) Purchase and install WVE recloser,
recloser bypass switches, and
necessary equipment to construct an
additional circuit out of Hamilton
County Substation.
(c) Purchase and install equipment
to convert two OCR's to remote
controlled in Hamilton County Subst
ation.
(d) Construct circuit getaway for
OCR 24-015 for Hamilton County
Substation.
17. Hill County.
(a) Purchase and install two type WVE OCR's in Hill County
Substation.
(b) Install mini-RTU, wiring and phone line for supervisory
control in Hill County Substation.
(c) Purchase and install steel fuse and arresters support
structure, three SMD-2B fuses and three arresters in
Hill County Substation.
18. Jack County. Replace CT's at Bryson Substation.
19. LaMarque. LaMarque Substation-Install SCADA equipment.
20. Lamar County.
(a) Purchase and install SCADA RTU for Deport Substation.
(b) Install CCW/CCVAR meter at Minter Substation.
21. League City.
(a) Build South Shore 138/12.5KV Substation.
(b) South Shore Substation-Purchase and install necessary
equipment to place 2nd 12/16/20 MVA transformer in
service.
(c) League City Dispatch Center-Upgrade SCADA/EMS master
computer system to implement AGC for control area
operations.
(d) League City Dispatch Center-Purchase and install 1-Data
link processor workstation with networking terminal
equipment, operating software, communication circuits
and 1-Remote Terminal Unit (R.T.U.) to communicate
control area information to ERCOT's South Texas
Security Center.
(e) League City Dispatch Center-Purchase Power System
Operation video training series w/20 videotapes,
student workbooks, and instructors guides required for
continuing training of power system operators in order
to gain and maintain ERCOT certification necessary as a
part of control area implementation plan.
(f) League City Dispatch Center-Purchase 2-Remote Terminal
Units (R.T.U.) necesssary for the implementation of
control area operations.
(g) League City Dispatch Center-Relocate the General Office
EMC telemetry receiving/conversion equipment, recording
equipment, SCADA master station equipment and furniture
to the League City Dispatch Center.
(h) League City Dispatch Center-Purchase and install Da-Tel
telemetry equipment and data acquisition hardware and
software to provide CP&L with dynamic schedule
signaling.
(i) League City Substation-Replace 200KVAR capacitor and
roof on control house.
22. Leonard.
Install metering on existing portable substation
transformer.
23. Lewisville.
(a) Install buswork, switch, and URD getaway at Lakepointe
Substation.
(b) Change out switch in TI Substation.
(c) Install new batteries for SCADA ups system.
(d) Reconductor work at West Substation.
(e) Purchase and install event recorder in TI Substation.
(f) Purchase and install 25/33/42/47 MVA 138-7.5 KV
transformer with arresters for Lewisville West Station.
(g) Install 25/37/42 MVA 138-7.5 KV transformer in north
position at TI Station. (h) Purchase four 138 KV SF6
circuit breakers for TI Substation.
(i) Purchase new remote interrogation unit for SCADA
operations.
(j) Purchase and install 2 SCADA RTU's for TU Flower Mound
POD's.
(k) Purchase and install 25/33/42 MVA transformer and
arresters at West Station.
(l) Purchase and install 12.5 KV 200A, 41 switches, and bus
in West Station.
(m) Purchase and install two reverse power relays for TI
Substation.
(n) Replace failed PT at Lakepointe Substation.
(o) Construct transformer foundation for spare transformer
at West Substation.
(p) Purchase 25/37/42 MVA power transformer for TI
Substation backup.
(q) Purchase and install relay panels and gas breaker at TI
Substation.
(r) Purchase and install relay panel at Lakepointe
Substation.
24. Montague County.
Repair transmission line hit by tornado.
25. Pecos County.
(a) Belding Substation-Install RV recloser.
(b) Airport Substation-Install 7500 KVA, 3 phase
transformer.
(c) Puckett Field Substation-Install 2-69KV gang switches.
(d) Install RV Recloser in the Belding Substation.
(e) Install 7500 KVA 3 phase transformer at Airport
Substation
26. Pecos.
(a) Pecos Main Substation-Purchase and install SPS 69KV
1200 AMP SF6 circuit breaker; install 3 each 69KV
arresters.
(b) Pecos Main Substation-Purchase oil circuit recloser
type KWE-7, 14.4KV 560a, 10KA type ME4C electronic
control, a substation mounting frame and additional
miscellaneous accessories.
(c) Airport Substation-Rewind, transportation and handling
costs of Allis-Chalmers 7500 KVA 66/12.5KV substation
transformer.
27. Red River County.
Purchase and install SCADA RTU for Red River
Substation.
28. Reeves County.
(a) Worsham Field Substation-Purchase and install a 138KV
airbreak switch on the Pecos side of the IH20 to
Wickett 69KV line.
(b) Worsham Field Substation-Purchase oil circuit recloser,
type KWE 7, 14.4KV, 465A 10KA, with type ME4C
electronic control. Purchase oil circuit recloser
substation mounting frame and additional miscellaneous
accessories.
(c) Worsham Field Station-Purchase & install a 138KV
airbreak switch.
(d) Reeves County #4 Substation-Replace oil circuit
recloser.
(e) Flat Top Substation-Replace 3-oil circuit reclosers.
29. Texas City.
(a) G.A.F. 138KV Switching Station-Purchase and install
1-145KV, 2,000 amp Gas Circuit Breaker, 2-138KV, 2,000
amp gang switches, 9-88KV MCOV line arresters, 138KV
steel switch stand, relaying, buswork, foundations,
fill & level, grounding, control cable & conduit.
(b) Caddo 138KV Switching Station-Purchase and install
relaying and communications equipment to interconnect
the UCC Cogeneration with 138KV transmission system.
(c) Grant Avenue Switching Station-Replace 2-HCB relays and
1-SC fault interruption relay due to flood damage.
(d) Union Carbide Substation-Replace station batteries.
(e) Amoco Substation-Replace 6-69KV disconnect switches and
2-200 KVAR, 69KV capacitor units.
(f) Build Apache 138KV Switching Station to interconnect
the UCC Cogeneration facility with 138KV transmission
system.
(g) Purchase and install telemetry equipment and 1-Remote
Terminal Units (R.T.U.) at the Enron Clear Lake
Cogeneration facility to provide operational
information to the League City Dispatch Center.
(h) Texas City Spare-Purchase 4-Remote Terminal Units
(R.T.U.) for future installation into new and existing
Cogeneration facilities.
30. Trenton.
Replace bank at Trenton Substation with 3750 KVA 69 KV
transformer and 4 KV regulators from Farmersville
Station.
31. Ward County.
(a) Cochise Substation-Purchase and install oil circuit
recloser, substation mounting frame and additional
miscellaneous accessories. Purchase and install oil
circuit recloser at Cochise Substation.
(b) Lone Star Tap Substation-Install 3 way switch.
32. Whitney.
(a) Install three 100 amp voltage regulators in the Whitney
66/22 KV Substation.
(b) Purchase and install WVE recloser for Whitney 66/22 KV
Substation.
33. Winkler County.
(a) California Substation-Install 2 way switch.
(b) Wink Substation-Replace 2-oil circuit breakers.
34. Young County.
(a) Purchase and install transformer cooling fan in Olney
69/12.5 KV Substation.
(b) Purchase and install ABB reclosing relay on OCR #1431
at Olney Station.
FOURTH
Franchises
All and singular, the corporate, federal, state, municipal and other
franchises, permits, consents, licenses, grants, immunities, privileges, and
rights owned by the Company 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:
A. State of New Mexico
Municipality Expiration Date
Dona Ana County November 1, 2019
B. State of Texas
Municipality Expiration Date
Alvin Extended to October 21, 1996
Cross Roads May 28, 2026
Nocona Extended to April 8, 2015
Texas City Extended to March 31, 1999
IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused this
Twenty-Fifth 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, First Trust of Illinois, National
Association has caused this Twenty-Fifth 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 Assistant Secretaries, all as of the
day and year first above written.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY,
(Corporate Seal) By:
M. S. Cheema
Senior Vice President
Attest:
B. Jan Adkins
Assistant Secretary
FIRST TRUST OF ILLINOIS,
NATIONAL ASSOCIATION,
as Trustee
(CORPORATE SEAL)
By:
Vice President
Attest:
Assistant Secretary
<PAGE>
STATE OF TEXAS SS.
SS. ss.:
COUNTY OF TARRANT SS.
On this ____ day of September, 1996, before me,
____________________________, Notary Public in and for the County and State
aforesaid, personally appeared M. S. Cheema, 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 Senior Vice President of TEXAS-NEW MEXICO POWER COMPANY, a
Texas corporation, who being by me duly sworn, did say that he resides in
Weatherford, Texas, that he is Senior Vice President 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 M. S. Cheema
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
____ day of September ___, 1996.
(NOTARIAL SEAL)
<PAGE>
STATE OF ILLINOIS SS.
SS. ss.:
COUNTY OF COOK SS.
On this ____ day of September, 1996, before me,
____________________________, Notary Public in and for the County and State
aforesaid, personally appeared _________________________________, 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 First Trust
of Illinois, National Association, who, being by me duly sworn, did say that he
resides in Chicago, Illinois; that he is a Vice President of said First Trust of
Illinois, National Association, and that the seal affixed to said instrument is
the corporate seal of said banking corporation, and that said instrument was
signed and sealed in behalf of said association by authority of its Board of
Directors; and said ___________________________, 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
____ day of September, 1996.
(NOTARIAL SEAL)
<PAGE>
STATE OF TEXAS SS.
SS. ss.:
COUNTY OF TARRANT SS.
M. S. Cheema, being duly sworn, deposes and says:
1. That he is Senior Vice President 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 ____ day of September, 1996.
(NOTARIAL SEAL)
D-337151.06
EXECUTION COPY
$100,000,000
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of September 10, 1996
among
TEXAS-NEW MEXICO POWER COMPANY,
THE LENDERS PARTY HERETO,
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent and Collateral Agent
and
THE FIRST NATIONAL BANK OF CHICAGO
and UNION BANK OF CALIFORNIA, N.A.,
as Co-Agents
<PAGE>
TABLE OF CONTENTS
<TABLE>
Section Page
ARTICLE I
DEFINITIONS
<S> <C>
1.01. Defined Terms.................................................................
1.02. Terms Generally...............................................................
1.03. Computations of Time Periods..................................................
ARTICLE II
THE CREDITS
2.01. Commitments...................................................................
2.02. Loans.........................................................................
2.03. Borrowing Procedure...........................................................
2.04. Evidence of Debt; Repayment of Loans..........................................
2.05. Fees..........................................................................
2.06. Interest on Loans.............................................................
2.07. Default Interest..............................................................
2.08. Alternate Rate of Interest....................................................
2.09. Termination and Reduction of Commitments......................................
2.10. Prepayment....................................................................
2.11. Reserve Requirements; Change in Circumstances.................................
2.12. Change in Legality............................................................
2.13. Indemnity.....................................................................
2.14. Pro Rata Treatment............................................................
2.15. Sharing of Setoffs............................................................
2.16. Payments......................................................................
2.17. Taxes.........................................................................
2.18. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate..............................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers..........................................................
3.02. Authorization.................................................................
3.03. Enforceability................................................................
3.04. Governmental Approvals........................................................
3.05. Financial Statements..........................................................
3.06. No Material Adverse Change....................................................
3.07. Title to Properties; Possession Under Leases..................................
3.08. Subsidiaries..................................................................
3.09. Litigation; Compliance with Laws..............................................
3.10. Agreements....................................................................
3.11. Federal Reserve Regulations...................................................
3.12. Investment Company Act; Public Utility Holding
Company Act..................................................................
3.13. Use of Proceeds...............................................................
3.14. Tax Returns...................................................................
3.15. No Material Misstatements.....................................................
3.16. Employee Benefit Plans........................................................
3.17. Environmental Matters.........................................................
3.18. Insurance.....................................................................
3.19. Bond Agreement................................................................
3.20. Labor Matters.................................................................
3.21. Solvency......................................................................
33.22. Force Majeure Event...........................................................
3.23. First Mortgage Bonds..........................................................
ARTICLE IV
CONDITIONS PRECEDENT
4.01. Conditions Precedent to Effectiveness of the
Commitments...................................................................
4.02. Conditions Precedent for Certain Borrowings...................................
4.03. Conditions Precedent to All Borrowings........................................
4.04. Reliance on Certificates......................................................
ARTICLE V
AFFIRMATIVE COVENANTS
5.01. Existence; Businesses and Properties..........................................
5.02. Insurance.....................................................................
5.03. Obligations and Taxes.........................................................
5.04. Financial Statements, Reports, etc............................................
5.05. Litigation and Other Notices..................................................
5.06. Employee Benefits.............................................................
5.07. Maintaining Records; Access to Properties and
Inspections...................................................................
5.08. Use of Proceeds...............................................................
5.09. Compliance with Laws and Environmental Laws...................................
5.10. Preparation of Environmental Reports..........................................
5.11. Further Assurances............................................................
5.12. Performance and Continuation of TNP Bond Indenture............................
ARTICLE VI
NEGATIVE COVENANTS
6.01. Indebtedness..................................................................
6.02. Liens.........................................................................
6.03. Sale and Lease-Back Transactions..............................................
6.04. Investments, Loans and Advances...............................................
6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions..................................................................
6.06. Dividends and Distributions; Restrictions on
Ability of Subsidiaries to Pay Dividends......................................
6.07. Transactions with Affiliates..................................................
6.08. Business of Borrower and Subsidiaries.........................................
6.09. Additional Generating Facilities..............................................
6.10. Interest Coverage Ratio.......................................................
6.11. Debt to Capitalization Ratio..................................................
6.12. Capital Expenditures..........................................................
ARTICLE VII
EVENTS OF DEFAULT......................................
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND
THE COLLATERAL AGENT.....................................
ARTICLE IX
MISCELLANEOUS
9.01. Notices.......................................................................
9.02. Survival of Agreement.........................................................
9.03. Binding Effect................................................................
9.04. Successors and Assigns........................................................
9.05. Expenses; Indemnity...........................................................
9.06. Right of Setoff...............................................................
9.07. Applicable Law................................................................
9.08. Waivers; Amendment............................................................
9.09. Interest Rate Limitation......................................................
9.10. Entire Agreement..............................................................
9.11. Waiver of Jury Trial..........................................................
9.12. Severability..................................................................
9.13. Counterparts..................................................................
9.14. Headings......................................................................
9.15. Jurisdiction; Consent to Service of Process...................................
9.16. Confidentiality...............................................................
9.17. Release of Collateral.........................................................
Schedules
<S> <C>
Schedule 2.01 Commitments of the Lenders
Schedule 3.06 Changes
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.23 First Mortgage Bonds
Schedule 6.01 Intercompany Indebtedness
Schedule 6.02 Existing Liens
Schedule 7(o) Series T
Exhibits
Exhibit A .........Form of Administrative Questionnaire
Exhibit B .........Form of Assignment and Acceptance
Exhibit C .........Form of Borrowing Request
Exhibit D .........Form of Note
Exhibit E .........Form of Bond Agreement
Exhibit F-1 Form of Opinion of Haynes and Boone, L.L.P.,
counsel for the Borrower
Exhibit F-2 Form of Opinion of Michael D. Blanchard, General
Counsel of the Borrower
Exhibit F-3 Form of Opinion of Winstead, Sechrest & Minick,
P.C., Texas counsel for the Administrative Agent
Exhibit F-4 Form of Opinion of Rubin, Katz, Salazar, Alley &
Rouse, New Mexico regulatory counsel for the
Borrower
Exhibit F-5 Form of Opinion of McDermott, Will & Emery, counsel
for the Administrative Agent
</TABLE>
CREDIT AGREEMENT, dated as of September 10, 1996, among TEXAS-NEW
MEXICO POWER COMPANY, a Texas corporation (the "Borrower"), the Lenders (as
defined in Article I), THE FIRST NATIONAL BANK OF CHICAGO, as administrative
agent (in such capacity, the "Administrative Agent") and as collateral agent (in
such capacity, the "Collateral Agent") for the Lenders, and THE FIRST NATIONAL
BANK OF CHICAGO and UNION BANK OF CALIFORNIA, N.A., as Co-Agents (the
"Co-Agents").
PRELIMINARY STATEMENTS
The Borrower has requested the Lenders to extend credit in the form of
Loans (such term and each other capitalized term used but not defined herein
having the meaning given to it in Article I) at any time and from time to time
prior to the Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $100,000,000. The proceeds of the Loans are to be
used solely (i) to repurchase and retire First Mortgage Bonds Series L (10-1/2
percent due March 1, 2000), Series M (8.70 percent due September 1, 2006),
Series R (10 percent due July 1, 2017), Series S (9-5/8 percent due July 1,
2019), Series U (9-1/4 percent due September 15, 2000) and (subject to the
receipt by the Administrative Agent of certified copies of satisfactory
resolutions of the Board of Directors of the Borrower) Series T (11-1/4 percent
due January 15, 1997) previously issued by the Borrower and (ii) for other
general corporate purposes.
The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of
ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the person specified.
"Agents" shall have the meaning assigned to such term in
subsection (a) of Article VIII.
"Aggregate Credit Exposure" shall mean the aggregate amount of
the Lenders' Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1 percent)
equal to the greater of (a) the Corporate Base Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1 percent. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with
the terms of the definition thereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the preceding sentence,
until the circumstances giving rise to such inability no longer exist.
Any change in the Alternate Base Rate due to a change in the Corporate
Base Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Corporate Base Rate or the Federal
Funds Effective Rate, respectively. The term "Corporate Base Rate"
shall mean a rate of interest per annum equal to the corporate base
rate of interest announced by the Administrative Agent from time to
time; each change in the Corporate Base Rate shall be effective on the
date such change is announced as being effective. The term "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"Applicable Percentage" shall mean, for any day, with respect
to any Eurodollar Loan or ABR Loan, as the case may be, the applicable
percentage set forth below under the caption "Eurodollar Spread" or
"ABR Spread", respectively, based upon the ratings by any two of S&P,
Moody's and D&P applicable on such date to the First Mortgage Bonds:
<TABLE>
============================================= -------------------- ====================
ABR
Eurodollar Spread
Spread
--------------------------------------------- -------------------- --------------------
Category 1
<S> <C> <C>
BBB- or higher by S&P or D&P 0.75 percent 0.00 percent
Baa3 or higher by Moody's
--------------------------------------------- -------------------- --------------------
Category 2
BB+ by S&P or D&P 1.25 percent 0.25 percent
Ba1 by Moody's
--------------------------------------------- -------------------- --------------------
Category 3
BB by S&P or D&P 1.45 percent 0.45 percent
Ba2 by Moody's
--------------------------------------------- -------------------- --------------------
Category 4
BB- by S&P or D&P 1.80 percent 0.80 percent
Ba3 by Moody's
--------------------------------------------- -------------------- --------------------
Category 5
B+ by S&P or D&P 2.25 percent 1.25 percent
B1 by Moody's
--------------------------------------------- -------------------- --------------------
Category 6
B or below by S&P or D&P 2.50 percent 1.50 percent
B2 or below by Moody's
--------------------------------------------- -------------------- --------------------
</TABLE>
For purposes of the foregoing, (i) if Moody's, S&P or D&P
shall not have in effect a rating for the First Mortgage Bonds (other
than by reason of the circumstances referred to in the last sentence of
this definition), then such rating agency shall be deemed to have
established a rating in Category 6; (ii) if the ratings established or
deemed to have been established by Moody's, S&P and D&P for the First
Mortgage Bonds shall fall within three different Categories, the
Applicable Percentage shall be based on the middle of the three
Categories; and (iii) if the rating established by Moody's, S&P or D&P
for the First Mortgage Bonds shall be changed (other than as a result
of a change in the rating system of Moody's, S&P or D&P), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Percentage
shall apply during the period commencing on the effective date of such
change and ending on the date immediately preceding the effective date
of the next such change. If the rating system of Moody's, S&P or D&P
shall change, or if any such rating agency shall cease to be in the
business of rating corporate debt obligations, the Borrower and the
Lenders shall negotiate in good faith to amend this definition to
reflect such changed rating system or the non-availability of ratings
from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Percentage shall be determined by reference
to the rating most recently in effect prior to such change or
cessation.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by
the Administrative Agent, in the form of Exhibit B or such other form
as shall be approved by the Administrative Agent.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Bond Agreement" shall mean the Bond Agreement, substantially
in the form of Exhibit E, between the Borrower and the Collateral Agent
for the benefit of the Lenders.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders on a single date and as to which a single Interest
Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form
of Exhibit C.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks in Chicago, Illinois are authorized or
required by law to close; provided, however, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
"Capital Expenditures" shall mean expenditures related to the
acquisition of plant and equipment (including, without limitation,
capitalized interest and start-up expenses related to such plant and
equipment) that are capitalized in accordance with GAAP.
"Capital Lease Obligations" of any person shall mean
obligations of such person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of
such person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Change in Control" shall mean an event or the last of a
series of events by which:
(i) any person or group (as such
term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the
Securities and Exchange Commission relating to such
sections, as amended from time to time) 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 percent of the total voting power of
all outstanding common stock of TNP Enterprises;
(ii) the Borrower consolidates with
or merges into another corporation and the Borrower
is not the surviving entity, or the Borrower conveys,
transfers or leases substantially all of its assets,
or TNP Enterprises shall cease to own 100 percent of
the common stock of the Borrower; or
(iii) 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 were
directors of TNP Enterprises,
and
(b) any new directors who were
elected or recommended for
election to the board of
directors of TNP Enterprises 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 TNP
Enterprises.
"Chemical Bank Agreement" shall have the meaning
assigned to such term in the definition of "Existing Facility
Documents" herein.
"Closing Date" shall mean the date on which each of the
conditions precedent enumerated in Section 4.01 shall have been
fulfilled to the satisfaction of the Administrative Agent, the
Co-Agents and the Lenders. All transactions contemplated by Section
4.01 shall take place on or before September 30, 1996 at the offices of
McDermott, Will & Emery, 227 West Monroe Street, Suite 4400, Chicago,
Illinois 60606, at 10:00 A.M. (Chicago, Illinois time), or such other
place or time as the parties hereto may mutually agree.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all of the "Collateral" as defined
in the Bond Agreement.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans hereunder as set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender assumed its Commitment, as applicable, as the same may be
(i) reduced from time to time pursuant to Section 2.09 or pursuant to
Section 2.18 and (ii) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04.
"Commitment Fee" shall have the meaning assigned to such term
in Section 2.05.
"Consolidated EBIT" shall mean, with respect to the Borrower
and its consolidated Subsidiaries for any period, operating revenues of
the Borrower and its consolidated Subsidiaries for such period less
operating expenses of the Borrower and its consolidated Subsidiaries,
but before the deduction therefrom of any applicable interest charges
and income taxes for such period, all determined on a consolidated
basis in accordance with GAAP. For the purposes of this definition,
EBIT shall be calculated before any reduction for any write-down after
the date hereof in the book value of assets of the Borrower or its
Subsidiaries resulting from any statute or any rule, regulation or
order of the PUCT.
"Consolidated Interest Expense" shall mean the aggregate
Interest Expense of the Borrower and the Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Total Indebtedness" shall mean the aggregate
Indebtedness of the Borrower and the Subsidiaries of the sort referred
to in clause (a) of the definition of "Indebtedness", determined on a
consolidated basis in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all
outstanding Loans of such Lender.
"Cumulative Net Income Available for Common Dividends" shall
mean, for any period, the sum of all consolidated net income available
for common dividends as reflected in the Borrower's consolidated
statements of operations for such period.
"D&P" shall mean Duff & Phelps, Inc., or any successor
thereto.
"Default" shall mean any event or condition that upon notice,
lapse of time or both would constitute an Event of Default.
"Dividend" shall mean, with respect to any person, any
dividend on any shares of the common, preferred or preference stock, or
any other class of stock or equity capital, of such person or any other
distribution in respect thereof (other than dividends payable solely in
shares of such stock) and any payments on account of the purchase,
redemption or other retirement of any of such person's common stock or
any other class of stock or equity capital, or any warrants or options
therefor, whether in cash or in property or in obligations or
securities.
"dollars" or "$" shall mean lawful money of the United
States of America.
"environment" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands),
the land surface or subsurface strata, the workplace or as otherwise
defined in any Environmental Law.
"Environmental Claim" shall mean any written accusation,
allegation, notice of violation, claim, demand, order, directive, cost
recovery action or other cause of action by, or on behalf of, any
Governmental Authority or any person for damages, injunctive or
equitable relief, personal injury (including sickness, disease or
death), Remedial Action costs, tangible or intangible property damage,
natural resource damages, nuisance, pollution, any adverse effect on
the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon: (a) the
existence, or the continuation of the existence, of a release of
Hazardous Materials (including sudden or non-sudden, accidental or
non-accidental releases); (b) exposure to any Hazardous Material; (c)
the presence, use, handling, transportation, storage, treatment or
disposal of any Hazardous Material; or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present
and future treaties, laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements
issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of
natural resources, the management, release or threatened release of any
Hazardous Material or to health and safety matters, including the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. Section Section 9601 et seq. (collectively, "CERCLA"),
the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Amendments of 1984, 42
U.S.C. Section Section 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
Section Section 1251 et seq., the Clean Air Act of 1970, as amended, 42
U.S.C. Section Section 7401 et seq., the Toxic Substances Control Act
of 1976, 15 U.S.C. Section Section 2601 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section Section
651 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section Section 11001 et seq., the Safe Drinking Water
Act of 1974, as amended, 42 U.S.C. Section Section 300(f) et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Section Section 1801
et seq., and any similar or implementing state or local law, and all
amendments or regulations promulgated thereunder.
"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission
required by or from any Governmental Authority pursuant to any
Environmental Law.
"Equity Capital" shall mean, as of any date of determination
thereof, the sum of the following for the Borrower and its Subsidiaries
determined on a consolidated basis (without duplication) in accordance
with GAAP:
(a) the amount of capital
stock (including, without limitation, preferred and
preference stock), plus
(b) the amount of surplus and
retained earnings (or, in the case of a surplus or
retained earnings deficit, minus the amount of such
deficit), plus
(c) the amount of any other
items of an equity capital nature, minus
(d) the sum of (x) the cost
of treasury shares plus (y) goodwill.
For the purposes of this definition, the sum shall be calculated before
any reduction for any write-down after the date hereof in the book
value of the assets of the Borrower or its Subsidiaries resulting from
any statute or any rule, regulation or order of the PUCT; provided,
that the excess of any such write-downs over $10,000,000 in the
aggregate during the term of this Agreement shall be taken into account
in determining Equity Capital.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a
single employer under Section 414(b) or (c) of the Code, or solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder,
with respect to a Plan; (b) the adoption of any amendment to a Plan
that would require the provision of security pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined
in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any
liability under Title IV of ERISA with respect to the termination of
any Plan or the withdrawal or partial withdrawal of the Borrower or any
of its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the
receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to the intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (g) the
receipt by the Borrower or any ERISA Affiliate of any notice concerning
the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the
occurrence of a "prohibited transaction" with respect to which the
Borrower or any of its Subsidiaries is a "disqualified person" (within
the meaning of Section 4975 of the Code) or with respect to which the
Borrower or any such Subsidiary could otherwise be liable; and (i) any
other event or condition with respect to a Plan or Multiemployer Plan
that could reasonably be expected to result in liability of the
Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a
rate determined by reference to the LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Existing Facility Documents" shall mean (i) that certain
Revolving Credit Facility Agreement, dated as of November 3, 1995, as
amended or otherwise modified from time to time, among the Borrower,
Chemical Bank, as Administrative Agent and Collateral Agent, and The
Bank of New York, CIBC, Inc., NationsBank of Texas, N.A. and Union
Bank, as Co-Agents (the "Chemical Bank Agreement") and (ii) the "Loan
Documents" (as defined in the Chemical Bank Agreement).
"Fee Letter" shall have the meaning assigned to that term in
Section 2.05(c).
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer or
controller of such corporation.
"First Mortgage Bonds" shall mean the first mortgage bonds
issued by the Borrower pursuant to the TNP Bond Indenture.
"GAAP" shall mean United States generally accepted accounting
principles applied on a consistent basis, but giving effect to changes
in such accounting principles as provided in Section 1.02.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other person
(the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Indebtedness, (b)
to purchase or lease property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Indebtedness" of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money, (b) all
obligations of such person with respect to deposits or advances of any
kind, (c) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (d) all obligations of such
person upon which interest charges are customarily paid, (e) all
obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such
person, (f) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary
course of business), (g) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired
by such person, whether or not the obligations secured thereby have
been assumed, (h) all Guarantees by such person of Indebtedness of
others, (i) all Capital Lease Obligations of such person, (j) all
obligations of such person in respect of Interest Rate Protection
Agreements, foreign currency exchange agreements or other interest or
exchange rate hedging arrangements and (k) all obligations of such
person as an account party in respect of letters of credit and bankers'
acceptances.
"Interest Expense" shall mean, with respect to any person, for
any period, the sum of the following: (a) all interest expense in
respect of Indebtedness of such person during such period (whether or
not actually paid during such period) plus (b) the net amounts payable
(or minus the net amounts receivable) by such person under any Interest
Rate Protection Agreement during such period (whether or not actually
paid or received during such period).
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a Eurodollar Borrowing
with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive Interest
Periods of three months' duration been applicable to such Borrowing,
and, in addition, the date of any prepayment of such Borrowing or
refinancing of such Borrowing with a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month
that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, and
(b) as to any ABR Borrowing, the period commencing on the date of such
Borrowing and ending on the earliest to occur of (i) the next
succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date and (iii) the date such Borrowing is prepaid in
accordance with Section 2.10; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in
the case of a Eurodollar Borrowing only, such next succeeding Business
Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall
accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any agreement
providing for an interest rate swap, cap or collar, or for any other
financial arrangement designed to protect against fluctuations in
interest rates.
"Lenders" shall mean (a) the financial institutions listed on
Schedule 2.01 (other than any such financial institution that has
ceased to be a party hereto pursuant to an Assignment and Acceptance)
and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIBO Rate" shall mean, for each Interest Period for each
Eurodollar Loan made as part of the same Eurodollar Borrowing, the rate
(rounded upwards, if necessary, to the next 1/16 of 1 percent) at which
dollar deposits approximately equal in principal amount to the
Administrative Agent's portion of such Eurodollar Loan made as part of
such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the
Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 A.M., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Notes, the
Bond Agreement and the Supplemental Indenture.
"Loans" shall mean the loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Loan shall be a Eurodollar Loan
or an ABR Loan.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, assets, operations or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b)
material impairment of the ability of the Borrower to perform any of
its obligations under any Loan Document to which it is or will be a
party or (c) material impairment of the rights of or benefits available
to the Lenders under any Loan Document.
"Maturity Date" shall mean August 31, 2001.
"Moody's" shall mean Moody's Investors Service, Inc, or any
successor thereto.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"New First Mortgage Bonds" shall have the meaning assigned to
such term in the definition of "1996 Regulatory Orders" herein.
"1996 NMPUC Order" shall mean the Final Order Approving
Recommended Decision of the New Mexico Public Utility Commission
issued on August 19, 1996 in Case No. 2712.
"1996 Regulatory Orders" shall mean the 1996 NMPUC Order and
the letter order, dated July 19, 1996, of the Federal Energy Regulatory
Commission in Docket No. ES96-35-000 authorizing the Borrower to issue
First Mortgage Bonds in an aggregate principal amount not less than the
aggregate amount of the Commitments, which First Mortgage Bonds shall
be issued in the name of the Collateral Agent to provide for the
payment of all obligations of the Borrower to the Lenders and the
Agents under this Agreement and to provide the Lenders and the Agents
with the benefits of the security provided for such First Mortgage
Bonds (the "New First Mortgage Bonds").
"Note" shall mean a promissory note of the Borrower payable to
the order of a Lender, in substantially the form of Exhibit D.
"Obligations" shall mean all obligations defined as
"Obligations" in the Bond Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted Investments" shall mean:
(a) direct obligations of, or
obligations the principal of and interest on which
are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent
such obligations are backed by the full faith and
credit of the United States of America), in each case
maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper
maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of
deposit, banker's acceptances and time deposits
maturing within one year from the date of acquisition
thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by,
any domestic office of any commercial bank organized
under the laws of the United States of America or any
State thereof which has a combined capital and
surplus and undivided profits of not less than
$250,000,000;
(d) deposits not exceeding
$2,000,000 in the aggregate with, or investments
issued by or guaranteed by (and backed by the full
faith and credit of the United States of America),
any domestic office of a commercial bank organized
under the laws of the United States of America or any
State thereof which has a combined capital and
surplus and undivided profits of less than
$250,000,000 but not less than $30,000,000; and
(e) other investment
instruments approved in writing by the Required
Lenders.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, limited liability company,
partnership or government, or any agency or political subdivision
thereof.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 307 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such
plan were terminated, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"Properties" shall have the meaning assigned to such term in
Section 3.17(a).
"PUCT" shall mean the Public Utility Commission of the State
of Texas or any successor thereto.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, the first of which Quarterly Dates shall be the
first such date after the date any Loan is made, provided that, if any
such date is not a Business Day, the relevant Quarterly Date shall be
the next succeeding Business Day.
"Register" shall have the meaning assigned to such term in
Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from
time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Release Conditions" shall have the meaning assigned to such
term in Section 9.17(a).
"Release Date" shall have the meaning assigned to such term in
Section 9.17(a).
"Required Lenders" shall mean, at any time, Lenders having
Loans and unused Commitments representing at least 66-2/3 percent of
the sum of all Loans outstanding and unused Commitments at such time.
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any
other officer or similar official thereof responsible for the
administration of the obligations of such corporation in respect of
this Agreement.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., or any successor thereto.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, limited
liability company, association or other business entity (a) of which
securities or other ownership interests representing more than 50
percent of the equity or more than 50 percent of the ordinary voting
power or more than 50 percent of the general partnership interests are,
at the time any determination is being made, owned, controlled or held,
or (b) that is, at the time any determination is made, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Supplemental Indenture" shall mean the Twenty-Fifth
Supplemental Indenture, dated as of September 10, 1996, between the
Borrower and First Trust of Illinois, National Association, as Trustee,
which supplements the TNP Bond Indenture and provides for the issuance
from time to time of New First Mortgage Bonds in an aggregate principal
amount of up to $100,000,000.
"TGC" shall mean Texas Generating Company, a Texas
corporation, all of whose common stock is on the date hereof owned by
the Borrower.
"TGC II" shall mean Texas Generating Company II, a Texas
corporation, all of whose common stock is on the date hereof owned by
the Borrower.
"TNP Bond Indenture" shall mean the Indenture of Mortgage and
Deed of Trust, dated as of November 1, 1944, between Community Public
Service Company (predecessor to the Borrower) and the Trustee, as
amended and supplemented by supplemental indentures.
"TNP Enterprises" shall mean TNP Enterprises, Inc., a Texas
corporation.
"Total Capitalization" shall mean, as of any date, the sum of
Equity Capital and the aggregate amount of Indebtedness of the sort
referred to in clause (a) of the definition of "Indebtedness"
(including the current portion of such Indebtedness), in each case of
the Borrower and its Subsidiaries, determined on a consolidated basis.
"Total Commitment" shall mean, at any time, the aggregate
amount of the Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term
in Section 3.02.
"Trustee" shall mean First Trust of Illinois, National
Association (successor to City National Bank and Trust Company of
Chicago), as trustee under the TNP Bond Indenture.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the
Loans comprising such Borrowing is determined. For purposes hereof, the
term "Rate" shall include the LIBO Rate and the Alternate Base Rate.
"wholly-owned subsidiary" of any person shall mean a
subsidiary of such person of which securities (except for directors'
qualifying shares) or other ownership interests representing 100
percent of the equity or 100 percent of the ordinary voting power or
100 percent of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person
or one or more wholly-owned subsidiaries of such person or by such
person and one or more wholly-owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.
SECTION 1.02. Terms Generally The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Whenever definitions in Section 1.01
or other capitalized terms contained in this Agreement are defined by reference
to defined terms in the Chemical Bank Agreement, and such defined terms in the
Chemical Bank Agreement contain capitalized terms not otherwise defined herein,
such capitalized terms shall have the meanings assigned to such terms in the
Chemical Bank Agreement. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Loan Document shall mean such document as
amended, restated, supplemented or otherwise modified from time to time and (b)
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided, however, that if the
Borrower notifies the Administrative Agent that the Borrower wishes to amend any
covenant in Article VI or any related definition to eliminate the effect of any
change in GAAP occurring after the date of this Agreement on the operation of
such covenant (or if the Administrative Agent notifies the Borrower that the
Required Lenders wish to amend Article VI or any related definition for such
purpose), then the Borrower's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders.
SECTION 1.03. Computation of Time Periods3. Computation of Time
Periods. Unless otherwise indicated, each reference in this Agreement to a
specific time of day is a reference to Chicago, Illinois time. In the
computation of periods of time under this Agreement, any period of a specified
number of days or months shall be computed by including the first day or month
occurring during such period and excluding the last such day or month. In the
case of a period of time "from" a specified date "to" or "until" a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Loans to the Borrower, at any time and from
time to time on or after the date hereof, and until the earlier of the Maturity
Date and the termination of the Commitment of such Lender in accordance with the
terms hereof, in an aggregate principal amount at any time outstanding that will
not result in such Lender's Credit Exposure exceeding its Commitment. Within the
limits set forth in the preceding sentence and subject to the terms, conditions
and limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Loans.
SECTION 2.02. Loans2. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments; provided, however, that the failure of any Lender
to make any Loan shall not in itself relieve any other Lender of its obligation
to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). The Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000 and
not less than $5,000,000 or (ii) equal to the remaining available balance of the
Commitments.
(b) Subject to Sections 2.08 and 2.12, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided, that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
the applicable Note and this Agreement. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the Borrower shall not be
entitled to request any Borrowing that, if made, would result in more than six
Eurodollar Borrowings outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in Chicago, Illinois as the Administrative Agent may designate not later
than 11:00 A.M. on such date, and the Administrative Agent shall by 12:00 noon
credit the amounts so received to an account with the Administrative Agent
designated by the Borrower in the applicable Borrowing Request, which account
must be in the name of the Borrower, or, if a Borrowing shall not occur on such
date because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available, then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date.
(f) The Borrower may refinance all or any part of a Borrowing with
another Borrowing, subject to the conditions and limitations set forth in this
Agreement. Any Borrowing or part thereof so refinanced shall be deemed to be
repaid or prepaid in accordance with the applicable provisions of this Agreement
with the proceeds of the new Borrowing, and the proceeds of such new Borrowing,
to the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be transferred as contemplated by subsection (c) above.
SECTION 2.03. Borrowing Procedure In order to request a Borrowing, the
Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request (or shall notify the Administrative Agent by
telephone of the information contained in such a Borrowing Request, with a copy
of such Borrowing Request to be delivered or telecopied to the Administrative
Agent promptly after such notice) (a) in the case of a Eurodollar Borrowing, not
later than 11:00 A.M. three Business Days before a proposed Borrowing, and (b)
in the case of an ABR Borrowing, not later than 12:00 noon one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day), (iii) the number and location of the account to which
funds are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the Lenders of any notice given pursuant to this Section
2.03 (and the contents thereof), and of each Lender's portion of the requested
Borrowing.
If the Borrower shall not have delivered a Borrowing Request in
accordance with this Section 2.03 prior to the end of the Interest Period then
in effect for any Borrowing and requesting that such Borrowing be refinanced,
then the Borrower shall (unless the Borrower has notified the Administrative
Agent, not less than three Business Days prior to the end of such Interest
Period, that such Borrowing is to be repaid at the end of such Interest Period)
be deemed to have delivered a Borrowing Request requesting that such Borrowing
be refinanced with a new Borrowing of equivalent amount, and such new Borrowing
shall be an ABR Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent, for the account of
each Lender, the principal amount of each Loan on the earlier of the last day of
the Interest Period applicable thereto and the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to subsections
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
SECTION 2.05. Fees (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on each Quarterly Date and on each date on which the
Commitment of such Lender shall expire or be terminated as provided herein, a
commitment fee (a "Commitment Fee") equal to 0.375 percent per annum on the
average daily unused amount of the Commitment of such Lender during the
preceding quarter (or other period commencing with the date hereof or ending
with the Maturity Date or the date on which the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fee due
to each Lender shall commence to accrue on the date hereof and shall cease to
accrue on the date on which the Commitment of such Lender shall be terminated as
provided herein.
All Commitment Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution among the Lenders.
Once paid, none of the Commitment Fees shall be refundable under any
circumstances.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender whose Commitment equals or exceeds $15,000,000 an upfront
fee equal to 0.20 percent of the amount of such Lender's Commitment, such fee to
be payable in immediately available funds on the Closing Date.
(c) In addition to the fees provided for in subsections (a) and (b)
above, the Borrower shall pay such other fees as provided for in that certain
letter agreement between the Borrower and the Co-Agents (the "Fee Letter")
entered into separately herefrom and dated the date hereof.
SECTION 2.06. Interest on Loans (a) Subject to the provisions of Section
2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate is determined by reference to
the Corporate Base Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Percentage in effect from time to time.
Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or LIBO Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. Default Interest If the Borrower shall default in the payment
of the principal of or interest on any Loan or any other amount becoming due
hereunder, by acceleration or otherwise, or under any other Loan Document, the
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount to but excluding the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, when determined by reference to the Corporate Base Rate and over a year
of 360 days at all other times) equal at all times to the sum of the Alternate
Base Rate plus the Applicable Percentage plus 2.00 percent per annum.
SECTION 2.08. Alternate Rate of Interest In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent or the
Required Lenders shall have determined that dollar deposits in the principal
amounts of the Loans comprising such Borrowing are not generally available in
the London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telecopy notice
of such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent or the Required Lenders hereunder
shall be conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments9.
Termination and Reduction of Commitments. (a) The Commitments shall
automatically terminate on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole, or from time to time in part, permanently reduce the Commitments;
provided, however, that (i) each partial reduction of the Commitments shall be
in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and
(ii) the Total Commitment shall not be reduced to an amount that is less than
the Aggregate Credit Exposure at the time.
(c) In the event a Change in Control shall have occurred, the Borrower
shall so notify the Administrative Agent and the Lenders and, in the event the
Required Lenders shall so elect in a notice delivered to the Borrower, the
Commitments shall permanently terminate on the date specified in such notice
(which date shall be not fewer than five Business Days after the delivery of
such notice to the Borrower).
(d) Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective Commitments. The Borrower
shall pay to the Administrative Agent for the account of the Lenders, on the
date of each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Prepayment. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) to the Administrative Agent
before 11:00 A.M.; provided, however, that each partial prepayment shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$2,000,000.
(b) In the event of any termination of all the Commitments (whether
mandatory or optional), the Borrower shall repay or prepay all its outstanding
Borrowings on the date of such termination. In the event of any partial
reduction of the Commitments (whether mandatory or optional), then (i) at or
prior to the effective date of such reduction, the Administrative Agent shall
notify the Borrower and the Lenders of the Aggregate Credit Exposure after
giving effect thereto and (ii) if the Aggregate Credit Exposure would exceed the
Total Commitment after giving effect to such reduction, then the Borrower shall,
on the date of such reduction, repay or prepay Borrowings in an amount
sufficient to eliminate such excess.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.10 shall be subject to Section 2.13 but otherwise without premium or penalty.
All prepayments under this Section 2.10 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
SECTION 2.11. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any
Commitment Fees or other amounts payable hereunder (other than changes in
respect of taxes imposed on the overall net income of such Lender by the
jurisdiction in which such Lender has its principal office or by any political
subdivision or taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by any Lender or
shall impose on such Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender, and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Loan or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then the Borrower
will pay to such Lender upon demand such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that the adoption after the
date hereof of any law, rule, regulation, agreement or guideline regarding
capital adequacy, or any change after the date hereof in any such law, rule,
regulation, agreement or guideline (whether such law, rule, regulation,
agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any Governmental Authority has or would have the effect of reducing the rate
of return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such applicability, adoption, change
or compliance (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company as specified in
subsection (a) or (b) above, and setting forth in reasonable detail the manner
in which such amount or amounts shall have been determined, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate delivered
by it within 10 days after its receipt of the same.
(d) Except as provided in Section 2.18(c), failure or delay on the part
of any Lender to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital shall not
constitute a waiver of such Lender's right to demand such compensation. The
protection of this Section 2.11 shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, agreement, guideline or other change or condition that shall have
occurred or been imposed.
SECTION 2.12. Change in Legality. (a) Notwithstanding any other provision
of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans
will not thereafter (for the duration of such unlawfulness) be made by
such Lender hereunder, whereupon any request for a Eurodollar Borrowing
shall, as to such Lender only, be deemed a request for an ABR Loan,
unless such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in which event
all such Eurodollar Loans shall be automatically converted to ABR Loans
as of the effective date of such notice as provided in subsection (b)
below.
In the event that any Lender shall exercise its rights under clause (i) or (ii)
above, all payments and prepayments of principal that would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such Lender
or the converted Eurodollar Loans of such Lender shall instead be applied to
repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.12, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.13. Indemnity. The Borrower shall indemnify each Lender against
any loss or expense that such Lender may sustain or incur as a consequence of
(a) any event, other than a default by such Lender or the Administrative Agent
in the performance of its obligations hereunder, which results in (i) such
Lender receiving or being deemed to receive any amount on account of the
principal of any Eurodollar Loan prior to the end of the Interest Period in
effect therefor or (ii) any Eurodollar Loan to be made by such Lender not being
made after notice of such Loan shall have been given by the Borrower hereunder
(any of the events referred to in this clause (a) being called a "Breakage
Event") or (b) any default in the making of any payment or prepayment required
to be made hereunder. In the case of any Breakage Event, such loss shall include
an amount equal to the excess, as reasonably determined by such Lender, of (x)
its cost of obtaining funds for the Eurodollar Loan that is the subject of such
Breakage Event for the period from the date of such Breakage Event to the last
day of the Interest Period in effect (or that would have been in effect) for
such Loan over (y) the amount of interest likely to be realized by such Lender
in redeploying the funds released or not utilized by reason of such Breakage
Event for such period. A certificate of any Lender setting forth any amount or
amounts, and setting forth in reasonable detail the manner in which such amount
or amounts shall have been determined, which such Lender is entitled to receive
pursuant to this Section 2.13 shall be delivered to the Borrower and shall be
conclusive absent manifest error.
SECTION 2.14. Pro Rata Treatment. Except as required under Section 2.12,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees and each
refinancing of any Borrowing with a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective Commitments (or, if
such Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). Each Lender agrees
that in computing such Lender's portion of any Borrowing to be made hereunder,
the Administrative Agent may, in its discretion, round each Lender's percentage
of such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.15. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of its Loans shall be proportionately less
than the unpaid principal portion of the Loans of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender, so that the aggregate unpaid
principal amount of the Loans and participation in Loans held by each Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.15
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Loan deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
SECTION 2.16. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Commitment Fees or other
amounts) hereunder and under any other Loan Document not later than 12:00 noon
on the date when due in immediately available dollars, without setoff, defense
or counterclaim. Each such payment shall be made to the Administrative Agent at
its address referred to in Section 9.01.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Commitment Fees or other amounts) hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Commitment Fees, if applicable.
SECTION 2.17. Taxes. (a) Any and all payments by or on behalf of the
Borrower hereunder and under any other Loan Document shall be made, in
accordance with Section 2.16, free and clear of and without deduction for any
and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) income
taxes imposed on the net income of the Administrative Agent or any Lender (or
any transferee or assignee thereof, including a participation holder (any such
entity a "Transferee")) and (ii) franchise taxes imposed on the net income of
the Administrative Agent or any Lender (or Transferee), in each case by the
jurisdiction under the laws of which the Administrative Agent or such Lender (or
Transferee) is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, being called "Taxes"). If the
Borrower shall be required to deduct any Taxes from or in respect of any sum
payable hereunder or under any other Loan Document to the Administrative Agent
or any Lender (or any Transferee), (x) the sum payable shall be increased by the
amount (an "additional amount") necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.17) the Administrative Agent or such Lender (or Transferee), as
the case may be, shall receive an amount equal to the sum it would have received
had no such deductions been made, (y) the Borrower shall make such deductions
and (z) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document ("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent and each
Lender (or Transferee) for the full amount of Taxes and Other Taxes paid by the
Administrative Agent or such Lender (or Transferee), as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability, and setting forth in reasonable detail the manner in which
such payment or liability shall have been determined, prepared by the
Administrative Agent or a Lender (or Transferee), or the Administrative Agent on
its behalf, absent manifest error, shall be final, conclusive and binding for
all purposes. Such indemnification shall be made within 30 days after the date
the Administrative Agent or any Lender (or Transferee), as the case may be,
makes written demand therefor.
(d) If the Administrative Agent or a Lender (or Transferee) receives a
refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17 and no Event of Default shall
have occurred and be continuing, it shall within 30 days from the date of such
receipt pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.17 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender (or Transferee) and without interest (other than interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon the request of the Administrative Agent or such Lender
(or Transferee), shall repay the amount paid over to the Borrower (plus
penalties, interest or other charges) to the Administrative Agent or such Lender
(or Transferee) in the event the Administrative Agent or such Lender (or
Transferee) is required to repay such refund to such Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the Borrower
will deliver to the Administrative Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof.
(f) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, that such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.17(f), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.17(f) that
such Non-U.S. Lender is not legally able to deliver.
(g) The Borrower shall not be required to indemnify any Non-U.S. Lender
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to subsection (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this subsection (g) shall not apply (x) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of the
Borrower and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender, acting through a New Lending Office, would be
entitled to receive (without regard to this subsection (g)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee, or Lender making the designation
of such New Lending Office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation, or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of subsection (f)
above.
(h) Nothing contained in this Section 2.17 shall require any Lender (or
any Transferee) or the Administrative Agent to make available any of its tax
returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.18. Assignment of Commitments Under Certain Circumstances; Duty
to Mitigate. (a) In the event that (i) any Lender delivers a certificate
requesting compensation pursuant to Section 2.11, (ii) any Lender delivers a
notice described in Section 2.12, or (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.17, the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.04(b)), upon notice to such Lender and the Administrative Agent,
require such Lender to transfer and assign, without recourse (in accordance with
and subject to the restrictions contained in Section 9.04), all of its
interests, rights and obligations under this Agreement to an assignee that shall
assume such assigned obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided, that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the Borrower shall have received
the prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, and (z) the Borrower or such assignee shall have paid
to the affected Lender in immediately available funds an amount equal to the sum
of the principal of and interest accrued to the date of such payment on the
outstanding Loans of such Lender plus all Commitment Fees and other amounts
accrued for the account of such Lender hereunder (including any amounts under
Section 2.11 and Section 2.13); provided further that, if prior to any such
transfer and assignment the circumstances or event that resulted in such
Lender's claim for compensation under Section 2.11 or notice under Section 2.12
or the amounts paid pursuant to Section 2.17, as the case may be, cease to cause
such Lender to suffer increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 2.12, or cease to result in amounts being payable under
Section 2.17, as the case may be (including as a result of any action taken by
such Lender pursuant to subsection (b) below), or if such Lender shall waive its
right to claim further compensation under Section 2.11 in respect of such
circumstances or event or shall withdraw its notice under Section 2.12 or shall
waive its right to further payments under Section 2.17 in respect of such
circumstances or event, as the case may be, then such Lender shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Lender shall request compensation under Section 2.11,
(ii) any Lender shall deliver a notice described in Section 2.12 or (iii) the
Borrower shall be required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.17, then
such Lender shall use reasonable efforts (which shall not require such Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.11 or enable it to withdraw its notice pursuant to Section 2.12 or would
reduce amounts payable pursuant to Section 2.17, as the case may be, in the
future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such filing or assignment,
delegation and transfer.
(c) Notwithstanding any other provision of this Agreement, no Lender
shall be entitled to compensation under Section 2.11 or 2.13, or to the payment
of any additional amount under Section 2.17, for any costs incurred or imposed,
reductions suffered or amounts withheld on or with respect to any date unless it
shall have notified the Borrower that it will request such compensation or the
payment of such additional amount not later than 180 days after the later of (i)
such date and (ii) the date on which such Lender shall have become aware of such
costs or reductions or such withholding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent, the
Collateral Agent and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (iii) is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, (iv) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by the
Borrower of each of the Loan Documents, the Borrowings hereunder and the
issuance and the pledge of the New First Mortgage Bonds (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision of
any indenture (including the TNP Bond Indenture), agreement (including the
Chemical Bank Agreement) or other instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property is or may
be bound, except to the extent that such violation could not reasonably be
expected to result in a Material Adverse Effect, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such indenture,
agreement or other instrument or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Borrower or any Subsidiary.
SECTION 3.03. Enforceability. This Agreement and each of the Loan Documents
to which the Borrower is a party has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
and therein is subject to bankruptcy and other similar laws of general
application affecting rights and remedies of creditors and the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or law).
SECTION 3.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for such
(including the 1996 Regulatory Orders) as have been duly made or obtained, are
in full force and effect, and (subject to the following sentence) are not
subject to appeal, reconsideration or other review. Although the period for
rehearing or appeal with respect to the 1996 NMPUC Order will not elapse until,
at the latest, the 80th day after the issuance of the 1996 NMPUC Order, except
for the Borrower there are no intervenors or other Persons who would have
standing to appeal or request rehearing of the 1996 NMPUC Order. All applicable
periods of time for review, rehearing or appeal with respect to the 1996
Regulatory Orders (other than the 1996 NMPUC Order) have expired.
SECTION 3.05. Financial Statements. The Borrower has heretofore furnished
to the Lenders its consolidated balance sheet and statement of operations and
cash flow (i) as of and for the fiscal year ended December 31, 1995, audited by
and accompanied by the opinion of KPMG Peat Marwick LLP, independent public
accountants, and (ii) as of and for the fiscal quarter and the three months
ended March 31, 1996, certified by its chief financial officer. Such financial
statements present fairly the financial condition and results of operations and
cash flows of the Borrower and its consolidated Subsidiaries as of such dates
and for such periods. Such balance sheets and the notes thereto disclose all
material liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the dates thereof. Such financial statements were prepared in
accordance with GAAP.
SECTION 3.06. No Material Adverse Change. Except as set forth on Schedule
3.06, there has been no material adverse change, and no event that could
reasonably be expected to result in a material adverse change, in the business,
assets, operations, condition, financial or otherwise, or material agreements of
the Borrower and the Subsidiaries, taken as a whole, since December 31, 1995.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) The
Borrower and each of the Subsidiaries has good and commercially acceptable title
to, or valid leasehold interests in, all its material properties and assets,
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties and
assets for their intended purposes. All such material properties and assets are
free and clear of Liens, other than Liens expressly permitted by Section 6.02.
(b) The Borrower and each of the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. The Borrower and each of the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date
a list of all Subsidiaries and the percentage ownership interest of the Borrower
therein. The shares of capital stock or other ownership interests so indicated
on Schedule 3.08 are fully paid and non-assessable and are owned by the
Borrower, directly or indirectly, free and clear of all Liens.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth on
Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation, or any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Borrower nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to buy or
carry any Margin Stock or for any purpose that entails a violation of, or that
is inconsistent with, the provisions of the Regulations of the Board, including
Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940, as
amended. The Borrower is exempt from regulation under the Public Utility Holding
Company Act of 1935, as amended, other than under Section 9(a)(2) thereof.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of the
Loans only for the purposes specified in the Preliminary Statements to this
Agreement.
SECTION 3.14. Tax Returns. Each of the Borrower and the Subsidiaries has
filed or caused to be filed all Federal, state, local and foreign tax returns or
materials required to have been filed by it and has paid or caused to be paid
all taxes due and payable by it and all assessments received by it, except taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves in accordance with GAAP.
SECTION 3.15. No Material Misstatements. No information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. The present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed by more than $20,000,000
the fair market value of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based on those assumptions used to
fund each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $20,000,000 the fair market value of the assets of
all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17:
(a) The properties owned or operated by the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or have constituted, a violation
of, or (ii) could give rise to liability under, Environmental Laws, which
violations and liabilities, in the aggregate, could result in a Material Adverse
Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last ten years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not result in a Material Adverse Effect;
(c) There have been no releases or threatened releases of Hazardous
Materials at, from or under the Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which releases or threatened
releases, in the aggregate, could result in a Material Adverse Effect;
(d) Neither the Borrower nor any of the Subsidiaries has received any
notice of an Environmental Claim in connection with the Properties or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could result in a Material Adverse Effect,
nor do the Borrower or the Subsidiaries have reason to believe that any such
notice will be received or is being threatened;
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor have the Borrower or the Subsidiaries retained
or assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, which transportation, generation, treatment, storage or disposal, or
retained or assumed liabilities, in the aggregate, could result in a Material
Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.19. Bond Agreement. The Bond Agreement is effective to create in
favor of the Collateral Agent, for the ratable benefit of the Lenders, a legal,
valid and enforceable security interest in all right, title and interest of the
Borrower in the Collateral and, when the Collateral is delivered to the
Collateral Agent, the Bond Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
Borrower thereunder in such Collateral, in each case prior and superior in right
to any other person.
SECTION 3.20. Labor Matters. As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened. The hours
worked by and payments made to employees of the Borrower and the Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters,
except to the extent such violations could not reasonably be expected to result
in a Material Adverse Effect. All payments due from the Borrower or any
Subsidiary, or for which any claim may be made against the Borrower or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Borrower or such Subsidiary, except to the extent the failure to pay or accrue
such liabilities could not reasonably be expected to result in a Material
Adverse Effect. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which the Borrower or any Subsidiary is
bound.
SECTION 3.21. Solvency. Immediately prior to and after the consummation of
the Transactions to occur on the Closing Date, (i) the fair market value of the
assets of the Borrower and its Subsidiaries on a consolidated basis will exceed
their debts and liabilities, subordinated, contingent or otherwise; (ii) the
present fair saleable value of the assets of the Borrower and its Subsidiaries
on a consolidated basis will be greater than the amount that will be required to
pay the probable liability on their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) the Borrower and its Subsidiaries on a consolidated basis will be
able to pay their debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (iv) the Borrower
and its Subsidiaries on a consolidated basis will not have unreasonably small
capital with which to conduct the business in which they are engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
SECTION 3.22. Force Majeure Event. No fire, explosion, accident, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (except for such circumstances, if any, that is covered by insurance,
which coverage has been confirmed and not disputed by the relevant insurer)
affecting the properties, business or operations of the Borrower or any
Subsidiary has occurred that could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.23. First Mortgage Bonds. The Borrower has good title to
substantially all the properties referred to in the granting clauses of the TNP
Bond Indenture as being subject to the Lien thereof and now owned by it, subject
only to the conditions and exceptions set forth in the TNP Bond Indenture, none
of which materially impairs the use of the property affected thereby in the
operation of the business of the Borrower. The TNP Bond Indenture and all
appropriate financing statements have been duly filed and recorded in all places
where such filing or recording is necessary for the perfection or preservation
of the Lien of the TNP Bond Indenture. The TNP Bond Indenture constitutes a
valid and direct first priority Lien upon all of the property of the Borrower
referred to in the first sentence of this Section 3.23, subject only to the
conditions and exceptions set forth in Schedule 3.23, and all property acquired
by the Borrower hereafter, other than property excepted from the Lien of the TNP
Bond Indenture, will become subject to the Lien thereof upon acquisition. The
TNP Bond Indenture conforms to the requirements of the Trust Indenture Act of
1939, as amended.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to Effectiveness of the Commitments. The
Commitments of the Lenders to make Loans under Article II shall not become
effective until the following conditions precedent have been fulfilled:
(a) The Administrative Agent shall have received the
following, each dated the Closing Date (unless otherwise specified
below), in form and substance satisfactory to the Administrative Agent
and the Lenders and (except for the Notes) in sufficient copies for the
Administrative Agent and each Lender:
(i) This Agreement, duly executed by the
Borrower, the Administrative Agent, the Co-Agents and the
Lenders.
(ii) A Note, payable to the order of each Lender then
party hereto, duly executed by the Borrower.
(iii) A copy of the certificate or articles of
incorporation, including all amendments thereto, of the
Borrower, certified as of a recent date by the Secretary of
State of the State of Texas, and a certificate as to the good
standing of the Borrower as of a recent date from such
Secretary of State and from the Secretary of State of the
State of New Mexico.
(iv) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying (A) that attached thereto
is a true and complete copy of the by-laws of the Borrower as
in effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance
of the Loan Documents to which the Borrower is a party and the
Transactions, and that such resolutions have not been
modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles of incorporation
of the Borrower have not been amended since the date of the
last amendment thereto shown on the certificate of good
standing furnished pursuant to paragraph (iii) above, (D) that
attached thereto are true and complete copies of the
applications filed by the Borrower for the 1996 Regulatory
Orders and of all approvals, authorizations, orders or
consents of, or notices to or registrations with, any
Governmental Authority (including the 1996 Regulatory Orders)
required for the Borrower to execute, deliver and perform its
obligations under this Agreement and the other Loan Documents,
and (E) as to the incumbency and specimen signature of each
officer executing any Loan Document or any other document
delivered in connection herewith on behalf of the Borrower,
together with a certificate of another officer of the Borrower
as to the incumbency and specimen signature of the Secretary
or Assistant Secretary executing the certificate delivered
pursuant to this paragraph (iv).
(v) A copy of the TNP Bond Indenture and all
supplemental indentures thereto (including the Supplemental
Indenture), certified by the Secretary or an Assistant
Secretary of the Borrower as being true and complete copies
thereof, in full force and effect and not having been
modified, rescinded or revoked.
(vi) The Fee Letter, duly executed by the
Borrower.
(vii) The Bond Agreement, duly executed by the
Borrower.
(viii) The Supplemental Indenture, duly executed
by the Borrower and the Trustee.
(ix) A certificate of a duly authorized officer of
the Trustee certifying the names and true signatures of the
officers of the Trustee authorized to sign the Supplemental
Indenture and any other documents to be delivered by the
Trustee hereunder or thereunder.
(x) Favorable opinions of (A) Haynes & Boone, L.L.P.,
counsel for the Borrower, substantially in the form of Exhibit
F-1, (B) Michael D. Blanchard, General Counsel of the
Borrower, substantially in the form of Exhibit F-2, (C)
Winstead, Sechrest & Minick, P.C., Texas counsel for the
Administrative Agent, substantially in the form of Exhibit
F-3, (D) Rubin, Katz, Salazar, Alley & Rouse, New Mexico
regulatory counsel for the Borrower, substantially in the form
of Exhibit F-4, and (E) McDermott, Will & Emery, counsel for
the Administrative Agent, substantially in the form of Exhibit
F-5.
(xi) A certificate of a Financial Officer of the
Borrower as to the solvency of the Borrower and its
Subsidiaries on a consolidated basis after giving effect to
the transactions contemplated hereby.
(xii) Such other opinions, certificates, approvals
and documents as any Lender or its counsel, or the
Administrative Agent or its counsel, may reasonably request.
(b) All legal matters incident to the Transactions shall be
satisfactory to the Lenders and their counsel, to the Administrative
Agent and to McDermott, Will & Emery, counsel for the Administrative
Agent.
(c) The following statements shall be true and the
Administrative Agent shall have received a certificate of a Financial
Officer of the Borrower, dated as of the Closing Date and in sufficient
copies for the Administrative Agent and each of the Lenders, stating
that:
(i) The representations and warranties set forth in
Article III hereof and in Section 2 of the Bond Agreement are
true and correct in all material respects on and as of the
Closing Date with the same effect as though made on and as of
such date.
(ii) No Event of Default or Default has
occurred and is continuing.
(d) The Transactions and the delivery of New First Mortgage
Bonds pursuant hereto and the Bond Agreement shall have been approved
or exempted by all Governmental Authorities to the extent required
under applicable law, and all such approvals or exemptions, including
any conditions imposed thereby, shall be satisfactory in all respects
to the Lenders. No action shall have been taken by any Governmental
Authority which restrains or prevents or seeks to restrain or prevent,
or imposes or seeks to impose materially adverse conditions upon, any
of the Transactions.
(e) Except as set forth in Schedule 3.09, no action, suit,
investigation, litigation or other proceeding at law or in equity or by
or before any court or other Governmental Authority shall exist or, in
the case of litigation by a Governmental Authority, be threatened, with
respect to any of the Transactions that would in the reasonable opinion
of the Lenders be likely to restrain, prevent or impose burdensome
conditions to any of the Transactions, or to result in a Material
Adverse Effect.
(f) All aspects of the structure and documentation of the
Transactions and all corporate and other proceedings taken or to be
taken in connection therewith and all documents incidental thereto, in
each case to the extent not otherwise provided for herein, shall be
reasonably satisfactory in form and substance to the Lenders and their
counsel, to the Administrative Agent and to McDermott, Will & Emery,
counsel to the Administrative Agent, and the Lenders shall have
received copies of all such documents as the Lenders may reasonably
request.
(g) The Administrative Agent shall have received all fees
payable pursuant to Section 2.05 to the extent due and payable and all
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(h) The Closing Date shall have occurred on or before
September 30, 1996.
SECTION 4.02. Conditions Precedent for Certain Borrowings. The obligation
of each Lender to make a Loan on the date of any Borrowing (other than (i) any
Borrowing in which Loans are refinanced with new Loans as contemplated by
Section 2.02(f) and (ii) any Borrowing that, after giving effect to such Loan,
would not cause the outstanding principal amount of the Loans to exceed the
aggregate outstanding principal amount of New First Mortgage Bonds theretofore
issued and registered in the name of the Collateral Agent pursuant to this
Section 4.02) shall be subject to the fulfillment of the following conditions
precedent:
(a) The Administrative Agent shall have received the
following, each dated the date of such Borrowing, in form and substance
satisfactory to the Administrative Agent and the Lenders and (except
for the New First Mortgage Bonds) in sufficient copies for the
Administrative Agent and each Lender:
(i) New First Mortgage Bonds in an aggregate
principal amount equal to the amount of such Borrowing,
registered in the name of the Collateral Agent.
(ii) A certificate of a duly authorized officer of
the Trustee certifying (A) the names and true signatures of
the officers of the Trustee authorized to sign any documents
to be delivered by the Trustee hereunder or under the TNP Bond
Indenture in connection with the issuance of such New First
Mortgage Bonds and (B) that such New First Mortgage Bonds have
been authenticated and are "outstanding" under the TNP Bond
Indenture.
(iii) Copies of all certificates, opinions (on which
the Administrative Agent, the Collateral Agent, the Co-Agents
and the Lenders shall be expressly entitled to rely), and
other documents delivered by the Borrower to the Trustee
pursuant to Article Four, Article Five or Article Six, as
applicable, of the TNP Bond Indenture in connection with the
issuance and authentication of such New First Mortgage Bonds,
certified by the Secretary or an Assistant Secretary of the
Borrower.
(iv) A favorable opinion of Michael D. Blanchard,
General Counsel of the Borrower, covering such matters as the
Administrative Agent shall reasonably request.
(v) Such other opinions, certificates,
approvals and documents as any Lender or its counsel, or the
Administrative Agent or its counsel, may reasonably request.
(b) All legal matters incident to the issuance of such New
First Mortgage Bonds shall be satisfactory to the Lenders and their
counsel, to the Administrative Agent and to McDermott, Will & Emery,
counsel for the Administrative Agent.
(c) The following statements shall be true and the
Administrative Agent shall have received a certificate of a Financial
Officer of the Borrower, dated as of the date of such Borrowing and in
sufficient copies for the Administrative Agent and each of the Lenders,
stating that:
(i) The New First Mortgage Bonds delivered pursuant
to Section 4.02(a) (A) have been duly authorized, executed,
authenticated and issued; (B) are the legal, valid and binding
obligations of the Borrower enforceable in accordance with
their terms and entitled to the benefits and security of the
First Mortgage Bonds outstanding under the TNP Bond Indenture,
(C) are not in default, and (D) have been delivered to the
Collateral Agent pursuant to the terms of the TNP Bond
Indenture (including the Supplemental Indenture) and the Bond
Agreement.
(ii) The Collateral is free and clear of any Lien,
except for the security interests created by the Bond
Agreement and the Supplemental Indenture.
(iii) Such New First Mortgage Bonds are not required
to be registered under the Securities Act of 1933, as amended.
(iv) The (A) resolutions of the Board of Directors of
the Borrower, (B) approvals, authorizations, orders or
consents of, or notices to or registrations with, any
Governmental Authority, and (C) incumbency certificate and
specimen signatures of certain officers of the Borrower,
delivered by the Borrower pursuant to Section 4.01(a)(iv)(B),
(D) and (E), respectively, have not been modified, rescinded
or amended and are in full force and effect on and as of the
date of such Borrowing, and such resolutions, approvals,
authorizations, orders, consents, notices and registrations,
if any, are sufficient for the issuance of such New First
Mortgage Bonds.
(d) The issuance of such New First Mortgage Bonds shall have
been approved or exempted by all Governmental Authorities to the extent
required under applicable law, and all such approvals or exemptions,
including any conditions imposed thereby, shall be satisfactory in all
respects to the Lenders. No action shall have been taken by any
Governmental Authority which restrains or prevents or seeks to restrain
or prevent, or imposes or seeks to impose materially adverse conditions
upon, the issuance of such New First Mortgage Bonds.
(e) Except as set forth in Schedule 3.09, no action, suit,
investigation, litigation or other proceeding at law or in equity or by
or before any court or other Governmental Authority shall exist or, in
the case of litigation by a Governmental Authority, be threatened, with
respect to any of the Transactions that would in the reasonable opinion
of the Lenders be likely to restrain, prevent or impose burdensome
conditions to any of the Transactions, or to result in a Material
Adverse Effect.
(f) All aspects of the structure and documentation of such New
First Mortgage Bonds and all corporate and other proceedings taken or
to be taken in connection therewith and all documents incidental
thereto, in each case to the extent not otherwise provided for herein,
shall be reasonably satisfactory in form and substance to the Lenders
and their counsel, to the Administrative Agent and to McDermott, Will &
Emery, counsel to the Administrative Agent, and the Lenders shall have
received copies of all such documents as the Lenders may reasonably
request.
SECTION 4.03. Conditions Precedent to All Borrowings. On the date of each
Borrowing, including each Borrowing in which Loans are refinanced with new Loans
as contemplated by Section 2.02(f):
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 (or such notice shall have
been deemed given in accordance with Section 2.03).
(b) The representations and warranties set forth in Article
III and in Section 2 of the Bond Agreement shall be true and correct in
all material respects on and as of the date of such Borrowing with the
same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier
date.
(c) The Borrower shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part
to be observed or performed, and at the time of and immediately after
giving effect to such Borrowing, no Event of Default or Default shall
have occurred and be continuing.
(d) Immediately prior to and after giving effect to such
Borrowing, (i) the fair market value of the assets of the Borrower and
its Subsidiaries on a consolidated basis will exceed their debts and
liabilities, subordinated, contingent or otherwise; (ii) the present
fair saleable value of the assets of the Borrower and its Subsidiaries
on a consolidated basis will be greater than the amount that will be
required to pay the probable liability on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Borrower and
its Subsidiaries on a consolidated basis will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (iv) the
Borrower and its Subsidiaries on a consolidated basis will not have
unreasonably small capital with which to conduct the business in which
they are engaged as such business is now conducted and is proposed to
be conducted following the date of such Borrowing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b), (c) and (d) of this Section 4.03.
SECTION 4.04. Reliance on Certificates. The Lenders, the Administrative
Agent and the Collateral Agent shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Borrower as to the
names, incumbency, authority and signatures of the respective persons named
therein until such time as the Administrative Agent may receive a replacement
certificate, in form acceptable to the Administrative Agent, from a Responsible
Officer of the Borrower, setting forth the names and true signatures of the
officers of the Borrower thereafter authorized to act on behalf of the Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Commitment Fees and all
other fees, expenses or amounts payable under any Loan Document shall have been
paid in full, unless the Required Lenders shall otherwise consent in writing,
the Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02. Insurance. Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim set forth in Schedule 3.09 or so long as
the validity or amount thereof shall be contested in good faith by appropriate
proceedings and the Borrower shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP and such contest operates to
suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 100 days after the end of each fiscal
year, a balance sheet and related statements of operations,
stockholders' equity and cash flows showing the financial condition of
the Borrower and its Subsidiaries on a consolidated basis as of the
close of such fiscal year and the results of operations of the Borrower
and its Subsidiaries on a consolidated basis during such year, all
audited by KPMG Peat Marwick LLP or other independent public
accountants of recognized national standing acceptable to the
Administrative Agent and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect
that such financial statements fairly present the financial condition
and results of operations of the Borrower and its Subsidiaries on a
consolidated basis, in accordance with GAAP;
(b) within 50 days after the end of each of the first
three fiscal quarters of each fiscal year, a balance sheet and related
statements of operations, stockholders' equity and cash flows showing
the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the close of such fiscal quarter and the
results of operations of the Borrower and its Subsidiaries on a
consolidated basis during such fiscal quarter and the then elapsed
portion of the fiscal year, all certified by one of its Financial
Officers as fairly presenting the financial condition and results of
operations of the Borrower and its Subsidiaries on a consolidated
basis, in accordance with GAAP, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial
statements under paragraph (a) or (b) above, a certificate of a
Financial Officer of the Borrower and, in the case of any delivery
under paragraph (a) above, the accounting firm opining on such
statements (which certificate, when furnished by an accounting firm,
may be limited to accounting matters and disclaim responsibility for
legal interpretations) (i) certifying that in making the examination
necessary for their opinion, they obtained no knowledge, except as
specifically stated, that an Event of Default or Default has occurred
or, if such an Event of Default or Default has occurred, specifying the
nature and extent thereof and any corrective action that the Borrower
has taken or proposed to take with respect thereto and (ii) setting
forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.10 and 6.11;
(d) promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed to its shareholders,
as the case may be; and
(e) promptly, from time to time, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender
may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative
Agent and each Lender prompt written notice of the following:
(a) any Event of Default or Default,
specifying the nature and extent thereof and the corrective action
(if any) taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or
notice of intention of any person to file or commence, any action, suit
or proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect;
(c) any change in the ratings assigned by S&P,
D&P or Moody's to the First Mortgage Bonds; and
(d) any development that has resulted in, or
could reasonably be expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within 10 days
after any Responsible Officer of the Borrower or any ERISA Affiliate knows or
has reason to know that, any ERISA Event has occurred that, alone or together
with any other ERISA Event, could reasonably be expected to result in liability
of the Borrower in an aggregate amount exceeding $20,000,000 or requiring
payments exceeding $5,000,000 in any year, a statement of a Financial Officer of
the Borrower setting forth details as to such ERISA Event and the action, if
any, that the Borrower proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender to visit and inspect the financial
records and the properties of the Borrower or any Subsidiary at reasonable times
and as often as reasonably requested and to make extracts from and copies of
such financial records, and permit any representatives designated by the
Administrative Agent or any Lender to discuss the affairs, finances and
condition of the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for the
purposes set forth in the Preliminary Statements to this Agreement.
SECTION 5.09. Compliance with Laws and Environmental Laws. Comply, and
cause all lessees and other persons occupying its Properties to comply, in all
material respects with all laws, rules, regulations and orders, and with all
Environmental Laws and Environmental Permits applicable to its operations and
Properties, except in each case to the extent that failure to so comply could
not reasonably be expected to result in a Material Adverse Effect; obtain and
renew all material Environmental Permits necessary for its operations and
Properties; and conduct any Remedial Action in accordance with Environmental
Laws; provided, however, that neither the Borrower nor any of the Subsidiaries
shall be required to undertake any Remedial Action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves in accordance with GAAP are being maintained with
respect to such circumstances.
SECTION 5.10. Preparation of Environmental Reports. If a Default caused by
reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 60 days after such request, at the expense
of the Borrower, an environmental site assessment report for the Properties that
are the subject of such Default prepared by an environmental consulting firm
acceptable to the Administrative Agent and indicating the presence or absence of
Hazardous Materials and the estimated cost of any compliance or Remedial Action
in connection with such Properties.
SECTION 5.11. Further Assurances. Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements) that
may be required under applicable law, or that the Required Lenders, the
Administrative Agent or the Collateral Agent may reasonably request, in order to
effectuate the transactions contemplated by the Loan Documents and in order to
grant, preserve, protect and perfect the validity and first priority of the
security interests created or intended to be created by the Bond Agreement. The
Borrower agrees to provide such evidence as the Collateral Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.12. Performance and Continuation of TNP Bond Indenture. Perform
and observe all of its covenants and agreements contained in the TNP Bond
Indenture (including all supplemental indentures thereto), and maintain the TNP
Bond Indenture in full force and effect in accordance with its terms.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Commitment Fees
and all other fees, expenses or amounts payable under any Loan Document have
been paid in full, unless the Required Lenders shall otherwise consent in
writing, the Borrower will not, and will not cause or permit any of the
Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness incurred hereunder, under any other Loan
Document, under the Existing Facility Documents or under the "Existing
Facility Documents" (as defined in the Chemical Bank Agreement);
(b) accounts payable owed by the Borrower to TGC or TGC
II, to the extent incurred and paid in the ordinary course of
business;
(c) Secured Debentures (as defined in the Chemical Bank
Agreement); provided, however, that the aggregate principal amount of
Secured Debentures outstanding at any time shall not exceed
$270,000,000;
(d) First Mortgage Bonds; provided, however, that the
aggregate principal amount of First Mortgage Bonds outstanding at any
time (including any New First Mortgage Bonds) shall not exceed the sum
of (i) $360,000,000 and (ii) the aggregate amount by which the Total
Commitment has been reduced subsequent to the Closing Date; and
provided further, however, that the limitations of the foregoing
proviso to this clause (d) shall not apply (A) so long as the aggregate
principal amount of the New First Mortgage Bonds is equal to or greater
than the Total Commitment or (B) after the Release Conditions have been
satisfied and the Release Date has occurred as provided in Section
9.17;
(e) intercompany Indebtedness owed to the Borrower on
the Closing Date and listed on Schedule 6.01;
(f) Indebtedness in respect of Interest Rate Protection
Agreements to the extent such agreements are used to hedge interest
rate risk in respect of outstanding floating rate Indebtedness and not
for speculative purposes;
(g) Indebtedness of TGC under the Unit 1 Credit
Agreement (as defined in the Chemical Bank Agreement);
(h) customer advances and security deposits in the
ordinary course of business; and
(i) additional Indebtedness not exceeding $2,000,000 in
aggregate principal amount outstanding at any time with local banking
institutions.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on
any property or assets (including capital stock or other securities of any
Subsidiary or other person) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.02; provided, that such Liens shall secure only those obligations
that they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) Liens arising under any trust indenture pursuant to
which the Borrower issues First Mortgage Bonds;
(d) Liens expressly permitted under the Chemical Bank
Agreement;
(e) Liens arising under the Secured Debenture
Indentures (as defined in the Chemical Bank Agreement), and
refinancings thereof;
(f) in the case of TGC, Liens expressly permitted under
the Unit 1 Credit Agreement (as defined in the Chemical Bank
Agreement); and
(g) sales of accounts receivable consistent with the
Borrower's past practices.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by the Borrower existing on the date
hereof in the capital stock of the Subsidiaries or resulting from
acquisitions made in accordance with Section 6.05;
(b) intercompany Indebtedness permitted under Section
6.01(e);
(c) investments accepted by the Borrower or any
Subsidiary in the ordinary course of business from customers in
satisfaction of indebtedness of such customers;
(d) Permitted Investments;
(e) investments, loans and advances that shall not
exceed $1,000,000 in the aggregate outstanding at any time made in
the ordinary course of business;
(f) loans and advances to Affiliates of the Borrower in an
aggregate amount at any time outstanding not to exceed (i) $5,000,000
less (ii) any amount outstanding under clause (e) above; and
(g) key personnel life insurance the proceeds of which
are intended to fund the excess benefit plan.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
(a) Merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or any
substantial part of its assets (whether now owned or hereafter acquired) or any
capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that (i) the Borrower and any Subsidiary may
purchase and sell inventory in the ordinary course of business, (ii) the
Borrower and any Subsidiary may permit any assets to be taken for any public or
quasi-public use under any governmental law, ordinance or regulation or by right
of eminent domain and to be sold under threat of condemnation; (iii) the
Borrower may sell accounts receivable consistent with its past practices; (iv)
the Borrower and its Subsidiaries may make acquisitions (in one transaction or a
series of transactions) of assets or capital stock of another person not to
exceed $25,000,000 in the aggregate; and (v) if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing (A) any wholly-owned Subsidiary (other than TGC
and TGC II) may merge into the Borrower in a transaction in which the Borrower
is the surviving corporation, (B) any wholly-owned Subsidiary (other than TGC
and TGC II) may merge into or consolidate with any other wholly-owned Subsidiary
in a transaction in which the surviving entity is a wholly-owned Subsidiary and
no person other than the Borrower or a wholly-owned Subsidiary receives any
consideration, and (C) the Borrower or any Subsidiary may sell assets which when
taken together with any other assets sold by the Borrower or any of its
Subsidiaries during the same period have an aggregate book value not exceeding
(x) $10,000,000 in any consecutive twelve-month period and (y) $25,000,000
during the period commencing on the Closing Date and ending upon the termination
of the Commitments and payment in full of all outstanding Loans.
(b) In the case of TGC II, purchase or acquire any assets other than
(i) assets reasonably required for the maintenance or operation of the Project
(as defined in the Chemical Bank Agreement) and (ii) supplies purchased in the
ordinary course of business.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Subsidiary to purchase or
acquire) any shares of any class of its capital stock or set aside any amount
for any such purpose; provided, however, that (i) any Subsidiary may declare and
pay dividends or make other distributions to the Borrower, (ii) the Borrower may
declare and pay cash dividends on its common stock to its shareholder if (A) no
Event of Default shall have occurred and be continuing (or would result
therefrom) and (B) such declaration or payment would not cause the sum of all
Dividends declared or paid on common stock by the Borrower during the most
recently ended twenty-four month period (or shorter period, as the case may be)
commencing not earlier than September 30, 1995 and ending on the Quarterly Date
next preceding the date of any proposed declaration or payment to exceed
Cumulative Net Income Available For Common Dividends for such period, (iii) the
Borrower may declare and pay cash dividends on its preferred stock (A) if no
Event of Default specified in paragraph (b), (c) or (d) of Article VII (if, in
the case of paragraph (d), such Event of Default relates to a default in Section
6.10 or 6. 11) shall have occurred and be continuing (or would result therefrom)
and (B) if any other Event of Default shall have occurred and be continuing (or
would result therefrom), the Borrower shall have requested in writing permission
to continue declaring and paying such dividends and the Required Lenders shall
have delivered to the Borrower such authorization and (iv) the Borrower may
redeem its preferred stock (A) pursuant to mandatory redemption requirements in
effect on the date hereof or (B) with the proceeds of newly-issued preferred
stock that will not be redeemable mandatorily or at the option of any holder
thereof (other than in the event of a Change in Control) prior to the Maturity
Date.
(b) Permit any Subsidiary, directly or indirectly, to create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
Subsidiary except encumbrances and restrictions existing on the date hereof
under this Agreement, the Chemical Bank Agreement, the Existing Facility
Agreement (as defined in the Chemical Bank Agreement) and the Unit 1 Credit
Agreement (as defined in the Chemical Bank Agreement).
SECTION 6.07. Transactions with Affiliates. Sell or transfer any property
or assets to, or purchase or acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except that the
Borrower or any Subsidiary may engage in any of the foregoing transactions in
the ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties; provided, that this Section
6.07 shall not apply to (i) any transactions expressly permitted or contemplated
by the Chemical Bank Agreement, (ii) the sale of power to Affiliates and (iii)
the payment of Dividends to TNP Enterprises as permitted by this Agreement.
SECTION 6.08. Business of Borrower and Subsidiaries. Engage at any time in
any business or business activity other than the business currently conducted by
it and business activities reasonably incidental thereto.
SECTION 6.09. Additional Generating Facilities. Create, acquire or
construct any additional generating facilities or generating assets.
SECTION 6.10. Interest Coverage Ratio. Permit the ratio of (i) Consolidated
EBIT to (ii) Consolidated Interest Expense for any period of four consecutive
fiscal quarters ending on any Quarterly Date during any period set forth below
to be less than the ratio set forth opposite such period:
Period Ratio
Closing Date through June 30, 1997 1.30
July 1, 1997 through June 30, 1998 1.30
Thereafter 1.50
SECTION 6.11. Debt to Capitalization Ratio. Permit the ratio of (i)
Consolidated Total Indebtedness to (ii) Total Capitalization (the "Debt to
Capitalization Ratio") at any time during any period set forth below to exceed
the ratio set forth opposite such period: Period Ratio Closing Date through June
30, 1997 0.75 July 1, 1997 through June 30, 1998 0.72 July 1, 1998 through June
30, 1999 0.68 Thereafter 0.65
SECTION 6. 12. Capital Expenditures. Make
Capital Expenditures in excess of $40,000,000 during any fiscal year; provided,
that any portion of such $40,000,000 not used in any fiscal year may be carried
over into and used in the next fiscal year but not any subsequent fiscal year
(it being understood that for purposes of computing the amount permitted to be
carried over, the $40,000,000 applicable to each fiscal year shall be deemed to
be used prior to the use of any applicable carryover).
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder, or
any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document shall prove to have
been false or misleading in any material respect when so made, deemed
made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Commitment Fee or any other amount (other than an
amount referred to in paragraph (b) above) due under any Loan Document
when and as the same shall become due and payable, and such default
shall continue unremedied for a period of five days;
(d) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.08 or 5.12 or in Article VI;
(e) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.05 and such default shall continue
unremedied for a period of 10 days;
(f) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
paragraph (b), (c), (d) or (e) above) and such default shall continue
unremedied for a period of 30 days after notice thereof from the
Administrative Agent or any Lender to the Borrower;
(g) an "Event of Default" under the Chemical Bank
Agreement shall have occurred;
(h) the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $5,000,000 in the case
of the Borrower, and $100,000 in the case of any Subsidiary, when and
as the same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower or any
Subsidiary, or of a substantial part of the property or assets of the
Borrower or a Subsidiary, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or
for a substantial part of the property or assets of the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of the Borrower or
any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(j) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in paragraph (i) above, (iii)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of the property or
assets of the Borrower or any Subsidiary, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $7,500,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties
of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the
Borrower and its ERISA Affiliates in an aggregate amount exceeding
$20,000,000 or requires payments exceeding $5,000,000 in any year;
(m) any security interest purported to be created by the Bond
Agreement or the TNP Bond Indenture shall cease to be, or shall be
asserted by the Borrower not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement, the Bond
Agreement or the TNP Bond Indenture) security interest in the
securities, assets or properties covered thereby, except to the extent
that any such loss of perfection or priority results from the failure
of the Collateral Agent to maintain possession of certificates
representing securities pledged under the Bond Agreement;
(n) any of the New First Mortgage Bonds, after delivery
thereof pursuant to the terms of Section 4.02 and the Bond Agreement,
shall for any reason, except to the extent permitted by the terms
hereof, (i) cease to be entitled to the benefits and security of the
TNP Bond Indenture, equally and ratably with all other First Mortgage
Bonds outstanding under the TNP Bond Indenture, or (ii) become subject
to any Lien, except for any Lien in favor of the Collateral Agent for
the benefit of the Lenders; or at any time the TNP Bond Indenture shall
for any reason fail to constitute a valid and direct first priority
Lien upon substantially all the properties referred to in the granting
clauses of the TNP Bond Indenture as being subject to the Lien thereof
and then owned by the Borrower, subject only to the conditions and
exceptions set forth in Schedule 3.23;
(o) any event of default or similar breach under the TNP Bond
Indenture or any supplemental indenture thereto shall have occurred
(other than any settlement, verdict or other adverse finding or result
arising from events described in Schedule 7(o) with respect to the
supplemental indenture governing First Mortgage Bonds Series T, 11-1/4
percent due January 15, 1997); or
(p) any material provision of this Agreement, the Supplemental
Indenture, any other Loan Document or the TNP Bond Indenture (except
pursuant to the terms thereof) shall at any time for any reason cease
to be valid and binding upon the Borrower, or shall be declared to be
null and void, or the validity or enforceability thereof shall be
contested by the Borrower or any Governmental Authority, or the
Borrower shall deny that it has any or further liability or obligation
under this Agreement, the Supplemental Indenture, any other Loan
Document or the TNP Bond Indenture;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (i) or (j) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued fees and all other liabilities of the Borrower accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding, (iii) instruct the
Collateral Agent to (A) furnish to the Trustee written notice of such Event of
Default and (B) direct the Trustee to cause a redemption of the New First
Mortgage Bonds by the Borrower pursuant to the terms of the Supplemental
Indenture, and (iv) direct the Collateral Agent to exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to the Collateral Agent, all the rights and remedies of a
secured party on default under the Uniform Commercial Code in effect in the
State of Illinois at that time; and in any event with respect to the Borrower
described in paragraph (i) or (j) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
(a) In order to expedite the transactions contemplated by this
Agreement, The First National Bank of Chicago is hereby appointed to act as
Administrative Agent and Collateral Agent on behalf of the Lenders (for purposes
of this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "Agents"). Each of the Lenders and each assignee
of any such Lender hereby irrevocably authorizes the Agents to take such actions
on behalf of such Lender or assignee and to exercise such powers as are
specifically delegated to the Agents by the terms and provisions hereof and of
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (i) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (ii) to
give notice on behalf of each of the Lenders to the Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (iii) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Collateral Agent is hereby expressly authorized
on behalf of the Administrative Agent and the Lenders, without hereby limiting
any implied authority, to hold the Collateral on their behalf, to exercise such
rights and remedies, and take such actions, as are contemplated by this
Agreement, the Bond Agreement and the Supplemental Indenture, and to execute any
and all documents (including releases) with respect to the Collateral and the
rights of the Lenders with respect thereto, as contemplated by and in accordance
with the provisions of this Agreement and the other Loan Documents.
(b) None of the Agents, the Co-Agents or any of their respective
directors, officers, employees or agents shall be liable as such for any action
taken or omitted by any of them except for its or his own gross negligence or
wilful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrower of any of the terms, conditions,
covenants or agreements contained in any Loan Document. None of the Agents or
any Co-Agent shall be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Document, or any related instrument or agreement. The Agents shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. None of the
Agents, the Co-Agents or any of their respective directors, officers, employees
or agents shall have any responsibility to the Borrower on account of the
failure of or delay in performance or breach by any Lender of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrower of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
(c) The powers conferred on the Collateral Agent hereunder and under
the other Loan Documents are solely to protect the interest of the Lenders in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its actual possession
and the accounting for moneys actually received by it hereunder or under the
other Loan Documents, the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Agent, any Co-Agent or any Lender has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
the Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property. The Lenders hereby
acknowledge and agree that neither Agent shall be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders.
(d) Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor which, unless a Default or Event of Default shall
have occurred and be continuing, shall be reasonably satisfactory to the
Borrower. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank with an office in
Chicago, Illinois, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall 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 the Agent's resignation hereunder, the provisions
of this Article VIII and Section 9.05 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.
(e) With respect to the Loans made by it hereunder, each Agent and
Co-Agent in its individual capacity and not as Agent or Co-Agent, respectively,
shall have the same rights and powers as any other Lender and may exercise the
same as though it were not an Agent or Co-Agent, respectively, and the Agents,
Co-Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent or Co-Agent, respectively.
(f) Each Lender agrees (i) to reimburse the Agents and Co-Agents, on
demand, in the amount of such Lender's pro rata share (based on its Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by the Agents
or Co-Agents, as the case may be, including counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrower and (ii) to indemnify and hold
harmless each Agent, Co-Agent and any of their directors, officers, employees or
agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or Co-Agent, as the case may be, or against any of their
respective directors, officers, employees or agents in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by the Borrower, provided
that no Lender shall be liable to an Agent, Co-Agent or any such other
indemnified person for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
as shall be determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Agent, Co-Agent or any of their directors, officers,
employees or agents.
(g) Each Lender acknowledges that it has, independently and without
reliance upon the Agents, the Co-Agents or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents,
the Co-Agents or any other Lender and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement or any other
Loan Document, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at Texas-New Mexico Power
Company, 4100 International Plaza, Fort Worth, Texas 76109, Attention
of Chief Financial Officer (Telecopy No. 817.737.1343);
(b) if to the Administrative Agent or the Collateral
Agent, to it at its address at One First National Plaza, Mail Suite
0363, Chicago, Illinois 60670-0363, Attention of Marilyn Pelkowski
(Telecopy No. 312.732.3055); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any Commitment Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not been terminated. The provisions
of Sections 2.11, 2.13, 2.17 and 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or unenforceability
of any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent or any Lender.
SECTION 9.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Borrower, the Administrative Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment, the Loans at the time owing to it and the Note or
Notes held by it); provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate of such Lender, (x) the Borrower (except
if an Event of Default shall have occurred and be continuing) must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) and (y) the amount of the Commitment of the
assigning Lender subject to each such assignment shall not be less than
$5,000,000 (or, if less, the entire remaining amount of such Lender's
Commitment), (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $4,000, and (iii) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to subsection (e) of this
Section 9.04, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.11, 2.13, 2.17 and 9.05, as well as to any
Commitment Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balance of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto, or the financial condition of the Borrower or any Subsidiary
or the performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 3.05 or delivered pursuant to Section 5.04 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance upon the
Administrative Agent, the Collateral Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in the City of Chicago,
Illinois a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive and the Borrower, the Administrative Agent, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Collateral Agent and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in subsection
(b) above, any Note or Notes subject to such assignment and, if required, the
written consent of the Borrower and the Administrative Agent to such assignment,
the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders. No assignment shall be effective unless it has
been recorded in the Register as provided in this subsection (e). Within five
days after the effective date specified in the Assignment and Acceptance, the
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note or Notes a new Note to the order of
the assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit D.
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment, the Loans owing to it and the
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the participating banks or other entities shall be entitled
to the benefit of the cost protection provisions contained in Sections 2.11,
2.13 and 2.17 to the same extent as if they were Lenders and (iv) the Borrower,
the Administrative Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans, increasing or extending the Commitments or
releasing all or substantially all the Collateral).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent
and each Lender, and any attempted assignment without such consent shall be null
and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent and the
Collateral Agent in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this Agreement and
the other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the
Administrative Agent, the Collateral Agent or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement, the
other Loan Documents or in connection with the Loans made hereunder, including
the fees, charges and disbursements of counsel for the Administrative Agent and
the Collateral Agent, and, in connection with any such enforcement or
protection, the fees, charges and disbursements of any other counsel for the
Administrative Agent, the Collateral Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent and each Lender, each Affiliate of any of the foregoing persons
and each of their respective directors, officers, employees, agents and advisors
(each such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans, (iii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged
presence or release of Hazardous Materials on any property owned or operated by
the Borrower or any of the Subsidiaries, or any Environmental Claim (including
any claim under CERCLA, as defined in the definition of "Environmental Law")
related in any way to the Borrower or the Subsidiaries; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
the Collateral Agent or any Lender. All amounts due under this Section 9.05
shall be payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, with the consent of the Administrative Agent or the Required Lenders, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement and other Loan Documents held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Lender under this Section 9.06
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS (AND NOT
THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent or any Lender in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the
Collateral Agent and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by subsection (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any other Loan Document may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders (or, in the case of the
Bond Agreement or the Supplemental Indenture, an agreement or agreements in
writing entered into by the Borrower or person party thereto and the Collateral
Agent, acting pursuant to the provisions of this Agreement or with the consent
of the Required Lenders); provided, however, that no such agreement shall (i)
decrease the principal amount of, or extend the maturity of or any scheduled
principal payment date or date for the payment of any interest on any Loan, or
waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan, without the prior written consent of each Lender affected
thereby, (ii) change or extend the Commitment or decrease the Commitment Fees of
any Lender without the prior written consent of such Lender, or (iii) amend or
modify the provisions of Section 2.14 or 9.04(i), the provisions of this Section
9.08 or the definition of the term "Required Lenders" or release all or any
substantial part of the Collateral other than as provided herein or in any other
Loan Document, without the prior written consent of each Lender; provided
further, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the Collateral Agent hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent or the Collateral Agent, as the case may be.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") that may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.09 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any Illinois State court or Federal court of
the United States of America sitting in Chicago, Illinois and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Loan Documents, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Illinois State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Borrower or its properties in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
Illinois State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral
Agent and each of the Lenders agrees to keep confidential (and to use its best
efforts to cause its respective agents and representatives to keep confidential)
the Information (as defined below) and all copies thereof, extracts therefrom
and analyses or other materials based thereon, except that the Administrative
Agent, the Collateral Agent or any Lender shall be permitted to disclose
Information (i) to such of its respective officers, directors, employees,
agents, affiliates and representatives as need to know such Information, (ii) to
the extent requested by any regulatory authority, (iii) to the extent otherwise
required by applicable laws and regulations or by any subpoena or similar legal
process, (iv) in connection with any suit, action or proceeding relating to the
enforcement of its rights hereunder or under the other Loan Documents or (v) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section 9.16 or (y) becomes available to the
Administrative Agent, any Lender or the Collateral Agent on a nonconfidential
basis from a source other than the Borrower. For the purposes of this Section
9.16, "Information" shall mean all financial statements, certificates, reports,
agreements and information (including all analyses, compilations and studies
prepared by the Administrative Agent, the Collateral Agent or any Lender based
on any of the foregoing) that are received from the Borrower and related to the
Borrower, any shareholder of the Borrower or any employee, customer or supplier
of the Borrower, other than any of the foregoing that were available to the
Administrative Agent, the Collateral Agent or any Lender on a nonconfidential
basis prior to its disclosure thereto by the Borrower, and which are in the case
of Information provided after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 9.16 shall remain
operative and in full force and effect regardless of the expiration and term of
this Agreement.
SECTION 9.17. Release of Collateral. (a) Notwithstanding any other
provision of this Agreement or the Bond Agreement, the New First Mortgage Bonds
delivered to the Collateral Agent pursuant to the Bond Agreement and all other
Collateral held under the Bond Agreement shall be released from the Liens
created by the Bond Agreement, in each case without representation, warranty or
recourse of any nature, on a Business Day specified by the Borrower (the
"Release Date"), upon the satisfaction of the following conditions precedent
(the "Release Conditions"):
(i) the Borrower shall have given written notice to the
Lenders and the Collateral Agent at least 10 Business Days prior to the
Release Date, specifying the proposed Release Date;
(ii) as of the Release Date, the First Mortgage Bonds shall be
rated "BBB-" or better by S&P and "Baa3" or better by Moody's, and
shall have been so rated by each of S&P and Moody's for a period of not
less than 30 consecutive days;
(iii) no Default or Event of Default shall have occurred
and be continuing as of the Release Date; and
(iv) on the Release Date, the Administrative Agent shall have
received a certificate, dated the Release Date and executed on behalf
of the Borrower by a Responsible Officer thereof, confirming the
satisfaction of the Release Conditions set forth in clauses (ii) and
(iii) above.
(b) Subject to the satisfaction of the conditions set forth in
subsection (a) above, on and after the Release Date, the Collateral Agent shall
deliver the New First Mortgage Bonds pledged under the Bond Agreement to the
Borrower and shall execute and deliver to the Borrower all such instruments and
documents as the Borrower may reasonably request to evidence or confirm the
releases of collateral provided for in this Section 9.17.
(c) Without limiting the provisions of Section 9.05, the Borrower shall
reimburse the Collateral Agent, the Administrative Agent and the Lenders upon
demand for all costs and expenses, including attorneys' fees and disbursements,
incurred by any of them in connection with any action contemplated by this
Section 9.17.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TEXAS-NEW MEXICO POWER COMPANY
By______________________________
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Administrative Agent,
Collateral Agent and Co-Agent
By______________________________
Name:
Title:
<PAGE>
UNION BANK OF CALIFORNIA, N.A.,
individually and as Co-Agent
By______________________________
Name:
Title:
<PAGE>
BANK OF MONTREAL
By______________________________
Name:
Title:
<PAGE>
CIBC, INC.
By______________________________
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By______________________________
Name:
Title:
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By______________________________
Name:
Title:
<PAGE>
Schedule 2.01
Commitments
<TABLE>
Contact Person
Name and Address of Lender and Telecopy Number Commitment
<S> <C> <C>
The First National Bank Mr. Michael J. Johnson $ 20,000,000
of Chicago Vice President
One First National Plaza (312) 732-3055
Mail Suite 0363
Chicago, Illinois 60670-0363
Union Bank of California, N.A. Mr. David Musicant $ 20,000,000
445 South Figueroa Street Vice President
15th Floor (213) 236-4096
Los Angeles, CA 90071
The First National Mr. Michael Kane $ 15,000,000
Bank of Boston Managing Director
100 Federal Street (617) 434-5388
Mailstop 01-08-82
Boston, MA 02110
Bank of Montreal Ms. Julia Buthman $ 15,000,000
700 Louisiana, Suite 4400 Director
Houston, TX 77002 (713) 546-9767
CIBC, Inc. Mr. Robert Lyle $ 15,000,000
200 West Madison, Suite 2300 Managing Director
Chicago, IL 60606 (312) 750-0927
NationsBank of Texas, N.A. Mr. Bryan L. Diers $ 15,000,000
901 Main Street, 64th Floor Senior Vice President
Dallas, TX 75202 (214) 508-3943
TOTAL $ 100,000,000
</TABLE>
<PAGE>
SCHEDULE 3.06
Changes
During 1994, Phillips Petroleum's Sweeny, Texas refinery contracted
with CSW Energy to construct a 300-megawatt cogeneration plant. Construction on
this plant is set to commence in September 1996, and it is expected to begin
operations in 1998. The refinery accounted for approximately $29 million of
Borrower's 1994 operating revenues ($9 million in base revenues) and
approximately $26.7 of 1995 operating revenues ($9.4 million in base revenues).
Revenues attributable to the refinery may be impacted adversely when the
cogeneration facility begins operations. Borrower's goal is to retain Phillips
Petroleum as a customer and to lower overall system operating costs through
negotiation with Phillips Petroleum and CSW Energy. Although Borrower cannot
predict the ultimate outcome of this process or its impact on Borrower, Borrower
and Phillips Petroleum are discussing arrangements through which Borrower may
retain electric service to Phillips Petroleum.
<PAGE>
SCHEDULE 3.08
Subsidiaries and percentage ownership interest therein of Borrower
Texas Generating Company - l,000 shares common stock, no par value, 100
percent owned by Borrower
Texas Generating Company II - l,000 shares common stock, no par value, 100
percent owned by Borrower
<PAGE>
SCHEDULE 3.09
Litigation
1. Revocation proceedings concerning 1991 private letter ruling from the
Internal Revenue Service confirming that Unit 1 of the TNP One generating plant
was property eligible for investment tax credit.
2. A. Joseph Burch v. Coastal Spray Company and Texas-New
Mexico Power Company, Cause No. 92CV1094, 212th Judicial District Court,
Galveston County, Texas. Plaintiff is claiming property damages to land due
to drifting of herbicides sprayed on Texas-New Mexico Power Company R.O.W.
adjacent to plaintiff's property. No amount of damages has been stated.
Discovery continues.
3. Billie Neumann v. Coastal Spray Company and Texas-New Mexico
Power Company, Cause No. 92CV0998, 10th Judicial District Court, Galveston,
County, Texas. Plaintiff is claiming property damages to land and animals due
to herbicide spraying on Texas-New Mexico Power Company R.O.W. adjacent to
Plaintiff's property. No amount of damages has been stated. Discovery
continues.
4. James P. Entrekin v. Coastal Spray Company and Texas-New Mexico Power
Company, Cause No. 92CV0953, 10th Judicial District Court, Galveston County,
Texas. Plaintiff is claiming property damages to land and Arabian horses due
to herbicide spraying on Texas-New Mexico Power Company R.O.W. adjacent to
Plaintiff's property. No amount of damages has been stated. Discovery
continues.
5. Texas-New Mexico Power Company v. PPM America, Inc. and Bank of
America-Illinois, No. 495-CV-738-A, in the United States District Court,
Northern District of Texas, Fort Worth Division. Declaratory judgment action
concerning redemption of the Borrower's Series T first mortgage bonds with
proceeds from the sale of its Panhandle properties under threat of condemnation
by local municipalities. PPM America, Inc. ("PPM") filed a counterclaim (i)
seeking declarations that the Series T partial redemption breached the indenture
governing the first mortgage bonds and that Texas-New Mexico Power Company
cannot redeem Series T first mortgage bonds prior to maturity under
circumstances like the sale of the Panhandle properties; (ii) seeking to enjoin
future redemptions under such circumstances; and (iii) claiming that Texas-New
Mexico Power Company violated the antifraud provisions of the Texas Securities
Act and Section 10(b) of the Securities Exchange Act of 1934 and restrictions of
the Trust Indenture Act of 1939 on impairing bondholder rights. PPM sought
alleged actual and punitive damages of approximately $6.0 million and attorneys'
fees. Because PPM was not a bondholder, it was dismissed from the lawsuit; on
PPM's motion, Jackson National Life Insurance Company ("Jackson") was
substituted as a defendant. Jackson has proposed that its counterclaim be
treated as a class action on behalf of all parties who were holders of Series T
first mortgage bonds when the partial redemption was announced. Texas-New Mexico
Power Company does not believe that the case is appropriate for class treatment
and is vigorously contesting this matter.
See Also Schedule 3.17 For A Description Of Certain Litigation That
Has Been Settled, Pending Bankruptcy Court Approval.
<PAGE>
SCHEDULE 3.17
Environmental Matters
1. Transformers and capacitors that may contain polychlorinated biphenyls
("PCBs"). Borrower does not know the concentration of PCBs, if any, in each and
every transformer and capacitor owned or operated by Borrower. If a transformer
or capacitor containing dielectric fluid with a PCB concentration in excess of
50 parts per million leaks into the environment and thereby contaminates the
water or soil, then Borrower would be liable for clean up and remediation costs.
Depending upon the location and magnitude of such an occurrence, the costs could
be significant.
In addition, Borrower contracts with licensed companies to pick up and
transport transformers and capacitors that contain over 50 parts per million
PCBs. Borrower reasonably believes that these companies perform their service in
accordance with applicable laws and regulations. However, if one of these
companies has violated an applicable law or regulation, then Borrower could be
held responsible for fines and damages resulting from improper handling,
transport, storage, treatment, or disposal of the PCB-contaminated items.
Borrower believes that the probability of such a situation occurring is remote.
If such an event occurred, however, the fines and damages for which Borrower
would be responsible could be significant.
2. Remediation at 300 Crews Way, West Columbia, Brazoria County, Texas. In
November 1995, Borrower hired an environmental engineering firm to assess the
progress of the remediation, define the plume of contamination, if any, and
recommend alternatives to the "pump and treat" technology which had been in
place since April 1993. Borrower has implemented a combination of two treatment
methods - vacuum recovery and aquifer air sparging - to expedite remediation.
The plume of contamination has not been defined and over 700,000 gallons of
contaminated water have been treated using the new remediation system. Borrower
anticipates that remediation efforts will continue for at least another year at
a cost of approximately $100,000.
3. Davis Utility Hydraulics, Inc., Highway 121, Lewisville, Denton County,
Texas; Notice of Violation from Texas Natural Resource Conservation Commission
("TNRCC") and Settlement of Litigation. In May, 1996, TNRCC approved closure of
two of the three tracts of land (herein, "Tract 1" and "Tract 2", respectively)
that were the subject of litigation between the Company and landowners in
Lewisville, Texas. Accordingly, Borrower has plugged and abandoned the
monitoring wells on Tracts 1 and 2 in accordance with TNRCC regulations and
requirements. The litigation has been settled, pending approval by the
bankruptcy court of the Settlement Agreement, which was submitted to the court
in July, 1996. Borrower expects that the bankruptcy court will approve the
Settlement Agreement. Upon such approval, Borrower or an affiliate will purchase
Tract 1 and the third tract ("Tract 3"), the property that still has operable
monitoring wells on-site, for a total of $300,000. Borrower will then complete
remediation activities on Tract 3, at a cost of approximately $50,000, and may
eventually lease or sell either or both Tract 1 and Tract 3. The Settlement
Agreement does not obligate Borrower to take any further action with respect to
Tract 2.
<PAGE>
SCHEDULE 3.18
Insurance maintained by Borrower
<PAGE>
SCHEDULE 3.23
Schedule of Conditions and Exceptions to First Priority Liens
The TNP Bond Indenture constitutes a valid and direct first priority
Lien upon all of the property of the Borrower referred to in the first sentence
of Section 3.23, subject only to:
Permitted Encumbrances, as defined in Section 1.07(G) of the TNP Bond
Indenture.
Prior Liens, as defined in Section 1.07(F) of the TNP Bond Indenture.
Liens expressly permitted under the Existing Facility Documents; Liens
expressly permitted and defined as "Permitted Liens" in the Unit 2
First Amended and Restated Project Loan and Credit Agreement dated January
8, 1992, as amended and currently in effect, among TNP, Texas Generating
Company II, a wholly owned subsidiary of TNP, and the Chase Manhattan Bank,
N.A.
Liens permitted under Section 6.02 of the Credit Agreement.
<PAGE>
SCHEDULE 6.01
Intercompany Indebtedness
Intercompany Indebtedness owed to the Borrower on the Closing Date by:
Obligor Amount
TGC $50,598,884.731
TGC II 58,874,548.072
<PAGE>
SCHEDULE 6.02
Liens
NONE*
* This schedule omits liens of $100,000 or less as immaterial; provided that the
aggregate of all such liens does not exceed $750,000.
<PAGE>
SCHEDULE 7(o)
Description of Events Related to Redemption of Series T Bonds
In September 1995, TNP deposited proceeds of $29.2 million received
from the sale of its properties located in the Texas Panhandle (the "Panhandle
Sale") directly with Bank of America, Illinois, as Trustee, and redeemed $29.2
million of Series T First Mortgage Bonds (the "Series T FNBs") in accordance
with the indenture governing TNP's first mortgage bonds. On October 16, 1995,
the Trustee paid the proceeds to the holders of the Series T FNBs that were
called.
In January 1996, TNP filed a class action lawsuit against John Hancock
Mutual Life Insurance Company, a Series T bondholder. TNP seeks confirmation
that its redemption of Series T FNBs with proceeds from the Panhandle Sale was
within its rights under the indenture governing the first mortgage bonds. TNP
also seeks attorneys fees.
TNP's lawsuit was originally filed in Texas state court in September
1995 against PPM America, Inc. ("PPM"), which claimed to be a bondholder and
threatened to take legal action against TNP over the redemption. On PPM's
motion, the original lawsuit was removed to the United States District Court,
Northern District of Texas, Fort Worth Division (No. 495-CV-738-A). PPM filed a
counterclaim seeking declarations that the Series T partial redemption breached
the indenture governing the first mortgage bonds and that TNP cannot redeem
Series T FMBs prior to maturity under circumstances like the Panhandle Sale. PPM
sought an injunction barring future redemptions under such circumstances. PPM
also claimed that TNP violated the antifraud provisions of the Texas Securities
Act and Section 10(b) of the Securities Exchange Act of 1934 and restrictions of
the Trust Indenture Act of 1939 on impairing bondholder rights. PPM sought
alleged actual and punitive damages of approximately $6.0 million and attorneys'
fees. Because PPM was not a bondholder, it was dismissed from the lawsuit and,
on PPM's motion, Jackson National Life Insurance Company ("Jackson") was
substituted as a defendant. Jackson has proposed that its counterclaim be
treated as a class action on behalf of all parities who were holders of Series T
FMBs at the time the partial redemption was announced. TNP does not believe that
the case is appropriate for class treatment, and believes that Jackson's
counterclaims are without merit. TNP is vigorously contesting the claims.
<PAGE>
EXHIBIT A
[FORM OF]
TEXAS-NEW MEXICO POWER COMPANY
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via telecopy
to the attention of Michael J. Johnson at The First National Bank of Chicago
as soon as possible, at Telecopy No. (312) 732-3055.
LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Telecopy Number:
Backup Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Telecopy Number:
TAX WITHHOLDING:
Nonresident Alien Y* N
* Form 4224 Enclosed
Tax ID Number _________________________
POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Telecopy Number:
PAYMENT INSTRUCTIONS:
Name of Bank to which funds are to be transferred:
Routing Transit/ABA number of Bank to which funds are to be transferred:
Name of Account, if applicable:
Account Number:
Additional information:
MAILINGS:
Please specify the person to whom the Borrower should send financial and
compliance information received subsequent to the closing (if different from
primary credit contact):
Name:
Street Address:
City, State, Zip Code:
It is very important that all the above information be accurately completed and
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and telecopy number and we will telecopy a copy of the
questionnaire. If you have any questions about this form, please call Michael J.
Johnson at (312) 732-4854.
<PAGE>
EXHIBIT B
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated __________ ___, 19__
Reference is made to the Credit Agreement, dated as of September ___,
1996 (as the same may be modified, amended, extended or restated from time to
time, the "Credit Agreement"), among Texas-New Mexico Power Company (the
"Borrower"), the lenders from time to time party thereto (the "Lenders"), The
First National Bank of Chicago, as administrative agent (in such capacity, the
"Administrative Agent") and collateral agent for the Lenders, and The First
National Bank of Chicago and Union Bank of California, N.A., as co-agents. Terms
defined in the Credit Agreement are used herein with the same meanings. Pursuant
to the Credit Agreement, _________________ (the "Assignor") has committed to
make Loans to the Borrower, which Loans are evidenced by a promissory note (the
"Note") issued by the Borrower to the Assignor.
The Assignor and ____________________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth in Schedule 1 (but
not prior to the recordation of the information contained herein in the Register
pursuant to Section 9.04(e) of the Credit Agreement), the interests set forth in
Schedule 1 (the "Assigned Interest") in the Assignor's interests, rights and
obligations under the Credit Agreement and the other Loan Documents, including,
without limitation, the amounts and percentages set forth in Schedule 1 of (i)
the Commitment of the Assignor on the Effective Date and (ii) the Loans owing to
the Assignor that are outstanding on the Effective Date.
2. From and after the Effective Date (i) the Assignee shall be a party
to and be bound by the provisions of the Credit Agreement and, to the extent of
the interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder, including without limitation
(A) the right to receive all payments in respect of the
Assigned Interest for the period from and after the Effective Date,
whether on account of principal, interest, fees, indemnities in respect
of claims arising after the Effective Date, increased costs, additional
amounts or otherwise,
(B) the right to vote and to instruct the Administrative Agent
and the Collateral Agent under the Credit Agreement and the other Loan
Documents based on the Assigned Interest,
(C) the right to set-off and to appropriate and apply
deposits of the Borrower as set forth in the Credit Agreement, and
(D) the right to receive notices, requests, demands and
other communications,
and (ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement [, but shall continue to be entitled to
the benefits of Sections 2.11, 2.13, 2.17 and 9.05 of the Credit Agreement, as
well as to any Commitment Fees accrued for its account and not yet paid].3 The
Assignor agrees that it will promptly remit to the Assignee any amount received
by it in respect of the Assigned Interest (whether from the Borrower, the
Administrative Agent or otherwise) in the same funds in which such amount is
received by the Assignor.
3. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned hereunder free and clear of any
adverse claim and that its Commitment, and the outstanding balance of its Loans,
in each case without giving effect to assignments thereof that have not become
effective, are as set forth in Schedule 1, and (ii) except as set forth in
clause (i) above, makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto, or the financial condition of the Borrower or any Subsidiary
or the performance or observance by the Borrower or any Subsidiary of any of its
obligations under the Credit Agreement, any other Loan Document or any other
instrument or document furnished pursuant thereto.
4. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance, (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements referred to in Section 3.05 thereof or delivered
pursuant to Section 5.04 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance, (iii) will independently and without
reliance upon the Administrative Agent, the Collateral Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, (iv) appoints and authorizes the
Administrative Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Administrative Agent and the Collateral
Agent, respectively, by the terms thereof, together with such powers as are
reasonably incidental thereto, and (v) agrees that it will perform in accordance
with its terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender.
5. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
2.17(f) of the Credit Agreement, duly completed and executed by the Assignee,
(ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit A to the Credit Agreement
and (iii) a processing and recordation fee of $4,000.
6. This Assignment and Acceptance may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts)
of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective authorized officers as of the day
and year first above written, such execution being made on Schedule 1 hereto.
<PAGE>
Schedule 1
to
Assignment and Acceptance
Date ___________ __, 19__
Effective Date of Assignment:4
Percentage Assigned of
Commitment (set forth, to at
least 8 decimals, as a
percentage of the aggregate
Commitments of all Lenders
Principal Amount Assigned
thereunder)
Commitment Assigned:5 $ percent
Loans outstanding: $ percent
The terms set forth above are hereby agreed to:
, as Assignor
By:
Name:
Title:
, as Assignee
By:
Name:
Title:
Assignee's Address for Notices:
<PAGE>
ACCEPTED:6
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:
Name:
Title:
[TEXAS-NEW MEXICO POWER COMPANY
By:
Name:
Title:]
<PAGE>
EXHIBIT C
FORM OF BORROWING REQUEST
The First National Bank of Chicago,
as Administrative Agent for the
Lenders referred to below,
One First National Plaza, Mail Suite 0363
Chicago, Illinois 60670-0363
Attention: [Name or Department]
[Date]
Ladies and Gentlemen:
The undersigned, Texas-New Mexico Power Company (the "Borrower"),
refers to the Credit Agreement, dated as of September ___, 1996 (as amended,
modified or supplemented from time to time, the "Credit Agreement"), among the
Borrower, the lenders from time to time party thereto (the "Lenders"), The First
National Bank of Chicago, as administrative agent (in such capacity, the
"Administrative Agent") and collateral agent for the Lenders, and The First
National Bank of Chicago and Union Bank of California, N.A., as co-agents.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives you notice pursuant to Section 2.03 of the Credit Agreement that it
requests a Borrowing under the Credit Agreement, and in that connection sets
forth below the terms on which such Borrowing is requested to be made:
(A) Date of Borrowing
(which is a Business Day) _______________________________
(B) Principal Amount of Borrowing
- -------------------------------
(C) Interest rate basis _______________________________
(D) Interest Period and the last
day thereof
- -------------------------------
(E) Funds are requested to be disbursed to the Borrower's account with the
Administrative Agent (Account No. ).
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Sections 4.03(b) and (c)
of the Credit Agreement have been satisfied.
TEXAS-NEW MEXICO POWER COMPANY
By
Name:
Title: [Responsible Officer]
<PAGE>
EXHIBIT D
FORM OF PROMISSORY NOTE
U.S.$ Dated: , 19
FOR VALUE RECEIVED, the undersigned, TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
(the "Lender") the principal sum of U.S.$[amount of the Lender's Commitment in
figures] or, if less, the aggregate principal amount of all Loans (as defined
below) made by the Lender to the Borrower pursuant to the Credit Agreement (as
defined below) outstanding on the Maturity Date (as defined in the Credit
Agreement).
The Borrower promises to pay interest on the principal amount hereof
from time to time outstanding from the date hereof until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to The First National Bank of Chicago, as Administrative
Agent, at the address designated from time to time under the Credit Agreement,
in same day funds. All Loans made by the Lender and all payments made on account
of the principal amount hereof shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note, provided that the failure to so record any such Loan or payment
shall not affect the payment obligations of the Borrower hereunder or under the
Credit Agreement.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of September ___,
1996 (as amended, modified or supplemented from time to time, the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined), among the Borrower, the Lender and certain
other Lenders parties thereto, the Co-Agents, the Administrative Agent and the
Collateral Agent, and the Loan Documents referred to therein and entered into
pursuant thereto. The Credit Agreement, among other things, (i) provides for the
making of loans (the "Loans") by the Lender to the Borrower from time to time in
an aggregate amount not to exceed the U.S. dollar amount first above mentioned,
the indebtedness of the Borrower resulting from such Loans being evidenced by
this Promissory Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
TEXAS-NEW MEXICO POWER COMPANY
By
Title:
<PAGE>
cxiv
LOANS AND PAYMENTS OF PRINCIPAL
Amount of
Principal Unpaid
Amount of Paid or Principal Notation
Date Loan Prepaid Balance Made By
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1 Consists of interest charges funded by TNP of $31,066,910.92 and reduction
of Secured Notes Payable funded by TNP of $19,531,973.81.
2 Consists of interest charges funded by TNP of $24,327,676.37 and reduction
of Secured Notes Payable funded by TNP of $34,546,871.70.
3 Bracketed language to be included if the Assignment and Acceptance covers
all or the remaining portion of the Assignor's rights and obligations under
the Credit Agreement.
4 May not be fewer than 5 Business Days after the date hereof.
5 Shall not be less than $5,000,000 (or, if less, the entire remaining amount
of the Assignor's Commitment).
6 To be completed to the extent consents are required under Section 9.04(b)
of the Credit Agreement.
7 Not less than $[10,000,000] and in an integral multiple of $1,000,000, but
in any event not exceeding the available Total Commitment.
8 Specify Eurodollar Borrowing or ABR Borrowing.
9 Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date (applicable only for Eurodollar Borrowings).
<PAGE>
EXHIBIT E
FORM OF BOND AGREEMENT
[FORM OF BOND AGREEMENT FOUND AT EXHIBIT 10(A) OF THIS REPORT]
<PAGE>
EXHIBIT F-1
HAYNES AND BOONE, LLP
September 10, 1996
The First National Bank of Chicago,
individually and as Administrative
Agent and Collateral Agent under the Credit
Agreement referred to below
One First National Plaza
Chicago, Illinois 60670
The Lenders and Co-Agents from time to time parties to the Credit Agreement
Ladies and Gentlemen:
We have acted as special counsel to Texas-New Mexico Power Company, a Texas
corporation ("TNP"), in connection with the transactions contemplated by (i) the
Revolving Credit Facility Agreement, dated as of September 10, 1996, (the
"Credit Agreement"), among TNP, each of the lenders that is a signatory thereto
(the "Lenders"), The First National Bank of Chicago, as administrative agent and
collateral agent for the Lenders (in such capacities, the 'Administrative Agent"
and the 'Collateral Agent," respectively), and The First National Bank of
Chicago and Union Bank -of California, N.A., as co-agents (in such capacity, the
"Co-Agents"), (ii) the Bond Agreement, dated as of September 10, 1996, by TNP in
favor of the Collateral Agent, (iii) the Twenty-Fifth Supplemental Indenture,
dated as of September 10, 1996, between the Borrower and The First Trust of
Illinois, N.A., pursuant to which the New First Mortgage Bonds (as defined in
the Credit Agreement) shall be issued from time to time, and (iv) the Notes (as
defined in the Credit Agreement), (each of the foregoing agreements, instruments
and documents referred to in the foregoing clauses (i) through (iv) being
collectively called the "Opinion Documents"). Unless otherwise defined herein,
terms defined in the Credit Agreement are used herein as therein defined. Except
where the context otherwise requires, words importing the singular include the
plural and vice versa.
In rendering the opinions expressed below, we have examined (a) the Opinion
Documents, and the Existing Facility Documents, (b) such corporate records of
TNP, agreements, instruments and documents which affect or purport to affect the
obligations of TNP under the Opinion Documents and the Existing Facility
Documents, and (c) the TNP Bond Indenture and such other documents as we have
deemed necessary as a basis for the opinions expressed below. When relevant
facts were not independently established, we have relied upon statements of
government officials and upon representations made in or pursuant to the Opinion
Documents and certificates of appropriate representatives of TNP.
In our examination we have assumed, with your consent (a) the genuineness
of all signatures (except as relates to the execution by TNP of any of the
Opinion Documents) and the legal capacity of natural persons, (b) the
authenticity of documents submitted to us as originals and the conformity with
authentic original documents of all documents submitted to us as copies, (c) the
full corporate (or equivalent) power, authority and legal I right of each party
other than TNP to enter into and perform all agreements to which it is a party
and the due authorization, execution and delivery of each Opinion Document by
each such party, (d) that the Opinion Documents constitute the valid, binding
and enforceable agreement of all parties thereto other than TNP, (e) receipt of
the consideration contemplated by the Opinion Documents and (f) the correctness
and accuracy of all the facts set forth in all documents and certificates
identified in this Opinion.
You have been furnished with an opinion of Michael Blanchard, Esq., general
counsel of TNP, dated the date hereof, addressing certain matters. In giving the
opinions set forth below, we have relied upon such opinion.
As used in the opinions expressed herein, a "Material Adverse Effect" means
our reasonable view of what would constitute a material adverse effect on (a)
the validity, performance or enforceability of any Opinion Document, (b) the
financial condition, operations and assets of TNP, or (c) the ability of TNP to
fulfill its obligations under the Opinion Documents.
We have been advised by officers of TNP (and with your consent have relied
on that advice) that the agreements described on Exhibit A hereto (the "Material
Agreements") are the only agreements that are material to TNP and which, if
violated by the execution, delivery or performance of the Opinion Documents,
would have a Material Adverse Effect on TNP's ability to comply with the Opinion
Documents. We advise you that we have not reviewed, and have not devoted
substantive attention to, any other agreements (other than those described on
Exhibit A) for the purposes of rendering the opinion set forth in paragraph 2
below.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of law
as we have deemed necessary as a basis for the opinions expressed below, we are
of the opinion that:
1. TNP is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas and has the necessary
corporate power, authority and legal right to execute, deliver and perform
each of the Opinion Documents to which it is party.
2. The execution, delivery and performance by TNP of the Credit Agreement, the
Bond Agreement and each other Opinion Document have been duly authorized by
all necessary corporate action and do not (a) require any consent or
approval of the shareholders of either TNP or of the trustee under the TNP
Bond Indenture or any holder of any interest in any of the bonds issued and
outstanding under the TNP Bond Indenture (b) violate any provision of law,
rule, regulation, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority, or any provision of
the articles or by-laws of TNP or the TNP Bond Indenture, (c) result in a
breach of, or constitute a default or require any consent under, any
Material Agreement or (d) to our knowledge, result in or require the
imposition of any Lien (other than a Lien permitted under Section 6.02 of
the Credit Agreement) upon or with respect to any property now owned or
hereafter- acquired by TNP.
3. TNP has duly executed and delivered each of the Opinion Documents.
4. Each Opinion Document constitutes the legal, valid and binding obligation
of TNP, enforceable against it in accordance with its terms, in each case
except as the enforceability thereof may be limited by (a) bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to
the enforcement of creditors' rights generally, (b) general principles of
equity, regardless of whether enforcement of any obligations mentioned
therein is sought in a proceeding at equity or at law, (c) statutory
provisions of the federal Bankruptcy Code and the Uniform Fraudulent
Transfer Act as adopted by the States of Illinois and Texas (and related
court decisions) pertaining to the voidability of preferential or
fraudulent transfers, conveyances and obligations, (d) the rights of the
United States under the Federal Tax Lien Act of 1966, as amended, (e)
applicable laws or judicial decisions which may qualify or limit certain
rights, remedies or provisions contained therein but which, in our opinion,
will not materially interfere with the practical realization of the
benefits intended to be provided thereby except for the economic
consequences of any procedural delay which may result therefrom.
5. Except as set forth in Schedule 3.09 to the Credit Agreement, there is to
our knowledge no action, suit or proceeding at law or in equity or by or
before any Governmental Authority now pending or threatened against or
affecting TNP or any of its properties, rights, or assets which could
reasonably be expected to materially and adversely affect the assets or
operations of TNP or its ability to carry out the transactions contemplated
by the Opinion Documents or materially impair the value of the security
granted by it to the Collateral Agent.
6. TNP is not an "investment company" or an "investment advisor" within the
meaning of the Investment Company Act of 1940, as amended.
7. The Bond Agreement is effective to create in favor of the Collateral Agent,
as collateral security for the Obligations (as defined therein), a valid
security interest in all of the right, title and interest of TNP in the
Collateral described therein. Upon delivery to the Collateral Agent of the
New First Mortgage Bonds and the filing of the Supplemental Indenture and
the Bond Agreement as utility security instruments in the office of the
Secretary of State of Texas, such security interest will be perfected.
The foregoing opinions are qualified as set forth below:
A. Without limiting the generality of paragraph 4(b) hereof, we note
specifically that in applying such principles of equity, a court, among other in
things (1) might not allow acceleration of the maturity of a debt upon the
occurrence of a default deemed immaterial or if a determination is made that any
Lender's security has not been impaired, (2) might require any Lender to act
with reasonableness and in good faith, (3) might not permit any Lender to retain
certain interests in any collateral which a court might view as resulting in a
forfeiture, (4) might apply its discretion in granting specific performance,
injunctive relief or other equitable remedies and (5) might not enforce
provisions purporting to give any Lender or any other party a power of attorney
to act on TNP's or any other party's behalf.
B. In rendering the opinion expressed in paragraph 4, we express no opinion
as to the enforceability of provisions of the Opinion Documents to the extent
that such provisions: (1) purport to waive or affect any rights to notices
required by law or that may be required by Section 9.504 of the Uniform
Commercial Code as adopted in the State of Illinois and as effective on the date
hereof (the 'Code") and that are not subject to waiver under Section 9.501 of
the Code, (2) state that the failure or delay in exercising rights, powers,
privileges or remedies under the Opinion Documents by any Lender or agent shall
not operate as a waiver thereof, (3) purport to indemnify- any person for (a)
such persons violations of federal or state securities laws or environmental
laws, or (b,) any obligation to the extent such obligation arises from or is a
result of any Lender's or any Agent's own negligence, (4) purport to grant to
Agents or Lenders the right to offset special deposits of TNP against any of the
Obligations, (5) purport to establish or satisfy certain factual standards or
conditions (e.g., standards of 'commercial reasonableness" or "reasonable care"
under Article 9 of the Code) in a manner not permitted by Section 9.501 of the
Code, (6) purport to sever unenforceable provisions from the Opinion Documents,
to the extent that the enforcement of remaining provisions would frustrate the
fundamental intent of the parties to such documents; (7) provide that TNP has
waived Agents' and Lenders' duties of reasonable care and disposition of
Collateral which may be imposed by Sections 9.207 and 9.504 of the Code, (8)
restrict access to legal or equitable remedies, or (9) purport to waive any
claim of TNP against Agents or any Lender arising out of, or in any way related
to, the Opinion Documents. We advise you that the inclusion of such provisions
in the Opinion Documents does not render void or invalidate the obligations and
liabilities of TNP under other provisions of such documents.
C. No opinion is expressed herein as to (1) the status of title to any of
the Collateral, (2) whether TNP has "rights in the Collateral" as that term in
used in Section 9.203 of the Code, (3) the priority of any security interests,
(4) the creation or perfection of any security interest in property excluded
from coverage of the Code pursuant to Sections 9.102 and 9.104 of the Code or
any proceeds of any of such property, (5) the creation or perfection of liens
and security interests in the Collateral insofar as the laws of a jurisdiction
other than the States of Illinois or Texas govern the creation or perfection of
such liens and security interests, or (6) the creation or perfection of hens and
security interests in the Collateral that is not described in the Opinion
Documents.
D. We express no opinion as to the validity or enforceability of any
provision contained in any of the Opinion Documents that (1) purports to
preclude the amendment, waiver, release or discharge of obligations except by an
instrument in writing, (2) relates to the subject matter jurisdiction of the
Federal courts of the United States of America sitting in Chicago, Illinois to
adjudicate any controversy relating to any of the Opinion Documents, (3)
purports to waive or otherwise restrict or deny access to claims, causes of
action or remedies that may be asserted in any suit or other proceeding, (4)
allows Lenders to institute foreclosure proceedings, or to exercise any similar
right, without notice to the person or entity signatory thereto or bound thereby
or (5) relates to the appointment of a receiver, to the extent that appointment
of a receiver is governed by applicable statutory requirements, and to the
extent that such provision may not be in compliance with such requirements.
E. With respect to our opinion in paragraph 2(b), we express no opinion
regarding the statutes and ordinances, the administrative decisions, and the
rules and regulations of counties, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the
federal, state or regional level), and any judicial decisions to the extent they
deal with any of the foregoing.
F. With respect to the opinion set forth in paragraph 6, we express no
opinion as to whether TNP is a "special situation investment company" for the
purposes of Rule 3a-1 promulgated pursuant to the Investment Company Act of
1940, as amended.
G. We express no opinion as to the enforceability of exculpatory provisions
(or their corresponding indemnity provisions) contained in the Opinion Documents
which purport to exculpate or indemnify Agents or Lenders for their own tortious
acts, or if Agents or Lenders should exceed their authority under the Opinion
Documents.
H. The qualification of any opinion or statement herein by the use of the
words "to our knowledge" means that during the course of representation as
described in this opinion, no information has come to the attention of the
attorneys of this firm involved in the transaction evidenced by the Opinion
Documents that would give such attorneys current actual knowledge of the
existence of the facts so qualified. Except as set forth herein, we have not
undertaken any investigation to determine the existence of such facts and no
inference as to our knowledge thereof shall be drawn from the fact of our
representation of any party or otherwise.
I. We express no opinion as to any matters which may be, or which purport
to be, governed by any law of any jurisdiction other than the federal laws of
the United States of America, the laws of the State of Illinois and the laws of
the State of Texas.
J. This opinion is limited to the matters expressly set forth herein, and
no opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion is solely for the information of the addressees hereof, and
is not to be quoted in whole or in part or otherwise referred to (except in a
list of dosing documents), nor is it to be filed with any governmental agency or
other person without our prior written consent. Other than the addressees
hereof, no one is entitled to rely on this opinion. This opinion is based on our
knowledge of the law and facts as of the date hereof. We assume no duty to
communicate with you with respect to any matter which comes to our attention
hereafter.
Very truly yours,
HAYNES AND BOONE, L.L.P.
<PAGE>
EXHIBIT A
Material Contracts
1. Fuel Supply Agreement, dated November 18, 1987, between
Phillips Coal Company and TNP.
2. Amendment No. 1, dated as of April 1, 1988, to the Fuel Supply
Agreement dated November 18, 1987, between Phillips Coal
Company and TNP.
3. Amendment No. 2, dated as of November 29, 1994, between Walnut
Creek Mining Company and TNP, to the Fuel Supply Agreement
dated November 18, 1987, between Phillips Coal Company and
TNP, effective as of January 1, 1995.
4. Unit 1 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1992 (the "Unit 1 Credit
Agreement"), among TNP, 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.
5. 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.
6. Amendment No. 1, dated as of September 21, 1993, to the Unit I
Credit Agreement.
7. Assignment and Security Agreement, dated December 1, 1987,
executed by TNP in favor of the Unit 1 Agent for the benefit of
the Secured Parties, as defined therein.
8. Amended and Restated Subordination Agreement, dated as of
October 1, 1988, among TNP, 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.
9. First TGC Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 1 Banks, the Unit 1 Agent,
TNP and TGC.
10. Second TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent,
TNP and TGC.
11. Third TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent, TNP
and TGC.
12. Fourth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit I Banks, the Unit 1 Agent,
TNP and TGC.
13. Fifth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 1 Banks, the Unit 1 Agent,
TNP and TGC.
14. 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.
15. Second Lien Mortgage and Deed of Trust (with Security Agreement)
executed by TNP, as Mortgagor, to Donald H. Snell, as Mortgage
Trustee, for the benefit it of the Secured Parties, as defined
therein.
16. Correction Second Lien Mortgage and Deed of Trust (with Security
Agreement), dated as of December 1, 1987, executed by TNP, as
Mortgagor, to Donald H. Snell, as Mortgage Trustee, f or the
benefit it of the Secured Parties, as defined therein.
17. Second Lien Mortgage and Deed of Trust (with Security Agreement)
Modification, Extension and Amendment Agreement, dated as of
January 8, 1992, executed by TNP to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as defined
therein.
18. TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by TNP to Donald H. Snell, as
Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein.
19. 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 TNP.
20. Inducement and Consent Agreement, dated as of June 15, 1988,
between Phillips Coal Company, Kiewit Texas Mining Company,
TNP, Phillips Petroleum Company and Peter Kiewit Son' s, Inc.
21. Guaranty, dated as of October 1, 1988, executed by TNP and
given in respect of the TGC obligations under the Unit 1 Credit
Agreement.
22. First Amended and Restated Facility Purchase Agreement, dated as
of January 8, 1992, among TNP, as the Purchaser, and TGC, as the
Seller, amending and restating the Facility Purchase Agreement
among such parties dated as of October 1, 1988.
23. Operating Agreement, dated as of October 1, 1988, among TNP
and TGC.
24. Unit 2 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1991 (the "Unit 2 Credit
Agreement"), among TNP, Texas Generating Company II ("TGC
II"), 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.
25. Amendment No. 1, dated as of September 21, 1993, to the Unit 2
Credit Agreement.
26. Assignment and Security Agreement, dated as of October 1, 1988,
executed by TNP in favor of the Unit 2 Agent for the benefit of
the Secured Parties, as defined therein.
27. Subordination Agreement, dated as of October 1, 1988, among TNP,
Continental Illinois National Bank and Trust Company of Chicago
and the Unit 2 Agent.
28. First TGC II Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 2 Banks, the Unit 2 Agent, TNP
and TGC II.
29. Second TGC II Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, TNP
and TGC II.
30. Third TGC II Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, TNP
and TGC II.
31. Fourth TGC II Modification and Extension Agreement, dated as of
September 29, 1992, among the Unit 2 Banks, the Unit 2 Agent,
TNP and TGC II.
32. Fifth TGC II Modification and Extension Agreement, dated as of
June 15, 1994, among the Unit 2 Banks, the Unit 2 Agent, TNP and
TGC II.
33. 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.
34. Second Lien Mortgage and Deed of Trust (with Security
Agreement), dated as of October 1, 1988, and executed by TNP, as
Mortgagor, to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein.
35. Second Lien Mortgage and Deed of Trust (with Security Agreement)
Modification, Extension and Amendment Agreement, dated as of
January 8, 1992, executed by TNP to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as defined
therein.
36. TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by TNP to Donald H. Snell, as
Mortgage Trustee for the benefit of the Secured Parties, as
defined therein.
37. Intercreditor and Nondisturbance Agreement, dated as of October
1, 1988, among PFC, Texas PFC, Inc., TNP, the Project Creditors,
as defined therein, and the Collateral Agent, as defined
therein.
38. Amendment #1, dated as of January 8, 1992, to the Intercreditor
and Nondisturbance Agreement, dated as of October 1, 1988, among
TGC, TGC II, TNP, the Unit I Banks, the Unit 2 Banks and The
Chase Manhattan Bank (National Association) in its capacity as
collateral agent for the Unit
I Banks and the Unit 2 Banks.
39. Amendment No. 2, dated as of September 21, 1993, to the
Intercreditor and Nondisturbance Agreement, among TGC, TGC II,
TNP, 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.
40. Non-Partition Agreement, dated as of May 30, 1990, among TNP,
TGC, and The Chase Manhattan Bank (National Association), as
Agent for the Banks which are parties to the Unit I Credit
Agreement.
41. Guaranty, dated July 26, 1991, to be effective as of May 31,
1991, by TNP and given in respect of the TGC II obligations
under the Unit 2 Credit Agreement.
42. First Amended and Restated Facility Purchase Agreement, dated as
of January 8, 1992, among TNP, as the Purchaser, and TGC II, 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.
43. Amendment No. 1 to the Unit 2 First Amended and Restated
Facility Purchase Agreement, dated as of September 21, 1993,
among TNP, as the Purchaser, and TGC II, as the Seller.
44. Operating Agreement, dated July 26, 1991, to be effective as
of May 31, 1991, between TNP and TGC II.
45. Non-Partition Agreement, executed July 26, 1991, to be effective
as of May 31, 1991, among TNP, TGC II and The Chase Manhattan
Bank (National Association).
Power Supply Contracts
46. Contract dated May 12, 1976 between TNP and Houston Lighting &
Power Company.
47. Amendment, dated January 4, 1989, to the Contract dated May 12,
1976 between TNP and Houston Lighting & Power Company.
48. Contract dated May 1, 1986 between TNP and Texas Electric
Utilities Company, amended September 29, 1986, October 24, 1986
and February 21, 1987.
49. Amended and Restated Agreement for Electric Service dated May
14, 1990 between TNP and Texas Utilities Electric Company.
50. Amendment, dated April 19, 1993, to Amended and Restated
Agreement for Electric Service, dated May 14, 1990, as Amended
between TNP and Texas Utilities Electric Company.
51. Contract dated June 11, 1984 between TNP and Southwestern
Public Service Company.
52. Contract dated April 27, 1977 between TNP and West Texas
Utilities Company amended April 14, 1982, April 19, 1983, May
18, 1984 and October 21, 1986.
53. Contract dated April 29, 1987 between TNP and El Paso Electric
Company.
54. Contract dated February 28, 1974, amended May 13, 1974, November
26, 1975, August 26, 1976 and October 7, 1980 between TNP and
Public Service Company of New Mexico.
55. 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 TNP and Public
Service Company of New Mexico.
56. 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 TNP and Public
Service Company of New Mexico.
57. Amended and Restated Contract for Electric Service, dated
April 29, 1988, between TNP and Public Service Company of New
Mexico.
58. Contract dated December 8, 1981 between TNP and Southwestern
Public Service Company amended December 12, 1984, December 2,
1985 and December 9, 1986.
59. Amendment, dated December 12, 1988, to the Contract dated
December 8, 1981 between TNP and Southwestern Public Service
Company amended December 12, 1984, December 2, 1985 and December
19, 1986.
60. Amendment, dated December 12, 1990, to the Contract dated
December 8, 1981 between TNP and Southwestern Public Service
Company.
61. Contract dated August 31, 1983, between TNP and Capitol
Cogeneration Company, Ltd. (including letter agreement dated
August 14, 1986).
62. Agreement Substituting a Party, dated May 3, 1988, among
Capitol Cogeneration Company, Ltd., Clear Lake Cogeneration
Limited Partnership and TNP.
63. Letter Agreements, dated May 30, 1990 and August 28, 1991,
between Clear Lake Cogeneration Limited Partnership and TNP.
64. Notice of Extension Letter, dated August 31, 1992, between
Clear Lake Cogeneration Limited Partnership and TNP.
65. Scheduling Agreement, dated September 15, 1992, between Clear
Lake Cogeneration Limited Partnership and TNP.
66. Interconnection Agreement between TNP and Plains Electric
Generation and Transmission Cooperative, Inc. dated July 9,
1984.
67. Interchange Agreement between TNP and El Paso Electric Company
dated April 29, 1987.
68. Amendment No. 1, dated November 21, 1994 to the Interchange
Agreement between TNP and El Paso Electric Company dated April
29, 1987.
69. DC Terminal Participation Agreement between TNP and El Paso
Electric Company dated December 8, 1981 amended April 29, 1987.
70. 1996 Firm Capacity & Energy Sale Agreement between TNP and TEP
dated December 20, 1994, effective as of January 1, 1996.
71. Texas-New Mexico Power Company Executive Agreement for
Severance Compensation Upon Change in Control, executed
between the Company and each of its Executives and certain
managers.
72. Revolving Credit Facility Agreement, dated as of November 3,
1995, among TNP, certain lenders, and Chemical Bank, as
Administrative Agent and Collateral Agent.
73. Guarantee and Pledge Agreement, dated as of November 3, 1995,
between TGC II, and Chemical Bank, as collateral agent.
74. Bond Agreement, dated as of November 3, 1995, between TNP and
Chemical Bank, as Collateral Agent.
75. Note Pledge Agreement, dated as of November 3, 1995, between
TNP and Chemical Bank, as collateral agent.
76. Sixth TGC II Modification and Extension Agreement, dated as of
November 3, 1995, among the Unit 2 Banks, The Chase Manhattan
Bank, as agent, TNP, and TGC II.
77. Second Lien Mortgage and Deed of Trust Modification, Extension
and Amendment Agreement No. 3, dated as of November 3, 1995.
78. Assignment and Amendment Agreement, dated as of November 3,
1995, among "TNP, TGC II, and Chemical Bank, as administrative
agent and collateral agent.
79. Assignment of TGC II Mortgage Lien, dated as of November 3,
1995, by The Chase Manhattan Bank as agent to Chemical Bank.
80. Collateral Transfer of Notes, Rights and Interests, dated as of
November 3, 1995, between TNP and Chemical Bank, as
Administrative Agent and as Collateral Agent.
81. Assignment of Second Lien Mortgage and Deed of Trust, dated as
of November 3, 1995, between The Chase Manhattan Bank, as
Agent, and Chemical Bank, as agent.
82. Collateral Transfer of Notes, Rights and Interests, dated as of
November 3, 1995, between TNP and Chemical Bank, as
Administrative Agent and as Collateral Agent.
83. Amendment No. 1, dated as of November 3, 1995, to the
Assignment and Security Agreement between TNP, and The Chase
Manhattan Bank, as agent.
84. Indenture and Security Agreement for 12-1/2% Secured
Debentures dated as of January 15, 1992.
85. Indenture and Security Agreement for 10-3/4% Secured
Debentures dated as of September 15, 1993.
86. Indenture of Mortgage and Deed of Trust dated as of November
1, 1944, as supplemented.
<PAGE>
EXHIBIT F-2
MICHAEL D. BLANCHARD
ATTORNEY AT LAW
4100 International Plaza
P.O. Box 2943
Fort Worth, Texas 76113
(817) 731-0099
September 10, 1996
The First National Bank of Chicago
individually and as Administrative
Agent and Collateral Agent under the Credit
Agreement referred to below
One First National Plaza
Chicago, Illinois 60670
The Lenders and Co-Agents from time to time
parties to the Credit Agreement
Ladies and Gentlemen:
I am the general counsel of Texas-New Mexico Power Company, a Texas
corporation ("TNP"), and have served in such capacity in connection with the
transactions contemplated by (i) the Credit Agreement, dated as of September 10,
1996 (the "Credit Agreement"), among TNP, each of the lenders that is a
signatory thereto (the "Lender"), The First National Bank of Chicago, as
administrative agent and collateral agent for the Lenders (in such capacities,
the "Administrative Agent' and the "Collateral Agent", respectively), and The
First National Bank of Chicago and Union Bank of California, N.A., as co-agents
(the "Co-Agent"), (ii) the Bond Agreement, dated as of September 10, 1996 (the
"Bond Agreement"), by TNP in favor of the Collateral Agent, (iii) the
Twenty-Fifth Supplemental Indenture, dated as of September 10, 1996 (the
"Supplemental Indenture"), between TNP and The First Trust of Illinois, N. A.,
pursuant to which the New First Mortgage Bonds (as defined in the Credit
Agreement) shall be issued from time to time, and (iv) the Notes (as defined in
the Credit Agreement (each of the agreements, instruments, and documents
referred to in the foregoing clauses (i) through (iv) being collectively called
the "Opinion Document'). Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined. Except where the context
otherwise requires, words importing the singular include the plural and vise
versa.
In rendering the opinions expressed below, I have examined (a) the Opinion
Documents and the Existing Facility Documents, (b) such corporate records of
TNP, agreements, instruments, and documents which affect or purport to affect
the obligations of TNP under the Opinion Documents and the Existing Facility
Documents, (c) the TNP Bond Indenture and (d) the various orders of the New
Mexico Public Utility Commission and the Federal Energy Regulatory Commission
related to the transactions contemplated by the Opinion Documents and such other
documents as I have deemed necessary as a basis for the opinions expressed
below. In my examination, except as relates to the execution by TNP of any of
the Opinion Documents, I have assumed the genuineness of all signatures and the
legal capacity of natural persons, the authenticity of documents submitted to me
as originals, and the conformity with authentic original documents of all
documents submitted to me as copies. When relevant facts were not independently
established, I have relied upon statements of government officials and upon
representations made in or pursuant to the Opinion Documents and certificates of
appropriate representatives of TNP.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of law
as I have deemed necessary as a basis for the opinions expressed below, I am of
the opinion that:
1. TNP is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas and has the necessary
corporate power, authority, and legal right to execute, deliver, and
perform each of the Opinion Documents.
2. The execution, delivery, and performance by TNP of the Opinion Documents
have been duly authorized by all necessary corporate action and do not (a)
require any consent or approval of the shareholders of TNP or of the
Trustee or any holder of any interest in any of the First Mortgage Bonds
issued and outstanding under the TNP Bond Indenture, (b.) violate any
provision of law, rule, regulation, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority,
or any provision of the articles or bylaws of TNP, or the TNP Bond
Indenture, (c) result in a breach of, or constitute a default or require
any consent under, any indenture or loan or credit agreement to which TNP
is a party or by which it or its properties are bound, except that TNP is
required, pursuant to the Chemical Bank Agreement, to obtain the consent of
Required Lenders thereunder, which consent has been obtained; or (d) result
in or require the creation or imposition of any Lien (other than a Lien
permitted under Section 6.02 of the Credit Agreement) upon or with respect
to any property now owned or hereafter acquired by TNP. TNP is not in
breach of or in default under any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any agreement or
instrument mentioned in the foregoing which breach or default could
reasonably be expected to have a Material Adverse Effect.
3. TNP has duly executed and delivered each of the Opinion Documents.
4. All actions, consents, approvals, registrations, or filings with or any
other action by any Governmental Authority necessary to be obtained by TNP
under applicable Texas and Federal laws and regulations (including, without
limitation, those promulgated by the PUCT or the Federal Energy Regulatory
Commission) in connection with (a) the due execution, delivery, and
performance by TNP of its obligations, and the exercise of its rights
under, the Credit Agreement and each of the other Opinion Documents and the
incurrence of the indebtedness and obligations to be incurred by TNP
thereunder, and (b) the grant of the Liens created pursuant to the Bond
Agreement and the Supplemental Indenture, have been duly obtained or made,
are in full force and effect and are not subject to appeal reconsideration
or other review.
5. None of the Administrative Agent, the Collateral Agent or any of the
Lenders, solely by reason of any extension of loans under the Credit
Agreement or by reason of the execution, delivery, or performance of any of
the Opinion Documents, will be or be subject to regulation as an "electric
utility", "electrical corporation", "electric company", "electric utility
company", "electric utility holding company", "public service company", or
"holding company" or a subsidiary or affiliate of any of the foregoing
under either (i) the Federal Power Act, as amended, (ii) the Public Utility
Holding Company Act of 1935, as amended, or (iii) any Texas law.
6. There is no investigation, action, suit, or proceeding pending or, to my
knowledge, threatened against TNP that seeks, or may reasonable be
expected, to rescind, terminate, modify, or suspend any approval by any
Governmental Authority (including, without limitation, the 1996 Regulatory
Orders) obtained by or given to TNP or that may impede or delay any such
approval.
7. TNP is not subject to regulation under the Public Utility Holding Company
Act of 1935, as amended, other than pursuant to Section 9(a)(2) thereof.
8. All notices of a utility security instrument affecting real property that,
pursuant to Section 35.07 of the Texas Business and Commerce Code, are
required to be recorded in the office of the county clerk of each county in
the State of Texas in which real property of TNP is located, have been
filed.
This opinion is solely for the information of the addressees hereof, and is
not to be quoted in whole or in part or otherwise referred to (except in a fist
of closing documents), nor is it to be filed with any governmental agency or
other person without my prior written consent, except to the extent otherwise
required by law. Other than the addressees hereof and McDermott, Will & Emery
(who may rely upon this opinion as if this opinion were separately addressed to
it), no one is entitled to rely on this opinion. This opinion is based on my
knowledge of the law and facts as of the date hereof I assume no duty to
communicate with you with respect to any matter which comes to my attention
hereafter.
Very truly yours,
MICHAEL D. BLANCHARD
<PAGE>
EXHIBIT F-3
WINSTEAD
SECHREST
& MINICK
A Professional Corporation
September 10, 1996
The First National Bank of Chicago,
individually and as Administrative Agent
and Collateral Agent under the Credit
Agreement referred to below
One First National Plaza
Chicago, Illinois 60670
The Lenders and Co-Agents from time to time parties to the Credit Agreement
Ladies and Gentlemen:
We have acted as special Texas counsel to The First National Bank of
Chicago, as Administrative Agent, in connection with the execution and delivery
of (i) the Credit Agreement, dated as of September 10, 1996 (the "Credit
Agreement"), among Texas-New Mexico Power Company, a Texas corporation ("TNP"),
each of the lenders that is a signatory thereto (the "Lenders"), The First
National Bank of Chicago, as Administrative Agent and Collateral Agent for the
Lenders, and The First National Bank of Chicago and Union Bank of California,
N.A., as Co-Agents, and (ii) the Twenty-Fifth Supplemental Indenture, dated as
of September 10, 1996, between TNP and First Trust of Illinois, National
Association (the "Supplemental Indenture"), pursuant to which the New First
Mortgage Bonds (as defined in the Credit Agreement) shall be issued from time to
time. Terms defined in the Credit Agreement are used herein as therein defined,
except as otherwise set forth herein. This opinion is being delivered to you
pursuant to Section 4.01(a)(x)(C) of the Credit Agreement.
We have reviewed executed counterparts of (or facsimile, photostatic or
conformed copies of) the Credit Agreement, the Bond Agreement, the Original
Indenture (as defined in the Supplemental Indenture), and the Supplemental
Indenture, and have also examined such other documents, records and certificates
as we have deemed necessary or appropriate to express the opinions set forth
below. We have also reviewed such statutes, regulations, rulings and judicial
decisions of the State of Texas as we have deemed necessary to render this
opinion.
In rendering this opinion, we have assumed, with your consent, without
independent verification or investigation:
A. The legal capacity of all natural persons, the absence of duress and the
genuineness of all signatures on documents submitted to us, the conformity to
executed originals of all documents submitted to us as facsimile, photostatic or
conformed copies, and the authenticity of such documents;
B. That the parties to the TNP Bond Indenture (including the Supplemental
Indenture) are duly incorporated, chartered, organized or formed, as the case
may be, and are validly existing and in good standing in the jurisdiction of
their incorporation, charter, organization or formation, as the case may be;
C. That TNP is a public utility (as defined in Section 2.0011 of the Texas
Public Utility Regulatory Act of 1995) and a utility (as defined in Section
35.01 of the Texas Business and Commerce Code ["BCC"]) and has all requisite
corporate power and all governmental licenses, authorizations, consents and
approvals necessary to own, operate and use the property (the "First Mortgage
Property") subject to the Lien of the TNP Bond Indenture (including the
Supplemental Indenture) and to execute and deliver the Supplemental Indenture
and the New First Mortgage Bonds;
D. That the execution, delivery and performance of the Credit Agreement and
the TNP Bond Indenture (including the Supplemental Indenture) have been duly
authorized by each of the parties thereto, that each such document has been duly
executed and delivered by each such party and constitutes the legal, valid and
binding obligation of each such party and is enforceable against each such
party, and that value has been given to TNP under the Credit Agreement;
E. That none of the execution, delivery and performance by TNP of the
Credit Agreement, the Bond Agreement and the Supplemental Indenture will
conflict with or result in a breach of any instrument, agreement, contract or
other document to which it is a party or by which its properties are bound, or
will conflict with or result in a breach of any order, writ, injunction, decree
or demand of any court or governmental authority affecting it or its First
Mortgage Property.
F. That the Original Indenture and all supplements thereto up to but
excluding the Supplemental Indenture (the Original Indenture as supplemented
prior to the execution of the Supplemental Indenture being herein referred to as
the "Original Supplemented Indenture") were previously deposited for filing in
the office of the Secretary of State of the State of Texas accompanied by
payment of the statutory filing fee pursuant to and in compliance with the
provisions of Section 35.02 and, as applicable, Section 35.08 of the TBCC and,
in connection therewith, notices of utility security instrument affecting real
property were recorded in the office of the county clerk in each county where
real property covered thereby is located (which includes, inter alia, all
counties where real property covered by the Supplemental Indenture is located)
pursuant to and in compliance with the provisions of Section 35.07 of the TBCC.
G. That a Lien has previously been created and is currently in existence as
a result of the previous execution and delivery by the parties thereto of, and
with respect to that portion of the First Mortgage Property constituting Real
Property (herein defined) and Personal Property (herein defined) described in,
the Original Supplemented Indenture.
H. That a Lien has been created and is currently in existence as a result
of the execution and delivery by the parties thereto of, and with respect to
that portion of the First Mortgage Property constituting Personal Property
(herein defined) described in, the Supplemental Indenture.
With your consent we have neither examined nor requested an examination of
the indices or records of any court or governmental or other agency, authority,
instrumentality or entity, nor have we made inquiry of any person or entity.
In connection with these opinions, we do not purport to be qualified to
express legal conclusions based on the laws of any state or jurisdiction other
than the laws of the State of Texas and the United States of America and,
accordingly, we express no opinion as to the laws of any other state or
jurisdiction.
Based solely and in reliance upon the foregoing and subject to the further
qualifications hereinafter set forth, we are of the opinion that:
1. The Supplemental Indenture is in appropriate form for filing in the Office
of the Secretary of State of the State of Texas, and the payment of the
statutory filing fee and deposit for filing of the Supplemental Indenture
in such office in accordance with the provisions of Section 35.02 of the
TBCC, will constitute perfection of a security interest on all of the First
Mortgage Property constituting personal property located in the State of
Texas in which a Lien has been created by the Supplemental Indenture and
may be perfected by filing under Chapter 9 of the Uniform Commercial Code
as enacted in the State of Texas (the "Personal Property"), in favor of the
Trustee, as security for the payment of the New First Mortgage Bonds issued
thereunder.
2. The provisions of the Supplemental Indenture governed by the laws of the
State of Texas are effective to create a Lien in the State of Texas on all
of TNP's right, title and interest in the portion of the First Mortgage
Property described therein that is real property (including fixtures
thereto) located in the State of Texas (the "Real Property"), in favor of
the Trustee, as security for the payment of the New First Mortgage Bonds.
3. The payment of the statutory filing fee and deposit for filing of the
Supplemental Indenture in the Office of the Secretary of State of the State
of Texas will be taken and held as notice to all persons of the existence
of the Supplemental Indenture and the interest granted therein, as
security, in the Real Property described therein in favor of the Trustee as
security for the payment of the New First Mortgage Bonds.
4. Other than as provided in the assumptions and opinions hereinabove
provided, no execution or re-recording or refiling of any other instrument
is necessary to create (as to that portion of the First Mortgage Property
constituting Real Property) or preserve (as to that portion of the First
Mortgage Property constituting Real Property and Personal Property) the
Liens in the First Mortgage Property created by the TNP Bond Indenture
(including the Supplemental Indenture).
5. None of the Agents nor any of the Lenders shall, solely as a result of the
financing evidenced by the Credit Agreement, become subject to any
registration or qualification requirements or any tax imposed by the State
of Texas or any political subdivision thereof. In this regard, Article
1396-8.01 of the Texas Miscellaneous Corporation Laws Act provides, in
part, that "a foreign corporation shall not be considered to be conducting
affairs in this State, for the purposes of this Act, by reason of carrying
on in this State any one (1) or more of the following activities: . . . (7)
creating as borrower or lender, or acquiring, indebtedness or mortgages or
other security interests in real or personal property, (8) securing or
collecting debts due to it or enforcing any rights in property securing the
same". However, if in the exercise of such rights, any of the Agents or
Lenders takes title to any of the First Mortgage Property and/or any other
of the Collateral, then such Agent or Lender, as the case may be, may be
required to qualify to do business in the State of Texas. We express no
opinion as to whether activities other than those contemplated by the
Credit Agreement and the Supplemental Indenture conducted by any Agent or
Lender in the State of Texas, if any, will constitute transacting business
in the State of Texas, requiring such Agent or Lender to qualify as a
foreign corporation in the State of Texas.
The foregoing opinions are limited by, subject to and based on the
following qualifications:
(a) We express no opinion as to (i) TNP's rights in
or title to its First Mortgage Property, or the existence of
or freedom from any Lien thereon not contemplated by this
opinion, (ii) the accuracy, completeness or legal sufficiency
of the description in the TNP Bond Indenture (including the
Supplemental Indenture) of the First Mortgage Property subject
thereto, or (iii) the priority of any Lien in the First
Mortgage Property.
(b) The foregoing opinions are limited by (i)
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and similar federal and state laws and judicial
decisions of general application relating to the rights of
creditors, and (ii) general principles of equity, including,
but not limited to, the defenses of unconscionability,
ambiguous claim or right, and economic duress, whether
asserted in equitable or in legal actions.
(c) Any security interest created by the TNP Bond
Indenture (including the Supplemental Indenture) in
after-acquired Personal Property of TNP will not be effective
until TNP has acquired rights therein; with respect to
Personal Property that is acquired by TNP after the date
hereof, Section 552 of the United States Bankruptcy Code will
limit the extent to which Personal Property acquired by a
debtor after the commencement of a case under the United
States Bankruptcy Code may be subject to a security interest
arising from a security agreement entered into by the debtor
before the commencement of such case.
These opinions are being issued and delivered to you solely for your
benefit, are intended solely for your use in connection with the transactions
contemplated by the Credit Agreement, and may not be filed publicly or otherwise
disclosed or relied upon by any other person (other than McDermott, Will & Emery
for purposes of its own opinion), or by you for any other purpose.
Very truly yours,
WINSTEAD SECHREST & MINICK
P.C.
<PAGE>
EXHIBIT F-4
RUBIN, KATZ, SALAZAR, ALLEY & ROUSE
ATTORNEYS AT LAW
September 10, 1996
The First National Bank of Chicago,
individually and as Administrative
Agent and Collateral Agent under the Credit
Agreement referred to below
One First National Plaza
Chicago, Illinois 60670
The Lenders and Co-Agents from time to time parties to the Credit Agreement
RE: TNP Credit Agreement
Ladies and Gentlemen:
We have acted as New Mexico counsel to Texas-New Mexico Power Company, a
Texas corporation ("TNP"), since 1993. During the period 1978 to 1993, the
undersigned individual also acted as New Mexico counsel to TNP as a member of a
different law firm. During this period from 1978 to date, the scope of my
representation has been limited to the specific matters referred to me by TNP
and has included all matters before governmental or regulatory agencies of New
Mexico with respect to the activities of TNP as a public utility under the New
Mexico Public Utility Act and material litigation and claims against TNP in the
state and federal courts in New Mexico. 'Me files of TNP in our office contain
the full and complete record of all proceedings involving TNP before the New
Mexico Public Utility Commission and in any material litigation in the state and
federal courts in New Mexico during this period. To our knowledge after due
inquiry, we have been employed as counsel for all material matters of TNP in New
Mexico for the periods described above.
Insofar as the law of the State of New Mexico and the law of the United
States of America, as it applies to the opinions expressed in this letter, are
concerned, we have acted as special New Mexico counsel to TNP in connection with
the transactions contemplated by (i) the Credit Agreement, dated as of September
10, 1996 (the "TNP Credit Agreement") among TNP, each of the lenders that is a
signatory thereto (the "Lender")The First National Bank of Chicago, as
administrative agent and collateral agent for the lenders (in such capacities,
the "Administrative Agent" and the "Collateral Agent", respectively), and the
First National Bank of Chicago and Union Bank of California, N.A., as co-agents
(in such capacity, the "Co-Agents"), (ii) the Bond Agreement, dated as of
September 10, 1996, by TNP in favor of the Collateral Agent, (iii) the
Twenty-Fifth Supplemental Indenture, dated as of September 10, 1996, between the
Borrower and The First Trust of Illinois, NA, pursuant to which the New first
Mortgage Bonds (as defined in the TNP Credit Agreement) shall be issued from
time to time, and (iv) the Notes (as defined in the TNP Credit Agreement) (each
of the foregoing Clauses (I) and documents referred to in d the "Opinion
Documents").
Unless otherwise defined herein, terms defined in the TNP Credit Agreement
are used herein as therein defined. Except where the context otherwise requires,
words importing the singular include the plural and vice versa.
In rendering the opinions expressed below, we have examined (a) the TNP
Credit Agreement and each of the other Opinion Documents, (b) such corporate
records of TNP, agreements, instruments and documents in the files of TNP in our
office which affect or purport to affect the obligations of TNP under the
Opinion Documents, (c) the Certificate of Comparison for TNP dated October 19,
1995, issued by the State Corporation Commission of the State of New Mexico
which certifies that a Certificate of Authority was issued to TNP on May 1, 1963
(collectively, the "Certificate of Comparison and Authority"), and (d) such
other documents as we have deemed necessary as a basis for the opinions
expressed below. In our examination, we have assumed the genuineness of all and
the authenticity of documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies.
When relevant facts were not independently established, we have relied upon such
statements of government officials expressly referred to in this letter and upon
representations made in or pursuant to the Opinion Documents and certificates of
appropriate representatives of TNP.
Despite any other express or implied statement in this letter, each of the
opinions expressed 'm this letter is subject to the following further
qualifications, conditions or assumptions, whether or not such opinions refer to
such qualifications, conditions or assumptions:
(a) As to the good standing of TNP in New Mexico, we have relied solely on
the Certificate of Good Standing for TNP dated October 19, 1995 and valid until
March- 1, 1997, issued by the State Corporation Commission of the State of New
Mexico (the "Certificate of Good Standing").
(b) We have not made independent inquiry into the law of any jurisdiction
other than the State of New Mexico and the political subdivisions of the State
of New Mexico and the United States of America, insofar as the Federal law of
the United States of America applies to the opinions expressed in this letter.
To the extent that matters discussed in this letter relate to or are dependent
on the application of law of any other jurisdiction, we state no opinion.
(c) Each of the parties to the Opinion Documents other than TNP, and each
of the entities having an interest, directly or indirectly, in any of the
parties to the Opinion Documents, is duly organized or formed, validly existing
and in good standing in its respective state or nation of organization or
incorporation.
(d) Each of the parties to the Opinion Documents other than TNP, and each
of the entities having an interest, directly or indirectly, in any of such
parties and executing the Opinion Documents on behalf of such parties, has full
power, authority and legal rights under the laws of its respective state or
nation of organization or incorporation to execute and deliver the Opinion
Documents to which it is a party.
(e) Where the phrase "to our knowledge after due inquiry" appears, we have
reviewed the Opinion Documents and such other documents and instruments as are
specifically referred to in this letter, and we have reviewed the files of TNP
in our offices, and we have made inquiries of the appropriate officers of TNP,
but we have conducted no further independent investigation and have made no
independent inquiries of others.
(f) Our opinions with respect to items 6 and 7 are qualified, conditioned
on and subject to provisions of the New Mexico Public Utility Act which provide
that abandonment or transfer of public utility property and acquisition of the
stock of a public utility are subject to approval by the New Mexico Public
Utility Commission under certain circumstances, as provided in the New Mexico
Public Utility Act.
(g) Our opinions with respect to items 3 and 7 are qualified, conditioned
on and subject to requirements that appropriate notices, filings or recordings
of the Twenty-Fifth Supplemental Indenture shall be made with the New Mexico
Secretary of State and in the proper recording office of any county in the State
of New Mexico in which property of the Company is situated, as provided in the
New Mexico Public Utility Act.
We have also reviewed executed originals or copies, certified to our
satisfaction, of such other documents, corporate records of TNP, certificates of
public officials and of corporate officers of TNP, agreements, instruments and
documents in the files of TNP in our offices related to the matters handled by
us for TNP since 1978 and referred to above, which affect or purport to affect
the obligations of TNP under the Opinion Documents, as we have deemed necessary
for the opinions expressed in this letter.
Based on the foregoing, which includes such investigations as we have
deemed necessary, and subject to the further qualifications set forth below, we
are of the opinion that:
1. TNP is in good standing as a foreign corporation under the laws of the
State of New Mexico and has the necessary corporate power, corporate authority
and legal right in such State to execute, deliver and perform the Opinion
Documents. No further filing, recordation, publishing or other act is necessary
in connection with the existence of TNP or the conduct of the business of TNP in
the State of New Mexico.
2. The execution, delivery and performance by TNP of the TNP Credit
Agreement and the other Opinion Documents do not and win not violate any
provision of law, rule or regulation or, to our knowledge after due inquiry, any
order, writ, judgment, injunction, decree, determination or award presently in
effect in the State of New Mexico which have applicability to TNP.
3. Except for the 1996 NMPUC Order, no approvals, authorizations. consents,
orders or other actions by, and no notices to, or filings, recordings or
registrations with any Governmental Authority of the State of New Mexico are
required (i) to authorize the execution and delivery by TNP of the TNP Credit
Agreement and the other Opinion Documents, (ii) to authorize the consummation by
TNP of the transactions contemplated by the Opinion Documents, or (iii) to
create or preserve the lien of the TNP Bond Indenture. The 1996 NMPUC Order has
been duly obtained, is in full force and effect and, subject to the following
sentence, is not subject to appeal, reconsideration or other review. Although
the period for rehearing or appeal with respect to the 1996 NMPUC Order will not
elapse until, at the latest, the 80th day after the issuance of the 1996 NMPUC
Order, except for TNP there are no intervenors or other Persons who would have
standing to appeal or request rehearing of the 1996 NMPUC Order. To our
Knowledge after due inquiry, no investigation, action, suit or proceeding is
pending or threatened against TNP in the State of New Mexico which seeks, or may
reasonable be expected, to rescind, terminate, modify or suspend the 1996 NMPUC
Order.
4. To our knowledge after due inquiry, no action, suit or proceeding at law
or in equity or by or before any governmental or regulatory authority, court,
arbitral, tribunal or other body in the State of New Mexico is now pending or
threatened which could reasonably be expected to materially and adversely affect
the financial condition, assets, or operations of TNP or the ability of TNP to
perform its obligations under the Opinion Documents.
5. A New Mexico court, or a Federal court applying conflict of law rules of
the State of New Mexico, would give effect to the choice of law provision
contained in each Opinion Document to which TNP is or is intended to be a party
stating that such Opinion Document (excluding matters relating to title to
property and security interests therein) is to be governed by the laws of the
State of Illinois in the case of an Opinion Document stated to be governed by
the laws of the State of Illinois, or in the case of an Opinion Document stated
to be governed by the laws of the State of Texas, by the laws of the State of
Texas. With respect to our conflict of law rules opinion, we have assumed that
the principal place of business and the site of the chief executive offices of
TNP are in the State of Texas, that the principal place of business and the site
of the chief executive office of The First National Bank of Chicago is the State
of Illinois, that the negotiations leading up to the signing of the TNP Credit
Agreement and the other Opinion Documents took place in several states by
telephone, telephonic transmissions and face-to-face meetings both inside and
outside the State of Texas and the State of Illinois, but not in the State of
New Mexico, that the last signature of a party to the TNP Credit Agreement and
the other Opinion Documents is the last act necessary to form the agreements
contemplated by the TNP Credit Agreement and the other Opinion Documents were
delivered by TNP in the State of Illinois.
6. None of the Administrative Agent the Collateral Agent or any of the
lenders, solely by reason of any extension of loans under the TNP Credit
Agreement or by reason of the execution, delivery or performance of any of the
Opinion Documents, will be or be subject to regulation as an "electric utility
company", and "electric utility holding company", "public service company, or
"holding company" or a subsidiary or affiliate of any of the foregoing under any
New Mexico law.
7. No consent, approval or authorization of any Governmental Authority in
New Mexico having jurisdiction is required for the validity of the execution and
delivery or for the performance by the Administrative Agent, the Collateral
Agent or any Lender of, or the consummation by the Administrative Agent, the
Collateral Agent or any Lender of the transactions contemplated by, the TNP
Credit Agreement.
These opinions are limited to the matters expressly stated in this letter,
and no opinion is inferred or may be implied beyond the matters expressly stated
in this letter. These opinions are being delivered to you, as addressee, at the
direction of TNP with the intent that you, as addressee, rely on these opinions.
This letter does not constitute a guarantee of the TNP Credit Agreement or the
other Opinion Documents or any of the obligations or other matters referred to
or opined upon in this letter, and by rendering the opinions as provided in this
letter we are not guarantying or insuring the TNP Credit Agreement or the other
Opinion Documents or any of the obligations or other matters referred to or
opined upon in this letter. This opinion is solely for the internal information
and assistance of the Administrative Agent, the Collateral Agent, the Co-Agents
and the Lenders, as an interpretation of the law of the State of New Mexico
applicable to the transactions contemplated by the Opinion Documents as of the
date of this letter and may not be relied upon or quoted by anyone else for any
purpose whatsoever, nor may copies be delivered to any other person or filed
with any governmental agency or corporation, without our prior written consent,
except that copies of this letter may be furnished to Haynes & Boone and to
McDermott, Will & Emery, who may rely upon these opinions as if this letter were
separately addressed to them. We make no undertaking to supplement this opinion
If facts or circumstances come to our attention or changes in the law occur
after the date of this letter which could affect this opinion.
Very truly yours,
RUBIN, KATZ,
SALAZAR, ALLEY &
ROUSE
A Professional
Corporation
Donald M.Salazar
<PAGE>
EXHIBIT F-5
McDermott, Will & Emery
September 10, 1996
The First National Bank of Chicago,
individually and as Administrative
Agent and Collateral Agent under the Credit
Agreement referred to below
One First National Plaza
Chicago, Illinois 60670
The Lenders and Co-Agents from time to time
parties to the Credit Agreement
Re: Texas-New Mexico Power Company
Ladies and Gentlemen:
We have acted as special counsel to The First National Bank of Chicago,
individually and as Administrative Agent, in connection with the execution and
delivery of the Credit Agreement, dated as of September 10, 1996 (the "Credit
Agreement"), among Texas-New Mexico Power Company, each of the Lenders from time
to time party thereto, The First National Bank of Chicago, as Administrative
Agent, Collateral Agent and Co-Agent, and Union Bank of California, N.A., as
Co-Agent. Terms defined in the Credit Agreement are used herein as therein
defined.
In this connection, we have examined executed counterparts of the Credit
Agreement, together with the other documents listed on Schedule A hereto.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuineness
of all signatures, the due authority of the parties executing such documents and
the conformity to the originals of all such documents submitted to us as copies.
We have further assumed that you have evaluated, and are satisfied with, the
creditworthiness of the Borrower and the business and financial terms evidenced
by the Loan Documents. We have relied, as to factual matters, on the documents
we have examined.
Our opinions expressed below are limited to the law of the State of
Illinois and the Federal law of the United States, and we do not express any
opinions concerning any other law. In addition, we express no opinion herein
regarding the creation or perfection of any security interest in the Collateral.
Based upon and subject to the foregoing and upon such investigations as we
have deemed necessary, and while we have not independently considered the
matters covered by the opinions listed on Schedule A hereto to the extent
necessary to enable us to express the conclusions stated therein, we are of the
opinion that (a) the Credit Agreement and the Notes are in substantially
acceptable legal form, and (b) the other Loan Documents and the opinions and
other documents listed on Schedule A hereto are substantially responsive to the
requirements of the corresponding subsections of Section 4.01 of the Credit
Agreement pursuant to which the same have been delivered.
Very truly yours,
Schedule A
List of Documents Examined
(All terms not defined herein have the meanings
ascribed to them in the Credit Agreement; unless
otherwise noted all documents are dated as of September
10, 1996.)
1. Bond Agreement by and among Texas-New Mexico Power
Company ("Borrower") and The First National Bank of Chicago, as
Collateral Agent for the Lenders.
2. Promissory Note in the principal amount of
$20,000,000 made payable to The First National Bank of Chicago by the
Borrower.
3. Promissory Note in the principal amount of
$20,000,000 made payable to Union Bank of California, N.A. by the
Borrower.
4. Promissory Note in the principal amount of
$15,000,000 made payable to The First National Bank of Boston by the
Borrower.
5. Promissory Note in the principal amount of
$15,000,000 made payable to Bank of Montreal by the Borrower.
6. Promissory Note in the principal amount of
$15,000,000 made payable to CIBC, Inc. by the Borrower.
7. Promissory Note in the principal amount of
$15,000,000 made payable to NationsBank of Texas N.A. by the Borrower.
8. Twenty-Fifth Supplemental Indenture by and between
the Borrower and First Trust of Illinois, National Association, as
Trustee.
9. UCC-1 Financing Statement listing the Borrower, as
Debtor, and The First National Bank of Chicago as Collateral Agent, as
Secured Party, to be filed with the Secretary of State of New Mexico.
10. UCC-1 Financing Statement listing the Borrower, as
Debtor, and The First National Bank of Chicago as Collateral Agent, as
Secured Party, to be filed with the Secretary of State of Texas.
11. Certificate of Incorporation of the Borrower issued
and certified by the Secretary of State of Texas on August 21, 1996.
12. Certificate of Good Standing of the Borrower issued
and certified by the Secretary of State of Texas on August 21, 1996.
13. Certificate of Good Standing and Compliance of the
Borrower issued and certified by the Chairman of the State Corporation
Commission of the State of New Mexico on August 21, 1996.
14. Certificate of Michael D. Blanchard, General Counsel and
Corporate Secretary of the Borrower, as to: (i) truth and correctness of
the copies of. (a) by-laws of the Borrower, (b) resolutions of the Board
of Directors of the Borrower, (c) 1996 Regulatory Orders and all
approvals, authorizations, orders or consents of, or notices to or
registrations with, any Governmental Authority required for the Borrower
to execute, delivery and perform its obligations under the Credit
Agreement and the other Loan Documents, each attached thereto; (ii) the
last amendment date of the Borrower's articles of incorporation; and
(iii) incumbency and signatures of certain officers of the Borrower.
15. Certificate of Michael D. Blanchard, General
Counsel and Corporate Secretary Of the Borrower, as to: (i) the full
force and effectiveness of the TNP Bond Indenture and the supplemental
indentures thereto and (ii) the truth and correctness of the copies of
the TNP Bond Indenture and the supplemental indentures attached thereto.
16. Certificate of Manjit S. Cheema, Senior Vice President and
Chief Financial Officer of the Borrower, as to: (i) representations and
warranties contained in Article In of the Credit Agreement and (ii)
compliance with the terms and provisions of the Credit Agreement, each
other Loan Document and each Existing Facility Document, and the absence
of any Event of Default.
17. Certificate of Manjit S. Cheema, Senior Vice President and
Chief Financial Officer of the Borrower, as to: (i) fair market value of
the assets of the Borrower and its Subsidiaries; (ii) the present fair
saleable value of the assets of the Borrower and its Subsidiaries; (iii)
the ability of the Borrower and its Subsidiaries to pay their debts and
liabilities; and (iv) the ability of the Borrower and its Subsidiaries to
conduct the businesses in which they are engaged.
18. Certificate of David S. Vick, Vice President and Assistant
Secretary of First Trust of Illinois, National Association, as to: (i)
First Trust of Illinois' capacity as Trustee under the TNP Bond
Indenture; (ii),the First Mortgage Bonds outstanding under the TNP Bond
Indenture; and (iii) the incumbency and genuine signatures of the
officers authorized to execute the Twenty-Fifth Supplemental Indenture.
19. Opinion of Michael D. Blanchard, Esq., General
Counsel for the Borrower.
20. Opinion of Haynes and Boone, L.L.P., special counsel
for the Borrower.
21. Opinion of Rubin, Katz, Salazar, Alley & Rouse, New
Mexico counsel for the Borrower.
22. Opinion of Winstead, Sechrest & Minick, special
Texas counsel for the Lenders.
<PAGE>
EXECUTION COPY
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY AND CONTAINS
AFTER-ACQUIRED PROPERTY PROVISIONS PURSUANT TO SUBCHAPTER 35A OF THE TEXAS
BUSINESS AND COMMERCE CODE
BOND AGREEMENT, dated as of September 10, 1996, by TEXAS-NEW MEXICO
POWER COMPANY, a Texas corporation ("TNP" or the "Pledgor"), in favor of THE
FIRST NATIONAL BANK OF CHICAGO, as collateral agent for the lenders (in such
capacity, the "Collateral Agent") party to the Credit Agreement, dated as of
September 10, 1996 (as amended, modified or supplemented from time to time, the
"Credit Agreement"), among TNP, the lenders named therein (the "Lenders"), The
First National Bank of Chicago, as administrative agent and collateral agent for
the Lenders, and The First National Bank of Chicago and Union Bank of
California, N.A., as co-agents (the "Co-Agents").
<PAGE>
The Lenders have agreed to make Loans (such term and each other term
used but not defined herein having the meaning assigned to it in the Credit
Agreement) to the Borrower pursuant to, and subject to the terms of, the Credit
Agreement. The obligations of the Lenders to make the Loans are conditioned,
among other things, upon the execution and delivery by the Pledgor of a bond
pledge agreement in the form hereof to secure the due and punctual payment by
the Borrower of (a) the principal of and interest on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (b) all other monetary obligations of the Borrower to the Agents
and the Lenders under the Loan Documents and (c) all obligations of the Pledgor
or any Subsidiary under any Interest Rate Protection Agreement entered into with
a Lender to protect against interest rate fluctuations with respect to
Indebtedness under the Credit Agreement (the foregoing obligations described in
clauses (a), (b) and (c) being collectively called the "Obligations"). It is
understood that TNP is the issuer of the New First Mortgage Bonds pledged
hereunder and that, accordingly, the New First Mortgage Bonds constitute
obligations, and not property, of TNP, the purpose of the arrangements provided
for herein being to provide for the payment of, and the benefits of security
for, the Obligations through the issuance and delivery of the Bonds to the
Collateral Agent as contemplated by Section 4.02 of the Credit Agreement.
Accordingly, the Pledgor and the Collateral Agent hereby agree as
follows:
SECTION 1. Pledge and Delivery of Bonds. To provide for the payment,
and the benefit of security for the payment and performance in full, of the
Obligations, the Pledgor hereby transfers, grants, bargains, sells, conveys,
hypothecates, pledges, sets over and delivers unto the Collateral Agent, for the
benefit of the Lenders and the Agents, and grants to the Collateral Agent, for
the benefit of the Lenders and the Agents, a security interest in, the
following:
(a) the New First Mortgage Bonds, and the certificate or
certificates representing or evidencing the New First Mortgage Bonds,
that may be delivered to the Administrative Agent from time to time
pursuant to Section 4.02(a) of the Credit Agreement and held by the
Collateral Agent pursuant to the terms hereof and the Supplemental
Indenture;
(b) all other property which may be delivered to and
held by the Collateral Agent pursuant to the terms hereof (whether or
not described herein);
(c) all payments of principal, interest and other amounts, and
all cash, instruments and other property, from time to time received,
receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of the securities referred to in clauses (a) and
(b) above;
(d) all rights and privileges of the Pledgor with
respect to the securities and other property referred to in
clauses (a) and (b) above; and
(e) all proceeds of any of the foregoing
(the items referred to in clauses (a) through (e) above being collectively
called the "Collateral"). Upon delivery to the Collateral Agent, (x) the New
First Mortgage Bonds and any certificates, instruments, notes or other
securities now or hereafter included in the Collateral shall be accompanied by
duly executed instruments of transfer or assignment satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (y) all other property included in the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the Pledgor and such other instruments or documents as the
Collateral Agent may reasonably request.
SECTION 2. Representations, Warranties and Covenants. The Pledgor
hereby represents, warrants and covenants to and with the Collateral Agent
that:
(a) At the time of their delivery hereunder, the New First
Mortgage Bonds will have been authorized, executed, issued,
authenticated and delivered, and registered as provided in Section 3
below, in accordance with applicable law and the terms and provisions
of the TNP Bond Indenture and will constitute the legal, valid and
binding obligations of the Borrower, enforceable in accordance with
their terms and entitled to the benefits of the TNP Bond Indenture and
the Liens created thereby to the same extent as the other First
Mortgage Bonds issued thereunder.
(b) The New First Mortgage Bonds delivered to and held by the
Collateral Agent hereunder will at all times be outstanding for all
purposes of the TNP Bond Indenture and the Collateral Agent and its
successors, as holders thereof, will be entitled to all voting,
consensual and other rights accruing to holders of First Mortgage Bonds
issued under the TNP Bond Indenture.
(c) The Pledgor will make no sale, assignment, pledge,
hypothecation or other transfer of, or create any other security
interest in, the New First Mortgage Bonds or other Collateral.
(d) The Pledgor (i) has good right and legal authority to
issue, pledge and deliver the New First Mortgage Bonds and the other
Collateral to the Collateral Agent in the manner hereby done or
contemplated, (ii) will defend the interest of the Collateral Agent in
the New First Mortgage Bonds and the other Collateral against any and
all attachments, liens, claims, encumbrances, security interests or
other impediments of any nature, however arising, of all persons and
(iii) will promptly turn over to the Collateral Agent in the form in
which received any Collateral which shall at any time come into its
possession.
(e) No consent or approval of any Governmental Authority, the
Trustee under the TNP Bond Indenture or any securities exchange was or
is necessary for the valid issuance of the New First Mortgage Bonds or
the pledge and delivery effected hereby except such as have been
obtained and are in full force and effect.
(f) By virtue of the execution and delivery by the Pledgor of
this Agreement and the Supplemental Indenture, when the certificates,
instruments or other documents representing or evidencing the New First
Mortgage Bonds are delivered to the Collateral Agent in accordance with
this Agreement and the Supplemental Indenture, the Collateral Agent
will obtain a valid and perfected first lien upon and security interest
in such New First Mortgage Bonds and the other Collateral as security
for the payment and performance of the Obligations, prior to all other
liens and encumbrances thereon and security interests therein.
(g) The pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Lenders and the Agents, the rights
of the Collateral Agent in the New First Mortgage Bonds and other
Collateral as set forth herein.
SECTION 3. Registration of New First Mortgage Bonds; Denominations. The
New First Mortgage Bonds shall be registered on the register maintained by the
Trustee under the TNP Bond Indenture in the name of the Collateral Agent or its
nominee. The Collateral Agent shall have the right to exchange the certificates
representing the New First Mortgage Bonds for certificates of smaller or larger
denominations to facilitate the exercise of its rights hereunder.
SECTION 4. Voting and Consensual Rights, Etc. (a) Until the Collateral
shall have been released as provided in Section 13, the Collateral Agent shall
have and may exercise, to the exclusion of the Pledgor, all voting, consensual
and other rights accruing to a holder of New First Mortgage Bonds, including,
without limitation, (i) the right to demand and receive payments of principal
and interest on the New First Mortgage Bonds in accordance with the terms of the
New First Mortgage Bonds and the TNP Bond Indenture, (ii) the right to attend or
be represented by proxy at any meeting of bondholders under the TNP Bond
Indenture, (iii) the right to vote the New First Mortgage Bonds in accordance
with the terms of the TNP Bond Indenture, (iv) the right to issue consents and
waivers with respect to the New First Mortgage Bonds, as a holder of First
Mortgage Bonds, under or in connection with the TNP Bond Indenture, (v) the
right to issue any and all instructions and requests for action to the Trustee
under the TNP Bond Indenture that are permitted to a bondholder under the TNP
Bond Indenture and (vi) the right to exercise all remedies provided in the TNP
Bond Indenture for the benefit of the holders of First Mortgage Bonds. The
Pledgor shall not amend, supplement or otherwise modify, or consent to any
amendment, supplement or other modification to, the terms of the New First
Mortgage Bonds or the TNP Bond Indenture in any manner that could directly or
indirectly affect the Collateral, the Lien of the TNP Bond Indenture or the
rights or interests of the Lenders (other than issuances of First Mortgage Bonds
permitted under Section 6.01(d) of the Credit Agreement pursuant to supplemental
bond indentures), in each case except with the prior written consent of the
Collateral Agent.
(b) The Pledgor shall not consent to any voluntary prepayment or
redemption of the New First Mortgage Bonds without the prior written consent of
the Collateral Agent, and any amounts received by or for the account of the
Pledgor in respect of any such prepayment or redemption shall constitute
Collateral hereunder and shall be held by the Collateral Agent for application
as provided herein.
SECTION 5. No Disposition. Without the prior written consent of the
Collateral Agent, the Pledgor agrees that it will not sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral, nor will it create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Collateral, or any interest therein, or
any proceeds thereof, except for the lien and security interest provided for by
this Agreement.
SECTION 6. Amendment, Modifications and Waivers with Respect to
Obligations. The Pledgor hereby agrees that, without notice to or further assent
by the Pledgor, any demand for payment of any of the Obligations made by the
Collateral Agent or the Lenders may be rescinded by the Collateral Agent or the
Lenders and any of the Obligations continued, and the Obligations, or the
liability of the Pledgor or any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of setoff with respect
thereto, may, from time to time, in whole or in part, be renewed, refunded,
extended, amended, modified, accelerated, compromised, waived, surrendered, or
released by the Collateral Agent or any Lender and the Credit Agreement and any
other Loan Document or any other documents delivered in connection therewith may
be amended, modified, supplemented or terminated in whole or in part, as the
Lenders may deem advisable from time to time, and any collateral security at any
time held by the Lenders for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released on terms that in the good faith
judgement of the Collateral Agent are commercially reasonable in view of the
applicable circumstances and in view of the limitations described in Section 12,
all without notice to or the consent of the Pledgor, which will remain bound
hereunder, notwithstanding any such renewal, extension, modification,
acceleration, compromise, amendment, supplement, termination, sale, exchange,
waiver, surrender or release. Neither the Collateral Agent nor the Lenders shall
have any obligation to protect, secure, perfect or insure any other collateral
security document or property subject thereto at any time held as security for
the Obligations. The Pledgor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by the Collateral Agent or any Lender upon this Agreement, and the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Agreement, and all dealings between
the Pledgor and the Collateral Agent and the Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. The Pledgor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Pledgor with respect
to the Obligations.
SECTION 7. Remedies. (a) If a Default or Event of Default shall have
occurred and be continuing, the Collateral Agent, without demand of performance
or other demand, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or upon the
Pledgor or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase, contract to sell or
otherwise dispose of and deliver said Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange, broker's board
or at any of the Collateral Agent's offices or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk,
and the Collateral Agent or any Lender shall have the right, upon any such sale
or sales, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Pledgor,
which right or equity is hereby expressly waived or released. In addition to the
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to any of the Obligations, the
Collateral Agent shall have all the rights and remedies of a secured party under
the Uniform Commercial Code in effect in the State of Illinois at that time (the
"Code"), whether or not the Code applies to the affected Collateral. The Pledgor
shall be liable for the deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations. The
Pledgor agrees that, to the extent notice of sale of any Collateral shall be
required by law, at least ten days' notice to the Pledgor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Any
cash held by the Collateral Agent as Collateral and all cash proceeds received
by the Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Collateral Agent, be held by the Collateral Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to the
Collateral Agent pursuant to paragraph FIRST of Section 8) in whole or in part
by the Collateral Agent against, all or any part of the Obligations in such
order as the Administrative Agent shall elect. Any surplus of such cash or cash
proceeds held by the Collateral Agent and remaining after payment in full of all
the Obligations shall be paid over to the Pledgor or to whosoever may be
lawfully entitled to receive such surplus.
(b) If an Event of Default shall have occurred and be continuing, in
addition to its other rights and remedies hereunder and under the other Loan
Documents, the Collateral Agent shall, upon the instruction of the
Administrative Agent pursuant to Article VII of the Credit Agreement, furnish to
the Trustee written notice of such Event of Default and direct the Trustee to
cause a redemption of the New First Mortgage Bonds by the Borrower pursuant to
the terms of the Supplemental Indenture.
(c) Neither the Collateral Agent nor any Lender shall be liable for
failure to collect or realize upon the Obligations or any collateral security or
guarantee therefor, or any part thereof, or for any delay in so doing nor shall
any of them be under any obligation to take any action whatsoever with regard
thereto. Although the Collateral Agent or its nominee may without notice
exercise any and all rights, privileges or options pertaining to any of the New
First Mortgage Bonds as if it were the absolute owner thereof, the Collateral
Agent shall have no duty to exercise any of the aforesaid rights, privileges or
options, shall not be responsible for any failure to do so or delay in so doing
and, in any event, may do so without liability.
SECTION 8. Application of Proceeds. The cash proceeds of any sale of
Collateral received by the Collateral Agent pursuant to Section 7, as well as
any cash Collateral received by the Collateral Agent, shall be applied by the
Collateral Agent as follows (the timing of such application to be in the sole
discretion of the Collateral Agent):
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with any such sale or otherwise in
connection with this Agreement or any of the Obligations, including,
but not limited to, all court costs and the reasonable fees and
expenses of its agents and legal counsel and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder;
SECOND, to the payment in full of the Obligations due but
unpaid at the time of such receipt, pro rata among the holders of the
Obligations in accordance with the amounts of the Obligations held by
them on the date of any distribution; provided, that in the event no
such Obligations are due and payable at such time, or to the extent the
Collateral Agent receives noncash Proceeds, all cash Collateral and
Proceeds shall be retained by the Collateral Agent for application
against the Obligations as they become due and payable; and
THIRD, to the Pledgor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
SECTION 9. Reimbursement of the Collateral Agent. The Pledgor hereby
agrees to reimburse the Collateral Agent, on demand, for all reasonable
out-of-pocket expenses incurred by the Collateral Agent in connection with the
administration and enforcement of this Agreement, and agrees to indemnify the
Collateral Agent and hold the Collateral Agent harmless from and against any and
all liability incurred by the Collateral Agent hereunder, or in connection
herewith, unless such liability shall be due to wilful misconduct or gross
negligence on the part of the Collateral Agent.
SECTION 10. The Collateral Agent Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Collateral Agent as attorney-in-fact of the Pledgor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Collateral Agent shall have the right and power to receive,
endorse and collect all checks and other orders for the payment of money made
payable to the Pledgor representing any payment of interest or other
distribution payable in respect of the Collateral or any part thereof and to
give full discharge for the same.
SECTION 11. No Waiver. No failure on the part of the Collateral Agent
to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy by the Collateral Agent preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 12. Securities Act, etc. The Pledgor understands that
compliance with the Securities Act of 1933, as now or hereafter in effect, or
any similar statute hereafter enacted analogous in purpose or effect (such Act
and any such similar statute as from time to time in effect being called the
"Federal Securities Laws") might very strictly limit the course of conduct of
the Collateral Agent if the Collateral Agent were to attempt to dispose of all
or any part of the Collateral pursuant to Section 7, and might also limit the
extent to which or the manner in which any subsequent transferee of any
Collateral could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Collateral pursuant to Section 7 under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Under applicable law, in the absence of an agreement to the contrary,
the Collateral Agent might be held to have certain general duties and
obligations to the Pledgor and to make some effort toward obtaining a fair price
even though the Obligations may be discharged or reduced by the proceeds of a
sale at a lesser price. The Pledgor clearly understands that the Collateral
Agent is not to have any such general duty or obligation to the Pledgor, and the
Pledgor will not in any way whatsoever attempt to hold the Collateral Agent
responsible for selling all or any part of the Collateral at an inadequate price
even if the Collateral Agent shall accept the first offer received or does not
approach more than one possible purchaser.
SECTION 13. Termination; Redelivery of New First Mortgage Bonds. This
Agreement shall terminate upon the earlier to occur of (a) the date on which all
of the Obligations have been fully and indefeasibly paid and the Lenders have no
further commitment to extend credit under the Credit Agreement and (b) the date
on which the conditions to the release of the Collateral set forth in Section
9.17 of the Credit Agreement shall have been satisfied. At the request of the
Pledgor following such termination, the Collateral Agent shall reconvey,
reassign and deliver to the Pledgor, or to such person or persons as the Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been applied by the Collateral Agent pursuant to the terms hereof and shall
still be held by it hereunder, together with appropriate instruments of
reconveyance, reassignment and release. Any such reconveyance and reassignment
shall be without recourse to or representation or warranty by the Collateral
Agent and at the expense of the Pledgor.
SECTION 14. Notices. All communications and notices hereunder shall
be in writing and given as provided in Section 9.01 of the Credit Agreement.
SECTION 15. Further Assurances. The Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder and under the Supplemental Indenture.
SECTION 16. Binding Agreement; Assignments. This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
(including any future Lender becoming a party to the Credit Agreement and any
purchaser of a participation in any of the Obligations), except that the Pledgor
shall not be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or otherwise convey, pledge, encumber or grant
any option with respect to the Collateral, or any part thereof, or any cash or
property held by the Collateral Agent as Collateral under this Agreement except
as contemplated by this Agreement.
SECTION 17. Survival of Agreement. All covenants and agreements made by
the Pledgor herein and in the certificates or other instruments prepared or
delivered in connection with this Agreement shall be considered to have been
relied upon by the Collateral Agent and the Lenders, shall survive the making by
the Lenders of the Loans and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any other fee or amount
payable under this Agreement or, without duplication of the foregoing, under any
of the other Loan Documents, or any of the other Obligations, is outstanding and
unpaid and so long as this Agreement has not terminated. The representations and
warranties contained in Section 2 of this Agreement shall be considered to have
been relied upon by the Lenders and shall survive the making of the Loans and
shall remain in full force and effect after the termination of this Agreement.
SECTION 18. Provisions Severable. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, and shall not in
any manner affect any other clause or provision of this Agreement.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF ILLINOIS.
SECTION 20. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
SECTION 21. Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Bond
Agreement, or have caused this Bond Agreement to be duly executed on their
behalf, as of the day and year first above written.
TEXAS-NEW MEXICO POWER COMPANY
By
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Collateral Agent,
By
Name:
Title:
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF TARRANT )
This instrument was acknowledged before me on the day of
September, 1996, by ,
of TEXAS-NEW MEXICO POWER COMPANY, a Texas
corporation, on behalf of said corporation.
----------------------------------------
NOTARY PUBLIC in and for the State of TEXAS
My Commission Expires:
- ------------------------------ ------------------------------
Typed or Printed Name of
Notary
<PAGE>
THE STATE OF ILLINOIS )
)
COUNTY OF COOK )
This instrument was acknowledged before me on the day of
September, 1996, by ,
of THE FIRST NATIONAL BANK OF CHICAGO, on behalf
of said financial institution.
NOTARY PUBLIC in and for the State of ILLINOIS
My Commission Expires:
Typed or Printed
Name of Notary
34\43834\011\BONDAGMT
November 1, 1996 11:19AM
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000741612
<NAME> TNP ENTERPRISES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 936,079
<OTHER-PROPERTY-AND-INVEST> 1,525
<TOTAL-CURRENT-ASSETS> 57,928
<TOTAL-DEFERRED-CHARGES> 28,480
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,024,012
<COMMON> 136,383
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 97,525
<TOTAL-COMMON-STOCKHOLDERS-EQ> 233,908
0
3,600
<LONG-TERM-DEBT-NET> 491,399
<SHORT-TERM-NOTES> 0
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<LONG-TERM-DEBT-CURRENT-PORT> 101,907
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 193,198
<TOT-CAPITALIZATION-AND-LIAB> 1,024,012
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126
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<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000022767
<NAME> TEXAS-NEW MEXICO POWER COMPANY
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<S> <C>
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<PERIOD-END> SEP-30-1996
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0
3,600
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0
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126
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