<PAGE>
As filed with the Securities and Exchange Commission on December 11, 1998
Registration No. 333-64215
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 75-0204070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
MICHAEL D. BLANCHARD
VICE PRESIDENT AND GENERAL COUNSEL
TEXAS-NEW MEXICO POWER COMPANY
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
FAX: (817) 737-1333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
BRIAN D. BARNARD ROBERT B. WILLIAMS
HAYNES AND BOONE, LLP MILBANK, TWEED, HADLEY & MCCLOY
201 MAIN STREET, SUITE 2200 1 CHASE MANHATTAN PLAZA
FORT WORTH, TEXAS 76102 NEW YORK, NEW YORK 10005
(817) 347-6600 (212) 530-5000
FAX: (817) 347-6650 FAX: (212) 530-5219
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the Registration Statement becomes effective, as determined by market
conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Debt Securities ................ (1) (1) (2) N/A
First Mortgage Bonds .................. (1) (1) (2) N/A
Total ............................ $200,000,000 $59,000(3)
===========================================================================================================
</TABLE>
(1) Not applicable pursuant to General Instruction II.D. to Form S-3.
(2) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement, other than collateral
securities, exceed $200,000,000.
(3) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as
amended. This amount was previously paid with the initial filing of this
Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
==============================================================================
<PAGE>
******************************************************************************
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
******************************************************************************
SUBJECT TO COMPLETION, DATED DECEMBER 11, 1998
PROSPECTUS
, 1998
$200,000,000
TEXAS-NEW MEXICO POWER COMPANY
SENIOR DEBT SECURITIES
_______________________________________
Texas-New Mexico Power Company ("TNMP" or the "Company") from time to time
may offer, in an aggregate principal amount not to exceed $200,000,000, in one
or more series, its senior debt securities (the "Senior Debt Securities").
Prior to the Release Date (as defined in "Overview of Securities" below), the
Senior Debt Securities will be secured by the issuance and delivery to the
Trustee (as defined below) in trust for the benefit of the holders of Senior
Debt Securities one or more series of first mortgage bonds (the "First Mortgage
Bonds") issued under the Company's Mortgage Indenture (as defined below). The
Senior Debt Securities will be issued under the indenture to be entered into
between TNMP and Chase Bank of Texas, N.A., as trustee (the "Trustee"), as
amended and supplemented by supplemental indentures thereto (collectively, the
"Indenture"). The Senior Debt Securities may be offered in amounts, at prices
and on terms to be determined at the time of sale. Certain terms of the Senior
Debt Securities including, where applicable, the specific designation, aggregate
principal amount, interest rate, interest payment dates, maturity, public
offering price, description of collateral, any redemption terms or other
specific terms of each series of the Senior Debt Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
prospectus supplement or supplements (each such supplement, a "Prospectus
Supplement").
TNMP may sell the Senior Debt Securities to or through underwriters,
through dealers or directly to purchasers. See "Plan of Distribution." Each
Prospectus Supplement will set forth the names of such underwriters or dealers,
if any, any applicable commissions or discounts and the proceeds to TNMP from
such sale.
This Prospectus may not be used to consummate sales of the Senior Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Senior Debt Securities being sold.
_______________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
AVAILABLE INFORMATION
The Company and TNP Enterprises, Inc. ("TNP"), of which the Company is the
principal wholly-owned operating subsidiary, are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In accordance with the Exchange Act, the Company and TNP file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The reports, proxy statements and other
information can be inspected and copied at the public reference facilities that
the Commission maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048, and Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Copies of these materials can be obtained at prescribed
rates from the Public Reference Section of the Commission at the principal
offices of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Senior Debt Securities. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements made in the Prospectus concerning the contents of any documents
referred to herein are not necessarily complete. With respect to each such
document filed with the Commission as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description, and each such
statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
(i) Annual Report on Form 10-K for the year ended December 31, 1997;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998;
(iv) Current Report on Form 8-K dated October 9, 1998; and
(v) Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus from their respective dates of filing.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Company at 4100 International Plaza, P.O. Box 2943,
Fort Worth, Texas 76113. Telephone requests may be directed to Michael D.
Blanchard, Vice President and General Counsel of the Company, at (817) 731-0099.
STATEMENT REGARDING FORWARD LOOKING INFORMATION
The discussions in this document and incorporated by reference herein, and
in any Prospectus Supplement hereto, that are not historical facts, including,
but not limited to, the outcome of current and future rate/regulatory
proceedings, the continued application of regulatory accounting principles,
future cash flows and the potential recovery of stranded costs, are based upon
current expectations. Actual results may differ materially. Among the facts that
could cause the results to differ materially from expectations are the
following: legislation in the states TNMP serves affecting the regulation of
TNMP's business; changes in
2
<PAGE>
regulations affecting TNMP's business; results of regulatory proceedings
affecting TNMP's operations; future acquisitions or strategic partnerships;
general business and economic conditions; the effectiveness of TNMP's year 2000
mitigation plan, and the timely year 2000 compliance by TNMP's vendors; and
other factors described from time to time in TNP's and TNMP's reports filed with
the Commission. The Company wishes to caution readers not to place undue
reliance on any such forward looking statements, which are made pursuant to the
Private Securities Litigation Reform Act of 1995 and, as such, speak only as of
the date made.
THE COMPANY
TNMP is a public utility engaged in generating, purchasing, transmitting,
distributing and selling electricity to approximately 226,000 customers in 85
municipalities and adjacent rural areas through three operating regions in Texas
and New Mexico. The Company's largest division, the Gulf Coast Region, includes
the area along the Texas Gulf Coast between Houston and Galveston. This
division produced 54.3% of total operating revenues in 1997. The Company's
North-Central Region produced 24.8% of total operating revenues in 1997, and the
Company's Mountain Region produced 18.5% of total operating revenues in 1997.
The remaining 2.4% of TNMP's revenues in 1997 were generated by the Company's
power marketing activities. TNMP's predecessor was organized in 1925.
TNMP, through its subsidiaries, owns one electric generating facility, TNP
One, which is located in Robertson County, Texas. TNP One consists of two 150-
megawatt units, each of which utilizes a lignite-fueled, circulating fluidized
bed technology. The two units supply, on an annualized basis, approximately 20%
of TNMP's power requirements.
TNMP has two subsidiaries, Texas Generating Company and Texas Generating
Company II, both of which were organized to facilitate TNMP's acquisitions of
Unit 1 and Unit 2 of TNP One, in 1990 and 1991, respectively. The Company and
its subsidiaries are all Texas corporations. Their executive offices are located
at 4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113 and their
telephone number is (817) 731-0099.
The Company is subject to regulation by the Public Utility Commission of
Texas and the New Mexico Public Utility Commission. The Company is subject in
some of its activities, including the issuance of securities, to the
jurisdiction of the Federal Energy Regulatory Commission.
The Company is a wholly-owned subsidiary of TNP, a Texas corporation and a
non-utility holding company, which is listed on the New York Stock Exchange
under the ticker symbol TNP.
USE OF PROCEEDS
Except as otherwise stated in the applicable Prospectus Supplement, net
proceeds from the sale of the Senior Debt Securities offered hereby will be used
for the discharge, retirement or repayment of short or long-term debt and
borrowings made or expected to be made and for other corporate purposes.
Specific allocations of proceeds for such purposes have not been made at this
time. Funds may be borrowed in anticipation of future requirements.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth TNMP's ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
Twelve Months Year Ended December 31,
Ended ----------------------------
September 30, 1998 1997 1996 1995 1994 1993
------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges/(1)/ ... 2.06 2.15 1.53 1.87 * 1.24
</TABLE>
* Earnings were insufficient to fund fixed charges in 1994. The amount of
the shortfall was $30 million.
(1) For the purpose of computing these ratios, earnings consist of net income
plus income taxes and fixed charges. Fixed charges consist of total
interest, amortization of debt discount, premium and expense and the
estimated portion of interest implicit in rentals.
3
<PAGE>
OVERVIEW OF SECURITIES
The Senior Debt Securities may be issued from time to time and in one or
more series. Prior to the Release Date (as defined below), the Senior Debt
Securities will be secured by TNMP's First Mortgage Bonds (the "Senior Note
Mortgage Bonds"). On the Release Date, any outstanding Senior Debt Securities
will cease to be secured by the Senior Note Mortgage Bonds and will become
unsecured general obligations of TNMP.
Each series of Senior Debt Securities will be issued under the Indenture,
as supplemented by a supplemental indenture describing the particular terms of
such series. The form of Indenture is filed as an exhibit to the Registration
Statement. The new supplemental indentures will be entered into
contemporaneously with the issuance of each series of the Senior Debt Securities
to be so secured.
TNMP will issue the Senior Note Mortgage Bonds under one or more
supplemental indentures (each, a "Supplemental Mortgage Indenture") to the
Indenture of Mortgage and Deed of Trust, dated as of November 1, 1944, between
Community Public Service Co. (now known as Texas-New Mexico Power Company) and
City National Bank and Trust Company of Chicago, Chicago, Illinois (whose
current successor is U.S. Bank Trust, N.A.) (the "Mortgage Trustee"), as
supplemented and amended by the supplemental indentures thereto (collectively,
the "Mortgage Indenture").
The "Release Date" will be the date on which the Senior Debt Securities
will cease to be secured by the Senior Note Mortgage Bonds and become unsecured
general obligations of TNMP. The date will be chosen by TNMP, but will not occur
prior to the later of (i) the date as of which all First Mortgage Bonds, other
than the Senior Note Mortgage Bonds securing the Senior Debt Securities of all
series, have been retired through payment, redemption or otherwise, at, before
or after the maturity thereof, and (ii) the date as of which all Liens on any
Property of the Company or any Subsidiary (other than certain Liens permitted to
exist as described in "Decription of the Senior Debt Securities--Limitation on
Liens") have been terminated or otherwise removed.
Neither the Indenture nor the Mortgage Indenture (collectively, the
"Indentures") requires that TNMP issue future issues of debt securities under
the Indentures. Subject to certain restrictions that are described in
"Description of the Senior Debt Securities -- Limitations on Liens" and "--
Limitations on Sale and Lease-Back Transactions," the Company will be free to
employ other indentures or documentation, containing provisions different from
those included in the Indentures or applicable to one or more issues of Senior
Debt Securities, in connection with future issues of such other debt securities.
Certain capitalized terms herein are defined in the Indentures.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
The following summaries of certain provisions of the Senior Debt Securities
and the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Capitalized
terms not defined herein are defined in the Indenture.
GENERAL
Until the Release Date, the Senior Debt Securities of each series will be
secured by one or more series of Senior Note Mortgage Bonds issued under the
Mortgage Indenture and delivered to the Trustee. See "-- Security; Release
Date." ON THE RELEASE DATE, THE SENIOR DEBT SECURITIES WILL CEASE TO BE SECURED
BY THE SENIOR NOTE MORTGAGE BONDS AND WILL BECOME UNSECURED GENERAL OBLIGATIONS
OF THE COMPANY AND WILL RANK ON A PARITY WITH OTHER UNSECURED INDEBTEDNESS OF
THE COMPANY. The Indenture provides that, in addition to the Senior Debt
Securities offered hereby, TNMP may issue additional Senior Debt Securities
thereunder, without limitation as to aggregate principal amount, from time to
time, in one or more series. Prior to the Release Date, the amount of Senior
Debt Securities that TNMP may issue cannot exceed the aggregate principal amount
of First Mortgage Bonds that the Company is able to issue under its Mortgage
Indenture. As of July 31, 1998, there were two series of First Mortgage Bonds
outstanding in an aggregate principal amount equal to $108,000,000. In addition,
at July 31, 1998, there were two series of First Mortgage Bonds in an aggregate
principal amount of $130,000,000 issued as collateral to secure two debt
facilities of the Company. At July 31, 1998, the Company could have issued
approximately $131 million of additional First Mortgage Bonds at an assumed 9%
interest rate.
The Indenture does not contain any debt covenants or provisions which would
afford holders of Senior Debt Securities protection in the event of a highly
leveraged transaction.
4
<PAGE>
Please refer to the Prospectus Supplement relating to each particular issue
of the Senior Debt Securities being offered for, among other things, the
following terms thereof:
(a) the title of the Senior Debt Securities of the series;
(b) any limit upon the aggregate principal amount of the Senior Debt
Securities of the series which may be authenticated and delivered
under the Indenture;
(c) the person to whom any interest on a Senior Debt Security of the
series shall be payable, if other than the Holder;
(d) the date or dates on which the principal or installments of principal
is payable and any rights to extend such date or dates and the
duration of such extension;
(e) the rate or rates (which may be fixed or variable) per annum at which
the Senior Debt Securities of the series will bear interest or the
method by which such rate or rates shall be determined and the date
from which such interest will accrue or the method by which such date
or dates shall be determined and the right (if any) to extend such
dates and the duration of such extension;
(f) the obligation, if any, of the Company to redeem, repay or purchase
any Senior Debt Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a holder thereof, and the
period or periods within which, the price or prices at which and the
terms and conditions upon which, any such securities shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(g) the denominations in which any Senior Debt Securities of the series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(h) if other than the principal amount thereof, the portion of the
principal amount of Senior Debt Securities of the series which shall
be payable upon declaration of acceleration of the maturity thereof;
(i) if other than such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public or
private debts, the coin or currency in which payment of the principal
of (and premium, if any) and interest, if any, on the Senior Debt
Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United
States of America for any purpose;
(j) if the principal of (and premium, if any) or interest, if any, on the
Senior Debt Securities of the series are to be payable, at the
election of the Company or a Holder thereof, in a coin or currency
other than that in which the Senior Debt Securities are stated to be
payable, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(k) if the amount of payments of principal of (and premium, if any) or
interest, if any, on the Senior Debt Securities of the series may be
determined with reference to an index based on a coin or currency
other than that in which such Senior Debt Securities are stated to be
payable or pursuant to a formula, the manner in which such amounts
shall be determined;
(l) any provisions permitted by the Indenture relating to Events of
Default or covenants of the Company with respect to such series of
Senior Debt Securities;
(m) if the principal amount payable at the stated maturity of any Senior
Debt Securities of the series will not be determinable as of any one
or more dates prior to the stated maturity, the amount which shall be
deemed to be the principal amount of such Senior Debt Securities as of
any such date for any purpose under the applicable Prospectus
Supplement or under the Indenture, including the principal amount
thereof which shall be due and payable upon any maturity other than
the stated maturity or which shall be deemed to be outstanding as of
any date prior to the stated maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
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<PAGE>
(n) if applicable, that the Senior Debt Securities of the series, in whole
or any specified part, shall not be defeasible pursuant to the
Indenture and the manner in which any election by the Company to
defease such Senior Debt Securities shall be evidenced;
(o) if applicable, that any Senior Debt Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities (as hereinafter defined at page 13) and, in such case, the
respective Depositaries (as hereinafter defined at page 13) for such
Global Securities, the form of any legend or legends which shall be
borne by any such Global Security and any circumstances in which any
such Global Security may be exchanged in whole or in part for Senior
Debt Securities registered, and any transfer of such Global Security
in whole or in part may be registered, in the name or names of persons
other than the Depositary for such Global Security or a nominee
thereof;
(p) providing collateral to the Trustee to secure payment of the principal
of (and premium, if any) and interest on the Senior Debt Securities of
any series, and provisions for the release of any such collateral;
and
(q) any other terms of the series.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of (and premium, if any) and interest on, the Senior Debt
Securities of each series will be payable, and the Senior Debt Securities of
each series will be exchangeable and transfers thereof will be registrable, at
the Place of Payment, provided that, if the Senior Debt Securities of any
series are not Global Securities, at the option of the Company, payment of
interest with respect to such Securities may be made by check mailed or wire
transferred to the address of each Holder of such Securities.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Senior Debt Securities of each series will be issued in United States
dollars in fully registered form, without coupons, in denominations of $1,000 or
any integral multiple thereof. No service charge will be made for any transfer
or exchange of the Senior Debt Securities of each series, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
SECURITY; RELEASE DATE
Until the Release Date, each series of the Senior Debt Securities will be
secured by one or more series of Senior Note Mortgage Bonds issued and delivered
by the Company to the Trustee. See "Description of the First Mortgage Bonds."
When issuing Senior Debt Securities prior to the Release Date, the Company will
simultaneously issue and deliver Senior Note Mortgage Bonds to the Trustee as
security for such Senior Debt Securities. The Senior Note Mortgage Bonds will
have the same stated rate of interest (or interest calculated in the same
manner), interest payment dates, stated maturity date and redemption provisions
and will be in the same aggregate principal amount as the corresponding Senior
Debt Securities. The Trustee has agreed to hold the Senior Note Mortgage Bonds
in such capacity under all circumstances and not transfer such Senior Note
Mortgage Bonds until the earlier of the Release Date or the prior retirement of
the Senior Debt Securities through redemption, repurchase or otherwise. Any
payment made in respect to the Company's obligations under the Senior Debt
Securities shall be deemed a payment in respect of the Senior Note Mortgage
Bonds. The obligation of the Company to make payments with respect to the
principal of and interest on the Senior Note Mortgage Bonds 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 Senior Debt Securities.
ON THE RELEASE DATE, THE TRUSTEE WILL DELIVER ALL SENIOR NOTE MORTGAGE
BONDS TO THE COMPANY FOR CANCELLATION AND THE COMPANY WILL CAUSE THE TRUSTEE TO
PROVIDE NOTICE TO ALL HOLDERS OF SENIOR DEBT SECURITIES THAT THE RELEASE DATE
HAS OCCURRED. AS A RESULT, ON THE RELEASE DATE, THE SENIOR NOTE MORTGAGE BONDS
WILL CEASE TO SECURE THE SENIOR DEBT SECURITIES, AND THE SENIOR DEBT SECURITIES
WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND WILL RANK ON A
PARITY WITH OTHER UNSECURED SENIOR INDEBTEDNESS OF THE COMPANY. Each series of
Senior Note Mortgage Bonds will be secured by a lien on certain property owned
by the Company. In certain circumstances prior to the Release Date, the Company
is permitted to reduce the aggregate principal amount of an issue of Senior Note
Mortgage Bonds held by the Trustee, but in no event to an amount lower than the
aggregate outstanding principal amount of the Senior Debt Securities initially
issued contemporaneously with such Senior Note Mortgage Bonds. Following the
Release Date, the Company will cause the Mortgage Indenture to be closed, and
the Company will not issue any additional bonds under such Mortgage Indenture.
The intention of these provisions is that before the
6
<PAGE>
Release Date the Senior Debt Securities will have the benefit of being secured
by the First Mortgage Bonds, and after the Release Date the Senior Debt
Securities will have the benefit of the same security as other secured debt of
the Company, if any, subject to specified exceptions.
LIMITATIONS ON LIENS
The Indenture provides that from and after the Release Date and as long as
any Senior Debt Securities are outstanding, the Company may not, and may not
permit any Subsidiary to, incur, issue, assume, guarantee or permit to exist
Indebtedness (as hereinafter defined at page 12), that is secured by any Liens
on any Property (each as hereinafter defined at page 12), of the Company or any
Subsidiary, whether such Property was owned by the Company or any Subsidiary, as
applicable, at the date of the Indenture or thereafter acquired, without making,
or causing such Subsidiary to make, effective provision to secure all of the
Senior Debt Securities of each series, issued under the Indenture and then
outstanding, by such Lien, equally and ratably with any and all other
Indebtedness thereby secured so long as such Indebtedness shall be so secured.
This restriction will not apply to any Indebtedness that is secured by any of
the following:
(a) Liens on any Property acquired, constructed or improved by the Company
or any Subsidiary after the date of the Indenture which are created or
assumed contemporaneously with such acquisition, construction or
improvement, or within 180 days after the completion thereof, to
secure or provide for the payment of all or any part of the cost of
such acquisition, construction or improvement (including related
expenditures capitalized for federal income tax purposes in connection
therewith) incurred after the date of the Indenture;
(b) Liens of or upon any Property existing at the time of acquisition
thereof, whether by merger, consolidation, purchase, lease or
otherwise (including Liens of or upon Property of a corporation
existing at the time such corporation becomes a Subsidiary);
(c) Liens in favor of the Company or any Subsidiary;
(d) Liens in favor of the United States of America or any State thereof,
or any department, agency or instrumentality or political subdivision
of the United States of America or any State thereof or political
entity affiliated therewith, to secure partial, progress, advance or
other payments, or other obligations, pursuant to any contract or
statute or to secure any Indebtedness incurred for the purpose of
financing all or any part of the cost of acquiring, constructing or
improving the property subject to such Liens (including Liens incurred
in connection with pollution control, industrial revenue or similar
financings);
(e) Liens on any Property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying Property, whether directly or indirectly, by way of share
disposition or otherwise; provided that 180 days from the creation of
such Liens the Company must have disposed of such Property and any
Indebtedness secured by such Liens shall be without recourse to the
Company or any Subsidiary;
(f) Liens imposed by law, such as mechanics', workmen's, repairmen's,
materialmen's, carriers', warehousemen's, vendors' or other similar
liens arising in the ordinary course of business, or governmental
(federal, state or municipal) liens arising out of contracts for the
sale of products or services by the Company or any Subsidiary, or
deposits or pledges to obtain the release of any of the foregoing;
(g) Liens arising out of pledges or deposits under workmen's compensation
laws or similar legislation and Liens of judgments thereunder which
are not currently dischargeable, or good faith deposits in connection
with bids, tenders, contracts (other than for the payment of money) or
leases to which the Company or any Subsidiary is a party, or deposits
to secure public or statutory obligations of the Company or any
Subsidiary, or deposits in connection with obtaining or maintaining
self-insurance or to obtain the benefits of any law, regulation or
arrangement pertaining to unemployment insurance, old age pensions,
social security or similar matters, or deposits of cash or obligations
of the United States of America to secure surety, appeal or customs
bonds to which the Company or any Subsidiary
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is a party, or deposits in litigation or other proceedings such as,
but not limited to, interpleader proceedings;
(h) Liens created by or resulting from any litigation or other proceeding
which is being contested in good faith by appropriate proceedings,
including Liens arising out of judgments or awards against the Company
or any Subsidiary with respect to which the Company or such Subsidiary
is in good faith prosecuting an appeal or proceedings for review; or
Liens incurred by the Company or any Subsidiary for the purpose of
obtaining a stay or discharge in the course of any litigation or other
proceeding to which the Company or such Subsidiary is a party;
(i) Liens for taxes or assessments or governmental charges or levies not
yet due or delinquent, or which can thereafter be paid without
penalty, or which are being contested in good faith by appropriate
proceedings;
(j) Liens consisting of easements, rights-of-way, zoning restrictions,
restrictions on the use of real property, and defects and
irregularities in the title thereto, landlords' liens and other
similar liens and encumbrances none of which interferes materially
with the use of the property covered thereby in the ordinary course of
the business of the Company or such Subsidiary and which do not, in
the opinion of the Company, materially detract from the value of such
properties; and
(k) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred
to in the foregoing clauses (a), (b), or (e) to (j), inclusive;
provided that (i) such extension, renewal or replacement Lien shall be
limited to all or a part of the same Property that secured the Lien
extended, renewed or replaced (plus improvements on such Property) and
(ii) the amount of Indebtedness secured by such Lien at such time is
not increased.
The Indenture provides that notwithstanding the foregoing limitations, the
Company or its Subsidiaries may incur, issue, assume or guarantee Indebtedness
secured by Liens without equally and ratably securing the Senior Debt Securities
of each series then Outstanding, provided, that at the time of such incurrence,
issuance, assumption or guarantee of Indebtedness, after giving effect thereto
and to the retirement of any Indebtedness of the Company or of any Subsidiary
which is concurrently being retired, the sum of (i) the aggregate amount of all
outstanding Indebtedness of the Company or of any Subsidiary secured by Liens
which could not have been incurred, issued, assumed or guaranteed by the Company
or a Subsidiary without equally or ratably securing the Senior Debt Securities
of each series then Outstanding, except for the provisions of this paragraph,
plus (ii) the Attributable Value of Sale and Leaseback Transactions entered into
pursuant to the last paragraph of "-- Limitations on Sale and Lease-Back
Transactions," does not at such time exceed the greater of 10% of the Net
Tangible Assets (as hereinafter defined at page 12) or 10% of the Consolidated
Capitalization of the Company.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that after the Release Date, so long as any Senior
Debt Securities are Outstanding, neither the Company nor any Subsidiary will
enter into any arrangement under which the Company or a Subsidiary would lease
any Property which it has sold or transferred or is going to sell or transfer (a
"Sale and Leaseback Transaction") unless either: (a) the Company or such
Subsidiary would, when entering into such arrangement, be entitled, without
equally and ratably securing the Securities of each series then Outstanding, to
incur, issue, assume or guarantee Indebtedness secured by a Lien on such
property pursuant to the first paragraph of "-- Limitations on Liens" (including
clauses (a) - (k) thereof); or (b) the Company, within 180 days after such sale
or transfer applies an amount equal to the greater of (i) the net proceeds of
the sale of Property sold and leased back pursuant to such arrangement or (ii)
the fair market value of the Property so sold and leased back at the time of
entering into such arrangement (as determined by any two Officers) to the
retirement of Funded Indebtedness of the Company; provided, that the amount to
be applied to the retirement of Funded Indebtedness of the Company shall be
reduced by (i) the principal amount of any Senior Debt Securities delivered
within 120 days after such sale to the Trustee for retirement and cancellation,
and (ii) the principal amount of Funded Indebtedness, other than Senior Debt
Securities, voluntarily retired by the Company within 120 days after such sale.
This provision applies to Sale and Leaseback Transactions with primary lease
terms and possible renewal terms exceeding three years. Notwithstanding the
foregoing, the Company and its Subsidiaries, or any of them, may enter into a
Sale and Leaseback Transaction which would otherwise be prohibited; provided,
that at the time of such transaction, after giving effect thereto, the sum of
(i) the aggregate amount of the Attributable Value in respect of all Sale and
Leaseback Transactions existing at such time which could not have been entered
into except for the provisions of this paragraph plus (ii) the aggregate amount
of outstanding Debt secured
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by Liens in reliance on the last paragraph of "--Limitations on Liens" of the
Indenture does not at such time exceed the greater of 10% of the Net Tangible
Assets or 10% of the Consolidated Capitalization of the Company. A Sale and
Leaseback Transaction shall not be deemed to result in the creation of a Lien.
VOTING OF SENIOR NOTE MORTGAGE BONDS HELD BY THE TRUSTEE
Prior to the Release Date, the Trustee, as a holder of Senior Note Mortgage
Bonds, will attend any meeting of bondholders under the Mortgage Indenture as to
which it receives due notice, or, at its option, will deliver its proxy in
connection therewith. Either at such meeting, or otherwise where the consent of
holders of Mortgage Bonds issued under the Mortgage Indenture is sought without
a meeting, the Trustee will vote all of the Senior Note Mortgage Bonds held by
it, or will consent or withhold its consent with respect thereto, as directed by
the Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities; provided, however, the Trustee may not vote the First
Mortgage Bonds pledged as collateral for any particular series in favor of, or
give consent to, any action which, in the Trustee's opinion, would materially
adversely affect such series of First Mortgage Bonds in a manner not shared
generally by all other First Mortgage Bonds, except upon notification by the
Trustee to the holders of the related series of Senior Debt Securities of such
proposal and consent thereto of the Holders of a majority in principal amount of
the Outstanding Senior Debt Securities of such series.
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time with respect to any series of Senior
Debt Securities by giving written notice thereof to the Company. The Trustee
may be removed at any time with respect to any series of Senior Debt Securities
by the Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of that series, delivered to the Trustee and to the
Company.
If at any time: (i) the Trustee fails to comply with the conflict of
interest provisions contained in Section 310(b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, with respect to any
series of Senior Debt Securities after written request therefor by the Company
or by any Holder who has been a Holder of a Senior Debt Security of that series
for at least six months, (ii) the Trustee ceases to be eligible under the
Indenture with respect to any series of Senior Debt Securities and fails to
resign after written request therefor by the Company or by any such Holder,
(iii) the Trustee becomes incapable of acting with respect to any series of
Senior Debt Securities, or (iv) the Trustee is adjudged a bankrupt or insolvent
or a receiver of the Trustee or of its property is appointed or any public
officer takes charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then, in any such
case, (1) the Company may remove the Trustee, with respect to the Senior Debt
Securities of that series, or, in the case of clause (iv), with respect to all
series, or (2) subject to the Indenture, any Holder who has been a Holder of a
Senior Debt Security of such series for at least six months may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee with respect to the series, or, in the case of clause (iv), with respect
to all series.
If the Trustee resigns, is removed or becomes incapable of acting with
respect to any series of Senior Debt Securities, or if a vacancy occurs in the
office of the Trustee with respect to any series of Senior Debt Securities for
any cause, the Company will promptly appoint a successor Trustee or Trustees
with respect to the Senior Debt Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Senior Debt Securities of one or more or all of such series and that at any time
there will be only one Trustee with respect to the Senior Debt Securities of any
particular series). If, within one year after such resignation, removal or
incapacity, or the occurrence of such vacancy, a successor Trustee with respect
to such series of Senior Debt Securities is appointed by the Holders of a
majority in aggregate principal amount of the Outstanding Senior Debt Securities
of such series delivered to the Company and the predecessor Trustee, the
successor Trustee so appointed will, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of the Indenture,
become the successor Trustee with respect to such series and supersede the
successor Trustee appointed by the Company with respect to such series. If no
successor Trustee with respect to such series has been so appointed by the
Company or the Holders of such series and accepted appointment in the manner
required by the Indenture, any Holder who has been a Holder of a Senior Debt
Security of that series for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to such series.
The Company will give notice of each resignation and each removal of the
Trustee with respect to the Senior Debt Securities of any series and each
appointment of a successor Trustee with respect to the Senior Debt Securities of
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any series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Senior Debt Securities of that series as their names
and addresses appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Senior Debt Securities of such
series and the address of its Corporate Trust Office.
CONCERNING THE TRUSTEE
Chase Bank of Texas, N.A. is the Trustee under the Indenture. The Trustee
is not the trustee under any other indenture pursuant to which securities of the
Company are outstanding. The Company maintains banking relationships with the
Trustee and with an affiliate of the Trustee in the ordinary course of business,
and such affiliate of the Trustee is the agent for a syndicated group of banks,
which includes the Trustee, that has extended a $150,000,000 revolving line of
credit to the Company.
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to the Senior Debt
Securities of any series as: (a) default in payment of principal (or premium, if
any) of any Senior Debt Security of that series when due and payable, at its
Maturity or otherwise; (b) default in payment of any interest on any Senior Debt
Security of that series when due and payable, and continuance of such default
for a period of 30 days; (c) default in the deposit of any sinking fund payment,
when and as due by the terms of a Senior Debt Security of that series; (d)
default in the performance, or breach, of any covenant or warranty of the
Company in the Indenture (other than certain covenants or warranties) and
continuance of such default or breach by the Company for 60 days after due
notice in the performance of any covenants or warranties in the Indenture; (e)
certain events of bankruptcy, insolvency or reorganization of the Company; (f)
prior to the Release Date, a "default" under the Mortgage Indenture has occurred
and is continuing; and (g) acceleration of any Indebtedness (including Senior
Debt Securities of any other series) of the Company in an aggregate principal
amount exceeding $10 million.
The Indenture provides that, if any Event of Default with respect to Senior
Debt Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Senior Debt Securities of that series may, by notice
as provided in the Indenture, declare the aggregate principal amount, together
with all accrued and unpaid interest thereon, of all Senior Debt Securities of
that series to be due and payable immediately upon notice in writing to the
Company (and to the Trustee if given by Holders), but upon certain conditions
such declaration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal of or interest on the Senior Debt
Securities and certain other specified defaults) may be waived by the Holders of
a majority in aggregate principal amount of the Outstanding Senior Debt
Securities of that series on behalf of the Holders of all Senior Debt Securities
of such series, except that upon the occurrence of certain bankruptcy Events of
Default, such principal and interest shall become immediately payable without
any such declaration.
The Indenture provides that the Trustee will, within 90 days after the
Trustee has received written notice of a default with respect to Senior Debt
Securities of any series at the time Outstanding, give to the Holders of the
Outstanding Senior Debt Securities of such series, notice of such default known
to it if uncured or not waived, provided that, except in the case of default in
the payment of principal of (or premium, if any) or interest on any such Senior
Debt Securities, the Trustee will be protected in withholding of such notice if
the Trustee in good faith determines that the withholding of such notice is in
the interest of the Holders of the Outstanding Senior Debt Securities of such
series; and, provided further, that such notice shall not be given until 30 days
after the occurrence of a "Default" specified in clause (d) of "Event of
Default" above. The term "Default" for the purpose only of this provision means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
The Holders of a majority in aggregate principal amount of the outstanding
Senior Debt Securities of any series will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Senior Debt Securities of such series; provided that (a) the Trustee
will have the right to decline to follow any such direction if the Trustee,
being advised by counsel, determines that the action so directed may not
lawfully be taken or would conflict with the Indenture; (b) the Trustee will
have the right to decline to follow such direction if the Trustee in good faith
determines that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such
direction; (c) such direction will be presented by such Holders to the Trustee
in a timely manner; (d) such direction will not be in conflict with any rule
of law or with the Indenture; and (e) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
The Indenture includes a covenant that the Company will file at least
annually with the Trustee a certificate of no Default, or specifying any Default
that exists.
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DISCHARGE; DEFEASANCE
The Indenture provides that the Company, at its option (to the extent
provided), (a) will be discharged from any and all obligations with respect to
the Senior Debt Securities (except for certain obligations, including
registering the transfer or exchange of the Senior Debt Securities, replacing
stolen, lost or mutilated Senior Debt Securities, maintaining paying agencies
and holding monies for payment in trust) or (b) need not comply with certain
restrictive covenants of the Indenture (and the occurrence of certain Events of
Default with respect to such restrictive covenants), upon the deposit with the
Trustee (and in the case of a defeasance, 91 days after such deposit), in trust,
of money, or U.S. Government Obligations, or a combination thereof, which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
of and interest on the Senior Debt Securities on the date such payments are due
in accordance with the terms of the Senior Debt Securities to their stated
maturities. Upon such defeasance and discharge, the Trustee will deliver to the
Company for cancellation all Senior Note Mortgage Bonds securing such Senior
Debt Securities, after which time such Senior Debt Securities will no longer be
secured by Senior Note Mortgage Bonds. To exercise any such option, the Company
is required to meet certain conditions, including delivering to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the Holders of the Senior Debt Securities to recognize income, gain or
loss for federal income tax purposes as a result of such deposit and defeasance,
and will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and defeasance
were not to occur.
MODIFICATION OF THE INDENTURE
The Indenture permits the Company and the Trustee to execute supplemental
indentures that add, change or eliminate provisions of the Indenture or modify
the rights of the Holders of Outstanding Senior Debt Securities. Such execution
may be without the consent of the Holders of the Senior Debt Securities in some
cases and in others with the consent of the Holders of at least a majority in
principal amount of Outstanding Senior Debt Securities of each series of Senior
Debt Securities affected by the supplemental indenture. No such supplemental
indenture, however, may, without the consent of Holders of 100% in Principal
Amount of Outstanding Senior Debt Securities of each series affected thereby
(a) change the Stated Maturity of any Senior Debt Security, (b) reduce the
principal amount of, or the rate of interest on, any Senior Debt Security, (c)
change the place or currency of payment on any Senior Debt Security, (d) impair
the right to institute suit for the enforcement of any payment on or after the
Stated Maturity thereof, (e) prior to the Release Date, impair the interest of
the Trustee in the Senior Note Mortgage Bonds, (f) reduce the stated percentage
of Outstanding Senior Debt Securities necessary to modify or amend the Indenture
or related documents, or (g) reduce the percentage of aggregate principal amount
of Outstanding Senior Debt Securities necessary for waiver of compliance with
certain provisions of the Indenture or for the waiver of certain covenants and
defaults.
OUTSTANDING SECURITIES
The Indenture provides that Senior Debt Securities owned by the Company or
any of its affiliates shall not be deemed to be Outstanding when determining
whether the Holders of the requisite principal amount of Outstanding Senior Debt
Securities have given any request, demand, authorization, direction, notice
consent or waiver under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may, without the consent of the
Holders of any of the Outstanding Senior Debt Securities under the Indenture,
consolidate with or merge with or into any other corporation, or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, provided that: (i) the successor is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia; (ii)
the successor corporation, if other than the Company, assumes the Company's
obligations on the Senior Debt Securities and under the Indenture, (iii) if
prior to the Release Date, the successor corporation assumes the Company's
obligations on the Senior Note Mortgage Bonds and under the Mortgage Indenture;
(iv) after giving effect to the transaction, no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing; (v) if the Company's assets would become
subject to a lien not permitted by the Indenture, the Senior Debt Securities are
secured equally and ratably with all Indebtedness secured thereby; and (vi) the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger, conveyance, transfer and
lease and such supplemental indenture comply with the Indenture and that all
conditions precedent therein provided for relating to such transaction have been
complied with.
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CERTAIN DEFINITIONS
"Attributable Value" in respect of any Sale and Leaseback Transaction
means, as of the time of determination, the lesser of (i) the sale price of the
property so leased multiplied by a fraction the numerator of which is the
remaining portion of the base term of the lease included in such Sale and
Leaseback Transaction and the denominator of which is the base term of such
lease, and (ii) the total obligation (discounted to present value at the rate of
interest specified by the terms of such lease) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes as well as
maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
base term of the lease included in such Sale and Leaseback Transaction.
"Consolidated Capitalization" of the Company means consolidated total
assets less consolidated non-interest bearing current liabilities, all as shown
by a consolidated balance sheet of the Company and all Subsidiaries prepared in
accordance with generally accepted accounting principles at the date of such
balance sheet.
"Funded Indebtedness" means notes, bonds, debentures or other similar
evidences of Indebtedness which by its terms matures at or is extendible or
renewable at the option of the obligor to a date more than 12 months after the
date of the creation of such Indebtedness.
"Indebtedness" means, with respect to any Person (without duplication),
(a) any liability of such Person (1) for borrowed money or under any
reimbursement obligation relating to a letter of credit, financial bond or
similar instrument or agreement, (2) evidenced by a bond, note, debenture or
similar instrument or agreement (including a purchase money obligation) given in
connection with the acquisition of any business, properties or assets of any
kind (other than a trade payable or a current liability arising in the ordinary
course of business or a performance bond or similar obligation), (3) for the
payment of money relating to any obligations under any capital lease of real or
personal property or (4) any agreement or instrument in respect of an interest
rate or currency swap, exchange or hedging transaction or other financial
derivatives transaction; (b) any liability of others described in the preceding
clause (a) that the Person has guaranteed or that is otherwise its legal
liability; and (c) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses (a)
and (b) above. For the purpose of determining any particular amount of
Indebtedness under this definition, guarantees of (or obligations with respect
to letters of credit or financial bonds supporting) Indebtedness otherwise
included in the determination of such amount shall not be included.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, security interest, lien, encumbrance, or
other security arrangement of any kind or nature whatsoever on or with respect
to such Property (including any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Net Tangible Assets" means the amount shown as total assets on the
consolidated balance sheet of the Company prepared in accordance with generally
accepted accounting principles on the date of such balance sheet, less the
following: (i) intangible assets including, but without limitation, such items
as goodwill, trademarks, tradenames, patents and unamortized debt discount and
expense and other regulatory assets carried as an asset on the balance sheet;
and (ii) appropriate adjustments, if any, on account of minority interests.
"Outstanding," when used with respect to Senior Debt Securities of any
series, means, as of the date of determination, all such Senior Debt Securities
theretofore authenticated and delivered under this Indenture, except:
(a) such Senior Debt Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;
(b) such Senior Debt Securities for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Senior Debt Securities; provided
that, if such Senior Debt Securities are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture of provision
therefor satisfactory to the Trustee has been made;
(c) Senior Debt Securities as to which Defeasance has been effected
pursuant to the Indenture; and
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(d) such Senior Debt Securities in exchange for or in lieu of which
other Senior Debt Securities have been authenticated and delivered pursuant
to the Indenture, or which shall have been paid in accordance with the
provisions of the Indenture governing mutilated, destroyed, lost or stolen
Senior Debt Securities (except with respect to any such Senior Debt
Security as to which proof satisfactory to the Trustee is presented that
such Senior Debt Security is held by a Person in whose hands such Senior
Debt Security is a legal, valid and binding obligation of the Company).
"Person" means any individual, corporation, partnership, joint venture,
association, company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Property" of any Person means all such Person's (i) property and assets
and (ii) rights to and interests in all property and assets.
"Sale and Lease-Back Transaction" means any arrangement with any Person,
providing for the leasing by the Company or a Subsidiary for a period, including
renewals, in excess of three years of any Property which has been or is to be
sold or transferred by the Company or any Subsidiary to such Person.
"Subsidiary" means any corporation or other business entity of which the
Company owns or controls (either directly or through one or more other
Subsidiaries) more than 50% of the issued share capital or other ownership
interests, in each case having ordinary voting power to elect or appoint
directors, managers or trustees of such corporation or other business entity
(whether or not capital stock or other ownership interests or any other class or
classes shall or might have voting power upon the occurrence of any
contingency).
"U.S. Government Obligations" means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof or any other
Person, and shall also include a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act), as custodian with respect to any
obligation or a specific payment of principal of or interest on any such
obligation held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the obligation or the specific payment of principal of or interest on the
obligation evidenced by such depository receipt.
BOOK-ENTRY SECURITIES
Each series of Senior Debt Securities may be issued in the form of one or
more global notes (the "Global Securities") representing all or part of such
series of Senior Debt Securities and which will be deposited with or on behalf
of The Depository Trust Company as depositary (the "Depositary") and registered
in the name of the Depositary or nominee of the Depositary. Certificated Senior
Debt Securities will not be exchangeable for Global Securities and, except under
the circumstances described below, the Global Securities will not be
exchangeable for certificated Senior Debt Securities.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
holds securities that its participants ("Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange Inc. and the National Association of
Securities Dealers, Inc. Access to The Depository Trust Company system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to the
Depositary and its Participants are on file with the Commission.
Upon the issuance of the Global Securities in registered form, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Senior Debt Securities represented by the
Global Securities to the accounts of Participants. The accounts to be credited
shall be designated by the Underwriters. Ownership of beneficial interests in
the Global Securities will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests by
Participants in the Global Securities will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee. Ownership of beneficial interests in the Global
Securities by persons that hold through Participants will be shown on, and the
transfer of that ownership interest within such Participant will be effected
only through, records maintained by such Participant. Owners of beneficial
interests in the Global Securities will not receive written confirmation
providing details of the transaction, as well as periodic statements of their
holdings, from the Participants through which they purchased beneficial
interests in the Global Securities. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Securities.
So long as the Depositary, or its nominee, is the registered owner of the
Global Securities, the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the Senior Debt Securities represented
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<PAGE>
by the Global Securities for all purposes under the Indenture. Except as set
forth below, owners of beneficial interests in the Global Securities will not be
entitled to have Senior Debt Securities registered in their names, will not
receive or be entitled to receive physical delivery of the Senior Debt
Securities in definitive form and will not be considered the owner or Holders
thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on the Senior
Debt Securities will be made to the Depositary or its nominee, as the case may
be, as the registered owner or the Holder of the Global Securities representing
the Senior Debt Securities. None of the Company, the Trustee, any Paying Agent
or the registrar for the Senior Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Depositary has advised the Company that, upon receipt of any payment of
principal, premium or interest in respect of the Global Securities, the
Depositary will credit immediately Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Securities as shown on the records of the Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in the Global Securities held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name" and will be the responsibility of such Participants.
The Global Securities may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor of the Depositary or a nominee of such successor.
If the Depositary is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within ninety days,
the Company will issue certificated notes in definitive registered form in
exchange for the Global Securities representing the Senior Debt Securities. In
addition, the Company may at any time and in its sole discretion determine not
to have any Senior Debt Securities in registered form represented by one or more
Global Securities and, in such event, will issue certificated notes in
definitive form in exchange for the Global Securities representing the Senior
Debt Securities. In any such instance, an owner of a beneficial interest in the
Global Securities will be entitled to physical delivery in definitive form of
certificated Senior Debt Securities represented by the Global Securities equal
in principal amount to such beneficial interest and to have such certificated
notes registered in its name.
DESCRIPTION OF THE FIRST MORTGAGE BONDS
First Mortgage Bonds, including any series of Senior Note Mortgage Bonds
issued as security for the Senior Debt Securities, will be issued in one or more
series under the Company's Mortgage Indenture.
The following summaries of certain provisions of the First Mortgage Bonds
and the Mortgage Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by express reference to, all the provisions of
the Mortgage Indenture, including the definitions therein of certain terms.
Certain capitalized terms herein are defined in the Mortgage Indenture.
REDEMPTION AND IMPROVEMENT FUND
Redemption provisions, if any, for each series of Senior Note Mortgage
Bonds will be described in the Prospectus Supplement relating thereto. Except
as provided below, the First Mortgage Bonds outstanding on the date of the
Indenture may not be redeemed at the option of the Company prior to maturity.
Under the Mortgage Indenture, the First Mortgage Bonds may be redeemed by
application of cash deposited with the Mortgage Trustee in connection with the
taking, purchase or sale of mortgage property, by or pursuant to the direction
of a municipal or governmental body.
As an Improvement Fund, the Company must pay to the Mortgage Trustee on or
before May 1, in each year, cash equal to the amount of the Minimum Provision
for Depreciation for the preceding calendar year (i.e., as to each full calendar
month included in such period the greater of (1) the amount recorded on the
books of the Company during such calendar month as charged to income for
depreciation of Public Utility Property or (2) 1/12 of 2% of the Book Cost of
Depreciable Public Utility Property at the beginning of such calendar month),
less credits consisting of (i) Available Additions, (ii) bonds of any series
(taken at principal amount) available as the basis for the issue of First
Mortgage Bonds under the Mortgage Indenture, and/or (iii) appropriations
required for prior lien improvement funds and improvements
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and/or additions to Public Utility Property which is subject to Prior Liens, not
previously used under such Prior Liens. First Mortgage Bonds used as a credit as
aforesaid (or retired by the application of cash in the Improvement Fund) may be
reinstated by using credits of the character referred to in (i) and (ii) above
or by the deposit of cash. Cash in the Improvement Fund may be withdrawn by
using credits of the character referred to in (i) and (ii) above or may be
applied to the retirement of First Mortgage Bonds of any series. Cash held in
such fund may not be applied to the redemption of the First Mortgage Bonds. The
Company intends to meet future Improvement Fund requirements with Available
Additions.
The First Mortgage Bonds are not subject to any sinking or additions fund.
KIND AND PRIORITY OF LIEN
The Senior Note Mortgage Bonds will be secured equally and ratably with all
First Mortgage Bonds of other series by the first lien of the Mortgage Indenture
on Public Utility Property and other property owned by the Company (but not its
Subsidiaries), which includes substantially all the permanent physical
properties and franchises of the Company (except as stated below), subject,
however, to Permitted Encumbrances and minor exceptions. The Mortgage Indenture
requires that there shall be subjected to the lien thereof all after-acquired
property (except as to property of the character expressly excepted and subject
to certain limitations in cases of mergers and consolidations), subject,
however, to Permitted Encumbrances and Prior Liens. Prior Liens may consist
only of existing liens or purchase money liens on after-acquired property, and
the principal amount of all such liens may not exceed 10% of the principal
amount of the outstanding First Mortgage Bonds.
There are excepted from the lien of the Mortgage Indenture bills, notes,
accounts receivable, cash, contracts, shares of stock, bonds, evidences of
indebtedness and other securities, and all other choses in action, unless
specifically mortgaged and pledged or expressly required so to be; goods,
merchandise and appliances held for sale; materials and supplies; automobiles
and trucks and similar equipment; oil, coal and other minerals (other than gas)
underlying mortgaged lands; oil properties, oil leases and royalties and income
therefrom and rights under oil and gas leases to explore for and produce oil;
property used principally in the oil business; office equipment; and all other
after-acquired property which is not Public Utility Property. While wholly-
owned subsidiaries of the Company own interests in Unit 1 or Unit 2 of TNP One,
the interests owned by such subsidiaries will not be subject to the lien of the
Mortgage Indenture.
REPORTS
The Mortgage Indenture requires periodic inspections and reports to the
Mortgage Trustee by an independent engineer as to maintenance. A certificate of
the Company as to absence of default is required to be furnished to the Mortgage
Trustee annually.
ISSUANCE OF ADDITIONAL BONDS AND WITHDRAWAL OF CASH DEPOSITED AGAINST SUCH
ISSUANCE
The aggregate principal amount of First Mortgage Bonds which may be issued
under the Mortgage Indenture is unlimited. First Mortgage Bonds of any series
may be issued from time to time on the basis of (1) 60% of the amount of
Available Additions, (2) the deposit of cash, and (3) First Mortgage Bonds of
any series paid, redeemed or otherwise retired (or for whose payment or
redemption cash has been deposited with the Mortgage Trustee) other than First
Mortgage Bonds the retirement of which has previously been made the basis for
the issuance of additional First Mortgage Bonds or the withdrawal of cash or
First Mortgage Bonds retired through the operation of any sinking, improvement
or analogous fund to the extent that the terms of any such fund preclude such
use.
With certain exceptions in the case of (3) above, additional First Mortgage
Bonds may not be issued under the Mortgage Indenture unless Net Earnings
Available for Interest of the Company for 12 consecutive months out of the
preceding 15 months are at least two-and-one-half times the aggregate amount of
annual Interest Charges on Bonded Indebtedness which gives effect to the
interest on the additional First Mortgage Bonds to be issued (the "Interest
Coverage Ratio"). Based upon this requirement and assuming an interest rate of
9.0%, the Company could have issued approximately $127 million principal amount
of First Mortgage Bonds as of June 30, 1998. Assuming an interest rate of 9.0%,
and with the availability of Available Additions, the Company could have issued
approximately $131 million principal amount of First Mortgage Bonds as of June
30, 1998.
Cash deposited with the Mortgage Trustee pursuant to (2) above may be
withdrawn to the extent of 60% of Available Additions and 100% of First Mortgage
Bonds retired and not previously used exclusive of First Mortgage
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Bonds retired through sinking fund operations, to the extent the Mortgage
Indenture precludes such use of First Mortgage Bonds, or through the Improvement
Fund.
RESTRICTIONS ON DECLARATION OF DIVIDENDS
The Mortgage Indenture provides that, so long as any First Mortgage Bonds
of Series U remain outstanding, the Company is prohibited from declaring
dividends on any shares of its common stock (other than dividends payable solely
in common stock of the Company), or making any payment on account of the
purchase, redemption, or other retirement of any shares of any class of its
stock (other than pursuant to any sinking, purchase or analogous fund for its
preferred stock) or, directly or indirectly, making any other distribution in
respect thereof (other than cash dividends on its preferred stock), unless such
dividends on common stock ("Stock Payments") are declared to be payable not more
than ninety days after the date of declaration, and unless, at the date of such
declaration of dividends on common stock or the date of such payment or
distribution (after giving effect, as if paid, to the proposed Stock Payment),
the sum of $1.5 million, plus (or minus, in the case of a deficit) the net
income of the Company computed for the period from December 31, 1969, to and
including the date of declaration (in the case of dividends on common stock) or
the making of such proposed Stock Payment, is greater than the sum of the
aggregate of all Stock Payments declared or made during such period plus the
aggregate amount of all cash dividends on, and payments pursuant to any sinking,
purchase or analogous fund for, preferred stock of the Company declared or made
during such period. At June 30, 1998, pursuant to the terms of the Mortgage
Indenture, approximately $19 million of the Company's $63 million of retained
earnings at such date was restricted.
MODIFICATION OF BONDHOLDERS' RIGHTS
The rights of the bondholders may be modified with the consent of the
holders of 75% of the First Mortgage Bonds, including not less than 60% of each
series affected. In general, no modification of the terms of maturity or
payment of principal, premium or interest is effective against any bondholder
without his consent.
THE MORTGAGE TRUSTEE
The holders of a majority in principal amount of the First Mortgage Bonds
outstanding may require the Mortgage Trustee to enforce the Mortgage Indenture,
but the Mortgage Trustee is not required to expend its own funds or incur
liability if it has reasonable grounds to believe that repayment of such funds
or liability is not reasonably assured.
No holder of any First Mortgage Bond has the right to institute suit to
enforce the Mortgage Indenture (other than with respect to the unconditional
obligation of the Company to pay the principal of, and interest accrued on,
First Mortgage Bonds to the holders thereof) unless the holders of at least 25%
in principal amount of the First Mortgage Bonds outstanding shall have filed a
request with the Mortgage Trustee for it to institute such action, together with
an offer of adequate security and indemnity.
DEFAULTS
An Event of Default is defined in the Mortgage Indenture as (a) failure to
pay principal or premium when due, (b) failure to pay interest for 30 days after
becoming due, (c) failure to discharge or satisfy any sinking or improvement
fund obligation when due, (d) failure to observe (i) the 10% restriction on
Prior Lien Indebtedness, (ii) certain restrictions on the payment of dividends,
(iii) the covenants as to sale, merger or lease, or (iv) the provisions as to
investment of certain trust funds, (e) failure to perform or observe other
covenants, agreements or conditions for 60 days after notice, (f) entry of an
order for reorganization or appointment of a trustee or receiver and continuance
of such order or appointment, unstayed, for 60 days, (g) certain adjudications,
petitions or consents in bankruptcy, insolvency or reorganization proceedings,
and (h) rendering of a judgment in excess of $100,000 and its continuance
unsatisfied for 60 days after any stay of execution thereon has been terminated.
Upon the occurrence of an Event of Default and until it shall have been
remedied, the Mortgage Trustee or the holders of not less than 25% in principal
amount of the First Mortgage Bonds outstanding may declare the principal of, and
interest accrued on, all First Mortgage Bonds to be due and payable immediately.
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PLAN OF DISTRIBUTION
The Company may sell any series of the Senior Debt Securities (i) to or
through underwriters; (ii) to or through dealers; or (iii) directly to
purchasers. A Prospectus Supplement will set forth the terms of the offering of
each series of the Senior Debt Securities; including the name or names of any
underwriters or dealers, the purchase price of such Senior Debt Securities and
the proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchange on which such Senior Debt Securities may be listed. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time. Only firms named
in the Prospectus Supplement or a related pricing supplement, if applicable,
will be deemed to be underwriters or dealers in connection with the Senior Debt
Securities offered thereby.
If underwriters are used in the sale, the Senior Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Senior Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Senior Debt Securities will be
named in the Prospectus relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Senior Debt Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all of such Senior
Debt Securities if any are purchased.
The Senior Debt Securities may be sold directly by the Company to investors
or others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or dealers to solicit offers from certain types of institutions to
purchase the Senior Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Underwriters and dealers may be entitled under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters or dealers may be required to
make in respect thereof. Underwriters and dealers may engage in transactions
with, or perform services for the Company in the ordinary course of business.
The Senior Debt Securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a market for
any series of the Senior Debt Securities.
VALIDITY OF SECURITIES
The validity of the Senior Debt Securities offered hereby and the Indenture
will be passed upon for the Company by Michael D. Blanchard, Vice President and
General Counsel of the Company and by Haynes and Boone, LLP. Certain other
matters will be passed upon for the Company by Haynes and Boone, LLP, Fort
Worth, Texas. Certain legal matters in connection with the offering will be
passed upon for any underwriters by Milbank, Tweed, Hadley & McCloy, New York,
New York. All matters pertaining to local laws in connection with the issuance
of the Senior Debt Securities offered hereby will be passed upon only by Haynes
and Boone, LLP as to Texas law, and Rubin, Katz, Salazar, Alley & Rouse, Santa
Fe, New Mexico, as to New Mexico law.
EXPERTS
The consolidated financial statements of Texas-New Mexico Power Company as
of and for the year ended December 31, 1997, included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of Arthur
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Andersen LLP, independent public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Texas-New Mexico Power Company as
of December 31, 1996 and 1995, and for each of the years in the two-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, have been incorporated by reference herein
and in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the Company's consolidated
financial statements refers to a change in the method of accounting for
operating revenues in 1995.
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===============================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to buy any securities
other than the securities described in this Prospectus or any offer to sell or a
solicitation of an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that the information contained herein or therein is correct as of
any time subsequent to the date of such information.
______________
TABLE OF CONTENTS
Page
----
Available Information .................................................... 2
Incorporation of Certain ................................................. 2
Documents by Reference ................................................... 2
Statement Regarding Forward
Looking Information .................................................... 2
The Company ............................................................... 3
Use of Proceeds ........................................................... 3
Ratio of Earnings to Fixed Charges ........................................ 3
Overview of Securities .................................................... 4
Description of the Senior Debt Securities ................................. 4
Description of the First Mortgage Bonds ................................... 14
Plan of Distribution ...................................................... 17
Validity of Securities .................................................... 17
Experts ................................................................... 17
===============================================================================
===============================================================================
$200,000,000
TEXAS-NEW MEXICO
POWER COMPANY
SENIOR DEBT SECURITIES
------------
PROSPECTUS
------------
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission Registration Fee .. $ 59,000
Printing Expenses .................................... 10,500
Accounting Fees and Expenses ......................... 45,000
Legal Fees and Expenses .............................. 150,000
Blue Sky Fees and Expenses ........................... 5,000
Rating Agency Fees ................................... 92,500
Trustee Fees ......................................... 20,000
Miscellaneous Expenses ............................... 20,000
--------
Total ............................................. $402,000
========
All of the above expenses except the Securities and Exchange Commission
registration fee are estimated. All of such expenses will be borne by the
Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") provides
that any director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he was, is or is threatened to be made a party by reason of
his position. With respect to any proceeding arising from actions taken in his
official capacity, as a director or officer, he may be indemnified so long as it
shall be determined that he conducted himself in good faith and that he
reasonably believed that such conduct was in the corporation's best interest.
In cases not concerning conduct in his official capacity as a director or
officer, a director or officer may be indemnified so long as it shall be
determined that he conducted himself in good faith and that he reasonably
believed that his conduct was not opposed to the corporation's best interest.
In the case of any criminal proceeding, a director or officer may be indemnified
if he had no reasonable cause to believe his conduct was unlawful. If a
director or officer is found liable to the corporation on the basis that
personal benefit was improperly received by him, the indemnification is limited
to reasonable expenses actually incurred in connection with such proceeding. No
indemnification may be made if such officer or director is found liable for
willful or intentional misconduct in the performance of his duty to the
corporation. If a director or officer is wholly successful, on the merits or
otherwise, in connection with such a proceeding, such indemnification is
mandatory.
Section 5 of Article 7 of the Company's Bylaws requires the indemnification
of officers and directors to the fullest extent permitted by the TBCA or any
other applicable law. The Company also has policies insuring its officers and
directors against certain liabilities for actions taken in such capacities,
including liabilities under the TBCA.
Article 7.06 of the Texas Miscellaneous Corporation Laws Act provides that
the articles of incorporation of a corporation may provide that a director of
the corporation shall not be liable, or shall be liable only to the extent
provided in the articles of incorporation, to the corporation or its
shareholders or members for monetary damages for an act or omission in the
director's capacity as a director, except that this article does not authorize
the elimination or limitation of the liability of a director to the extent the
director is found liable for:
(i) a breach of the director's duty of loyalty to the corporation
or its shareholders or members;
(ii) an act or omission not in good faith that constitutes a
breach of duty of the director to the corporation or an act or omission
that involves intentional misconduct or a knowing violation of the law;
(iii) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office;
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(iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute.
Article X of the Company's Articles of Incorporation provides that, to the
fullest extent allowed pursuant to the Texas Miscellaneous Corporation Laws Act,
or any other applicable laws as presently or hereafter in effect, no director of
the Company shall be personally liable to the Company or its shareholders for
monetary damages for or with respect to any acts or omissions in his capacity as
director of the Company.
ITEM 16. EXHIBITS
Exhibit
No. Description
------- -----------
1(a)** - Form of Underwriting Agreement.
4(a)* - Form of Indenture (the "Indenture") between Texas-New Mexico
Power Company and Chase Bank of Texas, N.A., related to the
Senior Debt Securities.
4(b)** - Form of First Supplemental Indenture related to Senior Debt
Securities.
4(c) - Indenture of Mortgage and Deed of Trust (the "Mortgage
Indenture") dated as of November 1, 1944 (Exhibit 2(d) to
Community Public Service Co. ("CPS") 1978 Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(d) - Seventh Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1963 (Exhibit 2(k) to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(e) - Eighth Supplemental Indenture to the Mortgage Indenture dated
as of July 1, 1963 (Exhibit 2(1), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(f) - Ninth Supplemental Indenture to the Mortgage Indenture dated
as of August 1, 1965 (Exhibit 2(m), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(g) - Tenth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1966 (Exhibit 2(n), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(h) - Eleventh Supplemental Indenture to the Mortgage Indenture
dated as of October 1, 1969 (Exhibit 2(o), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(i) - Twelfth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1971 (Exhibit 2(p), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(j) - Thirteenth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1974 (Exhibit 2(q), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(k) - Fourteenth Supplemental Indenture to the Mortgage Indenture
dated as of March 1, 1975 (Exhibit 2(r), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(l) - Fifteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1976 (Exhibit 2(e), File
No. 2-57034) and incorporated by reference herein.
4(m) - Sixteenth Supplemental Indenture to the Mortgage Indenture
dated as of November 1, 1981 (Exhibit 4(x), File No. 2-74332)
and incorporated by reference herein.
4(n) - Seventeenth Supplemental Indenture to the Mortgage Indenture
dated as of December 1, 1982 (Exhibit 4(cc), File
No. 2-80407) and incorporated by reference herein.
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4(o) - Eighteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1983 (Exhibit (a) to Form 10-Q of the
Company for the quarter ended September 30, 1983, File
No. 1-4756) and incorporated by reference herein.
4(p) - Nineteenth Supplemental Indenture to the Mortgage Indenture
dated as of May 1, 1985 (Exhibit 4(v), File No. 2-97230) and
incorporated by reference herein.
4(q) - Twentieth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1987 (Exhibit 4(o) to Form 10-K of the
Company for the year ended December 31, 1987, File
No. 2-97230) and incorporated by reference herein.
4(r) - Twenty-First Supplemental Indenture to the Mortgage
Indenture dated as of July 1, 1989 (Exhibit 4(p) to Form
10-Q of the Company for the quarter ended June 30, 1989,
File No. 2-97230) and incorporated by reference herein.
4(s) - Twenty-Second Supplemental Indenture to the Mortgage
Indenture dated as of January 15, 1992 (Exhibit 4(q) to Form
10-K of the Company for the year ended December 31, 1991,
File No. 2-97230) and incorporated by reference herein.
4(t) - Twenty-Third Supplemental Indenture to the Mortgage
Indenture dated as of September 15, 1993 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(u) - Twenty-Fourth Supplemental Indenture to the Mortgage
Indenture dated as of November 3, 1995 (Exhibit 4(s) to Form
10-K of the Company for the year ended December 31, 1993,
File No. 2-97230) and incorporated by reference herein.
4(v) - Twenty-Fifth Supplemental Indenture to the Mortgage
Indenture dated as of September 10, 1996 (Exhibit 4(t) to
Form 10-Q of the Company for the quarter ended September 30,
1996, File No. 2-97230) and incorporated by reference
herein.
4(w) - Indenture and Security Agreement for 12 1/2% Secured
Debentures dated as of January 15, 1992 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1991, File No. 2-97230) and incorporated by reference
herein.
4(x) - Indenture and Security Agreement for 10 3/4% Secured
Debentures dated as of September 15, 1993 (Exhibit 4(t) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(y)** - Form of Twenty-Sixth Supplemental Indenture to the Mortgage
Indenture, related to the Senior Note Mortgage Bonds.
5(a)** - Opinion of Haynes and Boone, LLP as to the validity of the
Senior Debt Securities.
12(a)** - Computation of Ratio of Earnings to Fixed Charges.
23(a)** - Consent of Haynes and Boone, LLP contained in the opinion
filed as Exhibit 5(a).
23(b)** - Consent of Rubin, Katz, Salazar, Alley & Rouse.
23(c)** - Consent of KPMG Peat Marwick LLP, independent auditors.
23(d)** - Consent of Arthur Andersen LLP, independent public
accountants.
24(a)* - Power of Attorney.
25(a)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Chase Bank of Texas, N.A., as
Trustee under the Indenture relating to the Senior Debt
Securities.
25(b)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of U.S. Bank Trust, N.A., as
Trustee under the Mortgage Indenture relating to the Senior
Note Mortgage Bonds.
- --------------------
* Previously filed.
** Filed herewith.
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ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement
notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Fort Worth, State of Texas, on the
11th day of December, 1998.
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ Manjit S. Cheema
-----------------------------------------
Manjit S. Cheema
Senior Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No 1. to the Registration Statement on Form S-3 has been signed by the following
persons on behalf of the Registrant in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, President and December 11, 1998
- --------------------------------- Chief Executive Officer
Kevern R. Joyce
/s/ Manjit S. Cheema Senior Vice President and December 11, 1998
- --------------------------------- Chief Financial Officer
Manjit S. Cheema
* Controller and December 11, 1998
- --------------------------------- Chief Accounting Officer
Michael J. Ricketts
* Director December 11, 1998
- ---------------------------------
R. Denny Alexander
* Director December 11, 1998
- ---------------------------------
John A. Fanning
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
* Director December 11, 1998
- --------------------------------
Sidney M. Gutierrez
* Director December 11, 1998
- --------------------------------
Harris L. Kempner, Jr.
* Director December 11, 1998
- --------------------------------
J. R. Holland, Jr.
* Director December 11, 1998
- --------------------------------
Dr. Carol D. Smith Surles
* Director December 11, 1998
- --------------------------------
Larry G. Wheeler
* Director December 11, 1998
- --------------------------------
Dennis H. Withers
* By: /s/ Manjit S. Cheema
--------------------------------------
Manjit S. Cheema, pursuant to power
of attorney previously filed with
the Securities and Exchange Commission
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
Exhibits filed with this registration statement are denoted by "*."
Exhibit
No. Description
------- -----------
1(a)** - Form of Underwriting Agreement.
4(a)* - Form of Indenture (the "Indenture") between Texas-New Mexico
Power Company and Chase Bank of Texas, N.A., related to the
Senior Debt Securities.
4(b)** - Form of First Supplemental Indenture related to Senior Debt
Securities.
4(c) - Indenture of Mortgage and Deed of Trust (the "Mortgage
Indenture") dated as of November 1, 1944 (Exhibit 2(d) to
Community Public Service Co. ("CPS") 1978 Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(d) - Seventh Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1963 (Exhibit 2(k) to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(e) - Eighth Supplemental Indenture to the Mortgage Indenture dated
as of July 1, 1963 (Exhibit 2(1), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(f) - Ninth Supplemental Indenture to the Mortgage Indenture dated
as of August 1, 1965 (Exhibit 2(m), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(g) - Tenth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1966 (Exhibit 2(n), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(h) - Eleventh Supplemental Indenture to the Mortgage Indenture
dated as of October 1, 1969 (Exhibit 2(o), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(i) - Twelfth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1971 (Exhibit 2(p), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(j) - Thirteenth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1974 (Exhibit 2(q), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(k) - Fourteenth Supplemental Indenture to the Mortgage Indenture
dated as of March 1, 1975 (Exhibit 2(r), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(l) - Fifteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1976 (Exhibit 2(e), File
No. 2-57034) and incorporated by reference herein.
4(m) - Sixteenth Supplemental Indenture to the Mortgage Indenture
dated as of November 1, 1981 (Exhibit 4(x), File No. 2-74332)
and incorporated by reference herein.
4(n) - Seventeenth Supplemental Indenture to the Mortgage Indenture
dated as of December 1, 1982 (Exhibit 4(cc), File
No. 2-80407) and incorporated by reference herein.
4(o) - Eighteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1983 (Exhibit (a) to Form 10-Q of the
Company for the quarter ended September 30, 1983, File
No. 1-4756) and incorporated by reference herein.
4(p) - Nineteenth Supplemental Indenture to the Mortgage Indenture
dated as of May 1, 1985 (Exhibit 4(v), File No. 2-97230) and
incorporated by reference herein.
<PAGE>
4(q) - Twentieth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1987 (Exhibit 4(o) to Form 10-K of the
Company for the year ended December 31, 1987, File
No. 2-97230) and incorporated by reference herein.
4(r) - Twenty-First Supplemental Indenture to the Mortgage
Indenture dated as of July 1, 1989 (Exhibit 4(p) to Form
10-Q of the Company for the quarter ended June 30, 1989,
File No. 2-97230) and incorporated by reference herein.
4(s) - Twenty-Second Supplemental Indenture to the Mortgage
Indenture dated as of January 15, 1992 (Exhibit 4(q) to Form
10-K of the Company for the year ended December 31, 1991,
File No. 2-97230) and incorporated by reference herein.
4(t) - Twenty-Third Supplemental Indenture to the Mortgage
Indenture dated as of September 15, 1993 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(u) - Twenty-Fourth Supplemental Indenture to the Mortgage
Indenture dated as of November 3, 1995 (Exhibit 4(s) to Form
10-K of the Company for the year ended December 31, 1993,
File No. 2-97230) and incorporated by reference herein.
4(v) - Twenty-Fifth Supplemental Indenture to the Mortgage
Indenture dated as of September 10, 1996 (Exhibit 4(t) to
Form 10-Q of the Company for the quarter ended September 30,
1996, File No. 2-97230) and incorporated by reference
herein.
4(w) - Indenture and Security Agreement for 12 1/2% Secured
Debentures dated as of January 15, 1992 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1991, File No. 2-97230) and incorporated by reference
herein.
4(x) - Indenture and Security Agreement for 10 3/4% Secured
Debentures dated as of September 15, 1993 (Exhibit 4(t) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(y)** - Form of Twenty-Sixth Supplemental Indenture to the Mortgage
Indenture, related to the Senior Note Mortgage Bonds.
5(a)** - Opinion of Haynes and Boone, LLP as to the validity of the
Senior Debt Securities.
12(a)** - Computation of Ratio of Earnings to Fixed Charges.
23(a)** - Consent of Haynes and Boone, LLP contained in the opinion
filed as Exhibit 5(a).
23(b)** - Consent of Rubin, Katz, Salazar, Alley & Rouse.
23(c)** - Consent of KPMG Peat Marwick LLP, independent auditors.
23(d)** - Consent of Arthur Andersen LLP, independent public
accountants.
24(a)* - Power of Attorney.
25(a)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Chase Bank of Texas, N.A., as
Trustee under the Indenture relating to the Senior Debt
Securities.
25(b)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of U.S. Bank Trust, N.A., as
Trustee under the Mortgage Indenture relating to the Senior
Note Mortgage Bonds.
- --------------------
* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 1(a)
$ ,000,000
TEXAS-NEW MEXICO POWER COMPANY
% SENIOR NOTES DUE
UNDERWRITING AGREEMENT
, 1999
Dear Sirs:
Texas-New Mexico Power Company, a Texas corporation (the "Company"),
proposes to issue and sell $ ,000,000 aggregate principal amount of its
% Senior Notes due (the "Securities") to the several underwriters
named in Schedule I hereto (the "Underwriters"). The Securities are described in
the Prospectus which is referred to below and are to be issued pursuant to the
provisions of an indenture (the "Indenture") to be dated as of January 1, 1999
between the Company and Chase Bank of Texas, National Association, as trustee
(the "Trustee"). Until the Release Date (as defined in the Indenture), the
Securities will be secured as to payment of principal and interest by one or
more series of First Mortgage Bonds (the "First Mortgage Bonds") issued, pledged
and delivered by the Company to the Trustee. The First Mortgage Bonds will be
issued pursuant to the provisions of the Company's Indenture of Mortgage and
Deed of Trust dated as of November 1, 1944 between Community Public Service Co.,
a Delaware corporation (which was merged into and whose obligations were assumed
by the Company), and City National Bank and Trust Company of Chicago, Chicago,
Illinois (the current successor of which is U.S. Bank Trust, N.A.) (the
"Mortgage Trustee"), as heretofore supplemented and modified, and as
supplemented by the Twenty-Sixth Supplemental Indenture (herein so called)
thereto, dated as of , 1999 between the Company and the Mortgage Trustee (as
so supplemented and modified, the "Mortgage Indenture").
Section 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 333-64215), including a prospectus subject to completion, relating to the
Securities, which will be amended from time to time. The registration statement,
as amended at the time it became effective, including all documents or
information incorporated or deemed to be incorporated by reference therein is
referred to as the "Registration Statement"; and the prospectus in the form
first used to confirm sales of Securities (including (a) the information
contained in any prospectus supplement relating to the securities or deemed to
be part of the Registration Statement at effectiveness pursuant to Rule 430A or
Rule 434 of the Act, and (b) any documents or information incorporated or deemed
to be incorporated by reference into such prospectus), is hereinafter referred
to as the "Prospectus". Any registration statement (including any amendment or
supplement thereto or information which is deemed to be a part thereof) filed by
the Company under Rule 462(b) of the Act (a "Rule 462(b) Registration
Statement") shall be deemed to be part of the Registration Statement. If the
Company elects to rely on Rule 434 under the Act, all references to the
Prospectus shall be deemed also to include, without limitation, the form of
prospectus and term sheet (a "Term Sheet"), taken together, provided to the
Underwriters by the Company in reliance on Rule 434 under the Act (the
<PAGE>
"Rule 434 Prospectus"). All references in this Agreement to financial statements
and schedules and other information which is "contained," "included,"
"described" or "stated" in the Registration Statement or the Prospectus (and all
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include, without limitation, even though not specifically stated, any
document filed under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (the "Exchange Act") which,
upon filing, is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus after the effective date, as the case may be.
Section 2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
I hereto at a purchase price of % of the principal amount thereof (the
"Purchase Price"), plus accrued interest from the date of issuance to the date
of delivery.
Section 3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.
Section 4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Securities shall be made at 10:00 A.M., New York City time, on
the third or fourth business day after the purchase of the Securities unless
otherwise permitted by the Commission pursuant to Rule 15c6-1 of the Exchange
Act (the "Closing Date") following the date of this Agreement at such place as
you shall designate. The Closing Date and the location of delivery of and
payment for the Securities may be varied by agreement between you and the
Company.
The Securities shall be registered in such names and issued in such
denominations as you shall request in writing not later than two full business
days prior to the Closing Date. A global certificate for the Securities shall be
made available to you for inspection not later than 9:30 A.M., New York City
time, on the business day next preceding the Closing Date. A global certificate
for the Securities in definitive form evidencing the Securities will be
delivered to you on the Closing Date with any transfer taxes thereon duly paid
by the Company, for the respective accounts of the several Underwriters, against
payment of the Purchase Price therefor by wire transfer in same day funds to an
account specified by the Company.
Section 5. Agreements of the Company. The Company agrees with you:
(a) Immediately following the determination of the Purchase Price, to
prepare, and file or transmit for filing with the Commission in accordance
with Rule 424(b) of the Act, copies of a prospectus supplement relating to
the Securities and containing all the information required under the Act.
(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become
effective, if it is not effective on the date hereof, and when any post-
effective amendment to it becomes effective, (ii) of the receipt of
comments, if any, from the Commission relating to the Registration
Statement, (iii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
the suspension of qualification of the Securities for offering or sale in
any jurisdiction, or the initiation of any proceeding for such purposes,
(v) if the Company is required to file a Rule
2
<PAGE>
462(b) Registration Statement, when the Rule 462(b) Registration Statement
has become effective and (vi) of the happening of any event during the
period referred to in paragraph (e) below which makes any statement of a
material fact made in the Registration Statement or the Prospectus untrue
or which requires any additions to or changes in the Registration Statement
or the Prospectus (as then amended or supplemented) in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, five signed copies of the
Registration Statement as first filed with the Commission and of each
amendment thereto, including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment thereto, without
exhibits, as you may reasonably request.
(d) Prior to the termination of the offering of Securities, (A) not to
(i) file any Rule 462(b) Registration Statement, (ii) file any amendment or
supplement to the Registration Statement, (iii) file any document under the
Exchange Act which shall be deemed to be incorporated by reference into the
Prospectus, or (iv) make any amendment or supplement to the Prospectus
(including the issuance or filing of any Term Sheet), of which you shall
not previously have been advised or to which you shall reasonably object;
and (B) to prepare and file with the Commission, promptly upon your
reasonable request, any Rule 462(b) Registration Statement, Term Sheet or
amendment or supplement to the Registration Statement or the Prospectus
which may be necessary or advisable in connection with the distribution of
the Securities by you, and which, in the judgment of the Company or in the
opinion of counsel for the Underwriters, is required by law, and to use its
reasonable best efforts to cause any such amendment to the Registration
Statement to become promptly effective.
(e) From time to time for such period as in the opinion of counsel for
the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish in New York
City to each Underwriter and any dealer as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus) as such Underwriter
or dealer may reasonably request.
(f) If during the period specified in paragraph (e), any event shall
occur or condition exist as a result of which, in the judgment of the
Company or in the opinion of counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the judgment of the
Company or in the opinion of counsel for the Underwriters, it is necessary
to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading in any material respect, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as you shall specify, such number of copies
thereof as such Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Securities, to cooperate with
you and counsel for the Underwriters in connection with the registration or
qualification of the Securities for offer and sale by the several
Underwriters and by dealers under the state securities or Blue Sky laws of
such jurisdictions as you may request, to continue such registration or
qualification in effect so long as required for distribution of the
Securities and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of process
under the laws of any such jurisdiction (other than as to
3
<PAGE>
matters and transactions relating to the Prospectus and the Registration
Statement); and to promptly advise the Underwriters of the receipt by the
Company of any notification with respect to the suspension of qualification
of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(h) To make generally available to the holders of the Securities as
soon as reasonably practicable a consolidated earnings statement that need
not be audited covering a period of at least twelve months after the
Closing Date (but in no event commencing later than 90 days after such
date) which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act, and to advise you in writing when such statement
has been so made available.
(i) So long as any of the Securities are outstanding, to furnish to
you as soon as available a copy of each report of the Company mailed to the
holders of the Securities or filed with the Commission and such other
publicly available information concerning the Company and its Subsidiaries
as you may reasonably request.
(j) To pay or cause to be paid all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and distribution under
the Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus relating to the Securities and all
amendments and supplements to any of them prior to or during the period
specified in paragraph (e), (ii) the printing and delivery of the
Prospectus and all amendments or supplements to it during the period
specified in paragraph (e), (iii) the word processing, printing and
delivery of this Agreement and the Indenture and other agreements or
documents in connection with the Securities, (iv) the registration or
qualification of the Securities for offer and sale under the securities or
Blue Sky laws of the several states (including in each case the reasonable
fees and disbursements of counsel for the Underwriters relating to such
registration or qualification and memoranda or surveys relating thereto),
and the printing and furnishing of copies of any blue sky or legal
investment memoranda or surveys to the Underwriters and to dealers, (v) the
rating of the Securities by securities rating agencies or services for
rating the Securities, (vi) any filing fees of the National Association of
Securities Dealers, Inc., (vii) all costs and expenses related to the
transfer and delivery of the Securities to the Underwriters, including any
transfer or other taxes payable thereon, (viii) the cost of printing
certificates representing the Securities, (ix) the fees and expenses of the
Trustee and the Mortgage Trustee in connection with the Indenture, the
Mortgage Indenture, the Securities and the First Mortgage Bonds, (x)
furnishing such copies of the Registration Statement, the Prospectus and
all amendments and supplements thereto as may be reasonably requested for
use in connection with the offering or sale of the Securities by the
Underwriters or by dealers to whom Securities may be sold, and (xi) the
performance of the Company's other obligations hereunder.
(k) To use its reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date and to satisfy all conditions precedent
to the delivery of the Securities.
(l) To use the net proceeds received by it from the sale of Securities
in the manner specified in the Prospectus under "Use of Proceeds."
(m) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
warrants to purchase debt securities of the Company substantially similar
to the Securities, other than (i) the Securities, (ii) commercial paper
issued in the ordinary course of business, (iii) securities issued under
the Mortgage Indenture, and (iv) promissory notes issued for working
capital purposes under the Company's existing bank credit facilities,
without your prior written consent.
4
<PAGE>
(n) If the Securities are not delivered for any reason other than the
termination of this Agreement pursuant to the third paragraph of Section 9
hereof or the default by an Underwriter in its obligation hereunder, the
Company shall reimburse the Underwriters for all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of their counsel.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) The Company meets the requirements for use of Form S-3; the
Registration Statement has become effective (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness
of this Agreement); no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or have been threatened by the Commission.
(b)(i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness
of this Agreement), when it became effective, did not contain and, as
amended, if applicable, will not, as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness
of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will, as of the Closing Date, comply in all
material respects with the Act, (iii) if the Company is required to file a
Rule 462(b) Registration Statement after the effectiveness of this
Agreement, such Rule 462(b) Registration Statement and any amendments
thereto, when they become effective (A) will not, as of the Closing Date,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (B) will comply in all material respects with
the Act and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not, as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no warranty or representation with respect to (i) any
statement contained in the Registration Statement, any post-effective
amendment or the Prospectus or the Prospectus as amended or supplemented in
reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of an Underwriter to
the Company expressly for use therein or (ii) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), of the Trustee.
(c) The documents incorporated or deemed to be incorporated by
reference in the Prospectus pursuant to Item 12(b) of Form S-3 under the
Act, at the time they were filed with the Commission, complied when so
filed in all material respects with the requirements of the Exchange Act,
and, when read together with other information in the Prospectus, at the
time the Registration Statement became effective and as of the Closing
Date, did not and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each Rule 462(b)
Registration Statement, if any, complied when so filed in all material
respects with the Act, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or
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omissions in any preliminary prospectus based upon information relating to
you furnished to the Company in writing by you expressly for use therein.
(e) The documents incorporated by reference into any preliminary
prospectus or Prospectus, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Act and the
Exchange Act, and at such time did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and all such
documents have been timely filed as required by the Act.
(f) The capitalization of the Company is, as of the date specified, as
set forth in the section of the Registration Statement and the Prospectus,
or any amendment or supplement thereto, entitled "Capitalization"; all of
the issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
all of the outstanding shares of capital stock of Texas Generating Company
and Texas Generating Company II (collectively, the "Subsidiaries") have
been duly authorized and are validly issued and owned by the Company, free
and clear of any liens, security interests, claims, charges or encumbrances
(collectively, the "Liens") except as otherwise disclosed in writing to the
Underwriters prior to the date hereof; and each of the Company and its
Subsidiaries is a corporation duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Texas, with
full corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus, and, in the case of the Company, to execute and deliver this
Agreement and the Indenture and to issue and sell the Securities as herein
and therein contemplated.
(g) The Indenture has been duly authorized and, when executed by the
Company and delivered, will constitute a legal, valid and binding
obligation of the Company (assuming the due and valid authorization,
execution and delivery thereof by the Trustee), enforceable in accordance
with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity (regardless of whether the
enforcement of remedies is considered in a proceeding in equity or at law);
and the issuance of the Securities has been duly authorized and when
executed by the Company, authenticated by the Trustee in accordance with
the Indenture and delivered and paid for by the Underwriters pursuant to
this Agreement, the Securities will be duly issued and will constitute
legal, valid and binding obligations of the Company, entitled to the
benefits and security afforded by the Indenture and enforceable in
accordance with their terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the rights
of creditors generally, and to general principles of equity (regardless of
whether the enforcement of remedies is considered in a proceeding in equity
or at law).
(h) The Mortgage Indenture has been duly authorized and, when executed
by the Company and delivered, will constitute a legal, valid and binding
obligation of the Company (assuming the due and valid authorization,
execution and delivery thereof by the Trustee), enforceable in accordance
with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity (regardless of whether the
enforcement of remedies is considered in a proceeding in equity or at law);
and the issuance of the First Mortgage Bonds has been duly authorized and
when executed by the Company, authenticated by the Trustee in accordance
with the Indenture and delivered to the Trustee as security for the
Securities, the First Mortgage Bonds will be duly issued and will
constitute legal, valid and binding obligations of the Company, entitled to
the benefits and security afforded by the Mortgage Indenture and
enforceable in accordance with their terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
the rights of creditors generally, and to general principles of
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equity (regardless of whether the enforcement of remedies is considered in
a proceeding in equity or at law).
(i) Each of the Company and its Subsidiaries is duly qualified by and
is in good standing in each jurisdiction in which it conducts its business
and in which the failure, individually or in the aggregate, to be so
qualified and in good standing could have a material adverse effect on the
business, financial condition or results of operations of the Company and
its Subsidiaries, taken as a whole, and each of the Company and its
Subsidiaries is in compliance in all material respects with the laws,
orders, rules, regulations and directives issued or administered by such
jurisdictions.
(j) Neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under) its
respective corporate charter or by-laws or in the performance or observance
of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them is bound (except for any default or breach
that would not, singly or in the aggregate, have a material adverse effect
on the business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole), and the execution,
delivery and performance of this Agreement and the Indenture and the
consummation of the transactions contemplated hereby and by the Prospectus
will not conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would constitute a breach of, or default under) or result in the creation
or imposition of any Lien upon any of the assets of the Company or any of
its Subsidiaries pursuant to any provisions of the corporate charter or by-
laws of the Company or any of its Subsidiaries or under any provision of
any license, indenture, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected, or under any federal, state or local
law, regulation or rule or any decree, judgment or order applicable to the
Company or any of its Subsidiaries (except for any default or breach that
would not, singly or in the aggregate, have a material adverse effect on
the business, financial condition or results of operations of the Company
and its Subsidiaries, taken as a whole).
(k) Neither the Company nor any of its Subsidiaries is in violation of
any law, ordinance, governmental rule or regulation or court decree to
which it may be subject (including any federal, state, or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws")), which violation might
have a material adverse effect on the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole.
(l) In the ordinary course of its business, the Company and its
Subsidiaries conduct a periodic review of the effect of Environmental Laws
on the business, operations and properties of the Company and its
Subsidiaries, in the course of which they identify and evaluate associated
costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, except to
the extent properly accrued for in the Company's financial statements,
singly or in the aggregate, have a material adverse effect on the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
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(m) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(n) The filing of the Registration Statement and the consummation of
the transactions contemplated hereby and by the Prospectus have been duly
authorized by the Company; and this Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company.
(o) The Indenture and the Mortgage Indenture filed as exhibits to the
Registration Statement conform, and the Securities and the First Mortgage
Bonds will conform, in all material respects to the description thereof
contained in the Registration Statement and Prospectus.
(p) The Company has obtained the approval of the Federal Energy
Regulatory Commission and the New Mexico Public Utility Commission with
respect to the issuance and sale of the Securities; and no other approval,
authorization, consent or order of or filing with any federal, state or
local governmental or regulatory commission, court, board, body, authority
or agency is required of the Company for the execution, delivery and
performance of this Agreement, the Indenture and the Securities, or the
pledge of the First Mortgage Bonds or the consummation of the transactions
related to the issuance and sale of the Securities as contemplated hereby
other than those obtained under the Act or the Trust Indenture Act and any
necessary qualification under the securities or Blue Sky laws of the
various jurisdictions in which the Securities are being offered by the
Underwriters.
(q) No person has the right, contractual or otherwise, to cause the
Company to issue to it, or register pursuant to the Act, securities held by
it who has not been notified of such right in respect of the Registration
Statement.
(r) Arthur Andersen LLP, and KPMG Peat Marwick, whose reports on the
consolidated financial statements of the Company are filed with the
Commission as part of the Registration Statement and Prospectus, are
independent public accountants with respect to the Company and its
Subsidiaries as required by the Act and the applicable published rules and
regulations thereunder.
(s) Each of the Company and its Subsidiaries has all licenses,
authorizations, consents and approvals (each, an "Authorization") and has
made all filings required under any federal, state or local law, regulation
or rule, and has obtained all Authorizations from other persons, in order
to conduct its business, except where the failure to have any such
Authorization or to make any such filing would not, singly or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company and its Subsidiaries,
taken as a whole; and neither the Company nor any of its Subsidiaries is in
violation of, or in default under, any such Authorization or any federal,
state or local law, regulation or rule or any decree, order or judgment
applicable to the Company or any of its Subsidiaries the effect of which
could have a material adverse effect on the business, financial condition
or results of operations of the Company and its Subsidiaries, taken as a
whole.
(t) All legal or governmental proceedings, contracts or documents
required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement have been so
described or filed as required or incorporated therein by reference as
permitted by the rules and regulations of the Commission.
(u) Except as disclosed in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties, at law or in equity, or
before or by any federal, state, local or foreign governmental or
regulatory commission,
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board, body, authority or agency which could result in a judgment, decree
or order having a material adverse effect on the business, financial
condition or results of operations of the Company and its Subsidiaries,
taken as a whole, or which, to the best knowledge of the Company, after due
inquiry, could affect the transactions contemplated by this Agreement and
the Prospectus.
(v) The consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present and (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being made)
will present fairly, as of the Closing Date and at all times during which a
Prospectus is required to be delivered under the Act, the consolidated
financial condition of the Company and its Subsidiaries as of the dates
indicated, consolidated results of operations and the cash flows of the
Company and its Subsidiaries for the periods indicated; and such financial
statements have been and (in the case of any amendment or supplement to any
such document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will be, as of the Closing Date and at all
times during which a Prospectus is required to be delivered under the Act,
prepared in conformity with generally accepted accounting principles.
(w) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not
occurred (A) any material adverse change or any development involving a
prospective material adverse change in the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole, (B) any transaction, which is material to the Company and its
Subsidiaries, taken as a whole entered into by the Company or any of its
Subsidiaries or (C) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of its Subsidiaries which is
material to the Company and its Subsidiaries, taken as a whole.
(x) Each of the Company and its Subsidiaries has good and marketable
title to all properties and assets described in the Prospectus as owned by
it, free and clear of all Liens, except such as are described in the
Prospectus or are not material to the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole; and each of the Company and its Subsidiaries has valid, subsisting
and enforceable leases for the properties described in the Prospectus as
leased by it, with such exceptions as are not material to the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole and do not materially interfere with the use
made and proposed to be made of such properties by the Company and its
Subsidiaries.
Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter, its directors, its officers and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), the Prospectus (as amended or
supplemented if the Company shall have furnished any amendment or supplement
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Company by
or on behalf of the Underwriters through you expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the
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benefit of any Underwriter (or to the benefit of any person controlling, or
controlled by, such Underwriter) who failed to deliver a Prospectus, as then
amended or supplemented (so long as the Prospectus and any amendment or
supplement thereto was provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages,
liabilities or judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Prospectus, as so amended or supplemented, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to such Underwriter but
only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus and in respect of
which indemnity may be sought against any Underwriter, the Underwriter shall
have the rights and duties given to the Company (except that if the Company
shall have assumed the defense thereof, such Underwriter shall not be required
to do so, but may employ separate counsel therein and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of
such Underwriter), and the Indemnified Party shall have the rights and duties
given to the Underwriter, by Section 7(c) hereof.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"Indemnified Party"), the Indemnified Party shall promptly notify the person
from whom such indemnity may be sought (the "Indemnifying Party") in writing and
the Indemnifying Party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses of such counsel, as incurred (except that in
the case of any action in respect of which indemnity may be sought pursuant to
both Sections 7(a) and 7(b), the Underwriter shall not be required to assume the
defense of such action pursuant to this Section 7(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of such
Underwriter). Any Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the Indemnified Party or (iii) the named parties to
any such action (including any impleaded parties) include both the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party).
In any such case, the Indemnifying Party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all Indemnified Parties and all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by , in the case of parties
indemnified pursuant to Section 7(a), and by the Company, in the case of parties
indemnified pursuant to Section 7(b). The Indemnifying Party shall indemnify and
hold harmless the Indemnified Party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
Indemnifying Party shall have received a request from the Indemnified Party for
reimbursement of the fees and expenses of counsel (in any case where
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such fees and expenses are at the expense of the Indemnifying Party) and, prior
to the date of such settlement, the Indemnifying Party shall have failed to
comply with such reimbursement request. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the Indemnified Party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the Indemnified Party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified Party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the Indemnified Party. No
Indemnifying Party will be liable for the costs and expenses of any settlement
of any pending or threatened action effected by the Indemnified Party without
the consent of the Indemnifying Party.
(d) To the extent the indemnification provided for in this Section 7
is unavailable to an Indemnified Party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities or (ii) if the allocation provided by clause 7(d)(i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (after deducting
underwriting discounts and commissions but before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Securities, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages, liabilities or judgments referred in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective
principal amount of Securities purchased by each of the Underwriters hereunder
and not joint.
(e) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.
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Section 8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Securities under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the date hereof and on the
Closing Date with the same force and effect as if made on and as of such
dates.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change
in, any rating of the Company or any securities of the Company (including,
without limitation, the placing of any of the foregoing ratings on credit
watch with negative or developing implications or under review with an
uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Act, (ii) there shall not have occurred any change, nor shall any
notice have been given of any potential or intended change, in the outlook
for any rating of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower rating to
the Securities than that on which the Securities were marketed.
(c) You shall have received on the Closing Date a certificate dated
the Closing Date, signed by Patrick Bridges and Paul Talbot, in their
capacities as the Treasurer and Corporate Secretary of the Company,
respectively, confirming the matters set forth in Sections 6(x), 8(a) and
8(b) and that the Company has complied with all of the agreements and has
satisfied all of the conditions herein contained and required to be
complied with or to be satisfied by the Company on or prior to the Closing
Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term
debt of the Company or any of its Subsidiaries and (iii) neither the
Company nor any of its Subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 8(d)(i), 8(d)(ii) or 8(d)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to
market the Securities on the terms and in the manner contemplated in the
Prospectus.
(e) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of the General Counsel of the Company, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto.
(f) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Haynes and Boone, LLP, counsel for the Company, in form and
substance satisfactory to you, to the effect set forth in Annex II hereto.
The opinion of Haynes and Boone, LLP described in this Section 8(g) shall
be rendered to you at the request of the Company and shall so state
therein.
(g) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Rubin, Katz, Salazar, Alley & Rouse, special New Mexico counsel
for the Company, in form and substance satisfactory to you, to the effect
set forth in Annex III hereto.
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(h) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Fennemore Craig, special Arizona counsel for the Company, in form
and substance satisfactory to you, to the effect set forth in Annex IV
hereto. The opinion of Fennemore Craig described in this Section 8(h) shall
be rendered to you at the request of the Company and shall so state
therein.
(i) You shall have received on the Closing Date a favorable opinion,
dated the Closing Date, of Milbank, Tweed, Hadley & McCloy, counsel for the
Underwriters, in form and substance satisfactory to you, to the effect set
forth in Annex V hereto, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(j) You shall have received on the Closing Date letters, dated the
Closing Date, in form and substance satisfactory to you, from Arthur
Andersen LLP and KPMG Peat Marwick, independent public accountants,
containing the information and statements of the type ordinarily included
in accountants' "comfort letters" to Underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus.
(k) The Underwriters shall have received a counterpart, conformed as
executed, of the Indenture which shall have been entered into by the
Company and the Trustee.
(l) The Company shall not have failed on or prior to the Closing Date
to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company on or prior to the
Closing Date.
(m) Subsequent to the execution and delivery of this Agreement and as
of the Closing Date, (i) there shall not have occurred any downgrading,
suspension or withdrawal of, nor any notice have been given of any
potential or intended down grading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that
does not indicate the direction of the possible change in, any rating of
the Company or any securities of the Company (including, without
limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction ) by any "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act and
(ii) there shall not have occurred any change, nor shall any notice have
been given of any potential or intended change, in the outlook for any
rating of the Company or any securities of the Company by any such rating
organization.
Section 9. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution and delivery of this
Agreement by the parties hereto and (ii) when notification of the effectiveness
of the Registration Statement has been released by the Commission.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any adverse change or development
involving a prospective adverse change in the condition, financial or otherwise,
of the Company or any of its Subsidiaries or the earnings, affairs or business
prospects of the Company or any of its Subsidiaries, whether or not arising in
the ordinary course of business, which would, in your judgment, make it
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in your judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
13
<PAGE>
Exchange or the Nasdaq National Market System or limitation on prices for
securities on any such exchange or National Market System, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will result in an material
adverse effect on the business, financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities, (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States or (vii) the
suspension or (vii) the suspension or material limitation of trading in
securities of TNP Enterprises, Inc. ("TNPE") on the New York Stock Exchange or
limitation on prices for TNPE's securities on such exchange.
If on the Closing Date any one or more of the Underwriters shall fail
or refuse to purchase the Securities which it or they have agreed to purchase
hereunder on such date and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the principal
amount of Securities set forth opposite its name in Schedule I bears to the
aggregate principal amount of Securities which all the non-defaulting
Underwriters have agreed to purchase, or in such other proportion as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date, provided
that in no event shall the aggregate principal amount of Securities which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such principal
amount of Securities without the written consent of such Underwriter. If on the
Closing Date any Underwriter or Underwriters shall fail or refuse to purchase
Securities and the aggregate principal amount of Securities with respect to
which such default occurs is more than one-tenth of the total principal amount
of Securities to be purchased by all Underwriters and arrangements satisfactory
to the non-defaulting Underwriters and the Company for purchase of such
Securities are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of the non-defaulting Underwriters and
the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of any such Underwriter under this Agreement.
Section 10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to Texas-
New Mexico Power Company, 4100 International Plaza, P.O. Box 2943, Fort Worth,
TX 76113, Attention: Michael B. Blanchard, (ii) if to any Underwriter, c/o
or (iii) in any case, to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Securities,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
If this Agreement is terminated by the Underwriters because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
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<PAGE>
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, the Underwriters' directors and officers, any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Securities from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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<PAGE>
If the foregoing correctly sets forth the understanding among each of
the Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and the Underwriters' acceptance shall
constitute a binding agreement among the Company and the Underwriters,
severally.
Very truly yours,
TEXAS-NEW MEXICO POWER COMPANY
By
--------------------------------------
Title:
Accepted and agreed to as of the
date first above written
By:
By
--------------------------------------
Title:
<PAGE>
SCHEDULE I
Principal Amount
Underwriter of Senior Notes
- ----------- ---------------
<PAGE>
EXHIBIT 4(b)
================================================================================
TEXASNEW MEXICO POWER COMPANY
to
CHASE BANK OF TEXAS, N.A.,
as Trustee
_________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of , 1999
Supplemental to the Indenture
dated as of January 1, 1999
Establishing a series of Securities
designated % Senior Notes Due
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of , 1999 (herein
called the "First Supplemental Indenture"), between Texas-New Mexico Power
Company, a corporation duly organized and existing under the laws of the State
of Texas (hereinafter called the "Company") and Chase Bank of Texas, N.A., as
Trustee under the Original Indenture referred to below (hereinafter called the
"Trustee").
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture dated as of January 1, 1999 (hereinafter called the "Original
Indenture"), to provide for the issuance from time to time in one or more series
of its debentures, notes, bonds or other evidences of indebtedness (herein
called the "Securities"), the form and terms of which are to be established as
set forth in Sections 2.1 and 3.1 of the Original Indenture;
WHEREAS, Section 9.1 of the Original Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Original Indenture for, among purposes, (1) securing the Securities in
accordance with Section 3.1 and (2) establishing the form and terms of the
Securities of any series as permitted in Sections 2.1 and 3.1 of the Original
Indenture;
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $ ,000,000 to be designated the " % Senior
Notes Due " (the "Senior Notes"), and all action on the part of the Company
necessary to authorize the issuance of the Senior Notes under the Original
Indenture and this First Supplemental Indenture has been duly taken;
WHEREAS, subject to the provisions hereof, the Company may issue one or
more series of Senior Note Mortgage Bonds (as hereinafter defined) and deliver
such series to the Trustee to hold in trust for the benefit of the respective
Holders from time to time of the Related Series of Securities (as defined
herein) and any payment by the Company of principal of, premium, if any, and
interest on, the Senior Notes will be applied by the Trustee to satisfy the
Company's obligations with respect to the principal of, premium, if any, and
interest on, the Related Series of Senior Note Mortgage Bonds; and, pursuant to
the terms and provisions hereof, the Company may require the Trustee to deliver
to the Company for cancellation any and all Senior Note Mortgage Bonds held by
the Trustee; and
WHEREAS, all acts and things necessary to make the Senior Notes, when
executed by the Company and completed, authenticated and delivered by the
Trustee as provided in the Original Indenture and this First Supplemental
Indenture, the valid and binding obligations of the Company and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and of the acceptance and purchase of
the Senior Notes by the holders thereof and of the acceptance of this trust by
the Trustee, the Company covenants and agrees with the Trustee, for the equal
benefit of holders of the Senior Notes, as follows:
ARTICLE ONE
Definitions
The use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture, as
amended and supplemented hereby, and the form of Senior Notes attached hereto as
Exhibit A.
<PAGE>
ARTICLE TWO
Terms and Issuance of the % Senior Notes Due
Section 2.1. Issue of Senior Notes. A series of Securities which shall be
designated the " % Senior Notes Due " shall be executed, authenticated
and delivered in accordance with the provisions of, and shall in all respects be
subject to, the terms, conditions and covenants of, the Original Indenture, as
amended, and this First Supplemental Indenture (including the form of Senior
Note set forth in Exhibit A). The aggregate principal amount of the Senior Notes
which may be authenticated and delivered under this First Supplemental Indenture
shall not, except as permitted by the provisions of the Original Indenture,
exceed $ ,000,000.
Section 2.2. Form of Senior Notes; Incorporation of Terms. The form of the
Senior Notes shall be substantially in the form of Exhibit A attached hereto.
The terms of such Senior Notes are herein incorporated by reference and are part
of this First Supplemental Indenture.
Section 2.3. Depositary for Global Securities. The Depositary for any
Global Securities of the series of which this Security is a part shall be The
Depository Trust Company in the City of New York.
Section 2.4. Place of Payment. The Place of Payment in respect of the
Senior Notes will be at the principal office or agency of the Company in the
City of New York, State of New York or at the principal office or place of
business of the Trustee or its successor in trust under the Original Indenture,
which, at the date hereof, is located at .
Section 2.5. Related Series of Senior Note Mortgage Bonds. The Related
Series of Senior Note Mortgage Bonds for the Senior Notes shall be the Company's
First Mortgage Bonds, Series , % due .
Section 2.6. Restrictions on Liens. The covenant provided by Section 10.10
of the Original Indenture shall be applicable to the Senior Notes from and after
the Release Date, provided, that no Event of Default has occurred and at such
--------
time is continuing under the Original Indenture.
Section 2.7. Restrictions on Sale and Leaseback Transactions. The covenant
provided by Section 10.11 of the Original Indenture shall be applicable to the
Senior Notes after the Release Date.
ARTICLE THREE
Amendments to Original Indenture
Section 3.1. Section 1.1 of the Original Indenture is hereby amended by
adding the following definitions:
"Expert" means any officer of the Company familiar with the terms of
the First Mortgage Indenture and this Indenture, any law firm, any
investment banking firm, or any other Person reasonably acceptable to the
Trustee.
"First Mortgage Bonds" means all first mortgage bonds issued by the
Company and outstanding under the First Mortgage Indenture, other than
Senior Note Mortgage Bonds.
"First Mortgage Indenture" means the Indenture of Mortgage and Deed of
Trust, dated November 1, 1944, by and between the Community Public
Service Co. (now known as the Company) and City National Bank and Trust Company
of Chicago, Chicago, Illinois (whose current successor is U.S. Bank Trust,
N.A.)
2
<PAGE>
(as of the date hereof, the "First Mortgage Trustee"), as supplemented and
modified from time to time.
"First Mortgage Trustee" means the Person serving as trustee at the
time under the First Mortgage Indenture.
"Related Series of Securities", when used in reference to any series
of Senior Note Mortgage Bonds, means the series of Securities which, in
connection with its original authentication and issuance pursuant to
Section 3.3 hereof, such series of Senior Note Mortgage Bonds were
delivered to the Trustee pursuant to Section 14.1 hereof.
"Related Series of Senior Note Mortgage Bonds", when used in reference
to any series of Securities, shall mean the series of Senior Note Mortgage
Bonds delivered to the Trustee pursuant to Section 14.1 hereof in
connection with the initial authentication and issuance of such series of
Securities pursuant to Section 3.3 hereof.
"Release Date" means a date chosen by the Company which shall be not
earlier than the later of (i) the date as of which all First Mortgage
Bonds, other than the Senior Note Mortgage Bonds, have been retired through
payment, redemption, or otherwise (including those First Mortgage Bonds
"deemed to be paid" or as to which the entire indebtedness is paid and
discharged within the meaning used in Article 18 of the First Mortgage
Indenture) at, before or after the maturity thereof, and (ii) the date as
of which no Liens on any Property of the Company or any Subsidiary exists
(whether such Liens secure Indebtedness of the Company or any Subsidiary or
any other Person), except that this clause (ii) shall not apply to any Lien
to the extent described in clauses (a) through (k) of Section 10.10 of the
Original Indenture or in the last paragraph of such Section 10.10.
"Senior Note Mortgage Bonds" shall mean any bonds issued by the
Company under the First Mortgage Indenture and delivered to the Trustee
pursuant to Section 14.1 hereof.
Section 3.2. Prior to the Release Date, Section 1.5(a) of the Original
Indenture is hereby amended by inserting the words ", the First Mortgage
Trustee" following the words "by any Holder".
Section 3.3. Prior to the Release Date, Section 3.1 of the Original
Indenture is hereby amended in the following manner:
1. Section 3.1(l) is amended by the ";" after the word "Securities"
and adding "and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount
thereof due and payable pursuant to Section 5.2;"
2. Section 3.1(p) is amended by deleting the word "and" at the end of
the Section;
3. The following Section 3.1(q) is added, to follow Section 3.1(p):
"(q) if prior to the Release Date, the designation of the series of
Senior Note Mortgage Bonds being delivered to the Trustee in connection
with such series of Securities, if any; and"
4. Former Section 3.1(q) is relettered as Section 3.1(r).
Section 3.4. Prior to the Release Date, the third paragraph of Section 3.3
of the Original Indenture is hereby amended by (a) adding "(i)" before the words
"a Company Order" on the [third] line of the
3
<PAGE>
paragraph, and (b) by adding, after the words "so offered;" on the [tenth] line
of such paragraph, the following words:
"(ii) an Officers' Certificate stating that (x) the Company is not, and
upon the authentication by the Trustee of the series of Securities, will
not be in default under any of the terms or covenants contained in the
Indenture, (y) all conditions that must be met by the Company to issue
Securities under the Indenture have been met, and (z) if prior to the
Release Date, the series of Senior Note Mortgage Bonds being delivered to
the Trustee meets the requirements of Section 14.10 hereof, (iii) if prior
to the Release Date, a certificate of an Expert meeting the requirements of
Section 14.06(a) hereof, and (iv) if prior to the Release Date, a series of
Senior Note Mortgage Bonds meeting the requirements of Section 14.09
hereof;"
Section 3.5. Prior to the Release Date, the fourth paragraph of Section 3.3
of the Original Indenture is hereby amended in the following manner:
1. Clause (b) of the fourth paragraph is amended by deleting the word
"and" at the end of the clause.
2. Clauses (d) and (e) are added after clause (c), as follows:
"(d) if prior to the Release Date, that the Senior Note Mortgage
Bonds to be delivered to the Trustee in connection with the issuance
of such series of Securities have been duly authorized, and that such
Senior Note Mortgage Bonds, when authenticated and delivered by the
First Mortgage Trustee and issued by the Company in accordance with
the terms of the First Mortgage Indenture, will constitute valid and
legally binding obligations of the Company, enforceable in accordance
with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other
similar laws relating to or affecting the rights of creditors
generally and except as the enforceability thereof is subject to the
application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without
limitation, (i) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (ii) concepts of
materiality, reasonableness, good faith and fair dealing, and except
as enforcement of remedial and procedural provisions thereof may be
limited by state laws affecting the remedies for the enforcement of
the security provided for in the First Mortgage Indenture; and that
such Senior Note Mortgage Bonds will be entitled to the benefit of the
First Mortgage Indenture, equally and ratably, with all other First
Mortgage Bonds outstanding thereunder, except as to any sinking fund
provisions; and
(e) if prior to the Release Date, that the First Mortgage
Indenture and any required 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 First Mortgage
Indenture, and the First Mortgage Indenture constitutes a valid and
perfected first lien upon the property purported to be covered
thereby, subject only to permissible encumbrances (as defined in the
First Mortgage Indenture);"
3. The flush language following clause (e) is amended (1) by adding
after the words "Opinion of Counsel" the words ", the Officers'
Certificate, the certificate of an Expert and the Senior note Mortgage
Bonds"; and (2) by replacing "clauses (b) and (c)" with "clauses (b),
(c), (d) and (e)".
4. The word "and" at the end of subclause (i) is deleted, and the
following subclauses (iii) and (iv) are inserted after subclause (ii):
4
<PAGE>
"(iii) if prior to the Release Date, when the terms of the
Senior Note Mortgage Bonds have been established in accordance
with the instrument or instruments creating the series of which
such Senior Note Mortgage Bonds are a part, that the Senior Note
Mortgage Bonds to be delivered to the Trustee in connection with
the issuance of such series of Securities will have been duly
authorized, and that such Senior Note Mortgage Bonds, when
authenticated and delivered by the First Mortgage Trustee and
issued by the Company in accordance with the terms of the First
Mortgage Indenture, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or
other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability thereof is
subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at
law), including, without limitation, (i) the possible
unavailability of specific performance, injunctive relief or any
other equitable remedy and (ii) concepts of materiality,
reasonableness, good faith and fair dealing, and except as
enforcement of remedial and procedural provisions thereof may be
limited by state laws affecting the remedies for the enforcement
of the security provided for in the First Mortgage Indenture; and
that such Senior Note Mortgage Bonds will be entitled to the
benefit of the First Mortgage Indenture, equally and ratably,
with all other First Mortgage Bonds outstanding thereunder,
except as to any sinking fund provisions; and
(iv) if prior to the Release Date, that when the First
Mortgage Indenture and any required 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 First Mortgage Indenture, the First Mortgage
Indenture will constitute a valid and perfected first lien upon
the property purported to be covered thereby, subject only to
Permitted Encumbrances (as defined in the First Mortgage
Indenture);"
Section 3.6. Prior to the Release Date, Article 3 of the Original Indenture
is hereby amended by adding, after Section 3.12, the following Section 3.13:
"Section 3.13. Payment of Securities. The Trustee shall receive the
Senior Note Mortgage Bonds from the Company as provided in this Indenture
and shall hold the Senior Note Mortgage Bonds, and any and all sums payable
thereon or with respect thereto or realized therefrom, in trust for the
benefit of the Holders of the Securities, as herein provided. Subject to
Article Five hereof, all payments made by the Company to the Trustee on a
series of Senior Note Mortgage Bonds, if any, shall be applied by the
Trustee to pay, when due, principal of, premium, if any, and interest on
the Related Series of Securities and, to the extent so applied, shall
satisfy the Company's obligations on such Securities. Notwithstanding the
foregoing, the Company's obligation to make payments of principal of,
premium, if any, and interest on any series of Senior Note Mortgage Bonds
shall be fully satisfied by making timely payments of principal of,
premium, if any, and interest on the Related Series of Securities."
Section 3.7. Prior to the Release Date, Article 4 of the Original Indenture
is hereby amended by adding, after Section 4.2, the following Section 4.3:
"Section 4.3. Release of Related Series of Senior Note Mortgage Bonds.
(a) If the obligations of the Company to make payment with respect to
any series of Securities are satisfied and discharged, in whole or in part,
pursuant to this Article Four, the Related Series of Senior Note Mortgage
Bonds shall be deemed to be paid and discharged in a principal amount equal
to the principal amount of the Related Series of Securities paid and
discharged pursuant hereto.
5
<PAGE>
(b) If the Company shall have paid or caused to be paid the principal
of and premium, if any, and interest on any Security (or portion thereof),
as and when the same shall have become due and payable or the Company shall
have delivered to the Trustee for cancellation any Outstanding Security (or
portion thereof), such Security (or portion thereof) shall cease to be
entitled to any lien, benefit or security under this Indenture. Upon a
Security of any series (or portion thereof) ceasing to be entitled to any
lien, benefit or security under this Indenture, the obligation of the
Company to make payment with respect to principal of and premium, if any,
and interest on a principal amount of the Related Series of Senior Note
Mortgage Bonds equal to the principal amount of such Security (or portion
thereof) shall be satisfied and discharged and such Senior Note Mortgage
Bonds (or portion thereof) shall cease to secure the Securities in any
manner, and the Trustee shall release and deliver to the Company such
Senior Note Mortgage Bonds (or portion thereof).
(c) Upon the satisfaction and discharge of this Indenture, the
Trustee shall at the request of the Company return to the Company all
Senior Note Mortgage Bonds and all other property and money held by it
under this Indenture and determined by it to be in excess of the amount
required to be held under Section 4.1 hereof."
Section 3.8. Prior to the Release Date, Sections 5.1 of the Original
Indenture is hereby amended by replacing the "." at the end of clause (h) with
"; or" and by adding, after such clause (h), the following clauses (i) and (j):
"(i) a "default" as defined in the First Mortgage Indenture has
occurred and is continuing, and the First Mortgage Trustee, the
Company or Holders of at least 33% in aggregate principal amount of
the Securities at the time outstanding shall have given written notice
thereof to the Trustee; or
(j) any Event of Default under any series of Securities issued
pursuant to this Indenture or any event of default, as defined in any
other indenture, mortgage or instrument under which there may be
issued, or by which there may be secured or evidenced, any
Indebtedness of the Company (whether such Indebtedness now exists or
shall hereafter be created or incurred) shall occur and shall consist
of default in the payment of such Indebtedness at the maturity thereof
(after giving effect to any applicable grace period) or shall result
in Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
default in payment is not cured or such acceleration shall not be
rescinded or annulled within 10 days after written notice to the
Company from the Trustee or to the Company and to the Trustee from the
Holders of at least 10% in aggregate principal amount of the
Securities of that series at the time Outstanding; provided that if,
prior to the declaration of acceleration of the maturity of the
Securities of that series or the entry of judgment in favor of the
Trustee in a suit pursuant to Section 5.3, such default shall be
remedied or cured by the Company or waived by the holders of such
Indebtedness, then the Event of Default hereunder by reason thereof
shall be deemed likewise to have been thereupon remedied, cured or
waived without further action on the part of either the Trustee or any
of the Holders of the Securities of that series, and provided further,
that, subject to Section 6.1 and 6.2, the Trustee shall not be charged
with knowledge of any such default unless written notice of such
default shall have been given to the Trustee by the Company, by a
holder or an agent of a holder of any such Indebtedness, by the
trustee then acting under any indenture or other instrument under
which such default shall have occurred, or by the Holders of at least
five percent in aggregate principal amount of the Securities of that
series at the time Outstanding."
Section 3.9. Prior to the Release Date, Section 5.2 of the Original
Indenture is hereby amended as follows:
1. A new paragraph is added, to follow the first paragraph of Section 5.2,
as follows:
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<PAGE>
"Upon the Securities being declared to be or becoming due and payable,
the Trustee can immediately file with the First Mortgage Trustee a written
demand for redemption of all Senior Note Mortgage Bonds pursuant to the
applicable provisions of the supplemental indenture to the First Mortgage
Indenture."
2. The paragraph following the new second paragraph of Section 5.2 is
amended (i) by adding after the word "provided," the words "and prior to
the mailing to the Trustee by the First Mortgage Trustee of a firm, valid
and unconditional notice to the Trustee of the acceleration of all of the
First Mortgage Bonds issued and outstanding under the First Mortgage
Indenture," and (ii) by adding after the word "consequences" the words
"(including if given the written demand for redemption of all Senior Note
Mortgage Bonds)".
3. Clause (b) of Section 5.2 is amended by deleting the "." at the end of
such clause (b) and replacing it with "(including any defaults under the
First Mortgage Indenture, as evidenced by notice thereof from the First
Mortgage Trustee to the Trustee).".
Section 3.10. Prior to the Release Date, Section 5.3 of the Original
Indenture is hereby amended in the following manner:
1. By adding after the word "unpaid" in the second paragraph of Section 5.3
the following words: "(including, prior to the Release Date, to exercise
any rights to that end it may have as holder of the Senior Note Mortgage
Bonds)".
2. By adding after the first occurrence of the word "rights" in the third
paragraph of Section 5.3 the following words: "(including, prior to the
Release Date, its rights as holder of the Senior Note Mortgage Bonds)".
Section 3.11. Prior to the Release Date, subclause (a) of the first
paragraph of Section 5.4 of the Original Indenture is hereby amended by adding,
after the word "(including" the words ", prior to the Release Date, any claims
of the Trustee as holder of Senior Note Mortgage Bonds and including".
Section 3.12. Prior to the Release Date, Section 5.5 of the Original
Indenture is hereby amended by adding, after the words "Securities of any
series" on the second line of such Section 5.5, the words "(including, prior to
the Release Date, its rights as holder of the Senior Note Mortgage Bonds),".
Section 3.13. Prior to the Release Date, Section 7.3 of the Original
Indenture is hereby amended as follows:
1. The word "and" at the end of Section 7.3(a)(6) is deleted.
2. The "." at the end of Section 7.3(a)(7) is replaced with "; and".
3. The following Section 7.3(a)(8) is added after Section 7.3(a)(7):
"(8) any release, or release and substitution, of property
subject to the lien of this Indenture (and the consideration therefor,
if any) which it has not previously reported."
4. Section 7.3(b) is amended by adding, before the words "the character" on
the [third] line of such Section 7.3, the words "(1) the release, or
release and substitution, of property subject to the lien of this Indenture
(and the consideration therefor, if any) unless the fair value of such
property, as set forth in the certificate required by Section 14.6 hereof,
is less than 10% of the principal amount of Securities outstanding at the
time of such release, or release and substitution, and".
7
<PAGE>
Section 3.14. Prior to the Release Date, Section 8.1(a) of the Original
Indenture is hereby amended in the following manner:
1. The letter "(i)" is added after the word "assume,".
2. The ";" at the end of Section 8.1(a) is replaced by "," followed by the
words: "and (ii) if such consolidation, merger, conveyance, sale or other
transfer occurs prior to the Release Date, by an indenture supplemental to
the First Mortgage Indenture, executed and delivered to the Trustee and the
First Mortgage Trustee, in form satisfactory to the Trustee and the First
Mortgage Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all of the Senior Note Mortgage Bonds and
the performance of every covenant of the First Mortgage Indenture on the
part of the Company to be performed or observed;".
Section 3.15. Section 9.1(j) of Article 9 of the Indenture is hereby
amended by deleting the "." after the words "fully registered form" and
inserting in its place the word "; and" and by adding the following new
paragraph (k) after paragraph (j):
"(k) after the Release Date, to amend this Indenture to eliminate any
provisions related to the Senior Note Mortgage Bonds which are no longer
applicable."
Section 3.16. Prior to the Release Date, Section 9.2(l) of the Original
Indenture is hereby amended by replacing the ";" at the end of such Section with
"," followed by the words: "or impair the interest hereunder of the Trustee in
the Senior Note Mortgage Bonds, or prior to the Release Date, reduce the
principal amount of any series of Senior Note Mortgage Bonds to an amount less
than the principal amount of the Related Series of Securities or alter the
payment provisions of such Senior Note Mortgage Bonds in a manner adverse to the
Holders of the Securities;".
Section 3.17. Prior to the Release Date, Article 10 of the Original
Indenture is hereby amended by adding, after Section 10.13, the following
Section 10.14:
"Section 10.14. Opinions of Counsel. The Company shall deliver to the
Trustee:
(a) promptly after the execution and delivery of this Indenture and of
any indenture supplemental to this Indenture but prior to the Release Date,
an Opinion of Counsel either stating that, in the opinion of such counsel,
this Indenture or such supplemental indenture and any financing or
continuation statements have been properly recorded and filed so as to make
effective and to perfect the security interest of the Trustee intended to
be created by this Indenture for the benefit of the Holders from time to
time of the Securities in the Senior Note Mortgage Bonds, and reciting the
details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to perfect or make such security interest
effective and stating what, if any, action of the foregoing character may
reasonably be expected to become necessary prior to the next succeeding
March 1 to maintain, perfect and make such security interest effective; and
(b) on or before March 1 of each year, beginning in 1999, and prior to
the Release Date, an Opinion of Counsel either stating that in the opinion
of such counsel such action has been taken, since the date of the most
recent Opinion of Counsel furnished pursuant to this Section 10.12(b) or
the first Opinion of Counsel furnished pursuant to Section 10.12(a) hereof,
with respect to the recording, filing, rerecording, or refiling of this
Indenture, each supplemental indenture and any financing or continuation
statements, as is necessary to maintain and perfect the security interest
of the Trustee intended to be created by this Indenture for the benefit of
the Holders from time to time of the Securities in the Senior Note Mortgage
Bonds, and reciting the details of such action, or stating that in the
opinion of such counsel no such action is necessary to maintain and perfect
such security interest and stating what, if any, action of the foregoing
8
<PAGE>
character may reasonably be expected to become necessary prior to the next
succeeding March 1 to maintain, perfect and make such security interest
effective."
Section 3.18. Prior to the Release Date, Section 13.2 of the Original
Indenture is hereby amended by replacing the "." after the word "Defeasance")"
in the first sentence of such Section with the following words: "and the
obligation of the Company to make payment with respect to the principal of and
premium, if any, and interest on the Senior Note First Mortgage Bonds shall be
satisfied and discharged, as provided in the supplemental indenture or
indentures to the First Mortgage creating such Senior Note First Mortgage Bonds
and the Senior Note First Mortgage Bonds shall cease to secure the related
Securities in any manner.".
Section 3.19. The Original Indenture is hereby amended by adding, after
Section 13.6, the following Article 14:
ARTICLE 14
Senior Note Mortgage Bonds
Section 14.1. Delivery of Senior Note Mortgage Bonds to the Trustee.
Subject to the provisions of Section 4.1 and Section 14.10 hereof, the
Company (a) shall, from time to time prior to the Release Date, deliver to
the Trustee, upon the issuance of a series of Securities hereunder, Senior
Note Mortgage Bonds conforming to the requirements of Section 14.9 hereof,
fully registered in the name of the Trustee, in trust for the benefit of
the Holders from time to time of the Securities issued under this Indenture
as security for any and all obligations of the Company under the
Securities, including, but not limited to, (1) the full and prompt payment
of the principal of the Securities when and as the same shall become due
and payable in accordance with the terms and provisions of this Indenture
or the Securities, either at the stated maturity thereof, upon acceleration
of the maturity thereof or upon redemption, and (2) the full and prompt
payment of any interest on the Securities when and as the same shall become
due and payable in accordance with the terms and provisions of this
Indenture or the Securities and (b) shall deliver concurrently therewith to
the Trustee the certificate of the Expert required by Section 14.6 hereof.
Section 14.2. Receipt.
The Trustee shall accept and acknowledge receipt of the Senior Note
Mortgage Bonds and Expert certificate described in Section 14.1 hereof upon
the delivery thereof in accordance with said Section 14.1.
Section 14.3. Senior Note Mortgage Bonds Held by the Trustee.
The Trustee, as holder of the Senior Note Mortgage Bonds, shall attend
any meeting of bondholders under the First Mortgage Indenture as to which
it receives due notice, or, at its option, shall deliver its proxy in
connection therewith. Either at such meeting, or otherwise where consent of
holders of first mortgage bonds issued under the First Mortgage Indenture
is sought without a meeting, the Trustee shall vote all of the Senior Note
Mortgage Bonds held by it, or shall consent or withhold its consent with
respect thereto, as directed by the Holders of not less than a majority in
the aggregate principal amount of the outstanding Securities; provided,
however, the Trustee shall not vote as such holder of any particular series
of Senior Note Mortgage Bonds in favor of, or give its consent to, any
action which, in the Trustee's opinion, would materially adversely affect
such series of Senior Note Mortgage Bonds in a manner not shared generally
by all other Senior Note Mortgage Bonds, except upon notification by the
Trustee to the Holders of the Related Series of Securities of such proposal
and consent thereto of
9
<PAGE>
the Holders of not less than a majority in aggregate principal amount of
the outstanding Securities of such series.
Section 14.4. No Transfer of Senior Note Mortgage Bonds; Exception.
Except as required to effect an assignment to a successor trustee
under this Indenture or pursuant to Section 14.5 or Section 14.8 hereof,
the Trustee shall not sell, assign or transfer the Senior Note Mortgage
Bonds and the Company shall issue stop transfer instructions to the First
Mortgage Trustee and any transfer agent under the First Mortgage Indenture
to effect compliance with this Section 14.4.
Section 14.5. Delivery to the Company of All Senior Note Mortgage
Bonds.
When the obligation of the Company to make payment with respect to the
principal of and premium, if any, and interest on the Senior Note Mortgage
Bonds shall be satisfied or deemed satisfied pursuant to Section 4.1 or
Section 14.10 hereof, the Trustee shall, upon written request of the
Company and receipt of the certificate of the Expert described in Section
14.6(b) hereof (if such certificate is then required by Section 14.6(b)
hereof), deliver to the Company without charge therefor all of the Senior
Note Mortgage Bonds, together with such appropriate instruments of transfer
or release as may be reasonably requested by the Company. All Senior Note
Mortgage Bonds delivered to the Company in accordance with this Section
14.5 shall be delivered by the Company to the First Mortgage Trustee for
cancellation.
Section 14.6. Fair Value Certificate.
(a) Upon the delivery by the Company to the Trustee of Senior Note
Mortgage Bonds pursuant to Section 14.1 hereof and subject to Section 3.3
hereof, the Company shall simultaneously therewith deliver to the Trustee a
certificate of an Expert (1) stating that it is familiar with the
provisions of such Senior Note Mortgage Bonds and of this Indenture, (2)
stating the principal amount of such Senior Note Mortgage Bonds so
delivered, the stated interest rate (or method of calculation of interest)
of such Senior Note Mortgage Bonds and the stated maturity date of such
Senior Note Mortgage Bonds, (3) identifying the Securities being issued
contemporaneously therewith, and (4) stating the fair value to the Company
of such Senior Note Mortgage Bonds. If the fair value to the Company of the
Senior Note Mortgage Bonds so delivered, as described in the certificate to
be delivered pursuant to this Section 14.6(a), both (l) is equal to or
exceeds (A) $25,000 and (B) 1% of the principal amount of the Securities
outstanding at the date of delivery of such Senior Note Mortgage Bonds and
(2) together with the fair value to the Company, as described in the
certificates to be delivered pursuant to this Section 14.6(a), of all other
Senior Note Mortgage Bonds delivered to the Trustee since the commencement
of the then current calendar year, is equal to or exceeds 10% of the
principal amount of the Securities outstanding at the date of delivery of
such Senior Note Mortgage Bonds, then the certificate required by this
Section 14.6(a) shall (1) be delivered by an Expert who shall be
independent of the Company and satisfactory to the Trustee in its
reasonable judgment and (2) shall, in addition to the certifications
described above, state the fair value to the Company of all Senior Note
Mortgage Bonds delivered to the Trustee pursuant to Section 14.1 hereof
since the commencement of the then current year as to which a certificate
was not delivered by an Expert independent of the Company.
(b) If Senior Note Mortgage Bonds are delivered or surrendered to the
Company pursuant to Section 14.5 or 14.8 hereof, the Company shall
simultaneously therewith deliver to the Trustee a certificate of an Expert
(1) stating that it is familiar with the provisions of such Senior Note
Mortgage Bonds and of this Indenture, (2) stating the principal amount of
such Senior Note Mortgage Bonds so delivered, the stated interest rate (or
method of calculation of interest) of such Senior Note Mortgage Bonds and
the stated maturity date of such Senior Note Mortgage Bonds, (3) if
applicable, identifying the Securities, the payment of the interest on and
principal of which has been discharged hereunder, and (4) stating that such
delivery and release
10
<PAGE>
will not impair the lien of this Indenture in contravention of the
provisions of this Indenture. If, prior to the Release Date, the fair value
of the Senior Note Mortgage Bonds so delivered and released, as described
in the certificate to be delivered pursuant to this Section 14.6(b), both
(l) is equal to or exceeds (A) $25,000 and (B) 1% of the principal amount
of the outstanding Securities at the date of release of such Senior Note
Mortgage Bonds and (2) together with the fair value, as described in the
certificates to be delivered pursuant to this Section 14.6(b), of all other
Senior Note Mortgage Bonds released from the lien of this Indenture since
the commencement of the then current calendar year, is equal to or exceeds
10% of the principal amount of the Securities outstanding at the date of
release of such Senior Note Mortgage Bonds, then the certificate required
by this Section 14.6(b) shall be delivered by an Expert who shall be
independent of the Company and satisfactory to the Trustee in its
reasonable judgment.
If, in connection with a delivery or release of outstanding Senior
Note Mortgage Bonds, the Company provides to the Trustee an Opinion of
Counsel stating that the certificate described by this Section 14.6 is not
required by law, such certificate shall not be required to be delivered
hereunder in connection with such delivery or release.
Section 14.7. Further Assurances.
The Company shall cause this Indenture, any indentures supplemental to
this Indenture, and any financing or continuation statements to be promptly
recorded and filed and rerecorded and refiled in such a manner and in such
places, as may be required by law in order fully to preserve, protect and
perfect the security of the Holders and all rights of the Trustee, and, at
its own expense, shall do such further lawful acts and things, and execute
and deliver such additional conveyances, assignments, assurances,
agreements, financing statements and instruments, as may be necessary in
order to better assign, assure, perfect and confirm to the Trustee its
security interest in the Senior Note Mortgage Bonds and for maintaining,
protecting and preserving such security interest.
Section 14.8. Exchange and Surrender of Senior Note Mortgage Bonds.
At any time at the written direction of the Company, the Trustee shall
surrender to the Company all or part of the Senior Note Mortgage Bonds in
exchange for Senior Note Mortgage Bonds equal in aggregate outstanding
principal amounts to, in different denominations than but of the same
series and with all other terms identical to, the Senior Note Mortgage
Bonds so surrendered to the Company. In addition, at any time a Security
shall cease to be entitled to any lien, benefit or security under this
Indenture pursuant to Section 4.4 hereof, the Trustee shall surrender
Senior Note Mortgage Bonds as provided in this Section to the Company for
cancellation. The Trustee shall, together with such Senior Note Mortgage
Bonds, deliver to the Company such appropriate instruments of transfer or
release as the Company may reasonably request. Prior to the surrender
required by this paragraph, the Trustee shall receive from the Company the
following, and (subject to Section 6.1 hereof) shall be fully protected in
relying upon, (a) an Officers' Certificate stating (i) the aggregate
outstanding principal amount of the Senior Note Mortgage Bonds of the
series surrendered by the Trustee, after giving effect to such surrender,
(ii) the aggregate outstanding principal amount of the Related Series of
Securities, (iii) that the surrender of the Senior Note Mortgage Bonds will
not result in any default under this Indenture, and (iv) that any Senior
Note Mortgage Bonds to be received in exchange for the Senior Note Mortgage
Bonds being surrendered comply with the provisions of this Section 14.8.
The Company shall not be permitted to cause the surrender or exchange
of all or any part of a series of Senior Note Mortgage Bonds contemplated
in this Section 14.8, if, after such surrender or exchange, the aggregate
outstanding principal amount of the Related Series of Securities would
exceed the aggregate outstanding principal amount of such series of Senior
Note Mortgage Bonds held by the Trustee. Any Senior Note Mortgage Bonds
received by the Company pursuant to this Section 14.8 shall be delivered to
the First Mortgage Trustee for cancellation.
11
<PAGE>
Section 14.9. Terms of Senior Note Mortgage Bonds.
Each series of Senior Note Mortgage Bonds delivered to the Trustee
pursuant to Section 14.1 hereof shall have the same stated rate or rates of
interest (or interest calculated in the same manner), Interest Payment
Dates, Stated Maturity, and redemption provisions, and shall be in the same
aggregate principal amount, as the Related Series of Securities being
issued.
Section 14.10. Senior Note Mortgage Bonds as Security for Securities.
Until the Release Date and subject to Article Four hereof, Senior Note
Mortgage Bonds delivered to the Trustee, for the benefit of the Holders of
the Securities, shall serve as security for any and all obligations of the
Company under the Securities, including, but not limited to (1) the full
and prompt payment of the principal of such Securities when and as the same
shall become due and payable in accordance with the terms and provisions of
this Indenture or the Securities, either at the Stated Maturity thereof,
upon acceleration of the maturity thereof or upon redemption, and (2) the
full and prompt payment of any interest on such Securities when and as the
same shall become due and payable in accordance with the terms and
provisions of this Indenture or the Securities.
Notwithstanding anything in this Indenture to the contrary, from and
after the Release Date, the obligation of the Company to make payment with
respect to the principal of and premium, if any, and interest on the Senior
Note Mortgage Bonds shall be deemed satisfied and discharged as provided in
the supplemental indenture or indentures to the First Mortgage Indenture
creating such Senior Note Mortgage Bonds and the Senior Note Mortgage Bonds
shall cease to secure in any manner Securities theretofore or subsequently
issued. From and after the Release Date, all Senior Notes, whether
theretofore or subsequently issued, shall be unsecured, and any conditions
to the issuance of Securities that refer or relate to Senior Note Mortgage
Bonds or the First Mortgage Indenture shall be inapplicable. From and after
the Release Date, the Company shall cause the First Mortgage Indenture to
be closed and the Company shall not issue any additional First Mortgage
Bonds or Senior Note Mortgage Bonds under the First Mortgage Indenture.
Notice of the occurrence of the Release Date shall be given by the Trustee
to the Holders of the Securities in the manner provided in Section 1.6
hereof not later than 30 days after the Company notifies the Trustee of the
occurrence of the Release Date."
ARTICLE FOUR
Miscellaneous
Section 4.1. Execution as Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof.
Section 4.2. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof, or with a
provision of the Original Indenture, which is required to be included in this
First Supplemental Indenture, or in the Original Indenture, respectively, by any
of the provisions of the Trust Indenture Act, such required provision shall
control.
Section 4.3. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 4.4. Successors and Assigns. All covenants and agreements by the
Company in this First Supplemental Indenture shall bind its successors and
assigns, whether so expressed or not.
12
<PAGE>
Section 4.5. Separability Clause. In case any provision in this First
Supplemental Indenture or in the Senior Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 4.6. Benefits of First Supplemental Indenture. Nothing in this
First Supplemental Indenture or in the Senior Notes, express or implied, shall
give to any person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this First Supplemental Indenture.
Section 4.7. Execution and Counterparts. This First Supplemental Indenture
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
[CORPORATE SEAL]
TEXAS-NEW MEXICO POWER COMPANY
By
------------------------
Name:
Title:
Attest:
By
------------------------
Name:
Title:
[SEAL] CHASE BANK OF TEXAS, N.A.,
As Trustee
By
------------------------
Name:
Title:
Attest:
By
------------------------
Name:
Title:
14
<PAGE>
STATE OF NEW YORK)
:ss
COUNTY OF NEW YORK)
On this day of , 1999, before me personally
came , to me known, who, being by me duly sworn, did depose and
say that he is a of Texas-New Mexico Power Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
----------------------------
STATE OF NEW YORK)
:ss
COUNTY OF NEW YORK)
On this day of , 1999 before me personally came
, to me known, who, being by me duly sworn, did depose and say
that he is a of , one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
----------------------------
15
<PAGE>
EXHIBIT A
[If the Security is to be a Global Security, insert -- Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.
THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE HEREINAFTER
REFERENCED AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
TEXAS-NEW MEXICO POWER COMPANY
% SENIOR NOTES DUE
$
No. CUSIP
TEXAS-NEW MEXICO POWER COMPANY, a corporation duly organized and
existing under the laws of the State of Texas (herein called the "Company,"
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to or registered
assigns, the principal sum of $ on , and to pay
interest thereon from , or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
and in each year, commencing , at the rate per annum
provided in the title hereof, until the principal hereof is paid or made
available for payment [if applicable, insert -- , and, subject to the terms of
the Indenture, at the rate of % per annum on any overdue principal and
premium and (to the extent that the payment of such interest shall be legally
enforceable) on any overdue installment of interest, from the dates such amounts
are due until they are paid or made available for payment, and such interest
shall be payable on demand]. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the or (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in , in such coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts; [if this Security is not a Global Security, insert -- provided, however,
that at the option of the Company
<PAGE>
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture, this Security shall
not be entitled to any benefits under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused this
Security to be duly executed.
Dated: TEXAS-NEW MEXICO POWER COMPANY
BY
----------------------------------
Name:
Title:
A-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Date:
--------------------,
as Trustee,
by
-------------------------
Authorized Signatory
A-3
<PAGE>
[REVERSE OF NOTE]
This Security is one of the duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company (hereinafter
called the "Securities"), of the series hereinafter specified, all issued or to
be issued under and pursuant to the Indenture dated as of January 1,
supplemented by the First Supplemental Indenture, dated as of ,
1999 (as so supplemented, the "Indenture"), duly executed and delivered by the
Company and , as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and any other indentures supplemental thereto reference is hereby made
for a statement of the respective rights, obligations, duties and immunities
thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the
Company and the Holders of the Securities and of the terms upon which the
Securities are issued and are to be authenticated and delivered. This Security
is one of the series designated on the face hereof, which series is limited in
aggregate principal amount to $ . By the terms of the Indenture,
additional Securities of other separate series, which may vary as to date,
aggregate principal amount, Stated Maturity, interest rate or method of
calculating the interest rate, redemption provisions and in other respects as
therein provided, may be issued in an unlimited amount.
Prior to the Release Date (as hereinafter defined), the Securities of
this series will be secured by first mortgage bonds (the "Senior Note Mortgage
Bonds") delivered by the Company to the Trustee for the benefit of the Holders
of the Securities, issued under the Indenture of Mortgage and Deed of Trust,
dated November 1, 1944, by and between the Company and U.S. Bank Trust, National
Association (which is successor trustee to First Trust of Illinois, National
Association, 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 (the "First Mortgage
Trustee"), as supplemented and modified (the "First Mortgage Indenture")
pursuant to the Supplemental Indenture dated ,
1999. Reference is made to the First Mortgage Indenture and the Indenture for a
description of property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the first mortgage bonds under the First
Mortgage Indenture and of the First Mortgage Trustee in respect thereof, the
duties and immunities of the First Mortgage Trustee and the terms and conditions
upon which the Senior Note Mortgage Bonds are secured and the circumstances
under which additional first mortgage bonds may be issued.
FROM AND AFTER THE DATE CHOSEN BY THE COMPANY WHICH IS NOT EARLIER
THAN THE LATER OF (I) SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN SENIOR
NOTE MORTGAGE BONDS) ISSUED UNDER THE FIRST MORTGAGE INDENTURE HAVE BEEN RETIRED
THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE FIRST MORTGAGE BONDS
"DEEMED TO BE PAID" OR AS TO WHICH THE ENTIRE INDEBTEDNESS IS PAID AND
DISCHARGED WITHIN THE MEANING USED IN ARTICLE 18 OF THE FIRST MORTGAGE
INDENTURE) AT, BEFORE OR AFTER THE MATURITY THEREOF AND (II) THE DATE AS OF
WHICH NO LIENS ON ANY PROPERTY OF THE COMPANY OR ANY SUBSIDIARY EXISTS (WHETHER
SUCH LIENS SECURE INDEBTEDNESS OF THE COMPANY OR ANY SUBSIDIARY OR ANY OTHER
PERSON), EXCEPT THAT THIS CLAUSE (II) SHALL NOT APPLY TO ANY LIEN TO THE EXTENT
DESCRIBED IN CLAUSES (A) THROUGH (K) OF SECTION 10.10 OF THE ORIGINAL INDENTURE
OR I THE LAST PARAGRAPH OF SUCH SECTION 10.10 (THE "RELEASE DATE"), THE SENIOR
NOTE MORTGAGE BONDS SHALL, AT THE OPTION OF THE COMPANY, CEASE TO SECURE THE
SECURITIES OF THIS SERIES IN ANY MANNER; PROVIDED THAT NO DEFAULT OR EVENT OF
DEFAULT HAS OCCURRED AND AT SUCH TIME IS CONTINUING UNDER THE INDENTURE. IN
CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE AS PROVIDED IN THE INDENTURE,
THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF
SENIOR NOTE MORTGAGE BONDS HELD BY THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE
RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT
OF THE SERIES OF SECURITIES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH SENIOR
NOTE MORTGAGE BONDS.
A-4
<PAGE>
These Securities will be redeemable, in whole or in part, at the
option of the Company, upon not less than 30 or more than 60 days' notice by
mail to the Holders of such Securities at their addresses in the Security
Register for such series, on any date (a "Redemption Date") at a redemption
price equal to the greater of (a) 100% of their principal amount of the
Securities to be redeemed and (b) the sum of the present values of the remaining
scheduled payments of principal and interest thereon (exclusive of interest
accrued to such Redemption Date) discounted to such Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus [__] basis points, plus accrued and unpaid interest on
the principal amount being redeemed to such Redemption Date; provided, however,
that installments of interest on Securities that are due and payable on an
Interest Payment Date falling on or prior to the relevant Redemption Date shall
be payable to the holders of such Securities, registered as such at the close of
business on the relevant Record Date according to their terms and provisions of
the Indenture.
"Treasury Rate" means, with respect to any Redemption Date for the
Securities, (a) the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication that is published
weekly by the Board of Governors of the Federal Reserve System and that
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities" for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Maturity Date, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight-line basis, rounding to the nearest month) or (b)
if such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date. The Treasury Rate shall be calculated
on the third Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means, the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.
"Independent Investment Banker" means
or, if such firms are unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Company.
"Comparable Treasury Price" means, with respect to any Redemption
Date, (a) the average of four Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (b) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer" means each of
and their respective successors; provided however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company will substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to the
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such Redemption Date.
A-5
<PAGE>
In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the unpaid principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture and, upon such declaration, the Trustee can demand the redemption
of the Senior Note Mortgage Bonds as provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding of all series to be affected (voting as a
class). The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest, if any, on this Security at the time, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest, if any, on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $ and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
A-6
<PAGE>
This Security shall be governed by and construed in accordance with
the laws of the State of New York.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
A-7
<PAGE>
Exhibit 4(y)
================================================================================
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
U.S. BANK TRUST, NATIONAL ASSOCIATION,
TRUSTEE
Twenty-Sixth Supplemental Indenture
Dated as of
_____________________
_____________________
Supplemental to and Modifying
Indenture of Mortgage
and
Deed of Trust
Dated as of November 1, 1944
(as supplemented and modified)
================================================================================
1
<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-SIXTH SUPPLEMENTAL INDENTURE, dated as of , 1999, between
Texas-New Mexico Power Company (formerly Community Public Service Company), as
debtor, a Texas corporation (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, and U.S. Bank Trust, National Association (successor by
merger to First Trust of Illinois, National Association) (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 (the "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:
WHEREAS, Community Public Service Company, a Delaware corporation the
"PREDECESSOR COMPANY"), has heretofore executed and delivered to the City
National Bank and Trust Company of Chicago (the "ORIGINAL TRUSTEE"), an
Indenture of Mortgage and Deed of Trust dated as of November 1, 1944 (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 Original 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
WHEREAS, simultaneously with the merger of the Predecessor Company into the
Company, the Company has 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 Original Trustee
was merged) as Predecessor Trustee; and
WHEREAS, the Company has executed and delivered to the Predecessor Trustee
an Eighth Supplemental Indenture dated as of July 1, 1963; a Ninth Supplemental
Indenture dated as
<PAGE>
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; a Twenty-Fourth
Supplemental Indenture dated as of November 3, 1995 and a Twenty-Fifth
Supplemental Indenture dated as of September 10, 1996;
WHEREAS, pursuant to the Original Indenture, as heretofore supplemented and
modified, there have been executed, authenticated, and delivered $100,000,000 in
original principal amount of First Mortgage Bonds of Series U, 9 1/4% due 2000,
of which $100,000,000 in principal amount remain outstanding; 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, on U.S. Bank Trust, National Association acquired
First Trust of Illinois, National Association; 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
2
<PAGE>
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 has executed and delivered to Chase Bank of Texas,
N.A. (the "SENIOR DEBT TRUSTEE") an indenture dated as of January 1, 1999 (the
"SENIOR DEBT INDENTURE") to provide for the issuance from time to time of its
debentures, notes, bonds or other evidences of indebtedness; and
WHEREAS, the Company is entering into an Indenture supplemental to the
Senior Debt Indenture dated as of [January 1, 1999] (the "FIRST SUPPLEMENTAL
INDENTURE") with the Senior Debt Trustee for the purpose of issuing a series of
securities in an aggregate principal amount of $ to be designated the
" % Senior Notes Due " (the "SENIOR NOTES"); and
WHEREAS, the First Supplemental Indenture requires, as a condition
precedent to the issuance and effectiveness of the Senior Notes, that the
Company issue a new series of First Mortgage Bonds to the Senior Debt Trustee in
an aggregate principal amount of up to $ to secure the payment when
due of the Senior Notes until the RELEASE DATE (as such term is defined in the
First Supplemental Indenture); and
WHEREAS, the agreements of the parties to the First Supplemental Indenture
constitute consideration for the issuance of such First Mortgage Bonds to the
Senior Debt Trustee; and
WHEREAS, the Company desires to, and as required by the First Supplemental
Indenture proposes to, create under the Original Indenture a new issue of First
Mortgage Bonds, to be designated as First Mortgage Bonds, Series X (the "BONDS
OF SERIES X") to be due on , 20 , in an aggregate
principal amount of up to $ and proposes to issue the same upon the
execution of this Twenty-Sixth Supplemental Indenture; and
WHEREAS, it is the intent of the Company and the Senior Debt Trustee that
any payment made in respect to the Company's obligations under the Senior Notes
shall be deemed a payment in respect of the Bonds of Series X and all payments
which are applied to payment of the
3
<PAGE>
outstanding principal balance of the Senior Notes shall be deemed to be payments
of principal of the Bonds of Series X and the balance of such Bonds of Series X
shall be reduced concurrently with such payment; and
WHEREAS, it is the intent of the Company and the Senior Debt Trustee that
there be no duplication in the obligations paid by the Company under the Senior
Notes and the Bonds of Series X, but the payments, if any, of principal of or
interest on the Bonds of Series X be applied to payment of the Senior Notes and
that the benefits and security of the lien of the Original Indenture, as
supplemented and amended, be extended to the Senior Notes until the Release Date
by means of the issuance and delivery of the Bonds of Series X to the Senior
Debt Trustee for the benefit of the holders of the Senior Notes; and
WHEREAS, the Company is required to execute this Twenty-Sixth Supplemental
Indenture and hereby requests the Trustee to join in this Twenty-Sixth
Supplemental Indenture for the purpose, among others, of (i) creating and
describing the terms of the Bonds of Series X and (ii) subjecting to the lien of
the Original Indenture, as supplemented and modified, additional property (the
"ADDITIONAL PROPERTY") acquired by the Company since the execution and delivery
of the Twenty-Fifth Supplemental Indenture dated as of September 16, 1996 (the
Original Indenture as heretofore supplemented and modified and as supplemented
and modified by this Twenty-Sixth 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 X, 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 First Mortgage Bonds in accordance with
its and their terms, have been done and taken; and the execution and delivery of
this Twenty-Sixth Supplemental Indenture have been in all respects duly
authorized.
NOW, THEREFORE, THIS TWENTY-SIXTH 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, to
indirectly secure payment of the principal of, premium, in any, and interest on
all Senior Notes at any time issued and outstanding under the Senior Debt
Indenture, according to their tenor, purport and effect, to expressly subject
the Additional Property to the lien of the Indenture, and to secure the
performance and observance of all the covenants and conditions contained in the
Senior Notes and in the Senior Debt Indenture, and to declare the terms and
conditions upon and subject to which the Bonds of Series X 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 X 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-Sixth
Supplemental Indenture, and by these presents does grant, bargain, sell, convey,
assign, transfer,
4
<PAGE>
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
(including those described in Article Five hereof and 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.
5
<PAGE>
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:
6
<PAGE>
SUBJECT, HOWEVER, to (i) the exceptions, reservations, restrictions,
conditions, limitations, covenants and matters recited in Article [ ] hereof,
(ii) Permitted Encumbrances as defined in Paragraph G of Section 1.07 of the
Original Indenture, and (iii) with respect to any property which the Company may
hereafter acquire, 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-Sixth 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 X AND CERTAIN PROVISIONS RELATING THERETO
SECTION 1.01. Terms of Bonds of Series X. There shall be, and hereby is,
created a new series of Bonds, known as and entitled "FIRST MORTGAGE BONDS,
SERIES X, DUE " (herein referred to as the "BONDS OF SERIES X"), and the
form thereof shall be substantially as hereinafter set forth in Section 1.02
hereof. The principal amount of the Bonds of Series X 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 X 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.
7
<PAGE>
The Bonds of Series X shall be registered in the name of the Senior Debt
Trustee or to any successor trustee under the Senior Debt Indenture for the
benefit of the holders of the Senior Notes.
The Bonds of Series X are to be issued to the Senior Debt Trustee to secure
the payment when due of all obligations of the Company under the Senior Notes.
The Bonds of Series X are to be dated as of the date hereof, are to be
issued in the aggregate principal amount of $ and are to mature on [
], 20 . The principal of the Bonds of Series X shall be payable in whole or in
installments on such date or dates as the Company has any obligation to make any
principal payment under the Senior Notes, but not later than [the maturity date
of the Senior Notes]. The Bonds of Series X will have the same stated rates of
interest (and interest shall be calculated in the same manner) and "INTEREST
PAYMENT DATES" (herein so called) as the Senior Notes.
Any payment made in respect to the Company's obligations under the Senior
Notes shall be deemed a payment in respect of the Company's related obligations
under the Bonds of Series X. The obligation of the Company to make payments
with respect to the principal of, premium, if any, and interest on the Bonds of
Series X 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, premium, if any, and interest on, and fees with respect to,
the Senior Notes. Until such time as the Trustee shall have received notice
from the Senior Debt Trustee that an "EVENT OF DEFAULT" under the First
Supplemental Indenture 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 X. Any payments of the principal of, premium,
if any, and the interest on the Bonds of Series X shall be payable, in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, at the principal
office of the Trustee in the City of Chicago, State of Illinois. Interest on
Bonds of Series X shall be payable in each case to the holder of record on the
record date as set forth below.
On the Release Date, the Bonds of Series X shall be surrendered to the
Company pursuant to the terms of the First Supplemental Indenture and the
Company's obligations under the Bonds of Series X from the Release Date forward
shall be discharged and deemed satisfied.
The definitive Bonds of Series X 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 X 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 X
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 defaults in the payment of the interest due on such interest payment
date, then the registered holders of Bonds of Series X on
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<PAGE>
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 X shall be the registered holders of such Bonds
of Series X 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 X, with respect to any interest payment date applicable to the Bonds of
Series X, shall mean the date fifteen 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), or such record date established for defaulted interest
as hereinafter provided.
Subject to the provisions of Section 2.11 of the Original Indenture, all
definitive Bonds of Series X, upon surrender at the principal office of the
Trustee, shall be exchangeable for other Bonds of Series X 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 X 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 X for other Bonds of
Series X of different authorized denominations or for any transfer of Bonds of
Series X, 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 X shall be redeemed by the Company in whole at any time
prior to maturity at a redemption price of 100% 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 Senior Debt Trustee for
redemption of all Bonds of Series X held by the Senior Debt Trustee stating that
an "EVENT OF DEFAULT" under the First Supplemental Indenture has occurred and is
continuing and that payment of the principal amount outstanding under the Senior
Notes, 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 X shall not be redeemed in the event that prior to the
date of such redemption the Trustee shall have received a certificate of the
Senior Debt Trustee (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 X shall be made forthwith upon receipt of such demand by the Company from
the Senior Debt Trustee on behalf of the holders of the Senior Notes 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 X and the registrar and
transfer agent of the Company for the purpose of registering and transferring
Bonds of Series X. Neither the Company nor the Trustee shall be required to
make transfers or exchanges of Bonds of Series X for a period of ten days next
preceding the mailing of notice of redemption of Bonds of Series X to be
redeemed and neither the Company nor the Trustee shall be required to make
transfers or exchanges of any Bonds of Series X designated in whole for
redemption or that part of any Bond of Series X designated in part for
redemption.
9
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SECTION 1.02. Form of Bonds of Series X. The Bonds of Series X shall be
in substantially the following form:
THIS BOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TRUSTEE UNDER THE
INDENTURE DATED JANUARY 1, 1999, AS SUPPLEMENTED, BETWEEN TEXAS-NEW MEXICO
POWER COMPANY AND CHASE BANK OF TEXAS, N.A., TRUSTEE
[FORM OF BOND OF Series X]
No. X $
TEXAS-NEW MEXICO POWER COMPANY
First Mortgage Bond, Series X, % Due 20
Texas-New Mexico Power Company, a Texas corporation (hereinafter called the
"Company"), for value received, hereby promises to pay to Chase Bank of Texas,
N.A. as Senior Debt Trustee (as hereinafter defined) under the Senior Debt
Indenture (as hereinafter defined), or to any successor Trustee under the Senior
Debt Indenture, Million Dollars ($ ) or such lesser amount
as is equal to the aggregate principal amount of the outstanding Senior Notes
(as defined in the First Supplemental Indenture hereinafter defined), in whole
or in installments on such date or dates as the Company has any obligation to
make payments under the First Supplemental Indenture, but not later than the
Maturity Date (as defined in the First Supplemental Indenture), 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) and
at maturity 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 First Supplemental Indenture as provided below.
The principal of, premium, if any, and interest on this Bond are payable at
the principal corporate trust office mentioned on the reverse hereof 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 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.
The Bonds of Series X have been issued to the Senior Debt Trustee in
connection with the issuance of the Senior Notes, to secure the payment when due
of all obligations of the Company under the Senior Notes issued under an
indenture supplemental (the "First Supplemental Indenture") to the Original
Senior Debt Indenture (hereinafter defined) with the Senior Debt Trustee for the
purpose of issuing a series of securities in an aggregate principal amount of
$ to be designated the " % Senior Notes Due "
(the "Senior Notes"). The Company has executed and delivered to Chase Bank of
Texas, N.A. (the "Senior Debt Trustee") an indenture dated as of January 1, 1999
(the "Original Senior Debt Indenture" and
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together with the First Supplemental Indenture, the "Senior Debt Indenture") to
provide for the issuance from time to time of its debentures, notes, bonds or
other evidences of indebtedness.
The interest on this Bond shall be payable on the same dates (each, an
"interest payment date") as interest is payable from time to time pursuant to
the Senior Notes until maturity of this Bond, or until the occurrence of the
Release Date, or, if the Company defaults 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 payable from time to
time under the Senior Notes, the basis on which such interest is computed and
the dates on which such interest is payable are set forth in the First
Supplemental Indenture.
Any payment of the principal of, premium, if any, and interest made in
respect of the Company's obligations under the Senior Notes shall be deemed a
payment in respect of the respective obligations under the Bonds of Series X.
The obligation of the Company to make payments with respect to the principal of,
premium, if any, and interest on the Bonds of Series X 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, premium, if
any, and interest on, the Senior Notes.
On the Release Date (as defined in the First Supplemental Indenture), and
subject to the terms and conditions of the First Supplemental Indenture, this
Bond shall be surrendered to the Company and the Company's obligations hereunder
from the Release Date forward shall be discharged and deemed satisfied.
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:
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- -------------------------
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
12
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[FORM OF REVERSE OF BOND OF SERIES X]
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-five supplemental
indentures thereto, including the Thirteenth, Fourteenth, Fifteenth, Sixteenth,
Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second,
Twenty-Third, Twenty-Fourth and Twenty-Fifth Supplemental Indentures which also
modified the Original Indenture and the Twenty-Sixth Supplemental Indenture (the
"Twenty-Sixth Supplemental Indenture") dated as of January 1, 1999 (said
Indenture of Mortgage and Deed of Trust, as so supplemented and modified, being
herein called the "Indenture"), to which Indenture 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 X, due " (hereinafter called the
"Bonds of Series X").
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
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<PAGE>
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 X 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 First Supplemental Indenture.
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 Senior Debt Trustee under the First Supplemental Indenture, 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.
Upon notice being given of the redemption of all or part of the Senior
Notes in accordance with the Senior Debt Indenture and such Senior Notes
becoming due and payable in accordance with such notice of redemption, the
Company shall redeem, on the redemption date specified in such notice a
principal amount of Bonds of Series X equal to the principal amount of Senior
Notes to be redeemed, at a redemption price equal to the principal amount of
such Bonds of Series X to be redeemed, plus a premium, if any, equal to the
premium payable on the redemption of such Senior Notes, if any, plus accrued
interest to such redemption date.
Upon payment by the Company of principal, premium, if any, and interest in
satisfaction of amounts due and payable in accordance with such notice of
redemption of all or part of the Senior Notes, as the case may be, the Company's
obligations to make payment with respect to the
14
<PAGE>
amounts due and payable with respect to the principal amount of Bonds of Series
X to be redeemed shall be satisfied.
The Company covenants that, prior to the Release Date, it will not take any
action that would cause the outstanding principal amount of the Bonds of Series
X to be less than the then outstanding principal amount of the Senior Notes.
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 $100,000,000 principal amount
of First Mortgage Bonds, Series U, 9 1/4% due 2000, due September 15, 2000 and
$ principal amount of First Mortgage Bonds, Series X, due , due
to be issued pursuant to Article Four of the
Original Indenture as provided for in this Twenty-Sixth Supplemental Indenture.
Additional Bonds of Series U and X and of subsequent series created after
the execution and delivery of this Twenty-Sixth 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, 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-Sixth 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
15
<PAGE>
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-Sixth Supplemental Indenture is dated for convenience
and for the purpose of reference as of [ ], 1999, 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-Sixth
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 acquired by the
Company since the execution and delivery of the Twenty-Fifth Supplemental
Indenture dated as of September 10, 1996, are located in the States and in the
Counties designated and hereinafter set forth:
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:
- -------------------------------------------------------------------------------
| THE FOLLOWING DESCRIPTIONS ARE TO BE UPDATED AND PROVIDED BY TNP. |
- -------------------------------------------------------------------------------
A. STATE OF NEW MEXICO
Municipality Expiration Date
------------ ---------------
Dona Ana County November 1, 2019
16
<PAGE>
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-
Sixth 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-Sixth 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.
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
17
<PAGE>
STATE OF TEXAS (S)
(S) ss.:
COUNTY OF TARRANT (S)
On this day of , 1999, 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 , 1998.
----------------------------------
(NOTARIAL SEAL)
18
<PAGE>
STATE OF ILLINOIS (S)
(S) ss.:
COUNTY OF COOK (S)
On this day of , 1999, 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 , 1999.
----------------------------------
(NOTARIAL SEAL)
19
<PAGE>
STATE OF TEXAS (S)
(S) ss.:
COUNTY OF TARRANT (S)
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 , 1999.
----------------------------------
(NOTARIAL SEAL)
20
<PAGE>
EXHIBIT 5(a)
[HAYNES AND BOONE, LLP LETTERHEAD]
December 11, 1998
Texas-New Mexico Power Company
4100 International Plaza
P.O. Box 2943
Fort Worth, Texas 76113
Re: Registration of $200,000,000 in Aggregate Principal Amount of Senior
Notes and First Mortgage Bonds
Gentlemen:
We have acted as counsel to Texas-New Mexico Power Company, a Texas
corporation (the "Company"), in connection with the registration and sale under
the Securities Act of 1933, as amended (the "Securities Act"), of up to
$200,000,000 in aggregate principal amount of senior notes (the "Notes")
pursuant to an Indenture to be entered into between Chase Bank of Texas, N.A.
(the "Trustee") and the Company (the "Indenture"), which Notes are to be secured
by First Mortgage Bonds of one or more series (the "Senior Note Mortgage Bonds")
to be issued under one or more supplemental indentures thereto (each, a
"Supplemental Mortgage Indenture") to the Indenture of Mortgage and Deed of
Trust, dated as of November 1, 1944, between Community Public Service Co. (now
known as the Company) and City National Bank and Trust Company of Chicago,
Chicago, Illinois (whose current successor is U.S. Bank Trust, N.A.) (the
"Mortgage Trustee"), as supplemented and amended by the Supplemental Mortgage
Indentures thereto (collectively, the "Mortgage Indenture"). The Notes and the
Senior Note Mortgage Bonds are being registered pursuant to a Registration
Statement on Form S-3 filed with the Securities and Exchange Commission under
the Securities Act of 1933, as subsequently amended or supplemented (the
Registration Statement, as amended or supplemented, is hereinafter referred to
as the "Registration Statement").
In connection therewith, we have examined and relied upon the original, or
copies certified to our satisfaction, of (i) the Articles of Incorporation and
the Bylaws of the Company; (ii) minutes and records of the corporate proceedings
of the Company with respect
<PAGE>
Texas-New Mexico Power Company
December 11, 1998
Page 2
to the issuance by the Company of the Notes and the Senior Note Mortgage Bonds;
(iii) the Registration Statement and all exhibits thereto; (iv) the form of
Indenture and the Supplemental Mortgage Indenture; and (v) such other documents
and instruments as we have deemed necessary for the expression of the opinions
contained herein.
In making the foregoing examinations, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof and the authenticity of the originals of
such latter documents. As to various questions of fact material to this
opinion, where such facts have not been independently established, and as to the
content and form of the Articles of Incorporation, the Bylaws, certain minutes,
records, resolutions and other documents or writings of the Company, we have
relied, to the extent we have deemed reasonably appropriate, upon
representations or certificates of officers, directors and agents of the
Company, upon documents, records and instruments furnished to us by the Company,
without independent check or verification of their accuracy, and upon
governmental officials. In rendering the opinions expressed below, we have
assumed (i) that the Indenture and the Supplemental Mortgage Indenture will be
executed in substantially the same form submitted to us, (ii) the due execution
and delivery of the Indenture and the Supplemental Mortgage Indenture by the
Trustee and the Mortgage Trustee, respectively, and (iii) that the Indenture and
the Supplemental Mortgage Indenture, when executed and delivered, will
constitute the legal, valid and binding obligation of the Trustee and the
Mortgage Trustee, respectively.
Based upon the foregoing, and having due regard for such legal
considerations as we deem relevant, we are of the opinion that when (a) the
Indenture and the Supplemental Mortgage Indenture have been duly executed by the
parties thereto, and (b) the Notes and the Senior Note Mortgage Bonds have been
duly executed and delivered by the Company, authenticated by the Trustee and the
Mortgage Trustee, respectively, and issued in accordance with the terms of the
Indenture and the Mortgage Indenture, respectively, the Notes and the Senior
Note Mortgage Bonds will be valid and legally binding obligations of the
Company, enforceable in accordance with their terms except as enforceability may
be limited by (1) applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect affecting the rights of creditors
generally, (2) provisions of applicable law pertaining to the voidability of
preferential or fraudulent transfers and conveyances and (3) the fact that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. In rendering the opinions
expressed herein, we express no opinion as to the enforceability of provisions
of the Indenture, the Mortgage Indenture, the Notes and the Senior Note Mortgage
Bonds to the
<PAGE>
Texas-New Mexico Power Company
December 11, 1998
Page 3
extent that such provisions (i) state that the delay or omission of
the Trustee or the Mortgage Trustee, as applicable, or of any holder of any Note
or Senior Note Mortgage Bond, as applicable, in the exercise of any right or
remedy accruing upon any Event of Default (as defined in the Indenture or the
Mortgage Indenture, as applicable) will not impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein or
(ii) state that the invalidity, illegality or unenforceability of any provision
of the Indenture, the Mortgage Indenture, the Notes or the Senior Note Mortgage
Bonds will not affect or impair the validity, legality or enforceability of the
remaining provisions of the Indenture, the Mortgage Indenture, the Notes or the
Senior Note Mortgage Bonds, as applicable, to the extent that the enforcement of
the remaining provisions would frustrate the fundamental intent of the parties
to such documents. In addition, certain other provisions of the Notes and the
Senior Note Mortgage Bonds may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America; provided, however, that the inclusion of any such provisions
and any limitations imposed by such laws on the enforceability of the Notes and
the Senior Note Mortgage Bonds will not affect the validity or enforceability as
a whole of any of the Notes or the Senior Note Mortgage Bonds, as applicable,
and will not prevent the holders thereof from the ultimate realization of the
practical rights and benefits afforded by such documents, except for the
economic consequences of any judicial, administrative or other procedural delay
which may result from the application of any such law.
The opinions expressed above are specifically limited to the laws of the
State of New York, the laws of the State of Texas, and the federal laws of the
United States of America.
This opinion (i) is rendered solely for your benefit in connection with the
issuance of the Notes and the Senior Note Mortgage Bonds, (ii) may not be used
or relied upon by any other person and may not be disclosed, quoted, filed with
a governmental agency or otherwise referred to without our prior written
consent, (iii) is rendered as of the date hereof, and we undertake no, and
hereby disclaim any kind of, obligation to advise you of any change or any new
developments that might affect any matters or opinions set forth herein, and
(iv) is limited to the matters stated herein and no opinions may be inferred or
implied beyond the matters expressly stated herein.
<PAGE>
Texas-New Mexico Power Company
December 11, 1998
Page 4
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and the
references to our firm under the caption "Legal Matters" in the Prospectus
forming a part of such Registration Statement.
Very truly yours,
/s/ Haynes and Boone, LLP
-------------------------
Haynes and Boone, LLP
<PAGE>
Exhibit 12(a)
TEXAS-NEW MEXICO POWER COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - CONSOLIDATED
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
12 MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED (1)
Net Income $ 38,094 $ 43,918 $ 26,862 $ 41,809 $(16,634) $ 11,523
Income Taxes 19,085 21,805 9,611 22,189 (11,932) 4,916
Fixed Charges 54,268 57,057 69,513 74,115 75,412 68,109
-------- -------- -------- -------- -------- --------
Earnings as defined 111,268 122,780 105,986 138,113 46,846 84,548
-------- -------- -------- -------- -------- --------
FIXED CHARGES AS DEFINED (2)
Interest 49,442 52,557 64,654 70,544 71,568 63,833
Amortization of debt discount, premium, & expense 4,504 4,355 4,709 3,416 3,680 4,108
Estimated portion of interest implicit in rentals (3) 143 145 150 155 164 168
-------- -------- -------- -------- -------- --------
Fixed charges as defined 54,089 57,057 69,513 74,115 75,412 68,109
-------- -------- -------- -------- -------- --------
RATIO OF EARNINGS TO FIXED CHARGES 2.06 2.15 1.52 1.86 * 1.24
</TABLE>
* Earnings were insufficient to fund fixed charges by $28.6 million.
(1) Earnings are defined as net income plus income taxes plus fixed charges.
(2) Fixed charges consist of total interest; amortization of debt discount,
premium, and expense; and the estimated portion of interest implicit in
rentals.
(3) This amount is estimated to be a reasonable approximation of the
interest portion of rentals.
<PAGE>
EXHIBIT 23(b)
[RUBIN, KATZ, SALAZAR, ALLEY & ROUSE LETTERHEAD]
October 19, 1998
VIA FACSIMILE (817) 348-2303
Texas New Mexico Power Company
4100 International Plaza
P.O. Box 2943
Fort Worth, Texas 76113
RE: REGISTRATION OF UP TO $200,000,000 AGGREGATE PRINCIPAL
AMOUNT OF SENIOR DEBT SECURITIES
Dear Ladies and Gentlemen:
We have acted as special counsel to Texas-New Mexico Power Company, a Texas
Corporation (the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-3 and the amendments thereto (as amended, the
"Registration Statement") originally filed on September 24, 1998, with the
Securities and Exchange Commission under the Securities Act of 1993, as amended.
The Registration Statement relates to the registration of up to $200,000,000 of
Senior Debt Securities to be offered on a continuous or delayed basis pursuant
to the provisions of Rule 415 under the Securities Act of 1933, as amended.
We hereby consent to the filing of this consent with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to this firm under "Validity of Securities" in the Prospectus forming
a part of such Registration Statement.
Sincerely,
RUBIN, KATZ, SALAZAR, ALLEY & ROUSE
A PROFESSIONAL CORPORATION
BY /s/ Donald M. Salazar
DONALD M. SALAZAR, ESQ.
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]
EXHIBIT 23(c)
Independent Auditors' Consent
-----------------------------
The Board of Directors
Texas-New Mexico Power Company:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the method of accounting for operating revenues
in 1995.
/s/ KPMG PEAT MARWICK LLP
Fort Worth, Texas
December 11, 1998
<PAGE>
Exhibit 23(d)
[LETTERHEAD OF ARTHUR ANDERSEN LLP APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our firm) included in or made a part of this
Amendment I to Registration Statement on Form S-3 File No. 333-64215.
/s/ Arthur Andersen LLP
Fort Worth, Texas,
December 11, 1998
