<PAGE>
As filed with the Securities and Exchange Commission on August 28, 1996
Registration No. 333- _________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1907501
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------
MICHAEL D. BLANCHARD
CORPORATE SECRETARY AND GENERAL COUNSEL
TNP ENTERPRISES, INC.
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
FAX: (817) 737-1333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
COPIES TO:
BRIAN D. BARNARD ROBERT B. WILLIAMS
HAYNES AND BOONE, LLP MILBANK, TWEED, HADLEY & MCCLOY
1300 BURNETT PLAZA 1 CHASE MANHATTAN PLAZA
801 CHERRY STREET NEW YORK, NEW YORK 10005
FORT WORTH, TEXAS 76102-6866 (212) 530-5000
(817) 347-6600 FAX: (212) 530-5219
FAX: (817) 347-6650
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Title of Each Class Amount to be Offering Price Aggregate Amount of
of Securities to be Registered Registered Per Share (1) Offering Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 2,000,000 Shares $25.9375 $51,875,000 $17,887.93
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The proposed maximum aggregate offering price has been estimated solely
for the purpose of calculating the registration fee pursuant to Rule
457(c) under the Securities Act of 1933, as amended (the "Securities
Act"). The proposed maximum offering price per share will be determined
from time to time by the registrant in connection with the issuance by
the registrant of the securities registered hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 28, 1996
PROSPECTUS
1,750,000 SHARES
TNP ENTERPRISES, INC.
[LOGO]
COMMON STOCK
---------------------
All of the shares of Common Stock offered hereby are being sold by TNP
Enterprises, Inc. The Common Stock of the Company is traded on the New York
Stock Exchange under the symbol "TNP". The last reported sale price of the
Common Stock on the New York Stock Exchange on August 26, 1996 was $25 3/4
per share (see "Common Stock Price Range and Dividends").
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Total (3) $ $ $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters a 30-day option to purchase up to
250,000 additional shares solely to cover over-allotments, if any. See
"Underwriting." If such option is exercised in full, the total Price to
the Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ and $ , respectively.
---------------------
The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that the certificates for the
shares of Common Stock offered hereby will be available for delivery on or
about _______________, 1996, at the office of Smith Barney Inc., 333 West 34th
Street, New York, New York 10001.
---------------------
SMITH BARNEY INC.
EDWARD D. JONES & CO., L.P.
LEGG MASON WOOD WALKER
INCORPORATED
_____________________, 1996
<PAGE>
[Graphic/Image Material - The Prospectus includes an image depicting a map of
the States of Texas and New Mexico and the Company's three regional operating
divisions. The map also depicts the locations of the Company's headquarters,
regional headquarters, and the Company's power plant.]
2
<PAGE>
AVAILABLE INFORMATION
TNP Enterprises, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). In accordance with the Exchange Act, the Company files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). The reports, proxy statements and
other information can be inspected and copied at the public reference
facilities that the Commission maintains at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of these
materials can be obtained at prescribed rates from the Public Reference
Section of the Commission at the principal offices of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, reports, proxy
statements, and other information concerning the Company may be inspected at
the offices of the New York Stock Exchange at 20 Broad Street, New York, New
York 10005. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements made in the Prospectus concerning the contents of any documents
referred to herein are not necessarily complete. With respect to each such
document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description,
and each such statement shall be deemed qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
in this Prospectus:
(i) Annual Report on Form 10-K for the year ended December 31, 1995;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1996;
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 1996;
and
(iv) the description of the Common Stock included in the Company's Report
on Form 8-B dated January 9, 1985.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated
by reference in this Prospectus from their respective dates of filing.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents which are not specifically incorporated by
reference in such documents). Written requests for such copies should be
directed to the Company at 4100 International Plaza, P.O. Box 2943, Fort
Worth, Texas 76113. Telephone requests may be directed to Michael D.
Blanchard, Corporate Secretary and General Counsel of the Company, at (817)
731-0099.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. UNLESS OTHERWISE INDICATED, (i) ALL
REFERENCES IN THIS PROSPECTUS TO THE COMPANY SHALL MEAN TNP ENTERPRISES, INC.
AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS, AND (ii) THE INFORMATION IN
THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION WILL NOT
BE EXERCISED.
THE COMPANY
TNP Enterprises, Inc., a non-utility holding company, is engaged in the
generation, purchase, transmission, distribution, and sale of electricity to
customers within the States of Texas and New Mexico through its wholly-owned
subsidiary, Texas-New Mexico Power Company ("TNP"). The Company is exempt
from regulation as a "registered holding company" as that term is defined in
the Public Utility Holding Company Act of 1935. TNP provides electric
service to approximately 216,000 customers in 85 municipalities and adjacent
rural areas. TNP's service territory is divided into three regional
divisions. TNP's largest region, the South-Western Region, includes the area
along the Texas Gulf Coast, between the cities of Houston and Galveston.
This region accounted for 57.4% of total operating revenues in 1995. The
North-Central Region, TNP's second largest region, extends from Lewisville,
Texas, which is north of Dallas-Fort Worth International Airport, to
municipalities along the Red River and accounted for 28.3% of total operating
revenues in 1995. The New Mexico Region includes areas in Southwest and
South Central New Mexico and accounted for 14.3% of total operating revenues
in 1995. The areas served by TNP contain a population of approximately
420,000.
The electric utility industry in general has experienced a significant
increase in the level of competition in the market for the generation and
transmission of electricity as a result of certain recent regulatory changes
and customer demands for lower energy costs. The Company believes that as the
electric utility industry moves toward a more deregulated and competitive
environment, customers will have more choice in the products and services
available to them. The Company is seeking to enhance its competitive position
and strengthen its financial position by pursuing a strategy to expand its
customer base, lower its cost of power and cost of capital, provide
additional customer services, and take advantage of new opportunities in
unregulated energy management services. See "The Company -- Strategy."
THE OFFERING
Common Stock offered.......................... 1,750,000 shares (1)
Common Stock to be outstanding
after the offering........................... 12,731,275 shares (1)(2)
Price Range of Common Stock (January 1,
1996 through August 26, 1996)................ $16 to $28 5/8
Closing Price on August 26, 1996.............. $25 3/4
Indicated Annual Dividend..................... $0.98 per share (3)
Use of Proceeds............................... Capital contribution to TNP
for repayment of certain
indebtedness, to provide
working capital and for other
general corporate purposes.
See "Use of Proceeds."
New York Stock Exchange Symbol................ TNP
________________________
(1) Assuming Underwriters' over-allotment option is not exercised. See
"Underwriting."
(2) Common Stock to be outstanding after the offering is based on 10,981,275
shares of Common Stock outstanding as of August 23, 1996, and does not
include shares that will be issued after such date pursuant to the Company's
Dividend Reinvestment Plan, Equity Incentive Plan or Non-Employee Director's
Stock Plan.
(3) Based upon a quarterly dividend of $0.245 per share. The third quarter,
1996 dividend is payable on September 15, 1996 to shareholders of record on
August 18, 1996. The shares of Common Stock offered hereby will not be
eligible for the September 15, 1996 dividend.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands except per share amounts)
<TABLE>
Twelve Months
Ended
June 30, 1996 Year Ended December 31,
------------- ---------------------------------
(Unaudited)(1) 1995 (1) 1994 (2) 1993
-------------- --------- -------- --------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues . . . . . . . . $480,786 $485,823 $477,989 $474,242
Operating income:
before income taxes . . . . . . . 112,719 108,912 76,753 82,534
after income taxes . . . . . . . 97,564 96,595 77,991 78,240
Net earnings (loss). . . . . . . . $ 37,643 $ 41,505 $(17,441) $ 11,605
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (loss) applicable to
Common Stock . . . . . . . . . . . 37,272 40,850 (18,231) 10,726
Earnings (loss) per share of
Common Stock . . . . . . . . . . $ 3.40 $ 3.75 $ (1.70) $ 1.01
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per share of Common Stock
excluding one-time
items . . . . . . . . . . . . . . . $ 2.26 $ 1.83 $ 0.74 $ 1.01
-------- -------- -------- --------
-------- -------- -------- --------
Dividends per share of Common
Stock . . . . . . . . . . . . . . . 0.86 0.82 1.22 1.63
Weighted average number of shares
of Common Stock outstanding . . . . 10,967 10,901 10,750 10,641
</TABLE>
<TABLE>
As of June 30, 1996 (Unaudited)
-------------------------------
Actual As Adjusted (3)
-------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Long-term debt (excluding current maturities) . . . . . $517,431 $575,551
Preferred stock . . . . . . . . . . . . . . . . . . . . 3,600 3,600
Common equity . . . . . . . . . . . . . . . . . . . . . 222,227 265,977
Total capitalization . . . . . . . . . . . . . . . . 743,258 845,128
Net utility plant . . . . . . . . . . . . . . . . . . . 938,594 938,594
Current maturities of long-term debt (4). . . . . . . . 101,870 0
</TABLE>
________________________
(1) One-time items that increased earnings in 1995 included (i) a gain from
the sale of the Company's properties in the Texas Panhandle ($9.48
million or $0.87 per share); (ii) the effect of the Company's change in
the method of accounting for operating revenues from cycle billing to the
accrual method ($8.45 million or $0.77 per share); and (iii) the
recognition of deferred revenues ($3.02 million or $0.28 per share).
Excluding the effects of these items in 1995, (i) net earnings (loss)
would have been $20.56 million; and (ii) earnings (loss) applicable to
Common Stock would have been $19.90 million.
(2) One-time items that decreased earnings in 1994 included (i) the
recognition of regulatory disallowances ($20.51 million or $1.91 per
share); and (ii) reorganization costs ($5.72 million or $0.53 per share).
Excluding the effects of these items in 1994, (i) net earnings (loss)
would have been $8.79 million; and (ii) earnings (loss) applicable to
Common Stock would have been $8.0 million.
(3) Adjusted to give effect to the issuance and sale of 1,750,000 shares of
Common Stock at an assumed net price of $25 per share and borrowings under
the Company's bank line of credit. See "Use of Proceeds."
(4) Represents primarily the $100,800,000 in aggregate principal amount due
January 15, 1997 (the "Maturity Date"), on the Company's 11 1/4% First
Mortgage Bonds, due 1997 (the "11 1/4% Bonds"). Assumes that the Company
uses all of the net proceeds from the offering, together with sufficient
borrowings from its bank line of credit, to repay the 11 1/4% Bonds on
the Maturity Date. See "Use of Proceeds."
5
<PAGE>
THE COMPANY
OVERVIEW
TNP Enterprises, Inc. (the "Company"), a non-utility holding company, is
engaged in the generation, purchase, transmission, distribution, and sale of
electricity to customers within the States of Texas and New Mexico through
its wholly-owned subsidiary, Texas-New Mexico Power Company ("TNP"). The
Company is exempt from regulation as a "registered holding company" as that
term is defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"). TNP provides electric service to approximately 216,000
customers in 85 municipalities and adjacent rural areas through three operating
regions.
TNP owns one electric generating facility, TNP One, which is located in
Robertson County, Texas. TNP One consists of two 150-megawatt units, each of
which utilizes a lignite-fueled, circulating fluidized bed technology. The
two units are supplying, on an annualized basis, approximately 25% of TNP's
power requirements.
The Company and its subsidiaries are all Texas corporations. Their
executive offices are located at 4100 International Plaza, P.O. Box 2943,
Fort Worth, Texas 76113 and their telephone number is (817) 731-0099.
COMPETITION
REGULATORY AND LEGISLATIVE DEVELOPMENTS
Electric utilities have historically faced limited or no competition within
the areas they serve. Recently, however, there has been substantial discussion
within the electric utility industry throughout the United States concerning the
potential for increased competition. Several states, including Texas and New
Mexico, are examining the consequences and feasibility of various legislative
options concerning competition.
Each of the Texas Senate and House of Representatives has appointed an
interim committee to report on the status of competition in the electric
utility industry and recommend possible legislation. The Public Utility
Regulatory Act of the State of Texas ("PURA") requires the Public Utility
Commission of Texas ("PUCT") to prepare a report to the Texas legislature on
the scope and impact of competition and possible industry restructuring on
customers. The Senate interim committee has issued a report recommending that
Texas maintain current regulations relating to wholesale and retail competition
until such time as further legislative action on competition occurs in other
states. Both the House interim committee and the PUCT are in the process of
gathering information for their respective reports. However, neither has issued
a report and the content of such reports is not yet known. The Company expects
the introduction of legislation relating to competition to be presented in the
next Texas legislative sessions, but cannot predict the outcome of such
proceedings.
The New Mexico legislature also has appointed an interim committee to
examine the status of competition within the electric utility industry.
Although this interim committee has previously issued a report stating that
legislation concerning retail competition was not yet appropriate in New
Mexico, the interim committee is continuing to study the issue. The New Mexico
Public Utility Commission ("NMPUC") also has initiated a review of competition,
industry restructuring as it relates to competition, and other related issues.
The Company cannot predict what either the interim committee or the NMPUC may
recommend at the conclusion of their respective proceedings.
The Company believes that wholesale competition within the electric utility
industry is likely to increase in the near future. Federal Energy Regulatory
Commission ("FERC") Order 888 and PUCT Substantive Rule 23.67 require open
access transmission on terms and conditions that will encourage and enhance the
development of a competitive wholesale market. See "-- Regulation."
EXISTING RETAIL COMPETITION
The existing statutory and regulatory systems in Texas and New Mexico
limit retail transmission and distribution competition. In Texas, retail
competition currently exists only where the PUCT has certified more than one
electric utility to serve a particular area. Currently, such areas contain
approximately 15% of TNP's customers and comprise 10% of its total revenues
attributable to Texas. Since the regulatory system in New Mexico generally does
not result in more than one utility being authorized to serve a particular area,
there is currently very limited retail competition in New Mexico. FERC is
expressly prohibited by the Energy Policy Act of 1992 from ordering transmission
and distribution of electric services to retail customers.
WHOLESALE COMPETITION
PURA provides for a competitive wholesale market and allows utilities to
seek approval from the PUCT for flexible pricing that can be set between the
utility's approved rate and its marginal cost. This flexible pricing can be
used to attract or retain customers on a utility's system.
THE COMPANY'S RESPONSE
Competition in the electric utility industry could result in many
companies, including TNP, not being able to recover potential "stranded
costs," which represent the difference between the cost to a company of
providing energy
6
<PAGE>
and what a customer would be willing to pay for such energy in a competitive
market. In order to address this significant uncertainty in the absence of
legislation or regulatory guidance, the Company has filed applications with
the PUCT and NMPUC for approval of its competitive retail electric service
plan, Community Choice-SM-. Community Choice-SM- provides the Company an
opportunity to recover from its customers a significant portion of the
Company's estimate of its potential stranded costs during a reasonable
transition period. There is no assurance that Community Choice-SM- will
obtain regulatory approval or, if approved, that Community Choice-SM- will be
successful. The Company's inability to recover a significant portion of its
estimated potential stranded costs could have a materially adverse effect on
the Company's financial condition. See "-- Strategy -- Community Choice-SM-."
STRATEGY
COMPONENTS OF THE COMPANY'S STRATEGY
The Company believes that as the electric utility industry moves toward
a more deregulated and competitive environment, customers will have more choice
in the products and services available to them. The Company is seeking to
enhance its competitive position and strengthen its financial position in this
new environment by pursuing a strategy to expand its customer base, lower its
cost of power and cost of capital, provide additional customer services, and
take advantage of new opportunities in unregulated energy management services.
The Company believes that this strategy, as described in more detail below, will
allow TNP to continue positioning itself to be competitive in the increasingly
deregulated utility industry.
EXPAND CUSTOMER BASE.
RESIDENTIAL AND COMMERCIAL CUSTOMERS. The Company principally focuses
on providing personalized electric service to residential and commercial
customers in small and medium-sized communities. The Company believes that
its focus on providing local, personalized service will allow TNP to grow along
with the communities it serves. This strategy differentiates the Company
from other electric utilities that have withdrawn from small and medium-sized
communities and become more centralized and focused on urban areas. The Company
believes that by maintaining a local presence in the communities it serves, it
will continue to be recognized as a valuable member of those communities.
INDUSTRIAL CUSTOMERS. Industrial customers have more power supply
options and are, consequently, more price sensitive. The Company will seek to
expand its industrial customer base by providing flexible pricing and services.
One method of pursuing this strategy is to match competitive purchased power
resources with a particular customer's requirements. Another method is to
provide self-generating customers with innovative power arrangements that may
lower their costs and increase their operational efficiency.
LOAD CONTROL AREA SERVICES. In July 1996, TNP began operating its own
electrical control area to manage its resources in its South-Western Region. The
implementation of the control area provides TNP with the flexibility to balance
its generated power from TNP One and its purchased power requirements with its
customers' needs. The increased efficiency provided by its new electrical
control area also enables TNP to reduce its costs of standby power. TNP also
will seek to market its control area services to other potential users.
REDUCE COST OF POWER.
PURCHASED POWER COSTS. Unlike many utilities that generate most of the
power provided to their customers, TNP generates approximately 25% of its
total power requirements and purchases the remainder from other electric
utilities and third-party power providers. This allows TNP to take advantage
of the current surplus of low-cost power available in the southwestern region
of the United States by replacing expiring high cost purchase power contracts
with lower cost contracts. This strategy provides the Company with the
increased flexibility necessary to benefit from a competitive wholesale market.
GENERATED POWER COSTS. The Company continues to seek ways to decrease
the annual operation and maintenance costs of TNP One. As discussed above,
the Company recently reduced the standby power costs of TNP One by installing
new control area facilities in its South-Western Region. The Company also is
seeking methods to reduce the work force at TNP One by up to 40 percent prior
to the end of 1997.
CAPITAL INVESTMENT COSTS.
The Company is working towards achieving an investment grade credit
rating over the next several years. Part of the Company's strategy is to use
a significant amount of its annual free cash flows to retire outstanding
indebtedness and reduce its cost of borrowed funds. Additionally, TNP
currently internally generates all of its capital requirements.
OPPORTUNITIES IN UNREGULATED BUSINESSES.
Another part of the Company's strategy is to capitalize on unregulated
business opportunities. Community Public Service Company ("CPS"), a wholly-owned
subsidiary of the Company, is currently evaluating a variety of unregulated
opportunities in energy management services. CPS's strategy is to provide
energy-related services to small and to medium-sized communities in the
Company's service areas, and, as this business expands, throughout the
southwestern region of the United States. The Company believes that its ability
to take advantage of these new
7
<PAGE>
unregulated opportunities may play an important role in enhancing the Company's
long-term financial performance as the electric utility industry moves toward
increased competition.
COMMUNITY CHOICE-SM-
Community Choice-SM- is designed to provide economic benefits to the
Company's customers and shareholders. During a four to five year transition
period, the Company would have the opportunity to reduce its potential
"stranded costs," and TNP would hold its rates constant at their 1995 level.
At the end of the transition period, TNP proposes to aggregate its customers
at the community level and permit these customer groups to choose their
energy supplier and the types and nature of electric services they desire.
TNP would continue to provide transmission and distribution services to its
customers. There can be no assurance that Community Choice-SM- will obtain
regulatory approval. If Community Choice-SM- is not approved but the retail
electric service market eventually becomes deregulated, the Company intends
to develop an alternative strategy that will provide the Company and its
customers with many of the benefits of Community Choice-SM-.
SERVICE TERRITORY
TNP's service territory is divided into three regional divisions: the
South-Western Region, the North-Central Region, and the New Mexico Region.
SOUTH-WESTERN REGION
The South-Western Region includes the area along the Texas Gulf Coast
between Houston and Galveston. The oil and petrochemical industries,
agricultural industry, and general commercial activity in the Houston area
support the economy of this area. This region also includes the area in far
west Texas between Midland and El Paso. The economy in this area is based
primarily on oil and gas production, agriculture, and food processing.
NORTH-CENTRAL REGION
The North-Central Region extends from Lewisville, Texas, which is north
of Dallas-Fort Worth International Airport, to municipalities along the Red
River. TNP provides electric service to a variety of commercial, agricultural,
and petroleum industry customers in this area. This region also includes
municipalities and communities south and west of Fort Worth. This area's
economy depends largely on agriculture and, to a lesser extent, tourism and oil
production.
NEW MEXICO REGION
The New Mexico Region includes areas in southwest and south-central New
Mexico. This region's economy is primarily dependent upon mining and
agriculture. Copper mines are the major industrial customers in this region.
TNP's sales in all regions are primarily to retail customers. Revenues
contributed by each operating region and its percentage of total operating
revenues in 1995, 1994, and 1993, respectively, are set forth in the following
table. No single customer accounted for more than 10% of operating revenues
during the years presented in the table.
Operating Revenues
(Dollars in thousands)
<TABLE>
Region 1995 1994 1993
- ------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
South-Western $ 278,791 57.4% $ 269,194 56.3% $ 262,979 55.4%
North-Central 137,521 28.3 132,595 27.8 131,725 27.8
New Mexico 69,511 14.3 76,200 15.9 79,538 16.8
--------- ------ --------- ------ --------- ------
Total $ 485,823 100.0% $ 477,989 100.0% $ 474,242 100.0%
--------- ------ --------- ------ --------- ------
--------- ------ --------- ------ --------- ------
</TABLE>
8
<PAGE>
The following table provides certain information regarding the total
revenues of the Company from the sale of electricity and average revenue per
kilowatt hour by customer class during the years presented:
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUE FROM SALE OF ELECTRICITY (IN THOUSANDS):
Residential . . . . . . . . . . . . . . . . . . $ 200,455 $ 194,933 $ 193,484
Commercial . . . . . . . . . . . . . . . . . . . 148,908 141,886 138,680
Industrial . . . . . . . . . . . . . . . . . . . 113,728 122,714 124,474
Other . . . . . . . . . . . . . . . . . . . . . 22,732 18,456 17,604
---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . $ 485,823 $ 477,989 $ 474,242
---------- ---------- ----------
---------- ---------- ----------
AVERAGE REVENUE PER KILOWATT HOUR (IN CENTS):
Residential . . . . . . . . . . . . . . . . . . 9.4 9.3 9.5
Commercial . . . . . . . . . . . . . . . . . . . 8.9 8.8 8.8
Industrial . . . . . . . . . . . . . . . . . . . 4.2 4.6 4.8
</TABLE>
The following table provides the number of customers of the Company by
class at December 31 for each of the three years presented:
<TABLE>
1995(1) 1994 1993
------ ---- ----
<S> <C> <C> <C>
Residential . . . . . . . . . . . . . . . . . . 183,863 185,364 181,298
Commercial . . . . . . . . . . . . . . . . . . . 29,361 30,624 30,235
Industrial . . . . . . . . . . . . . . . . . 136 142 142
Other . . . . . . . . . . . . . . . . . . . . . 244 237 237
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . 213,604 216,367 211,911
------- ------- -------
------- ------- -------
</TABLE>
- ----------------
(1) Excludes approximately 7,300 residential, commercial and industrial
customers located within the Company's former service area in the Texas
Panhandle. The Company sold its properties in this service area to
Southwestern Public Service Co. in September 1995.
SOURCES OF ENERGY
TNP generates electricity at TNP One and purchases the remainder of its
requirements of electricity from various suppliers with diversified fuel
sources. TNP One, which has 300 megawatts of capacity, provided approximately
25% of TNP's total power requirements during 1995. Power generated at TNP
One is transmitted over TNP's own transmission lines to other utilities'
transmission systems for delivery to TNP's Texas service area systems. To
maintain a reliable power supply for its customers and to coordinate
interconnected operations, TNP is a member of the Electric Reliability
Council of Texas ("ERCOT"), the Inland Power Pool, and the New Mexico Power
Pool. The availability and cost of purchased energy to TNP may be affected
by changes in supplier costs, regulations and laws, fuel costs, and other
factors. TNP is pursuing various opportunities to reduce purchased power costs.
See " -- Strategy -- Reduce Cost of Power." Management believes that current
supply arrangements and the availability of electricity on the wholesale market
are adequate to satisfy TNP's foreseeable power requirements.
9
<PAGE>
The following table sets forth certain information concerning TNP's
sources of electric energy in 1995 by state.
YEAR PERCENT
CONTRACT OF ENERGY
TEXAS EXPIRES PROVIDED
----- --------- ----------
GENERATION
TNP One . . . . . . . . . . . . . . . . -- 44%
PURCHASED POWER
Texas Utilities Electric Co. ("TU")(1) 1999 29%
Clear Lake Cogeneration L.P. . . . . . 2004 19%
Other . . . . . . . . . . . . . . . . . Various 8%
----
Total 100%
----
----
NEW MEXICO
----------
PURCHASED POWER
Tucson Electric Power Co. . . . . . . . 1996 35%
Public Service Co. of New Mexico(2) . . 2006 26%
El Paso Electric Co.(2) . . . . . . . . 2002 21%
Southwestern Public Service Co.(2). . . 2001 11%
Other . . . . . . . . . . . . . . . . . Various 7%
----
Total 100%
----
----
- ----------------
(1) TNP has notified TU of its intent to cease purchasing its full
requirements of power and energy effective January 1, 1999.
(2) Supplier may not terminate service to TNP without FERC authorization.
SEASONALITY OF BUSINESS
TNP experiences increased sales and operating revenues during the summer
months as a result of increased air conditioner usage in hot weather. In 1995,
approximately 40% of annual revenues were recorded in June, July, August and
September.
REGULATION
GENERAL
The Company is a holding company as defined in the 1935 Act. However,
the Company and its subsidiaries are exempt from the provisions of the 1935
Act, except Section 9(a)(2) thereof, which relates to the acquisition of
securities of public utility companies. TNP is subject to regulation by the
PUCT and the NMPUC, and certain of its activities in New Mexico are subject to
the jurisdiction of FERC. In addition, each of the cities within TNP's Texas
service areas that have not surrendered jurisdiction to the PUCT has original
rate jurisdiction over the utilities that provide electricity to the city. The
rate-related decisions of each of these cities are appealable to the PUCT on a
DE NOVO basis.
PUCT
Amendments to PURA, the legal foundation of electric regulation in Texas,
became effective on September 1, 1995. Among other things, the amendments
deregulate the wholesale bulk power market in the ERCOT region, permit pricing
flexibility for utilities facing competitive challenges, provide for a
market-driven
10
<PAGE>
integrated resource planning process and mandate open access transmission
service comparable to the service a utility provides itself.
PURA requires the PUCT to present to the Texas legislature prior to each
of its regular sessions a report on the scope of competition in the electric
markets within Texas as well as the impact of competition and industry
restructuring on customers. The information necessary to present the report is
currently being gathered by the PUCT in its Project No. 15000.
The PUCT recently passed a wholesale transmission access rule that
establishes a regional method of transmission pricing, terms and conditions.
The purpose is to unbundle the price for transmission rate services within
Texas and establish an Independent System Operator for the ERCOT transmission
system. As a direct result, cost data from all Texas utilities have been
filed with the PUCT. These filings will be used by the PUCT to set the
transmission pricing rules for the ERCOT region. TNP's initial review of
these rules indicates that implementation results in a greater reduction in
its transmission expenses than the expected reduction in transmission related
revenues. TNP believes it should benefit from the new rules as competition
increases in the wholesale power market, thereby providing TNP with increased
access to the ERCOT transmission system and resulting in reduced purchased
power and transmission costs.
TNP currently recovers its eligible fuel costs by means of a fixed fuel
factor set by the PUCT. Eligible fuel costs may be reconciled at a utility's
option every six months but must be reconciled on a three year basis or, if
an over or under cost recovery greater than 4% occurs, then the utility must
file a fuel reconciliation with the PUCT within six months after any such
occurrence. The PUCT allows the current recovery of TNP's purchased power
through a recovery factor that changes each month. TNP expects that its fuel
factor will be reviewed this year by the PUCT. In the event Community
Choice-SM- receives regulatory approval, both the fuel and purchased power
factors will be fixed at their 1995 levels, and any recovery in excess of costs
will be used to reduce TNP's potential stranded costs.
NMPUC
The NMPUC is presently engaged in work sessions to develop proposed
rulemaking or legislation that will address the restructuring of the electric
utility industry in New Mexico with respect to competition in retail utility
service, including potential open access of transmission and distribution lines
and customer choice of energy suppliers. In addition, the NMPUC has proposed
new regulations that address the manner in which electric utilities may engage
in non-utility activities, form affiliated entities and engage in transactions
with affiliates. The Company cannot predict the outcome of the NMPUC's proposed
rulemaking proceedings and work sessions or the impact that any permanent
regulations or legislation that result from the NMPUC's efforts will have on
TNP's operations in New Mexico.
FERC
In March 1995, FERC released a notice of proposed rulemaking (the
"MegaNOPR") to solicit comments on pending policy changes aimed at increasing
access to the nation's electric transmission lines. The proposed changes would
require utilities with power transmission lines to grant access to those lines
under the same terms and conditions as the utility itself uses the lines. The
purpose of this initiative is to promote competition in bulk power markets.
After receiving comments to the MegaNOPR, on April 24, 1996, FERC issued
orders 888 and 889. Order 888 opens wholesale power sales to competition by
requiring public utilities that own, control, or operate transmission facilities
to file non-discriminatory open access tariffs offering other utilities the
same transmission service they provide themselves. Order 888 also allows
utilities, under certain conditions, to petition FERC for the full recovery
of stranded costs for wholesale requirements agreements signed before July 11,
1994. After that date, the recovery of stranded costs must be specifically
provided for in the service agreement.
Order 889 provides for a real time information system known as OASIS (Open
Access Same-time Information System). It also addresses standards of conduct to
ensure that transmission owners and their affiliates do not have an unfair
competitive advantage by using transmission to sell power. This rule requires
that transmission utilities provide information about their transmission system
for their own wholesale power transmissions and functionally separates the
wholesale power marketing and transmission operation functions.
Order 888 leaves pricing issues raised by the MegaNOPR to be resolved
through subsequent litigation at the FERC on a case by case basis. Due to the
uncertainty of this litigation, the Company is unable to estimate the potential
impact of these orders on TNP's operations.
ENVIRONMENTAL
In addition to regulation as a utility, TNP's facilities are regulated by
the Environmental Protection Agency and by Texas and New Mexico environmental
agencies. TNP One uses environmentally efficient circulating fluidizing bed
technology that eliminates the need for expensive scrubbers. TNP was allotted
sufficient emission allowances to comply with the Clean Air Act of 1990 through
the year 2000. During 1995, 1994 and 1993, TNP
11
<PAGE>
incurred expenses related to air, water, and solid waste pollution abatement
(including ash removal) of approximately $5.5 million, $5.9 million, and $4.3
million, respectively.
USE OF PROCEEDS
The net proceeds from the sale of 1,750,000 shares of Common Stock
offered hereby are estimated to be $_______ million ($_______ million if the
Underwriters' over-allotment is exercised) after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company. The Company intends to use such proceeds (i) to make contributions
to the equity capital of TNP, (ii) to provide working capital, and (iii) for
other general corporate purposes. TNP intends to utilize approximately
$______ million of the net proceeds and borrowings in the amount of $________
from its bank line of credit to repay at maturity (January 15, 1997) the
$100,800,000 outstanding principal amount of its 11 1/4% First Mortgage Bonds,
due 1997. Pending application of the net proceeds for specific purposes, such
proceeds may be used to reduce certain revolving bank indebtedness or may be
invested in short-term or marketable securities.
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange under the symbol
"TNP." The following table sets forth on a per share basis the price range and
cash dividends paid for the Common Stock as reported on the New York Stock
Exchange for the periods indicated.
DIVIDENDS
PRICE RANGE PAID
YEAR HIGH LOW PER SHARE
---- ---- --- ---------
1994
First Quarter . . . . . . . . . . . . . . $ 18 5/8 $ 16 5/8 $ 0.41
Second Quarter. . . . . . . . . . . . . . 17 3/8 14 5/8 0.41
Third Quarter . . . . . . . . . . . . . . 15 5/8 13 1/4 0.20 (1)
Fourth Quarter. . . . . . . . . . . . . . 15 3/8 13 3/8 0.20
1995
First Quarter . . . . . . . . . . . . . . $ 16 $ 14 5/8 $ 0.20
Second Quarter. . . . . . . . . . . . . . 16 3/4 15 0.20
Third Quarter . . . . . . . . . . . . . . 17 3/4 16 0.20
Fourth Quarter. . . . . . . . . . . . . . 19 1/8 17 1/2 0.22
1996
First Quarter . . . . . . . . . . . . . . $ 23 1/4 $ 18 1/2 $ 0.22
Second Quarter. . . . . . . . . . . . . . 28 5/8 22 0.22
Third Quarter (through August 26, 1996) . 27 3/4 25 1/8 0.245(2)
- ----------------
(1) The Board of Directors of the Company reduced the third quarter 1994
dividend due to the Company's financial condition during such period.
(2) The third quarter 1996 dividend is payable on September 15, 1996, to
shareholders of record on August 28, 1996. The shares of Common Stock
offered hereby will not be eligible for the September 15, 1996 dividend.
As of August 20, 1996, there were approximately 6,300 record holders of
Common Stock. For a recent closing sales price of the Common Stock, see the
cover page of this Prospectus.
The Company has a dividend reinvestment plan ("DRP") that allows
shareholders of record to purchase additional shares of Common Stock with cash
dividends paid by the Company. Currently, a person must either already own
shares of Common Stock or purchase shares through a broker prior to
participating in the DRP. After a shareholder becomes a participant in the
DRP, the shareholder may purchase, without brokerage fees, additional shares
from the Company in an amount of not less than $25 or more than $5,000 per
calendar quarter. Since October 1984, the Company has issued approximately
900,000 of the 1,200,000 shares of Common Stock authorized for the DRP.
12
<PAGE>
DESCRIPTION OF COMMON STOCK
The statements herein concerning the Common Stock and the Articles of
Incorporation, as amended (the "Articles"), are merely a summary and do not
purport to be complete. The relative rights, authorized amounts, descriptions,
and preferences and limitations of the preferred stock, no par value ("Preferred
Stock"), of the Company and the Common Stock are stated in full in the Articles
and other instruments, which are exhibits to the Registration Statement.
Presently, the Company has no outstanding shares of Preferred Stock. All
outstanding shares of preferred stock set forth in the Company's consolidated
financial statements incorporated herein by reference were issued by TNP and
only affect the rights of the holders of the Common Stock with respect to the
ownership rights in the assets of TNP as a wholly owned subsidiary of the
Company.
DIVIDEND RIGHTS AND LIMITATIONS
The holders of the Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors, but no dividends may be
declared or paid on the Common Stock (other than dividends payable solely in
shares of the Common Stock) unless all past and current dividends on any
issued and outstanding Preferred Stock of the Company have been paid or
declared and set apart for payment and all requisite sinking or purchase fund
obligations for the Preferred Stock have been fulfilled.
Since TNP constitutes the Company's principal subsidiary, the ability of
the Company to pay dividends may be dependent on the ability of TNP to pay
dividends to the Company. A summary of the legal limitations on TNP's ability
to pay dividends is set forth below and is qualified in its entirety by the
documents referenced in such summary.
Under TNP's Articles of Incorporation, the Company, as holder of the
common stock of TNP, is entitled to receive such dividends as may be declared
by the Board of Directors, but no dividends may be declared or paid on the
common stock of TNP (other than dividends payable solely in shares of common
stock of TNP) unless all past and current dividends on outstanding preferred
stock of TNP have been paid or declared and set apart for payment and all
requisite sinking or purchase fund obligations for the preferred stock of TNP
have been fulfilled.
Under TNP's Indenture of Mortgage and Deed of Trust dated as of November
1, 1944 (the "Mortgage"), as supplemented and modified, TNP may not pay cash
dividends on its common stock to the Company (other than dividends payable
solely in shares of its common stock), unless at the date of such declaration
of dividends on its common stock, after giving effect thereto, the sum of
$1,500,000 plus (or minus in case of a deficit) the Net Income of TNP from
December 31, 1969, to and including the date of such common stock dividend
declaration shall be greater than the aggregate amount of all such payments
or distributions declared or authorized during such period on TNP's common
stock plus the aggregate amount of all cash dividends on, and payment
pursuant to any sinking, purchase or analogous fund for, preferred stock of
TNP declared or made during such period. At June 30, 1996, the amount of
restricted retained earnings of TNP was approximately $18.66 million.
Under TNP's Credit Agreement dated as of November 3, 1995 (the "Credit
Agreement"), TNP may not, without the consent of the holders of at least
two-thirds of the indebtedness under the Credit Agreement declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or
a combination thereof, with respect to any shares of its capital stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for
value any shares of any class of its capital stock or set aside any amount
for such purpose, subject to certain exceptions based upon TNP's compliance
with debt and interest coverage ratios.
Similar restrictions also are contained in separate credit agreements
entered into by TGC and TGCII with third party creditors, pursuant to which
TNP is subject to certain obligations and negative covenants.
VOTING RIGHTS
The holders of the Common Stock are entitled to one vote for each share
held at all meetings of shareholders. Pursuant to the Company's Bylaws, the
Board of Directors has been divided into three equal classes. At each Annual
Meeting, directors are elected to succeed those in the class whose terms then
expire for three-year terms so that the terms of one class of directors will
expire each year.
LIQUIDATION RIGHTS
In the event of liquidation dissolution or winding up of the affairs of
the Company, the holders of the Common Stock are entitled to receive pro rata
all assets of the Company distributable to shareholders, but only after
payment to the holders, if any, of the Preferred Stock of the Company of the
full preferential amounts fixed for all series of the Company's Preferred
Stock.
13
<PAGE>
SHAREHOLDER RIGHTS PLAN
The Company has a Shareholder Rights Plan (the "Rights Plan") that is
designed to protect the Company's shareholders from coercive takeover tactics
and inadequate or unfair takeover bids. The Rights Plan, adopted in 1988 and
amended on November 13, 1990, by the Company's Board of Directors, provides
for the distribution of one right for each share of Common Stock held of
record as of the close of business on November 4, 1988 and for each share of
Common Stock issued thereafter until November 4, 1998. Each right entitles
the shareholder to elect to exercise the right in whole or in part to
purchase, upon the occurrence of certain events, one share of Common Stock at
an initial price of $45 per share or, under certain circumstances, shares of
Common Stock at half the then-current market price, or with an election to
exercise such rights without payment of cash, to receive the number of shares
of the Common Stock or other securities having an aggregate value equal to
the excess of (i) the value of the Common Stock or other securities on the
date of the exercise of the rights over (ii) the cash payment that would have
been payable upon the exercise of the rights if an election for cash payment
had been made. Until certain triggering events occur, the rights will trade
together with the Common Stock, separate rights certificates will not be
issued, and the rights will have no voting or dividend rights. Among the
triggering events are the acquisition by a person or group of persons of 10%
or more of the outstanding Common Stock or the commencement of a tender or
exchange offer which, upon consummation, would result in a person or group of
persons owning 15% or more of the outstanding Common Stock. The rights expire
November 4, 1998, unless earlier redeemed or exchanged by the Company, and
the existence of the rights has had no effect on earnings per share.
The stock certificates relating to the shares of Common Stock offered
hereby will bear a legend referring to the rights.
MISCELLANEOUS
The Common Stock has no preemptive rights or cumulative voting rights
and there are no redemption, sinking fund, or conversion provisions with
respect to the Common Stock.
The outstanding Common Stock is, and the shares offered hereby when
issued will be, fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Society
National Bank, in care of KeyCorp. Shareholder Services, Inc., 1201 Elm
Street, Suite 5050, Dallas, Texas 75270.
14
<PAGE>
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell to such Underwriter,
the number of shares of Common Stock set forth opposite the name of such
Underwriter below:
Underwriter Number of Shares
Smith Barney Inc. . . . . . . . . . . . . . . . .
Edward D. Jones & Co., L.P. . . . . . . . . . . .
Legg Mason Wood Walker, Inc. . . . . . . . . . . .
--------------
Total . . . . . . . . . . . . . . . . . .
--------------
--------------
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to approval of certain legal matters by counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all shares of
Common Stock offered hereby (other than those covered by the over-allotment
option described below) if any such shares are taken.
The Underwriters, for whom Smith Barney Inc., Edward D. Jones & Co.,
L.P. and Legg Mason Wood Walker, Inc. are acting as the Representatives,
propose to offer part of the shares of Common Stock directly to the public at
the public offering price set forth on the cover page of this Prospectus and
part of the shares to certain dealers at a price which represents a concession
not in excess of $____________ per share under the public offering price. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $_____________ per share to certain other dealers. After the initial offering
of the Common Stock, the public offering price and such concessions may be
changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable for
thirty days from the date of this Prospectus, to purchase up to 250,000
additional shares of Common Stock at the price to public set forth on the
cover page of this Prospectus minus the underwriting discounts and
commissions. The Underwriters may exercise such option solely for the purpose
of covering over-allotments, if any, in connection with the offering of the
shares offered hereby. To the extent such option is exercised, each
Underwriter will be obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares of Common Stock set forth opposite each Underwriter's name in the
preceding table bears to the total number of shares listed in such table.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
Smith Barney Inc. has, from time to time, provided and may in the future
provide certain investment banking services to the Company.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Michael D. Blanchard, Corporate Secretary and General
Counsel of the Company, and by Haynes and Boone, LLP, Fort Worth, Texas. Certain
legal matters in connection with the offering will be passed upon for the
Underwriters by Milbank, Tweed, Hadley & McCloy, New York, New York. All matters
pertaining to local laws in connection with the issuance of the shares offered
hereby will be passed upon only by Haynes and Boone, LLP as to Texas law, and
Rubin, Katz, Salazar, Alley & Rouse, Santa Fe, New Mexico, as to New Mexico law.
15
<PAGE>
EXPERTS
The consolidated financial statements of TNP Enterprises, Inc. as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, have been incorporated by reference herein
and in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The report of KPMG Peat Marwick LLP covering the Company's consolidated
financial statements refers to a change in the method of accounting for
operating revenues in 1995 and changes in the methods of accounting for income
taxes and postretirement benefits in 1993.
16
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained herein, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company or by any of the Underwriters. This Prospectus
does not constitute an offer of any securities other than those to which it
relates or an offer to sell, or a solicitation of an offer to buy, those to
which it relates in any state to any person to whom it is not lawful to make
such offer in such state. The delivery of this Prospectus at any time does
not imply that the information herein is correct as of any time subsequent to
its date.
---------------------------
TABLE OF CONTENTS
Page
----
Available Information................................................ 3
Incorporation of Certain Documents by Reference...................... 3
Prospectus Summary................................................... 4
The Company.......................................................... 6
Use of Proceeds...................................................... 12
Common Stock Price Range and Dividends............................... 12
Description of Common Stock.......................................... 13
Underwriting......................................................... 15
Legal Matters........................................................ 15
Experts.............................................................. 16
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1,750,000 Shares
TNP ENTERPRISES, INC.
Common Stock
[LOGO]
---------------------------
PROSPECTUS
______ __, 1996
---------------------------
SMITH BARNEY INC.
EDWARD D. JONES & CO., L.P.
LEGG MASON WOOD WALKER
INCORPORATED
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission Registration Fee.......... $ 17,888
NASD Filing Fee.............................................. 5,687
Printing Expenses............................................ 17,500
Listing Fee of the New York Stock Exchange................... 7,000
Accounting Fees and Expenses................................. 40,000
Legal Fees and Expenses...................................... 100,000
Blue Sky Fees and Expenses................................... 7,500
Fees of Transfer Agent and Registrar......................... 1,000
Miscellaneous Expenses....................................... 3,425
--------
Total...................................................... $200,000
--------
--------
All of the above expenses except the Securities and Exchange Commission
registration fee are estimated. All of such expenses will be borne by the
Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02-1 of the Texas Business Corporation Act provides that any
director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he was, is or is threatened to be made a party by reason
of his position. With respect to any proceeding arising from actions taken in
his official capacity, as a director or officer, he may be indemnified so
long as it shall be determined that he conducted himself in good faith and
that he reasonably believed that such conduct was in the corporation's best
interest. In cases not concerning conduct in his official capacity as a
director or officer, a director or officer may be indemnified so long as it
shall be determined that he conducted himself in good faith and that he
reasonably believed that his conduct was not opposed to the corporation's
best interest. In the case of any criminal proceeding, a director or officer
may be indemnified if he had no reasonable cause to believe his conduct was
unlawful. If a director or officer is found liable to the corporation on the
basis that personal benefit was improperly received by him, the
indemnification is limited to reasonable expenses actually incurred in
connection with such proceeding. No indemnification may be made if such
officer or director is found liable for willful or intentional misconduct in
the performance of his duty to the corporation. If a director or officer is
wholly successful, on the merits or otherwise, in connection with such a
proceeding, such indemnification is mandatory.
Section 5 of Article 7 of the Company's Bylaws requires the indemnification
of officers and directors to the fullest extent permitted by the Texas Business
Corporation Act or any other applicable Act. The Company also has policies
insuring its officers and directors against certain liabilities for actions
taken in such capacities, including liabilities under the Act.
Article 7.06 of the Texas Miscellaneous Corporation Laws Act provides
that the articles of incorporation of a corporation may provide that a
director of the corporation shall not be liable, or shall be liable only to
the extent provided in the articles of incorporation, to the corporation or
its shareholders or members for monetary damages for an act or omission in
the director's capacity as a director, except that this article does not
authorize the elimination or limitation of the liability of a director to the
extent the director is found liable for:
(i) a breach of the director's duty of loyalty to the corporation or
its shareholders or members;
(ii) an act or omission not in good faith that constitutes a breach of
duty of the director to the corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(iii) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office;
(iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute.
Article X of the Company's Articles of Incorporation provides that, to
the fullest extent allowed pursuant to the Texas Miscellaneous Corporation
Laws Act, or any other applicable laws as presently or hereafter in effect,
II-1
<PAGE>
no director of the Company shall be personally liable to the Company or its
shareholders for monetary damages for or with respect to any acts or
omissions in his capacity as director of the Company.
ITEM 16. EXHIBITS
Exhibits filed with this report are denoted by "*."
EXHIBIT
NO. DESCRIPTION
- ------- -----------
THE COMPANY INCORPORATES CERTAIN EXHIBITS LISTED BELOW BY REFERENCE TO THE
EXHIBITS AND FILINGS NOTED IN PARENTHESIS.
*1(a) - Form of Underwriting Agreement.
3(a) - Articles of Incorporation and Amendments through March 6, 1984
(Exhibit 3(a) to TNPE 1984 Form S-14, File No. 2-89800).
3(b) - Amendment to Articles of Incorporation filed September 25, 1984
(Exhibit 3(b) to TNPE 1984 Form 10-K, File No. 1-8847).
3(c) - Amendment to Articles of Incorporation filed August 29, 1985
(Exhibit 3(a) to TNPE 1985 Form 10-K, File No. 1-8847).
3(d) - Amendment to Articles of Incorporation filed June 2, 1986
(Exhibit 3(a) to TNPE 1986 Form 10-K, File No. 1-8847).
3(e) - Amendment to Articles of Incorporation filed May 10, 1988
(Exhibit 3(e) to TNPE 1988 Form 10-K, File No. 1-8847).
3(f) - Amendment to Articles of Incorporation filed May 10, 1988
(Exhibit 3(f) to TNPE 1988 Form 10-K, File No. 1-8847).
3(g) - Amendment to Articles of Incorporation filed December 27, 1988
(Exhibit 3(g) to TNPE 1988 Form 10-K, File No. 1-8847).
3(h) - Bylaws, as amended (Exhibit 3(h) to joint 1994 Form 10-K, File
Nos. 1-8847 and 2-97230).
4(a) - Rights Agreement and Form of Right Certificate, as amended,
effective November 13, 1990 (Exhibit 2.1 to TNPE Form 8-A, File
No. 1-8847).
* 5(a) - Opinion of Haynes and Boone, LLP as to the validity of the Common
Stock.
*23(a) - Consent of Haynes and Boone, LLP contained in the opinion filed as
Exhibit 5(a).
*23(b) - Consent of Rubin, Katz, Salazar, Alley & Rouse.
*23(c) - Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
*24(a) - Power of Attorney appears on the signature page hereof.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or
II-2
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth, State of Texas, on the 28th day of
August, 1996.
TNP ENTERPRISES, INC.
By: /s/ Manjit S. Cheema
----------------------------------
Manjit S. Cheema
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Manjit S. Cheema and Michael D.
Blanchard, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign, execute and file
with the Securities and Exchange Commission and any state securities
regulatory board or commission any documents relating to the proposed
issuance and registration of the securities offered pursuant to this
Registration Statement on Form S-3 and any registration statement of the
Company relating to Common Stock filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, including any amendment or
amendments, including post-effective amendments, relating thereto, with all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he or she might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons
on behalf of the Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Kevern R. Joyce Chairman, President and August 28, 1996
- -------------------------------- Chief Executive Officer
Kevern R. Joyce
/s/ Manjit S. Cheema Vice President and August 28, 1996
- -------------------------------- Chief Financial Officer
Manjit S. Cheema
/s/ Melissa D. Davis Chief Accounting Officer August 28, 1996
- --------------------------------
Melissa D. Davis
/s/ R. Denny Alexander Director August 28, 1996
- --------------------------------
R. Denny Alexander
/s/ John A. Fanning Director August 28, 1996
- --------------------------------
John A. Fanning
/s/ Sidney M. Gutierrez Director August 28, 1996
- --------------------------------
Sidney M. Gutierrez
/s/ Harris L. Kempner, Jr. Director August 28,1996
- --------------------------------
Harris L. Kempner, Jr.
/s/ Dwight R. Spurlock Director August 28, 1996
- --------------------------------
Dwight R. Spurlock
II-4
<PAGE>
/s/ Dr. Carol D. Smith Surles Director August 28, 1996
- --------------------------------
Dr. Carol D. Smith Surles
/s/ Dennis H. Withers Director August 28, 1996
- --------------------------------
Dennis H. Withers
/s/ James R. Holland, Jr. Director August 28, 1996
- --------------------------------
James R. Holland, Jr.
II-5
<PAGE>
EXHIBIT INDEX
Exhibits filed with this report are denoted by "*."
EXHIBIT
NO. DESCRIPTION
- ------- -----------
THE COMPANY INCORPORATES CERTAIN EXHIBITS LISTED BELOW BY REFERENCE TO THE
EXHIBITS AND FILINGS NOTED IN PARENTHESIS.
*1(a) - Form of Underwriting Agreement.
3(a) - Articles of Incorporation and Amendments through March 6, 1984
(Exhibit 3(a) to TNPE 1984 Form S-14, File No. 2-89800).
3(b) - Amendment to Articles of Incorporation filed September 25, 1984
(Exhibit 3(b) to TNPE 1984 Form 10-K, File No. 1-8847).
3(c) - Amendment to Articles of Incorporation filed August 29, 1985
(Exhibit 3(a) to TNPE 1985 Form 10-K, File No. 1-8847).
3(d) - Amendment to Articles of Incorporation filed June 2, 1986
(Exhibit 3(a) to TNPE 1986 Form 10-K, File No. 1-8847).
3(e) - Amendment to Articles of Incorporation filed May 10, 1988
(Exhibit 3(e) to TNPE 1988 Form 10-K, File No. 1-8847).
3(f) - Amendment to Articles of Incorporation filed May 10, 1988
(Exhibit 3(f) to TNPE 1988 Form 10-K, File No. 1-8847).
3(g) - Amendment to Articles of Incorporation filed December 27, 1988
(Exhibit 3(g) to TNPE 1988 Form 10-K, File No. 1-8847).
3(h) - Bylaws, as amended (Exhibit 3(h) to joint 1994 Form 10-K, File
Nos. 1-8847 and 2-97230).
4(a) - Rights Agreement and Form of Right Certificate, as amended,
effective November 13, 1990 (Exhibit 2.1 to TNPE Form 8-A, File
No. 1-8847).
* 5(a) - Opinion of Haynes and Boone, LLP as to the validity of the Common
Stock.
*23(a) - Consent of Haynes and Boone, LLP contained in the opinion filed as
Exhibit 5(a).
*23(b) - Consent of Rubin, Katz, Salazar, Alley & Rouse.
*23(c) - Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
*24(a) - Power of Attorney appears on the signature page hereof.
<PAGE>
EXHIBIT 1(a)
_,000,000 Shares
TNP ENTERPRISES, INC.
Common Stock
(No Par Value)
UNDERWRITING AGREEMENT
________ __, 1996
SMITH BARNEY INC.
EDWARD D. JONES & CO., L.P.
LEGG MASON WOOD WALKER, INC.
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
TNP Enterprises, Inc., a Texas corporation (the "Company"), proposes to
issue and sell an aggregate of _,000,000 shares (the "Firm Shares") of its
common stock, no par value (the "Common Stock"), to the several Underwriters
named in SCHEDULE I hereto (the "Underwriters"). The Company also proposes to
sell to the Underwriters, upon the terms and conditions set forth in Section 2
hereof, up to an additional _00,000 shares (the "Additional Shares") of Common
Stock. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares".
The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 under the Act (the "registration
statement"), including a prospectus subject to completion relating to the
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of
<PAGE>
this Agreement. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will
be filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means
the registration statement as amended by said post-effective amendment. The
term "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the
Act and such information is included in a prospectus filed with the
Commission pursuant to Rule 424(b) under the Act, the term "Prospectus" as
used in this Agreement means the prospectus in the form included in the
Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectus" as used in this Agreement
means the prospectus subject to completion in the form included in the
registration statement at the time of the initial filing of the registration
statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus. Any reference in this
Agreement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act, as of the date of the registration statement, the
Registration Statement, such Prepricing Prospectus or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, any Prepricing Prospectus
or the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the Registration
Statement, any Prepricing Prospectus, the Prospectus, or any amendment or
supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $________ per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in SCHEDULE I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set forth
herein, to sell to the Underwriters, and, upon the basis of the representations,
warranties and agreements
-2-
<PAGE>
of the Company herein contained and subject to all the terms and conditions
set forth herein, the Underwriters shall have the right to purchase from the
Company, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date
of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange
is open for trading), up to an aggregate of _00,000 Additional Shares.
Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares.
Upon any exercise of the over-allotment option, each Underwriter, severally
and not jointly, agrees to purchase from the Company the number of Additional
Shares (subject to such adjustments as you may determine in order to avoid
fractional shares) which bears the same proportion to the number of
Additional Shares to be purchased by the Underwriters as the number of Firm
Shares set forth opposite the name of such Underwriter in SCHEDULE I hereto
(or such number of Firm Shares increased as set forth in Section 10 hereof)
bears to the aggregate number of Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Payment for the Firm
Shares shall be made at the office of Milbank, Tweed, Hadley & McCloy, One Chase
Manhattan Plaza, New York, NY 10005, at 10:00 A.M., New York City time, on
___________, 1996 (the "Closing Date") [against delivery of the certificates for
the Firm Shares to you at the offices of the Depository Trust Company for the
respective Accounts of the Underwriters]. The place of closing for the Firm
Shares and the Closing Date may be varied by agreement between you and the
Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the same offices as the delivery
of and payment for the Firm Shares at such time on such date (the "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than two nor later than ten
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf of the Underwriters to the
Company of the Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. The place of closing for any Additional
Shares and the Option Closing Date for such Shares may be varied by agreement
between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such
-3-
<PAGE>
names and in such denominations as you shall request prior to 9:30 A.M., New
York City time, on the second business day preceding the Closing Date or any
Option Closing Date, as the case may be. Such certificates shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and any Additional Shares to be purchased
hereunder shall be delivered to you on the Closing Date or the Option Closing
Date, as the case may be, against payment of the purchase price therefor by
certified or official bank check or wire transfer payable in Federal (same
day) funds to the order of the Company.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when the
Registration Statement or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.
-4-
<PAGE>
(c) The Company will furnish to you, without charge (i) four signed
copies of the registration statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits to
the registration statement, (ii) such number of conformed copies of the
registration statement as originally filed and of each amendment thereto, but
without exhibits, as you may request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may request, and (iv) four
copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior to the
end of the period of time referred to in the first sentence in subsection (f)
below, file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are offered
by the several Underwriters and by dealers, prior to the date of the Prospectus,
of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Act or any
-5-
<PAGE>
other law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you, as Representatives of the several Underwriters, agree
that the Prospectus should be amended or supplemented, the Company, if requested
by you, will promptly issue a press release announcing or disclosing the matters
to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for all
out-of-pocket expenses (including the reasonable fees and expenses of counsel
for the Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth in the
Prospectus.
-6-
<PAGE>
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectus pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not sell,
contract to sell or otherwise dispose of any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or grant any
options or warrants to purchase Common Stock, for a period of 180 days after the
date of the Prospectus, except for (i) rights issued pursuant to the Rights Plan
described in the Prospectus, (ii) shares of Common Stock issued pursuant to the
Plans, and (iii) issuances of Common Stock upon the exercise of outstanding
options and warrants, without the prior written consent of Smith Barney Inc.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its stockholders designated by you.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the shares of
Common Stock which it agrees to sell under this Agreement listed, subject to
notice of issuance, on the New York Stock Exchange on or before the Closing
Date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3; at the
time the Registration Statement became or becomes effective, the
Registration Statement and the Prospectus will fully comply in all material
respects with the provisions of the Act, and the Registration Statement
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 not misleading, and the 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 light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company makes no warranty or representation
with respect to any statement contained in the Registration Statement or
the Prospectus in reliance upon and in conformity with information
concerning the Underwriters and furnished in writing by or on behalf of any
Underwriter through you to the Company expressly for use in the
Registration Statement or the Prospectus; the documents incorporated by
reference
-7-
<PAGE>
in the Prospectus, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Exchange
Act, and at such time did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(b) The capitalization of the Company is, as of the date specified,
as set forth under the heading entitled ["As Reported" in the section of
the Registration Statement and the Prospectus entitled ["Capitalization
(Unaudited)"]; all of the issued and outstanding shares of capital stock
including Common Stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; each of the Company and its direct or
indirect subsidiaries (the "Subsidiaries") has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of its incorporation, with full power and authority to own its
properties and conduct its business as described in the Registration
Statement and the Prospectus, and, in the case of the Company, to execute
and deliver this Agreement and to issue and sell the Shares as herein
contemplated; the issuance of the Shares has been duly authorized and when
issued and paid for by the Underwriters pursuant to this Agreement the
Shares will be validly issued and fully paid and non-assessable and
entitled to the rights set forth in the Company's Articles of
Incorporation;
(c) Each of the Company and its Subsidiaries is duly qualified or
licensed by and is in good standing in each jurisdiction in which it
conducts its business and in which the failure, individually or in the
aggregate, to be so licensed or qualified could have a material adverse
effect on the operations, business or condition of the Company and its
Subsidiaries, taken as a whole; all of the outstanding shares of capital
stock of each of the Subsidiaries of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and the common
stock of each Subsidiary is owned directly or indirectly by the Company,
free and clear from any lien, encumbrance or security interest except as
otherwise disclosed in writing to the Underwriters prior to the date hereof
and each of the Company and its Subsidiaries is in compliance in all
material respects with the laws, orders, rules, regulations and directives
issued or administered by such jurisdictions;
(d) Neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its
respective corporate charter or by-laws or in the performance or observance
of any obligation, agreement, covenant or
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condition contained in any indenture, mortgage, deed of trust, bank loan or
credit agreement or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which any of them is bound, and
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and by the Prospectus
will not conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would constitute a breach of, or default under), or result in the creation
or imposition of any lien, charge, or encumbrance upon any of the assets of
the Company or any of its Subsidiaries pursuant to, any provisions of the
corporate charter or by-laws, of the Company or any of its Subsidiaries or
under any provision of any license, indenture, mortgage, deed of trust,
bank loan or credit agreement or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected, or under any federal,
state or local law, regulation or rule or any decree, judgment or order
applicable to the Company or any of its Subsidiaries;
(e) The filing of the Registration Statement and the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and by the Prospectus have been duly authorized by the
Company; this Agreement has been duly authorized, executed and delivered by
the Company;
(f) The capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus and the certificates for the Shares
are in due and proper form and the holders of the Shares will not be
subject to personal liability by reason of being such holders;
(g) No approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, court,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares as contemplated hereby other than
registration of the Shares under the Act and any necessary qualification
under the securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriters;
(h) No person has the right, contractual or otherwise, to cause the
Company to issue to it, or register pursuant to the Act, any shares of
capital stock of the Company upon the issue and sale of the Shares to the
Underwriters hereunder, nor does any person have preemptive rights, rights
of first refusal or other rights (excluding rights arising under the
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Rights Plan described in the Prospectus) to purchase any of the Shares;
(i) KPMG Peat Marwick LLP, whose reports on the consolidated
financial statements of the Company and its Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, are
independent public accountants as required by the Act and the applicable
published rules and regulations thereunder;
(j) Each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule,
and has obtained all necessary authorizations, consents and approvals from
other persons, in order to conduct its business; neither the Company nor
any of its Subsidiaries is in violation of, or in default under, any such
license, authorization, consent or approval or any federal, state or local
law, regulation or rule or any decree, order or judgment applicable to the
Company or any of its Subsidiaries the effect of which could have a
material adverse effect on the Company and its Subsidiaries taken as a
whole;
(k) All legal or governmental proceedings, contracts or documents of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required;
(l) Except as disclosed in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or
threatened against the Company or any of its Subsidiaries or any of their
respective properties, at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which could result in a judgment, decree or order
having a material adverse effect on the business, condition, prospects or
property of the Company and its Subsidiaries taken as a whole;
(m) The financial statements included or incorporated by reference in
the Registration Statement and the Prospectus present and (in the case of
any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the Commission
after the date as of which this representation is being made) will present
fairly, at all times during which a prospectus is required to be delivered
under the Act, the consolidated financial position of the Company and its
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows of
the Company and its Subsidiaries for the periods specified; such
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financial statements have been and (in the case of any amendment or
supplement to any such document, or any material incorporated by reference
in any such document, filed with the Commission after the date as of which
this representation is being made) will be, at all times during which a
prospectus is required to be delivered under the Act, prepared in
conformity with generally accepted accounting principles;
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not
been (A) any material and unfavorable change, financial or otherwise, or
any adverse development concerning the Company or any of its Subsidiaries
which may reasonably be expected to involve a prospective material and
unfavorable change, financial or otherwise, in the business, properties,
regulatory environment, results of operations or condition (financial or
otherwise), of the Company and its Subsidiaries taken as a whole, (B) any
transaction, which is material to the Company and its Subsidiaries taken as
a whole, contemplated or entered into by the Company or any of its
Subsidiaries or (C) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of its Subsidiaries which is
material to the Company and its Subsidiaries taken as a whole;
(o) Each of the Company and its Subsidiaries has good and marketable
title to all properties and assets described in the Prospectus as owned by
it, free and clear of all liens, security interests, claims, charges,
encumbrances or restrictions, except such as are described in the
Prospectus or are not material to the business, properties, business
prospects, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole. Each of the Company and
its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material to the business, properties, business
prospects, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole and do not materially
interfere with the use made and proposed to be made of such properties by
the Company and its Subsidiaries;
(p) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Shares, it being understood that from time to time the Company
issues shares of its Common Stock pursuant to its Dividend Reinvestment and
Stock
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Purchase Plan and its voluntary thrift plan (the "Plans"); and
(q) Prior to the time of purchase, the Firm Shares, and prior to any
additional time of purchase, any Additional Shares, will be duly authorized
for listing by the New York Stock Exchange upon official notice of
issuance.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each of you and each other Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
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 not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use in connection therewith. The
foregoing indemnity agreement shall be in addition to any liability which the
Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter
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or such controlling person). It is understood, however, that the Company
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and
expenses shall be reimbursed as they are incurred. The Company shall not be
liable for any settlement of any such action, suit or proceeding effected
without its written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with respect
to information relating to such Underwriter furnished in writing by or on behalf
of such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the
Company, any of its directors, any such officer, or any such controlling person
based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph (c),
such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is unavailable
to an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
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of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other hand from the offering of the
Shares, or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by a pro
rata allocation (even if the Underwriters 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 paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in SCHEDULE I
hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.
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<PAGE>
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall be in effect on the Closing Date or any Option Closing Date and
no proceeding for that purpose shall have been instituted or, to the knowledge
of the Company or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the registration
statement or the prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or the
Subsidiaries not
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contemplated by the Prospectus, which in your opinion, as Representatives of
the several Underwriters, would materially adversely affect the market for
the Shares, or (ii) any event or development relating to or involving the
Company or any officer or director of the Company which makes any statement
made in the Prospectus untrue or which, in the opinion of the Company and its
counsel or the Underwriters and their counsel, requires the making of any
addition to or change in the Prospectus in order to state a material fact
required by the Act or any other law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in
your opinion, as Representatives of the several Underwriters, materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date and each Option
Closing Date, an opinion of Haynes & Boone, counsel for the Company, dated the
Closing Date or such option Closing Date, as applicable, and addressed to you,
as Representatives of the several Underwriters, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Texas with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole;
(ii) Each of the Subsidiaries is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease, and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; and all the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company directly, or indirectly through one of the other Subsidiaries,
free and clear of any perfected security interest, or, to the best knowledge of
such counsel
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after reasonable inquiry, any other security interest, lien, adverse claim,
equity or other encumbrance;
(iii) The authorized and outstanding capital stock of the Company is
as set forth under the caption ["Capitalization"] in the Prospectus; and the
authorized capital stock of the Company, including the Shares, conforms in all
material respects as to legal matters to the description thereof contained in
the Registration Statement and the Prospectus and the Company's Articles of
Incorporation;
(iv) All the shares of capital stock of the Company outstanding prior
to the issuance of the Shares have been duly authorized and validly issued, and
are fully paid and nonassessable;
(v) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive, or to the best knowledge of such counsel after reasonable
inquiry, similar rights that entitle or will entitle any person to acquire any
Shares upon the issuance thereof by the Company;
(vi) The form of certificates for the Shares conforms to the
requirements of the Texas Business Corporation Act;
(vii) The Registration Statement and all post-effective amendments, if
any, have become effective under the Act and, to the best knowledge of such
counsel after reasonable inquiry, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
are pending before or contemplated by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(viii) The Company has corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Shares to the Underwriters as
provided herein, and this Agreement has been duly authorized, executed and
delivered by the Company and is a valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement of rights to indemnity and contribution hereunder may be limited by
Federal or state securities laws or principles of public policy and subject to
the qualification that the enforceability of the Company's obligations hereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally,
and by general equitable principles;
(ix) Neither the Company nor any of the Subsidiaries is in violation
of its respective certificate or articles of incorporation or bylaws, or other
organizational documents, or to the best knowledge of such counsel after
reasonable inquiry, is
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in default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectus;
(x) Neither the offer, sale or delivery of the Shares, the execution,
delivery or performance of this Agreement, compliance by the Company with the
provisions hereof nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or any agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties is bound that is an exhibit to the
Registration Statement or to any Incorporated Document, or is known to such
counsel after reasonable inquiry, or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries, nor will any such action result in any violation of any
existing law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel after reasonable inquiry, applicable to the Company, the
Subsidiaries or any of their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act and the Exchange Act or such
as may be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares) for the valid issuance and sale of the
Shares to the Underwriters as contemplated by this Agreement;
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act; and each
of the Incorporated Documents, at the time it was filed (except for the
financial statements and the notes thereto and the schedules and other financial
and statistical data included therein, as to which counsel need not express any
opinion), complied as to form in all material respects with the Exchange Act and
the rules and regulations of the Commission thereunder;
(xiii) To the best knowledge of such counsel after reasonable inquiry,
(A) other than as described or contemplated in the Prospectus (or any supplement
thereto), there are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which the Company or
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any of the Subsidiaries, or any of their property, is subject, which might
result in any material adverse change in the business, properties, financial
condition, results of operations of the Company or any of the Subsidiaries or
which might affect the subject matter of this Agreement or which are required
to be described in the Registration Statement or Prospectus (or any amendment
or supplement thereto) and (B) there are no agreements, contracts, indentures,
leases or other instruments, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required, as the
case may be;
(xiv) To the best knowledge of such counsel after reasonable inquiry,
neither the Company nor any of the Subsidiaries is in violation of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of the Subsidiaries;
(xv) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be shown; and
(xvi) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data included in
the Registration Statement or the Prospectus or any Incorporated Document).
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In rendering their opinion as aforesaid, counsel may rely upon an opinion
or opinions, each dated the Closing Date, of other counsel retained by them or
the Company as to laws of any jurisdiction other than the United States or the
State of Texas, provided that (1) each such local counsel is acceptable to the
Representatives, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Representatives
and is, in form and substance satisfactory to them and their counsel, and (3)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date, an opinion of Michael D.
Blanchard Esq., Corporate Secretary & General Counsel for the Company, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:
(i) The Company and each of the Subsidiaries has full corporate power
and authority, and all necessary governmental authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental
regulatory officials and bodies (except where the failure so to have any such
authorizations, approvals, orders, licenses, certificates, franchises or
permits, individually or in the aggregate, would not have a material adverse
effect on the business, properties, operations or financial condition of the
Company and the Subsidiaries taken as a whole), to own their respective
properties and to conduct their respective businesses as now being conducted, as
described in the Prospectus;
(ii) Except as disclosed in the Prospectus, the Company owns of
record, directly or indirectly, all the outstanding shares of capital stock of
each of the Subsidiaries free and clear of any lien, adverse claim, security
interest, equity, or other encumbrance;
(iii) Other than as described or contemplated in the Prospectus (or
any supplement thereto), there are no legal or governmental proceedings pending
or threatened against the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries, or any of their property, is subject, which
are required to be described in the Registration Statement or Prospectus (or any
amendment or supplement thereto);
(iv) There are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement or any Incorporated Document that are not
described or filed as required, as the case may be;
(v) The Company and the Subsidiaries own all patents, trademarks,
trademark registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions,
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trade secrets and rights described in the Prospectus as being owned by them
or any of them or necessary for the conduct of their respective businesses,
and such counsel is not aware of any claim to the contrary or any challenge
by any other person to the rights of the Company and the Subsidiaries with
respect to the foregoing;
(vi) Neither the Company nor any of the Subsidiaries is in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree of any
court or governmental agency or body having jurisdiction over the Company or any
of the Subsidiaries;
(vii) Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and such counsel
does not know of any commitment, plan or arrangement to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company; and
(viii) Except as described in the Prospectus, there is no holder of
any security of the Company or any other person who has the right, contractual
or otherwise, to cause the Company to sell or otherwise issue to them, or to
permit them to underwrite the sale of, the Shares or the right to have any
Common Stock or other securities of the Company included in the registration
statement or the right, as a result of the filing of the registration statement,
to require registration under the Act of any shares of Common Stock or other
securities of the Company.
(e) You shall have received on the Closing Date an opinion of Milbank,
Tweed, Hadley & McCloy, counsel for the Underwriters, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, with respect
to the matters referred to in clauses (v), (vii), (viii), (xii) and (xvi) of the
foregoing paragraph (c) and such other related matters as you may request.
(f) You shall have received letters addressed to you, as Representatives
of the several Underwriters, and dated the date hereof and the Closing Date from
KPMG Peat Marwick LLP, independent certified public accountants, substantially
in the forms heretofore approved by you.
(g)(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
change in the capital stock of the Company nor any material increase in the
short-term or long-term debt of the Company (other than in the ordinary course
of business) from that set forth or contemplated in the Registration Statement
or the Prospectus (or any amendment or Supplement thereto); (iii) there shall
not have been, since
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<PAGE>
the respective dates as of which information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), except
as may otherwise be stated in the Registration Statement and Prospectus (or
any amendment or supplement thereto), any material adverse change in the
condition (financial or other), business, prospects, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a whole;
(iv) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement
shall be true and correct on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such
other officers as are acceptable to you), to the effect set forth in this
Section 8(g) and in Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) Prior to the Closing Date the Shares shall have been listed, subject to
notice of issuance, on the New York Stock Exchange.
(j) The Company shall have furnished or caused to be furnished to you such
further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company to
each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of any Option Closing Date
of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d) and
(e) shall be revised to reflect the sale of Additional Shares.
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<PAGE>
9. EXPENSES. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the registration statement, each
Prepricing Prospectus, the Prospectus, the Incorporated Documents, and all
amendments or supplements to any of them, as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the listing of the Shares on the New York Stock Exchange;
(vi) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
5(g) hereof (including the reasonable fees, expenses and disbursements of
counsel for the Underwriters relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees and
the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are
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<PAGE>
obligated but fail or refuse to purchase is not more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase
on the Closing Date, each non-defaulting Underwriter shall be obligated,
severally, in the proportion which the number of Firm Shares set forth
opposite its name in SCHEDULE I hereto bears to the aggregate number of Firm
Shares set forth opposite the names of all non-defaulting Underwriters or in
such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Smith Barney Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but
fail or refuse, to purchase. If any one or more of the Underwriters shall
fail or refuse to purchase Shares which it or they are obligated to purchase
on the Closing Date and the aggregate number of Shares with respect to which
such default occurs is more than one-tenth of the aggregate number of Shares
which the Underwriters are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such
Shares by one or more non-defaulting Underwriters or other party or parties
approved by you and the Company are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "Underwriter" as used in
this Agreement includes, for all purposes of this Agreement, any party not
listed in SCHEDULE I hereto who, with your approval and the approval of the
Company, purchases Shares which a defaulting Underwriter is obligated, but
fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York or Texas shall
have been declared by either federal or state authorities, or (iii) there shall
have occurred any outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political, financial or economic
conditions, the
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<PAGE>
effect of which on the financial markets of the United States is such as to
make it, in your judgment, impracticable or inadvisable to commence or
continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the
resale of the Shares by the Underwriters. Notice of such termination may be
given to the Company by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
front cover, and the statements in the first and third paragraphs under the
caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 1400 International Plaza, Fort Worth, Texas 76109, Attention:
[insert name and title]; or (ii) if to you, as Representatives of the several
Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 7 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
TNP ENTERPRISES, INC.
By
------------------------------------
Chairman of the Board
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
SMITH BARNEY INC.
EDWARD D. JONES & CO., L.P.
LEGG MASON WOOD WALKER, INC.
As Representatives of the Several Underwriters
By SMITH BARNEY INC.
By
-----------------------------------
Managing Director
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<PAGE>
SCHEDULE I
TNP ENTERPRISES, INC.
NUMBER OF
UNDERWRITER FIRM SHARES
----------- -----------
Smith Barney Inc.
Edward D. Jones & Co., L.P.
Legg Mason Wood Walker, Inc.
-----------
Total
-----------
-----------
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<PAGE>
EXHIBIT 5(a)
[LETTERHEAD]
August 28, 1996
TNP Enterprises, Inc.
4100 International Plaza
P.O. Box 2943
Fort Worth, Texas 76113
Re: Registration of 2,000,000 shares of Common Stock of TNP Enterprises, Inc.
Ladies and Gentlemen:
We have acted as counsel to TNP Enterprises, Inc., a Texas corporation (the
"Company"), in connection with the preparation of the Company's Registration
Statement on Form S-3 and the amendments thereto (as amended, the "Registration
Statement") originally filed on August 28, 1996, with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to the offer and sale by the Company of 2,000,000
shares (the "Shares") of its Common Stock, no par value ("Common Stock"),
assuming the full exercise of the Underwriters' over-allotment option.
In connection therewith, we have examined and relied upon originals, or copies
certified to our satisfaction, of (i) the Articles of Incorporation of the
Company and the Bylaws of the Company; (ii) the minutes and records of the
corporate proceedings of the Company with respect to the issuance by the Company
of the Shares; (iii) the Registration Statement and all exhibits thereto; (iv)
the form of Underwriting Agreement to be entered into by and among the Company
and Smith Barney Inc., Edward D. Jones & Co., L.P. and Legg Mason Wood Walker,
Inc., as representatives (the "Representatives") of the various Underwriters
named therein, as contemplated by the Registration Statement (the "Underwriting
Agreement"); and (v) such other documents and instruments as we have deemed
necessary for the expression of the opinions contained herein. The laws covered
by the opinions expressed herein are limited to the federal laws of the United
States and the laws of the State of Texas. No opinions are expressed herein
with respect to the effect of any laws, rules or regulations relating to
electric utility regulatory matters.
In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof. As to various questions of fact
material to this opinion, where such facts have not been independently
established, and as to the content and form of certain minutes, records,
resolutions and other
<PAGE>
[LETTERHEAD]
TNP Enterprises, Inc.
August 28, 1996
Page 2
documents or writings of the Company, we have relied, to the extent we have
deemed reasonably appropriate, upon representations or certificates of
officers of the Company and its subsidiaries or governmental officials. We
also have assumed that the Underwriting Agreement will be duly executed by
the parties thereto.
Based upon the foregoing, and having due regard for such legal considerations as
we deem relevant, we are of the opinion that the Shares have been duly
authorized for issuance and, when issued in accordance with the terms of the
Underwriting Agreement and upon passage of pricing resolutions by the Financing
Committee of the Company's Board of Directors, will be validly issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the reference to
this firm under "Legal Matters" in the Prospectus forming a part of such
Registration Statement.
Very truly yours,
/s/ Haynes and Boone, LLP
Haynes and Boone, LLP
<PAGE>
EXHIBIT 23(b)
August 27, 1996
TNP Enterprises, Inc.
4100 International Plaza
P.O. Box 2943
Fort Worth, Texas 76113
Re: Registration of 2,000,000 shares of Common Stock of TNP Enterprises, Inc.
Ladies and Gentlemen:
We have acted as special counsel to TNP Enterprises, Inc., a Texas corporation
(the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-3 and the amendments thereto (as amended,
the "Registration Statement") originally filed on August 28, 1996, with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended. The Registration Statement relates to the offer and sale by the
Company of 2,000,000 shares of its Common Stock, no par value, assuming the
full exercise of the Underwriters' over-allotment option.
We hereby consent to the filing of this consent with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to this firm under "Legal Matters" in the Prospectus forming a part
of such Registration Statement.
Very truly yours,
/s/ Rubin, Katz, Salazar, Alley & Rouse
Rubin, Katz, Salazar, Alley & Rouse,
A Professional Corporation
<PAGE>
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
TNP Enterprises, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the method of accounting for operating
revenues in 1995 and changes in the methods of accounting for income taxes
and postretirement benefits in 1993.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Fort Worth, Texas
August 28, 1996
