<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
(X) COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
- -------------------------------------------------------------------------------
Commission File Number: 1-8847
TNP ENTERPRISES, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1907501
----------- ----------------
(State of incorporation) (I.R.S. employer identification number)
4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
-----------------------------------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes \X\ No \ \
TNP Enterprises, Inc. has no publicly traded shares of common stock outstanding.
- -------------------------------------------------------------------------------
Commission File Number: 2-97230
TEXAS-NEW MEXICO POWER COMPANY
----------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-0204070
----------- ----------------
(State of incorporation) (I.R.S. employer identification number)
4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
-----------------------------------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes \X\ No \ \
TNP Enterprises, Inc. holds all 10,705 outstanding common shares of Texas-New
Mexico Power Company.
<PAGE>
TNP Enterprises, Inc. And Subsidiaries
Texas New-Mexico Power Company And Subsidiaries
Combined Quarterly Report on Form 10-Q for the period ended March 31, 2000
This Combined Quarterly Report on Form 10-Q is filed separately by TNP
Enterprises, Inc., and Texas-New Mexico Power Company. Texas-New Mexico Power
Company makes no representation as to information relating to TNP Enterprises,
Inc., except as it may relate to Texas-New Mexico Power Company, or to any other
affiliate or subsidiary of TNP Enterprises, Inc.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
------------------------------
<TABLE>
<S> <C> <C>
Item 1. Financial Statements.
TNP Enterprises, Inc. (TNP) and Subsidiaries:
Consolidated Statements of Income
Three Month Periods Ended March 31, 2000, and 1999 3
Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 2000, and 1999 4
Consolidated Balance Sheets
March 31, 2000, and December 31, 1999 5
Texas-New Mexico Power Company (TNMP) and Subsidiaries:
Consolidated Statements of Income
Three Month Periods Ended March 31, 2000, and 1999 6
Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 2000, and 1999 7
Consolidated Balance Sheets
March 31, 2000, and December 31, 1999 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 16
</TABLE>
PART II. OTHER INFORMATION
---------------------------
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings. 20
Item 6. Exhibits and Reports on Form 8-K. 20
(a) Exhibit Index 20
(b) Reports on Form 8-K 20
Statement Regarding Forward Looking Information 20
Signature page 21
</TABLE>
-2-
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
----------------------------
2000 1999
---------- ----------
(In thousands)
OPERATING REVENUES $ 124,526 $ 118,125
---------- ----------
OPERATING EXPENSES:
Purchased power and fuel 59,550 57,372
Other operating and maintenance 24,158 23,825
Depreciation 10,230 9,974
Charge for recovery of stranded plant 1,629 3,750
Taxes other than income taxes 7,941 8,000
Income taxes 3,579 712
---------- ----------
Total operating expenses 107,087 103,633
---------- ----------
NET OPERATING INCOME 17,439 14,492
---------- ----------
OTHER INCOME:
Other income and deductions, net 465 163
Income taxes (131) 118
---------- ----------
Other income, net of taxes 334 281
---------- ----------
INCOME BEFORE INTEREST CHARGES 17,773 14,773
---------- ----------
INTEREST CHARGES:
Interest on long-term debt 9,626 10,224
Other interest and amortization
of debt-related costs 888 1,417
---------- ----------
Total interest charges 10,514 11,641
---------- ----------
NET INCOME 7,259 3,132
Dividends on preferred stock and other 5 36
---------- ----------
INCOME APPLICABLE TO COMMON STOCK $ 7,254 $ 3,096
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
2000 1999
--------- ---------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from sales to customers $ 102,091 $ 105,835
Purchased power and fuel costs paid (63,613) (62,523)
Cash paid for payroll and to other suppliers (24,234) (27,935)
Interest paid, net of amounts capitalized (14,690) (11,577)
Income taxes refunded 5,500 4,000
Other taxes paid (17,089) (18,147)
Other operating cash receipts and payments, net 147 181
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (11,888) (10,166)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (9,200) (11,592)
Withdrawals from escrow account - 1,902
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (9,200) (9,690)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks (3,926) (3,906)
Common stock issuances 1,202 3,091
Borrowings from (repayments to) revolving credit
facilities - net 21,000 (27,500)
Issuances:
Senior notes, net of discount - 174,164
Deferred expenses associated with financings - (1,280)
Redemptions:
Secured debentures - (130,000)
Preferred stock, net of gain (117) -
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 18,159 14,569
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,929) (5,287)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,456 12,216
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,527 $ 6,929
========= =========
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES:
Net income $ 7,259 $ 3,132
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 10,230 9,974
Charge for recovery of stranded plant 1,629 3,750
Purchased power settlement adjustment (2,425) -
Amortization of debt-related costs and
other deferred charges 957 1,881
Allowance for funds used during construction (82) (78)
Deferred income taxes 2,541 (2,126)
Investment tax credits (401) 678
Deferred purchased power and fuel costs (2,535) (587)
Cash flows impacted by changes in current assets
and liabilities:
Accounts payable (2,740) (6,858)
Accrued interest (4,990) (1,071)
Accrued taxes (1,991) (5,369)
Reserve for customer refund 838 (8,511)
Changes in other current assets and liabilities (20,560) (4,818)
Other, net 382 (163)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $ (11,888) $ (10,166)
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
-4-
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31,
(Unaudited) 1999
----------- -----------
(In thousands)
<S> <C> <C>
ASSETS
- ------
UTILITY PLANT:
Electric plant $ 1,293,744 $ 1,288,104
Construction work in progress 4,093 2,501
----------- -----------
Total 1,297,837 1,290,605
Less accumulated depreciation 390,203 382,627
----------- -----------
Net utility plant 907,634 907,978
----------- -----------
OTHER PROPERTY AND INVESTMENTS, at cost 4,243 4,243
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents 11,527 14,456
Accounts receivable 9,405 8,384
Inventories, at lower of average cost or market:
Fuel 1,235 575
Materials and supplies 3,896 3,834
Other current assets 614 939
----------- -----------
Total current assets 26,677 28,188
----------- -----------
LONG-TERM AND OTHER ASSETS:
Recoverable stranded costs 19,029 19,256
Deferred purchased power and fuel costs 24,332 21,797
Deferred charges 18,775 19,737
----------- -----------
Total long-term and other assets 62,136 60,790
----------- -----------
$ 1,000,690 $ 1,001,199
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
CAPITALIZATION:
Common shareholders' equity:
Common stock - no par value per share.
Authorized 50,000,000 shares; issued
13,445,494 shares in 2000 and
13,416,556 in 1999 $ 197,887 $ 196,685
Retained earnings 133,771 130,425
----------- -----------
Total common shareholders' equity 331,658 327,110
Redeemable cumulative preferred stock 1,534 1,664
Long-term debt, less current maturities 361,264 340,244
----------- -----------
Total capitalization 694,456 669,018
----------- -----------
CURRENT LIABILITIES:
Current maturities of long-term debt 100,000 100,000
Accounts payable 17,560 20,300
Accrued interest 3,430 8,420
Accrued taxes 10,827 12,818
Customers' deposits 3,890 3,786
Accumulated deferred income taxes 8,321 7,543
Reserve for customer refund 1,520 682
Other current liabilities 10,583 29,720
----------- -----------
Total current liabilities 156,131 183,269
----------- -----------
LONG-TERM AND OTHER LIABILITIES:
Regulatory tax liabilities 6,509 6,633
Accumulated deferred income taxes 98,973 97,196
Accumulated deferred investment tax credits 23,578 23,978
Deferred credits 21,043 21,105
----------- -----------
Total long-term and other liabilities 150,103 148,912
----------- -----------
COMMITMENTS AND CONTINGENCIES
----------- -----------
$ 1,000,690 $ 1,001,199
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
-5-
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF TNP ENTERPRISES, INC.)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
2000 1999
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING REVENUES $ 124,512 $ 118,111
--------- ---------
OPERATING EXPENSES:
Purchased power and fuel 59,550 57,372
Other operating and maintenance 23,607 23,023
Depreciation 10,230 9,974
Charge for recovery of stranded plant 1,629 3,750
Taxes other than income taxes 7,822 7,879
Income taxes 3,627 1,044
--------- ---------
Total operating expenses 106,465 103,042
--------- ---------
NET OPERATING INCOME 18,047 15,069
--------- ---------
OTHER INCOME:
Other income and deductions, net 330 73
Income taxes (131) 142
--------- ---------
Other income, net of taxes 199 215
--------- ---------
INCOME BEFORE INTEREST CHARGES 18,246 15,284
--------- ---------
INTEREST CHARGES:
Interest on long-term debt 9,595 10,054
Other interest and amortization
of debt-related costs 888 1,417
--------- ---------
Total interest charges 10,483 11,471
--------- ---------
NET INCOME 7,763 3,813
Dividends on preferred stock and other 5 36
--------- ---------
INCOME APPLICABLE TO COMMON STOCK $ 7,758 $ 3,777
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
-6-
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY, INC. AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
2000 1999
--------- ---------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from sales to customers $ 102,460 $ 105,001
Purchased power and fuel costs paid (63,613) (62,523)
Cash paid for payroll and to other suppliers (23,538) (22,504)
Interest paid, net of amounts capitalized (14,626) (11,447)
Income taxes refunded 4,508 4,000
Other taxes paid (17,146) (18,089)
Other operating cash receipts and payments, net 13 158
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (11,942) (5,404)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (9,200) (11,692)
Withdrawals from escrow account - 1,902
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES (9,200) (9,790)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks (18) (36)
Borrowings from (repayments to) revolving
credit facilities - net 21,000 (31,000)
Issuances:
Senior notes, net of discount - 174,164
Deferred expenses associated with financings - (1,280)
Redemptions:
Secured debentures - (130,000)
Preferred stock, net of gain (117) -
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 20,865 11,848
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (277) (3,346)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,002 7,977
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,725 $ 4,631
========= =========
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES:
Net income $ 7,763 $ 3,813
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 10,230 9,974
Charge for recovery of stranded plant 1,629 3,750
Purchased power settlement adjustment (2,425) -
Amortization of debt-related costs and
other deferred charges 957 1,881
Allowance for funds used during construction (82) (78)
Deferred income taxes 1,980 (2,125)
Investment tax credits (401) 894
Deferred purchased power and fuel costs (2,535) (587)
Cash flows impacted by changes in current assets
and liabilities:
Accounts payable (2,662) (6,310)
Accrued interest (4,958) (1,112)
Accrued taxes (2,635) (4,075)
Reserve for customer refund 838 (8,511)
Changes in other current assets and liabilities (20,186) (3,048)
Other, net 545 (130)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $ (11,942) $ (5,404)
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
-7-
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF TNP ENTERPRISES, INC.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31,
(Unaudited) 1999
----------- -----------
(In thousands)
<S> <C> <C>
ASSETS
- ------
UTILITY PLANT:
Electric plant $ 1,293,720 $ 1,288,080
Construction work in progress 4,093 2,501
----------- -----------
Total 1,297,813 1,290,581
Less accumulated depreciation 390,203 382,627
----------- -----------
Net utility plant 907,610 907,954
----------- -----------
OTHER PROPERTY AND INVESTMENTS, at cost 213 213
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents 3,725 4,002
Accounts receivable 6,985 6,347
Inventories, at lower of average cost or market:
Fuel 1,235 575
Materials and supplies 3,897 3,834
Other current assets 438 660
----------- -----------
Total current assets 16,280 15,418
----------- -----------
LONG-TERM AND OTHER ASSETS:
Recoverable stranded costs 19,029 19,256
Deferred purchased power and fuel costs 24,332 21,797
Deferred charges 18,714 19,757
----------- -----------
Total long-term and other assets 62,075 60,810
----------- -----------
$ 986,178 $ 984,395
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
CAPITALIZATION:
Common shareholders' equity:
Common stock - $10 par value per share
Authorized 12,000,000 shares;
issued 10,705 shares
$ 107 $ 107
Capital in excess of par value 222,149 222,149
Retained earnings 98,061 90,302
----------- -----------
Total common shareholders' equity 320,317 312,558
Redeemable cumulative preferred stock 1,534 1,664
Long-term debt, less current maturities 361,264 340,244
----------- -----------
Total capitalization 683,115 654,466
----------- -----------
CURRENT LIABILITIES:
Current maturities of long-term debt 100,000 100,000
Accounts payable 17,412 20,074
Accrued interest 3,430 8,388
Accrued taxes 11,554 14,189
Customers' deposits 3,890 3,786
Accumulated deferred income taxes 9,321 8,434
Reserve for customer refund 1,520 682
Other current liabilities 8,864 28,015
----------- -----------
Total current liabilities 155,991 183,568
----------- -----------
LONG-TERM AND OTHER LIABILITIES:
Regulatory tax liabilities 6,509 6,633
Accumulated deferred income taxes 96,381 95,165
Accumulated deferred investment tax credits 23,578 23,978
Deferred credits 20,604 20,585
----------- -----------
Total long-term and other liabilities 147,072 146,361
----------- -----------
COMMITMENTS AND CONTINGENCIES
----------- -----------
$ 986,178 $ 984,395
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
-8-
<PAGE>
TNP Enterprises Inc. and Subsidiaries
Texas-New Mexico Power Company and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Interim Financial Statements
The interim consolidated financial statements of TNP and subsidiaries, and
TNMP and subsidiaries, are unaudited and contain all adjustments (consisting
primarily of normal recurring accruals) necessary for a fair statement of the
results for the interim periods presented. Results for interim periods are not
necessarily indicative of results to be expected for a full year or for
previously reported periods due in part to seasonal revenue fluctuations. It is
suggested that these consolidated financial statements be read in conjunction
with the audited consolidated financial statements and notes thereto included in
TNP's and TNMP's 1999 Combined Annual Report on Form 10-K.
Prior period statements have been reclassified in order to be consistent
with current period presentation. The reclassification had no effect on net
income or common shareholders equity.
Note 2. Acquisition
On March 14, 2000, the process of obtaining needed approvals for the Merger
was completed. On April 7, 2000, ST Acquisition Corp., a Texas corporation (ST
Corp.) merged with and into TNP, the parent of TNMP. Upon closing, each
outstanding share of TNP's common stock that was outstanding at the effective
time of the merger was automatically converted into the right to receive $44.00
in cash. Prior to the merger, TNP common stock was traded on the New York Stock
Exchange. As a result of the Merger, TNP is no longer publicly held.
The merger occurred pursuant to an Agreement and Plan of Merger (Merger
Agreement) dated May 24, 1999, between TNP, ST Corp. and SW Acquisition, L.P.
("SW Acquisition"), the parent of ST Corp. TNP is the surviving corporation in
the Merger. SW Acquisition now holds all outstanding common stock of TNP.
SW Acquisition and ST Corp. funded the merger as follows (in millions):
Sources of funding:
-------------------
Equity contribution to ST Corp. by SW Acquisition $ 100.0
Sale of 100,000 shares of senior preferred stock by ST Corp. 100.0
Borrowings from senior secured credit facility by ST Corp. 160.0
Issuance of senior subordinated notes by ST Corp. 275.0
Cash on hand (TNP) 5.3
--------
Total $ 640.3
========
Uses of funding:
---------------
Payment of Merger consideration $ 591.6
Costs and expenses related to Merger 48.7
--------
Total $ 640.3
========
The senior preferred stock was issued in a private placement under a bridge
preferred stock commitment. Until the bridge preferred stock is replaced with a
permanent issuance of senior preferred stock, it will accrue dividends at a rate
based off of LIBOR, with the initial dividend rate set at 13.28%. If the senior
preferred stock has not been replaced by July 7, 2000, the dividend rate will
increase by an additional 100 basis points. Further delays in permanently
placing the stock will cause the dividend rate to increase an additional 50
basis points on October 5, 2000 and January 3, 2001, with the rate being fixed
at 18% beginning April 8, 2001. TNP intends to replace the bridge preferred
stock with a senior preferred stock that pays an in-kind dividend. The
borrowings from the senior secured credit facility include a $160 million term
loan due in 2006. The term loan bears interest at a variable rate that is
currently 9.21%. The senior secured credit facility is secured by a pledge of
all TNMP common stock held by TNP. The senior subordinated notes were issued
through a private offering, bear interest at 10.25% per year, and mature in
2010.
In connection with the Merger, TNMP entered into a Backstop Credit Facility
(Backstop Facility) in the amount of $240 million on April 17, 2000. The
Backstop Facility will provide financing for TNMP to repurchase up to $100
million of its 9.25% Series U first mortgage bonds and up to $140 million of its
10.75% Series A Secured Debentures. As required by its first mortgage bond and
secured debenture indentures, TNMP must offer to repurchase this debt at 101
percent of par value due to the change in control of TNP resulting from the
Merger. TNMP made such an offer in late April 2000, and holders have until May
24, 2000, to respond. Payment on tendered bonds and debentures shall be made
within five business days of the offer's expiration.
-9-
<PAGE>
The Merger is to be accounted for under the purchase method of accounting.
In accordance with the purchase method of accounting, the purchase price will be
allocated to the acquired assets and assumed liabilities based on their fair
values and the unallocated amount will be recorded as goodwill. The process of
determining the fair value of assets and liabilities is underway, and the final
results will not be completed until certain information about pre-acquisition
contingencies is assessed. The most significant items to be determined include
the appropriate value to assign to TNP's sole generating plant and the amount of
regulatory assets to be recorded for recovery of stranded costs as permitted by
Texas legislation.
The following condensed unaudited pro forma consolidated balance sheet
shows the effect of the Merger closing as if it had occurred on March 31, 2000.
The condensed unaudited pro forma consolidated statements of income and loss
show the effects of the Merger closing as if it had occurred on January 1, 2000
and 1999, respectively. These pro forma financial statements are based on a
preliminary estimate of the fair value of assets acquired and liabilities
assumed in connection with the Merger. These results are not necessarily
indicative of actual results that would have occurred had the Merger closed at
the beginning of the periods presented. Further, the pro forma results are not
intended to be a projection of future results of operations. A substantial
portion of TNMP's earnings occur during the second and third quarters of the
year, which include the periods of peak electricity usage in the TNMP service
territory.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Actual Adjustment Balance
------------- ----------- ------------
(in thousands)
<S> <C> <C> <C>
Assets
- ------------------------------------------
Net utility plant $ 907,634 $ - (1) $ 907,634
Other property and investments, at cost 4,243 - 4,243
Current assets 26,677 (5,343) (7) 21,334
Long-term and other assets
Recoverable stranded costs 19,029 - (1) 19,029
Deferred charges 18,775 299,960 (2) 318,735
Other 24,332 - 24,332
------------- ----------- ------------
$ 1,000,690 $ 294,617 $ 1,295,307
============= =========== ============
Capitalization and Liabilities
- ------------------------------------------
Common stock $ 197,887 $ (104,574) (3) $ 93,313
Retained earnings 133,771 (133,771) (4) -
Preferred stock 1,534 100,000 (5) 101,534
Long-term debt, less current maturities 361,264 435,000 (6) 796,264
------------- ----------- ------------
Total capitalizaton 694,456 296,655 991,111
Current liabilities 156,131 (2,038) (8) 154,093
Long-term and other liabilities 150,103 - 150,103
------------- ----------- ------------
$ 1,000,690 $ 294,617 $ 1,295,307
============= =========== ============
</TABLE>
Adjustments:
(1) TNP is currently assessing the fair value of TNP One and its other
assets as required by the purchase method of accounting.
-10-
<PAGE>
(2) Adjustment to record goodwill and other deferred charges resulting
from the merger. The amount is calculated as follows:
<TABLE>
<S> <C>
Merger consideration paid $ 591,602
Direct expenses 22,865
Less: estimated fair value of assets acquired, net of liabilities assumed 327,873
---------
Goodwill 286,594
Capitalized financing fees 13,366
---------
$ 299,960
=========
</TABLE>
(3) Adjustment to eliminate TNP equity and record $100 million equity
contribution from SW Acquisition, less preferred stock issuance
costs of $6.7 million.
(4) Adjustment to eliminate TNP retained earnings.
(5) Adjustment to record issuance of $100 million of senior preferred
stock by ST Corp.
(6) Adjustment to reflect issuance of debt related to the Merger as
follows:
<TABLE>
<S> <C>
Senior secured credit facility $ 160,000
Senior subordinated notes 275,000
---------
$ 435,000
=========
</TABLE>
(7) Reflects the net cash effect from the preceding pro forma
adjustments.
(8) Tax effects related to certain goodwill items.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Actual Adjustment Balance
------------- ----------- ------------
(in thousands)
<S> <C> <C> <C>
Operating revenues $ 124,526 $ - $ 124,526
------------- ----------- ------------
Operations and maintenance expense 83,708 439 (1) 84,147
Depreciation and amortization 10,230 2,866 (2) 13,096
Income taxes 3,579 (4,062) (3) (483)
Other operating expenses 9,570 - 9,570
------------- ----------- ------------
Total operating expenses 107,087 (757) (106,330)
------------- ----------- ------------
Net operating income 17,439 757 18,196
Other income, net of taxes 334 - 334
------------- ----------- ------------
Income before interest charges 17,773 757 18,530
Interest charges 10,514 11,166 (4) 21,680
------------- ----------- ------------
Net income (loss) 7,259 (10,409) (3,150)
Dividends on preferred stock and other 5 3,320 (5) 3,325
------------- ----------- ------------
Income (loss) applicable to common stock $ 7,254 $ (13,729) $ (6,475)
============= =========== ============
</TABLE>
-11-
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Actual Adjustment Balance
------------- ----------- ------------
(in thousands)
<S> <C> <C> <C>
Operating revenues $ 118,125 $ - $ 118,125
------------- ----------- ------------
Operations and maintenance expense 81,197 380 (1) 81,577
Depreciation and amortization 9,974 2,866 (2) 12,840
Income taxes 712 (4,041) (3) (3,329)
Other operating expenses 11,750 - 11,750
------------- ----------- ------------
Total operating expenses 103,633 (795) 102,838
------------- ----------- ------------
Net operating income 14,492 795 15,287
Other income, net of taxes 281 - 281
------------- ----------- ------------
Income before interest charges 14,773 795 15,568
Interest charges 11,641 11,166 (4) 22,807
------------- ----------- ------------
Net income (loss) 3,132 (10,371) (7,239)
Dividends on preferred stock and other 36 3,320 (5) 3,356
------------- ----------- ------------
Income (loss) applicable to common stock $ 3,096 $ (13,691) $ (10,595)
============= =========== ============
</TABLE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Actual Adjustment Balance
------------- ----------- ------------
(in thousands)
<S> <C> <C> <C>
Operating revenues $ 576,150 $ - $ 576,150
------------- ----------- ------------
Operations and maintenance expense 386,221 (1,435) (1) 384,786
Depreciation and amortization 39,295 11,464 (2) 50,759
Income taxes 19,120 (15,130) (3) 3,990
Other operating expenses 57,122 - 57,122
------------- ----------- ------------
Total operating expenses 501,758 (5,101) 496,657
------------- ----------- ------------
Net operating income 74,392 5,101 79,493
Other income, net of taxes (482) - (482)
------------- ----------- ------------
Income before interest charges 73,910 5,101 79,011
Interest charges 43,743 44,663 (4) 88,046
------------- ----------- ------------
Net income (loss) 30,167 (39,562) (9,395)
Dividends on preferred stock and other 19 13,280 (5) 13,261
------------- ----------- ------------
Income (loss) applicable to common stock $ 30,186 $ (52,842) $ (22,656)
============= =========== ============
</TABLE>
-12-
<PAGE>
Adjustments:
(1) Reflects pro forma TNP expenses, excluding one-time Merger
expenses, as follows:
Three Months Ended
March 31,
---------------------- Twelve Months Ended
2000 1999 December 31, 1999
------- ------- -------------------
TNP expenses:
Salaries and benefits $ 544 $ 544 $ 2,177
Rent and utilities 96 96 384
Miscellaneous 29 29 116
------- ------- -------------
Subtotal 669 669 2,677
One-time Merger expenses (230) (289) (4,112)
------- ------- -------------
$ 439 $ 380 $ (1,435)
======= ======= -------------
(2) Reflects amortization of goodwill over a 25-year amortization
period.
(3) Income tax effect of pro forma adjustments, excluding non-
deductible goodwill.
(4) Adjustment to interest expense reflects the following:
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended Ended
March 31, December 31,
2000 and 1999 1999
------------- -------------
<S> <C> <C>
Senior subordinated notes at 10.25 percent $ 7,047 $ 28,189
Term loan at 9.21 percent 3,685 14,738
Fees on unused senior secured credit facility at 0.5 percent 31 124
Amortization of capitalized financing fees 403 1,612
-------- --------
$ 11,166 $ 44,663
======== ========
</TABLE>
(5) Adjustment to record estimated preferred stock dividend at 13.28%.
Note 3. Regulatory Matters
During 1999, legislation was passed in both Texas and New Mexico that
establishes retail competition for generation operations. Retail competition is
currently scheduled to begin in New Mexico and Texas on January 1, 2001, and
January 1, 2002, respectively. The legislation in both states contains
provisions that affect TNMP's operations. The impact of those provisions will
be noted as necessary in the following discussion.
Texas
Excess Earnings. As discussed in TNMP's 1999 Annual Report on Form 10-K,
TNMP has operated since 1998 with an earnings cap that provided for excess
earnings to be used, in part, to recover stranded costs. During 1998, TNMP's
Transition Plan directed the method for sharing of excess earnings. In 1999,
legislation was passed in Texas, which also provides for stranded cost recovery
through use of earnings in excess of an allowed rate of return.
1998 Excess Earnings. In its original 1998 earnings report filing, TNMP
reported that it had not earned in excess of the 11.25% return on equity
established in the Transition Plan. On May 3, 2000, the Public Utility
Commission of Texas (PUCT) issued a final order resolving two issues raised by
the PUCT's Office of Regulatory Affairs on August 16, 1999. The PUCT held in
favor of TNMP that the effects of a 1999 refinancing should not be retroactively
applied to 1998, but should be applied starting with the 1999 earnings report.
However, the PUCT ordered TNMP to defer a $4.8 million purchased power dispute
payment it made in 1998, and to amortize it over a four-year period, beginning
in 1998 and ending in 2001. Accordingly, in March 2000 TNMP recorded a
regulatory asset of $2.4 million, the unamortized balance of the $4.8 million
payment and a corresponding reduction to purchased power expense.
Based on the adjustment discussed above, TNMP earned $1.2 million more than
the earnings cap for 1998. In accordance with the Transition Plan, the excess
earnings will be shared equally between customer refunds and stranded cost
recovery.
-13-
<PAGE>
1999 Excess Earnings. On March 30, 2000, TNMP filed its Annual Report
pursuant to (S)39.257 of the Public Utility Regulatory Act. The Annual Report
details TNMP's calculation of excess earnings under the provisions of the
legislation passed in 1999. The Annual Report showed that TNMP earned $22.0
million in excess of the 10.53% return on rate base established in the
legislation. That amount is $1.4 million lower than the $23.4 million TNMP had
accrued for excess earnings as of December 31, 1999. The difference is
attributable to the amortization of the 1998 purchased power settlement
described above.
2000 Excess Earnings. TNMP has recorded estimated excess earnings of $2.0
million for the three months ended March 31, 2000.
Unbundled Cost of Service Filing. The legislation requires TNMP to file a
rate case that will set rates for the transmission and distribution company that
will provide regulated services once competition begins in 2002. On March 31,
2000, TNMP filed its Unbundled Cost of Service Filing (UCOS) with the PUCT. The
filing proposes tariffs under which Retail Electric Providers (REPs) will be
able to purchase transmission and distribution services after December 31, 2001
in TNMP's service area. The tariffs are based upon a projected cost of service
of $150.3 million. The cost of service includes TNMP's projected reasonable and
necessary expenses, and return on its transmission and distribution rate base at
a 9.11% weighted average cost of capital.
The filing also includes a proposed Competition Transition Charge (CTC), as
required by the legislation. The CTC is designed to recover stranded costs
related to TNMP's generation assets and purchased power contracts, as determined
by a PUCT-established model. In its filing, TNMP calculated Economic Cost over
Market (ECOM) in the amount of $194.4 million would remain at January 1, 2002.
In addition, TNMP expects the PUCT to address certain issues related to its
January 2000 Business Separation Plan filing in the UCOS.
The PUCT has proposed a schedule for TNMP's UCOS that contemplates a
settlement conference in August 2000, hearings in October 2000, if no settlement
is reached, a preliminary decision in February 2001, and final orders in August
2001.
Fuel Reconciliation. At March 31, 2000, TNMP had an under-recovered
balance of fuel and the energy-related portion of purchased power costs of $24.3
million. PUCT rules require TNMP to reconcile its fuel and energy-related
purchased power costs at least every three years. In June 2000, TNMP plans to
file with the PUCT to recover and reconcile fuel and energy-related purchased
power expenses. TNMP will request an increase to the fuel factor based on
projected fuel and energy-related purchased power costs. TNMP will also request
an interim surcharge to begin recovery of TNMP's under recovered costs as of
March 31, 2000. Management believes the ultimate outcome of this fuel
reconciliation will not have a material adverse effect on TNP's or TNMP's
consolidated financial position.
New Mexico
1999 Rate Case. TNMP and the NMPRC Staff reached a settlement in this
case, which was filed in June 1999, and have submitted the settlement to the
NMPRC for approval. The settlement calls for a decrease in TNMP's base rates of
$1.8 million, or 6%, effective October 1, 1999. TNMP has reserved $0.9 million
related to the base rate reductions through March 31, 2000. TNMP expects the
NMPRC to act on the proposed settlement during the second quarter of 2000.
Restructuring. The New Mexico Legislature opened the state's electric
power market to consumer choice with the passage of the Electric Utility
Industry Restructuring Act of 1999 (the Act) in April 1999. The Act provides
for the phase-in of retail choice beginning January 1, 2001, and guarantees
recovery of at least 50 percent of a utility's stranded costs over a five-year
period. The Act also requires utilities to disaggregate their regulated
transmission and distribution business activities from their generation
operations, which will be subject to competition. TNMP is required to file its
plan for complying with the Act by June 1, 2000.
-14-
<PAGE>
Note 4. Segment and Related Information
TNP's principal subsidiary, TNMP, has two reportable segments, Texas and
New Mexico. TNP manages the segments separately to respond to the differing
operational and regulatory climates in the two states.
The following tables present information about profits, losses and assets
of TNP's reportable segments (in thousands). In the tables below, "Total
assets" for Texas and New Mexico includes only net utility plant. All other
assets are included in All Other and Eliminations.
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
---------------------------------
All Other and
Texas New Mexico Eliminations Consolidated
----- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenues $ 104,449 $ 20,063 $ 14 $ 124,526
Net income (loss) 7,106 657 (504) 7,259
Total assets at March 31, 2000 823,261 84,349 93,080 1,000,690
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
---------------------------------
All Other and
Texas New Mexico Eliminations Consolidated
----- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenues $ 98,994 $ 19,117 $ 14 $ 118,125
Net income (loss) 3,194 619 (681) 3,132
Total assets at December 31, 1999 823,565 84,389 93,245 1,001,199
</TABLE>
Note 5. Commitments and Contingencies
Legal Actions
Phillips Petroleum. TNMP is the defendant in a suit styled Phillips
Petroleum Company vs. Texas-New Mexico Power Company, filed on October 1, 1997
and pending in the 149th State District Court of Brazoria County, Texas. The
suit, which is in the discovery stage, is based on events surrounding an
interruption of electricity to a petroleum refinery and related facilities that
occurred in May 1997. Phillips Petroleum Company is seeking the recovery of
damages arising from the interruption and in May 1999 demanded payment in the
amount of $47.1 million. TNMP's tariff approved by the PUCT contains
limitations against recovery of the great majority of Phillip's alleged damages.
The Texas Supreme Court, in another matter, has recently upheld the
enforceability of such tariff limitations in litigation of this type; TNMP
believes the ruling will operate to substantially limit any recovery by Phillips
to the cost of its electrical equipment, in the event that any damages are
awarded in this matter. Discovery has not sufficiently progressed to quantify
any damages to Phillips' electrical equipment; however, Phillips has previously
reported to the SEC that it incurred costs of approximately $2.0 million in this
interruption. In May 1999, TNMP filed a Third Party Petition naming Sweeny
Cogeneration Limited Partnership, the operator of cogeneration and related
facilities at the Phillips refinery, as a defendant. TNMP has previously
charged to earnings the deductible amount of its insurance coverage, $500,000.
Power Resource Group. TNMP is a defendant in a suit styled Power Resource
Group, Inc. v. Public Utility Commission of Texas and Texas-New Mexico Power
Company, pending in the 345th District Court of Travis County, Texas. This
lawsuit, which was originally filed on May 21, 1999, appeals the PUCT's
dismissal of a regulatory case that Power Resource Group, Inc. (PR Group) had
filed against TNMP. PR Group is a developer of electric generating plants that
are intended to be qualifying cogeneration facilities. This lawsuit and the
regulatory case it appeals both stem from discontinued negotiations for power
supply. PR Group alleged that TNMP was required to buy power to be generated
from an as-yet-unbuilt cogeneration facility. TNMP filed its original answer
with the court on June 28, 1999.
In an amended petition filed January 13, 2000, PR Group asserts a claim of
damages of at least $158,000,000. It bases its claim on the assertion that it
was damaged when TNMP refused to execute an agreement after the aforementioned
discontinued negotiations, that TNMP profited significantly from PR Group's
work, that TNMP is in error when it relies on a PUCT order dismissing PR Group's
petition before the PUCT on substantially the same facts, and that TNMP
misrepresented that it would enter into a contract with PR Group to purchase
energy and capacity at rates equal to or below TNMP's avoided costs. TNMP
believes that PR Group's claims are without merit and intends to contest this
claim vigorously.
TNMP is involved in various claims and other legal proceedings arising in
the ordinary course of business. In the opinion of management, the ultimate
dispositions of these matters will not have a material adverse effect on TNMP's
and TNP's consolidated financial position or results of operations.
-15-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A).
The following discussion should be read in conjunction with the related
interim consolidated financial statements and notes.
Results Of Operations
Overall Results
TNP's earnings applicable to common stock were $7.3 million for the quarter
ended March 31, 2000 as compared to $3.1 million for the quarter ended March 31,
1999. Since the operations of TNMP (the principal subsidiary) currently
represent most of TNP's operations, the following discussion focuses on TNMP's
operations unless noted otherwise.
Under legislation passed in 1999, TNMP's earnings on its Texas operations
are capped at a 10.53% return on rate base adjusted for discounted rates to
industrial customers, which are expected to be approximately $2.0 million in
2000. TNMP will apply Texas earnings in excess of the cap to recover its
stranded costs. During the first quarter of 2000, TNMP recorded pre-tax excess
earnings of $2.0 million ($1.2 million after tax). That amount included an
adjustment to the excess earnings recorded in 1998 and 1999 due to the
resolution of a purchased power dispute discussed in Note 3 - 1998 Excess
Earnings.
TNMP's earnings applicable to common stock were $7.8 million for the
quarter ended March 31, 2000 as compared to $3.8 million for the quarter ended
March 31, 1999. The $4.0 million increase is attributable to the factors listed
below (in millions):
Changes in base revenues $ 1.5
Non-pass through purchased power and fuel expense 2.7
Transmission expenses 1.1
Other operating expenses (1.7)
Charge for recovery of stranded plant 2.1
Interest 1.0
All other (including income tax effects on the items above) (2.7)
--------
$ 4.0
========
Operating Revenues
The following table summarizes the components of base revenues (in
thousands).
Three Months Ended March 31,
-----------------------------
Increase
2000 1999 (Decrease)
-------- -------- ---------
Operating revenues $124,512 $118,111 $6,401
Pass-through expenses 47,895 43,033 4,862
-------- -------- ---------
Base revenues $ 76,617 $ 75,078 $1,539
======== ======== =========
Pass-through expenses in Texas include fuel and the energy-related portion
of purchased power. In New Mexico, pass-through expenses include all purchased
power costs. Details of pass-through expenses are discussed under "Results of
Operations -- Operating Expenses."
The following table summarizes the components of the change in base
revenues for the three months ended March 31, 2000 compared to the same period
in 1999 (in thousands).
Base revenue
-------------
Weather related $ 1,871
Customer growth 882
Price/sales mix (primarily base rate reductions) (2,418)
Transmission revenue 1,342
Other (138)
-------
Base revenue increase $ 1,539
=======
-16-
<PAGE>
Current quarter base revenue increased $1.5 million, or 2.0%, compared to
the corresponding 1999 period. The increase resulted from higher weather-
related sales in the residential and commercial classes, higher transmission
revenues, and growth in the number of residential and commercial customers.
These increases were offset in part by a rate reduction in Texas pursuant to the
Transition Plan.
Transmission revenues increased due to a change in the method of allocating
Texas transmission costs that the PUCT approved as of September 1, 1999. The
PUCT adopted the new method to comply with the restructuring legislation passed
in 1999 as discussed in Note 3.
Effective January 1, 2000, TNMP implemented base rate reductions of 3% and
1% for residential and commercial customers, respectively, under the terms of a
Declaratory Order issued by the PUCT on December 6, 1999. Similar rate
reductions will take effect January 1, 2001.
The following table summarizes the components of gigawatt-hour (GWH) sales.
Three Months Ended March 31,
-----------------------------
Increase
2000 1999 (Decrease)
------ ------ -----------
GWH sales:
---------
Residential 503 492 11
Commercial 433 402 31
Industrial:
Firm 130 112 18
Economy 1,023 1,044 (21)
Power marketing 68 22 46
Other 23 26 (3)
----- ----- ---
Total GWH sales 2,180 2,098 82
===== ===== ===
Current quarter sales of 2,180 GWHs increased by 82 GWHs (or 3.9%) as
compared to the corresponding 1999 period. The increase resulted from higher
off-system sales, higher weather-related sales in the commercial and residential
classes, and growth in the number of commercial and residential customers.
Although weather in the first quarter of 2000 was below normal, it was not as
mild as weather in the first quarter of 1999.
Operating Expenses
TNMP incurred operating expenses of $106.5 million in the quarter ended
March 31, 2000, an increase of $3.4 million over the amount incurred during the
corresponding period of 1999. The increase reflects higher costs for purchased
power, fuel, and other operating expenses partially offset by lower transmission
expenses and lower charges for recovery of stranded plant.
Purchased Power and Fuel Expenses
The following table summarizes the components of TNMP's purchased power and
fuel expenses (in thousands).
Three Months Ended March 31,
-------------------------------
Increase
2000 1999 (Decrease)
------ ------ ----------
Purchased power and fuel expenses:
Pass through expenses:
Purchased power $ 39,411 $ 36,071 $ 3,340
Fuel 8,484 6,962 1,522
--------- --------- -------
47,895 43,033 4,862
--------- --------- -------
Non-pass through expenses
Texas demand purchased power 11,215 14,092 (2,877)
Other fuel costs 440 247 193
--------- --------- -------
11,655 14,339 (2,684)
--------- --------- -------
Total purchased power and fuel $ 59,550 $ 57,372 $ 2,178
========= ========= =======
In the first quarter of 2000, purchased power and fuel expenses increased
$2.2 million from the level incurred during the first quarter of 1999. Pass-
through expenses increased $4.9 million, reflecting increased purchases caused
by higher sales and price increases in New Mexico. Non pass-through expenses
decreased $2.7 million due to the deferral of a 1998 payment made to resolve a
billing dispute as described in Note 3 - 1998 Excess Earnings.
-17-
<PAGE>
Transmission Expenses
Transmission expenses decreased by $1.1 million in the first quarter of
2000 compared to the corresponding period in 1999, due to the change in cost
allocation described in "Operating Revenues," above.
Other Operating Expenses
Other operating expenses for the current quarter were $1.7 million higher
than in the same quarter of 1999. This increase is primarily due to higher
payroll costs and a payment to the Texas Department of Housing for programs to
assist low-income customers.
Charge for Recovery of Stranded Plant
Charge for recovery of stranded plant decreased $2.1 million in the first
quarter of 2000 compared to the same period in 1999. During the first quarter
of 2000, TNMP recorded pre-tax excess earnings of $1.6 million. In the first
quarter of 1999, TNMP recorded $3.7 million of additional depreciation under the
Transition Plan.
Interest Expense
Interest charges decreased by $1.0 million due to TNMP's January 1999
issuance of $175 million of 6.25% senior notes, which replaced $130 million of
12.5% secured debentures, and due to reduced debt levels of the credit
facilities, and lower amortization of debt related expenses.
Financial Condition
TNMP Liquidity
The main sources of liquidity for TNMP are cash flow from operations and
borrowings from its credit facility. TNMP's cash flow from operations was $6.5
million lower for the first quarter of 2000 as compared to the first quarter of
1999 due to lower receipts from customers, resulting from base rate reductions
in Texas, and the timing of the first interest payment on TNMP's 6.25% senior
notes.
As discussed in Note 2, due to the change in control of TNMP resulting from
the Merger, TNMP has made a tender offer to purchase its Series U first mortgage
bonds and Series A Secured Debentures at a price of 101% of par. TNMP has the
ability to borrow up to $240 million from a backstop credit facility to
refinance any debt that must be redeemed as a result of this tender offer.
TNMP has $100 million of 9.25% Series U first mortgage bonds that mature in
September 2000. To the extent that the bonds are not purchased under the tender
offer described above, TNMP expects to establish a new credit facility in an
amount sufficient to refinance the bonds.
TNMP has sufficient liquidity to satisfy the possibility of any known
contingencies. Management believes cash flow from operations, the backstop
credit facility described above and periodic borrowings under its revolving
credit facility should be sufficient to meet working capital requirements at
least through 2000.
TNP Liquidity
TNP's main sources of liquidity, and its ability to service the debt issued
to finance the Merger, depend primarily on the earnings of TNMP and the
distribution of those earnings in the form of cash dividends, as well as tax
payments from TNMP due under a tax sharing agreement between TNP and TNMP. TNP
has a $25 million revolving credit facility that will be used to provide working
capital and meet other requirements. The revolving credit facility was put in
place at the time of the Merger. As of the date of the Merger, TNP had not
borrowed against the revolving credit facility, and the entire $25 million was
available to TNP.
Cash dividends from TNMP to TNP are limited by restrictions included in
TNMP's debt indentures and bank agreements. In addition, the regulatory orders
from the PUCT and the NMPRC approving the Merger contain additional restrictions
on TNMP's ability to pay cash dividends to TNP.
During the first quarter of 2000, TNP's cash flow from operations was $1.7
million lower than in the first quarter of 1999 due to TNMP's lower cash flow
from operations as discussed above, offset by reduced expenditures for non-
regulated activities.
-18-
<PAGE>
Management believes that dividends from TNMP, payments from TNMP under the
tax sharing agreement, and periodic borrowings under its revolving credit
facility should be sufficient to meet TNP's working capital requirements at
least through 2000.
-19-
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
See Note 5 for information regarding material legal proceedings.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits are filed with this report:
3(a)(i) Amended and Restated Articles of Incorporation of TNP Enterprises,
Inc.
3(a)(ii) Amended and Restated Bylaws of TNP Enterprises, Inc.
3(b)(i) Amended and Restated Articles of Incorporation of Texas-New Mexico
Power Company
3(b)(ii) Amended and Restated Bylaws of Texas-New Mexico Power.
3(a)(iii) Articles of Merger of ST Acquisition Corp. with and into TNP
Enterprises, Inc.
4(a)(i) Statement of Resolutions Establishing Two Series of Shares of ST
Acquisition Corp., relating to Senior Redeemable Preferred Stock,
Series A and Series B.
4(a)(ii) Share Registration Rights Agreement dated as of April 7, 2000 by
and among ST Acquisition, Corp., as Issuer, and CIBC Inc., CIBC
World markets Corp., Chase Securities Inc., Continental Casualty
Company and Laurel Hill Capital Partners LLC, as Purchasers,
relating to 100,000 shares of Senior Redeemable Preferred Stock,
$1,000 Liquidation Preference per Share.
4(a)(iii) Assumption Agreement by TNP Enterprises, Inc. dated April 7, 2000.
4(b)(i) Registration Rights Agreement Dated as of April 7, 2000 by and
among ST Acquisition Corp, as Issuer, and CIBC World Markets
Corp., Chase Securities, Inc., and Barclays Capital, Inc., as
Initial Purchasers, relating to 10.25% Senior Subordinated Notes
Due 2010.
4(b)(ii) Assumption Agreement by TNP Enterprises, Inc. dated April 7, 2000.
27(a) Financial Data Schedule for TNP.
27(b) Financial Data Schedule for TNMP.
(b) Reports on Form 8-K:
TNP filed a report on Form 8-K dated April 21, 2000, to disclose the
closing of the Merger.
TNP filed a report on Form 8-K dated May 2, 2000, to disclose the
termination of Arthur Andersen, LLP, and the appointment of Deloitte &
Touche, LLP, as its independent accountants effective April 25, 2000.
Statement Regarding Forward Looking Information
The discussions in this document that are not historical facts, including,
but not limited to, 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: our ability to adapt to open market competition enacted by
our legislators and regulators; the effects of accounting pronouncements that
may be issued periodically; changes in regulations affecting TNP's and TNMP's
businesses; insurance coverage available for claims made in litigation; the
effect of a Texas Supreme Court decision on the limitations of any actual
damages awarded in currently ongoing litigation; future acquisitions or
strategic partnerships; general business and economic conditions, and price
fluctuations in the electric power market; our ability to market preferred stock
to replace the bridge preferred stock; and other factors described from time to
time in TNP's and TNMP's reports filed with the Securities and Exchange
Commission. TNP and TNMP wish 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.
-20-
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(Registrant) TNP ENTERPRISES, INC.
Date: May 12, 2000 By \s\ THEODORE A. BABCOCK
-----------------------
Theodore A. Babcock
Chief Financial Officer
TEXAS-NEW MEXICO POWER COMPANY
Date: May 12, 2000 By \s\ MANJIT S. CHEEMA
--------------------
Manjit S. Cheema
Senior Vice President and Chief Financial
Officer
Date: May 12, 2000 By \s\ SCOTT FORBES
----------------
Scott Forbes
Chief Accounting Officer
-21-
<PAGE>
Exhibit 3(a)(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF ST ACQUISITION CORP.
ARTICLE ONE
Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act (the "TBCA"), ST Acquisition Corp. (the "Corporation") adopts
the following Amended and Restated Articles of Incorporation which accurately
copy the Articles of Incorporation and all amendments thereto that are in effect
to date and as further amended by such Restated Articles of Incorporation as
hereinafter set forth and which contain no other change in any provision hereof.
ARTICLE TWO
The Articles of Incorporation of the Corporation are hereby amended by
these Amended and Restated Articles of Incorporation as follows: (a) current
ARTICLES I, II, V, VI, VII, VIII, IX, XI and XII remain unchanged and are
redesignated as ARTICLES I, II, V, VI, VII, VIII, IX, XI and XII respectively of
ARTICLE FIVE below, (b) current ARTICLES III, IV and X are amended and
redesignated ARTICLES III, IV and X respectively of ARTICLE FIVE below, (c)
current ARTICLES XIII is deleted and replaced with ARTICLE XIII of ARTICLE FIVE
below.
ARTICLE THREE
Each amendment made by the Amended and Restated Articles of Incorporation
has been effected in conformity with the provisions of the TBCA and each such
amendment made was duly adopted on April 5, 2000, by the shareholders of the
Corporation.
ARTICLE FOUR
The number of shares of the Corporation outstanding was 100 shares of
common stock, and the number of shares entitled to vote on the restated articles
of incorporation as so amended was 100 shares of common stock. All of the
shareholders of the Corporation have signed a written consent to the adoption of
such restated articles of incorporation as so amended pursuant to Article 9.10
of the TBCA.
ARTICLE FIVE
The articles of incorporation and all amendments and supplements thereto
are hereby superseded by the following restated articles of incorporation which
accurately copy the entire text thereof and as amended as above set forth:
<PAGE>
ARTICLE I
NAME
The name of the Corporation is ST Acquisition Corp.
ARTICLE II
DURATION
The period of the Corporation's duration is perpetual.
ARTICLE III
PURPOSE
Section 1. The purpose or purposes for which the Corporation is organized
are to transact any and all lawful business for which corporations may be
incorporated under the Texas Business Corporation Act; provided that, to ensure
the separateness of the Corporation, the Corporation will
(a) maintain accurate and appropriate detailed books, financial records
and accounts, including checking and other bank accounts and custodian
and other securities safekeeping accounts, that are separate and
distinct from those of any other Person;
(b) maintain its books, financial records and accounts (including
inter-entity transaction accounts) in a manner so that it will not be
difficult or costly to segregate, ascertain or otherwise identify its
assets and liabilities;
(c) not commingle any of its assets, funds, liabilities or business
functions with the assets, funds, liabilities or business functions of
any other Person;
(d) observe all appropriate corporate procedures and formalities;
(e) not merge or consolidate with any other Person (other than for
financial reporting purposes);
(f) cause all material transactions and agreements between it and any one
or more of its Affiliates (including transactions and agreements
pursuant to which the assets or property of one is used or to be used
by the other) to be entered into in the names of the Persons
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that are parties to the transaction or agreement and to be formally
documented in writing;
(g) conduct transactions with third parties in its name and as a Person
that is separate and distinct from its Affiliates;
(h) pay its own liabilities, expenses and losses only from its own assets;
(i) compensate all consultants, independent contractors and agents from
its own funds for services provided to it by such consultants,
independent contractors and agents;
(j) to the extent that it and its Affiliates jointly contract or do
business with vendors or service providers or share overhead expenses,
allocate fairly, appropriately non-arbitrarily the costs and expenses
incurred in so doing between or among such Persons, with the result
that each such Person bears its fair share of all such costs and
expenses;
(k) to the extent that it contracts or does business with vendors or
service providers where the goods or services are wholly or partially
for the benefit of its Affiliates, allocate fairly, appropriately and
non-arbitrarily the costs incurred in so doing to the Person for whose
benefit the goods or services are provided, with the result that each
such Person bears its fair share of all such costs;
(l) not enter into any guaranty, or otherwise become liable for, or pledge
its assets to secure, the liabilities, debts or obligations of any
other Person;
(m) hold itself out as separate and distinct from any other Person and
shall not identify itself as a division or department of any other
Person;
(n) ensure that decisions with respect to its business and daily
operations shall be independently made (although the individual making
any particular decision may also be an employee, officer or director
of any one or more of its Affiliates) and shall not be dictated by its
Affiliates;
(o) to the extent that it occupies any premises in the same location or
shares the use of equipment with its Affiliates, allocate fairly,
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appropriately and non-arbitrarily any rent and overhead expenses among
and between such Persons with the result that each bears its fair
share of all such rent and expenses;
(p) cause its representatives and agents to hold themselves out to third
parties as being its representatives or agents, as the case may be,
and conduct its business using separate business cards, letterhead,
purchase orders, invoices, checks and the like bearing its own name,
it being understood that it need not have its own dedicated employees;
(q) to the extent that it share the same officers or other employees with
its Affiliates, allocate fairly, appropriately and non-arbitrarily the
salaries of and expenses related to providing other benefits to such
officers and other employees between or among such Persons, with the
result that each such Person will bear its fair share of the salary
and benefit costs associated with all such common or shared officers
or other employees;
(r) maintain separate annual financial statements prepared in accordance
with generally accepted accounting principles, consistently applied,
showing its assets and liabilities separate and distinct from those of
any other Person;
(s) pay or bear the cost of the preparation of its financial statements,
and have such financial statements audited by an independent certified
public accounting firm;
(t) to the extent its financial statements are to be consolidated with the
financial statements of any other Person, cause to be included in such
consolidated financial statements a narrative description of its
separate assets, liabilities, business functions, operations and
existence to ensure that such separate assets, liabilities, business
functions, operations and existence are readily distinguishable by any
Person receiving or relying upon a copy of such consolidated financial
statements;
(u) not hold out its credit as being available to satisfy the debts or
obligations of any other Person;
(v) correct any known misunderstanding regarding its separate identity;
(w) not make any loans to any Person or buy or hold any indebtedness
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or other obligations issued by any other Person (except for cash and
cash equivalents);
(x) hold all of its assets in its own name;
(y) maintain an arm's-length relationship with its Affiliates and enter
into transactions with Affiliates only on a commercially reasonably
basis.
Section 2. For the purpose of this Article III,
(a) "Affiliate" shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person;
for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and
"under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise.
(b) "Person" shall include individuals, corporations, partnerships,
trusts, other entities and groups (which term shall include a "group"
as such term is defined in Section 13(d)(3) of the Exchange Act).
ARTICLE IV
SHARES
Section 1. The aggregate number of shares which the Corporation has
authority to issue is three million (3,000,000); one million (1,000,000) shares
shall be common stock (the "Common Stock"), no par value per share, and two
million (2,000,000) shares shall be preferred stock (the "Preferred Stock"), no
par value per share.
Section 2. Shares of Preferred Stock may be issued from time to time in one
or more series, each of which is to have a distinctive serial designation as
determined in the resolution or resolutions of the Board of Directors providing
for the issuance of such Preferred Stock from time to time.
Section 3. Each series of Preferred Stock:
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(a) may have such number of shares;
(b) may have such voting powers or may be without voting powers;
(c) may be subject to redemption at such time or times and at such price;
(d) may be entitled to receive dividends (which may be cumulative or
noncumulative) at such rate or rates, on such conditions, from such
date or dates, and at such times, and payable in preference to, or in
such relation to, the dividends payable on any other class or classes
or series of stock;
(e) may have such rights upon the dissolution of, or upon any distribution
of the assets of, the Corporation;
(f) may be made convertible into, or exchangeable for, shares of any other
class or classes, or of any other series of the same class or of any
other class or classes, of stock of the Corporation at such price or
prices or at such rates of exchange, and with adjustments;
(g) may be entitled to the benefit of a sinking fund or purchase fund to
be applied to the purchase or redemption of shares of such series in
such amount or amounts;
(h) may be entitled to the benefit of conditions and restrictions upon the
creation of indebtedness of the Corporation or any subsidiary, upon
the issuance of any additional stock (including additional shares of
such series or of any other series) and upon the payment of dividends
or the making of other distributions on, and the purchase, redemption
or other acquisition by the Corporation of stock of any class or
series; and
(i) may have such other relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof;
as in each such instance is stated in the resolution or resolutions of the
Board of Directors providing for the issuance of such Preferred Stock.
Except where otherwise set forth in such resolution or resolutions the
number of shares comprising such series may be increased or decreased (but
not below the number of shares then outstanding) from time to time by like
action of the Board of Directors. The foregoing enumeration of the
designations, preferences, limitations and relative rights which may be
fixed with respect to shares of Preferred Stock is merely illustrative of
the power of the Board of Directors. The authority of the Board of
Directors to fix such designations, preferences, limitations and relative
rights
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shall be with the maximum authority permissible pursuant to Article 2.13 of
the TBCA, as it may be amended from time to time.
Section 4. Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation, or which, if convertible or exchangeable, have been converted
into or exchanged for shares of stock of any other series, class or classes will
have the status of authorized but unissued shares of Preferred Stock and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of any series of Preferred Stock and to any
filing required by law.
Section 5. (a) Except as otherwise provided by law or by the resolutions
of the Board of Directors providing for the issuance of any
series of Preferred Stock, Common Stock will have the
exclusive right to vote for the election of directors and
for all other purposes. Each holder of Common Stock will be
entitled to one vote for each share held.
(b) Subject to all of the rights of Preferred Stock or any
series thereof, the holders of Common Stock will be
entitled to receive, when, as and if declared by the Board
of Directors, out of funds legally available therefor,
dividends payable in cash, in stock or otherwise.
(c) Upon any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, and subject
to the rights of the holders of Preferred Stock, the
remaining net assets of the Corporation will be distributed
pro rata to the holders of Common Stock in accordance with
their respective rights and interests.
Section 6. All shares of Common Stock or Preferred Stock of the
Corporation, including, without limitation, shares issued as a stock dividend,
shall, when the full lawful consideration fixed by the Board of Directors has
been paid, or when so issued as a stock dividend, be deemed fully paid and not
liable to any further call or assessment thereon, and the holders of such shares
shall not be liable for any further payment thereon. Any of the unissued shares
of capital stock of the Corporation may be issued from time to time in such
amount and manner, including, without limitation, in distribution as stock
dividends, and for such lawful consideration as the Board of Directors may
determine.
ARTICLE V
DENIAL OF PREEMPTIVE RIGHTS
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<PAGE>
The right of a shareholder referred to in Article 2.22-1 of the Texas
Business Corporation Act, to exercise a preemptive right to acquire additional,
unissued or treasury shares of the Corporation or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire shares of the
Corporation is hereby denied.
ARTICLE VI
ELECTION OF DIRECTORS; NONCUMULATIVE VOTING
Directors shall be elected by majority vote. No shareholder of the
Corporation shall have the right to cumulate his votes in the election of
directors. Subject to any voting rights granted to holders of any class or
series of Preferred Stock, each holder of Stock of the Corporation entitled to
vote in connection with the election of directors shall be entitled to cast that
number of votes as is equal to the number of shares of capital stock of the
Corporation owned by such holder for as many directors as there are to be
elected.
ARTICLE VII
POWER TO AMEND BYLAWS
Without limiting the power of the shareholders of the Corporation to amend
or repeal the Corporation's bylaws or to adopt new bylaws, the Board of
Directors shall have the power to amend or repeal the Corporation's bylaws and
to adopt new bylaws at any regular or special meeting of the directors at which
a quorum is present by the affirmative vote of a majority of those present at
such meeting, provided notice of the proposed alteration, amendment or repeal is
contained in the notice of such meeting.
ARTICLE VIII
COMMENCEMENT OF BUSINESS
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00).
ARTICLE IX
REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the Corporation is
CT Corporation System, 350 N. St. Paul Street, Dallas, Texas 75201, and the name
of its initial registered agent at such address is CT Corporation System.
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<PAGE>
ARTICLE X
BOARD OF DIRECTORS
The number of directors presently constituting the Board of Directors is
one (1) and the name and address of the person who is serving as director is:
William J. Catacosinos
2 Robbins Lane
Suite 201
Jericho, NY 11753
The number of directors may hereafter be increased or decreased as provided
in the bylaws of the Corporation.
ARTICLE XI
LIABILITY OF DIRECTORS
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except that this article does not eliminate or limit the
liability of a director to the extent the director is found liable for: (a) a
breach of the director's duty of loyalty to the Corporation or its shareholders;
(b) 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; (c) 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; (d) an act or
omission for which the liability of a director is expressly provided for by an
applicable statute.
ARTICLE XII
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
Any action required by the Texas Business Corporation Act to be taken at
any annual or special meeting of shareholders, or any action which may be taken
at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted.
ARTICLE XIII
SPECIAL MEETINGS OF SHAREHOLDERS
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Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by (a) the President or Chairman
of the Board of Directors, (b) a majority of the members of the Board of
Directors or (c) the holders of at least fifty percent (50%) of all the shares
entitled to vote at such meetings.
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IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated
Articles of Incorporation as of this 6th day of April, 2000.
ST ACQUISITION CORP.
By:
---------------------------------------
Theodore Babcock
Vice President, Treasurer and Secretary
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<PAGE>
EXHIBIT 3(a)(ii)
AMENDED AND RESTATED
BYLAWS
OF
TNP ENTERPRISES, INC.
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
TNP ENTERPRISES, INC.
* * * * * * * * * * * * * * * * * * * *
TABLE OF CONTENTS
Page
----
ARTICLE I OFFICES.........................................................1
1.1 Principal Office............................................1
1.2 Other Offices...............................................1
ARTICLE II MEETINGS OF SHAREHOLDERS.......................................1
2.1 Place of Meetings...........................................1
2.2 Annual Meeting..............................................1
2.3 List of Shareholders........................................1
2.4 Special Meetings............................................2
2.5 Notice......................................................2
2.6 Quorum......................................................2
2.7 Voting by Shareholders......................................2
2.8 Voting Procedure............................................3
2.9 Record Date.................................................3
2.10 Action Without Meeting; Telephone Meetings..................4
ARTICLE III DIRECTORS.....................................................5
3.1 Management..................................................5
3.2 Number; Election............................................5
3.3 Change in Number............................................5
3.4 Removal.....................................................5
3.5 Vacancy.....................................................5
3.6 Advisory Director...........................................6
3.7 Place of Meetings...........................................6
3.8 First Meetings..............................................6
3.9 Regular Meetings............................................6
3.10 Special Meetings............................................6
3.11 Quorum......................................................6
3.12 Action Without Meeting; Telephone Meetings..................7
3.13 Chairman of the Board of Directors..........................7
3.14 Compensation................................................7
3.15 Executive Committee.........................................7
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Page
----
3.16 Other Committees............................................7
3.17 Annual Report...............................................8
ARTICLE IV NOTICES........................................................8
4.1 Method......................................................8
4.2 Waiver......................................................8
ARTICLE V OFFICERS........................................................8
5.1 Officers....................................................8
5.2 Election....................................................8
5.3 Compensation and Contracts with Officers....................9
5.4 Removal and Vacancies.......................................9
5.5 Chairman of the Board of Directors..........................9
5.6 Chief Executive Officer.....................................9
5.7 President...................................................9
5.8 Vice Presidents............................................10
5.9 Secretary..................................................10
5.10 Assistant Secretaries......................................10
5.11 Chief Financial Officer....................................10
5.12 Treasurer..................................................11
5.13 Assistant Treasurers.......................................11
5.14 Controller.................................................11
5.15 Assistant Controllers......................................11
ARTICLE VI CERTIFICATES REPRESENTING SHARES..............................12
6.1 Certificates...............................................12
6.2 Lost Certificates..........................................12
6.3 Transfer Agent and Registrar...............................12
6.4 Transfer of Shares.........................................12
6.5 Registered Shareholders....................................12
6.6 Closing of Transfer Books..................................13
ARTICLE VII GENERAL PROVISIONS...........................................13
7.1 Distributions and Share Dividends..........................13
7.2 Reserves...................................................13
7.3 Checks.....................................................13
7.4 Fiscal Year................................................13
7.5 Seal.......................................................14
7.6 Voting Securities Held by the Corporation..................14
7.7 Indemnification............................................14
7.8 Amendments.................................................14
7.9 Table of Contents; Headings................................14
ii
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
TNP ENTERPRISES, INC.
(the "Corporation")
ARTICLE I
OFFICES
1.1 Principal Office. The principal business office of the Corporation
shall be at 2 Robbins Lane, Suite 201, Jericho, New York 11753.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Texas, as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings. Meetings of shareholders for all purposes may be
held at such time and place, within or without the State of Texas, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2.2 Annual Meeting. An annual meeting of the shareholders, commencing with
the year 1999 shall be held each year on such date and at such time as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meetings, the shareholders shall elect a Board of Directors and transact such
other business as may properly be brought before the meeting.
2.3 List of Shareholders. At least ten (10) days before each meeting of
the shareholders, a complete list of the shareholders entitled to vote at said
meeting or any adjournment thereof, arranged in alphabetical order with the
address of and the number of voting shares held by each, shall be prepared by
the officer or agent having charge of the stock transfer books. Such list, for a
period of ten (10) days prior to such meeting, shall be kept on file at the
registered office or principal place of business of the Corporation and shall be
subject to
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inspection by any shareholder at any time during usual business hours. Such list
shall be produced and kept open at the time and place of the meeting during the
whole time thereof, and shall be subject to the inspection of any shareholder
who may be present.
2.4 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, the Articles of
Incorporation, or these Bylaws, may be called by (a) the President or Chairman
of the Board of Directors, (b) a majority of the members of the Board of
Directors or (c) the holders of at least fifty percent (50%) of all the shares
entitled to vote at such meetings. Business transacted at a special meeting
shall be confined to the purposes stated in the notice of the meeting.
2.5 Notice. Written or printed notice stating the place, day and hour of a
meeting of shareholders, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) or, in the event of a merger or consolidation, not less than twenty (20),
nor more than fifty (50) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, the Secretary, or the
officer or person calling the meeting, to each shareholder of record entitled to
vote at the meeting. Notice need not be given to a shareholder if (1) notice of
two consecutive annual meetings and all notices of any meetings held during the
period between those annual meetings or (2) all (but in no event less than two)
payments (if sent by first class mail) of distributions or interest on
securities during a 12-month period have been mailed to the shareholder,
addressed at his address as shown on the records of the Corporation, and have
been returned undeliverable. If such a shareholder delivers to the Corporation a
written notice setting forth his current address, the notice requirement of this
Section shall be reinstated.
2.6 Quorum. At each meeting the holders of a majority of the shares issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum of the shareholders
for the transaction of business except as otherwise provided by statute, the
Articles of Incorporation or these Bylaws, but in no event shall a quorum
consist of the holders of less than one-third of the shares entitled to vote at
such a meeting. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting, without notice other than announcement at the meeting, until a quorum
shall be present or represented. When such adjourned meeting is reconvened and a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.7 Voting by Shareholders. With respect to any matter other than the
election of Directors or a matter for which the affirmative vote of the holders
of a specified portion of the shares entitled to vote is required by the Texas
Business Corporation Act, the affirmative vote of the holders of a majority of
the shares entitled to vote on that matter and represented in person or by proxy
at a meeting of shareholders at which a quorum is present shall be the act of
the shareholders, unless otherwise provided in the Articles of Incorporation,
the Bylaws or resolution adopted by an affirmative majority vote of the Board of
Directors.
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Unless otherwise provided in the Articles of Incorporation, the Bylaws or
an affirmative majority vote of the Board of Directors, directors shall be
elected by a plurality of the votes cast by the holders of shares entitled to
vote in the election of directors at a meeting of shareholders at which a quorum
is present.
2.8 Voting Procedure. Each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied or special voting rights are provided by
the Articles of Incorporation (including voting rights created pursuant to
Article 2.29 of the Texas Business Corporation Act). At any meeting of the
shareholders, every shareholder having the right to vote shall be entitled to
vote in person, by proxy appointed by an instrument in writing subscribed by
such shareholder, or by his duly authorized attorney-in-fact. No form of proxy
or power of attorney bearing a date more than eleven (11) months prior to said
meeting shall be valid, unless said instrument provides for a longer period.
Each proxy shall be revocable unless the proxy form conspicuously states that
the proxy is irrevocable and the proxy is coupled with an interest. All proxies
must be filed with the Secretary of the Corporation prior to or at the time of
the meeting.
2.9 Record Date. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive a distribution by the Corporation (other than a
distribution involving a purchase or redemption by the Corporation of any of its
own shares) or a share dividend, or in order to make a determination of
shareholders for any other proper purpose (other than determining shareholders
entitled to consent to action by shareholders proposed to be taken without a
meeting of shareholders), the Board of Directors of the Corporation may fix in
advance a record date to be not less than ten (10) nor more than fifty (50) days
prior to such meeting. If the share transfer records are not closed, as provided
in Article VI, Section 6.6, and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive a distribution (other than a distribution
involving a purchase or redemption by the Corporation of any of its own shares)
or a share dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such
distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this Section or Article VI, Section 6.6, such determination shall
apply to any adjournment thereof, except where the determination has been made
through the closing of the share transfer records and the stated period of
closing has expired.
For the purpose of determining shareholders entitled to call a special
meeting of shareholders pursuant to Article II, Section 2.4, the record date
shall be the date the first shareholder signs the notice of the meeting.
Unless a record date shall have previously been fixed or determined
pursuant to this section, whenever action by shareholders is proposed to be
taken by consent in writing without a meeting of shareholders, the Board of
Directors may fix a record date for the purpose of
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determining shareholders entitled to consent to that action, which record date
shall not precede, and shall not be more than ten (10) days after, the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors and the
prior action of the Board of Directors is not required by the Texas Business
Corporation Act, the record date for determining shareholders entitled to
consent to action in writing without a meeting shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation in the manner provided by Article II, Section
2.10. If no record date shall have been fixed by the Board of Directors and
prior action of the Board of Directors is required by the Texas Business
Corporation Act, the record date for determining shareholders entitled to
consent to action in writing without a meeting shall be at the close of business
on the date on which the Board of Directors adopts a resolution taking such
prior action.
2.10 Action Without Meeting; Telephone Meetings. Any action required or
permitted to be taken at a meeting of the shareholders of the Corporation may be
taken without a meeting without prior notice, and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders of
all shares entitled to vote on the action were present and voted.
Every written consent signed by the holders of less than all the shares
entitled to vote with respect to the action that is the subject of the consent
shall bear the date of signature of each shareholder who signs the consent. No
written consent signed by the holders of less than all the shares entitled to
vote with respect to the action that is the subject of the consent shall be
effective to take the action that is the subject of the consent unless, within
sixty (60) days after the date of the earliest dated consent delivered to the
Corporation in the manner required by this Section, a consent or consents signed
by the holder or holders of shares having not less than the minimum number of
votes that would be necessary to take the action that is the subject of the
consent are delivered to the Corporation by delivery to its registered office,
registered agent, principal place of business, transfer agent, registrar,
exchange agent or an officer or agent of the Corporation having custody of the
books in which proceedings of meetings of shareholders are recorded. Delivery
shall be by hand or certified or registered mail, return receipt requested.
Delivery to the Corporation's principal place of business shall be addressed to
the president or principal executive officer of the Corporation.
A telegram, telex, cablegram, or similar transmission by a shareholder, or
a photographic, photostatic, facsimile, or similar reproduction of a writing
signed by a shareholder, shall be regarded as signed by the shareholder for
purposes of this section.
Prompt notice of the taking of any action by shareholders without a meeting
by less than unanimous written consent shall be given to those shareholders who
did not consent in writing to the action.
Subject to applicable notice provisions and unless otherwise restricted by
the Articles of Incorporation, shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in
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the meeting can hear each other, and participation in such meeting shall
constitute presence in person at such meeting, except where a person's
participation is for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.1 Management. The business and affairs of the Corporation shall be
managed by its Board of Directors who may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders. The Board of Directors shall keep regular
minutes of its proceedings.
3.2 Number; Election. The Board of Directors shall consist of at least one
and not more than fifteen Directors, who need not be shareholders or residents
of the State of Texas. Directors shall be elected at the annual meeting of the
shareholders, except as hereinafter provided, and each Director elected shall
hold office until his successor shall be elected and shall qualify. At every
election of Directors, each shareholder entitled to vote with respect to such
matter shall have the right to vote in person or by proxy the number of voting
shares owned by him or her for as many persons as there are Directors to be
elected and for whose election he has a right to vote. Cumulative voting shall
be prohibited.
3.3 Change in Number. The number of Directors may be increased or
decreased from time to time by an amendment to these Bylaws or a resolution
adopted by the affirmative vote of a majority of the Directors, but no decrease
shall have the effect of shortening the term of any incumbent Director.
3.4 Removal. Any Director may be removed either for or without cause at
any annual or special meeting of shareholders by the affirmative vote of a
majority in number of shares or class of shares of the shareholders present in
person or by proxy at such meeting and entitled to vote for the election of such
Directors, as the case may be, which elected the Director being removed, if
notice of the intention to act upon such matters shall have been given in the
notice calling such meeting. Upon the removal of a Director, the shareholders
shall have the power at the same meeting to elect a new Director to serve until
the next annual shareholders meeting, if notice of the intention to act upon
such matter shall have been given in the notice calling such meeting. If the
shareholders fail to elect a person to fill the unexpired term of the Director
so removed, such unexpired term shall be considered a vacancy on the Board of
Directors to be filled by the remaining directors in the manner next provided.
3.5 Vacancy. If any vacancy occurs in the Board of Directors caused by
death, resignation, retirement, disqualification, removal from office of any
Director, or otherwise, a majority of the Directors then in office, though less
than a quorum, may choose a successor, or a
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successor may be chosen at a special meeting of shareholders called for that
purpose, and each Director so chosen shall be elected until the next annual
meeting of the shareholders and until such Director's successor shall have been
elected and shall qualify. Any director position to be filled by reason of an
increase in the number of Directors shall be by election at an annual meeting of
shareholders or at a special meeting of shareholders duly called for such
purpose Newly created directorships may also be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director, for a term of office continuing only until the next election of one or
more directors by the shareholders; provided that the Board of Directors may not
fill more than two such directorships during the period between any two
successive annual meetings of shareholders.
3.6 Advisory Director. The position of Advisory Director may be created
from time to time by the Board of Directors. Any Advisory Director shall be
entitled to notice of meetings and expected to attend such meetings. Any
Advisory Director may render advice to the Board of Directors, but may not vote
on any issue. Any Advisory Director shall be entitled to the same compensation
and benefits as a duly elected Director.
3.7 Place of Meetings. The Directors of the Corporation may hold their
meetings, both regular and special, either within or without the State of Texas.
3.8 First Meetings. The first meeting of each newly elected Board of
Directors shall be held without further notice immediately following the annual
meeting of shareholders, and at the same place, unless by unanimous consent of
the Directors then elected and serving, such time or place shall be changed. At
the first meeting, the Board of Directors shall elect one Director to serve as
Chairman of the Board Directors and to preside at all meetings of the
shareholders and of the Board of Directors.
3.9 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board of Directors.
3.10 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board of Directors or the President on three (3)
days' notice to each Director, either personally or by mail or telegram or email
or facsimile transmission stating the purpose of such meeting. Notice given by
telephone should be confirmed in writing. Notice given by email or facsimile
transmission shall be deemed to be given upon receipt. Special meetings shall be
called by the Chairman of the Board of Directors, the President or Secretary in
like manner and on like notice on the written request of any two (2) directors.
3.11 Quorum. At all meetings of the Board of Directors, the presence of a
majority of the Directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute, the Articles of Incorporation or these Bylaws. If a quorum shall not be
present at any meeting of Directors, the Directors present thereat may adjourn
the meeting from
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time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
3.12 Action Without Meeting; Telephone Meetings. Any action required or
permitted to be taken at a meeting of the Board of Directors or members of any
committee designated by the Board of Directors may be taken without a meeting if
a consent in writing, setting forth the action so taken, is signed by all the
members of the Board of Directors or committee, as the case may be. Such consent
shall have the same force and effect as a unanimous vote at a meeting. Subject
to applicable notice provisions and unless otherwise restricted by the Articles
of Incorporation, members of the Board of Directors, or members of any committee
designated by the Board of Directors, may participate in and hold a meeting by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in such meeting shall constitute presence in person at such
meeting, except where a person's participation is for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
3.13 Chairman of the Board of Directors. The Board of Directors may elect a
Chairman of the Board of Directors to preside at their meetings and to perform
such other duties as the Board of Directors may from time to time assign to him
or her.
3.14 Compensation. Directors and Advisory Directors, as such, may by
resolution of the Board of Directors be allowed a fixed sum and expenses of
attendance, if any, for attendance at each regular or special meeting of the
Board of Directors or of any meeting by members of an authorized committee, if
any, and may also receive such other compensation for their services as
Directors, or for serving the Corporation in any other capacity, as the Board of
Directors from time to time may determine. Any Director who is also an employee
of the Corporation shall not be compensated for services as a Director.
3.15 Executive Committee. The Board of Directors may, by resolution adopted
by a majority of the whole Board of Directors, designate an Executive Committee,
to consist of one or more of the Directors of the Corporation. The Executive
Committee, to the extent provided in said resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
business and affairs of the Corporation, except where action of the full Board
of Directors is required by statute or by the Articles of Incorporation, and
shall have power to authorize the seal of the Corporation to be affixed to all
papers which may require it. Any member of the Executive Committee may be
removed by the Board of Directors by the affirmative vote of a majority of the
Board of Directors, whenever in its judgment the best interests of the
Corporation will be served thereby. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
3.16 Other Committees. The Board of Directors may, by resolution adopted by
a majority of the whole Board of Directors, designate from among its members one
or more committees, other than an Executive Committee, to the extent provided in
such resolution.
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3.17 Annual Report. The Board of Directors shall present at each annual
meeting and, when called for by a vote of the shareholders at any special
meeting of the shareholders, a full and clear statement of the business and
condition of the Corporation.
ARTICLE IV
NOTICES
4.1 Method. Whenever by statute, the Articles of Incorporation, or these
Bylaws, notice is required to be given to any Director or shareholder, and no
provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given in writing,
by facsimile transmission or by email or by mail, postage prepaid, addressed to
such Director or shareholder at such address as appears on the books of the
Corporation or in any other method permitted by law. Any notice required or
permitted to be given by mail shall be deemed to be given at the time when the
same shall be thus deposited in the United States mail as aforesaid. Any notice
given by email or facsimile transmission shall be deemed to be given upon
receipt.
4.2 Waiver. Whenever any notice is required to be given to any shareholder
or Director of the Corporation by statute, the Articles of Incorporation, or
these Bylaws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated in such notice,
shall be deemed equivalent to the giving of such notice. Attendance of a
shareholder or Director at a meeting shall constitute a waiver of notice of such
meeting, except where a shareholder or Director attends for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened. Consent in writing by a shareholder or
Director to any action taken or resolution adopted by the shareholders or
Directors of the Corporation shall constitute a waiver of any and all notices
required to be given in connection with such action or resolution.
ARTICLE V
OFFICERS
5.1 Officers. The officers of the Corporation shall be elected by the
Directors and shall be a President and Secretary. The Board of Directors may
also choose a Chief Financial Officer, a Controller, a Treasurer and such number
of Assistant Controllers, Assistant Secretaries, Assistant Treasurers, a Vice
President and Assistant Vice Presidents as the Board of Directors may from time
to time determine. Any two or more offices may be held by the same person.
5.2 Election. The Board of Directors at its first meeting after each
annual meeting of shareholders shall elect the officers of the Corporation, who
need not be members of the Board of Directors, shareholders or residents of the
State of Texas. The Board of Directors may appoint such other officers and
agents as it shall deem necessary, who shall be appointed for
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such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
5.3 Compensation and Contracts with Officers. The compensation of all
officers who report directly to the President of the Corporation shall be fixed
by the Board of Directors. The compensation of agents and employees shall be
determined and fixed by the President. The Board of Directors of the Corporation
may enter into agreements with officers on such terms as are deemed necessary
for present or future performance of service to and for the Corporation by
officers at such amounts of compensation as may be required to obtain such
services or as to which such officers may agree, and for lease to the
Corporation by the officers of any vehicles, equipment, furnishings or other
articles of property owned or held by officers as may be useful or necessary to
the organization and functioning of the Corporation. No officer shall be
ineligible to receive such compensation by reason of the fact that such officer
is also a Director of the Corporation.
5.4 Removal and Vacancies. Each officer of the Corporation shall hold
office until his successor is chosen and qualifies in his stead or until his
death or until his resignation or removal from office. Any officer or agent or
member of a committee elected or appointed by the Board of Directors may be
removed either for or without cause by a majority of the Board of Directors
present at a meeting of the Board of Directors at which a quorum is represented,
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. If the office of any
officer becomes vacant for any reason, the vacancy may be filled by the Board of
Directors.
5.5 Chairman of the Board of Directors. The Chairman of the Board of
Directors shall preside at all meetings of shareholders and Directors, and may
be designated as the Chief Executive Officer of the Corporation, but unless so
designated shall not otherwise be considered an officer of the Corporation.
5.6 Chief Executive Officer. The Chief Executive Officer shall have
responsibility for the general direction of the business and affairs of the
Corporation, subject to the control of the Board of Directors. The Chief
Executive Officer shall have authority to sign, execute and acknowledge in the
name and on behalf of the Corporation all contracts and other documents and
instruments, including bonds and mortgages, except as otherwise provided by law,
and shall have authority to appoint and discharge agents and employees. The
Chief Executive Officer shall have such additional powers and duties as the
Board of Directors may from time to time prescribe. In the absence or disability
of the President, the Chief Executive Officer shall perform such duties and
exercise such powers of the President as the Chief Executive Officer shall deem
necessary unless such functions are assumed by the Chairman of the Board of
Directors or otherwise delegated by the Board of Directors or the Executive
Committee. The Chief Executive Officer shall be an ex officio member of all
Board Committees.
5.7 President. (a) The President shall, in the absence of the Chairman of
the Board of Directors, perform all of the functions and duties herein above
assigned to the Chairman of the
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Board of Directors. If the President is designated as the Chief Executive
Officer, the President shall perform all the functions of that office as set
forth in Article V, Section 5.6 above; but, in all events, the President shall
be the Chief Operating Officer of the Corporation and shall have general and
active management of the business and affairs of the Corporation, shall see that
all orders and resolutions of the Board of Directors are carried into effect,
and shall perform such other duties as the Board of Directors shall prescribe.
(b) The President may execute bonds, mortgages and other contracts or
instruments requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
5.8 Vice Presidents. The Board of Directors may elect an Executive Vice
President who shall perform the duties of the President during the President's
absence or disability and shall perform such other duties as the Board of
Directors may prescribe. The Board of Directors may elect other Vice Presidents
who shall in the order of their seniority in office and in the absence or
disability of the President and the Executive Vice President, perform the duties
and exercise the powers of the President and shall perform such other duties as
the Board of Directors may prescribe.
The Assistant Vice Presidents, if any, in order of their seniority in
office shall, in the absence or disability of their respective Vice President,
perform the duties and exercise the powers of such Vice President, and shall
perform such other duties and have such other powers as the Board of Directors
or President may from time to time prescribe.
5.9 Secretary. The Secretary shall attend all sessions of the Board of
Directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision the Secretary shall function. The Secretary shall keep in safe
custody the seal of the Corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it, and, when so affixed,
it shall be attested by the Secretary's signature or by the signature of the
Treasurer or an Assistant Secretary.
5.10 Assistant Secretaries. The Assistant Secretaries, if any, in order of
their seniority in office shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary, and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe or as the President may from time to time delegate.
5.11 Chief Financial Officer. The Chief Financial Officer, if one is
appointed, shall be a Vice President and shall be in charge of the financial
affairs of the Corporation under the direction and the supervision of the
President. The Chief Financial Officer shall supervise the activities of the
Controller and the Treasurer.
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5.12 Treasurer. The Treasurer, if one is appointed, shall act under the
supervision of the Chief Financial officer, or if there is no Chief Financial
Officer, the Treasurer shall act under the President's supervision. The
Treasurer shall have the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements of the Corporation
and shall deposit all monies and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Chief Financial Officer, taking proper vouchers for such
disbursements, and shall render to the Chief Financial Offer, or to the
President if there is no Chief Financial Officer, and at the regular meetings of
the Board of Directors, or whenever they may require it, an account of all
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board of Directors may prescribe. If
required by the Board of Directors, the Treasurer shall give the Corporation a
bond in such form in such sum, and with surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of such office and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.
5.13 Assistant Treasurers. The Assistant Treasurers, if any, in order of
their seniority in office shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer, and shall perform
such other duties and have such other powers as the Board of Directors or
President may from time to time prescribe.
5.14 Controller. The Controller, if one is appointed, shall act under the
supervision of the Chief Financial Officer, or if there is no Chief Financial
Officer, the Controller shall act under the supervision of the President. The
Controller shall be the chief accounting officer of the Corporation and shall,
when proper, approve all bills for purchases, payrolls and similar instruments
providing for disbursement of money by the Corporation for payment by the Chief
Financial Officer. The Controller shall be in charge of and maintain books of
account and accounting records of the Corporation and shall render to the Chief
Financial Officer, or to President if there if no Chief Financial Officer, an
account of all his transactions as Controller and of the financial condition of
the Corporation. In addition, the Controller shall perform such other acts as
are usually performed by the Controller of a Corporation or assigned to him or
her by the President.
5.15 Assistant Controllers. The Assistant Controllers, if any, in order of
their seniority in office shall, in the absence or disability of the Controller,
perform the duties and exercise the powers of Controller, and shall perform such
other duties and have such other powers as the Board of Directors or President
may from time to time prescribe.
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ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.1 Certificates. Certificates in such form as may be determined by the
Board of Directors shall be delivered representing all shares to which
shareholders are entitled. Such certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. Each
certificate shall state on the face thereof the holder's name, the number and
class of shares, and the par value of such shares or a statement that such
shares are without par value. They shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary and may be sealed with the
seal of the Corporation or a facsimile thereof. The signature of any such
officer may be facsimile if the certificate is countersigned by a transfer agent
or is registered by a registrar other than the Corporation itself or its
employees.
6.2 Lost Certificates. The Board of Directors may direct a new certificate
representing shares to be issued in place of any certificate theretofore issued
by the Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate, or the
owner's legal representative, to advertise the same in such manner as it shall
require and/or give the Corporation a bond in such form, in an amount not
exceeding double the value of the stock, and with such surety or sureties as it
may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
6.3 Transfer Agent and Registrar. The Board of Directors may appoint one
or more transfer agents or transfer clerks and one or more registrars and may
require all certificates for shares to bear the signature or signatures of any
of them.
6.4 Transfer of Shares. Shares of stock shall be transferable only on the
books of the Corporation by endorsement by the holder thereof in person or by
the holder's duly authorized attorney. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or the transfer
agent of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
6.5 Registered Shareholders. Unless otherwise provided in the Texas
Business Corporation Act, and subject to the provisions of Chapter 8 of the
Texas Business & Commerce Code: (a) the Corporation may regard the person in
whose name any shares issued by the Corporation are registered in the share
transfer records of the Corporation at any particular time (including, without
limitation, as of a record date fixed pursuant to these Bylaws) as the owner of
those shares at that time for purposes of voting those shares, receiving
distributions thereon or notices in respect thereof, transferring those shares,
exercising rights of dissent with respect to those shares, exercising or waiving
any preemptive right with respect to those shares, entering into agreements with
respect to those shares in accordance with Article 2.22 or 2.30 of the Texas
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Business Corporation Act, or giving proxies with respect to those shares; and
(b) neither the Corporation nor any of its officers, directors, employees, or
agents shall be liable for regarding that person as the owner of those shares at
that time for those purposes, regardless of whether that person possesses a
certificate for those shares.
6.6 Closing of Transfer Books. The Board of Directors may provide that the
stock transfer books shall be closed for a stated period not to exceed fifty
(50) days for the purpose of determining shareholders entitled to receive notice
of or to vote at any meeting of shareholders or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose. If the stock transfer books shall
be closed for the purpose of determining shareholders entitled to receive notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting.
ARTICLE VII
GENERAL PROVISIONS
7.1 Distributions and Share Dividends. Subject to the provisions of law
and the Articles of Incorporation, distributions and share dividends, if any,
may be authorized by the Board of Directors at any regular or special meeting.
Distributions may be paid in cash, in property, or in the issuance of
indebtedness, and may be in the form of a dividend on the outstanding shares of
the Corporation, a purchase or redemption by the Corporation of any of its own
shares, or a payment in liquidation of all or a portion of the assets of the
Corporation. Share dividends shall be paid in authorized but unissued shares of
the Corporation or in treasury shares subject to the provisions of the Texas
Business Corporation Act and the Articles of Incorporation. The Board of
Directors may fix a record date in the manner provided in Article II of these
Bylaws or may close the stock transfer books in the manner provided in Article
VI of these Bylaws for the purpose of determining shareholders entitled to
receive a distribution (other than a distribution involving a purchase or
redemption by the Corporation of any of its own shares) or share dividend.
7.2 Reserves. There may be created by resolution of the Board of Directors
out of the surplus of the Corporation such reserve or reserves as the Directors
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize distributions, or to repair or maintain any
property of the Corporation, or for such other purposes as the Directors shall
think beneficial to the Corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.
7.3 Checks. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
7.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
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7.5 Seal. The corporate seal shall have inscribed thereon the name of the
Corporation. Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
7.6 Voting Securities Held by the Corporation. Unless otherwise ordered by
the Board of Directors, the President shall have full power and authority on
behalf of the Corporation to attend, to act and to vote at any meeting of
security holders of other corporations in which the Corporation may hold
securities. At such meeting the President shall possess and may exercise any and
all rights and powers incident to the ownership of such securities which the
Corporation might have possessed and exercised if it had been present. The Board
of Directors may from time to time confer like powers upon any other person or
persons.
7.7 Indemnification. (a) The Corporation shall indemnify every Director,
officer, employee or former Director, officer or employee of the Corporation, or
any person who has served at the Corporation's request as a Director, officer or
employee of another Corporation in which the Corporation owns shares of stock,
against, and reimburse and advance to every Director, officer and employee or
former Director, officer or employee for, all liabilities, costs and expenses
incurred in connection with such directorship, office or employment and any
actions taken or omitted in such capacity to the greatest extent permitted under
the Texas Business Corporation Act and other applicable laws at the time of such
indemnification, reimbursement or advance payment.
(b) Such rights of indemnification and reimbursement shall not be deemed
exclusive of any other rights to which such Director, officer or employee may be
entitled by law or under any bylaw, vote of shareholders, agreement or
otherwise. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of any other Corporation against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this section.
7.8 Amendments. These Bylaws may be altered, amended or repealed, or new
Bylaws may be adopted, by the affirmative vote of a majority of the full Board
of Directors at any regular meeting of the Board of Directors or at any special
meeting of the Board of Directors if notice of the proposed alteration,
amendment, repeal or adoption be contained in the notice of such special
meeting; provided, however, that no change of the time or place for the election
of Directors shall be made within sixty (60) days next before the day on which
such election is to be held, and that in case of any change of such time or
place, notice thereof shall be given to each shareholder in person or by letter
mailed to his last known post office address at least twenty (20) days before
the election is held.
7.9 Table of Contents; Headings. The Table of Contents and headings used
in these Bylaws have been inserted for convenience only and do not constitute
matters to be construed in interpretation.
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CERTIFICATE BY SECRETARY
------------------------
The undersigned, being the secretary of the Corporation, hereby certifies
that the foregoing code of Bylaws was duly adopted by the initial Directors of
the Corporation effective on April ___, 2000.
IN WITNESS WHEREOF, I have signed this certification as of the ____ day of
April, 2000.
--------------------------------------
Theodore Babcock, Secretary
<PAGE>
Exhibit 3(b)(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TEXAS-NEW MEXICO POWER COMPANY
ARTICLE I
Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act, Texas-New Mexico Power Company adopts the following Amended and
Restated Articles of Incorporation which accurately copy the Articles of
Incorporation and all amendments thereto that are in effect to date and as
further amended by such Restated Articles of Incorporation as hereinafter set
forth and which contain no other change in any provision hereof.
ARTICLE II
The Articles of Incorporation of the corporation are hereby amended by
these Amended and Restated Articles of Incorporation as follows: (a) current
ARTICLE ONE, TWO, THREE, FOUR, FIVE, SIX, SEVEN, EIGHT and NINE are redesignated
as ARTICLE ONE, TWO, THREE, FOUR, FIVE, SIX, SEVEN, EIGHT and NINE, respectively
of ARTICLE V below and (b) ARTICLE TEN and ARTICLE ELEVEN of ARTICLE V is hereby
added to the Articles of Incorporation.
ARTICLE III
Each amendment made by the Amended and Restated Articles of Incorporation
has been effected in conformity with the provisions of the Texas Business
Corporation Act and each such amendment made was duly adopted on April 6, 2000,
by the shareholders of the corporation.
ARTICLE IV
The number of shares of the corporation outstanding was 10,705 shares of
common stock, 8,390 shares of Series B Preferred Stock and 6,950 shares of
Series C Preferred Stock and the number of shares entitled to vote on the
restated articles of incorporation as so amended was 10,705 shares of common
stock. All of the shareholders of the common stock of the corporation have
signed a written consent to the adoption of such restated articles of
incorporation as so amended pursuant to Article 9.10 of the Texas Business
Corporation Act.
<PAGE>
ARTICLE V
The articles of incorporation and all amendments and supplements thereto
are hereby superseded by the following restated articles of incorporation which
accurately copy the entire text thereof and as amended as above set forth:
ARTICLE ONE
The name of the corporation is TEXAS-NEW MEXICO POWER COMPANY.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
SECTION 1 - PURPOSE; OPERATION AS A STAND-ALONE ENTITY
The purpose for which the corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act, provided that, to ensure the separateness of the
corporation, the corporation will:
1.01. maintain accurate and appropriate detailed books, financial records
and accounts, including checking and other bank accounts and custodian and other
securities safekeeping accounts, that are separate and distinct from those of
any other Person;
1.02. maintain its books, financial records and accounts (including
inter-entity transaction accounts) in a manner so that it will not be difficult
or costly to segregate, ascertain or otherwise identify its assets and
liabilities;
1.03. not commingle any of its assets, funds, liabilities or business
functions with the assets, funds, liabilities or business functions of any other
Person;
1.04. observe all appropriate corporate procedures and formalities;
1.05. not merge or consolidate with any other Person (other than for
financial reporting purposes);
1.06. cause all material transactions and agreements between it and any one
or more of its Affiliates (including transactions and agreements pursuant to
which the assets or property of one is used or to be used by the other) to be
entered into in the names of the Persons that are parties to the transaction or
agreement and to be formally documented in writing;
1.07. conduct transactions with third parties in its name and as a Person
that is separate and distinct from its Affiliates;
1.08. pay its own liabilities, expenses and losses only from its own
assets;
1.09. compensate all consultants, independent contractors and agents from
its own funds for services provided to it by such consultants, independent
contractors and agents;
1.10. to the extent that it and its Affiliates jointly contract or do
business with vendors or service providers or share overhead expenses, allocate
fairly, appropriately non-arbitrarily the
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costs and expenses incurred in so doing between or among such Persons, with the
result that each such Person bears its fair share of all such costs and
expenses;
1.11. to the extent that it contracts or does business with vendors or
service providers where the goods or services are wholly or partially for the
benefit of its Affiliates, allocate fairly, appropriately and non-arbitrarily
the costs incurred in so doing to the Person for whose benefit the goods or
services are provided, with the result that each such Person bears its fair
share of all such costs;
1.12. not enter into any guaranty, or otherwise become liable for, or
pledge its assets to secure, the liabilities, debts or obligations of any other
Person;
1.13. hold itself out as separate and distinct from any other Person and
shall not identify itself as a division or department of any other Person;
1.14. ensure that decisions with respect to its business and daily
operations shall be independently made (although the individual making any
particular decision may also be an employee, officer or director of any one or
more of its Affiliates) and shall not be dictated by its Affiliates;
1.15. to the extent that it occupies any premises in the same location or
shares the use of equipment with its Affiliates, allocate fairly, appropriately
and non-arbitrarily any rent and overhead expenses among and between such
Persons with the result that each bears its fair share of all such rent and
expenses;
1.16. cause its representatives and agents to hold themselves out to third
parties as being its representatives or agents, as the case may be, and conduct
its business using separate business cards, letterhead, purchase orders,
invoices, checks and the like bearing its own name, it being understood that it
need not have its own dedicated employees;
1.17. to the extent that it share the same officers or other employees with
its Affiliates, allocate fairly, appropriately and non-arbitrarily the salaries
of and expenses related to providing other benefits to such officers and other
employees between or among such Persons, with the result that each such Person
will bear its fair share of the salary and benefit costs associated with all
such common or shared officers or other employees;
1.18. maintain separate annual financial statements prepared in accordance
with generally accepted accounting principles, consistently applied], showing
its assets and liabilities separate and distinct from those of any other Person;
1.19. pay or bear the cost of the preparation of its financial statements,
and have such financial statements audited by an independent certified public
accounting firm;
1.20. to the extent its financial statements are to be consolidated with
the financial statements of any other Person, cause to be included in such
consolidated financial statements a narrative description of its separate
assets, liabilities, business functions, operations and existence to ensure that
such separate assets, liabilities, business functions, operations and existence
are readily distinguishable by any Person receiving or relying upon a copy of
such consolidated financial statements;
1.21. not hold out its credit as being available to satisfy the debts or
obligations of any other Person;
1.22. correct any known misunderstanding regarding its separate identity;
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1.23. not make any loans to any Person or buy or hold any indebtedness or
other obligations issued by any other Person (except for cash and cash
equivalents);
1.24. hold all of its assets in its own name; and
1.25. maintain an arm's-length relationship with its Affiliates and enter
into transactions with Affiliates only on a commercially reasonably basis.
SECTION 2 - DEFINITIONS
2.01. The term "Affiliate" shall mean any other person directly or
indirectly controlling, controlled by, or under common control with, that
person; for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that person, whether through the ownership of voting securities, by contract or
otherwise.
2.02. The term "Person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act).
ARTICLE FOUR
The total number of shares of Capital Stock which the corporation is
authorized to issue is thirteen million (13,000,000), of which Capital Stock
twelve million (12,000,000) shares of the par value of Ten Dollars ($10.00) per
share shall be Common Stock and of which one million (1,000,000) shares of the
par value of One Hundred Dollars ($100.00) per share shall be Preferred Stock.
The designations, preferences, limitations and relative rights in respect
of the shares of each class of Capital Stock of the corporation, and the
authority granted to the Board of Directors to fix by resolution or resolutions
any thereof which shall not be fixed herein, are as follows:
SECTION 1 - DEFINITIONS
1.01.The term "Preferred Stock" shall mean all or any shares of any series
of Preferred Stock described in Section (2) of this Article Four.
1.02.The term "Parity Stock" shall mean stock of any class other than the
Preferred Stock with respect to which dividends and amounts payable upon any
liquidation, dissolution or winding up of the corporation shall be payable on a
parity with and in proportion to the respective amounts payable in respect of
the Preferred Stock, notwithstanding that such Parity Stock may have other terms
and provisions varying from those of the Preferred Stock.
1.03. The term "Junior Stock" shall mean the Common Stock and stock of any
other class ranking junior to the Preferred Stock and Parity Stock in respect of
dividends and amounts payable upon any liquidation, dissolution or winding up of
the corporation.
1.04. The term "accrued dividends" shall mean, in respect of each share of
stock, that amount which shall be equal to simple interest upon the par value at
the annual dividend rate fixed for such share and no more, from and including
the date upon which dividends on such share became cumulative and (i) up to but
not including the date fixed for payment in liquidation, dissolution or winding
up or for redemption, or (ii) up to and including the last day of any period
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for which such accrued dividends are to be determined, less the aggregate amount
of all dividends theretofore paid or declared and set apart for payment thereon.
Computation of accrued dividends in respect of any portion of a quarterly
dividend period shall be by the 360-day method of computing interest.
1.05. The term "gross income available for payment of interest charges"
shall mean the total operating revenues and other income net of the corporation,
less all proper deductions for operating expenses, taxes (including income,
excess profits and other taxes based on or measured by income or undistributed
earnings or income), and other appropriate items, including provision for
maintenance, and provision for retirements, depreciation and obsolescence (but
in no event less than the minimum provisions required by the terms of any
indenture or agreement securing any outstanding indebtedness of the
corporation), but excluding any charges on account of interest on indebtedness
outstanding and any credits or charges for amortization of debt premium,
discount and expense, all to be determined in accordance with sound accounting
practice. In determining such "gross income available for payment of interest
charges," no deduction, credit or adjustment shall be made on account of (1)
profits or losses from sales of property carried in plant or investment accounts
of the corporation, or from the reacquisition of any securities of the
corporation, or (2) charges for the elimination or amortization of utility plant
adjustment or acquisition accounts or other intangibles; and income, excess
profits and other taxes based on or measured by income or undistributed earnings
or income shall be appropriately adjusted to reflect the effect of the exclusion
of such items.
1.06. The term "net income of the corporation available for dividends"
shall mean the "gross income available for payment of interest charges," as
defined and determined above under Section 1.05, less the sum of charges for
interest on indebtedness and less charges or plus credits for amortization of
debt premium, discount and expense, and other appropriate items, determined in
accordance with sound accounting practice.
In determining "net income of the corporation available for dividends" no
deduction, credit or adjustment shall be made on account of (1) expenses in
connection with the issuance (except charges or credits for amortization of debt
premium, discount and expense), redemption or retirement of any securities
issued by the corporation, including any amount paid in excess of the principal
amount or par or stated value of securities redeemed or retired, or, in the
event such redemption or retirement is effected with the proceeds of the sale of
other securities of the corporation, interest or dividends on the securities
redeemed or retired from the date on which the funds required for such
redemption or retirement are deposited in trust for such purpose to date of
redemption or retirement, (2) profits or losses from the sales of property
carried in plant or investment accounts of the corporation, or from the
reacquisition of any securities of the corporation, (3) charges for the
elimination or amortization of utility plant adjustment or acquisition accounts
or other intangibles, or (4) any earned surplus adjustment (including tax
adjustments) applicable to any period of this corporation's predecessor
corporation, Community Public Service Company, a Delaware corporation, prior to
January 1, 1963; and income, excess profits and other taxes based on or measured
by income or undistributed earnings or income shall be appropriately adjusted to
reflect the effect of the exclusion of such items.
1.07. The term "net income of the corporation available for dividends on
Junior Stock" shall mean "net income of the corporation available for
dividends," as defined above, less all accrued dividends and all dividends paid
on outstanding Preferred Stock and Parity Stock and on any class of stock
ranking as to dividends prior to such Preferred Stock or Parity Stock.
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1.08 The term "sound accounting practice" shall mean recognized principles
of accounting practice followed by electric utility companies or required by any
applicable rules, regulations or orders of any public regulatory authority
having Jurisdiction over the accounts of the corporation, provided that the
corporation may, at the time, contest or controvert in good faith the validity
or applicability to the corporation of any such rule, regulation or order and
thereby suspend the effect thereof until such contest or controversy has been
terminated.
SECTION 2 - PREFERRED STOCK
2.01. Issue in Series. The shares of Preferred Stock may be divided and
issued from time to time in one or more series, with such distinguishing
characteristics, including designations, preferences, limitations and relative
rights, as are hereinafter provided in this Article Four and otherwise as
permitted by law. All shares of Preferred Stock of any particular series shall
be identical except as to the date or dates from which dividends thereon shall
become cumulative as provided in Section 2.02. The authorized but unissued
shares of Preferred Stock may be divided by number from time to time into and
issued in designated series, and the shares of each series of Preferred Stock so
designated shall provide for dividends at such rates, and shall be subject to
redemption at such price or prices and at such time or times, as shall be
provided in the resolution or resolutions of the Board of Directors providing
for the issuance of such stock, full authority for such purpose being granted to
and vested in the Board of Directors. The resolution or resolutions of the Board
of Directors of the corporation dividing the number of shares of authorized but
unissued Preferred Stock, and designating the series and fixing the relative
rights and preferences thereof shall (a) designate the series to which Preferred
Stock shall belong and fix the number of shares thereof, (b) fix the dividend
rate therefor and fix the date from which dividends on the shares of such series
initially issued shall be cumulative, (c) state at what times the Preferred
Stock of such series shall be redeemable and the redemption price or prices
payable thereon in the event of redemption; and may, in a manner not
inconsistent with the provisions of this Article Four and insofar as permitted
by applicable provisions of law, (i) provide for a sinking fund for the purchase
or redemption or a purchase fund for the purchase of shares of such series and
the terms and provisions governing the operation of any such fund, (ii) impose
conditions or restrictions upon the creation of indebtedness of the corporation
or upon the issue of additional Preferred Stock or other stock ranking equally
therewith or prior thereto as to dividends or assets, (iii) impose conditions or
restrictions upon the payment of dividends upon, or the making of other
distributions to, or the acquisition of, Junior Stock, (iv) grant to the holders
of the Preferred Stock of such series the right to convert such stock into
shares of Junior Stock, and (v) grant such other special rights to, or impose
other conditions or restrictions upon, the holders of shares of such series as
the Board of Directors may determine; the term "fixed for such series" and
similar terms shall mean stated and expressed in this Article Four, or in any
amendment to these Restated Articles of Incorporation, or in a resolution or
resolutions adopted by the Board of Directors providing for the issue of
Preferred Stock of the series referred to.
2.02. Dividends. Out of the assets of the corporation legally available for
dividends the holders of the Preferred Stock shall be entitled to receive, but
only when and as declared by the Board of Directors, dividends at the rate per
annum fixed for each series and no more. Dividends declared shall be payable
quarterly on March 15, June 15, September 15 and December 15 in each year, to
Preferred stockholders of record on such date, not more than fifty (50) days and
not less than ten (10) days prior to each such payment date, as may be
determined by the Board of Directors. Dividends on the shares of Preferred Stock
of any series initially issued shall be
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cumulative from and including a date fixed for such series at the time of the
initial establishment or designation of a series and on any additional shares of
the same series from and including the first day of the quarterly dividend
period in which such additional shares shall be issued.
Each share of Preferred Stock shall rank on a parity with each other share
of Preferred Stock, irrespective of series, with respect to dividends at the
respective rates fixed for such series, and no dividends shall be paid or
declared on the Preferred Stock of any series or Parity Stock unless at the same
time a dividend in like proportion, ratably, to the accrued dividends on the
Preferred Stock of each series outstanding shall be paid or declared and set
apart for payment on each series of Preferred Stock then outstanding. The amount
of any deficiency for past dividend periods may be paid or declared, and set
apart at any time without reference to any quarterly dividend payment date.
Accrued dividends on Preferred Stock shall not bear interest.
2.03. Liquidation Rights. In the event of any involuntary liquidation,
dissolution or winding up of the corporation, the holders of each series of
Preferred Stock shall be entitled to receive, for each share thereof, the par
value thereof, together with accrued dividends, or, in case such liquidation,
dissolution or winding up shall have been voluntary, an amount per share equal
to the then applicable current redemption price fixed for such series, before
any distribution of the assets shall be made to the holders of shares of any
class of Junior Stock; but the holders of Preferred Stock of such series shall
be entitled to no further participation in such distribution. In the event that
the assets of the corporation available for distribution to holders of Preferred
Stock shall not be sufficient to make the full payment herein required, such
assets shall be distributed to the holders of the shares of respective series of
Preferred Stock ratably in proportion to the amounts payable on each share
thereof, including accrued dividends. A consolidation or merger of the
corporation or sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the corporation shall not be deemed a dissolution,
liquidation or winding up of the corporation within the meaning of this Section
2.03.
2.04. Redemption and Repurchase Provisions.
(A) Preferred Stock of each series shall be subject to redemption, in
whole or in part, at the redemption prices fixed for such series in such
amount, at such place and by such method, which, if in part, shall be by
lot, as shall from time to time be determined by resolution of the Board of
Directors. Notice of the proposed redemption of any shares of any series of
Preferred Stock shall be given the corporation by mailing a copy of such
notice, at least twenty (20) days but not more than fifty (50) days prior
to the date fixed for such redemption, to the holders of record of such
shares to be redeemed, at their respective addresses then appearing on the
books of the corporation. On or after the date specified in such notice,
each holder of shares of Preferred Stock called for redemption as
aforesaid, shall be entitled to receive therefor the redemption price
thereof, upon presentation and surrender at any place designated in such
notice of the certificates for such shares of Preferred Stock held by him.
On and after the date fixed for redemption, if notice is given as
aforesaid, and unless default is made by the corporation in providing
moneys for payment of the redemption price, all dividends on the shares
called for redemption shall cease to accrue, and on and after such
redemption date, unless default be made as aforesaid, or on and after the
date of earlier deposit by the corporation with a bank or trust company
doing business in the City of Fort Worth, Texas, or any bank or trust
company in the City of New York, New York, duly appointed and acting as
transfer agent for this corporation in
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either case having a capital and surplus of at least $3,000,000.00 in trust
for the benefit of the holders of the shares of the Preferred Stock of such
series so called for redemption, of all funds necessary for redemption as
aforesaid (provided in the latter case that there shall have been mailed as
aforesaid to holders of record of shares to be redeemed, a notice of the
redemption thereof or that the corporation shall have executed and
delivered to the Transfer Agent for the Preferred Stock or to the bank or
trust company with which such deposit is made an instrument irrevocably
authorizing it to mail such notice at the corporation's expense) all rights
of the holders of the shares called for redemption as stockholders of the
corporation, except only the right to receive the redemption price, shall
cease and determine. Any funds so deposited which shall remain unclaimed by
the holders of such Preferred Stock at the end of six (6) years after the
redemption date, together with any interest thereon which shall have been
allowed by the bank or trust company with which such deposit shall have
been made, shall be paid by it to the corporation, free of any trust, and
thereafter such holders shall look only to the corporation therefor. Shares
of Preferred Stock redeemed as aforesaid shall be restored to the status of
authorized but unissued shares.
(B) Except as otherwise herein provided or prohibited by law, the
corporation may also from time to time purchase shares of Preferred Stock
of any series for any sinking or purchase fund and otherwise at not
exceeding the then current redemption prices applicable to redemptions for
the sinking fund for such series or otherwise, as the case may be,
including accrued dividends thereon to the date of purchase, plus customary
brokerage commissions. Shares of Preferred Stock of any series so purchased
not used to satisfy sinking or purchase fund obligations may in the
discretion of the Board of Directors be reissued or otherwise disposed of
from time to time to the extent permitted by law.
C) If and so long as there are dividends in arrears on any shares of
Preferred Stock of any series or Parity Stock or a default exists in any
sinking or purchase fund obligation provided for the benefit of any series
of Preferred Stock, the corporation shall not redeem any shares of any
series of Preferred Stock or Parity Stock, unless in connection therewith
all the outstanding Preferred Stock of all series is redeemed, or purchase
any shares of any series of Preferred Stock or Parity Stock unless an offer
to purchase on a comparable basis is made to the holders of all the
Preferred Stock then outstanding.
(D) The corporation will not permit any subsidiary corporation to
purchase any shares of stock of any class of the corporation.
2.05. Restrictions on Corporate Action.
(A) So long as any Preferred Stock is outstanding, the corporation
shall not, (1) without the consent (given by vote in person or by proxy at
a meeting called for the purpose) of the holders of at least two-thirds, or
(2) without the consent (given in writing without a meeting) of all the
holders, of the aggregate number of shares of all series of Preferred Stock
(treated as one class) then outstanding -
(I) Create, authorize or increase the authorized amount of any
shares of any class of stock other than Preferred Stock, Parity Stock
or Junior Stock or any obligation or security convertible into stock
other than Preferred Stock, Parity Stock or Junior Stock, or
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(ii) Amend, change or repeal any of the express terms of the
Preferred Stock outstanding in any manner prejudicial to the holders
thereof, except that, if such amendment, change or repeal is
prejudicial to the holders of less than all series of Preferred Stock,
the consent of only the holders of two-thirds of the aggregate number
of shares of the series thereof so affected shall be required, or
(iii) Issue any shares of Preferred Stock in addition to the
shares issued or presently to be issued or issue any Parity Stock
unless, after giving effect to the issue of such additional shares,
(a) the net income of the corporation available for
dividends for the period of twelve (12) consecutive calendar
months within the fifteen (15) calendar months immediately
preceding the calendar month within which such additional shares
of stock are to be issued shall have been at least two and
one-half (2 1/2) times the aggregate annual dividend requirements
upon the entire amount to be outstanding (upon the issuance of
such additional shares of Preferred Stock or such Parity Stock)
of Preferred Stock and Parity Stock and of any stocks of the
corporation of any class ranking as to dividends prior to the
Preferred Stock or Parity Stock;
(b) the gross income available for payment of interest
charges for a period of twelve (12) consecutive calendar months
within the fifteen (15) calendar months immediately preceding the
calendar month within which such additional shares of stock are
to be issued, shall have been at least one and one-half (1 1/2)
times the sum of (1) the aggregate annual interest charges on all
the indebtedness of the corporation then outstanding, and (2) the
aggregate annual dividend requirements upon the entire amount to
be outstanding of Preferred Stock and Parity Stock and of any
stocks of the corporation of any class ranking as to dividends
prior to the Preferred Stock or Parity Stock; and
(c) the aggregate of the capital of the corporation
applicable to all Junior Stock, plus the capital surplus and the
earned surplus of the corporation, determined in accordance with
sound accounting practice, shall be not less than the aggregate
payable upon involuntary liquidation, dissolution or winding up
of the corporation to the holders of the entire amount to be
outstanding of Preferred Stock and Parity Stock and of any stocks
of the corporation of any class ranking as to assets prior to the
Preferred Stock.
In the foregoing computations, there shall be excluded (a) all
indebtedness and all shares of stock to be retired in connection with the
issue of such additional shares, and (b) all interest charges on all
indebtedness and dividend requirements on all shares of stock to be retired
in connection with the issue of such additional shares. The net earnings of
any property acquired by the corporation during or after the period for
which income is computed, or of any property which is to be acquired in
connection with the issuance of any such additional shares, if capable of
being separately determined or estimated, may be included on a pro forma
basis (including a pro forma increase in income, excess profits and other
taxes based on or measured by income or undistributed earnings or income)
in the foregoing computations; and if within or after the period for which
income is computed any substantial portion of the properties of the
corporation shall have been disposed of, the net
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earnings of such property, if capable of being separately determined or
estimated, shall be excluded on a pro forma basis (including a pro forma
decrease in income, excess profits and other taxes based on or measured by
income, or undistributed earnings or income) in the foregoing computations
for a period prior to the date of such disposition.
(B) So long as any Preferred Stock is outstanding, the corporation
shall not, (1) without the consent (given by vote in person or proxy at a
meeting called for the purpose) of the holders of a majority or (2) without
the consent (given in writing without a meeting) of all the holders, of the
aggregate number of shares of all series of Preferred Stock (treated as one
class) then outstanding, issue, assume or create unsecured securities (the
words "unsecured securities," as used in this paragraph being deemed to
mean notes, debentures or other securities representing unsecured
indebtedness other than indebtedness maturing by its terms in one year or
less from the date of its creation and not renewable or extendible at the
option of the corporation for a period of more than one year from the date
of its creation) for any purpose, except to refund outstanding unsecured
securities of such character, theretofore issued or assumed, if thereby the
aggregate principal amount of such unsecured securities would exceed twenty
percent (20%) of the sum of (1) the total principal amount of all bonds or
other securities representing secured indebtedness of the corporation then
to be outstanding, and (2) the capital represented by stocks of the
corporation and the earned and capital surplus of the corporation,
determined in accordance with sound accounting practice; provided, however,
that any unsecured securities theretofore issued under any authorization of
holders of Preferred Stock given pursuant hereto (and any securities to
refund the same) shall not be considered in determining the amount of other
unsecured securities which may be issued, assumed or created within the
aforesaid twenty percent (20%) limitation.
(C) So long as any Preferred Stock is outstanding, the corporation
shall not, (1) without the consent (given by vote in person or by proxy at
a meeting called for the purpose) of the holders of at least four-fifths,
or (2) without the consent (given in writing without a meeting) of all the
holders of the aggregate number of shares of all series of Preferred Stock
(treated as one class) then outstanding -
(I) merge or consolidate with or into any other corporation or
corporations, provided that the provisions of this clause (i) shall
not apply to a purchase or other acquisition by the corporation of
franchises or assets of another corporation in any manner which does
not involve a merger or consolidation; or
(ii) sell, lease or otherwise dispose of all or substantially all
of its property.
No consent of the holders of the shares of any series of Preferred
Stock in respect of action hereinabove set forth in subparagraphs (A), (B)
or (C) shall be required if irrevocable provision is contemporaneously made
for the redemption of all shares of such series of Preferred Stock at the
time outstanding, or provision is made that the proposed action shall not
be effective unless irrevocable provision is made for the prompt purchase,
redemption or retirement of all shares of such series of Preferred Stock at
the time outstanding.
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2.06. Voting Rights. The holders of Preferred Stock shall not be entitled
to vote except:
(a) as provided above under Section 2.05;
(b) as may from time to time be required by the laws of Texas; and
(c) voting separately as a class for the election of the smallest
number of directors necessary to constitute a majority of the Board of
Directors whenever and as often as dividends payable on any series of
Preferred Stock outstanding shall be in arrears in an amount equivalent to
or exceeding six (6) quarterly dividends, which right may be exercised at
any annual meeting and at any special meeting of stockholders called for
the purpose of electing directors, until such time as arrears in dividends
on the Preferred Stock and the current dividend thereon shall have been
paid or declared and a sum sufficient for the payment thereof set apart,
whereupon all voting rights given by this clause (c) shall be divested from
the Preferred Stock (subject, however, to being at any time or from time to
time similarly revived and divested).
So long as holders of the Preferred Stock shall have the right to elect
directors under the terms of the foregoing clause (c), the holders of the Common
Stock, voting separately as a class, shall, subject to the voting rights of any
other class of stock, be entitled to elect the remaining directors.
Whenever, under the provisions of the foregoing clause (c) the right of
holders of the Preferred Stock, if any, to elect directors shall accrue or shall
terminate, the Board of Directors shall, within ten (10) days after delivery to
the corporation at its principal office of a request or requests to such effect
signed by the holders of at least five percent (5%) of the outstanding shares of
any class of stock entitled to vote, call a special meeting, in accordance with
the Bylaws of the corporation, of the holders of the class or classes of stock
of the corporation entitled to vote, to be held within sixty (60) days from the
delivery of such request, for the purpose of electing a full Board of Directors
to serve until the next annual meeting and until their respective successors
shall be elected and shall qualify; provided, however, that if the annual
meeting of stockholders for the election of directors is to be held within
eighty (80) days after the delivery of such request, the Board of Directors need
not act thereon. If, at any special meeting called as aforesaid or at any annual
meeting of stockholders after accrual or termination of the right of holders of
the Preferred Stock to elect directors as in the foregoing clause (c) provided,
any director shall not be re-elected, his term of office shall end upon the
election and qualification of his successor, notwithstanding that the term for
which such director was originally elected shall not at the time have expired.
If, during any interval between annual meetings of stockholders for the
election of directors while holders of the Preferred Stock shall be entitled to
elect any director pursuant to the foregoing clause (c), the number of directors
in office who have been elected by the holders of the Preferred Stock (voting as
a class) or by the holders of the Common Stock (voting as a class), as the case
may be, shall become less than the total number of directors subject to election
by holders of shares of such class, whether by reason of the resignation, death
or removal of any director or directors, or an increase in the total number of
directors, the vacancy or vacancies shall be filled (1) by the remaining
directors or director, if any, then in office who either were or was elected by
the votes of shares of such class or succeeded to a vacancy originally filled by
the votes of shares of such class or (2) if there is no such director remaining
in office, at a special meeting of holders of shares of such class called by the
President of the corporation to be held within sixty (60) days after there shall
have been delivered to the corporation at its principal office a request or
requests
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signed by the holders of at least five percent (5%) of the outstanding shares of
such class; provided, however, that such request need not be so acted upon if
delivered less than eighty (80) days before the date fixed for the annual
meeting of stockholders for the election of directors.
Any director may be removed from office for cause by vote of the holders of
a majority of the shares of the class of stock which voted for his election (or
for his predecessor in case such director was elected by directors). A special
meeting of holders of shares of any class may be called by a majority vote of
the Board of Directors or by the President for the purpose of removing a
director in accordance with the provisions of the preceding sentence, and shall
be called to be held within sixty (60) days after there shall have been
delivered to the corporation at its principal office a request or requests to
such effect signed by holders of at least five percent (5%) of the outstanding
shares of the class entitled to vote with respect to the removal of any such
director; provided, however, that such request need not be so acted upon if
delivered less than eighty (80) days before the date fixed for the annual
meeting of stockholders for the election of directors.
The holders of a majority of the shares of a class of stock entitled under
this Section 2.06 to vote for the election or removal of directors or the
filling of any vacancy however created in the Board of Directors, present in
person or represented by proxy at a meeting called for the purpose of voting on
any such action, shall constitute a quorum for such purpose without regard to
the presence or absence at the meeting of the holders of any other class of
stock not entitled under this Section 2.06 to vote in respect thereto. A lesser
interest of the class entitled to vote from time to time may adjourn any meeting
for such purpose, and the same shall be held as adjourned without further
notice. When a quorum is present, the vote of the holders of a majority of the
shares of such quorum shall govern each such election, removal or filling of a
vacancy in respect of which such class is entitled to vote.
Preferred Stockholders shall not be entitled to receive notice of any
meeting of holders of any class of stock at which they are not entitled to vote.
Each holder of Preferred Stock, as to all matters in respect of which such
stock has voting power, is entitled to one vote for each share of stock standing
in his name. Cumulative voting shall not be allowed, but each holder of
Preferred Stock, at any election of directors at which such Preferred Stock has
voting power, shall be entitled to cast that number of votes equal to the number
of shares of Preferred Stock owned by him for as many directors as there are to
be elected.
2.07. Restriction on Dividends. So long as any shares of Preferred Stock
shall be outstanding, the corporation shall not declare or pay or set apart any
dividends on any shares of Junior Stock (other than dividends payable in shares
of Junior Stock), or make any other distribution on shares of Junior Stock, or
make any expenditures for the purchase, redemption or other retirement for a
consideration of shares of Junior Stock (other than in exchange for other shares
of Junior Stock),.unless accrued dividends on all shares of all series of
Preferred Stock outstanding for all past quarterly dividend periods shall have
been paid or declared and set apart and the full dividend for the then current
quarterly dividend period shall have been or concurrently shall be paid or
declared and set apart, or if the corporation shall be in default of the sinking
or purchase fund obligation provided for any series of Preferred Stock.
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2.08. Relative Rights and Preferences of Outstanding Series of Preferred
Stock. The relative rights and preferences of each of the outstanding series of
Preferred Stock which are not set forth elsewhere in this Article Four are as
follows:
(A) 4.65% Cumulative Preferred Stock, Series B (8,290 shares), and 4.75%
Cumulative Preferred Stock, Series C (6,950 shares).
1. The Preferred Stock of each of said series shall be designated,
respectively, "4.65% Cumulative Preferred Stock, Series B" (herein called
"Series B Preferred Stock"), and "4.75% Cumulative Preferred Stock, Series
C" (herein called "Series C Preferred Stock").
2(a). Series B Preferred Stock. The fixed dividend rate of the shares
of Series B Preferred Stock is 4.65% per share per annum and such dividends
are cumulative from the date of issue of the shares of such series
initially issued and on any additional shares of the same series from and
including the first day of the quarterly dividend period in which such
additional shares shall be issued, with the first quarterly dividend
payable September 15, 1963; the fixed redemption prices on the shares of
such series are $106.50 per share if redeemed prior to September 15, 1966;
$105.00 per share if redeemed on September 15, 1966 or thereafter and prior
to September 15, 1969; $103.50 per share if redeemed on September 15, 1969
or thereafter and prior to September 15, 1972 ; $102.00 per share if
redeemed on September 15, 1972 or thereafter and prior to September 15,
1972 or thereafter and prior to September 15, 1975; $101.00 per share if
redeemed on September 15, 1975 or thereafter and prior to September 15,
1978; and $100.00 per share if redeemed on September 15, 1978 or
thereafter; together with all accrued dividends thereon (as such phrase is
defined for the purposes of Article Four of the Restated Articles of
Incorporation of the corporation). The fixed liquidation price for the
shares of such series is One Hundred Dollars ($100) per share, together
with all accrued dividends thereon (as such phrase is so defined), in the
event of involuntary liquidation and the applicable current redemption
price in the event of voluntary liquidation, all as more fully prescribed
by the provisions of Paragraph 2.03 of Article Four of the Restated
Articles of Incorporation of the corporation.
2(b). Series C Preferred Stock. The fixed dividend rate on the shares
of Series C Preferred Stock is 4.75% per share per annum and such dividends
are cumulative from the date of issue of the shares of such series
initially issued and on any additional shares of the same series from and
including the first day of the quarterly dividend period in which such
additional shares shall be issued, with the first quarterly dividend
payable September 15, 1965; the fixed redemption prices on the shares of
such series are $105.75 per share if redeemed prior to September 15, 1968;
$104.60 per share if redeemed on September 15, 1968 or thereafter and prior
to September 15, 1971; $103.45 per share if redeemed on September 15, 1971
or thereafter and prior to September 15, 1974; $102.30 per share if
redeemed on September 15, 1974 or thereafter and prior to September 15,
1977; $101.15 per share if redeemed on September 15, 1977 or thereafter and
prior to September 15, 1980; and $100.00 per share if redeemed on September
15, 1980 or thereafter; together with all accrued dividends thereon (as
such phrase is defined for the purposes of Article Four of the Restated
Articles of Incorporation of the corporation). The fixed
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liquidation price for the shares of such series is One Hundred Dollars
($100) per share, together with all accrued dividends thereon (as such
phrase is so defined), in the event of involuntary liquidation and the
applicable current redemption price in the event of voluntary liquidation,
all as more fully prescribed by the provisions of Section 2.03 of Article
Four of the Restated Articles of Incorporation of the corporation.
3. The corporation (unless prevented from so doing by any applicable
restriction of law) will in each year, so long as any shares of the Series
B or Series C Preferred Stock are outstanding, make offers (hereinafter in
this Paragraph 3 called a Purchase Offer) to the holders of shares of the
Series B and/or Series C Preferred Stock to purchase on October 1 in each
such year, at the prices at which the same may be offered to the
corporation up to but not exceeding a price of $100 per share and accrued
dividends, a number of shares of said series equal to 2% of the maximum
number of shares of each of the Series B and Series C Preferred Stock
outstanding at any one time prior to August 15 of such year, all as
hereinafter provided in this Paragraph 3.
The Transfer Agent for the Series B and Series C Preferred Stock
shall, at least 30 days prior to October 1 of each such year, mail to the
holders of record of shares of each of the said Series as at the day prior
to the mailing date, a notice, in the name of the corporation, that the
corporation will on October I of that year, accept offers to sell the
number of shares required to be covered by the Purchase Offers at the
prices at which shares are offered to the corporation up to but not
exceeding a price of $100 per share and accrued dividends thereon.
The Transfer Agent shall on October 1, on behalf of the corporation,
accept offers to sell shares of the Series B and Series C Preferred Stock
received by it up to the full number of shares covered by the Purchase
Offer upon such basis as will result in the lowest aggregate cost to the
corporation. To that end, the Transfer Agent shall accept offers at the
same prices on a pro rata basis with respect to each series, as nearly as
may be. In case any person whose offer is accepted shall thereafter fail to
make good such offer, said Transfer Agent shall, to the extent practicable,
within 30 days after October 1, accept in lieu thereof, the best offer or
offers, if any, theretofore made and not theretofore accepted.
On or prior to October 1 in each year, the corporation shall deposit
with said Transfer Agent cash sufficient to purchase the shares of each of
said Series, if any, which have been accepted for purchase pursuant to the
Purchase Offer made in such year and thereafter shall deposit any
additional funds required to carry out the Purchase Offer for such year.
The Transfer Agent shall return to the corporation any funds deposited with
it and not applied to the purchase of shares of the Series B or Series C
Preferred Stock pursuant to the Purchase Offer for such year.
If in any year the full purchase obligation of the corporation shall
not have been satisfied by the making and carrying out of the Purchase
Offer, any deficiency in the satisfaction of such purchase obligation shall
be made good, in the manner hereinafter in this paragraph set forth, before
any dividends shall be declared or paid upon or set apart for any shares of
Common Stock or any shares of any class of stock ranking junior to the
Preferred Stock or any sums applied to the purchase, redemption or other
retirement of the Common Stock or any shares of any class of stock ranking
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junior to the Preferred Stock or any sums applied to the purchase,
redemption or other retirement of the Common Stock or any shares of any
class of stock ranking junior to the Preferred Stock. Any such deficiency
may be made good at any time by the making and carrying out of a Special
Purchase Offer covering the number of shares of the Series B or Series C
Preferred Stock as to which such deficiency exists and, to that end, the
corporation shall file with the Transfer Agent a certificate, signed by the
President or a Vice President, specifying a date, not less than 45 days
after the date of filing thereof, on which offers to sell shares of the
Series B or Series C Preferred Stock will be accepted. Such Special
Purchase Offer shall otherwise be made and carried out on thirty days'
notice and in the same manner as hereinabove provided for Purchase Offers
to be carried out on October 1.
The Purchase Offer in any year shall be deemed to have been completed
and satisfied if the corporation shall have complied with the provisions of
this Paragraph 3 notwithstanding that the total number of shares purchased
by it shall have been less than the total number of shares covered by the
corporation's Purchase Offer for that year because too few offers to sell
were received by it.
Shares of the Series B and Series C Preferred Stock purchased pursuant
to any Purchase Offer or Special Purchase Offer shall be canceled and shall
not be reissued as shares of the same Series.
The provisions of this Paragraph 3 in so far as the same relate to
purchases of outstanding shares of each of said Series, are subject to the
applicable provisions of Section (2) of Article Four of the Restated
Articles of Incorporation of the corporation.
4. The shares of the Series B Preferred Stock and Series C Preferred
Stock are not convertible.
5. So long as any shares of the Series B or Series C Preferred Stock
shall be outstanding, the corporation shall not declare or pay or set apart
any dividends on any shares of Junior Stock (other than dividends payable
in shares of Junior Stock) or make any other distribution on any shares of
Junior Stock, or make any expenditures for the purchase, redemption or
other retirement for a consideration of shares of Junior Stock (other than
in exchange for other shares of Junior Stock or from the proceeds of any
sale of such stock received not more than six (6) months prior to such
retirement), if the aggregate amount of all such dividends, distributions
and expenditures of the corporation after December 31, 1962, would exceed
the aggregate amount of the net income of such corporation available for
dividends on Junior Stock accumulated after December 31, 1962, plus
$1,500,000, and then only within the limits set forth in Section 3.01 of
Article Four of the Restated Articles of Incorporation of the corporation.
For the purposes of this paragraph, references to the "corporation" shall
mean both the corporation and its predecessor, Community Public Service
Company, a Delaware corporation.
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SECTION 3 THE COMMON STOCK
3.01. Dividends. Out of any assets of the corporation legally available for
dividends remaining after full cumulative dividends upon any shares of Preferred
Stock or of any other class of stock ranking as to dividends ahead of the Common
Stock of the corporation then outstanding shall have been paid or declared and
set apart for all past quarterly dividend periods and for the current quarterly
dividend period, then and not otherwise, dividends may be paid upon the Common
Stock to the exclusion of the Preferred Stock and of any such other class of
stock.
3.02. Distribution of Assets. In the event of any liquidation, dissolution
or winding up of the corporation, after there shall have been paid to or set
aside for the holders of all series of Preferred Stock and of any other class of
stock ranking as to assets ahead of the Common Stock the full preferential
amounts, including accrued dividends, to which they are respectively entitled,
the holders of the Common Stock shall be entitled to receive, pro rata, all the
remaining assets of the corporation available for distribution to its
stockholders. The Board of Directors, by vote of a majority of the members
thereof, may distribute in kind to the holders of the Common Stock such
remaining assets of the corporation or may sell, transfer or otherwise dispose
of all or any of the remaining property and assets of the corporation to any
other corporation and receive payment therefor wholly or partly in cash and/or
in stock and/or in obligations of such corporation, and may sell all or any part
of the consideration received therefor or distribute the same and/or the balance
thereof in kind to the holders of the Common Stock.
3.03. Voting Rights. Subject to the voting rights expressly conferred upon
the Preferred Stock by Section (2) of this Article Four and by law and the
voting rights of any other class of stock, the holders of the Common Stock shall
exclusively possess full voting power for the election of directors and for all
other purposes and shall be entitled to one vote for each share of Common Stock
held of record. Cumulative voting shall not be allowed, but each holder of
Common Stock, at any election of directors at which such Common Stock has voting
power, shall be entitled to cast that number of votes equal to the number of
shares of Common Stock owned by him for as many directors as there are to be
elected.
SECTION 4 - MISCELLANEOUS
4.01. Preemptive Rights. No holder of stock of any class of the corporation
shall have any right, as such holder, to purchase or subscribe for any stock of
any class of the corporation now or hereafter authorized or any securities
convertible into, or carrying or evidencing any right or option to purchase,
stock of any class now or hereafter authorized which the corporation may at any
time issue, but any and all such stock, securities, rights and/or options may be
issued and disposed of by the Board of Directors to such persons and for such
lawful consideration and on such terms as the Board of Directors in its
discretion may determine, without first offering the same or any thereof to the
stockholders of the corporation.
4.02. Stock Fully Paid. All shares of capital stock, whether heretofore
issued or hereafter issued for a lawful consideration fixed by the Board of
Directors, including, without limitation, issuance of stock dividends, shall,
when the full lawfuI consideration fixed by the Board of Directors has been
paid, or when so issued as a stock dividend, be deemed fully paid stock and not
liable to any further call or assessment thereon, and the holders of such shares
shall not be liable for any further payment thereon.
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4.03. Unissued Shares. Any of the unissued shares of capital stock of the
corporation may be issued from time to time in such amount and manner,
including, without limitation, in distribution as stock dividends, and for such
lawful consideration as the Board of Directors may determine.
ARTICLE FIVE
The Bylaws of the corporation may be altered, amended or repealed at any
regular or special meeting of the directors at which a quorum is present by the
affirmative vote of a majority of those present at such meeting, provided notice
of the proposed alteration, amendment or repeal is contained in the notice of
such meeting.
ARTICLE SIX
The corporation has heretofore complied with the requirements of law as to
the initial minimum capital requirements without which it could not commence
business under the Texas Business Corporation Act.
ARTICLE SEVEN
The post office address of its registered office is 4100 International
Plaza, P.O. Box 2943, Fort Worth, Texas 76113, and the name of its registered
agent at such address is M. D. Blanchard.
ARTICLE EIGHT
The number of directors presently constituting the Board of Directors of
the corporation is nine, and the names and addresses of the persons now serving
as directors are as follows:
R. Denny Alexander Fort Worth, Texas
John A. Fanning Fort Worth, Texas
Sidney M. Gutierrez Albuquerque, New Mexico
J. R. Holland, Jr. Dallas, Texas
Harris L. Kempner, Jr. Galveston, Texas
Kevern R. Joyce Fort Worth, Texas
Dr. Carol D. Surles Charleston, Illinois
Larry G. Wheeler Oakland, California
Dennis H. Withers Mansfield, Texas
ARTICLE NINE
To the full extent allowed pursuant to the Texas Miscellaneous Corporation
Laws Act as it now exists or as it may be amended or recodified from time to
time, directors shall not be personally liable to the Corporation or its
shareholders for monetary damages for any act or omission in the director's
capacity as a director except for liability for:
1. a breach of the director's duty of loyalty to the corporation or its
shareholders or members;
2. an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
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3. a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the
scope of the director's office;
4. an act or omission for which the liability of a director is expressly
provided for by statute;
5. an act related to an unlawful stock repurchase or payment of a
dividend.
ARTICLE TEN
The corporation shall at all times have at least one Independent Director,
who will be appointed by the shareholders. To the fullest extent permitted by
the Texas Business Corporation Act, the Independent Director shall consider only
the interests of the corporation and its creditors in acting or otherwise voting
on any Material Action. For purposes of this provision: "Independent Director"
means a natural person who, for the five-year period prior to his or her
appointment as Independent Director has not been, and during the continuation of
his or her service as Independent Director is not: (i) an employee, director,
stockholder, partner or officer of the corporation or any of its Affiliates
(other than his or her service as an Independent Director of the corporation);
(ii) a customer or supplier that derives more than ten percent of its revenues
from the corporation or any of its Affiliates; or (iii) any member of the
immediate family of a person described in (i) or (ii); and "Material Action"
shall mean to amend the Article of Incorporation, consolidate or merge the
corporation with or into any Person, or sell all or substantially all of the
assets of the corporation or to institute proceedings to have the corporation be
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the corporation or file a petition seeking, or
consent to, reorganization or relief with respect to the corporation under any
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the corporation or a substantial part of its property, or
make any assignment for the benefit of creditors of the corporation, or admit in
writing the corporation's inability to pay its debts generally as they become
due, or, to the fullest extent permitted by law, take action in furtherance of
any such action, or dissolve or liquidate the corporation.
ARTICLE ELEVEN
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of not less than One Thousand
Dollars ($1,000.00).
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IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated
Articles of Incorporation as of this ____ day of April, 2000.
TEXAS-NEW MEXICO POWER COMPANY
By:
----------------------------
Name: Paul W. Talbot
Title: Secretary
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EXHIBIT 3(b)(ii)
AMENDED AND RESTATED
BYLAWS
OF
TEXAS-NEW MEXICO POWER COMPANY
(REVISED APRIL 6, 2000)
<PAGE>
Exhibit 3(b)(ii)
TEXAS-NEW MEXICO POWER COMPANY
AMENDED AND RESTATED
B Y L A W S
----------
ARTICLE I
OFFICES
1. The registered office of the Corporation shall be at 4100
International Plaza, Tower II, Fort Worth, Texas 76109, and the registered agent
of the Corporation at such address shall be the Secretary of the Corporation.
2. The Corporation may also have offices at such other places, within or
without the State of Texas, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Place
l. All meetings shall be held in the offices of the Corporation at 4100
International Plaza, Tower II, Fort Worth, Texas 76109, or at such other place
as may be fixed from time to time by the Board of Directors.
Annual Meeting
2. An annual meeting of the shareholders, commencing with the year 1985,
shall be held on the fourth Friday in April each year at a time to be set by the
Board of Directors, if not a legal holiday and, if a legal holiday, then on the
next business day following (other than a Saturday), at which they shall elect,
by a plurality vote, a Board of Directors and transact such other business as
may properly be brought before the meeting; provided, however, that such date
for any annual meeting may be altered as deemed appropriate by the Board of
Directors.
Shareholders List
3. At least ten days before each meeting of shareholders, a complete list
of shareholders entitled to vote at said meeting,
<PAGE>
arranged in alphabetical order, with the residence of each and the number of
voting shares held by each, shall be prepared by the officer or agent having
charge of the stock transfer books. Such list, for a period of ten days prior to
such meeting, shall be kept on file at the registered office of such Corporation
and shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of meeting during the whole time thereof, and shall be subject to the inspection
of any shareholder who may be present.
Quorum
4. The attendance of the holders of a majority of shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business, except as otherwise provided by Statute, the Restated
Articles of Incorporation, or these Bylaws. In the absence of such a quorum at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have power to recess the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be constituted. When such recessed meeting is
reconvened and a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally called.
Special Meetings
5. Special meetings of the shareholders for any purpose or purposes,
unless otherwise prescribed by Statute, the Restated Articles of Incorporation,
or these Bylaws, may be called by the Chairman of the Board, the President, or a
majority of the members of the Board of Directors or by the holders of not less
than one-fifth of all the shares entitled to vote at such meeting. Business
transacted at all special meetings shall be confined to items stated in the
call.
Voting Rights
6.(a) When a quorum is present at any meeting, the affirmative vote of
the holders of a majority of the shares having voting power, present in person
or represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the Statutes,
the Restated Articles of Incorporation, or these Bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. The shareholders present at a duly organized meeting
may continue to
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transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
(b) Each outstanding share, regardless of class, shall be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders, except
to the extent that the voting rights of the shares of any class or classes are
limited or denied by the Restated Articles of Incorporation. At any meeting of
shareholders, every shareholder having the right to vote shall be entitled to
vote in person or by proxy appointed by an instrument in writing subscribed by
such shareholder, or by his duly authorized attorney in fact, and bearing a date
of not more than eleven months prior to said meeting, unless said instrument
provides for a longer period. Such proxy shall be filed with the Secretary of
the Corporation prior to or at the time of the meeting. The Board of Directors
may fix in advance a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such record date
to be not less than ten nor more than fifty days prior to such meeting; or the
Board of Directors may close the stock transfer books for such purpose for a
period of not less than ten nor more than fifty days prior to such meeting. In
the absence of any action by the Board of Directors, the date upon which the
notice of the meeting is mailed shall be the record date.
(c) No shareholder shall have the right to cumulate his votes in the
election of Directors.
Notice of Meeting
7. Written or printed notice, stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each shareholder of record entitled to vote at the meeting.
Unanimous Consent
8. Any action required to be taken at a meeting of shareholders may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as the
unanimous vote of the shareholders.
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ARTICLE III
DIRECTORS
Authority
1. The business and affairs of the Corporation shall be managed by its
Board of Directors, who may exercise all such powers of the Corporation and do
all such lawful acts and things as are not directed or required by Statute, the
Restated Articles of Incorporation, or these Bylaws to be exercised or done by
the shareholders.
Number, Election and Term of Office
2.(a) The Board of Directors shall be made up of nine (9) members,
which shall include one Independent Director. Except as hereinafter provided,
Directors shall be elected at the annual meeting of the shareholders, and each
Director elected shall serve until the next succeeding annual meeting and until
his successor shall be elected and shall qualify. Directors need not be
residents of the State of Texas nor shareholders of the Corporation. The term
"Independent Director" shall mean a natural person who, for the five-year period
prior to his or her appointment as Independent Director has not been, and during
the continuation of his or her service as Independent Director is not: (i) an
employee, director, stockholder, partner or officer of the corporation or any of
its Affiliates (other than his or her service as an Independent Director of the
corporation); (ii) a customer or supplier that derives more than ten percent of
its revenues from the corporation or any of its Affiliates; or (iii) any member
of the immediate family of a person described in (i) or (ii). The term
"Affiliate" shall mean any other person directly or indirectly controlling,
controlled by, or under common control with, that person; for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise.
(b) The position of Advisory Director may be created from time to
time by the Board of Directors. Any Advisory Director shall be entitled to
notice of meetings and expected to attend such meetings. Any Advisory Director
may render advice to the Board, but may not vote on any issue. Any Advisory
Director shall
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be entitled to the same compensation and benefits as a duly elected Director.
(c) The number of Directors may be increased or decreased from time
to time by an amendment to these Bylaws, but shall never be less than three (3).
Retirement
3. No person shall be eligible for election or reelection to the Board of
Directors on or after the date of the Annual Meeting of Shareholders next
following the date on which such person attains the age of seventy (70) years;
provided, however, that the Board may waive the foregoing provision, but only if
the Board finds each year that the retention of a Director on the Board after
his seventieth birthday will be beneficial to the Corporation, but no such
waiver may be made in the case of a Director who has attained or will attain the
age of seventy-six (76) years on or prior to the date of the Annual Meeting of
Shareholders.
Removal
4. Any Director may be removed for or without cause at any special
meeting of the shareholders by the affirmative vote of a majority in number of
the shares or class of shares, as the case may be, which elected the Director
being removed, if notice of the intention to act upon such matter shall have
been given in the notice calling such meeting. Upon the removal of a Director,
the shareholders, by affirmative vote of the majority of the outstanding shares,
shall have the power at the same special meeting to elect a new Director to
serve until the next annual shareholders meeting, if notice of the intention to
act upon such matter shall have been given in the notice calling such meeting.
If the shareholders fail to elect a person to fill the unexpired term of the
Director so removed, such unexpired term shall be considered a vacancy on the
Board to be filled by the remaining Directors in the manner next provided.
Vacancies
5. If any vacancy occurs in the Board of Directors caused by death,
resignation, retirement, disqualification, removal from office of any Director,
or otherwise, a majority of the Directors then in office, though less than a
quorum, may choose a successor, or a successor may be chosen at a special
meeting of shareholders called for that purpose, and each Director so chosen
shall be elected until the next annual meeting of the shareholders and until his
successor shall have been elected and shall qualify. Any
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Directorship to be filled by reason of an increase in the number of Directors
shall be by election at an annual meeting of shareholders or at a special
meeting of shareholders called for that purpose.
Organize the Board
6. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of shareholders, and at
the same place, unless by unanimous consent of the Directors then elected and
serving, such time or place shall be changed. The Board shall elect one Director
to serve as Chairman and to preside at all meetings of the shareholders and of
the Board of Directors.
Regular Meeting Dates
7. Regular meetings of the Board will be held quarterly without notice on
a day certain at such time and place as shall be determined by the Board during
the periods specified below:
First Quarter - From January 16 through February 15, both days
inclusive;
Second Quarter - From April 16 through May 15, both days inclusive;
Third Quarter - From July 16 through August 15, both days inclusive;
and
Fourth Quarter - From October 16 through November 15, both days
inclusive.
Special Meetings
8. Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors or the President on three days' notice to
each Director, either personally or by telephone, mail or telegram stating the
purpose of such meeting. Notice given by telephone shall be confirmed in
writing. Special meetings shall be called by the Chairman of the Board, the
President or Secretary in like manner and on like notice on the written request
of two Directors. The notice of and request for a special meeting shall state
the time and place and purpose or purposes of such meeting. Business transacted
at all special meetings shall be confined to purposes stated in the call. Action
may be taken by the Board of Directors without a meeting, if the action is
evidenced by a written unanimous consent of the Directors.
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Waiver of Notice
9. Attendance of a Director at any meeting shall constitute a waiver of
notice of such meeting, except where a Director attends for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Except as may be otherwise expressly provided by
Statute, or the Restated Articles of Incorporation, or these Bylaws, neither the
business to be transacted at nor the purpose of any special meeting need be
specified in a notice or waiver of notice.
Quorum
10. At all meetings of the Board of Directors the presence of a majority
of the Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the act of a majority of the Directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specially provided by Statute, the
Restated Articles of Incorporation, or these Bylaws. If a quorum shall not be
present at any meeting of Directors, the Directors present thereat may adjourn
the meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be present.
Executive Committee and Other Committees
Creation
11. By resolution passed by a majority of the full Board, the Board of
Directors may designate an Executive Committee. The Chairman of the Board shall
have authority to create such other Committees as he finds necessary.
Executive Committee
12. The Executive Committee, if established, shall be comprised of three
or more Directors of the Corporation, one of whom shall be the President of the
Corporation and the majority of whom shall be outside Directors. To the extent
provided by resolution, the Executive Committee shall have the authority of the
Board of Directors to manage the business and affairs of the Corporation, except
where action of the full Board may be required by Statute, or the Restated
Articles of Incorporation.
Other Committees
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13. Other Committees which are created by the Chairman of the Board shall
have all the authority of the Board which may be granted to the Committee by a
resolution of the full Board.
Minutes
14. The Executive Committee and any other Committees which may be created
shall keep minutes of any proceedings and report such to the Board. Copies of
the approved Committees' minutes shall be circulated to the full Board.
Compensation
15. Directors and Advisory Directors of the Corporation may by resolution
of the Board be allowed a fixed sum and expenses of attendance for attendance at
each regular or special meeting of the Board or of any meeting by members of an
authorized Committee, if any, and may also receive such other compensation for
their services as Directors, or for serving the Corporation in any other
capacity, as the Board of Directors from time to time may determine. Any
Director who is also an employee of the Corporation shall not be compensated for
services as a Director.
Dividends
16. Subject always to the provisions of law and the Restated Articles of
Incorporation, the Board of Directors shall have full power to determine whether
any and, if so, what part of the funds legally available for the payment of
dividends shall be declared in dividends and paid to the shareholders of the
Corporation. Dividends may be declared at any regular or special meeting of the
Board and may be made payable in cash, in property or in shares of capital
stock. The Board of Directors may fix a sum which may be set aside or reserved
over and above the paid-in capital of the Corporation for working capital or as
a reserve for any proper purpose and from time to time may increase, diminish
and vary such fund in the Board's absolute judgment and discretion.
Annual Report
17. The Board of Directors shall present at each annual meeting and, when
called for by a vote of the shareholders at any special meeting of the
shareholders, a full and clear statement of the business and condition of the
Corporation.
ARTICLE IV
NOTICES
Notice of Meetings
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1. Whenever, under provisions of Statutes, the Restated Articles of
Incorporation, or these Bylaws, notice is required to be given to any Director
or shareholder and no provision is made as to how such notice shall be given,
personal notice shall not be required, and such notice may be given in writing,
by postage prepaid mail addressed to such Director or shareholder at such
address as appears on the books of the Corporation. Any notice required or
permitted to be given by mail shall be deemed to be given at the time when such
notice is deposited in the United States Mail as aforesaid.
Waiver
2. Whenever any notice is required to be given to any shareholder or
Director of the Corporation under provisions of Statutes, the Restated Articles
of Incorporation, or these Bylaws, a waiver thereof in writing, signed before or
after the time stated in such notice by the person or persons entitled to such
notice, shall be deemed equivalent to the giving of such notice.
ARTICLE V
OFFICERS
Positions
1. The officers of the Corporation shall be chosen by the Directors and
shall include a President, Vice President, a Controller, a Secretary and a
Treasurer. Additional officers may include such number of additional Vice
Presidents, Assistant Vice Presidents, Assistant Controllers, Assistant
Secretaries and Assistant Treasurers as the Board of Directors may from time to
time determine, and a Chief Information Officer. Any two or more offices may be
held by the same person except the offices of President and Secretary shall not
be held by the same person.
Election
2. (a) The Board of Directors, at its first meeting after each annual
meeting of shareholders, shall elect the officers of the Corporation, as above
provided.
(b) The Board may appoint such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms, exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
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Term
3. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. An officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the full Board of Directors. If the office of
any officer becomes vacant for any reason, the vacancy shall be filled by
affirmative vote of a majority of the full Board of Directors.
Salaries and Contracts with Officers
4. The salaries of all officers who report directly to the President of
the Corporation shall be fixed by the Board of Directors. The salaries of agents
and employees shall be determined and fixed by the President. The Board of
Directors of the Corporation may enter into agreements with officers on such
terms as are deemed necessary for present or future performance of service to
and for the Corporation by officers at such amounts of compensation, salary or
remuneration as may be required to obtain such services or as to which such
officers may agree, and for lease to the Corporation by the officers of any
vehicles, equipment, furnishings or other articles of property owned or held by
officers as may be useful or necessary to the organization and functioning of
the Corporation. No officer shall be ineligible to receive such salary by reason
of the fact that he is also a Director of the Corporation.
Duties
Chairman of the Board
5. The Chairman of the Board shall preside at all meetings of
shareholders and Directors, and may be designated as the Chief Executive Officer
of the Corporation, but unless so designated shall not otherwise be considered
an officer of the Corporation.
Chief Executive Officer
6. The Chief Executive Officer shall have responsibility for the general
direction of the business and affairs of the Corporation, subject to the control
of the Board of Directors. He shall have authority to sign, execute and
acknowledge in the name and on behalf of the Corporation all contracts and other
documents and instruments, including bonds and mortgages, except as otherwise
provided by law, and shall have authority to appoint and discharge agents and
employees. He shall have such additional powers and duties as the Board of
Directors may from time to time assign to him. In the absence or disability of
the President, he shall perform such duties and exercise such powers of the
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President as he shall deem necessary unless such functions are assumed by the
Chairman of the Board or otherwise delegated by the Board of Directors or the
Executive Committee.
President
7.(a) The President shall, in the absence of the Chairman of the Board,
perform all of the functions and duties herein above assigned to the Chairman of
the Board. If the President is designated as the Chief Executive Officer, he
shall perform all the functions of that office as set out in Paragraph 6 above;
but in all events, the President shall be the Chief Operating Officer of the
Corporation and shall be responsible for the active day-to-day management of the
business of the Corporation and shall perform such other functions and duties as
may from time to time be designated by the Board of Directors.
(b) The President may execute bonds, mortgages and other contracts or
instruments requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
Vice Presidents
8. The Board of Directors may elect an Executive Vice President who shall
perform the duties of the President during his absence or disability and shall
perform such other duties as the Board of Directors may prescribe. The Board of
Directors may elect other Vice Presidents who shall in the order of their
seniority in office and in the absence or disability of the President and the
Executive Vice President, perform the duties and exercise the powers of the
President and shall perform such other duties as the Board of Directors may
prescribe.
The Assistant Vice Presidents, if any, in order of their seniority in
office shall, in the absence or disability of their respective Vice President,
perform the duties and exercise the powers of such Vice President, and shall
perform such other duties and have such other powers as the Board of Directors
or President may from time to time prescribe.
Chief Information Officer
9. The Chief Information Officer, if one is appointed, shall have the
general responsibility for and authority over all matters related to the
Company's information and communication technologies and systems including,
without limitation, computer systems, networks and software; customer and other
information
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systems; and telephone and other telecommunications systems, under the direction
and the supervision of the Chief Financial Officer.
Secretary
10. The Secretary shall attend all sessions of the Board of Directors and
all meetings of the shareholders and record all votes and the minutes of all
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall function. He shall
keep in safe custody the seal of the Corporation and, when authorized by the
Board, shall affix the same to any instrument requiring it and, when so affixed,
it shall be attested by his signature.
The Assistant Secretaries, if any, in order of their seniority in office
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary, and shall perform such other duties and
have such other powers as the Board of Directors or President may from time to
time prescribe.
Chief Financial Officer
11. The Chief Financial Officer, if one is appointed, shall be a Vice
President and shall be in charge of the financial affairs of the Corporation
under the direction and the supervision of the President. He shall supervise the
activities of the Controller and the Treasurer.
Treasurer
12. The Treasurer shall act under the supervision of the Chief Financial
Officer, or if there is no Chief Financial Officer, the Treasurer shall act
under the President's supervision. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Chief Financial Officer, taking proper vouchers for such disbursements, and
shall render to the Chief Financial Officer, or to the President, if there is no
Chief Financial Officer, an account of all his transactions as Treasurer.
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The Assistant Treasurers, if any, in order of their seniority in office
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer, and shall perform such other duties and
have such other powers as the Board of Directors or President may from time to
time prescribe.
Controller
13. The Controller shall act under the supervision of the Chief Financial
Officer, or if there is no Chief Financial Officer, the Controller shall act
under the President's supervision. The Controller, if one is appointed, shall be
the chief accounting officer of the Corporation. He shall, when proper, approve
all bills for purchases, payrolls, and similar instruments providing for
disbursement of money by the Corporation for payment by the Chief Financial
Officer. He shall be in charge of and maintain books of account and accounting
records of the Corporation and shall render to the Chief Financial Officer, or
to the President, if there is no Chief Financial Officer, an account of all his
transactions as Controller and of the financial condition of the corporation. In
addition, he shall perform such other acts as are usually performed by the
Controller of a corporation or assigned to him by the President.
The Assistant Controllers, if any, in order of their seniority in office
shall, in the absence or disability of the Controller, perform the duties and
exercise the powers of the Controller, and shall perform such other duties and
have such other powers as the Board of Directors or President may from time to
time prescribe.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Form
1. The interest of each shareholder of the Corporation shall be evidenced
by certificates for shares of stock certifying the number of shares represented
thereby. Such certificates shall be consecutively numbered and entered on the
books of the Corporation as they are issued and shall be in such form not
inconsistent with the Restated Articles of Incorporation as the Board of
Directors may from time to time prescribe. Each certificate shall state on the
face thereof the holder's name, the number and class of shares, and the par
value of such shares or a statement that such shares are without par value. Each
certificate shall be signed by the President or a Vice President and the
Secretary or an
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Assistant Secretary and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of such officers may be facsimiles if the
certificate is countersigned by a transfer agent or is registered by a registrar
other than the Corporation itself or its employee.
Lost Certificates
2. The Board of Directors may direct that a new certificate representing
shares be issued in place of any certificate theretofore issued by the
Corporation and alleged to have been lost or destroyed, upon the making of an
affidavit of loss or destruction by the person claiming the certificate to be
lost or destroyed. When authorizing such issue of a new certificate, the Board
of Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or his
legal representative to give the Corporation a bond or indemnity not exceeding
an amount which is double the value of the stock.
Transfer Agent and Registrar
3. The Board of Directors may appoint one or more transfer agents or
transfer clerks and one or more registrars and may require all certificates for
shares to bear the signature or signatures of any of them.
Registered Owner
4. The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and accordingly shall not
be bound to recognize any equitable or other claim to or interest in such share
on the part of any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by law, the Restated Articles of
Incorporation, or these Bylaws.
Transfer of Shares
5. Shares of stock shall be transferable on the books of the Corporation
only by endorsement by the holder thereof in person or by his duly authorized
attorney. Upon surrender to the Corporation or the Corporation's transfer agent
of a certificate representing shares which has been duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the Corporation or the Corporation's transfer agent to issue a
new certificate to the
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person entitled thereto, cancel the old certificate and record the transaction
upon its books.
Closing of Transfer Books
6. The Board of Directors may provide that the stock transfer books shall
be closed for a stated period not to exceed fifty days for the purpose of
determining shareholders entitled to receive notice of or to vote at any meeting
of shareholders or any adjournment thereof or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to receive notice of or to vote at a meeting
of shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance a record date for any such determination of
shareholders, such date to be not more than fifty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment of such meeting.
ARTICLE VII
GENERAL PROVISIONS
Checks
1. All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
Fiscal Year
2. The fiscal year of the Corporation shall begin the first day of
January in each year.
Corporation Seal
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3. The Corporation seal shall have inscribed thereon the name of the
Corporation and the words "Corporate Seal, Texas." Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise imprinted.
Voting Securities Held by the Corporation
4. Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote at any meeting of security holders of other Corporations in
which the Corporation may hold securities. At such meeting the President shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities which the Corporation might have possessed and exercised if
it had been present. The Board of Directors may from time to time confer like
powers upon any other person or persons.
Indemnification
5. The Corporation shall indemnify any Director, officer, employee, or
former Director, officer or employee of the Corporation, or any person who has
served at the Corporation's request as a Director, officer or employee of
another Corporation in which the Corporation owns shares of stock or of which it
is a creditor against expenses actually and necessarily incurred by him and any
amount paid in satisfaction of judgments in connection with any action, suit or
proceeding, whether civil or criminal, in which he is made a party because of
his service to the Corporation in one of the above capacities subject to the
following provisions.
6. Before a person requesting indemnity shall be entitled to indemnity,
it shall have been determined in the manner provided in paragraph 7 that he:
a. conducted himself in good faith,
b. reasonably believed:
1) his conduct in his official capacity was in the Corporation's
best interest, or
2) where his conduct was not in his official capacity, that his
conduct was not opposed to the Corporation's best interest; and
where a criminal proceeding is involved, he had no reasonable
cause to believe his conduct was unlawful.
7. For a person to be eligible for indemnification, a determination of
such eligibility shall be made by one of the following means:
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a. a majority vote of a quorum of Directors who are not named parties in
the proceeding at the time of the vote,
b. where such a quorum cannot be obtained by a majority vote of a
committee of the Board consisting of Directors who are not parties in
the proceeding at the time of the vote,
c. by special legal counsel selected in the manner as required by
Statute, or
d. by a vote of the shareholders which excludes those shares held by
Directors who are parties to the proceeding.
8. Reasonable expenses incurred by a person eligible for indemnification
may be reimbursed in advance of final disposition of the proceeding if:
a. the Corporation receives a written affirmation by the Director of his
good faith belief that he has met the standard of conduct necessary
for indemnification,
b. the Director provides a written obligation to repay all amounts paid
or reimbursed if it is ultimately determined that he is not eligible
for indemnification, and
c. a determination of the facts known at the time of the request for the
advance reimbursement would not preclude indemnification.
9. Where eligibility has been determined, a person may be indemnified
against judgments, penalties, fines, settlements, and reasonable expenses
actually incurred, provided that if the proceeding is brought by or on behalf of
the Corporation, the indemnification is limited to reasonable expenses actually
incurred.
10. A person is not eligible for indemnification if:
a. the person is found liable on the basis of personal benefit being
improperly received by him regardless of whether or not the benefit
resulted from action taken in the person's official capacity,
b. the person is found liable to the Corporation.
11. Such rights of indemnification and reimbursement shall not be deemed
exclusive of any other rights to which such Director, officer, or employee may
be entitled by law or under any bylaw, vote of shareholders, agreement or
otherwise. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a Director,
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officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of any
other Corporation against any liability asserted against him and incurred by him
in any such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this section.
ARTICLE VIII
AMENDMENTS
These Bylaws may be altered, amended or repealed by the affirmative vote of
a majority of the full Board of Directors at any regular meeting of the Board or
at any special meeting of the Board if notice of the proposed alteration,
amendment or repeal be contained in the notice of such special meeting;
provided, however, that no change of the time or place for the election of
Directors shall be made within sixty days next before the day on which such
election is to be held, and that in case of any change of such time or place,
notice thereof shall be given to each shareholder in person or by letter mailed
to his last known postoffice address at least twenty days before the election is
held.
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EXHIBIT 3(a)(iii)
ARTICLES OF MERGER
of
ST ACQUISITION CORP.,
a Texas corporation
with and into
TNP ENTERPRISES, INC.,
a Texas corporation
Pursuant to Article 5.04 of the Texas Business Corporation Act, ST
Acquisition Corp., a Texas corporation ("ST Acquisition"), and TNP Enterprises,
Inc., a Texas corporation ("TNP Enterprises"), adopt the following Articles of
Merger:
FIRST: The name of each corporation that is a party to the plan of
merger (the "Merger"), and the state under whose laws each corporation is
incorporated are:
Name State
---- -----
ST Acquisition Corp. Texas
TNP Enterprises, Inc. Texas
SECOND: TNP Enterprises shall be the surviving corporation of the Merger.
THIRD: An Agreement and Plan of Merger has been approved by ST
Acquisition and TNP Enterprises in the manner prescribed by their constituent
documents and the provisions of Article 5.03 of the Texas Business Corporation
Act.
FOURTH: The Articles of Incorporation of the surviving corporation will
be the Articles of Incorporation of ST Acquisition as in effect immediately
prior to the Merger, except that the Articles of Incorporation of ST Acquisition
will be amended to change the name of the corporation as it appears therein from
"ST Acquisition Corp." to "TNP Enterprises, Inc." By way of clarification, the
surviving corporation will retain the name "TNP Enterprises, Inc." but will
change its Articles of Incorporation to those of ST Acquisition in effect
immediately prior to the Merger.
FIFTH: An executed copy of the Agreement and Plan of Merger is on file
at the principal place of business of TNP Enterprises, the surviving
corporation. The address of the principal place of business of TNP Enterprises
is 4100 International Plaza, Fort Worth, Texas 76109.
SIXTH: A copy of the Agreement and Plan of Merger will be furnished by
TNP Enterprises, the surviving corporation, on written request and without cost
to any shareholder of ST Acquisition and TNP Enterprises, and to any creditor or
obligee of ST Acquisition and TNP Enterprises at the time of the Merger if such
obligation is then outstanding.
F-Articles of Merger Page 1
<PAGE>
SEVENTH: TNP Enterprises, the surviving corporation, will be responsible
for, and obligated to pay, all applicable Texas franchise taxes and related fees
of ST Acquisition, if the same are not timely paid.
EIGHTH: For each corporation that is a party to the Merger, the number of
shares outstanding and entitled to vote on the Merger, and the number of shares
which voted for and against the Merger are as follows:
<TABLE>
<S> <C>
ST Acquisition
--------------
Number and Type of Shares Outstanding 100 shares common stock, no par value
100,000 shares of Series A Preferred Stock, no par value
Number and Type of Shares Entitled to Vote 100 shares common stock, no par value
100,000 shares of Series A Preferred Stock, no par value
Number of Shares which Voted For the Merger 100 shares common stock, no par value
100,000 shares of Series A Preferred Stock, no par value
Number of Shares which Voted Against the Merger 0 shares common stock, no par value
0 shares of Series A Preferred Stock, no par value
TNP Enterprises
---------------
Number and Type of Shares Outstanding 13,415,566 shares common stock, no par value
Number and Type of Shares Entitled to Vote 13,415,566 shares common stock, no par value
Number of Shares which Voted For the Merger 10,893,305 shares common stock, no par value
Number of Shares which Voted Against the Merger 107,777 shares common stock, no par value
</TABLE>
NINTH: The Merger shall become effective upon the filing of these
Articles of Merger with the Texas Secretary of State.
* * * * *
Remainder of Page Intentionally Left Blank.
Signature Page(s) Follow.
F-Articles of Merger Page 2
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed these Articles of Merger,
in one or more counterparts, as of the 7th day of April, 2000.
ST ACQUISITION CORP.,
a Texas corporation
By: /s/ William J. Catacosinos
-------------------------------------------
William J. Catacosinos, Chairman, President
and Chief Executive Officer
TNP ENTERPRISES, INC.,
a Texas corporation
By: /s/ Kevern R. Joyce
--------------------------------------------
Kevern R. Joyce, Chairman, President and
Chief Executive Officer
F-Articles of Merger Page 3
<PAGE>
Exhibit 4(A)(i)
STATEMENT OF RESOLUTION ESTABLISHING TWO SERIES OF SHARES
To: The Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating two series of shares and fixing and
determining the preferences, limitations and relative rights of the series:
1. The name of the corporation is ST Acquisition Corp. (the "Company").
2. The following resolution, establishing and designating two series of
shares and fixing and determining the relative rights and preferences of such
series, was duly adopted by all necessary action of the corporation on April 6,
2000.
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by the Amended and Restated Articles of Incorporation of the
Company, the Directors do hereby designate and authorize for issuance (i)
1,000,000 shares of the Senior Redeemable Preferred Stock, Series A,
$1,000.00 liquidation preference per share, and (ii) 1,000,000 shares of
the Senior Redeemable Preferred Stock, Series B, $1,000.00 liquidation
preference per share, which shall have the relative rights, preferences and
limitations as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a class of Preferred
Stock designated as the "Senior Redeemable Preferred Stock." The number of
shares constituting such class shall be 2,000,000 and are referred to
herein as the "Senior Preferred Stock." 1,000,000 shares of Senior
Preferred Stock shall be designated as the "Senior Redeemable Preferred
Stock, Series A," and 1,000,000 shares of the Senior Preferred Stock shall
be designated as the "Senior Redeemable Preferred Stock, Series B." The
liquidation preference of the Senior Preferred Stock shall be $1,000.00 per
share.
One Hundred Thousand (100,000) shares of the Series A Senior Preferred
Stock shall be initially issued, with an additional 900,000 shares of
Series A Senior Preferred Stock reserved for issuance in accordance with
paragraph (c)(i) hereof. The Company shall issue the shares of the Series B
Senior Preferred Stock to the Holders of the Series A Senior Preferred
Stock as is necessary to comply with the registration and exchange
provisions of the Registration Rights Agreement and for issuance in
accordance with paragraph (c)(i) hereof following such exchange.
<PAGE>
-2-
(b) Rank. The Senior Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Company, rank (i) senior to the extent set forth herein to all classes of
common stock of the Company ("Common Stock"), and to each other class of capital
stock or series of Preferred Stock hereafter established by the Board of
Directors of the Company the terms of which do not expressly provide that it
ranks senior to or on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Company (collectively referred to with the Common Stock of the Company as
"Junior Securities"); (ii) equally with any class of capital stock or series of
Preferred Stock issued by the Company hereafter established by the Board of
Directors of the Company the terms of which expressly provide that such class
will rank equally with the Senior Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up or dissolution of the Company
(collectively referred to as "Parity Securities"), provided that any such Parity
Securities that were not approved by the Holders in accordance with paragraph
(f)(ii)(A) hereof (to the extent such approval is required) shall be deemed to
be Junior Securities and not Parity Securities; and (iii) junior to each other
class of capital stock or series of Preferred Stock issued by the Company
hereafter established by the Board of Directors of the Company the terms of
which expressly provide that such class or series will rank senior to the Senior
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up or dissolution of the Company (collectively, referred to
as "Senior Securities"), provided that any such Senior Securities that were not
approved by the Holders in accordance with paragraph (f)(ii)(B) hereof shall be
deemed to be Junior Securities and not Senior Securities.
The Senior Preferred Stock will be subject to the issuance of series of
Junior Securities, Parity Securities and Senior Securities; provided that the
Company may not issue any new class of Parity Securities (other than the
issuance of additional shares of Senior Preferred Stock to satisfy dividend
payments on outstanding shares of Senior Preferred Stock) or Senior Securities
(or amend the provisions of any existing class of capital stock to make such
class of capital stock Parity Securities or Senior Securities) without the
approval of the Holders in accordance with paragraph f(ii) hereof.
No full dividends may be declared or paid on any Parity Securities for any
period unless full cumulative dividends shall have been or contemporaneously are
declared and paid (or are deemed declared and paid) in full. If full dividends
are not paid, the Senior Preferred Stock will share dividends pro rata with the
Parity Securities. No dividends may be paid on any Junior Securities (except
dividends on Junior Securities payable in additional shares of Junior
Securities) and no Junior Securities may be repurchased, redeemed or otherwise
retired (except in exchange for Junior Securities) if full cumulative dividends
have not been paid in full (or deemed paid) on the Senior Preferred Stock for
all full semi-annual Divi-
<PAGE>
-3-
dend Periods ended prior to the date of such payment in respect of Junior
Securities as may be further restricted as provided under paragraph (k)(ii).
(c) Dividends.
(i) From the Issue Date, Holders of the Senior Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available for the payment of dividends, dividends
on the Senior Preferred Stock, payable semi-annually, at an initial rate per
annum equal to the greater of (x) 12% or (y) LIBOR plus 700 basis points of the
liquidation preference per share of Senior Preferred Stock (the "Initial
Dividend Rate"). If the Senior Preferred Stock is still outstanding, the
dividend rate (A) for the period from July 7, 2000 to and including October 4,
2000 will be equal to the Initial Dividend Rate plus 100 basis points, (B) for
the period from October 5, 2000 to and including January 2, 2001 will be equal
to the Initial Dividend Rate plus 150 basis points and (C) for the period from
January 3, 2001 to and including April 7, 2001 will be equal to the Initial
Dividend Rate plus 200 basis points; thereafter, the dividend rate on the Senior
Preferred Stock will be fixed at a rate per annum equal to 18.00%. All dividends
will accumulate on a daily basis whether or not earned or declared from the
Issue Date and will be payable semi-annually in arrears on April 1 and October 1
of each year (each, a "Dividend Payment Date"), commencing on October 1, 2000,
to holders of record on March 15 and September 15 immediately preceding the
relevant Dividend Payment Date. Dividends will be paid by the issuance of
additional shares of Senior Preferred Stock (including fractional shares) having
an aggregate liquidation preference equal to the amount of such dividends. If,
at any time, any of the Voting Rights Triggering Events described in clause (1)
or (2) of paragraph (f)(iv) shall have occurred, the per annum dividend rate
will be increased by 2% during the continuance of any such Voting Rights
Triggering Event. After the date on which such Voting Rights Triggering Event
ceases to exist, the dividend rate will be the rate borne by the Senior
Preferred Stock.
(ii) All dividends paid with respect to shares of the Senior Preferred
Stock pursuant to paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
(iii) Dividends accumulating after April 1, 2005 on the Senior Preferred
Stock for any past Dividend Period and dividends in connection with any optional
redemption pursuant to paragraph (e)(i) may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of record on such
date, not more than sixty (60) days prior to the payment thereof, as may be
fixed by the Board of Directors.
<PAGE>
-4-
(iv) (A) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Company on any Parity Securities for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid in full on the Senior Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of such full dividends on such
Parity Securities. If any dividends are not so paid, all dividends declared upon
shares of the Senior Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends declared per share on the
Senior Preferred Stock and such Parity Securities shall in all cases bear to
each other the same ratio that accumulated dividends per share on the Senior
Preferred Stock and such Parity Securities bear to each other.
(B) So long as any share of the Senior Preferred Stock is outstanding, the
Company shall not declare, pay or set apart for payment any dividend on any of
the Junior Securities (other than dividends in Junior Securities to the holders
of Junior Securities), or make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the purchase, redemption
or other retirement of, any of the Junior Securities or any warrants, rights,
calls or options exercisable for or convertible into any of the Junior
Securities whether in cash, obligations or shares of the Company or other
property (other than in exchange for Junior Securities), and shall not permit
any corporation or other entity directly or indirectly controlled by the Company
to purchase or redeem any of the Junior Securities or any such warrants, rights,
calls or options (other than in exchange for Junior Securities) unless full
cumulative dividends determined in accordance herewith on the Senior Preferred
Stock have been paid in full for all full semi-annual Dividend Periods ended
prior to the date of such payment in respect of Junior Securities.
(C) So long as any share of the Senior Preferred Stock is outstanding, the
Company shall not (except with respect to dividends as permitted by paragraph
(c)(iv)(A)) make any payment on account of, or set apart for payment money for a
sinking or other similar fund for, the purchase, redemption or other retirement
of, any of the Parity Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Parity Securities whether in
cash, obligations or shares of the Company or other property, and shall not
permit any corporation or other entity directly or indirectly controlled by the
Company to purchase or redeem any of the Parity Securities or any such warrants,
rights, calls or options unless full cumulative dividends determined in
accordance herewith on the Senior Preferred Stock have been or contemporaneously
are paid in full.
(v) Dividends payable on the Senior Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months
<PAGE>
-5-
and, for periods not involving a full calendar month, the actual number of days
elapsed (not to exceed 30 days).
(vi) Additional Dividends shall become due and payable with respect to the
Senior Preferred Stock as set forth in the Registration Rights Agreement.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Company, the Holders of shares of Senior
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Company available for distribution to its stockholders an amount in cash
equal to the liquidation preference for each share outstanding, plus, without
duplication, an amount in cash equal to accumulated and unpaid dividends thereon
to the date fixed for liquidation, dissolution or winding-up (including an
amount equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up)
before any distribution shall be made or any assets distributed in respect of
Junior Securities to the holders of any Junior Securities including, without
limitation, Common Stock of the Company. If upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Senior Preferred Stock and all other Parity Securities are not
paid in full, the Holders of the Senior Preferred Stock and the Parity
Securities will share equally and ratably in any distribution of assets of the
Company first in proportion to the full liquidation preference to which each is
entitled until such preferences are paid in full, and then in proportion to
their respective amounts of accumulated but unpaid dividends.
(ii) For the purposes of this paragraph (d), neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
affairs of the Company.
(e) Redemption.
(i) Optional Redemption. (A) The Company may redeem the Senior Preferred
Stock at its option, in whole at any time or in part from time to time, after
the Issue Date but on or prior to April 1, 2001, subject to contractual and
other restrictions with respect thereto, from any source of funds legally
available therefor, in the manner provided for in paragraph (e)(iii) hereof, at
a redemption price in cash equal to the liquidation preference thereof, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including Additional Dividends, if any) (including
<PAGE>
-6-
an amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date).
In addition, the Company may redeem the Senior Preferred Stock at its option, in
whole at any time or in part from time to time, subject to contractual and other
restrictions with respect thereto, from any source of funds legally available
therefor, in the manner provided for in paragraph (e)(iii) hereof, at the
redemption prices in cash (expressed as a percentage of the liquidation
preference) set forth below, plus, without duplication, an amount in cash equal
to all accumulated and unpaid dividends (including Additional Dividends, if any)
(including an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date) if redeemed during the 12-month period beginning on April 1 of
each of the years listed below:
2005.................................................. 109.000%
2006.................................................. 107.200%
2007.................................................. 105.400%
2008.................................................. 103.600%
2009.................................................. 101.800%
2010 and thereafter................................... 100.000%
; provided that no redemption pursuant to this paragraph (e)(i)(A) shall be
authorized or made unless prior thereto full accumulated and unpaid dividends
(including Additional Dividends, if any) are declared and paid in full on the
Senior Preferred Stock for all Dividend Periods terminating on or prior to the
Redemption Date.
(B) In the event of a redemption pursuant to paragraph (e)(i)(A) hereof of
only a portion of the then outstanding shares of Senior Preferred Stock, the
Company shall effect such redemption on a pro rata basis according to the number
of shares held by each Holder of Senior Preferred Stock, except that the Company
may redeem such shares held by Holders of fewer than ten shares (or shares held
by Holders who would hold less than ten shares as a result of such redemption)
as may be determined by the Company.
(ii) Mandatory Redemption. On April 1, 2011, the Company shall redeem, to
the extent of funds legally available therefor, in the manner provided for in
paragraph (e)(iii) hereof, all of the shares of Senior Preferred Stock then
outstanding at a redemption price equal to 100% of the liquidation preference
per share, plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends (including Additional Dividends, if any) per share
(including an amount equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the Redemption
Date) (the "Mandatory Redemption Price").
<PAGE>
-7-
(iii) Procedures for Redemption. (A) At least 30 days and not more than 60
days prior to the date fixed for any redemption of the Senior Preferred Stock,
written notice (the "Redemption Notice") shall be given by first-class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Senior Preferred Stock at such Holder's address as it appears
in the register maintained by the Transfer Agent for the Senior Preferred Stock,
provided that no failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption of any shares of Senior
Preferred Stock to be redeemed except as to the Holder or Holders to whom the
Company has failed to give said notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:
(1) that the redemption is pursuant to paragraph (e)(i)(A) hereof;
(2) the redemption price;
(3) whether all or less than all the outstanding shares of Senior
Preferred Stock are to be redeemed and the total number of shares of Senior
Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Company, in the manner, at
the place or places and at the price designated, his certificate or
certificates representing the shares of Senior Preferred Stock to be
redeemed; and
(6) that dividends on the shares of Senior Preferred Stock to be
redeemed shall cease to accumulate on such Redemption Date unless the
Company defaults in the payment of the redemption price.
(B) Each Holder of Senior Preferred Stock shall surrender the certificate
or certificates representing such shares of Senior Preferred Stock to the
Company, duly endorsed (or otherwise in proper form for transfer, as determined
by the Company), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full redemption price for such shares
shall be payable in cash to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
<PAGE>
-8-
(C) On and after the Redemption Date, unless the Company defaults in the
payment in full of the applicable redemption price, dividends on Senior
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the redemption price; provided, however, that if a notice of redemption
shall have been given as provided in paragraph (iii)(A) above and the funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the Redemption Date) shall have been
irrevocably deposited in trust for the equal and ratable benefit for the Holders
of the shares of senior Preferred Stock to be redeemed, then, at the close of
business on the Business Day on which such funds are segregated and set aside,
the Holders of the shares to be redeemed shall cease to be stockholders of the
Company and shall be entitled only to receive the redemption price.
(f) Voting Rights.
(i) The Holders of Senior Preferred Stock, except as otherwise
required under Texas law or as set forth in paragraphs (ii), (iii) and (iv)
below, shall not be entitled or permitted to vote on any matter required or
permitted to be voted upon by the stockholders of the Company.
(ii) (A) So long as any shares of Senior Preferred Stock are
outstanding, the Company shall not authorize or issue any class of Parity
Securities without the affirmative vote or consent of Holders of at least a
majority of the then outstanding shares of Senior Preferred Stock, voting
or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting; provided, however, that no such vote or consent shall be necessary
in connection with the issuance of additional shares of Senior Preferred
Stock pursuant to the provisions of paragraph (c) of this Statement of
Resolution.
(B) So long as any shares of Senior Preferred Stock are outstanding,
the Company shall not authorize or issue any class of Senior Securities
without the affirmative vote or consent of Holders of at least a majority
of the outstanding shares of Senior Preferred Stock, voting or consenting,
as the case may be, as one class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting.
(C) So long as any shares of Senior Preferred Stock are outstanding,
the Company shall not amend this Statement of Resolution or its Articles of
Incorporation so as to affect adversely the specified rights, preferences,
privileges or voting rights of Holders of shares of Senior Preferred Stock
without the affirmative vote or consent of Holders of at least a majority
of the issued and outstanding shares of Senior Preferred
<PAGE>
-9-
Stock, voting or consenting, as the case may be, as one class, given in
person or by proxy, either in writing or by resolution adopted at an annual
or special meeting.
(iii) Without the affirmative vote or consent of Holders of a majority
of the issued and outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, as a separate class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting, the Company shall not, in a single transaction or series of
related transactions, consolidate with or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person unless: (A) either (1)
the Company is the continuing Person or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged
or to which the properties and assets of the Company are sold, assigned,
transferred, leased, conveyed or otherwise disposed of shall be a
corporation organized and existing under the laws of the United States or
any State thereof or the District of Columbia and shall expressly assume
all of the obligations of the Company under this Statement of Resolution
and the obligations hereunder shall remain in full force and effect; (B) if
the Company is not the surviving Person, the Senior Preferred Stock shall
be converted into or exchanged for and shall become shares of such
successor, transferee or resulting Person, having in respect of such
successor, transferee or resulting Person the same powers, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the Senior
Preferred Stock had immediately prior to such transaction; (C) immediately
after giving effect to such transaction on a pro forma basis the Company or
such Person could incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with paragraph (k)(i); and (D)
immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction), no Voting Rights Triggering Event shall have occurred or be
continuing.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties or assets of
one or more Restricted Subsidiaries of the Company, the Capital Stock of
which constitutes all or substantially all of the properties and assets of
the Company shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
(iv) (A) If (1) the Company fails to redeem all of the then
outstanding shares of Senior Preferred Stock on or before April 1, 2011 or
otherwise fails to discharge any redemption obligation with respect to the
Senior Preferred Stock; (2) the Company fails to make a Change of Control
Offer following a Change of Control if
<PAGE>
-10-
such Change of Control Offer is required by paragraph (g) hereof or fails
to purchase shares of Senior Preferred Stock from Holders who elect to have
such shares purchased pursuant to the Change of Control Offer; or (3) the
Company breaches or violates one of the provisions set forth in paragraph
(k) or paragraph (f)(iii) hereof and the breach or violation continues for
a period of 60 days or more after the Company receives notice thereof
specifying the default from the Holders of at least 25% of the shares of
Senior Preferred Stock then outstanding, then in the case of any of clauses
(1) through (3) (each of such clauses (1) through (3) a "Voting Rights
Triggering Event"), the number of directors constituting the Board of
Directors shall be adjusted by the number, if any, necessary to permit the
Holders of the Senior Preferred Stock, voting separately and as one class,
to elect the lesser of two directors or that number of directors
constituting at least 25% of the Board of Directors; provided, that, in the
event more than one of the above defaults occurs, at the same or at
different times, the maximum number of directors that such Holders shall be
entitled to elect is the lesser of two directors and that number of
directors constituting 25% of the Board of Directors. Holders of a majority
of the issued and outstanding shares of Senior Preferred Stock, voting
separately and as one class, shall have the exclusive right to elect the
lesser of two directors or 25% of the members of the Board of Directors at
a meeting therefor called upon occurrence of such Voting Rights Triggering
Event, and at every subsequent meeting at which the terms of office of the
directors so elected by the Holders of Senior Preferred stock expire (other
than as described in (f)(iv)(B) below). The voting rights provided herein
shall be the exclusive remedy at law or in equity of the Holders of the
Senior Preferred Stock for any Voting Rights Triggering Event.
(B) The right of the Holders of the Senior Preferred Stock voting
together as a separate class to elect members of the Board of Directors as
set forth in subparagraph (f)(iv)(A) above shall continue until such time
as the failure, breach or default giving rise to such Voting Rights
Triggering Event is remedied, cured or waived by the Holders of at least a
majority of the shares of Senior Preferred Stock then outstanding and
entitled to vote thereon, at which time (1) the special right of the
Holders of Senior Preferred Stock so to vote as a class for the election of
directors and (2) the term of office of the directors elected by the
Holders of Senior Preferred Stock shall each terminate and the directors
elected by the holders of Common Stock or Capital Stock (other than the
Senior Preferred Stock) shall constitute the entire Board of Directors. At
any time after voting power to elect directors shall have become vested and
be continuing in the Holders of Senior Preferred Stock pursuant to
paragraph (f)(iv) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Senior Preferred Stock, a proper
officer of the Company may, and upon the written request of the Holders of
record of at least 25% of the shares of Senior Preferred Stock then
outstanding addressed to the secretary of the Company shall, call a special
meeting of the Holders
<PAGE>
-11-
of Senior Preferred Stock, for the purpose of electing the directors which such
Holders are entitled to elect. If such meeting shall not be called by a proper
officer of the Company within 20 days after personal service of said written
request upon the secretary of the Company, or within 20 days after mailing the
same within the United States by certified mail, addressed to the secretary of
the Company at its principal executive offices, then the Holders of record of at
least 25% of the outstanding shares of Senior Preferred Stock may designate in
writing one Holder to call such meeting at the expense of the Company, and such
meeting may be called by the Person so designated upon the notice required for
the annual meetings of stockholders of the Company and shall be held at the
place for holding the annual meetings of stockholders. Any Holder of Senior
Preferred Stock so designated shall have, and the Company shall provide, access
to the lists of stockholders to be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors at which the
Holders of Senior Preferred Stock shall have the right, voting together as a
separate class, to elect directors as aforesaid, the presence in person or by
proxy of the Holders of at least a majority of the outstanding shares of Senior
Preferred Stock entitled to vote thereat shall be required to constitute a
quorum of the Senior Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by the
Holders of the Senior Preferred Stock may be filled by the remaining director
elected by the Holders of the Senior Preferred Stock unless and until such
vacancy shall be filled by the Holders of the Senior Preferred Stock.
(v) In any case in which the Holders of the Senior Preferred Stock shall be
entitled to vote pursuant to this paragraph (f) or pursuant to Texas law, each
Holder of Senior Preferred Stock entitled to vote with respect to such matter
shall be entitled to one vote for each share of Senior Preferred Stock held.
(g) Change of Control.
(i) Upon the occurrence of a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Company shall make an offer to purchase
(the "Change of Control Offer") the outstanding shares of Senior Preferred Stock
at a purchase price equal to 101% of the liquidation preference thereof plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including Additional Dividends, if any) thereon (including an amount
in cash equal to a prorated dividend for the period from the immediately
preceding Dividend Payment Date to the Change of Control Payment Date).
<PAGE>
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(ii) Within 30 days of the occurrence of a Change of Control, the Company
also shall (i) cause a notice of the Change of Control to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (ii) send by first-class mail, postage prepaid, to each Holder of
Senior Preferred Stock, at the address appearing in the register maintained by
the Transfer Agent for the Senior Preferred Stock, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
paragraph (g) and that all of the Senior Preferred Stock tendered will be
accepted for payment, and otherwise subject to the terms and conditions set
forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the "Change of Control Payment Date"));
(3) that any of the Senior Preferred Stock not tendered will continue
to accumulate dividends;
(4) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any of the Senior Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to accumulate
dividends after the Change of Control Payment Date;
(5) that Holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Company, properly endorsed for transfer together with such customary
documents as the Company and the transfer agent may reasonably require, in
the manner and at the address specified in the notice prior to the close of
business on the Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their acceptance if the
Company receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the number of shares of Senior Preferred Stock delivered for
purchase, and a statement that such Holder is withdrawing his election to
have such Senior Preferred Stock purchased;
<PAGE>
-13-
(7) that Holders whose Senior Preferred Stock is being purchased only
in part will be issued new certificates representing the number of shares
of Senior Preferred Stock equal to the unpurchased portion of the
certificates surrendered; and
(8) any other procedures that a Holder must follow to accept a Change
of Control Offer or effect withdrawal of such acceptance.
(iii) The Company will comply with any securities laws and regulations, to
the extent such laws and regulations are applicable to the redemption of the
Senior Preferred Stock in connection with a Change of Control Offer.
(iv) On the Change of Control Payment Date, the Company shall (A) accept
for payment the shares of Senior Preferred Stock validly tendered pursuant to
the Change of Control Offer, (B) promptly mail to the Holders of shares so
accepted the Change of Control Purchase Price therefor in cash and (C) cancel
and retire each surrendered certificate and execute a new certificate
representing that number of shares of Senior Preferred Stock equal to any
unpurchased shares represented by a certificate surrendered. Unless the Company
defaults in the payment for the shares of Senior Preferred Stock tendered
pursuant to the Change of Control Offer, dividends shall cease to accumulate
with respect to the shares of Senior Preferred Stock tendered and all rights of
Holders of such tendered shares shall terminate, except for the right to receive
payment therefor, on the Change of Control Payment Date.
(v) If the repurchase of the Senior Preferred Stock would violate or
constitute a default or be otherwise prohibited under any Indebtedness of the
Company then outstanding, then, notwithstanding anything to the contrary
contained above, prior to complying with the foregoing provisions, but in any
event within 30 days following the date the Change of Control occurs, the
Company shall, to the extent required to permit the repurchase of the Senior
Preferred Stock required by this paragraph (g), either (A) repay in full all
such Indebtedness (and terminate all commitments) or (B) obtain the requisite
consents, if any, under such Indebtedness required to permit the repurchase of
the Senior Preferred Stock required by this paragraph (g). The Company must
first comply with the covenant described in the preceding sentence before it
shall be required to purchase shares of Senior Preferred Stock in the event of a
Change of Control; provided that the Company's failure to consummate a Change of
Control Offer in accordance with the provisions of this covenant due to the
covenant described in the immediately preceding sentence shall constitute a
Voting Rights Triggering Event described in clause (3) of the definition of
"Voting Rights Triggering Event" if not cured within 30 days of the last date on
which the Company would have
<PAGE>
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been required to consummate the Change of Control Offer without giving effect to
the covenant described in the immediately preceding sentence.
(h) Conversion or Exchange. The Holders of shares of Senior Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Company other than as provided in the
Registration Rights Agreement.
(i) Reissuance of Senior Preferred Stock. Shares of Senior Preferred Stock
that have been issued and reacquired in any manner, including shares purchased
or redeemed or exchanged, shall (upon compliance with any applicable provisions
of the laws of Texas) have the status of authorized and unissued shares of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of Preferred Stock; provided that shares of Senior
Preferred Stock reacquired pursuant to the exchange offer contemplated by the
Registration Rights Agreement shall be reissued as Senior Preferred Stock with
the series designation referred to in paragraph (a) hereof; and provided,
further, that any issuance of such shares of Preferred Stock must be in
compliance with the terms hereof.
(j) Business Day. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(k) Certain Covenants. During any period of time that (i) the ratings
assigned to the Notes (or, if the Notes are no longer outstanding, a similar
debt issuance of the Company) by both of the Rating Agencies are Investment
Grade Ratings and (ii) no Voting Rights Triggering Event has occurred and is
continuing, the Company and its Restricted Subsidiaries will not be subject to
the provisions described below under paragraphs (k)(i), (k)(ii), (k)(iii),
(k)(v) and clause (c) of paragraph (f)(iii) (collectively, the "Suspended
Covenants"). In the event that the Company and its Restricted Subsidiaries are
not subject to the Suspended Covenants with respect to the Senior Preferred
Stock for any period of time as a result of the preceding sentence and,
subsequently, one or both Rating Agencies withdraw their ratings or downgrade
the ratings assigned to the Notes below the required Investment Grade Ratings,
then the Company and each of its Restricted Subsidiaries (except to the extent
that any such Restricted Subsidiary is not subject to such covenant pursuant to
the terms thereof) will thereafter again be subject to the Suspended Covenants
for the benefit of such Senior Preferred Stock and compliance with the Suspended
Covenants with respect to Restricted Payments made after the time of such
withdrawal or downgrade will be calculated in accordance with the terms of the
covenant described below under paragraph (k)(ii) as if such covenant had been in
effect during the entire period of time from April 7, 2000.
<PAGE>
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(i) Limitation on Additional Indebtedness. The Company shall not, and shall
not permit any of its Restricted Subsidiaries (other than any Regulated
Restricted Subsidiary) to, directly or indirectly, incur (as defined) any
Indebtedness (including Acquired Indebtedness); provided that if no Voting
Rights Triggering Event has occurred and is continuing at the time or as a
consequence of the incurrence of such Indebtedness, the Company or any of its
Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness)
if after giving effect to the incurrence of such Indebtedness and the receipt
and application of the proceeds thereof, the Company's Consolidated Fixed Charge
Coverage Ratio is at least 2.0 to 1 if the Indebtedness is incurred on or prior
to December 31, 2001 and 2.25 to 1 if the Indebtedness is incurred thereafter.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness which the Company and any Restricted Subsidiary are permitted to
issue, the Company and such Restricted Subsidiary, as the case may be, will have
the right, in the Company's sole discretion, to classify such item of
Indebtedness at the time of its issuance and from time to time thereafter and
will only be required to include the amount and type of such Indebtedness under
the clause permitting the Indebtedness as so classified.
(ii) Limitation on Restricted Payments. The Company shall not make, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
make, any Restricted Payment, unless:
(1) no Voting Rights Triggering Event has occurred and is continuing
at the time of or immediately after giving effect to such Restricted
Payment;
(2) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under paragraph (k)(i); and
(3) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments made after the Issue Date does not
exceed the sum of
(a) 50% of the Company's Cumulative Consolidated Net Income (or
minus 100% of any cumulative deficit in Consolidated Net Income during
such period);
<PAGE>
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(b) 100% of the aggregate Net Proceeds and the fair market value
of any property or securities received by the Company from the issue
or sale after the Issue Date of Capital Stock (other than Disqualified
Capital Stock or Capital Stock of the Company issued to any Subsidiary
of the Company) of the Company or any Indebtedness or other securities
of the Company convertible into or exercisable or exchangeable for
Capital Stock (other than Disqualified Capital Stock) of the Company
which have been so converted, exercised or exchanged, as the case may
be;
(c) without duplication of any amounts included in clause (3)(b)
above, 100% of the aggregate Net Proceeds received by the Company from
any equity contribution from a holder of the Company's Capital Stock,
excluding any Net Proceeds from a Public Equity Offering to the extent
used to redeem the Notes; and
(d) without duplication, the sum of:
(i) the aggregate amount returned in cash on or with respect
to an Investment (other than a Permitted Investment) in any
Person made subsequent to the Issue Date whether through interest
payments, principal payments, dividends or other distributions;
(ii) the net proceeds received by the Company or any of its
Restricted Subsidiaries from the disposition (other than to the
Company or a Subsidiary of the Company), retirement or redemption
of all or any portion of an Investment described in clause
(3)(d)(i); and
(iii) upon redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the fair market value of the net assets of
such Subsidiary as of such date;
provided, however, that, with respect to an Investment in any Person, the
sum of clauses (i), (ii) and (iii) above with respect to the Investment in
such Person may not exceed the aggregate amount of all Investments made in
such Person subsequent to the Issue Date; and
(e) $5.0 million.
For purposes of determining under clause (3) above, the amount expended for
Restricted Payments, cash distributed shall be valued at the face amount thereof
and property other than cash shall be valued at its fair market value.
<PAGE>
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The provisions of this covenant shall not prohibit
(1) the payment of any distribution within 60 days after the date of
declaration thereof, if at such date of declaration such payment would
comply with the provisions of this Statement of Resolution;
(2) the repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company by conversion into, or by or in
exchange for, shares of Capital Stock of the Company (other than
Disqualified Capital Stock), or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company)
of other shares of Capital Stock of the Company (other than Disqualified
Capital Stock);
(3) distributions to SW Acquisition, L.P. by the Company for the
purpose of (a) enabling the partners of SW Acquisition, L.P. to pay their
tax liabilities and (b) enabling SW Acquisition, L.P. to pay management,
consulting and financial advisory fees and reimburse expenses in an amount
in the case of this clause (b) not to exceed $2.0 million in the aggregate
in any fiscal year;
(4) the repurchase, redemption or other acquisition or retirement of
any shares of Disqualified Capital Stock out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company)
of other shares of Disqualified Capital Stock; provided, however, that the
amounts of the redemption obligations of the Disqualified Capital Stock
being issued shall not exceed the amounts of the redemption obligations of,
and such Disqualified Capital Stock shall have redemption obligations no
earlier than those required by, the Disqualified Capital Stock being
refinanced;
(5) the repurchase, redemption, retirement or acquisition of Capital
Stock of the Company from employees or directors of the Company upon such
employees' or directors' death, retirement or termination of employment or
otherwise in accordance with any employment agreement, employee or director
stock option plan or agreement or employee or director equity subscription
agreement, in an aggregate amount not to exceed $2.0 million in any
calendar year, plus the aggregate cash proceeds received by the Company
during such calendar year from any issuance of such Capital Stock to
employees or directors of the Company, plus the portion of such $2.0
million which remains unused at the end of the prior calendar year, but in
no event to exceed $3.0 million in any calendar year; provided, that the
cancellation of Indebtedness owing to the Company from employees or
directors in connection with a repurchase of Capital Stock of the Company
will not be deemed to constitute a Restricted Payment; and
<PAGE>
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(6) Investments constituting Restricted Payments made as a result of
the receipt of non-cash consideration from any Asset Sale.
In calculating the aggregate amount of Restricted Payments made subsequent
to the Issue Date for purposes of clause (3) of the first paragraph above,
amounts expended pursuant to clauses (1), (2) and (5) of the immediately
preceding paragraph will be included in such calculation.
(iii) Limitation on Transactions with Affiliates. The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with or for the benefit of any Affiliate (each an
"Affiliate Transaction") or extend, renew, waive or otherwise amend or modify
the terms of any Affiliate Transaction entered into prior to the Issue Date
unless
(1) such Affiliate Transaction is between or among the Company and one
or more of its Wholly Owned Subsidiaries; or
(2) the terms of such Affiliate Transaction are at least as favorable
as the terms which could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis between unaffiliated parties.
In any Affiliate Transaction (or any series of related Affiliate
Transactions which are similar or part of a common plan) involving an amount or
having a fair market value in excess of $2.0 million which is not permitted
under clause (1) above, the Company must obtain a board resolution of the Board
of Directors of the Company (and approved by at least a majority of the
disinterested directors) certifying that such Affiliate Transaction complies
with clause (2) above. In any Affiliate Transaction (or any series of related
Affiliate Transactions which are similar or part of a common plan) involving an
amount or having a fair market value in excess of $5.0 million which is not
permitted under clause (1) above, the Company must obtain a favorable written
opinion as to the fairness of such transaction or transactions, as the case may
be, from an Independent Financial Advisor.
The foregoing provisions shall not apply to
(1) any Restricted Payment that is not prohibited by the provisions
described under paragraph (k)(ii);
(2) fees and compensation paid to, indemnity provided on behalf of,
and employee benefit arrangements for, officers, directors or employees of
the Company or
<PAGE>
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any Restricted Subsidiary of the Company, as determined in good faith by
the Company's Board of Directors or senior management;
(3) any transactions with and any fees paid to Laurel Hill Capital
Partners LLC and its Affiliates and CIBC World Markets Corp. and its
Affiliates relating to advisory, banking and investment banking services
provided to the Company or any Restricted Subsidiary of the Company;
(4) distributions to SW Acquisition, L.P. by the Company for the
purpose of (a) enabling the partners of SW Acquisition, L.P. to pay their
tax liabilities and (b) enabling SW Acquisition, L.P. to pay management,
consulting and financial advisory fees and reimburse expenses in an amount
in the case of this clause (b) not to exceed $2.0 million in the aggregate
in any fiscal year;
(5) loans or advances to employees of the Company or any Restricted
Subsidiary in the ordinary course of business, but in any event not to
exceed $2.0 million in the aggregate outstanding at any time;
(6) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business approved in good
faith by the Company's Board of Directors; or
(7) any agreement as in effect as of the Issue Date or any amendment
thereto or any transaction contemplated thereby (including pursuant to any
amendment thereto) in any replacement agreement thereto so long as any such
amendment or replacement agreement is not more disadvantageous to the
holders in any material respect than the original agreement as in effect on
the Issue Date.
(iv) Limitation on Preferred Stock of Restricted Subsidiaries. The
Company shall not permit any of its Restricted Subsidiaries (other than any
Regulated Restricted Subsidiary) to issue any Preferred Stock (except
Preferred Stock issued to the Company or a Wholly Owned Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to hold any such Preferred Stock unless such
Restricted Subsidiary would be entitled to incur or assume Indebtedness
(other than Permitted Indebtedness) in compliance with paragraph (k)(i) in
the aggregate principal amount equal to the aggregate liquidation value of
the Preferred Stock to be issued.
(v) Limitation on Asset Sales. (A) The Company shall not, and shall
not permit any of its Restricted Subsidiaries (other than any Regulated
Restricted Subsidiary) to, consummate an Asset Sale (excluding any sale of
interests in an Unrestricted Subsidiary) unless
<PAGE>
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(1) the Company or such Restricted Subsidiary, as the case may
be, receives consideration at the time of such sale or other
disposition at least equal to the fair market value of the assets sold
or otherwise disposed of; and
(2) not less than 75% of the consideration received by the
Company or such Restricted Subsidiary, as the case may be, is in the
form of cash and Cash Equivalents other than in the case where the
Company is undertaking a Permitted Asset Swap; provided that the
following shall be deemed to be cash for purposes of this clause (2):
(a) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet), of the
Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinate
in right of payment to the Senior Preferred Stock) that are
assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such
Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary
settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received in that
conversion).
(B) The Asset Sale Proceeds received by the Company or any Restricted
Subsidiary may be applied to one or more of the following purposes in such
combination as the Company or the applicable Restricted Subsidiary shall elect:
(1) to the extent the Company or any such Restricted Subsidiary, as
the case may be, elects, or is required, to prepay, repay or purchase
Indebtedness under any then existing Indebtedness of the Company or any
such Restricted Subsidiary within 270 days following the receipt of the
Asset Sale Proceeds from any Asset Sale; provided that any such repayment
shall result in a permanent reduction of the commitments thereunder in an
amount equal to the principal amount so repaid; and
(2) (i) to an Investment in Property or other assets (including
Capital Stock or other securities purchased in connection with the
acquisition of Capital Stock or Property of another Person) or (ii) to the
cash collateralization of letters of credit or bankers acceptances designed
to facilitate the purchase of property and services; provided that any cash
collateral released to the Company or such Restricted Subsidiary upon the
expiration of such letters of credit, bankers acceptances or other
instruments
<PAGE>
-21-
or arrangements shall be deemed Asset Sale Proceeds received on the date of
such release; provided, however, that in the case of clauses (i) and (ii)
above, such applications of Asset Sale Proceeds must be made in compliance
with paragraph (k)(x) within 270 days following the receipt of such Asset
Sale Proceeds; and
(3) to the reimbursement of the Company or any such Restricted
Subsidiary within 270 days following the receipt of insurance proceeds for
expenditures made, and costs incurred, to repair, rebuild, replace or
restore property subject to loss, damage or taking to the extent that the
Asset Sale Proceeds consist of insurance proceeds received on account of
such loss, damage or taking.
The aggregate Asset Sale Proceeds from any Asset Sale made by the Company
or any of its Restricted Subsidiaries (other than any such Asset Sale Proceeds
received by any Regulated Restricted Subsidiary that are not paid as a dividend
to the Company) that have not been applied in accordance with the preceding
paragraph, and that have not yet been the basis for an Excess Proceeds Offer in
accordance with the following paragraph, are referred to herein as "Available
Asset Sale Proceeds."
If the Available Asset Sale Proceeds exceed $10.0 million, the Company or
such Restricted Subsidiary, as the case may be, must apply an amount equal to
the Available Asset Sale Proceeds to an offer to repurchase the Senior Preferred
Stock, at a purchase price in cash equal to 100% of the liquidation preference
thereof plus accumulated and unpaid dividends, if any, to the purchase date (an
"Excess Proceeds Offer").
(C) If the Company is required to make an Excess Proceeds Offer, the
Company shall mail, within 30 days following the date specified in clause (B)(2)
above, a notice to the Holders. Such notice shall be sent by first-class mail,
postage prepaid, to the Transfer Agent and to each Holder, at the address
appearing in the register maintained by the Transfer Agent, and shall state:
(1) that the Excess Proceeds Offer is being made by the Company or
such Restricted Subsidiary pursuant to this paragraph (k)(v);
(2) that such Holders have the right to require the Company or such
Restricted Subsidiary to apply the Available Asset Sale Proceeds to
repurchase such Senior Preferred Stock at a purchase price in cash equal to
100% of the liquidation preference thereof plus accumulated and unpaid
dividends, if any, to the purchase date which shall be no earlier than 30
days and not later than 60 days from the date such notice is mailed (the
"Excess Proceeds Payment Date");
<PAGE>
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(3) that any share of Senior Preferred Stock not tendered or accepted
for payment will continue to accumulate dividends;
(4) that any Senior Preferred Stock accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accumulate dividends after the
Excess Proceeds Payment Date;
(5) that Holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to an Excess Proceeds Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Company, properly endorsed for transfer together with such customary
documents as the Company and the transfer agent may reasonably require, in
the manner and at the address specified in the notice prior to the close of
business on the Business Day preceding the Excess Proceeds Payment Date;
(6) that Holders will be entitled to withdraw their acceptance of the
Excess Proceeds Offer if the Company receives, not later than the close of
business on the third Business Day preceding the Excess Proceeds Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Senior Preferred Stock
delivered for purchase, and a statement that such Holder is withdrawing his
election to have such Senior Preferred Stock purchased;
(7) that if the aggregate liquidation preference of Senior Preferred
Stock surrendered by Holders exceeds the amount of Excess Proceeds, Company
shall select the Senior Preferred Stock to be purchased on a pro rata
basis;
(8) that Holders whose shares of Senior Preferred Stock are being
purchased only in part will be issued new certificates representing the
number of shares of Senior Preferred Stock equal to the unpurchased portion
of the certificates surrendered;
(9) the calculations used in determining the amount of Available Asset
Sale Proceeds to be applied to the purchase of such Senior Preferred Stock;
and
(10) any other procedures that a Holder must follow to accept an
Excess Proceeds Offer or effect withdrawal of such acceptance.
On the Excess Proceeds Payment Date, the Company or such Restricted
Subsidiary shall, to the extent lawful, accept for payment, on a pro rata basis
to the extent necessary, Senior Preferred Stock or portions thereof tendered
pursuant to the Excess Proceeds Offer. The Company shall promptly mail to each
Holder so accepted payment in an amount equal to the purchase price for such
Senior Preferred Stock, and the Company shall execute
<PAGE>
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and issue to such Holder a new Senior Preferred Stock certificate equal in
liquidation preference to any unpurchased portion of the Senior Preferred Stock
surrendered.
If an Excess Proceeds Offer is not fully subscribed, the Company or such
Restricted Subsidiary may retain the portion of the Available Asset Proceeds not
required to repurchase Senior Preferred Stock.
(D) In the event of the transfer of substantially all of the Property and
assets of the Company and its Restricted Subsidiaries as an entirety to a Person
in a transaction permitted under paragraph (f)(iii), the successor Person shall
be deemed to have sold the Properties and assets of the Company and its
Restricted Subsidiaries not so transferred for purposes of this paragraph
(k)(v), and shall comply with the provisions of this paragraph (k)(v) with
respect to such deemed sale as if it were an Asset Sale.
(E) The Company and any such Restricted Subsidiary shall comply with the
requirements of Rule 14e-1 under the Exchange Act and other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Senior Preferred Stock pursuant to an Excess
Proceeds Offer. To the extent that the provisions of any securities laws or
regulations conflict with this paragraph (k)(v), the Company or such Restricted
Subsidiary shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this paragraph (k)(v)
by virtue thereof.
(vi) Limitation on Liens. The Company shall not, and shall not permit any
of its Restricted Subsidiaries (other than any Regulated Restricted Subsidiary)
to, create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind (other than Permitted Liens) upon any Property or asset of the
Company or any of its Restricted Subsidiaries or any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary of the Company which owns Property or
assets, now owned or hereafter acquired.
(vii) Limitation on Capital Stock of Restricted Subsidiaries. The Company
shall not
(1) sell, pledge, hypothecate or otherwise convey or dispose of any
Capital Stock of a Restricted Subsidiary of the Company (other than any
such transaction resulting in a Lien which constitutes a Permitted Lien);
or
(2) permit any of its Restricted Subsidiaries to issue any Capital
Stock, other than to the Company or a Wholly Owned Subsidiary of the
Company.
<PAGE>
-24-
The foregoing restrictions shall not apply to (i) an Asset Sale made in
compliance with paragraph (k)(v) (provided that if such Asset Sale is for less
than all of the outstanding Capital Stock of any Restricted Subsidiary held by
the Company or any of its Restricted Subsidiaries, such Asset Sale must also
comply with paragraph (k)(ii)), (ii) the issuance of Preferred Stock in
compliance with paragraph (k)(iv) or (iii) if, immediately after giving effect
to such issuance, sale or other disposition, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect thereto would have been permitted to be made under
paragraph (k)(ii) if made on the date of such issuance, sale or other
disposition.
(viii) Limitation on Transfer of Assets to Certain Subsidiaries. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
sell, convey, transfer, lease or otherwise dispose of any of its assets or
property to any Subsidiary that is not a Wholly Owned Subsidiary.
(ix) Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to
(1) pay dividends or make any other distributions to the Company or
any Restricted Subsidiary of the Company
(a) on its Capital Stock or
(b) with respect to any other interest or participation in, or
measured by, its profits;
(2) repay any Indebtedness or any other obligation owed to the
Company or any Restricted Subsidiary of the Company;
(3) make loans or advances or capital contributions to the
Company or any of its Restricted Subsidiaries; or
(4) transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of
(1) encumbrances or restrictions existing or entered into on the
Issue Date to the extent and in the manner such encumbrances and
restrictions are in effect on the
<PAGE>
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Issue Date, including, without limitation, the stipulation agreements
entered into with the hearings held by the New Mexico Public
Regulation Commission and the Public Utility Commission of Texas, the
restrictions to be included in the amended and restated articles of
incorporation of TNP Enterprises, Inc. and the Texas-New Mexico Public
Regulation Commission that will become effective on the date of the
closing of the Merger, and any amendments, extensions or renewals
thereof that are no more restrictive in any material respect with
regard to the interests of the holders of Senior Preferred Stock than
the restrictions and encumbrances in effect on the Issue Date;
(2) any instrument governing Indebtedness of Regulated Restricted
Subsidiaries; provided that such restrictions or encumbrances are no
more restrictive in the aggregate than those contained in the
instruments governing Indebtedness of Regulated Restricted
Subsidiaries on the Issue Date;
(3) any instrument governing Indebtedness of any Restricted
Subsidiary that was a Regulated Restricted Subsidiary at any time
after such Restricted Subsidiary ceases to be a Regulated Restricted
Subsidiary, to the extent and in the manner such encumbrances and
restrictions are in effect on the date such Restricted Subsidiary
ceases to be a Regulated Restricted Subsidiary; provided that such
encumbrances and restrictions (together with encumbrances and
restrictions that apply to all Regulated Restricted Subsidiaries and
Restricted Subsidiaries that were Regulated Restricted Subsidiaries)
are no more restrictive in the aggregate than those contained in the
instruments governing Indebtedness of Regulated Restricted
Subsidiaries on the Issue Date;
(4) financial maintenance covenants;
(5) the Indenture and the Notes;
(6) applicable law or regulation;
(7) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person (including any Subsidiary of the
Person), so acquired;
(8) customary net worth or non-assignment provisions in leases or
other agreements entered into in the ordinary course of business and
consistent with past practices;
<PAGE>
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(9) Refinancing Indebtedness; provided that such restrictions,
including restricted payment baskets, are no more restrictive than
those contained in the agreements governing the Indebtedness being
refunded, refinanced or extended;
(10) customary restrictions in security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject
to such security agreements and mortgages;
(11) customary restrictions with respect to a Restricted
Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all
of the Capital Stock or assets of such Restricted Subsidiary;
(12) the Senior Preferred Stock; or
(13) any preferred stock that refinances the Senior Preferred
Stock; provided that such restrictions, including restricted payment
baskets, are no more restrictive than those that apply to the Senior
Preferred Stock.
(x) Limitation on Conduct of Business. The Company and its Restricted
Subsidiaries shall not engage in any businesses which are not the same, similar,
ancillary or related to the businesses in which the Company and its Restricted
Subsidiaries are engaged in on the Issue Date. No Regulated Restricted
Subsidiary will own any capital stock of any Restricted Subsidiary that is not a
Regulated Restricted Subsidiary.
(xi) Limitation on Sale and Lease-Back Transactions. The Company shall not,
and shall not permit any of its Restricted Subsidiaries (other than any
Regulated Restricted Subsidiary) to, enter into any Sale and Lease-Back
Transaction; provided that the Company may enter into a Sale and Lease-Back
Transaction if:
(1) the Company could have
(a) incurred Indebtedness (other than Permitted Indebtedness) in
an amount equal to the Attributable Indebtedness relating to such Sale and
Lease-Back Transaction under paragraph (k)(i); and
(b) incurred a Lien to secure such Indebtedness pursuant to
paragraph (k)(vii);
(2) the gross cash proceeds of that Sale and Lease-Back Transaction
are at least equal to the fair market value of the Property sold; and
<PAGE>
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(3) the transfer of assets in that Sale and Lease-Back Transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with paragraph (k)(iv).
(xii) Payments for Consent. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any holder of
Senior Preferred Stock for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Statement of Resolution or
the Senior Preferred Stock unless such consideration is offered to be paid or
agreed to be paid to all holders of Senior Preferred Stock that so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or amendment.
(xiii) Reports. Whether or not required by the SEC, so long as any shares
of Senior Preferred Stock are outstanding, the Company shall furnish to the
holders of Senior Preferred Stock, within 15 days of the time periods specified
in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report on the annual
financial statements by the Company's certified independent accountants;
and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in a
management's discussion and analysis of financial condition and results of
operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.
In addition, whether or not required by the SEC, the Company
shall file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the SEC for public availability within 15 days of the
time periods specified in the SEC's rules and regulations (unless the SEC will
not accept such a filing) and make such information available to prospective
investors upon request. The Company shall also furnish to holders of Senior
Pre-
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ferred Stock and prospective investors upon request the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(l) Definitions. As used in this Statement of Resolution, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or is merged into or consolidated with any other Person or which is
assumed in connection with the acquisition of assets from such Person and, in
each case, whether or not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such merger, consolidation or acquisition.
"Additional Dividends" has the meaning set forth in the Registration Rights
Agreement.
"Affiliate" means, with respect to any specific Person, any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that, for purposes of the covenant described under paragraph
(k)(iii) beneficial ownership of at least 10% of the voting securities of a
Person, either directly or indirectly, will be deemed to be control.
"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the Company.
"Asset Acquisition" means
(1) an Investment by the Company or any Restricted Subsidiary of the
Company in any other Person pursuant to which such Person becomes a
Restricted Subsidiary of the Company or any Restricted Subsidiary of the
Company, or is merged with or into the Company or any Restricted Subsidiary
of the Company; or
(2) the acquisition by the Company or any Restricted Subsidiary of the
Company of the assets of any Person (other than a Restricted Subsidiary of
the Company) which constitute all or substantially all of the assets of
such Person or comprise
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any division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
assignment, transfer, lease or other disposition (including any sale and lease-
back transaction), other than to the Company or any of its Wholly Owned
Subsidiaries, in any single transaction or series of related transactions of
(1) any Capital Stock of or other equity interest in any Restricted
Subsidiary of the Company; or
(2) any other property or assets of the Company or of any Restricted
Subsidiary thereof;
provided that Asset Sales do not include
(1) a transaction or series of related transactions that involves
assets having a fair market value or for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $1.0
million;
(2) sales of inventory and vehicles in the ordinary course of business
and consistent with past practices;
(3) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Company as permitted under
paragraph (f)(iii);
(4) a disposition of obsolete, worn-out, damaged or otherwise
unsuitable or unnecessary equipment or other obsolete assets;
(5) dispositions with respect to sales of excess energy, capacity and
rights of use in the Company's distribution network in the ordinary course
of the electricity transmission and distribution business and the
electricity generation business;
(6) a sale-leaseback of assets within one year of the acquisition of
such assets; and
(7) a transaction or series of transactions that results in a Change
of Control.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
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(1) cash received by the Company or any Restricted Subsidiary of the
Company from such Asset Sale (including cash received as consideration for
the assumption of liabilities incurred in connection with or in
anticipation of such Asset Sale), after
(a) provision for all income or other taxes measured by or
resulting from such Asset Sale,
(b) payment of all brokerage commissions, underwriting and other
fees and expenses related to such Asset Sale,
(c) provision for minority interest holders in any Restricted
Subsidiary of the Company as a result of such Asset Sale,
(d) repayment of Indebtedness that is secured by the assets
subject to such Asset Sale or otherwise required to be repaid in
connection with such Asset Sale, and
(e) deduction of appropriate amounts to be provided by the
Company or a Restricted Subsidiary of the Company as a reserve, in
accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Sale and retained by the
Company or a Restricted Subsidiary after such Asset Sale, including,
without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or
against any indemnification obligations associated with the assets
sold or disposed of in such Asset Sale; and
(2) promissory notes and other noncash consideration received by the
Company or any Restricted Subsidiary of the Company from such Asset Sale or
other disposition upon the liquidation or conversion of such promissory
notes or noncash consideration into cash.
"Attributable Indebtedness" in respect of a sale and lease-back transaction
means, as at the time of determination, the present value (discounted at the
rate of interest implicit in such transaction, determined in accordance with
GAAP) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in such sale and lease-back transaction
(including any period for which such lease has been extended).
"Available Asset Sale Proceeds" shall have the meaning provided in
paragraph (k)(v)(B).
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"Board of Directors" means, as to any Person, the board of directors of
such Person (or, if such Person is a partnership, the board of directors or
other governing body of the general partner (or, if there is more than one
general partner of such person, the general partner or general partners which
may take the applicable action pursuant to the partnership agreement of such
Person) of such Person or, if such Person is a limited liability company, the
board of managers of such company) or similar governing body or any duly
authorized committee thereof.
"Business Day" means a day that is not a Legal Holiday. A "Legal Holiday"
is a Saturday, a Sunday or other day on which (i) commercial banks in The City
of New York are authorized or required by law to close or (ii) the New York
Stock Exchange is not open for trading.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness will be the capitalized amount of such obligations
determined in accordance with GAAP.
"Cash Equivalents" means
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency or
instrumentality thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's");
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
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(4) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$500.0 million;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4)
above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through
(5) above.
A "Change of Control" of the Company will be deemed to have occurred at
such time as
(1) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), other than a Permitted Holder,
becomes the beneficial owner (as defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act, except that a Person
will be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time) of more than 50% of the
total voting power of the Company's Capital Stock;
(2) there is consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company or TNMP to any Person or
Group, together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of the Indenture);
(3) there is consummated any consolidation or merger of the Company or
TNMP in which the Company or TNMP, as the case may be, is not the
continuing or surviving Person or pursuant to which the Common Stock of the
Company or TNMP, as the case may be, would be converted into cash,
securities or other property, other than a merger or consolidation of the
Company in which the holders of the Capital Stock of the Company
outstanding immediately prior to the consolidation or merger hold, directly
or indirectly, at least a majority of the Capital Stock of the surviving
corporation immediately after such consolidation or merger;
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
or TNMP (together with any new directors whose election by such Board of
Directors or whose
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nomination for election by the shareholders of the Company or TNMP, as the
case may be, has been approved by 66 2/3% of the directors then still in
office who either were directors at the beginning of such period or whose
election or recommendation for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Company or TNMP, as the case may be, then in office;
(5) the approval by the holders of Capital Stock of the Company or
TNMP of any plan or proposal for the liquidation or dissolution of the
Company or TNMP, as the case may be (whether or not otherwise in compliance
with the provisions of the Indenture); or
(6) any order, judgment or decree shall be entered against the Company
or TNMP decreeing the dissolution or split-up of the Company or TNMP, as
the case may be; provided that any sale, assignment, conveyance, transfer
or other disposition of TNMP's assets to another Restricted Subsidiary in
connection with the Company's compliance with Texas Senate Bill 7 shall not
be deemed to be a Change of Control hereunder.
"Change of Control Date" shall have the meaning provided in paragraph
(h)(i).
"Change of Control Offer" shall have the meaning provided in paragraph
(h)(i).
"Change of Control Payment Date" shall have the meanings provided in
paragraph (h)(ii).
"Common Stock" of any Person means all Capital Stock of such Person
that is generally ntitled to
(1) vote in the election of directors of such Person; or
(2) if such Person is not a corporation, vote or otherwise participate
in the selection of the governing body, partners, managers or others that
will control the management and policies of such Person.
"Company" shall have the meanings provided in the first paragraph of this
Statement of Resolution.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limita-
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tion of the foregoing, for purposes of this definition, "EBITDA" and
"Consolidated Fixed Charges" will be calculated after giving effect on a pro
forma basis for the period of such calculation to
(1) the incurrence or repayment of any Indebtedness of such Person or
any of its Restricted Subsidiaries or the issuance or redemption or other
repayment of Preferred Stock of any such Restricted Subsidiary (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness and, in
the case of any Restricted Subsidiary, the issuance or redemption or other
repayment of Preferred Stock (and the application of the proceeds thereof),
other than the incurrence or repayment of Indebtedness in the ordinary
course of business for working capital purposes pursuant to working capital
facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such incurrence or repayment or issuance or
redemption or other repayment, as the case may be (and the application of
the proceeds thereof), occurred on the first day of the Four Quarter
Period; and
(2) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any EBITDA (provided
that such EBITDA will be included only to the extent that Consolidated Net
Income would be includable pursuant to the definition of "Consolidated Net
Income") (including any pro forma expense and cost reductions calculated on
a basis consistent with Regulation S-X of the Exchange Act) attributable to
the assets which are the subject of the Asset Acquisition or Asset Sale
during the Four Quarter Period) occurring during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence will give
effect to the incurrence of such guaranteed Indebtedness as if such Person or
any Restricted Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio,"
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(1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so
determined thereafter will be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in effect on the
Transaction Date;
(2) if interest on any Indebtedness actually incurred on the
Transaction Date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate in effect on the Transaction
Date will be deemed to have been in effect during the Four Quarter Period;
and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered
by one or more agreements in respect of Hedging Obligations, will be deemed
to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum, without duplication, of
(1) Consolidated Interest Expense, plus
(2) the product of
(a) the amount of all dividend payments (whether or not in cash)
on any series of Preferred Stock of such Person and its Restricted
Subsidiaries (other than dividends paid in Capital Stock (other than
Disqualified Capital Stock)) paid, accrued or scheduled to be paid or
accrued during such period times
(b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated federal,
state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest expense which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Restricted Subsidiaries on a
consolidated basis including, but not limited to,
(1) imputed interest included in Capitalized Lease Obligations and
Attributable Indebtedness;
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(2) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing;
(3) the net payment obligations associated with Hedging Obligations;
(4) amortization of financing fees and expenses and the write-off of
deferred financing costs;
(5) the interest portion of any deferred payment obligation;
(6) amortization of discount or premium, if any;
(7) all non-cash interest expense (other than interest amortized to
cost of sales);
(8) all capitalized interest for such period; and
(9) all interest incurred or paid under any guarantee of Indebtedness
(including a guarantee of principal, interest or any combination thereof)
of any Person.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that
(1) the portion of Net Income of any Person, other than a Restricted
Subsidiary of the referent Person, will be included only to the extent of
the amount of dividends or distributions paid to the referent Person or a
Restricted Subsidiary of such referent Person;
(2) the Net Income of any Restricted Subsidiary of the Person in
question that is subject to any restriction or limitation on the payment of
dividends or the making of other distributions will be excluded to the
extent of, and for only the period of time that, such restriction or
limitation actually prohibits the payment of such dividends or the making
of such other distributions;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition will be
excluded;
(4) any net gain (but not loss) resulting from an Asset Sale by the
Person in question or any of its Restricted Subsidiaries other than in the
ordinary course of business will be excluded;
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(5) extraordinary gains and losses will be excluded;
(6) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or
not such operations were classified as discontinued) will be excluded; and
(7) in the case of a successor to the referent Person by consolidation
or merger or as a transferee of the referent Person's assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets will be excluded.
"Cumulative Consolidated Net Income" means, with respect to any Person, as
of any date of determination, the Consolidated Net Income of such Person from
April 1, 2000 to the end of such Person's must recently ended full fiscal
quarter prior to such date, taken as a single accounting period.
"Disqualified Capital Stock" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the mandatory redemption date of the Senior Preferred Stock, for cash
or securities constituting Indebtedness. Without limitation of the foregoing,
Disqualified Capital Stock will be deemed to include any Preferred Stock of a
Person under the terms of such Preferred Stock, by agreement or otherwise, such
Person is obligated to pay current dividends or distributions in cash during the
period prior to the mandatory redemption date of the Senior Preferred Stock;
provided, however, that Preferred Stock of a Person that is issued with the
benefit of provisions requiring a change of control offer to be made for such
Preferred Stock in the event of a change of control of such Person which
provisions have substantially the same effect as the provisions described under
paragraph (h) above, will not be deemed to be Disqualified Capital Stock solely
by virtue of such provisions. Without limitation of the foregoing, Disqualified
Capital Stock shall be deemed to include (i) any Preferred Stock of a Restricted
Subsidiary of any Person and (ii) any Senior Securities and Parity Securities.
"Dividend Payment Date" shall have the meaning provided in paragraph
(c)(i).
"Dividend Period" means the Initial Dividend Period, and, thereafter, each
semi-annual period from a Dividend Payment Date to the next following Dividend
Payment Date (but without including such Dividend Payment Date).
"EBITDA" means, with respect to any Person and its Restricted Subsidiaries,
for any period, an amount equal to
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(1) the sum of
(a) Consolidated Net Income for such period, plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in
computing Consolidated Net Income and any provision for taxes utilized
in computing net loss under clause (a) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other non-cash items reducing Consolidated Net Income for
such period, other than non-cash items that represent accruals of, or
reserves for, cash disbursements to be made in any future period;
minus
(2) all non-cash items increasing Consolidated Net Income (other than
any non-cash items that were accrued in the ordinary course of business)
for such period, all for such Person and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP;
provided, however, that, for purposes of calculating EBITDA during any fiscal
quarter, cash income from a particular Investment (other than a Restricted
Subsidiary) of such Person will be included only
(1) if cash income has been received by such Person with respect to
such Investment during each of the previous four fiscal quarters, or
(2) if the cash income derived from such Investment is attributable to
Cash Equivalents.
"Excess Proceeds Offer" shall have the meaning provided in paragraph
(k)(v)(B).
"Excess Proceeds Payment Date" shall have the meaning provided in paragraph
(k)(v)(C)(2).
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value will
be determined by the Board of Directors of the Company acting reasonably and in
good faith and shall be evidenced by a board resolution of such Board of
Directors.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Hedging Obligations" means, with respect to any Person, the net payment
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements entered into in order to protect such Person against
fluctuations in commodity, electricity or fuel prices, interest rates or
currency exchange rates.
"Holder" means a holder of shares of Senior Preferred Stock as reflected in
the register maintained by the Transfer Agent for the Senior Preferred Stock.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurable," and "incurring" will have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness will
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and will also include, to the extent not otherwise included
(1) any Capitalized Lease Obligations of such Person;
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(2) obligations secured by a lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby have been assumed;
(3) guarantees of (or obligations with respect to letters of credit
supporting) items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear
upon the balance sheet of the guarantor);
(4) all obligations for the reimbursement of any obligor on any letter
of credit, banker's acceptance or similar credit transaction;
(5) Disqualified Capital Stock of such Person or any Restricted
Subsidiary thereof and any Preferred Stock of a Restricted Subsidiary of
such Person incurred under paragraph (k)(iv); and
(6) hedging obligations of any such Person applicable to any of the
foregoing (if and to the extent such hedging obligations would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP).
The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided that
(1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP; and
(2) Indebtedness will not include
(a) any liability for federal, state, local or other taxes, and
(b) any accounts payable, trade payables and other accrued
liabilities arising from the purchase of goods or materials or for
services obtained in the ordinary course of business.
"Indenture" means the indenture governing the Notes.
"Independent Financial Advisor" means an investment banking firm of
national reputation in the United States
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(1) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the
Company, and
(2) which, in the judgment of the Board of Directors of the Company,
is otherwise independent and qualified to perform the task for which it is
to be engaged.
Notwithstanding the foregoing, CIBC World Markets Corp. and its Affiliates shall
be deemed to be Independent Financial Advisors.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) and BBB- (or the equivalent) by Moody's Investors Service, Inc.
(or any successor to the rating agency business thereof) and Standard & Poor's
Ratings Service, a division of McGraw Hill, Inc. (or any successor to the rating
agency business thereof), respectively.
"Investments" means, with respect of any Person, directly or indirectly,
any advance, account receivable (other than an account receivable arising in the
ordinary course of business of such Person), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any Capital Stock,
bonds, notes, debentures, partnership or joint venture interests or other
securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments exclude
(1) extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices of such Person; and
(2) the repurchase of securities of any Person by such Person.
For the purposes of the paragraph (k)(ii) covenant, (1) "Investments" (a)
include and are valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and (b) exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary, provided, that, in no event
may such amount exceed the net amount of any Investments constituting Restricted
Payments made in such Subsidiary after the Issue Date and (2) the amount of any
Investment will be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the (i)
amount re-
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turned in cash with respect to such Investment whether through interest
payments, principal payments, dividends or other distributions and (ii) proceeds
received by the Company or any of its Restricted Subsidiaries from the
disposition, retirement or redemption of all or any portion of such Investment;
provided that the aggregate of all such reductions may not exceed the amount of
such initial Investment plus the cost of all additional Investments; provided,
further, that no such payment of distributions or receipt of any such other
amounts may reduce the amount of any Investment if such payment of distributions
or receipt of any such amounts would be included in Consolidated Net Income. If
the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Common Stock of any direct or indirect Restricted Subsidiary of
the Company such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, 100% of the outstanding Common
Stock of such Restricted Subsidiary, the Company will be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Common Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means April 7, 2000.
"Junior Securities" shall have the meaning provided in paragraph (b).
"LIBOR" means the rate determined on the basis of the offered rates for
deposits in U.S. Dollars for a period of three months which appear on the
Reuters Screen LIBO Page as of 11:00 a.m., London time, on the Issue Date. If at
least two rates appear on the Reuters Screen LIBO Page, LIBOR will be the
arithmetic mean of such rates rounded upwards, if necessary, to the nearest 1/16
of 1%. If fewer than two rates appear on the Reuters Screen LIBO Page, then
LIBOR shall equal the arithmetic mean (rounded upward to the nearest 1/16 of 1%)
of the interest rates per annum at which deposits in U.S. Dollars for a period
of three months are offered by CIBC World Markets Corp. or its designee at
approximately 11:00 a.m., London time, on the Issue Date to first class banks in
the London interbank market.
"Lien" means, with respect to any Property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Mandatory Redemption Price" shall have the meaning provided in paragraph
(e)(ii).
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"Merger" means the merger of ST Acquisition Corp. with and into TNP
Enterprises, Inc. with TNP Enterprises, Inc. as the survivor of the merger.
"Net Income" means, with respect to any Person, for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means
(1) in the case of any sale of Capital Stock by or equity contribution
to any Person, the aggregate net cash proceeds received by such Person,
after payment of expenses, commissions and the like incurred in connection
therewith;
(2) in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind for or into shares of Capital Stock of
the Company which is not Disqualified Capital Stock, the net book value of
such outstanding securities on the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to be paid by
the holder to such Person upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account
of fractional shares and less all expenses incurred by such Person in
connection therewith); and
(3) in the case of any issuance of any Indebtedness by the Company or
any Restricted Subsidiary, the aggregate net cash proceeds received by such
Person after the payment of expenses, commissions, underwriting discounts
and the like incurred in connection therewith.
"NMPRC" means the New Mexico Public Regulation Commission.
"Notes" means $275.0 million aggregate principal amount of 10.25% senior
subordinated notes due 2010 of the Company issued on the Issue Date pursuant to
the Indenture and any exchange notes issued pursuant to the registration rights
agreement relating thereto.
"Parity Securities" shall have the meaning provided in paragraph (b).
"Permitted Asset Swap" means, with respect to any Person, the substantially
concurrent exchange of assets of such Person for assets of another Person which
are useful to the business of such aforementioned Person.
"Permitted Holders" means Laurel Hill Capital Partners LLC, Caravelle
Investment Fund, L.L.C., CIBC WG Argosy Merchant Fund 2, L.L.C., Co-Investment
Merchant
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Fund 3, L.L.C., Continental Casualty Company and their respective affiliates,
other than their portfolio companies.
"Permitted Indebtedness" means:
(1) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with the Senior Credit Facility in an aggregate
principal amount not to exceed $185.0 million at any time outstanding less
any mandatory prepayment actually made thereunder (to the extent, in the
case of payments of revolving credit borrowings, that the corresponding
commitments have been permanently reduced) or scheduled payments actually
made thereunder;
(2) Indebtedness under the Notes and the Indenture;
(3) Indebtedness not covered by any other clause of this definition
which is outstanding on the Issue Date reduced by the amount of any
mandatory prepayments, permanent reductions or scheduled payments actually
made thereunder;
(4) Indebtedness of the Company to any Wholly Owned Subsidiary and
Indebtedness of any Wholly Owned Subsidiary to the Company or another
Wholly Owned Subsidiary;
(5) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business which
Purchase Money Indebtedness and Capitalized Lease Obligations do not in the
aggregate exceed $10.0 million at any one time outstanding;
(6) Indebtedness of the Company or any Restricted Subsidiary arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business;
(7) the incurrence by the Company or any Restricted Subsidiary of
Hedging Obligations that are incurred in the ordinary course of business of
the Company or such Restricted Subsidiary and not for speculative purposes;
provided that, in the case of any Hedging Obligation that relates to
(a) interest rate risk, the notional principal amount of such
Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates and
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(b) currency risk, such Hedging Obligation does not increase the
Indebtedness of the Company and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(8) Indebtedness of a Restricted Subsidiary (other than any Regulated
Restricted Subsidiary) of the Company assumed by the Company to the extent
such Indebtedness was permitted to be incurred by such Restricted
Subsidiary at the time of incurrence thereof;
(9) Refinancing Indebtedness;
(10) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in
each case, incurred or assumed in connection with the disposition of any
business, assets or a Restricted Subsidiary of the Company, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the purpose
of financing such acquisition; provided that the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition;
(11) Indebtedness consisting of performance and other similar bonds
and reimbursement obligations incurred by the Company in the ordinary
course of business securing the performance of contractual, franchise,
license or other obligations of the Company or a Restricted Subsidiary;
(12) Indebtedness of a Receivables Subsidiary that is not recourse to
the Company or any other Restricted Subsidiary (other than with respect to
Standard Securitization Undertakings) in connection with a Qualified
Receivables Transaction;
(13) Indebtedness of the Company or any of its Restricted Subsidiaries
constituting reimbursement obligations with respect to bankers' acceptances
and letters of credit issued in the ordinary course of business in respect
of workers' compensation claims or self-insurance, or other Indebtedness
with respect to reimbursement type obligations regarding workers'
compensation claims; provided, however, that obligations arising upon the
drawing of such letters of credit or the incurrence of such Indebtedness
are reimbursed within 30 days following such drawing or incurrence;
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(14) the accrual of interest, the issuance of additional Indebtedness
in the form of additional promissory notes or otherwise in lieu of the
payment of cash interest and the accretion of accreted value; and
(15) additional Indebtedness of the Company and its Restricted
Subsidiaries (other than its Regulated Restricted Subsidiaries) not to
exceed $25.0 million in aggregate principal amount at any one time
outstanding (which may be, but shall not be required to be, in the form of
additional Indebtedness under the Senior Credit Facility).
"Permitted Investments" means Investments made on or after the Issue Date
consisting of
(1) Investments by the Company, or by a Restricted Subsidiary thereof,
in the Company or a Wholly Owned Subsidiary;
(2) Investments by the Company, or by a Restricted Subsidiary thereof,
in a Person, if as a result of such Investment
(a) such Person becomes a Wholly Owned Subsidiary of the Company
or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a Wholly Owned Subsidiary thereof;
(3) Investments in cash and Cash Equivalents;
(4) reasonable and customary loans made to employees not to exceed
$2.0 million in the aggregate at any one time outstanding;
(5) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any Capital Stock, bonds, notes,
debentures, partnership or joint venture interests or other securities that
are issued by a third party to the Company or such Restricted Subsidiary
solely as partial consideration for the consummation of an Asset Sale that
is otherwise permitted under paragraph f(iii);
(6) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(7) Hedging Obligations entered into in the ordinary course of the
Company's or its Restricted Subsidiaries' business and not for speculative
purposes;
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(8) any Investment solely in exchange for the issuance of equity
interests (other than Disqualified Capital Stock) of the Company;
(9) any Investment constituting Permitted Securities of a Person
issued in exchange for trade or other claims against such Person in
connection with a financial reorganization or restructuring of such Person
or as a result of a foreclosure by the Company or any Restricted Subsidiary
with respect to any secured Investment in default;
(10) the contribution by the Company of any portion or all of the
undeveloped sites located on the 2,700 acres adjacent to TNP One to any
Person in exchange for an equity interest in such Person; provided that
such Person may not be a Subsidiary of the Company; and
(11) additional Investments not to exceed $10.0 million at any one
time outstanding.
"Permitted Liens" means
(1) Liens on Property or assets of, or any shares of Capital Stock of
or secured Indebtedness of, any Person existing at the time such Person
becomes a Restricted Subsidiary of the Company or at the time such Person
is merged into the Company or any of its Restricted Subsidiaries; provided
that such Liens
(a) are not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary of the Company or merging
into the Company or any of its Restricted Subsidiaries, and
(b) do not extend to or cover any Property, assets, Capital Stock
or Indebtedness other than those of such Person at the time such
Person becomes a Restricted Subsidiary or is merged into the Company
or any of its Restricted Subsidiaries;
(2) Liens securing Indebtedness which Indebtedness is outstanding on
the Issue Date or incurred in compliance with paragraph (k)(i);
(3) Liens existing on the Issue Date;
(4) Liens securing the Notes and Liens in favor of the trustee under
the Indenture or the Transfer Agent and any Lien granted in respect of
amounts owed to such trustee or to any trustee or similar institution under
any indenture for Indebtedness permitted under the Indenture or to the
Transfer Agent;
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(5) Liens securing Refinancing Indebtedness; provided that any such
Lien does not extend to or cover any Property, asset, Capital Stock or
Indebtedness other than the Property, asset, Capital Stock or Indebtedness
so refunded, refinanced or extended;
(6) Liens in favor of the Company or any of its Restricted
Subsidiaries (other than any Regulated Restricted Subsidiary);
(7) Liens to secure Purchase Money Indebtedness that is otherwise
permitted under this Statement of Resolution; provided that
(a) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of the purchase price, or the cost of
installation, construction or improvement, of the Property or asset to
which such Purchase Money Indebtedness relates,
(b) such Lien does not extend to or cover any Property or asset
other than such item of Property or asset and any improvements on such
Property or asset, and
(c) such Lien is created at the time of such acquisition or
within 100 days of such acquisition or the completion of such
installation, construction or improvement, as the case may be;
(8) statutory liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
imposed by law arising in the ordinary course of business which do not
secure any Indebtedness and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve or
other appropriate provision, if any, as is required in conformity with GAAP
have been made therefor;
(9) Liens for taxes, assessments or governmental charges that are
being contested in good faith by appropriate proceedings;
(10) Liens securing Capitalized Lease Obligations permitted to be
incurred under clause (5) of the definition of "Permitted Indebtedness";
provided that such Lien does not extend to any Property other than that
subject to the underlying lease;
(11) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
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(12) Liens incurred on deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
governmental contracts, performance, completion and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money) or to secure obligations arising from statutory,
regulatory, contractual or warranty requirements;
(13) judgment Liens so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired;
(14) Liens relating to Hedging Obligations;
(15) Liens in favor of the Company securing intercompany Indebtedness
issued by any Restricted Subsidiary to the Company;
(16) Liens securing reimbursement obligations with respect to letters
of credit incurred in the ordinary course which encumber documents and
other property relating to such letters of credit and the products and
proceeds thereof; provided, the Indebtedness represented thereby is
permitted under the Inden ture;
(17) Liens on Capital Stock of Unrestricted Subsidiaries;
(18) other Liens securing obligations incurred in the ordinary course
of business which obligations do not exceed $1.0 million in the aggregate
at any one time outstanding;
(19) any extensions, substitutions, replacements or renewals of the
foregoing; and
(20) Liens permitted under the Notes and the Indenture.
"Permitted Securities" means equity securities or debt securities of the
Company as reorganized or readjusted or securities of the Company or any other
company, trust, corporation or partnership provided for by a plan of
reorganization or readjustment.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
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"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Equity Offering" means a public offering by the Company of shares
of its Common Stock (however designated and whether voting or non-voting) and
any and all rights, warrants or options to acquire such Common Stock.
"PUCT" means the Public Utility Commission of Texas.
"Purchase Agreement" means the purchase agreement dated April 7, 2000 among
the Company, CIBC Inc., CIBC World Markets Corp., Chase Securities Inc.,
Continental Casualty Company and Laurel Hill Capital Partners LLC.
"Purchase Money Indebtedness" means Indebtedness of any Person incurred in
the normal course of business of such Person for the purpose of financing all or
any part of the purchase price, or the cost of installation, construction or
improvement of, any property or asset.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a
transfer by the Company or any Restricted Subsidiary) and (b) any other Person
(in the case of a transfer by a Receivables Subsidiary), or may grant a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company or any Restricted Subsidiary and any asset related
thereto, including, without limitation, all collateral securing the accounts
receivable, all contracts and all guarantees or other obligations in respect of
the accounts receivable, proceeds of the accounts receivable and other assets
which are customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization transactions
involving accounts receivable. In addition, "Qualified Receivables Transaction"
shall include any financing transaction by the Company or any Restricted
Subsidiary under Chapter 39, Subchapter G of the Texas Public Utility Regulatory
Act or any analogous law which the Company or such Restricted Subsidiary is
subject to.
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"Rating Agencies" means Standard & Poor's Ratings Service, a division of
McGraw Hill, Inc., and Moody's Investors Service, Inc. or any successor to the
respective rating agency businesses thereof.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
which engages in no activities other than in connection with the financing of
accounts receivable and which is designated by a board resolution of the Board
of Directors of the Company (as provided below) as a Receivables Subsidiary:
(1) has no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which
(a) is guaranteed by the Company or any other Restricted
Subsidiary (excluding guarantees of obligations pursuant to Standard
Securitization Undertakings),
(b) is recourse to or obligates the Company or any other
Restricted Subsidiary in any way other than pursuant to Standard
Securitization Undertakings, or
(c) subjects any property or asset of the Company or any other
Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) with which neither the Company nor any other Restricted Subsidiary
of the Company has any material contract, agreement, arrangement or
understanding (except in connection with a Qualified Receivables
Transaction) other than on terms no less favorable to the Company or such
other Restricted Subsidiary of the Company than those that might be
obtained at the time from persons that are not Affiliates of the Company,
other than fees payable in the ordinary course of business in connection
with servicing accounts receivable; and
(3) to which neither the Company nor any Restricted Subsidiary of the
Company has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating
results.
"Redeemable Dividend" means, for any dividend or distribution paid in cash
with regard to Preferred Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Preferred Stock.
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"Redemption Date", with respect to any shares of Senior Preferred Stock,
means the date on which such shares of Senior Preferred Stock are redeemed by
the Company.
"Redemption Notice" shall have the meaning provided in paragraph (e)(iii).
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company or any Restricted Subsidiary outstanding
on the Issue Date or other Indebtedness permitted to be incurred by the Company
or its Restricted Subsidiaries pursuant to the terms of the Indenture, but only
to the extent that
(1) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being refunded, refinanced
or extended, or
(b) after the mandatory redemption date of the Senior Preferred
Stock;
(2) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of
(a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended,
(b) the amount of accrued and unpaid interest, if any, and
premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or
extended, and
(c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness; and
(3) such Refinancing Indebtedness is incurred by the same Person (or
its successor) that initially incurred the Indebtedness being refunded,
refinanced or extended.
"Registration Rights Agreement" means the registration rights agreement
dated April 7, 2000 among the Company, CIBC Inc.,
CIBC World Markets Corp., Chase Securities Inc., Continental Casualty Company
and Laurel Hill Capital Partners LLC.
"Regulated Restricted Subsidiary" means a Restricted Subsidiary that is
regulated or certified by the PUCT or the NMPRC or any successor thereto or any
analogous regulatory body of any state of the United States or the District of
Columbia.
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"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other
distribution or payment on Capital Stock of the Company or any Restricted
Subsidiary of the Company or any payment made to the direct or indirect
holders (in their capacities as such) of Capital Stock of the Company or
any Restricted Subsidiary of the Company (other than (a) dividends or
distributions in respect of Senior Securities of the Company, (b) dividends
or distributions payable solely in Capital Stock (other than Disqualified
Capital Stock) or in options, warrants or other rights to purchase such
Capital Stock (other than Disqualified Capital Stock), and (c) in the case
of Restricted Subsidiaries of the Company, dividends or distributions
payable to the Company or to a Restricted Subsidiary of the Company);
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company or any of its Restricted
Subsidiaries (other than (a) Senior Securities of the Company and (b)
Capital Stock owned by the Company or a Wholly Owned Subsidiary of the
Company, excluding Disqualified Capital Stock) or any option, warrants or
other rights to purchase such Capital Stock;
(3) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment;
(4) any designation of a Subsidiary as an Unrestricted Subsidiary
(valued at the fair market value of the net assets of such Subsidiary on
the date of designation); and
(5) the forgiveness of any Indebtedness of an Affiliate of the Company
to the Company or a Restricted Subsidiary of the Company.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if immediately
after giving effect to such action (and treating any Acquired Indebtedness as
having been incurred at the time of such action),
(1) the Company could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to paragraph
(k)(i); and
(2) no Voting Rights Triggering Event has occurred and is continuing
or results therefrom.
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"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal property, which property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Credit Facility" means the Credit Agreement dated as of April 7,
2000, among ST Acquisition Corp., whose rights and obligations thereunder will
be assumed by the Company upon consummation of the Merger, the lenders party
thereto in their capacities as lenders thereunder, Canadian Imperial Bank of
Commerce, as administrative agent, and CIBC World Markets Corp. and Chase
Securities Inc., as co-arrangers and co-book managers, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted under paragraph (k)(i)) or adding Restricted Subsidiaries of the
Company as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"Senior Preferred Stock" shall have the meaning provided in paragraph (a).
"Senior Securities" shall have the meaning provided in paragraph (b).
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Restricted
Subsidiary of the Company which are reasonably customary in an accounts
receivable securitization transaction.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired,
(1) in the case of a corporation, of which more than 50% of the total
voting power of the Capital Stock entitled (without regard to the
occurrence of any contin-
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gency) to vote in the election of directors, officers or trustees thereof
is held by such first-named Person or any of its Subsidiaries; or
(2) in the case of a partnership, limited liability company, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with GAAP such entity is
consolidated with the first-named Person for financial statement purposes.
"Suspended Covenants" shall have the meaning provided in paragraph (k).
"Texas Senate Bill 7" means Senate Bill 7 of the State of Texas signed in
June 1999 by Texas Governor George W. Bush which implements competition in Texas
retail electric markets.
"TIA" shall have the meaning provided in paragraph (g)(i).
"TNMP" means the Texas-New Mexico Power Company, a Texas corporation.
"Transactions" shall have the meaning provided to such term in the Purchase
Agreement.
"Unrestricted Subsidiary" means
(1) any Subsidiary of an Unrestricted Subsidiary; and
(2) any Subsidiary of the Company which is designated after the Issue
Date as an Unrestricted Subsidiary by a board resolution of the Board of
Directors of the Company;
provided that a Subsidiary may be so designated as an Unrestricted
Subsidiary only if
(a) such designation is in compliance with paragraph (k)(ii); and
(b) neither the Company nor any Restricted Subsidiary will at any time
(i) provide a guarantee of, or similar credit support to, any
Indebtedness of such Subsidiary (including any undertaking, agreement
or instrument evidencing such Indebtedness),
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(ii) be directly or indirectly liable for any Indebtedness of
such Subsidiary or
(iii) be directly or indirectly liable for any other Indebtedness
which provides that the holder thereof may (upon notice, lapse of time
or both) declare a default thereon (or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity) upon the
occurrence of a default with respect to any other Indebtedness that is
Indebtedness of such Subsidiary (including any corresponding right to
take enforcement action against such Subsidiary),
except in the case of clause (i) or (ii) to the extent
(i) that the Company or such Restricted Subsidiary could otherwise
provide such a guarantee or incur such Indebtedness (other than as
Permitted Indebtedness) pursuant to paragraph (k)(i) and
(ii) the provision of such guarantee and the incurrence of such
Indebtedness otherwise would be permitted under paragraph (k)(ii).
"Wholly Owned Subsidiary" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares and, in
the case of TNMP, other than shares of preferred stock outstanding on the Issue
Date) of which are owned, directly or indirectly, by the Company.
<PAGE>
-57-
IN WITNESS WHEREOF, said ST Acquisition Corp. has caused this Statement of
Resolution to be signed by _________, its _______, this 7th day of April, 2000.
ST ACQUISITION CORP.
By:
----------------------------
Name:
Title:
<PAGE>
Ex4(a)(ii)
SHARE REGISTRATION RIGHTS AGREEMENT
Dated as of April 7, 2000
by and among
ST ACQUISITION CORP.,
as Issuer,
and
CIBC INC.,
CIBC WORLD MARKETS CORP.,
CHASE SECURITIES INC.,
CONTINENTAL CASUALTY COMPANY
and
LAUREL HILL CAPITAL PARTNERS LLC,
as Purchasers
----------
100,000 Shares of
SENIOR REDEEMABLE PREFERRED STOCK,
$1,000 Liquidation Preference Per Share
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions............................................................. 2
2. Exchange Offer.......................................................... 5
3. Shelf Registration...................................................... 9
4. Additional Dividends................................................... 10
5. Registration Procedures................................................ 12
6. Registration Expenses.................................................. 21
7. Indemnification........................................................ 22
8. Rules 144 and 144A..................................................... 25
9. Underwritten Registrations............................................. 25
10. Miscellaneous.......................................................... 26
(a) Remedies.......................................................... 26
(b) No Inconsistent Agreements........................................ 26
(c) Adjustments Affecting Registrable Shares.......................... 26
(d) Amendments and Waivers............................................ 27
(e) Notices........................................................... 27
(f) Successors and Assigns............................................ 29
(g) Counterparts...................................................... 29
(h) Headings.......................................................... 29
(i) Governing Law..................................................... 29
(j) Severability...................................................... 29
(k) Shares Held by the Company or Its Affiliates...................... 29
(l) Third Party Beneficiaries......................................... 30
(m) Registration of Dividend Shares................................... 30
(n) Entire Agreement.................................................. 30
(o) Assumption Permitted.............................................. 30
-i-
<PAGE>
SHARE REGISTRATION RIGHTS AGREEMENT
This Share Registration Rights Agreement (this "Agreement") is made and
entered into as of April 7, 2000, by and among ST Acquisition Corp., a Texas
corporation, as issuer ("Acquisition"), and CIBC Inc., CIBC World Markets Corp.,
Chase Securities Inc., Continental Casualty Company and Laurel Hill Capital
Partners LLC, as purchasers (the "Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated April 7, 2000, by and among Acquisition and the Purchasers (the "Purchase
Agreement") relating to, among other things, the sale by the Company to the
Purchasers of 100,000 shares (the "Initial Shares") of Acquisition's Senior
Redeemable Preferred Stock, $1,000 liquidation preference per share (the
"Shares"). In order to induce the Purchasers to enter into the Purchase
Agreement, Acquisition has agreed to provide the registration rights set forth
in this Agreement for the benefit of the holders of Registrable Shares (as
defined), including, without limitation, the Purchasers. The execution and
delivery of this Agreement is a condition to the Purchasers' obligation to
purchase the Shares under the Purchase Agreement.
The Initial Shares are being sold in connection with the merger (the
"Merger") of Acquisition with and into TNP Enterprises, Inc., a Texas
corporation ("TNP"), with TNP surviving the Merger pursuant to the Agreement and
Plan of Merger dated as of May 24, 1999 by and among SW Acquisition L.P.,
Acquisition and TNP (as amended through the date hereof and together with all
ancillary agreements entered into in connection therewith). The time of the
consummation of the Merger is referred to herein as the "Effective Time.
Immediately after the Effective Time, TNP will execute an assumption
agreement (the "Assumption Agreement"), substantially in the form attached to
the Purchase Agreement as Exhibit A, pursuant to which TNP, as the survivor of
the Merger, will assume all of the obligations of Acquisition under this
Agreement and the Purchase Agreement. References to this Agreement as of and
after the Effective Time will refer to this Registration Rights Agreement
together with the Assumption Agreement and references to the Purchase Agreement
as of and after the Effective Time will refer to the Purchase Agreement together
with the Assumption Agreement. As used herein, the "Company" shall mean
Acquisition prior to the Effective Time and, at and after the Effective Time,
TNP.
The parties hereby agree as follows:
<PAGE>
-2-
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Acquisition: See the first introductory paragraph to this Agreement.
Additional Dividends: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first and fourth introductory paragraphs to this
Agreement.
Applicable Period: See Section 2(b).
Assumption Agreement: See the third introductory paragraph to this
Agreement.
Business Day: A day that is not a Saturday, a Sunday, or a day on which
banking institutions in New York, New York are required to be closed.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Company: See the fourth introductory paragraph to this Agreement.
Dividend Shares: The Shares issued as dividends or Additional Dividends on
outstanding Shares or Dividend Shares, as the case may be.
DTC: See Section 5(i).
Effective Time: See the third introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
<PAGE>
-3-
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Exchange Shares: See Section 2(a).
Filing Date: The 60th day after the Issue Date (regardless of whether the
actual filing precedes such date).
Holder: Any registered holder of Registrable Shares.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Initial Shares: See the second introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the Shares were sold to the Purchasers
pursuant to the Purchase Agreement.
Merger: See the third introductory paragraph to this Agreement.
NASD: National Association of Securities Dealers, Inc.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Private Exchange: See Section 2(b).
Private Exchange Shares: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration
<PAGE>
-4-
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Shares covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second and fourth introductory paragraphs to
this Agreement.
Purchasers: See the first introductory paragraph to this Agreement.
Records: See Section 5(o).
Registrable Shares: Each Share upon original issuance thereof and at all
times subsequent thereto, each Exchange Share as to which Section 2(c)(iv)
hereof is applicable upon original issuance thereof and at all times subsequent
thereto and each Private Exchange Share, if issued, upon original issuance
thereof and at all times subsequent thereto, until, in the case of any such
Share, Exchange Share or Private Exchange Share, if issued, as the case may be,
the earliest to occur of (i) a Registration Statement (other than, with respect
to any Exchange Share as to which Section 2(c)(iv) hereof is applicable)
covering such Share, Exchange Share or Private Exchange Share, as the case may
be, has been declared effective by the Commission and such Share, Exchange Share
or Private Exchange Share, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Share, Exchange
Share or Private Exchange Share, as the case may be, is sold in compliance with
Rule 144, (iii) in the case of any Share, such Share has been exchanged pursuant
to the Exchange Offer for an Exchange Share or Exchange Shares which may be
resold without restriction under federal securities laws, or (iv) such Share,
Exchange Share or Private Exchange Share, as the case may be, ceases to be
outstanding for purposes of the Statement of Resolution.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule (other than Rule 144A) or regulation
hereafter adopted by the Commission providing for offers and sales of securities
made in compliance therewith
<PAGE>
-5-
resulting in offers and sales by subsequent holders that are not affiliates of
an issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended
from time to time, or any similar rule (other than Rule 144) or regulation
hereafter adopted by the Commission.
Rule 415: Rule 415 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
Shares: See the second introductory paragraph to this Agreement. Unless the
context otherwise necessitates, when used in this Agreement the term "Shares"
shall be deemed to include any and all Dividend Shares that may be outstanding
at the time of the application of any of the applicable provisions of this
Agreement.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Statement of Resolution: The statement of resolution filed by Acquisition
with the Secretary of State of the State of Texas relating to the Shares issued
by Acquisition.
Subsequent Shelf Registration: See Section 3(b).
TNP: See the third introductory paragraph to this Agreement.
Underwritten registration or underwritten offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company agrees to file with the Commission no later than the Filing
Date, an offer to exchange (the "Exchange Offer") any and all of the Registrable
Shares (other than Private Exchange Shares, if any) for a like aggregate
liquidate preference of preferred equity securities of Acquisition and, at and
after the Effective Time, TNP, which are identical in all material respects to
the Shares (the "Exchange Shares") (and which are entitled to the benefits of
the Statement of Resolution), except that the Exchange Shares shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and
<PAGE>
-6-
shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. The Company agrees to use its reasonable
best efforts to (x) cause the Exchange Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is first mailed
to Holders; and (z) consummate the Exchange Offer on or prior to the 30th day
following the date on which the Exchange Registration Statement is declared
effective. If after such Exchange Registration Statement is initially declared
effective by the Commission, the Exchange Offer or the issuance of the Exchange
Shares thereunder is interfered with by any stop order, injunction or other
order or requirement of the Commission or any other governmental agency or
court, such Exchange Registration Statement shall be deemed not to have become
effective for purposes of this Agreement. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Shares received
by it will be acquired in the ordinary course of its business, that at the time
of the consummation of the Exchange Offer such Holder does not and will not have
any arrangement or understanding with any Person to participate in the
distribution of the Exchange Shares, that such Holder is not an affiliate of the
Company within the meaning of Rule 405 of the Securities Act, and any additional
representations that in the written opinion of counsel to the Company are
necessary under then-existing interpretations of the Commission in order for the
Exchange Registration Statement to be declared effective. Upon consummation of
the Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Shares that are Private Exchange Shares and Exchange Shares held by
Participating Broker-Dealers, and the Company shall have no further obligation
to register Registrable Shares (other than Private Exchange Shares and other
than in respect of any Exchange Shares as to which clause 2(c)(iv) hereof
applies) pursuant to Section 3 of this Agreement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Purchasers, which shall contain a summary statement
of the positions taken or policies made by the Staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Shares received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the Staff of the Commission or such positions or policies, in
the judgment of the Purchasers, represent the prevailing views of the Staff of
the Commission. Such "Plan of Distribution" section shall also allow, to the
extent permitted by applicable policies and regulations of the Commission, the
use of the Prospectus by all Persons subject to the
<PAGE>
-7-
prospectus delivery requirements of the Securities Act, including, to the extent
so permitted, all Participating Broker-Dealers, and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Shares.
The Company shall use its reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time beginning when the Exchange Shares are first issued
in the Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed and such Persons are no longer
required to comply with the prospectus delivery requirements in connection with
offers and sales of the Exchange Shares (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Purchaser holds any Shares
acquired by it and having the status of an unsold allotment in the initial
distribution, the Company upon the request of such Purchaser shall,
simultaneously with the delivery of the Exchange Shares in the Exchange Offer,
issue and deliver to such Purchaser, in exchange (the "Private Exchange") for
the Shares held by such Purchaser, a like liquidation preference of preferred
equity securities of the Company that are identical in all material respects to
the Exchange Shares except for the existence of restrictions on transfer thereof
under the Securities Act and securities laws of the several states of the U.S.
(the "Private Exchange Shares") (and which are issued pursuant to the same
indenture as the Exchange Shares). The Private Exchange Shares shall bear the
same CUSIP number as the Exchange Shares to the extent possible. Dividends on
the Exchange Shares and Private Exchange Shares will accumulate from the last
dividend payment date on which dividends were paid on the Shares surrendered in
exchange therefor or, if no dividends have been paid on the Shares, from the
Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
a Holder or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Shares at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
<PAGE>
-8-
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the Private
Exchange, as the case may be, the Company shall:
(5) accept for exchange all Registrable Shares validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(6) cancel all Registrable Shares so accepted for exchange
concurrently with the consummation of such exchange; and
(7) deliver promptly to each Holder tendering such Registrable Shares,
Exchange Shares or Private Exchange Shares, as the case may be, equal in
liquidation preference to the Shares of such Holder so accepted for
exchange.
The Exchange Shares and the Private Exchange Shares may be issued under the
Statement of Resolution or a statement of resolution identical in all material
respects to the Statement of Resolution, which in either event will provide that
the Exchange Shares will not be subject to the transfer restrictions set forth
in the Statement of Resolution and/or the Purchase Agreement, as applicable, and
that the Exchange Shares, the Private Exchange Shares and the Shares, if any,
will vote and consent together on all matters as one class and that none of the
Exchange Shares, the Private Exchange Shares or the Shares, if any, will have
the right to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 180
days of the Issue Date and the Holders of 25% of the Registrable Shares so
request, (iii) any holder of Private Exchange Shares so requests in writing to
the Company or (iv) in the case of any Holder that participates in the Exchange
Offer (and tenders its Registrable Shares prior to the expiration thereof), such
Holder does not receive Exchange Shares on the date of the exchange that may be
sold without restriction under federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Company within the meaning of
the Securities Act) and so notifies the Company within 30 days following the
consummation of the Exchange Offer (and providing a reasonable basis for its
conclusions), in the case of each of clauses (i)-(iv), then the Company shall as
promptly as practicable deliver to the Holders and the Transfer Agent written
notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant
to Section 3.
<PAGE>
-9-
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Company shall as promptly as reasonably
practicable file with the Commission a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Shares (the "Initial Shelf Registration"). If the Company shall not
have yet filed the Exchange Registration Statement, the Company shall file with
the Commission the Initial Shelf Registration on or prior to the Filing Date and
shall use its reasonable best efforts to cause such Initial Shelf Registration
to be declared effective under the Securities Act on or prior to the
Effectiveness Date. Otherwise, the Company shall file with the Commission the
Initial Shelf Registration within 45 days of the delivery of the Shelf Notice
and shall use its reasonable best efforts to cause such Shelf Registration to be
declared effective under the Securities Act on or prior to the 90th day after
filing of the Initial Shelf Registration. The Initial Shelf Registration shall
be on Form S-1 or another appropriate form permitting registration of such
Registrable Shares for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall not permit any securities other than the Registrable Shares to be
included in any Shelf Registration. The Company shall use its reasonable best
efforts to keep the Initial Shelf Registration continuously effective under the
Securities Act until the date which is 24 months from the Issue Date (or, if
Rule 144(k) under the Securities Act is amended to permit unlimited resales by
non-affiliates within a lesser period, such lesser period) (subject to extension
pursuant to the last paragraph of Section 5 hereof) (the "Effectiveness Period")
or such shorter period ending when (i) all Registrable Shares covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Shares has been declared effective
under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration or
any Subsequent Shelf Registration ceases to be effective for any reason at any
time during the Effectiveness Period (other than because of the sale of all of
the securities registered thereunder), the Company shall use its reasonable best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Shares (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company shall use its reasonable best efforts
to cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf
<PAGE>
-10-
Registration or any Subsequent Shelf Registrations was previously continuously
effective. As used herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly supplement and
amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate liquidation preference of the Registrable
Shares covered by such Shelf Registration or by any underwriter of such
Registrable Shares, in each case, with the Company's consent, which consent
shall not be unreasonably withheld or delayed.
4. Additional Dividends
(a) The Company and the Purchasers agree that the Holders of Registrable
Shares will suffer damages if the Company fails to fulfill its obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Company agrees to pay,
as liquidated damages, additional dividends on the Registrable Shares
("Additional Dividends") under the circumstances and to the extent set forth
below, each of which shall be given independent effect (each a "Registration
Default"):
(i) if (A) neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date or (B)
notwithstanding that the Company has consummated or will consummate an
Exchange Offer, the Company is required to file a Shelf Registration and
such Shelf Registration is not filed on or prior to the 45th day after
delivery of the Shelf Notice, then, in the case of subclause (A),
commencing on the day after the Filing Date or, in the case of subclause
(B), commencing on the 46th day following delivery of the Shelf Notice,
Additional Dividends shall accumulate on the Registrable Shares over and
above the dividend rate otherwise then in effect at a rate of 0.50% per
annum for the first 90 days immediately following the Filing Date or such
45th day, as the case may be, such Additional Dividends rate increasing by
an additional 0.25% per annum at the beginning of each subsequent 90-day
period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date or (B) notwithstanding that the Company has consummated
or will consummate an Exchange Offer, the Company is required to file a
Shelf Registration and such Shelf Registration is not declared effective by
the Commission on or prior to the 90th day after filing of the Initial
Shelf Registration, then, commencing on the day after the Effectiveness
Date or
<PAGE>
-11-
the 90th day, as the case may be, Additional Dividends shall accumulate on
the Registrable Shares over and above the dividend rate otherwise then if
effect at a rate of 0.50% per annum for the first 90 days immediately
following the day after the Effectiveness Date or the 90th day, as the case
may be, such Additional Dividends rate increasing by an additional 0.25%
per annum at the beginning of each subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Shares for all
Shares validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 180th day after the Issue Date, (B) the Exchange
Registration Statement ceases to be effective prior to consummation of the
Exchange Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Dividends shall accumulate
on the Registrable Shares over and above the dividend rate otherwise then
in effect at a rate of 0.50% per annum for the first 90 days commencing on
the (x) 181st day after the Issue Date in the case of (A) above or (y) the
day such Exchange Registration Statement or Shelf Registration ceases to be
effective in the case of (B) and (C) above, such Additional Dividends rate
increasing by an additional 0.25% per annum at the beginning of each such
subsequent 90-day period;
provided, however, that the Additional Dividends rate on the Registrable Shares
may not exceed in the aggregate 2.0% per annum; provided further that (1) upon
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Shares for all Registrable Shares
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Dividends on any
Registrable Shares then accumulating Additional Dividends as a result of such
clause (or the relevant subclause thereof), as the case may be, shall cease to
accumulate.
(b) The Company shall notify each Holder within one Business Day after each
and every date on which a Registration Default occurs in respect of which
Additional Dividends is required to be paid (an "Event Date"). Any amounts of
Additional Dividends due pursuant to a Registration Default will be payable in
Share Dividends, semi-annually on each regular dividend payment date specified
in the Statement of Resolution (to the Holders of Registrable Shares of record
on the regular record date therefor (as specified in the Statement of
Resolution) immediately preceding such dates), commencing with the first such
regular dividend payment date occurring after any such Additional Dividends
commences to accumulate. The amount of Additional Dividends will be determined
by multiplying the applicable Additional Dividends rate by the liquidation
preference of the Shares subject
<PAGE>
-12-
thereto, multiplied by a fraction, the numerator of which is the number of days
such Additional Dividends rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months), and the
denominator of which is 360.
Notwithstanding anything to the contrary in this Section 4, the Company
shall not be required to pay Additional Dividends to a Holder (i) if such Holder
failed to comply with its obligations to make the representations set forth in
Section 2(a) or failed to provide the information required to be provided by it,
if any, pursuant to Section 5 or (ii) if the Exchange Offer was consummated
within 180 days of the Issue Date and such Holder of Registrable Shares was, at
any time while the Exchange Offer was pending, eligible to exchange, and did not
validly tender, such Registrable Shares for freely transferable corresponding
Exchange Shares in such Exchange Offer.
The parties hereto agree that the liquidated damages provided for in this
Section 4 constitute a reasonable estimate of and are intended to constitute the
sole damages that will be suffered by Holders of Registrable Shares by reason of
the failure of (i) the Shelf Registration or the Exchange Registration Statement
to be filed, (ii) the Shelf Registration to remain effective or (iii) the
Exchange Registration Statement to be declared effective and remain effective
and the Exchange Offer to be consummated, in each case to the extent required by
this Agreement.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall use its reasonable best efforts to
effect such registrations to permit the sale of such securities covered thereby
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall use its reasonable best efforts to:
(a) Prepare and file with the Commission prior to the Filing Date, the
Exchange Registration Statement or if the Exchange Registration Statement is not
filed or is unavailable, a Shelf Registration as prescribed by Section 2 or 3,
and use its reasonable best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided that, if (1)
a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Shares during the Applicable Period and
has advised the Company that it is a Participating Broker-Dealer, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the Holders of
the Registrable Shares to be registered pursuant to such Shelf
<PAGE>
-13-
Registration or each such Participating Broker-Dealer, as the case may be,
covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five Business Days prior to such filing). The Company shall not file any such
Registration Statement or Prospectus or any amendments or supplements thereto if
the Holders of a majority in aggregate liquidation preference of the Registrable
Shares covered by such Registration Statement, or any such Participating Broker-
Dealer, as the case may be, their counsel, or the managing underwriters, if any,
shall reasonably object.
(b) Prepare and file with the Commission such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus. The
Company shall be deemed not to have used its reasonable best efforts to keep a
Registration Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the Registrable Shares
covered thereby or Participating Broker-Dealers seeking to sell Exchange Shares
not being able to sell such Registrable Shares or such Exchange Shares during
that period unless such action is required by applicable law, rule or regulation
or unless the Company complies with this Agreement, including, without
limitation, the provisions of paragraph 5(k) hereof and the last paragraph of
Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period from whom the Company has received written notice that it will
be a Participating Broker-Dealer, notify the selling Holders of Registrable
Shares, and each such Participating Broker-Dealer, their counsel and the
managing underwriters, if any, promptly (but in any event within two Business
Days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of
<PAGE>
-14-
such Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company contained
in any agreement pursuant to this Agreement (including any underwriting
agreement contemplated by Section 5(n) hereof) cease to be true and correct in
any material respect, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Shares or
the Exchange Shares to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any condition
or any information becoming known that makes any statement of material fact made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents so that, in
the case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any 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, and (vi) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Shares
or the Exchange Shares to be sold by any Participating Broker-Dealer, for sale
in any jurisdiction, and, if any such order is issued, to use its reasonable
best efforts to obtain the withdrawal of any such order at the earliest possible
date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if requested
by the managing underwriters, if any, or the Holders of a majority in aggregate
liquidation preference of the Registrable Shares being sold in connection with
an underwritten offering,
<PAGE>
-15-
(i) as promptly as practicable incorporate in a prospectus supplement or post-
effective amendment such information or revisions to information therein
relating to such underwriters or selling Holders as the managing underwriters,
if any, or such Holders or their counsel reasonably request to be included or
made therein, (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make amendments
to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, furnish to each selling Holder of Registrable Shares and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable
Shares or each such Participating Broker-Dealer, as the case may be, their
respective counsel, and the underwriters, if any, without charge, as many copies
of the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use (in accordance with law) of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Shares and each
Participating Broker-Dealer, and the underwriters or agents, if any, and dealers
(if any), in connection with the offering and sale of the Registrable Shares
covered by, or the sale by Participating Broker-Dealers of the Exchange Shares
pursuant to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Shares or any delivery of a
Prospectus contained in the Exchange Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Shares during the Applicable Period,
use its reasonable best efforts to register or qualify, and cooperate with the
selling Holders of Registrable Shares and each such Participating Broker-Dealer,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Shares or Exchange Shares, as the case may
<PAGE>
-16-
be, for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any, reasonably
request in writing; provided that where Exchange Shares held by Participating
Broker-Dealers or Registrable Shares are offered pursuant to an underwritten
offering, counsel to the underwriters shall, at the cost and expense of the
Company, perform the Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Shares by Participating
Broker-Dealers or the Registrable Shares covered by the applicable Registration
Statement; provided that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction where it
is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate with
the selling Holders of Registrable Shares, any Participating Broker-Dealer and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company (the "DTC"); and
enable such Registrable Shares to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or Holders may
reasonably request at least two Business Days prior to such sale of Registrable
Shares.
(j) Use its reasonable best efforts to cause the Registrable Shares covered
by the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Shares, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals; provided that the Company shall not be required to
(A) qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, upon the occurrence of any event
<PAGE>
-17-
contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the Commission, at the
Company's sole expense, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Shares being sold thereunder or to the purchasers of the
Exchange Shares to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus 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.
(l) Use its reasonable best efforts to cause the Registrable Shares covered
by a Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate liquidation preference of
Registrable Shares covered by such Registration Statement or the managing
underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Shares, (i) provide the Holders with printed
certificates for the Registrable Shares or the Exchange Shares, as the case may
be, in a form eligible for deposit with the Depository Trust Company and (ii)
provide a CUSIP number for the Registrable Shares or the Exchange Shares, as the
case may be.
(n) In connection with an underwritten offering of Registrable Shares
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of preferred equity securities similar to
the Shares and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Shares and, in such
connection, (i) make such representations and warranties to the underwriters,
with respect to the business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of preferred equity
securities similar to the Shares, and confirm the same in writing if and when
requested; (ii) obtain the opinion of counsel to the Company and updates thereof
in form and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings of preferred equity
securities similar to the Shares and such other matters as may be reasonably
requested by managing underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company
<PAGE>
-18-
for which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings of preferred equity securities similar to the Shares and such other
matters as reasonably requested by the managing underwriter or underwriters; and
(iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate liquidation preference of Registrable Shares
covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Shares being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Shares, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii) the
information in such Records has been made generally available to the public
other than as a result of a disclosure or failure to safeguard by such Inspector
or (iv) disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder. Each
selling Holder of such Registrable Shares and each Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any
<PAGE>
-19-
market transactions in the securities of the Company or any of its subsidiaries
unless and until such is made generally available to the public. Each Inspector,
each selling Holder of such Registrable Shares and each Participating Broker-
Dealer will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction
pursuant to clauses (ii) or (iv) of the previous sentence or otherwise, give
notice to the Company and allow the Company to undertake appropriate action to
obtain a protective order or otherwise prevent disclosure of the Records deemed
confidential at its expense.
(p) Provide a transfer agent for the Registrable Shares or the Exchange
Shares, as the case may be.
(q) Comply with all applicable rules and regulations of the Commission and
make generally available to its securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Shares are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange, obtain
an opinion of counsel to the Company, in a form customary for underwritten
transactions, addressed to the Holders of Registrable Shares participating in
the Exchange Offer or the Private Exchange, as the case may be, as follows: (i)
the Exchange Shares or the Private Exchange Shares, as the case may be have been
duly authorized, and are validly issued, fully paid and nonassessable and free
of any preemptive or similar rights; and (ii) the Amended and Restated Articles
of Incorporation of the Company, by virtue of the Statement of Resolution, sets
forth the rights, preferences and priorities of the Exchange Shares or Private
Exchange Shares, as the case may be, and the holders of Exchange Shares or
Private Exchange Shares, as the case may be, will have the rights set forth in
the Statement of Resolution.
(s) If the Exchange Offer or a Private Exchange is to be consummated, upon
delivery of the Registrable Shares by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Shares or the
Private Exchange Shares, as the case may be, the Company shall mark, or caused
to be marked, on such Registrable Shares that such Registrable Shares are being
cancelled in exchange for the Exchange Shares or the Private Exchange Shares, as
the case may be; in no event shall such Registrable Shares be marked as paid or
otherwise satisfied.
<PAGE>
-20-
(t) Cooperate with each seller of Registrable Shares covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the NASD.
(u) Use its best efforts to take all other steps reasonably necessary to
effect the registration of the Registrable Shares covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Shares as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Shares as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Shares of any seller who fails to furnish such
information within a reasonable time after receiving such request. No seller
shall be entitled to Additional Dividends pursuant to Section 4 unless and until
such seller has provided all such information. Each seller as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Shares and each Participating Broker-Dealer
agrees by acquisition of such Registrable Shares or Exchange Shares to be sold
by such Participating Broker-Dealer, as the case may be, that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Shares covered by such Registration
Statement or Prospectus or Exchange Shares to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Company shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Shares covered by such Registration
Statement or Exchange Shares to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (y) the Advice.
<PAGE>
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6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company, whether or not the
Exchange Offer or a Shelf Registration is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Shares or Exchange Shares and
determination of the eligibility of the Registrable Shares or Exchange Shares
for investment under the laws of such jurisdictions (x) where the holders of
Registrable Shares are located, in the case of the Exchange Shares, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Shares or Exchange
Shares to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Shares or Exchange Shares in a form
eligible for deposit with the DTC and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriter or underwriters, if
any, or by the Holders of a majority in aggregate liquidation preference of the
Registrable Shares included in any Registration Statement or by any
Participating Broker-Dealer, as the case may be, (iii) reasonable messenger,
telephone and delivery expenses incurred in connection with the Exchange
Registration Statement and any Shelf Registration, (iv) fees and disbursements
of counsel for the Company and reasonable fees and disbursements of special
counsel for the Purchasers and the sellers of Registrable Shares, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other Persons
retained by the Company (ix) internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees of the
Company, performing legal or accounting duties), (x) the expense of any annual
or special audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange, (xii) the
fees and disbursements of underwriters, if any, customarily paid by issuers or
sellers of securities (but not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of the
Registrable Shares which discounts, commissions or taxes shall be paid by
Holders of such Registrable Shares) and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
<PAGE>
-22-
7. Indemnification
(a) Acquisition and, at and after the Effective Time, TNP, agrees to
indemnify and hold harmless each Holder of Registrable Shares and each
Participating Broker-Dealer, the officers, directors, employees and agents of
each such Person, and each Person, if any, who controls any such Person within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, the reasonable
legal fees and other reasonable expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused by, arising out of or based upon any omission or alleged
omission to state therein 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 insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Company in writing
by or on behalf of such Participant expressly for use therein; provided,
however, that the Company shall not be liable if such untrue statement or
omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Shares or Exchange Shares which are the subject thereof from such Participant
and it is established in the related proceeding that such Participant failed to
deliver or provide a copy of the Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Shares
or Exchange Shares sold to such Person if required by applicable law, unless
such failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5 of
this Agreement.
(b) Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless Acquisition and, at and after the Effective Time,
TNP, their respective directors and officers and each Person who controls
Acquisition and, at and after the Effective Time, TNP, within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Participant, but only
with reference to information relating to such Participant furnished to the
<PAGE>
-23-
Company in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Shares or Exchange Shares giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and the Indemnified Person shall have reasonably concluded that there may
be one or more legal defenses available to it and/or other Indemnified Persons
that are different from or additional to those available to any such
Indemnifying Person. It is understood that, unless there is a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Participants
and such control Persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Shares sold by all
such Participants and any such separate firm for the Company, its directors,
officers and such control Persons of the Company shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there is a final non-appealable judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have
requested an Indemnifying Person to reimburse the Indemnified Person for
reasonable
<PAGE>
-24-
fees and expenses actually incurred by counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its consent if (i)
such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement; provided, however, that the Indemnifying
Person shall not be liable for any settlement effected without its consent
pursuant to this sentence if the Indemnifying Person is contesting, in good
faith, the request for reimbursement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
release of such Indemnified Person, in form and substance satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to, or insufficient to hold harmless, an
Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Person or Persons on the one hand and the Indemnified
Person or Persons on the other in connection with the statements or omissions
(or alleged statements or omissions) that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof) as well as any other
relevant equitable considerations. The relative fault of the parties 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, on the one hand,
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
<PAGE>
-25-
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Shares or
Exchange Shares, as the case may be, exceeds the amount of any damages that such
Participant 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
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Acquisition and, at and after the Effective Time, TNP, covenants, for so
long as any Registrable Shares remain outstanding, that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder in a timely manner
and, if at any time it is not required to file such reports, it will, upon the
request of any Holder of Registrable Shares, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A. Acquisition and, at and after the Effective Time, TNP, further covenants,
for so long as any Registrable Shares remain outstanding, to make available to
any Holder or beneficial owner of Registrable Shares in connection with any sale
thereof and any prospective purchaser of such Registrable Shares from such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Shares
pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Shares covered by any Shelf Registration are to
be sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate liquidation preference of such Registrable
Shares included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Shares may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Shares on the
<PAGE>
-26-
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. Except as provided in Section 4, in the event of a breach by
Acquisition and, at and after the Effective Time, TNP, of any of its obligations
under this Agreement, each Holder of Registrable Shares and each Participating
Broker-Dealer holding Exchange Shares, in addition to being entitled to exercise
all rights provided herein, in the Statement of Resolution or, in the case of an
Purchaser, in the Purchase Agreement, or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Except as provided in Section 4, Acquisition and, at and after the
Effective Time, TNP, agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Acquisition has not entered, as of the date
hereof, and Acquisition and, at and after the Effective Time, TNP, shall not
enter, after the date of this Agreement, into any agreement with respect to any
of its securities that is inconsistent with the rights granted to the Holders of
Registrable Shares in this Agreement or otherwise conflicts with the provisions
hereof. Acquisition has not entered and, at and after the Effective Time, TNP,
shall not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Shares. Acquisition and, at and after
the Effective Time, TNP, shall not directly or indirectly, take any action with
respect to the Registrable Shares as a class that would adversely affect the
ability of the Holders of Registrable Shares to include such Registrable Shares
in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate liquidation
preference of the then outstanding Registrable Shares and (B) in circumstances
that would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate liquidation
preference of the Exchange Shares held by all Participating Broker-Dealers;
<PAGE>
-27-
provided, however, that Section 7 and this Section 10(d) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Shares or Exchange Shares, as the
case may be, disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders of Registrable Shares whose securities are being tendered pursuant to
the Exchange Offer or sold pursuant to a Registration Statement and that does
not directly or indirectly affect, impair, limit or compromise the rights of
other Holders of Registrable Shares may be given by Holders of at least a
majority in aggregate liquidation preference of the Registrable Shares being
tendered or being sold by such Holders pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Shares or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Statement of Resolution, with a copy in like manner to
the Purchasers at their addresses set forth in Schedule 1 to the Purchase
Agreement and as follows:
CIBC INC.
CIBC WORLD MARKETS CORP.
CHASE SECURITIES INC.
CONTINENTAL CASUALTY COMPANY
LAUREL HILL CAPITAL PARTNERS LLC
c/o CIBC Inc.
424 Lexington Avenue
3rd Floor
New York, New York 10017
Facsimile No.: (212) 885-4998
Attention: Corporate Finance
Department
<PAGE>
-28-
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
2. if to the Purchasers, at the address specified in Section 10(e)(1);
3. if to the Company, as follows:
c/o Laurel Hill Capital Partners LLC
2 Robbins Lane, Suite 201
Jericho, New York 11753
Facsimile No.: (516) 933-3108
Attention: Kathleen Marion
with copies to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Facsimile No.: (212) 530-5219
Attention: M. Douglas Dunn, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto and
the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registrable Shares.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
-29-
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(k) Shares Held by the Company or Its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Shares is required
hereunder, Registrable Shares held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(l) Third Party Beneficiaries. Holders of Registrable Shares and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(m) Registration of Dividend Shares. If the issuance of Dividend Shares
requires registration under the Securities Act and any such issuance shall not
have been effectively registered under the Securities Act pursuant to the
Exchange Registration Statement then, prior to any issuance of Dividend Shares,
the Company shall file with the Commission and cause to become effective a
Registration Statement registering the issuance of such Dividend Shares.
<PAGE>
-30-
(n) Entire Agreement. This Agreement, together with the Purchase Agreement
and the Statement of Resolution, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda among the Purchasers
on the one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
(o) Assumption Permitted. The assumption by TNP pursuant to the Assumption
Agreement of the obligations of Acquisition hereunder shall be permitted without
the written consent of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Share Registration
Rights Agreement as of the date first written above.
ST ACQUISITION CORP.
By:
----------------------------------
Name:
Title:
CIBC INC.
By:
----------------------------------
Name:
Title:
CIBC WORLD MARKETS CORP.
By:
----------------------------------
Name:
Title:
CHASE SECURITIES INC.
By:
----------------------------------
Name:
Title:
CONTINENTAL CASUALTY COMPANY
By:
----------------------------------
Name:
Title:
LAUREL HILL CAPITAL PARTNERS LLC
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit 4(a)(iii)
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT (this "Agreement"), dated as of April 7, 2000, is by
TNP Enterprises, Inc., a Texas corporation (the "Company").
W I T N E S S E T H
WHEREAS, ST Acquisition Corp., a Texas corporation ("Acquisition"), has
heretofore executed and delivered to CIBC Inc., CIBC World Markets Corp., Chase
Securities, Continental Casualty Company and Laurel Hill Capital Partners LLC
(the "Purchasers") a purchase agreement (the "Purchase Agreement"), dated as of
April 7, 2000, providing for the terms pursuant to which the Purchasers have
purchased 100,000 shares of Senior Redeemable Preferred Stock (the "Shares") of
Acquisition;
WHEREAS, Acquisition has heretofore executed and delivered to the
Purchasers a registration rights agreement (the "Registration Rights
Agreement"), dated as of April 7, 2000, providing for the registration of the
Shares and the Exchange Shares (as defined in the Registration Rights Agreement)
of Acquisition under the Securities Act of 1933, as amended;
WHEREAS, Acquisition has been merged with and into the Company (the
"Merger"); and
WHEREAS, pursuant to the Purchase Agreement and the Registration Rights
Agreement, the Company upon consummation of the Merger is required to assume all
of the obligations of Acquisition under the Purchase Agreement and the
Registration Rights Agreement and to execute and deliver this Agreement
concurrently with the Merger.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
covenants and agrees for the benefit of the Purchasers as follows:
1. ASSUMPTION. The Company hereby agrees to assume all of the obligations
of Acquisition and all of its own obligations under the Purchase Agreement and
the Registration Rights Agreement.
2. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF, SHALL GOVERN AND BE USED
TO CONSTRUE THIS AGREEMENT.
3. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
<PAGE>
-2-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered as of the date first above written, which is the date of
the Merger.
TNP ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 4(b)(i)
REGISTRATION RIGHTS AGREEMENT
Dated as of April 7, 2000
by and among
ST ACQUISITION CORP.,
as Issuer,
and
CIBC WORLD MARKETS CORP.,
CHASE SECURITIES INC.
and
BARCLAYS CAPITAL INC.,
as Initial Purchasers
------------------------------
$275,000,000
10.25% SENIOR SUBORDINATED NOTES DUE 2010
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions...........................................................2
2. Exchange Offer........................................................5
3. Shelf Registration....................................................9
4. Additional Interest..................................................10
5. Registration Procedures..............................................12
6. Registration Expenses................................................21
7. Indemnification......................................................22
8. Rules 144 and 144A...................................................25
9. Underwritten Registrations...........................................25
10. Miscellaneous.......................................................26
(a) Remedies26
(b) No Inconsistent Agreements.................................26
(c) Adjustments Affecting Registrable Notes....................26
(d) Amendments and Waivers.....................................26
(e) Notices....................................................27
(f) Successors and Assigns.....................................28
(g) Counterparts...............................................28
(h) Headings...................................................28
(i) Governing Law..............................................29
(j) Severability...............................................29
(k) Notes Held by the Company or Its Affiliates................29
(l) Third Party Beneficiaries..................................29
(m) Entire Agreement...........................................29
(n) Assumption Permitted.......................................29
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of April 7, 2000, by and among ST Acquisition Corp., a Texas corporation
("Acquisition"), and CIBC World Markets Corp., Chase Securities Inc. and
Barclays Capital Inc., as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated March 31, 2000, by and among Acquisition and the Initial Purchasers (the
"Purchase Agreement") relating to, among other things, the sale by the Company
to the Initial Purchasers of $275,000,000 aggregate principal amount of
Acquisition's 10.25% Senior Subordinated Notes due 2010 (the "Notes"). In order
to induce the Initial Purchasers to enter into the Purchase Agreement,
Acquisition has agreed to provide the registration rights set forth in this
Agreement for the benefit of the holders of Registrable Notes (as defined),
including, without limitation, the Initial Purchasers. The execution and
delivery of this Agreement is a condition to the Initial Purchasers' obligation
to purchase the Notes under the Purchase Agreement.
The Notes are being sold in connection with the merger (the "Merger") of
Acquisition with and into TNP Enterprises, Inc., a Texas corporation ("TNP"),
with TNP surviving the Merger pursuant to the Agreement and Plan of Merger dated
as of May 24, 1999 by and among SW Acquisition L.P., Acquisition and TNP (as
amended through the date hereof and together with all ancillary agreements
entered into in connection therewith). The time of the consummation of the
Merger is referred to herein as the "Effective Time.
Immediately after the Effective Time, (i) TNP will execute an assumption
agreement (the "Assumption Agreement"), substantially in the form attached to
the Purchase Agreement as Exhibit A, pursuant to which TNP, as the survivor of
the Merger, will assume all of the obligations of Acquisition under this
Agreement and the Purchase Agreement and (ii) TNP and the Trustee will enter
into a first supplemental indenture to the Indenture (the "First Supplemental
Indenture") providing for the express assumption by TNP, as survivor of the
Merger, of the covenants, agreements and undertakings of Acquisition in the
Indenture and under the Notes. References to this Agreement as of and after the
Effective Time will refer to this Registration Rights Agreement together with
the Assumption Agreement, references to the Purchase Agreement as of and after
the Effective Time will refer to the Purchase Agreement together with the
Assumption Agreement and references to the Indenture as of and after the
Effective Time will refer to the Indenture and the First Supplemental Indenture.
As used herein, the "Company" shall mean Acquisition prior to the Effective Time
and, at and after the Effective Time, TNP.
The parties hereby agree as follows:
<PAGE>
-2-
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Acquisition: See the first introductory paragraph to this Agreement.
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first and fourth introductory paragraphs to this
Agreement.
Applicable Period: See Section 2(b).
Assumption Agreement: See the third introductory paragraph to this
Agreement.
Business Day: A day that is not a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required to be closed.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Company: See the fourth introductory paragraph to this Agreement.
DTC: See Section 5(i).
Effective Time: See the third introductory paragraph to this
Agreement.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Exchange Notes: See Section 2(a).
<PAGE>
-3-
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 60th day after the Issue Date (regardless of whether
the actual filing precedes such date).
First Supplemental Indenture: See the fourth introductory paragraph to
this Agreement.
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of April 7, 2000, by and between
Acquisition and The Bank of New York, as trustee, pursuant to which the Notes
are being issued, as amended or supplemented from time to time in accordance
with the terms thereof.
Initial Purchasers: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the Notes were sold to the Initial
Purchasers pursuant to the Purchase Agreement.
Merger: See the third introductory paragraph to this Agreement.
NASD: National Association of Securities Dealers, Inc.
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
<PAGE>
-4-
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second and fourth introductory paragraphs
to this Agreement.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance thereof and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable) covering such Note, Exchange Note
or Private Exchange Note, as the case may be, has been declared effective by the
Commission and such Note, Exchange Note or Private Exchange Note, as the case
may be, has been disposed of in accordance with such effective Registration
Statement, (ii) such Note, Exchange Note or Private Exchange Note, as the case
may be, is sold in compliance with Rule 144, (iii) in the case of any Note, such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes which may be resold without restriction under federal securities
laws, or (iv) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
<PAGE>
-5-
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
TNP: See the third introductory paragraph to this Agreement.
Trustee: The trustee under the Indenture and the First Supplemental
Indenture and, if existent, the trustee under any indenture governing the
Exchange Notes and Private Exchange Notes (if any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company agrees to file with the Commission no later than the
Filing Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of Acquisition and, at and after
the Effective Time, TNP, which are identical in all material respects to the
Notes (the "Exchange Notes") (and which are entitled to the benefits of the
Indenture or a trust indenture which is identical in all material respects to
the Indenture
<PAGE>
-6-
(other than such changes to the Indenture or any such identical trust indenture
as are necessary to comply with any requirements of the Commission to effect or
maintain the qualification thereof under the TIA) and which, in either case, has
been qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. The Company agrees to use its reasonable
best efforts to (x) cause the Exchange Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is first mailed
to Holders; and (z) consummate the Exchange Offer on or prior to the 30th day
following the date on which the Exchange Registration Statement is declared
effective. If after such Exchange Registration Statement is initially declared
effective by the Commission, the Exchange Offer or the issuance of the Exchange
Notes thereunder is interfered with by any stop order, injunction or other order
or requirement of the Commission or any other governmental agency or court, such
Exchange Registration Statement shall be deemed not to have become effective for
purposes of this Agreement. Each Holder who participates in the Exchange Offer
will be required to represent that any Exchange Notes received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder does not and will not have any
arrangement or understanding with any Person to participate in the distribution
of the Exchange Notes, that such Holder is not an affiliate of the Company
within the meaning of Rule 405 of the Securities Act, and any additional
representations that in the written opinion of counsel to the Company are
necessary under then-existing interpretations of the Commission in order for the
Exchange Registration Statement to be declared effective. Upon consummation of
the Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers, and the Company shall have no further obligation
to register Registrable Notes (other than Private Exchange Notes and other than
in respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 of this Agreement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly
<PAGE>
-7-
disseminated by the Staff of the Commission or such positions or policies, in
the judgment of the Initial Purchasers, represent the prevailing views of the
Staff of the Commission. Such "Plan of Distribution" section shall also allow,
to the extent permitted by applicable policies and regulations of the
Commission, the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including, to the extent so
permitted, all Participating Broker-Dealers, and include a statement describing
the manner in which Participating Broker-Dealers may resell the Exchange Notes.
The Company shall use its reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time beginning when the Exchange Notes are first issued
in the Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed and such Persons are no longer
required to comply with the prospectus delivery requirements in connection with
offers and sales of the Exchange Notes (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company that are identical in all material respects to
the Exchange Notes except for the existence of restrictions on transfer thereof
under the Securities Act and securities laws of the several states of the U.S.
(the "Private Exchange Notes") (and which are issued pursuant to the same
indenture as the Exchange Notes). The Private Exchange Notes shall bear the same
CUSIP number as the Exchange Notes to the extent possible. Interest on the
Exchange Notes and Private Exchange Notes will accrue from the last interest
payment date on which interest was paid on the Notes surrendered in exchange
therefor or, if no interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
the Trustee or an affiliate thereof;
<PAGE>
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(3) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(5) accept for exchange all Registrable Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(6) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(7) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 180
days of the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Company or (iv) in the case of any Holder that participates in
the Exchange Offer (and tenders its Registrable Notes prior to the expiration
thereof), such Holder does not receive Exchange Notes on the date of the
exchange that may be sold without restriction under federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act) and so notifies the Company
within 30 days following the consummation of the Exchange Offer (and providing a
reasonable basis for its conclusions), in the case of each of clauses (i)-(iv),
then the Company shall as promptly as practicable deliver to the Holders and the
Trustee written notice thereof (the "Shelf Notice") and shall file a Shelf
Registration pursuant to Section 3.
<PAGE>
-9-
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Company shall as promptly as reasonably
practicable file with the Commission a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes (the "Initial Shelf Registration"). If the Company shall not
have yet filed the Exchange Registration Statement, the Company shall file with
the Commission the Initial Shelf Registration on or prior to the Filing Date and
shall use its reasonable best efforts to cause such Initial Shelf Registration
to be declared effective under the Securities Act on or prior to the
Effectiveness Date. Otherwise, the Company shall file with the Commission the
Initial Shelf Registration within 45 days of the delivery of the Shelf Notice
and shall use its reasonable best efforts to cause such Shelf Registration to be
declared effective under the Securities Act on or prior to the 90th day after
filing of the Initial Shelf Registration. The Initial Shelf Registration shall
be on Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall not permit any securities other than the Registrable Notes to be
included in any Shelf Registration. The Company shall use its best efforts to
keep the Initial Shelf Registration continuously effective under the Securities
Act until the date which is 24 months from the Issue Date (or, if Rule 144(k)
under the Securities Act is amended to permit unlimited resales by non-
affiliates within a lesser period, such lesser period) (subject to extension
pursuant to the last paragraph of Section 5 hereof) (the "Effectiveness Period")
or such shorter period ending when (i) all Registrable Notes covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Notes has been declared effective
under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Company shall use its reasonable
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company shall use its reasonable best efforts to
cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf
<PAGE>
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Registration or any Subsequent Shelf Registrations was previously continuously
effective. As used herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes, in each case, with the Company's consent, which consent shall not be
unreasonably withheld or delayed.
4. Additional Interest
(a) The Company and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional interest on the
Registrable Notes ("Additional Interest") under the circumstances and to the
extent set forth below, each of which shall be given independent effect (each a
"Registration Default"):
(i) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing Date or
(B) notwithstanding that the Company has consummated or will consummate an
Exchange Offer, the Company is required to file a Shelf Registration and
such Shelf Registration is not filed on or prior to the 45th day after
delivery of the Shelf Notice, then, in the case of subclause (A),
commencing on the day after the Filing Date or, in the case of subclause
(B), commencing on the 46th day following delivery of the Shelf Notice,
Additional Interest shall accrue on the Registrable Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
immediately following the Filing Date or such 45th day, as the case may be,
such Additional Interest rate increasing by an additional 0.25% per annum
at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date or (B) notwithstanding that the Company has consummated
or will consummate an Exchange Offer, the Company is required to file a
Shelf Registration and such Shelf Registration is not declared effective by
the Commission on or prior to the 90th day after filing of the Initial
Shelf Registration, then, commencing on the day after the Effectiveness
Date or the 90th day, as the case may be, Additional Interest shall accrue
on the Registrable
<PAGE>
-11-
Notes over and above the stated interest at a rate of 0.50% per annum for
the first 90 days immediately following the day after the Effectiveness
Date or the 90th day, as the case may be, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each
subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 180th day after the Issue Date, (B) the Exchange
Registration Statement ceases to be effective prior to consummation of the
Exchange Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Interest shall accrue on
the Registrable Notes over and above the stated interest at a rate of 0.50%
per annum for the first 90 days commencing on the (x) 181st day after the
Issue Date in the case of (A) above or (y) the day such Exchange
Registration Statement or Shelf Registration ceases to be effective in the
case of (B) and (C) above, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each such subsequent 90-day
period;
provided, however, that the Additional Interest rate on the Registrable Notes
may not exceed in the aggregate 2.0% per annum; provided further that (1) upon
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Notes for all Registrable Notes
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Interest on any
Registrable Notes then accruing Additional Interest as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within one Business Day after
each and every date on which a Registration Default occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to a Registration Default will be payable in
cash semi-annually on each regular interest payment date specified in the
Indenture (to the Holders of Registrable Notes of record on the regular record
date therefor (as specified in the Indenture) immediately preceding such dates),
commencing with the first such regular interest payment date occurring after any
such Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes subject thereto, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
<PAGE>
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Notwithstanding anything to the contrary in this Section 4, the
Company shall not be required to pay Additional Dividends to a Holder (i) if
such Holder failed to comply with its obligations to make the representations
set forth in Section 2(a) or failed to provide the information required to be
provided by it, if any, pursuant to Section 5 or (ii) if the Exchange Offer was
consummated within 180 days of the Issue Date and such Holder of Registrable
Notes was, at any time while the Exchange Offer was pending, eligible to
exchange, and did not validly tender, such Registrable Notes for freely
transferable corresponding Exchange Notes in such Exchange Offer.
The parties hereto agree that the liquidated damages provided for in
this Section 4 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Registrable
Notes by reason of the failure of (i) the Shelf Registration or the Exchange
Registration Statement to be filed, (ii) the Shelf Registration to remain
effective or (iii) the Exchange Registration Statement to be declared effective
and remain effective and the Exchange Offer to be consummated, in each case to
the extent required by this Agreement.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall use its reasonable best efforts to
effect such registrations to permit the sale of such securities covered thereby
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall use its reasonable best efforts to:
(a) Prepare and file with the Commission prior to the Filing Date, the
Exchange Registration Statement or if the Exchange Registration Statement is not
filed or is unavailable, a Shelf Registration as prescribed by Section 2 or 3,
and use its reasonable best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided that, if (1)
a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period and
has advised the Company that it is a Participating Broker-Dealer, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the Holders of
the Registrable Notes to be registered pursuant to such Shelf Registration or
each such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at
<PAGE>
-13-
least five Business Days prior to such filing). The Company shall not file any
such Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus. The
Company shall be deemed not to have used its reasonable best efforts to keep a
Registration Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the Registrable Notes
covered thereby or Participating Broker-Dealers seeking to sell Exchange Notes
not being able to sell such Registrable Notes or such Exchange Notes during that
period unless such action is required by applicable law, rule or regulation or
unless the Company complies with this Agreement, including, without limitation,
the provisions of paragraph 5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from whom the Company has received written notice that it will
be a Participating Broker-Dealer, notify the selling Holders of Registrable
Notes, and each such Participating Broker-Dealer, their counsel and the managing
underwriters, if any, promptly (but in any event within two Business Days), and
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective (including in such notice a written statement that any Holder may,
upon request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a
<PAGE>
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prospectus is required by the Securities Act to be delivered in connection with
sales of the Registrable Notes the representations and warranties of the Company
contained in any agreement pursuant to this Agreement (including any
underwriting agreement contemplated by Section 5(n) hereof) cease to be true and
correct in any material respect, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any condition
or any information becoming known that makes any statement of material fact made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents so that, in
the case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any 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, and (vi) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel reasonably
request to be included or made therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be incorporated in
such prospectus supplement or post-
<PAGE>
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effective amendment, and (iii) supplement or make amendments to such
Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Company hereby consents to the use (in
accordance with law) of such Prospectus and each amendment or supplement thereto
by each of the selling Holders of Registrable Notes and each Participating
Broker-Dealer, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Notes covered by, or
the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable best efforts to register or qualify, and
cooperate with the selling Holders of Registrable Notes and each such
Participating Broker-Dealer, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Notes or Exchange Notes,
as the case may be, for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any, reasonably
request in writing; provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered pursuant to an underwritten
offering, counsel to the underwriters shall, at the cost and expense of the
Company, perform the Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this
<PAGE>
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Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Notes by Participating Broker-Dealers or the Registrable Notes covered
by the applicable Registration Statement; provided that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes, any Participating Broker-Dealer
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company (the "DTC"); and
enable such Registrable Notes to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
reasonably request at least two Business Days prior to such sale of Registrable
Notes.
(j) Use its reasonable best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Notes, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals; provided that the Company shall not be required to
(A) qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the Commission, at the Company's sole expense, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
<PAGE>
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Prospectus 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.
(l) Use its reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate principal
amount of Registrable Notes covered by such Registration Statement or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes or the Exchange Notes, as the case may
be, in a form eligible for deposit with the Depository Trust Company and (ii)
provide a CUSIP number for the Registrable Notes or the Exchange Notes, as the
case may be.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to the underwriters, with respect to the
business of the Company and its subsidiaries and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the Notes,
and confirm the same in writing if and when requested; (ii) obtain the opinion
of counsel to the Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities similar to the Notes and such other
matters as may be reasonably requested by managing underwriters; (iii) obtain
"cold comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings of debt securities
similar to the Notes and such other matters as reasonably requested by the
managing underwriter or underwriters; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
<PAGE>
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aggregate principal amount of Registrable Notes covered by such Registration
Statement and the managing underwriter or underwriters or agents) with respect
to all parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Notes, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii) the
information in such Records has been made generally available to the public
other than as a result of a disclosure or failure to safeguard by such Inspector
or (iv) disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder. Each
selling Holder of such Registrable Notes and each Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company or any of its
subsidiaries unless and until such is made generally available to the public.
Each Inspector, each selling Holder of such Registrable Notes and each
Participating Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction pursuant to clauses (ii) or (iv) of the previous sentence or
otherwise, give notice to the Company and allow the Company to undertake
appropriate action to obtain a protective order or otherwise prevent disclosure
of the Records deemed confidential at its expense.
<PAGE>
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(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the Commission to enable such
indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or the Private Exchange
Notes, as the case may be, and the related indenture constitute legally valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
(s) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or
caused to be marked, on such Registrable Notes that such Registrable Notes are
being cancelled in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be; in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such
<PAGE>
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Registrable Notes and their respective counsel in connection with any filings
required to be made with the NASD.
(u) Use its best efforts to take all other steps reasonably necessary
to effect the registration of the Registrable Notes covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. No seller
shall be entitled to Additional Interest pursuant to Section 4 unless and until
such seller has provided all such information. Each seller as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Company shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company, whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all
<PAGE>
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registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with the DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or by any Participating Broker-Dealer, as the case may be, (iii)
reasonable messenger, telephone and delivery expenses incurred in connection
with the Exchange Registration Statement and any Shelf Registration, (iv) fees
and disbursements of counsel for the Company and reasonable fees and
disbursements of special counsel for the Initial Purchasers and the sellers of
Registrable Notes, (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(n)(iii) (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) rating agency fees, (vii)
Securities Act liability insurance, if the Company desires such insurance,
(viii) fees and expenses of all other Persons retained by the Company (ix)
internal expenses of the Company (including, without limitation, all salaries
and expenses of officers and employees of the Company, performing legal or
accounting duties), (x) the expense of any annual or special audit, (xi) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange, (xii) the fees and disbursements of
underwriters, if any, customarily paid by issuers or sellers of securities (but
not including any underwriting discounts or commissions or transfer taxes, if
any, attributable to the sale of the Registrable Notes which discounts,
commissions or taxes shall be paid by Holders of such Registrable Notes) and
(xiii) the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
7. Indemnification
(a) Acquisition and, at and after the Effective Time, TNP, agrees to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer, the officers, directors, employees and agents of
each such Person, and each Person, if any, who controls any such Person within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, the reasonable
legal fees
<PAGE>
-22-
and other reasonable expenses actually incurred in connection with any suit,
action or proceeding or any claim asserted) caused by, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused by, arising out of or based upon any omission or alleged
omission to state therein 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 insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Company in writing
by or on behalf of such Participant expressly for use therein; provided,
however, that the Company shall not be liable if such untrue statement or
omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Notes or Exchange Notes which are the subject thereof from such Participant and
it is established in the related proceeding that such Participant failed to
deliver or provide a copy of the Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5 of
this Agreement.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless Acquisition and, at and after the
Effective Time, TNP, their respective directors and officers and each Person who
controls Acquisition and, at and after the Effective Time, TNP, within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each Participant,
but only with reference to information relating to such Participant furnished to
the Company in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such
<PAGE>
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indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided, however,
that the failure to so notify the Indemnifying Person shall not relieve it of
any obligation or liability which it may have hereunder or otherwise. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and the Indemnified Person shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other Indemnified Persons that are different from or additional to
those available to any such Indemnifying Person. It is understood that, unless
there is a conflict among Indemnified Persons, the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes sold by all such Participants and any such separate firm
for the Company, its directors, officers and such control Persons of the Company
shall be designated in writing by the Company. The Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there is a final non-appealable
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for reasonable fees and expenses actually incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its consent if (i) such settlement is entered into
more than 30 days after receipt by such Indemnifying Person of the aforesaid
request and (ii) such Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Person is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified
<PAGE>
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Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement (A) includes an
unconditional release of such Indemnified Person, in form and substance
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties 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, on the one hand,
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant 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
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
<PAGE>
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(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Acquisition and, at and after the Effective Time, TNP, covenants, for
so long as any Registrable Notes remain outstanding, that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder in a timely
manner and, if at any time it is not required to file such reports, it will,
upon the request of any Holder of Registrable Notes, make publicly available
other information so long as necessary to permit sales pursuant to Rule 144 and
Rule 144A. Acquisition and, at and after the Effective Time, TNP, further
covenants, for so long as any Registrable Notes remain outstanding, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registation hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by Acquisition and, at and
after the Effective Time, TNP, of any of its obligations under this Agreement,
each Holder of Registrable Notes and each Participating Broker-Dealer holding
Exchange Notes, in addition to being entitled to exercise all rights provided
herein, in the Indenture or, in the case of an Initial Purchaser, in the
Purchase Agreement, or granted by law, including recovery of
<PAGE>
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damages, will be entitled to specific performance of its rights under this
Agreement. Acquisition and, at and after the Effective Time, TNP, agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Acquisition has not entered, as of the
date hereof, and Acquisition and, at and after the Effective Time, TNP, shall
not enter, after the date of this Agreement, into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Holders of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. Acquisition has not entered and Acquisition and, at and after
the Effective Time, TNP, shall not enter into any agreement with respect to any
of its securities which will grant to any Person piggy-back rights with respect
to a Registration Statement.
(c) Adjustments Affecting Registrable Notes. Acquisition and, at and
after the Effective Time, TNP, shall not directly or indirectly, take any action
with respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Notes and (B) in circumstances that
would adversely affect Participating Broker-Dealers, the Participating Broker-
Dealers holding not less than a majority in aggregate principal amount of the
Exchange Notes held by all Participating Broker-Dealers; provided, however, that
Section 7 and this Section 10(d) may not be amended, modified or supplemented
without the prior written consent of each Holder and each Participating Broker-
Dealer (including any person who was a Holder or Participating Broker-Dealer of
Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant to
any Registration Statement). Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Notes whose securities are
being tendered pursuant to the Exchange Offer or sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being tendered or being sold by such Holders pursuant to such Registration
Statement.
<PAGE>
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(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
CIBC WORLD MARKETS CORP.
CHASE SECURITIES INC.
BARCLAYS CAPITAL INC.
c/o CIBC World Markets Corp.
424 Lexington Avenue
3rd Floor
New York, New York 10017
Facsimile No.: (212) 885-4998
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
2. if to the Initial Purchasers, at the address specified in Section
10(e)(1);
3. if to the Company, as follows:
c/o Laurel Hill Capital Partners LLC
2 Robbins Lane, Suite 201
Jericho, New York 11753
Facsimile No.: (516) 933-3108
Attention: Kathleen Marion
<PAGE>
-28-
with copies to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Facsimile No.: (212) 530-5219
Attention: M. Douglas Dunn, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registrable Notes.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
-29-
(j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Notes Held by the Company or Its Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(l) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(m) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda among the Initial Purchasers on the
one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
(n) Assumption Permitted. The assumption by TNP pursuant to the
Assumption Agreement of the obligations of Acquisition hereunder shall be
permitted without the written consent of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ST ACQUISITION CORP.
By:
-------------------------------
Name:
Title:
CIBC WORLD MARKETS CORP.
By:
-------------------------------
Name:
Title:
CHASE SECURITIES INC.
By:
-------------------------------
Name:
Title:
BARCLAYS CAPITAL INC.
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4(b)(ii)
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT (this "Agreement"), dated as of April 7, 2000, is by
TNP Enterprises, Inc., a Texas corporation (the "Company").
W I T N E S S E T H
WHEREAS, ST Acquisition Corp., a Texas corporation ("Acquisition"), has
heretofore executed and delivered to CIBC World Markets Corp., Chase Securities
Inc. and Barclays Capital Inc. (the "Initial Purchasers") a purchase agreement
(the "Purchase Agreement"), dated as of March 31, 2000, providing for the terms
pursuant to which the Initial Purchasers have purchased $275,000,000 aggregate
principal amount of 10.25% Senior Subordinated Notes due 2010 (the "Notes") of
Acquisition;
WHEREAS, Acquisition has heretofore executed and delivered to the Initial
Purchasers a registration rights agreement (the "Registration Rights
Agreement"), dated as of April 7, 2000, providing for the registration of the
Notes and the Exchange Notes (as defined in the Registration Rights Agreement)
of Acquisition under the Securities Act of 1933, as amended;
WHEREAS, Acquisition has been merged with and into the Company (the
"Merger"); and
WHEREAS, pursuant to the Purchase Agreement and the Registration Rights
Agreement, the Company upon consummation of the Merger is required to assume all
of the obligations of Acquisition under the Purchase Agreement and the
Registration Rights Agreement and to execute and deliver this Agreement
concurrently with the Merger.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
covenants and agrees for the benefit of the Initial Purchasers as follows:
1. ASSUMPTION. The Company hereby agrees to assume all of the obligations
of Acquisition and all of its own obligations under the Purchase Agreement and
the Registration Rights Agreement.
2. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF, SHALL GOVERN AND BE USED
TO CONSTRUE THIS AGREEMENT.
<PAGE>
-2-
3. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
<PAGE>
-3-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered as of the date first above written, which is the date of
the Merger.
TNP ENTERPRISES, INC.
By:
------------------------
Name:
Title:
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<CIK> 0000022767
<NAME> TEXAS-NEW MEXICO POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
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<OTHER-OPERATING-EXPENSES> 102,838
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