PROSPECTUS Rule 424(b)(2)
SEC File #333-17835
TNP LOGO
Direct Stock Purchase Plan
TNP Enterprises, Inc. (the "Company") hereby offers participation in its
Direct Stock Purchase Plan (the "Plan"). The Plan is designed to provide
investors with a convenient method to purchase shares (the "Shares") of Common
Stock, no par value, of the Company (the "Common Stock), and to reinvest the
cash dividends paid to the holders of Shares. This Plan replaces the Company's
prior dividend reinvestment and stock purchase plan; current participants in
that plan automatically continue in this Plan.
Participants in the Plan may:
- Reinvest Common Stock dividends in Shares.
- Make an initial investment of at least $100 or, if already a holder of
Common Stock, at least $25.
- Make optional investments at any time of at least $25 up to a maximum of
$100,000 per calendar year.
- Receive certificates for whole Shares credited to their Plan accounts.
- Deposit certificates representing Shares into the Plan for safekeeping.
- Sell Shares credited to their Plan accounts through the Plan.
Shares purchased under the Plan will be either newly issued shares of
Common Stock or purchased in the open market, at the option of the Company. Open
market purchases will be effected through an Independent Agent (as hereinafter
defined) selected by the Company (as hereinafter defined). The Common Stock is
listed on the New York Stock Exchange ("NYSE") under the symbol TNP.
The purchase price of newly issued Shares purchased under the Plan will be
the average of the closing prices, computed to four decimal places, of the
Common Stock as reported on the NYSE for the five trading days preceding the
Investment Date (as hereinafter defined) for such Shares. The price of Shares
purchased or sold in the open market will be the weighted average price per
share of the aggregate number of Shares purchased or sold, respectively, in the
open market for the relevant period. There will be no discount from these
purchase prices offered for Shares purchased under the Plan. The Company will
pay the costs of administration of the Plan and any brokerage commissions and
related fees incurred for the purchase of Shares. Participants in the Plan
("Participants") will be responsible for any taxes incurred in the purchase of
Shares and bear the costs relating to the sale of shares of Common Stock sold in
the open market. Such costs include a $5.00 transaction fee, brokerage
commissions up to a maximum amount of $0.25 per share, any other related service
charges and applicable taxes.
To the extent required by applicable law in certain jurisdictions,
including Arizona, Florida, North Carolina and North Dakota, Shares offered
under the Plan to persons not presently record holders of Common Stock will be
offered only through a registered broker/dealer in such jurisdictions.
This Prospectus relates to 1,000,000 shares of Common Stock registered for
sale under the Plan and contains a summary of the material provisions of the
Plan. Participants should retain this Prospectus for future reference.
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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.
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December 23, 1996
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus and if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any underwriter, dealer or agent. This Prospectus does not
constitute an offer or solicitation by any person in any jurisdiction in which
it is unlawful to make an offer or solicitation. The delivery of this Prospectus
at any time does not imply that the information herein is correct as of any time
subsequent to the date of this Prospectus.
AVAILABLE INFORMATION
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 filed by the Company with the Commission pursuant
to the Exchange Act are 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;
(iv) the description of the Common Stock included in the Company's Report
on Form 8-B dated January 9, 1985;
(v) Current Report on Form 8-K dated September 25, 1996; and
(vi) Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
with 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.
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 operating regions. TNP's largest
region, the Gulf-Coast Region, includes the area along the Texas Gulf Coast,
between the cities of Houston and Galveston. 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 southwest of Fort Worth. The Mountain Region includes areas in Southwest and
South Central New Mexico and in Far West Texas. The areas served by TNP contain
a population of approximately 420,000.
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 lignite-fueled, circulating fluidized bed technology. The two
units are supplying, on an annualized basis, approximately 25 percent 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.
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APPLICATION OF PROCEEDS
Purchases of Common Stock under the Plan may be satisfied by either (i) the
purchase of authorized but unissued shares of Common Stock issued by the Company
("newly issued shares"), or (ii) the purchase of shares of Common Stock in the
open market. The Company does not know the number of Shares that the Company
ultimately will sell under the Plan or the price at which such Shares will be
sold. The Company will use the proceeds from sales of newly issued Shares for
general corporate purposes, or advance or contribute such proceeds to one or
more of its subsidiaries for their general corporate purposes. Such purposes may
include, but are not limited to, the redemption, repayment or retirement of
outstanding indebtedness of the Company or its subsidiaries. The Company will
not receive any proceeds when shares of Common Stock are purchased under the
Plan in the open market.
DESCRIPTION OF THE PLAN
Purpose
The purpose of the Plan is to provide current and potential investors with
a convenient way to purchase shares of Common Stock and to reinvest the
dividends paid on shares of Common Stock without payment of a brokerage
commission.
Advantages
- Interested investors who are not already record or registered holders
of Common Stock may become Participants by (i) completing and signing
a new enrollment form ("Enrollment Form"), (ii) making an initial
minimum investment of at least $100 to purchase Common Stock through
the Plan and (iii) paying an account set-up fee of $5.00.
- Record or registered holders of Common Stock who are not already
participating in the Plan may become Participants by completing and
signing an Enrollment Form and doing at least one of the following:
(i) electing to have their dividends reinvested in Common Stock, (ii)
depositing certificates representing Common Stock into the Plan for
safekeeping or (iii) making an initial minimum investment of at least
$25 to purchase Shares through the Plan.
- In addition to having dividends reinvested in Common Stock,
Participants may purchase additional Common Stock under the Plan in
amounts of at least $25 for any single investment, up to $100,000 per
calendar year. A Participant may make optional investments
occasionally or at regular intervals, as the Participant desires.
- Funds invested in the Plan are fully invested in Common Stock through
the purchase of whole shares and fractional shares. Dividends will be
paid on the total number of Shares held in the account, including
fractional Shares. The Company will pay any brokerage commissions and
fees incurred for the purchase of Shares through the Plan.
Participants will be responsible for applicable taxes.
- The Plan offers a "safekeeping" service through which Participants may
deposit, free of any service charges, certificates representing Common
Stock into the Plan. Shares deposited will be credited to the account
of the Participant. Participants can select this service without
participating in any other feature of the Plan.
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- A Participant may direct the Company, at any time and at no cost to
the Participant, to transfer all or a portion of the Shares credited
to his account (including safekeeping) to the account of another
Participant (or to set up an account for a new Participant in
connection with such transfer) or to send certificate(s) representing
shares to the Participant or another designated person or entity.
- The Administrator will mail statements to Participants during the
month following any transaction or activity, showing current
transactions, total Shares credited to their accounts and other
information related to their accounts. Otherwise, statements will be
mailed quarterly. The Administrator also will send each Participant a
confirmation promptly after each sale of Common Stock under the Plan.
(Note: Participants should retain all statements for tax purposes.)
- Participants may direct that dividends on Shares credited to their
accounts or shares of Common Stock held outside the Plan be reinvested
in Shares. Dividends that the Participant elects not to reinvest will
be paid in the usual manner.
- Participants may sell Shares credited to their accounts (including
those Shares deposited into the Plan for safekeeping) through the
Plan. In addition, for the sale of Shares through the Plan,
Participants will only pay brokerage commissions up to a maximum
amount of $0.25 per share, a $5.00 transaction fee, any other related
service charges and applicable taxes.
Disadvantages
- Participants have no control over the price or, in the case of Shares
purchased or sold in the open market by an Independent Agent, the time
at which Common Stock is purchased or sold for such Participant's
account. Purchases in the open market may be, but are not required to
be, made on the relevant Investment Date. The Independent Agent will
execute the sale of a Participant's shares as soon as practicable
after processing the Participant's sales request, but such sale may
not occur for several days. Therefore, Participants bear the market
risk associated with fluctuations in the price of the Common Stock.
See "Description of the Plan--Administration," "--When Funds Will Be
Invested," "--Purchases of Shares" and "--How to Sell Shares."
- No interest will be paid on funds held by the Administrator (as
hereinafter defined) pending investment under the Plan.
- Funds for optional and initial investments must be received by the
Administrator no later than the business day prior to an Investment
Date to be invested beginning on that Investment Date. Otherwise, the
funds may be held by the Administrator and invested beginning on the
next Investment Date. Funds for optional and initial investments need
not be returned to Participants unless the Administrator receives a
written request no later than three business days prior to the
applicable Investment Date, or 35 days have passed since receipt. See
"Description of the Plan--Initial and Optional Cash Investments."
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Description of the Plan
The following description summarizes the material terms and provisions of
the Plan and is not a complete description of all of its terms and provisions.
It is qualified in its entirety by reference to all of the terms and provisions
of the Plan, which is an exhibit to the Registration Statement.
Administration
The Plan is administered by The Bank of New York (the "Administrator"). The
Administrator's address and telephone number for the processing of all Plan
transactions are as follows:
The Bank of New York
Dividend Reinvestment Department
P.O. Box 1958
Newark, New Jersey 07101-9774
1-(800) 524-4458
The Administrator's address and telephone number for all account inquiries,
forms and other information about the Plan are:
The Bank of New York
Investor Relations Department
P.O. Box 11258
Church Street Station
New York, NY 10286
1-(800) 524-4458
Telephone communications may be made between 8:00 a.m. and 5:00 p.m.,
Central Time, Monday through Friday.
Participants may accomplish many Plan transactions by telephone (other than
enrolling in the Plan, making cash investments, or transferring Shares) after
they have received a personal identification, or "pin" number, from the
Administrator.
The Administrator receives all funds invested by Participants, maintains
records of each Participant's account activities, issues account statements and
performs other duties required by the Plan. The Administrator or its nominee, as
custodian, will hold one or more certificates registered in its name or have
such Shares on deposit at a depository representing Shares purchased under or
deposited for safekeeping into the Plan and credited to Participants' accounts.
The Administrator will promptly transmit funds to be used to purchase Common
Stock to a segregated bank account or to an independent agent selected by the
Company (the "Independent Agent"), and will promptly forward sales instructions
to the Independent Agent. The Independent Agent will execute open-market
purchases and sales of the Common Stock under the Plan. BNY Brokerage, Inc., a
registered broker-dealer and wholly-owned subsidiary of The Bank of New York
Company, Inc., will initially serve as the Independent Agent. The Company has
the discretion to select other broker-dealers to serve as Independent Agent.
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Who is Eligible to Participate in the Plan
ANY PERSON OR ENTITY, whether or not a record holder of Common Stock, MAY
PARTICIPATE IN THE PLAN, provided that (i) the person or entity fulfills the
prerequisites for participation described below under "How to Enroll in the
Plan" and (ii) in the case of citizens or residents of a country other than the
United States, its territories and possessions, participation would not violate
local laws applicable to the Company, the Plan and the Participant.
How to Enroll in the Plan
Current Participants in the Company's Dividend Reinvestment and Stock
Purchase Plan. The Plan is replacing the Company's Dividend Reinvestment and
Stock Purchase Plan (the "Dividend Plan"). CURRENT DIVIDEND PLAN PARTICIPANTS
WILL AUTOMATICALLY BECOME PARTICIPANTS IN THE PLAN AND NEED NOT TAKE ANY FURTHER
ACTION AT THIS TIME, UNLESS THEY WISH TO MAKE A CHANGE IN THEIR PARTICIPATION.
If Dividend Plan participants wish to make any change in their participation
(for example, to elect to change their dividend reinvestment option), they must
submit a written request or call the Plan Administrator to request a change.
Partial reinvestment of dividends will not be available under the Plan. The
Administrator will reinvest all dividends paid to participants in the Dividend
Plan whose dividends were partially reinvested, unless the participants in the
Dividend Plan notify the Administrator that they desire to receive their
dividend payments in cash. A Dividend Plan participant should submit a written
request or call the Administrator if he or she wishes to receive a dividend
payment in cash rather than having the dividends reinvested.
New Participants. Persons may enroll in the Plan in one of the following
ways:
Applicants Who Are Not Shareholders. Eligible applicants who are not
Company shareholders may join the Plan at any time after being furnished with a
copy of this Prospectus by completing and signing an Enrollment Form and
returning it, along with an initial investment of at least $100 and an account
set-up fee of $5.00, to the Administrator. See "Initial and Optional Cash
Investments," below.
Applicants Who Are Record Shareholders. Eligible applicants who are record
shareholders of the Company (i.e., who hold the stock in their own name) and who
are not already Dividend Plan participants may join the Plan at any time after
being furnished with a copy of this Prospectus by completing and signing an
Enrollment Form and returning it: (a) with an initial investment of at least $25
to the Administrator (see "Initial and Optional Cash Investments," below) (no
set-up fee is required for existing shareholders); or (b) electing to have
dividends on their Common Stock invested in Common Stock (see "Reinvestment of
Dividends," below); or (c) depositing certificates representing shares of Common
Stock into the Plan for safekeeping (see "Safekeeping Service," below).
Applicants Whose Shares Are Registered in Names Other Than Their Own.
Persons (also known as "beneficial owners") whose shares of Common Stock are
registered in names other than their own, such as in the name of a bank, broker
or trustee, may participate in the Plan with respect to their shares by either
(i) having the shares of Common Stock that they wish to be subject to the Plan
transferred into their own name and depositing those Shares into the Plan for
safekeeping and/or electing to reinvest cash dividends in Common Stock, or (ii)
consulting and making arrangements with their banker, broker, nominee for the
terms, fees and conditions on which they can reinvest dividends in Common Stock.
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Applicants who are Employees. Employees of the Company and its subsidiaries
may enroll in the Plan either by (i) submitting an Employee Enrollment Form and
an initial cash investment of at least $25 to the Administrator, or (ii)
submitting an Employee Enrollment Form and a completed Payroll Deduction Form to
the Company Payroll Office, which will forward the Employee Enrollment Form to
the Administrator. An employee investing through regular payroll deductions must
invest at least $12.50 per pay period (or at least $6.25 per week, if the
employee is paid weekly). Employees may make additional optional investments
when enrolling or at any other time in the same manner as other Participants.
Payroll deduction is not available to contract or temporary employees. (See
"Initial and Optional Cash Investments," and "Employee Participation," below.)
A person will become a Participant after the Administrator has received and
accepted a properly completed Enrollment Form and other necessary investments,
fees and/or documents.
Where to Get Forms
Enrollment Forms and all other Plan forms, stock powers and additional
copies of this Prospectus may be obtained at any time by written request to the
Administrator at the address set forth under "Administration" above, or by
calling the Administrator at 1-(800) 524-4458.
Initial and Optional Cash Investments
Initial Investment. Interested investors, whether or not record or
registered holders of Common Stock, may become Participants by investing through
the Plan as hereinafter described. ELIGIBLE APPLICANTS WHO ARE NOT RECORD OR
REGISTERED HOLDERS OF COMMON STOCK MUST SUBMIT TO THE ADMINISTRATOR A MINIMUM
INITIAL INVESTMENT OF AT LEAST $100 WITH THEIR COMPLETED ENROLLMENT FORMS PLUS
AN ACCOUNT SET-UP FEE OF $5.00. Eligible applicants who are record or registered
holders of Common Stock must submit to the Administrator a minimum initial
investment of at least $25 with their completed Authorization Forms. (See "New
Participants," above.)
Optional Investments. Investments may be made by personal check or money
order drawn on a U.S. bank, in U.S. currency, payable to Bank of New York. Third
party checks will not be accepted and will be returned to sender. Please do not
send cash. Optional investments must be at least $25 for any single investment.
There is no obligation to make any optional investments and the amount and
timing of investments may vary from time to time at the discretion of the
Participant.
PARTICIPANTS WHO WISH TO MAKE REGULAR, OPTIONAL INVESTMENTS SHOULD CONTACT
THE ADMINISTRATOR TO REQUEST AN AUTOMATIC MONTHLY DEDUCTION FORM. THIS PROGRAM
PROVIDES THE CONVENIENCE OF AUTOMATIC MONTHLY INVESTMENTS DEDUCTED DIRECTLY FROM
YOUR BANK ACCOUNT, WITHOUT THE NEED TO MAIL CHECKS.
Investment Limit. The total initial and optional investments may not exceed
$100,000 per calendar year. This amount may be invested all at one time.
When Funds Will Be Invested.
An Investment Date will occur once every month. However, the Administrator
may determine that more frequent Investment Dates shall be necessary. If the
Administrator changes the frequency of Investment Dates, a notice describing any
such change will be sent to Participants.
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An "Investment Date" under the Plan generally will be the fifteenth day of
the month, or if a weekend day or holiday, the next business day after the
fifteenth of the month. During months in which dividends are paid, the
Investment Date will be the dividend payment date. If Shares are purchased on
the open market, and if, in the discretion of the Independent Agent, it is not
practicable to make all the investments on the fifteenth of the month, the
Shares will be purchased as soon as practicable thereafter in accordance with
applicable securities laws and regulations or New York Stock Exchange Rules.
Shares will be purchased beginning on the first Investment Date following
the receipt of funds by the Administrator, provided that the Administrator
receives the funds no later than one business day prior to an Investment Date.
Otherwise, the Administrator may hold the funds for investment on the next
Investment Date. (See "Purchases of Shares.") NO INTEREST WILL BE PAID ON FUNDS
HELD BY THE ADMINISTRATOR PENDING INVESTMENT. Accordingly, Participants and
interested investors may wish to transmit funds so as to reach the Administrator
shortly before an Investment Date.
The Administrator will return funds not already invested in Common Stock to
the Participant upon a Participant's written request, provided that the
Administrator receives the request at least three business days prior to the
applicable Investment Date. The Administrator will not refund funds submitted by
check or money order until the Administrator has actually collected funds from
the instruments. Accordingly, the refunds may be significantly delayed. If the
Administrator does not receive the request to stop investment by three business
days prior to an Investment Date, the Administrator will invest any funds then
held in Common Stock on the Investment Date. Refund requests should be made in
writing to the Administrator.
Pending the purchase of Common Stock pursuant to the Plan, funds for
optional and initial investments will be credited to a Participant's account and
held in a bank account that will be separated from any other funds or monies of
the Company. Funds not invested in Common Stock within 35 days of receipt will
be promptly returned to the Participant. All funds are subject to collection by
the Administrator in U.S. dollars. The Participant or interested investor may
choose and will bear the risk of the method of delivery of any funds. Funds will
be deemed received when actually received by the Administrator.
Reinvestment of Dividends
Participants and other record shareholders may reinvest dividends paid on
their Common Stock in Shares. Participants may elect on their Enrollment Form
whether to reinvest dividends paid on (i) Common Stock purchased through the
Plan and credited to their accounts, and (ii) Common Stock deposited into the
Plan for safekeeping. (See "How to Enroll in the Plan.") If a Participant does
not make an election, dividends will be reinvested. Once a Participant elects
reinvestment, dividends on the designated Common Stock will be reinvested in
Shares. Record shareholders may elect on an Enrollment Form to reinvest
dividends without otherwise participating in the Plan. The amount reinvested
will be reduced by any amount that is required to be withheld under any
applicable tax or other statutes.
Dividends will be invested in Common Stock on the date of payment, or as
soon as practicable thereafter. Dividends not invested in Common Stock within 30
days of receipt will be returned to the Participant. No interest will be paid on
funds held by the Administrator pending investment. (See "When Funds Will Be
Invested" and "Purchases of Shares.")
Participants may change their dividend reinvestment option by delivering
instructions to that effect to the Administrator on a Transaction Request form
or by telephone at 1-(800) 524-4458. (See "Administration"). To
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be effective for a particular dividend, the Administrator must receive the
instructions on or before the record date relating to the dividend. IF THE
ADMINISTRATOR DOES NOT RECEIVE INSTRUCTIONS ON OR BEFORE THE RECORD DATE, THE
INSTRUCTIONS WILL NOT BECOME EFFECTIVE UNTIL AFTER THE DIVIDEND IS PAID. The
Shares purchased with the funds will be credited to the Participant's account.
Direct Deposit of Dividends Not Reinvested
Participants who elect not to reinvest dividends may receive their
dividends by electronic deposit to their bank, savings, or credit union account.
To receive a direct deposit of funds, Participants must complete and sign a
Direct Deposit Authorization Form and return it to the Administrator. Direct
deposit will become effective as soon as practicable after the Administrator has
received a completed Direct Deposit Authorization Form. Changes in designated
direct deposit accounts may be made by delivering written instructions or a
completed Direct Deposit Authorization Form to the Administrator.
Cash dividends on Common Stock not designated for reinvestment and not
directly deposited will be paid by check on the applicable dividend payment
date. The dividend payment dates for Common Stock generally have been, but are
not required to be, the 15th day of March, June, September, and December.
Purchases of Shares
Shares purchased for Participants under the Plan will be either newly
issued Shares or purchased in the open market by an Independent Agent (see
"Administration"). As of the date of this Prospectus, Shares purchased for
Participants under the Plan are newly issued Shares. The Company shall select
the source of Shares, but may not change its determination regarding the source
of purchases of the Shares more than once during any three-month period.
Whenever Shares are being purchased for Participants in the open market, the
Company will not exercise its right to change the source of purchases of Shares
unless the Chief Financial Officer or Financial Committee of the Board of
Directors determines that the Company needs to increase equity capital or there
is another valid reason for the change.
Purchases of newly issued Shares from the Company will be made on the
relevant Investment Date at the average of the closing price of the Common Stock
reported on the NYSE as published in The Wall Street Journal for the last five
trading days preceding the Investment Date. If no trading is reported for the
trading day, the Company may determine the purchase price on the basis of the
market quotations it deems appropriate. No brokerage commissions will be charged
for shares acquired directly from the Company.
Open-market purchases of Shares will occur on the relevant Investment Date,
or as soon thereafter as practicable (see "When Funds Will Be Invested" above).
The Administrator will promptly return funds that have not been invested in
Common Stock within 35 days after the receipt of optional and/or initial
investments. Dividends not invested in Common Stock within 30 days after receipt
will be returned to the Participant. The price of Shares purchased in the open
market for Participants will be the weighted average market price per share of
the aggregate number of shares of Common Stock purchased or sold as of the
relevant Investment Date. The Company will pay any brokerage commissions and
related fees incurred for the purchase of Shares. The Participants will be
responsible for all applicable taxes.
The number of Shares (including any fractional shares rounded to four
decimal places) credited to the account of a Participant for a particular
Investment Date will be determined by dividing the total amount of dividends and
funds provided for investment for a Participant on the Investment Date by the
relevant purchase price per Share.
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With regard to open market purchases and sales of Shares by an Independent
Agent, neither the Company, the Administrator (if it is not also the Independent
Agent) nor any Participant will have authority or power to direct the time or
price at which Shares may be purchased or sold, the markets on which the Shares
are to be purchased or sold (including on any securities exchange, in the
over-the-counter market or in negotiated transactions), or the selection of the
broker or dealer (other than any Independent Agent) through or from whom
purchases and sales may be made. The Independent Agent may commingle each
Participant's funds with those of other Participants for the purpose of
executing purchase and sale transactions, but will not offset purchases against
sales. Dividend and voting rights will commence upon settlement, whether Shares
are purchased from the Company or any other source.
Safekeeping Service
Participants may take advantage of the Plan's cost-free safekeeping
services at the time of enrollment or at any later time. A Participant holding
Common Stock in certificate form may deposit these Shares into the Plan by
delivering a completed Enrollment Form or Transaction Request Form and stock
certificates to the Administrator. THE CERTIFICATES SHOULD NOT BE ENDORSED. The
Shares deposited will be transferred into the name of the Administrator or its
nominee, as custodian, and credited to the Participant's account. References in
this Prospectus to the Shares in a Participant's account will include Shares
deposited into the Plan for safekeeping unless otherwise indicated. Cash
dividends paid on Shares deposited into the Plan for safekeeping will be
reinvested in accordance with the Participant's reinvestment election designated
on the Enrollment Form. However, Participants can select the safekeeping service
without participating in any other feature of the Plan.
How to Sell Shares
A Participant may request that all or a portion of the Shares in the
Participant's account be sold by delivering to the Administrator a completed
Transaction Request Form or by calling the Administrator. The Independent Agent
will sell Shares at least once per week or more frequently, if volume requires.
The price of Shares sold in the open market for Participants will be the
weighted average price per share of the aggregate number of Shares sold on the
relevant date of sale. The proceeds of the sale (less brokerage commissions of
up to $.25 per share, a $5.00 transaction fee, and any other related service
charges and applicable taxes) will then be paid to the Participants by check.
Payment of Dividends on Shares Sold. If the Administrator receives
instructions to sell Shares on which dividends are not being reinvested on or
after the record date relating to dividend payment, but before the dividend
payment date, the sale will be processed as described above and the dividends
will be paid to the Participant in the usual manner following the dividend
payment date. If the Administrator receives instructions to sell Shares on which
dividends are being reinvested on or after the record date relating to a
dividend payment date but before the Investment Date, and (i) if the
Participant's sale instructions cover fewer than all of the Shares credited to
the account, the sale will be processed as described in the immediately
preceding paragraph, the dividends will be invested in Shares and the newly
purchased Shares will be credited to the Participant's account or (ii) if the
Participant's sale instructions cover all of the Shares credited to the account,
the sale instructions will be processed and a check for the dividend will be
provided.
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How to Withdraw Shares from the Plan
Participants may withdraw some or all of the Shares credited to their
accounts from the Plan at any time by delivering to the Administrator (i)
transfer instructions, and (ii) if the Participant will not be the record holder
of the Shares after withdrawal, a properly completed stock assignment (stock
power form) signed by the Participant with a Medallion guarantee of the
Participant's signature. The instructions may be given by using the Transaction
Request Form attached to the account statement and transaction advices. If no
Shares are being transferred to another person, the Participant may also give
the instructions by telephone. Upon the Administrator's receipt of the proper
documentation, certificates representing the designated Shares will be sent to
the Participant or to persons that the Participant has designated.
Payment of Dividends on Withdrawn Shares. If the Administrator receives a
request to withdraw Shares from a Participant's account on which dividends are
not being reinvested on or after the record date relating to a dividend payment
date but before the dividend payment date, the withdrawal will be processed as
described above and the dividends will be paid to the Participant in the usual
manner following the dividend payment date.
If the Administrator receives a request to withdraw Shares from a
Participant's account on which dividends are being reinvested on or after the
record date relating to the dividend payment date but before the Investment
Date, and (i) if the Participant's withdrawal instructions cover fewer than all
of the Shares in the account, then the withdrawal will be processed as described
in the immediately preceding paragraph, dividends will be invested in Common
Stock through the Plan, and the newly purchased Shares will be credited to the
Participant's account or (ii) if the Participant's withdrawal instructions cover
all of the Shares in the account, the withdrawal instructions will be processed
and checks for the dividend and for the sale of any fractional shares will be
provided. Dividends on Shares withdrawn will continue to be reinvested in
accordance with the Participant's prior election unless the Participant elects
otherwise in writing or by telephone.
Certificates representing whole Shares withdrawn from the Plan will be sent
to the Participant or designated recipient by First Class Mail as soon as
practicable following the Administrator's receipt of the required documentation,
subject to the provisions of the preceding paragraph. Withdrawal of Shares does
not affect reinvestment of dividends on the shares withdrawn unless (i) the
Participant is no longer the record holder of the Shares, (ii) the reinvestment
is specifically discontinued by the Participant (see "How to Change Plan
Options"), or (iii) the Participant terminates participation in the Plan (see
"How to Terminate Participation in the Plan").
How to Transfer Shares
To a Brokerage Account. A Participant wishing to transfer all or any part
of the Shares in his Account to a brokerage account may do so by delivering to
the Administrator a written request and a stock assignment (stock power) signed
by the Participant and with a Medallion guarantee of the Participant's
signature, acceptable to the Administrator. The written request must specify the
whole number of Shares to be transferred, if fewer than all of such Shares in
his Account, and the name and address of the brokerage firm to which the Shares
are to be transferred. The transfer will be handled as described in "How to
Withdraw Shares from the Plan" above.
Transfer of Shares From One Plan Account to Another. The transfer of Shares
from a Participant's Plan account to another account (whether by gift, private
sale or otherwise) has the same requirements as the transfer of securities
generally. The Participant should deliver to the Administrator a written request
and a stock assignment (stock power form) signed by the Participant and with a
Medallion guarantee of the Participant's signature. The Administrator will
effect the transfer as soon as practicable after it has received the required
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documentation. Brokerage firms and banks generally can provide the Medallion
signature guarantee. Stock power forms are available at banks, brokerage firms
and from the Administrator. (See "Where to Get Forms," above.)
Shares transferred will be credited to the transferee's account. Dividends
will be reinvested or paid in full in the same manner as the Shares already in
the account unless the Participant otherwise directs the Administrator in
writing. If the transferee is not already a Participant, an account will be
opened in the transferee's name. The transferee may make elections with regard
to reinvestment of dividends on the transferred Shares and other services
provided by the Plan on the Enrollment Form provided. If no election is made,
dividends will be reinvested. Transferees will be sent a statement of account
showing the transfer of the Shares into their accounts. The transferor may
request that a gift certificate be provided. The transferor may send the gift
certificate directly or request that it be sent by the Administrator to the
transferee.
Payment of Dividends on Transferred Shares. If the Administrator receives a
request to transfer a Participant's Plan Shares on which dividends are not being
reinvested on or after the record date relating to a dividend payment but before
the dividend payment date, the Participant will receive the dividends paid with
respect to the transferred Shares either by mail or by direct deposit into the
Participant's designated direct deposit account.
If the Administrator receives a request to transfer a Participant's Plan
Shares on which dividends are being reinvested on or after the record date
relating to a dividend payment and before the next Investment Date, the
dividends paid with respect to the transferred Shares will be invested in Common
Stock through the Plan. If the Participant's transfer instructions cover fewer
than all of the Shares in the Participant's Plan Account, the Administrator will
process the transfer as described above in "Transfer of Shares from One Plan
Account to Another" and all Shares purchased with the reinvested dividend
payment will be credited to the transferor Participant's account. If the
transfer instructions cover all the Share s in the Participant's Plan account,
the transfer instructions will be processed after the Investment Date, and the
Shares purchased with the reinvested dividend payment will be transferred along
with the other Shares in the Plan account in accordance with the Participant's
instructions.
Pledge of Plan Shares
Except for transfers described in "How to Transfer Shares," Shares credited
to a Participant's account may not be pledged or assigned. A Participant who
wishes to pledge or assign such Shares must request that they be withdrawn from
the Plan. (See "How to Withdraw Shares.")
How to Purchase Gift Shares for Others
Participants can purchase Common Stock for others. If the recipient is not
a record owner of Common Stock, an initial investment of at least $100, the
payment of an account set-up fee of $5.00 and a completed Enrollment Form in the
name of the recipient are required to establish an account in the recipient's
name. If the recipient is already a record owner of Common Stock or a
Participant, an investment of at least $25 may be gifted, and no account set-up
fee will be required. (See "How to Enroll in the Plan.") The gifted shares and
statement of account will be handled as discussed above under "Transfer of
Shares From One Plan Account to Another." Gift certificates are available.
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<PAGE>
Account Statements and Other Communications
Participants will receive statements of account showing current
transactions for their accounts, the number of Shares credited to their
accounts, the amount of cash held in the account pending investment and other
information for the account. The Administrator will provide account statements
during the month after which the Participant has (i) made an optional
investment; (ii) deposited, transferred, sold or withdrawn Shares; or (iii) had
dividends reinvested in Common Stock. Otherwise, statements will be mailed
quarterly. The Administrator also will send each Participant a confirmation
promptly after each Plan transaction. Participants should retain these account
statements and confirmations in order to establish the cost basis, for tax
purposes, for Shares acquired under the Plan.
Participants will receive copies of all communications sent to holders of
Common Stock. These may include quarterly and annual reports to shareholders,
proxy material, consent solicitation material and Internal Revenue Service
information, if appropriate, for reporting dividend income. All notices, account
statements and other communications from the Administrator to Participants will
be addressed to the latest address of record; therefore, it is important that
Participants promptly notify the Administrator of any change of address.
Certificates for Shares
Normally, certificates for Shares purchased under the Plan will not be
issued. The number of Shares credited to an account under the Plan will be shown
on the Participant's statement of account. This convenience protects against
loss, theft or destruction of stock certificates.
Participants may obtain, free of charge at any time, a certificate for all
or part of the whole Shares credited to their accounts upon request to the
Administrator. The certificate(s) will be mailed by First Class Mail, within ten
business days of the Administrator's receipt of the request, to the
Participant's address of record.
Certificates for fractional Shares will not be issued under any
circumstances.
How to Terminate Participation in the Plan
Participants may terminate their participation in the Plan at any time by
notifying the Administrator on a Transaction Request Form or by telephone. Upon
the Administrator's receipt of the notification, Participants will receive (i) a
certificate for all of the whole Shares credited to their accounts, (ii) any
dividends and funds credited to their accounts pending investment for which the
Administrator has collected the value in U.S. dollars, and (iii) a check for the
cash value of any fractional Shares credited to their accounts. The fractional
shares will be valued at the closing sales price of the Common Stock reported on
the NYSE as published in The Wall Street Journal for the trading day preceding
the date of termination.
Costs
The Company will pay all administrative costs and expenses associated with
the Plan. PARTICIPANTS WILL BEAR THE COST OF BROKERAGE COMMISSIONS UP TO A
MAXIMUM OF $0.25 PER SHARE, RELATED SERVICE CHARGES, INCLUDING A $5.00
TRANSACTION FEE, AND ANY APPLICABLE TAXES INCURRED ON ALL SALES OF SHARES MADE
IN THE OPEN MARKET AND, IN THE CASE OF FIRST TIME PURCHASES BY APPLICANTS WHO
ARE NOT RECORD OR REGISTERED HOLDERS OF COMMON STOCK OR EMPLOYEES, AN ACCOUNT
SET-UP FEE OF $5.00. As of the date of this Prospectus, Shares purchased for
Participants under the Plan are being purchased directly from the Company.
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<PAGE>
There will be no brokerage commissions or related service charges for Shares
purchased in the open market or directly from the Company.
Federal Income Tax Consequences
THE FOLLOWING DISCUSSION RELATES TO THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF PARTICIPATION IN THE PLAN. THE EFFECT OF SUCH TAX CONSEQUENCES
UPON ANY PARTICIPANT WILL DEPEND UPON SUCH PARTICIPANT'S INDIVIDUAL
CIRCUMSTANCES WHICH, TOGETHER WITH THE STATE AND LOCAL TAX CONSEQUENCES OF
PARTICIPATION, SHOULD BE DISCUSSED BY EACH PARTICIPANT WITH A TAX ADVISOR.
Participants will be required to include in income for federal income tax
purposes amounts equal to the dividends reinvested in Common Stock pursuant to
the Plan as if they had directly received such in cash. A Participant who
receives Shares purchased in the open market for which the Company has paid the
Participant's share of brokerage commissions and service fees may be treated as
receiving additional dividend income for tax purposes in the amount of the
Participant's share of brokerage commissions and service fees paid by the
Company.
A Participant's tax basis for Shares purchased pursuant to the Plan will be
equal to the cost of such Shares as discussed above; in the case of Shares
purchased in the open market such cost may include any brokerage commissions,
service fees and applicable taxes. Such Shares will have a holding period
beginning on the day after the Shares are allocated to the Participant's
account.
All or a portion of the dividends distributed to holders of the Company's
stock may be a return of capital and, as such, would not be taxable as ordinary
income. Reports will be provided to shareholders which will indicate if the
Company has made a return of capital distribution during the year. Shareholders
receiving a return of capital dividend must reduce the tax basis of the share on
which the dividend is paid by the amount of the dividend that is a return of
capital. If the amount that is a return of capital exceeds the tax basis, the
excess must be reported as capital gains.
Participants will not realize any taxable income when they receive
certificates for whole shares credited to their accounts under the Plan. Gain or
loss will be recognized by Participants when they sell such whole shares
previously received in certificated form from their accounts, when fractional
shares credited to their accounts are sold pursuant to the terms of the Plan,
and when Shares credited to their accounts are sold through the Plan.
If a Participant who is an employee of the Company authorizes payroll
deductions for investments in the Plan, any amounts transferred to the Plan
pursuant to such authorization will be treated as compensation in the year
otherwise payable to the employee and will be subject to income tax and payroll
taxes.
Employee Participation
Employees may participate in the Plan by making cash investments or through
payroll deductions. (See "How to Enroll in the Plan--Applicants Who Are
Employees.")
Shares will be purchased for employees in the same manner as for other
Participants. (See "Purchases of Shares.")
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<PAGE>
The Company will pay no interest on any optional investments or payroll
deduction amounts held prior to investment.
An employee may cancel the payroll deduction at any time and remain in the
Plan by notifying the Company's payroll administrator.
In order to withdraw from the Plan, an employee Participant must (i) call
or submit a Transaction Request Form to the Plan Administrator and (ii) submit a
written request to the Payroll Department at the Company. The employee's payroll
deduction will be canceled effective with the pay period following receipt of
the written request in the Company's Payroll office. The employee Participant's
account will be terminated as soon as practicable. (See "How to Withdraw Shares
from the Plan" and "How to Terminate Participation in the Plan.")
If an employee leaves the Company or its subsidiaries, the employee will
continue to be a Participant unless the employee notifies the Administrator that
he or she is withdrawing from the Plan. (See "How to Withdraw Shares from the
Plan" and "How to Terminate Participation in the Plan.")
Miscellaneous
Stock Splits, Stock Dividends and Rights Offerings. Any shares or other
securities representing stock splits or noncash distributions on Shares in the
account of a Participant will be credited to the Participant's account. Stock
splits, combinations, recapitalization and similar events affecting Shares in a
Participant's account will be credited on a pro rata basis. Transaction
processing may be curtailed or suspended until the completion of any stock
dividend, stock split or rights offering.
In the event of a rights offering, a Participant will receive rights based
upon the total number of whole Shares credited to the Participant's account.
Voting. Participants will have the exclusive right to exercise all voting
rights for Shares credited to their accounts. The Administrator will forward to
the Participant all shareholder materials relating to Shares in a Participant's
account. Participants may vote the Shares in their accounts in person or by
proxy. Participants' proxy cards will represent all Shares in their accounts and
Shares registered in their names. Shares in a Participant's account will not be
voted unless the Participant or the proxy votes them. (See "Description of
Common Stock--Voting Rights.")
Limitation of Liability. The Plan provides that neither the Company, the
Administrator (including the Company if it is acting as such) nor any
Independent Agent will be liable for any act done in good faith or for the good
faith omission to act in connection with the Plan, including, without
limitation, any claim of liability arising out of failure to terminate a
Participant's account upon the Participant's death prior to receipt of written
notice of the death, or with respect to the prices at which Shares are purchased
or sold for the Participant's account and the times when purchases and sales are
made, or with respect to any loss or fluctuation in the market value after the
purchase or sale of the shares. However, these Plan provisions do not affect a
Participant's right to bring a cause of action based on alleged violations of
federal securities laws.
Interpretation and Regulation of the Plan. The officers of the Company are
authorized to take actions to carry out the Plan in a manner consistent with the
Plan's terms and conditions. The Company reserves the right to interpret and
regulate the Plan as it deems desirable or necessary in connection with the
Plan's operations.
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<PAGE>
Change or Termination of the Plan. The Company may suspend, modify or
terminate the Plan at any time, in whole, in part or in respect of Participants
in one or more jurisdictions, without the approval of Participants. Notice of
such suspension, modification or termination will be sent to all affected
Participants, who will in all events have the right to withdraw from
participation. Upon any whole or partial termination of the Plan by the Company,
affected Participants will receive (i) certificates for all of the whole Shares
credited to their accounts, (ii) any dividends and funds credited to their
accounts pending investment for which the Administrator has collected the full
face value in U.S. dollars, and (iii) a check for the cash value for any
fractional Shares credited to their accounts. Fractional shares will be valued
at the closing sales price of the Common Stock reported on the NYSE as published
in The Wall Street Journal for the trading day preceding the date of
termination.
Termination of Participation by the Company. If a Participant does not have
at least one whole share of Common Stock credited to the account, or does not
own any Common Stock for which dividends are designated for reinvestment
pursuant to the Plan, the Company may terminate the Participant's participation
in the Plan upon written notice to the Participant. Additionally, the Company
may terminate any Participant's participation in the Plan after it has provided
written notice, mailed in advance of such termination, to the Participant at the
address appearing on the Administrator's records. A Participant whose
participation has been terminated will receive (i) a certificate for all of the
whole Shares credited to the account, (ii) any dividends and funds credited to
the account pending investment for which the Administrator has collected the
face value in U.S. dollars, and (iii) a check for the cash value of any
fractional Shares credited to the account. Fractional shares will be valued at
the closing price of the Common Stock reported on the NYSE as published in The
Wall Street Journal for the trading day preceding the date of termination.
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<PAGE>
PLAN OF DISTRIBUTION
The Common Stock being offered hereby is offered pursuant to the Plan. The
Plan provides for the purchase of Shares directly from the Company, or, at the
Company's option, by an Independent Agent on the open market. As of the date of
this Prospectus, Shares purchased for Participants under the Plan are being
purchased from the Company. The Plan provides that the Company may not change
the source of purchases of Shares under the Plan more than once in any
three-month period. Whenever Shares are being purchased for Participants in the
open market, the Company will not exercise its right to change the source of
purchase of Shares unless the Chief Financial Officer or Financial Committee of
the Board of Directors determines that the Company needs to increase equity
capital or there is another valid reason for the change.
The Company will pay all administrative costs and expenses associated with
the Plan, except as noted below. The Company will pay any brokerage commissions
and related service charges incurred in the purchase of Shares on the open
market. Participants will be responsible for applicable taxes incurred in
purchases of Shares on the open market. Participants will also bear the cost of
brokerage commissions up to a maximum of $0.25 per share, related service
charges, including a $5.00 transaction fee and any applicable taxes incurred on
all sales of Shares made in the open market and, in the case of first time
purchases by applicants who are not record or registered holders of common
stock, an account set-up fee of $5.00. There will be no brokerage commissions or
related service charges for Shares purchased directly from the Company.
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<PAGE>
DESCRIPTION OF COMMON STOCK
The statements in this Prospectus 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. As of the date of this Prospectus, 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 in
this Prospectus by reference were issued by TNP and affect only 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 th e
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 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 September 30, 1996, the amount of restricted retained
earnings of TNP was approximately $18.66 million.
Under TNP's Credit Agreements dated as of November 3, 1995 and September
10, 1996 (the "Credit Agreements"), TNP may not, without the consent of the
holders of at least two-thirds of the indebtedness under each 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
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<PAGE>
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 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.
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 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 percent 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 percent 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.
Stock certificates relating to the Shares 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.
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<PAGE>
The outstanding Common Stock is, and the shares offered hereby when issued
will be, fully paid and nonassessable.
Transfer Agent and Registrar
Beginning January 1, 1997, the Transfer Agent and Registrar for the Common
Stock will be The Bank of New York.
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.
LEGAL OPINIONS
An opinion as to the legality of the securities offered hereby has been
rendered by Michael D. Blanchard, Secretary and General Counsel for the Company.
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus. If given or made, such information
or representations must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. This Prospectus does not constitute
an offer or solicitation by any person in any jurisdiction in which it is
unlawful to make an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder at any time shall imply that there has
been no change in the affairs of the Company or that the information herein is
correct as of any time subsequent to the date of this Prospectus.
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TABLE OF CONTENTS
Page
Prospectus
Available Information .....2
Incorporation of Certain Documents by
Reference .....2
The Company .....3
Application of Proceeds .....4
Description of the Plan .....4
Plan of Distribution ....18
Description of Common Stock ....19
Experts ....21
Legal Opinions ....21
1,000,000 Shares
TNP LOGO
Direct Stock Purchase Plan
PROSPECTUS
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December 23, 1996
