PROSPECTUS SUPPLEMENT
- ---------------------
(To Prospectus Dated May 28, 1996)
$125,000,000
Public Service Company of Colorado
First Collateral Trust Bonds, Series No. 3
7-1/8% Bonds due 2006
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Interest Payable June 1 and December 1
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The First Collateral Trust Bonds, Series No. 3, due 2006 (the "Offered
Bonds") of Public Service Company of Colorado (the "Company") will bear interest
at 7-1/8% per annum and will not be redeemable prior to maturity. See "CERTAIN
TERMS OF THE OFFERED BONDS" herein and "DESCRIPTION OF THE BONDS" in the
accompanying Prospectus.
The Offered Bonds will be represented by a global bond (the "Global Bond")
registered in the name of a nominee of The Depository Trust Company, as
Depository. Beneficial interests in the Global Bond representing Offered Bonds
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its participants. The Offered Bonds will not be
represented by certificates issued in definitive form (such an Offered Bond, so
represented, being called a "Certificated Bond"), except under the limited
circumstances described herein. See "CERTAIN TERMS OF THE OFFERED
BONDS--Book-Entry System."
As discussed herein and in the accompanying Prospectus, the principal of and
accrued interest on the Offered Bonds will be secured by (i) an equal principal
amount of first mortgage bonds of the Company, which will not bear interest,
delivered to the Trustee under the Mortgage, and (ii) a second mortgage on
substantially all of the Company's properties used in the electric utility
business. Since such first mortgage bonds will not bear interest, an amount
equal to accrued interest, if any, on the Offered Bonds will be secured only by
such second mortgage. See "DESCRIPTION OF THE BONDS--Security" in the
accompanying Prospectus.
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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 SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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Price to Underwriting Proceeds to
Public (1) Discount (2) Company (1)(3)
- --------------------------------------------------------------------------------
Per Offered Bond.......... 99.366% .65% 98.716%
- --------------------------------------------------------------------------------
Total................... $124,207,500 $812,500 $123,395,000
================================================================================
(1) Plus accrued interest, if any, from May 31, 1996.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933, as amended.See "UNDERWRITING."
(3) Before deduction of expenses payable by the Company estimated at $300,000.
------------------
The Offered Bonds are offered subject to prior sale, when, as and if
delivered to and accepted by the Underwriters, and subject to approval of
certain legal matters by their counsel and counsel for the Company. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Offered
Bonds will be made through the book-entry facilities of The Depository Trust
Company on or about May 31, 1996.
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Merrill Lynch & Co. Goldman, Sachs & Co. PaineWebber Incorporated
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The date of this Prospectus Supplement is May 28, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RECENT DEVELOPMENTS
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995; Quarterly Report on Form 10-Q for the quarter ended March 31, 1996;
and Current Report on Form 8-K dated January 31, 1996, incorporated herein by
reference (see "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus), contain information with respect to the proposed
mergers of two wholly-owned subsidiaries of New Century Energies, Inc. ("New
Century"), a newly formed holding company, into the Company and Southwestern
Public Service Company ("SPS"), respectively. As a result, New Century would
become the holding company for the Company and SPS, but the transaction would
not affect the outstanding debt, including the Offered Bonds, or shares of
preferred stock of the Company. The transaction would result in the common
shareholders of the Company owning 62% of the common equity of New Century and
the common shareholders of SPS owning 38% of the common equity of New Century.
The transaction is subject to customary closing conditions, including,
without limitation, the receipt of all necessary governmental approvals and the
making of all necessary governmental filings. Furthermore, the merger agreement
may be terminated under certain circumstances, including, without limitation, by
mutual written consent of the Boards of Directors of the Company and SPS.
Following the transaction, New Century will maintain its corporate offices
in Denver, Colorado and significant operating offices in Amarillo, Texas. The
headquarters of the Company and SPS will remain in their current locations, and
each of the Company and SPS will continue their existing utility operations.
CERTAIN TERMS OF THE OFFERED BONDS
The following information concerning the Offered Bonds supplements, and
should be read in conjunction with, the statements under "DESCRIPTION OF THE
BONDS" in the accompanying Prospectus. Certain capitalized terms used herein
which are not otherwise defined herein are defined in the accompanying
Prospectus.
General
The Offered Bonds will be issued as a series of the Company's First
Collateral Trust Bonds under the Mortgage, as previously supplemented and as
further supplemented by the supplemental indenture dated as of May 1, 1996 (the
"Supplemental Indenture"), relating to the Offered Bonds. The statements herein
concerning the Offered Bonds, the Mortgage and the Supplemental Indenture are
merely a summary and do not purport to be complete. Such statements make use of
terms defined in the Mortgage and are qualified in their entirety by reference
to said documents.
The Offered Bonds will be issued in fully registered form only, without
coupons. Each Offered Bond will be issued initially in book-entry form. Except
as set forth herein under "Book-Entry System",
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<PAGE>
the Offered Bonds will not be issuable as Certificated Bonds. The authorized
denominations of the Offered Bonds will be $1,000 and integral multiples
thereof.
Payment and Maturity
Each Offered Bond will bear interest from May 31, 1996, payable semiannually
on June 1 and December 1, commencing December 1, 1996. The interest on each
Offered Bond (other than interest payable at maturity) will be payable by check
mailed to the person in whose name such Offered Bond is registered at the close
of business on the May 15 or November 15, as the case may be, next preceding the
interest payment date in respect thereof, except that (a) in the case of a
Global Bond representing Offered Bonds, such payment will be made in accordance
with arrangements then in effect among the Company, the Trustee and the
Depository (as hereinafter defined), and (b) if and to the extent the Company
defaults in the payment of the interest due on any interest payment date, such
defaulted interest will be paid to the person in whose name such Offered Bond
(or any bond or bonds issued upon transfer or exchange thereof) is registered
five business days before the date of payment of such defaulted interest.
Principal, premium, if any, and interest due at maturity on the Offered Bonds
will be payable upon presentation thereof at the office of the Trustee that has
been designated by the Company as its office or agency for payment.
The Offered Bonds will mature on June 1, 2006, will be initially issued in
the aggregate principal amount of $125,000,000, and will bear interest at the
rate set forth on the cover page hereof.
Redemption of the Offered Bonds
The Offered Bonds will not be redeemable prior to maturity.
Book-Entry System
The Offered Bonds will be issued in whole or in part in the form of a Global
Bond that will be deposited with, or on behalf of, The Depository Trust Company,
New York, New York ("DTC"), or such other depository as may be subsequently
designated by the Company (DTC and any such other depository being herein
referred to as the "Depository"), and registered in the name of the Depository,
or its nominee. Except under the limited circumstances described below, Offered
Bonds represented by a Global Bond will not be exchangeable for Certificated
Bonds.
So long as the Depository, or its nominee, is the registered owner of a
Global Bond, such Depository or such nominee, as the case may be, will be
considered the sole registered holder of the individual Offered Bonds
represented by such Global Bond for all purposes under the Mortgage. Payments of
principal of and premium, if any, and any interest on individual Offered Bonds
represented by a Global Bond will be made to the Depository or its nominee, as
the case may be, as the registered holder of such Global Bond. Except as set
forth below, owners of beneficial interests in a Global Bond will not be
entitled to have any of the individual Offered Bonds represented by such Global
Bond registered in their names, will not receive or be entitled to receive
physical delivery of any such Offered Bonds and will not be considered the
registered holder thereof under the Mortgage, including, without limitation, for
purposes of consenting to any amendment thereof or supplement thereto as
described in the accompanying Prospectus.
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<PAGE>
If (x) the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed within 90 days, or (y)
the Company executes and delivers to the Trustee a Company Order to the effect
that the Global Bond shall be exchangeable, or (z) an Event of Default has
occurred and is continuing with respect to the Offered Bonds and there has been
delivered to the Company and the Trustee an Opinion of Counsel to the effect
that the interests of the beneficial owners of the Offered Bonds in respect
thereof will be materially impaired unless such owners hold Certificated Bonds,
the Company will issue individual Certificated Bonds in exchange for the Global
Bond representing the corresponding Offered Bonds. In any such instance, an
owner of an Offered Bond represented by a Global Bond will be entitled to
physical delivery of individual Certificated Bonds equal in principal amount to
such Offered Bond and to have such Certificated Bonds registered in its name.
Individual Certificated Bonds so issued will be issued as registered Offered
Bonds in denominations of $1,000 and integral multiples thereof.
The following is based upon information furnished by DTC:
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its
direct participants ("Direct Participants") deposit with DTC. DTC
also facilitates the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry
changes in Direct Participants' accounts, thereby eliminating the
need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers,
banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"; together with Direct
Participants, the "Participants"). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Offered Bonds under the DTC system must be made
by or through Direct Participants, which will receive a credit
for the Offered Bonds on DTC's records. The ownership interest of
each actual purchaser of each Offered Bond ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details
of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which
the Beneficial Owner entered into the transaction. Beneficial
Owners will not receive certificates representing their ownership
interests in Offered Bonds, except in the event that use of the
book-entry system for the Offered Bonds is discontinued.
S-4
<PAGE>
Transfers of ownership interests in the Offered Bonds are to
be accomplished by entries made on the books of Participants
acting on behalf of the Beneficial Owners. To facilitate
subsequent transfers, all Offered Bonds deposited by Participants
with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Offered Bonds with DTC and their
registration in the name of Cede & Co. effect no change in
beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Offered Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such Offered Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices must be sent to Cede & Co. If less than
all of the Offered Bonds represented by a Global Bond are being
redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in such Global Bond to be
redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect
to Offered Bonds. Under its usual procedures, DTC mails an
"Omnibus Proxy" to the Company as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the
Offered Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Offered Bonds will be
made to DTC. DTC's practice is to credit Direct Participants'
accounts on payment dates in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on the applicable payment date.
Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of
such Participant and not of DTC, the Trustee, or the Company,
subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to
DTC is the responsibility of the Trustee. Disbursement of such
payments to Direct Participants shall be the responsibility of
DTC, and disbursements of such payments to Beneficial Owners
shall be the responsibility of the Participants.
DTC may discontinue providing its services as securities
depository with respect to the Offered Bonds at any time by
giving reasonable notice to the Company and the Trustee. Under
such circumstances, in the event that a successor securities
depository is not obtained, Certificated Bonds are required to be
printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Certificated Bonds will be printed and delivered.
S-5
<PAGE>
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
None of the Company, the Trustee or any agent for payment on or registration
of transfer or exchange of the Offered Bonds will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial interests in such Global Bond or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
APPLICATION OF PROCEEDS
The net proceeds from the sale of the Offered Bonds will be used to fund the
Company's construction program, for other general corporate purposes and to
repay short term indebtedness incurred for such purposes.
UNDERWRITING
Subject to the terms and conditions set forth in the Bond Purchase Contract
dated as of May 28, 1996 (the "Bond Purchase Contract") among the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and
PaineWebber Incorporated (the "Underwriters"), the Company has agreed to sell to
the Underwriters, and the Underwriters have severally agreed to purchase, the
respective principal amounts of the Offered Bonds set forth after their names
below.
Principal
Underwriter Amount
----------- ------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................$ 42,000,000
Goldman, Sachs & Co............................ 41,500,000
PaineWebber Incorporated....................... 41,500,000
Total.......................................$125,000,000
The Underwriters have advised the Company that they propose initially to
offer the Offered Bonds to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of .4% of the principal amount of the
Offered Bonds; that the Underwriters may allow, and such dealers may reallow, a
discount not in excess of .25% of the principal amount of the Offered Bonds to
certain other dealers; and that after the initial public offering, the public
offering price, concession and discount may be changed.
The Bond Purchase Contract provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and
PaineWebber Incorporated and certain affiliates thereof engage in transactions
with and perform services for the Company and its affiliates in the ordinary
course of business.
S-6
<PAGE>
PROSPECTUS
$306,000,000
PUBLIC SERVICE COMPANY OF COLORADO
First Collateral Trust Bonds And Cumulative Preferred Stock
----------------
Public Service Company of Colorado (the "Company") may offer from time to
time (i) its First Collateral Trust Bonds (the "New Bonds"), in one or more
series, and (ii) its Cumulative Preferred Stock, $100 par value per share (the
"$100 Cumulative Preferred Stock") or its Cumulative Preferred Stock ($25), $25
par value per share (the "$25 Cumulative Preferred Stock" and, together with the
$100 Cumulative Preferred Stock, the "New Preferred Stock"), in one or more
series. The New Bonds and the New Preferred Stock are referred to hereinafter
individually and sometimes collectively as the "Securities". The Securities will
be issued in amounts, at prices and on terms to be determined at the time or
times of sale. The sum of the aggregate principal amount of the New Bonds plus
the aggregate par value of the shares of New Preferred Stock will not exceed
$306,000,000 (the "Stated Value").
For each offering of the Securities for which this Prospectus is being
delivered, there will be an accompanying Prospectus Supplement (each a
"Prospectus Supplement") that will set forth where applicable, with respect to
the New Bonds, the series designation, the aggregate principal amount of the
series, the maturity date or dates, the interest rate or rates and times of
payment of interest, the provisions for redemption, if any, and other
provisions, together with the initial public offering price and the terms of
offering of such New Bonds; and with respect to the New Preferred Stock, the
series designation, the specific number of shares, liquidation value, dividend
rate or rates, any redemption and sinking fund terms and other provisions,
together with the initial public offering price and the terms of offering of
such New Preferred Stock.
The Securities may be sold by the Company through underwriters or dealers,
directly by the Company or through agents for offering pursuant to the terms
fixed at the time of sale. See "PLAN OF DISTRIBUTION" herein.
----------------
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.
The date of this Prospectus is May 28, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC") and the New York, Chicago and
Pacific Stock Exchanges. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and
at the following regional offices of the SEC: New York Regional Office, 13th
Floor, Seven World Trade Center, New York, New York, and the Chicago Regional
Office, 14th Floor, 500 West Madison Street, Chicago, Illinois. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Common Stock of the Company is listed on the
New York, Chicago and Pacific Stock Exchanges. The Company's $100 Cumulative
Preferred Stock 4-1/4% Series is listed on the American Stock Exchange. The
Company's $100 Cumulative Preferred Stock 7.15% Series and $25 Cumulative
Preferred Stock 8.40% Series are listed on the New York Stock Exchange. Reports,
proxy statements and other information can also be inspected and copied at the
offices of such exchanges on the 7th Floor, 20 Broad Street, New York, New York;
on the 12th Floor, 440 South LaSalle Street, Chicago, Illinois; and 301 Pine
Street, San Francisco, California, respectively.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's most recent Annual Report on Form 10-K filed pursuant to
Section 13(a) or 15(d) of the Exchange Act and all other reports filed by the
Company pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of
the fiscal year covered by such Annual Report on Form 10-K are hereby
incorporated herein by reference. In addition, all documents filed by the
Company pursuant to Section 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 the
offering made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. The
documents incorporated or deemed to be incorporated herein by reference are
sometimes hereinafter called the "Incorporated Documents." Any statement
contained in an Incorporated Document shall be deemed to be modified or
superseded for all purposes to the extent that a statement herein or in a
Prospectus Supplement or supplement thereto or in any subsequently filed
Incorporated Document modifies or supersedes such statement. The Incorporated
Documents incorporated herein by reference as of the date of this Prospectus are
the Company's Annual Report on Form 10-K for the year ended December 31, 1995;
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1996; and the Company's Current Reports on Form 8-K dated January 18, 1996,
January 31, 1996 and May 21, 1996.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of any such person, a copy of any or
all of the Incorporated Documents, excluding the exhibits thereto unless such
exhibits are specifically incorporated by reference into such documents.
Requests for such documents should be directed to Richard C. Kelly, Senior Vice
President, Finance and Administration and Chief Financial Officer, by mail at
Suite 900, 1225 17th Street, Denver, Colorado 80202-5533, or by telephone at
(303) 571-7511.
2
<PAGE>
THE COMPANY
The Company, incorporated through merger of predecessors under the laws of
the State of Colorado on September 3, 1924, is an operating public utility
engaged, together with its subsidiaries, principally in the generation,
purchase, transmission, distribution and sale of electricity and in the
purchase, transmission, distribution, sale and transportation of natural gas,
with the Company's principal distribution center being the Denver metropolitan
area. The Company's executive offices are located at 1225 17th Street, Denver,
Colorado 80202-5533, where the telephone number is (303) 571-7511.
RATIO OF CONSOLIDATED EARNINGS TO
CONSOLIDATED FIXED CHARGES AND
RATIO OF CONSOLIDATED EARNINGS TO CONSOLIDATED COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Three Months
Ended
Twelve Months Ended December 31, March 31,
--------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges 2.94 2.43 2.54 2.53 2.78 3.68
Ratio of earnings to combined
fixed charges and preferred
stock dividend requirements 2.54 2.16 2.27 2.28 2.49 3.27
APPLICATION OF PROCEEDS
Except as may be otherwise provided in the applicable Prospectus
Supplement or any supplement thereto, the net proceeds from the sale of the
Securities will be used for one or more of the following: (i) to fund the
Company's construction program; (ii) to refund certain issues of the Company's
$100 Cumulative Preferred Stock and $25 Cumulative Preferred Stock, including
the payment of redemption premiums and issuance and other costs associated with
such refunding; and (iii) for other general corporate purposes, and for the
payment of short-term indebtedness incurred for any of the foregoing purposes.
DESCRIPTION OF THE BONDS
General: The New Bonds will be issued in one or more series as fully
registered bonds, without coupons, under an Indenture, dated as of October 1,
1993 (the "Original Mortgage"), between the Company and First Trust of New York,
National Association (together with any successor thereto, the "Trustee") as
successor trustee to Morgan Guaranty Trust Company of New York. The Original
Mortgage, as supplemented and to be supplemented by various supplemental
indentures, including one or more supplemental indentures relating to the New
Bonds, is hereinafter referred to as the "Mortgage". The summaries under this
heading do not purport to be complete and are subject to, and qualified in their
entirety by, the detailed provisions of the Mortgage. Capitalized terms used
under this heading which are not otherwise defined in this Prospectus shall have
the meanings ascribed thereto in the Mortgage. Wherever particular provisions of
the Mortgage or terms defined therein are referred to, such provisions
3
<PAGE>
or definitions are incorporated by reference as a part of the statements made
herein and such statements are qualified in their entirety by such reference.
References to article and section numbers herein, unless otherwise indicated,
are references to article and section numbers of the Original Mortgage.
The Mortgage provides that, in addition to the New Bonds, other debt
securities may be issued thereunder, without limitation as to the aggregate
principal amount, on the basis of Class A Bonds (as hereinafter defined),
property additions, retired Mortgage Securities (as hereinafter defined) and
cash. (See "Issuance of Additional Mortgage Securities".) The New Bonds and all
other debt securities heretofore or hereafter issued under the Mortgage are
collectively referred to herein as the "Mortgage Securities" or the "Bonds".
Reference is made to the Prospectus Supplement, or a supplement thereto,
for a description of the following terms of the series of New Bonds in respect
of which this Prospectus is being delivered: (i) the title of such New Bonds;
(ii) the aggregate principal amount of such New Bonds; (iii) the date or dates
on which the principal of such New Bonds is payable; (iv) the rate or rates at
which such New Bonds will bear interest; the date or dates from which such
interest will accrue; the dates on which such interest will be payable
("Interest Payment Dates"); and the regular record dates for the interest
payable on such Interest Payment Dates; (v) the option, if any, of the Company
to redeem such New Bonds and the period or periods within which or the date or
dates on which, the prices at which and the terms and conditions upon which,
such New Bonds may be redeemed, in whole or in part, upon the exercise of such
option; (vi) the obligation, if any, of the Company to redeem or purchase such
New Bonds pursuant to any sinking fund or analogous provisions and the period or
periods within which or the date or dates on which, the price or prices at which
and the terms and conditions upon which such New Bonds will be redeemed or
purchased, in whole or in part, pursuant to such obligation; (vii) the
denominations in which such New Bonds will be issuable, if other than $1,000 and
integral multiples thereof; (viii) whether such New Bonds are to be issued in
whole or in part in book-entry form and represented by one or more global New
Bonds and, if so, the identity of the depositary for such global New Bonds; and
(ix) any other terms of such New Bonds not inconsistent with the provisions of
the Mortgage.
Payment of Bonds; Transfers; Exchanges: Except as may be provided in the
applicable Prospectus Supplement or supplement thereto, interest, if any, on
each Bond payable on each Interest Payment Date will be paid to the person in
whose name such Bond is registered (the registered holder of any Mortgage
Security being hereinafter called a "Holder") as of the close of business on the
regular record date relating to such Interest Payment Date; provided, however,
that interest payable at maturity (whether at stated maturity, upon redemption
or otherwise, hereinafter "Maturity") will be paid to the person to whom
principal is paid at Maturity. However, if there has been a default in the
payment of interest on any Bond, such defaulted interest may be payable to the
Holder of such Bond as of the close of business on a date selected by the
Trustee which is not more than 30 days and not less than 10 days prior to the
date proposed by the Company for payment of such defaulted interest or in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which such Bond may be listed, if the Trustee deems such manner of
payment practicable. (See Section 307.)
Unless otherwise specified in a Prospectus Supplement or supplement
thereto, the principal of and premium, if any, and interest on the Bonds at
Maturity will be payable upon presentation of the Bonds at the corporate trust
office of First Trust of New York, National Association, in New York, New York,
as Paying Agent for the Company. The Company may change the Place of Payment on
the Bonds, may appoint one or more additional Paying Agents (including the
Company) and may remove any Paying
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Agent, all at its discretion. (See Section 602 and Article 1 of the Supplemental
Indenture(s) relating to the New Bonds.)
Unless otherwise specified in a Prospectus Supplement or supplement
thereto, the transfer of Bonds may be registered, and Bonds may be exchanged for
other Bonds of the same series and tranche, of authorized denominations and of
like tenor and aggregate principal amount, at the corporate trust office of
First Trust of New York, National Association, in New York, New York, as
Security Registrar for the Bonds. The Company may change the place for
registration of transfer and exchange of the Bonds, and may designate one or
more additional places for such registration and exchange, all at its
discretion. (See Section 602.) Except as otherwise provided in the applicable
Prospectus Supplement or a supplement thereto, no service charge will be made
for any transfer or exchange of the Bonds, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of the
Bonds. The Company will not be required to execute or to provide for the
registration of transfer of or the exchange of (a) any Bond during a period of
15 days prior to giving any notice of redemption or (b) any Bond selected for
redemption in whole or in part, except the unredeemed portion of any Bond being
redeemed in part. (See Section 305.)
Redemption: Any terms for the optional or mandatory redemption of New
Bonds will be set forth in the Prospectus Supplement or a supplement thereto.
Except as shall otherwise be provided in the applicable Prospectus Supplement or
a supplement thereto with respect to Bonds redeemable at the option of the
Holder, Bonds will be redeemable only upon notice by mail not less than 30 nor
more than 60 days prior to the date fixed for redemption, and, if less than all
the Bonds of a series, or any tranche thereof, are to be redeemed, the
particular Bonds to be redeemed will be selected by such method as shall be
provided for any particular series, or in the absence of any such provision, by
such method of random selection as the Security Registrar deems fair and
appropriate. (See Sections 503 and 504.)
Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Paying Agent or Agents, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such Bonds and that
if such money has not been so received, such notice will be of no force and
effect and the Company will not be required to redeem such Bonds. (See Section
504.)
While the Original Mortgage contains provisions for the maintenance of the
Mortgaged Property, it does not contain any provisions for a maintenance or
sinking fund and, except as may be provided in the applicable Prospectus
Supplement or a supplement thereto, there will be no provisions for any such
funds for the New Bonds.
Security: General. Except as discussed under this heading and under
"Issuance of Additional Mortgage Securities" below, all Mortgage Securities now
or hereafter issued under the Mortgage will be secured, equally and ratably,
primarily by
(a) an equal principal amount of first mortgage bonds (which need
not bear interest) issued under the Company's Indenture, dated as of
December 1, 1939 (the "Original 1939 Mortgage"), between the Company and
First Trust of New York, National Association (together with any successor
thereto, the "1939 Mortgage Trustee"), as successor trustee to Morgan
Guaranty Trust Company of New York (formerly Guaranty Trust Company of New
York), and delivered to the Trustee under the Mortgage (the Original 1939
Mortgage, as amended and
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supplemented, being hereinafter called the "1939 Mortgage"); as discussed
under "DESCRIPTION OF THE 1939 MORTGAGE--Security," the 1939 Mortgage
constitutes, subject to certain exceptions, a first mortgage lien on
substantially all properties of the Company; and
(b) the lien of the Mortgage on substantially all of the Company's
properties used or to be used in or in connection with the business of
generating, purchasing, transmitting, distributing and/or selling electric
energy (the "Electric Utility Business"), which lien is junior to the lien
of the 1939 Mortgage.
As discussed below under "Class A Bonds," following a merger or consolidation of
another corporation into the Company or the transfer to the Company of property
subject to the lien of an existing mortgage all the obligations of the mortgagor
under which have been assumed by the Company, the Company could deliver to the
Trustee bonds issued under a mortgage existing on the properties acquired in
such transaction in lieu of or in addition to bonds issued under the 1939
Mortgage. In such event, the Mortgage Securities would be secured, additionally,
by such bonds and by the lien of the Mortgage on such properties, which would be
junior to the liens of such existing mortgage and the 1939 Mortgage on such
properties. The 1939 Mortgage and all such other mortgages are hereinafter
collectively referred to as "Class A Mortgages," and all bonds issued under the
Class A Mortgages and delivered to the Trustee are hereinafter collectively
referred to as "Class A Bonds". If and when no Class A Mortgages are in effect,
the Mortgage will constitute a first mortgage lien on all property of the
Company subject thereto, subject to certain Permitted Liens (see "Lien of the
Mortgage," below). As discussed below under "Class A Bonds", at the date of this
Prospectus the only Class A Mortgage is the 1939 Mortgage. The Company currently
believes that it is possible that prior to the Stated Maturity of the New Bonds,
all Class A Bonds outstanding under the 1939 Mortgage, other than Class A Bonds
delivered to and held by the Trustee as the basis of authentication and delivery
of Mortgage Securities, may have been paid, redeemed or otherwise retired and
that, thereupon, the Class A Bonds issued under the 1939 Mortgage would be
surrendered for cancellation and the 1939 Mortgage would be discharged. Upon
discharge of the 1939 Mortgage and assuming no other Class A Mortgage exists at
the time, the Mortgage would become a first mortgage lien on all property of the
Company subject thereto, subject to certain Permitted Liens as referred to
above.
Class A Bonds. Class A Bonds issued as the basis for the authentication
and delivery of Mortgage Securities will be issued and delivered to, and
registered in the name of, the Trustee or its nominee and will be owned and held
by the Trustee, subject to the provisions of the Mortgage, for the benefit of
the Holders of all Mortgage Securities Outstanding from time to time, and the
Company will have no interest in such Class A Bonds. Class A Bonds issued as the
basis of authentication and delivery of Mortgage Securities (a) will mature or
be subject to mandatory redemption on the same dates, and in the same principal
amounts, as such Mortgage Securities and (b) will contain, in addition to any
mandatory redemption provisions applicable to all Class A Bonds Outstanding
under the related Class A Mortgage, mandatory redemption provisions correlative
to provisions for mandatory redemption (pursuant to a sinking fund or
otherwise), or for redemption at the option of the Holder, of such Mortgage
Securities. Class A Bonds issued as the basis for authentication and delivery of
a series or tranche of Mortgage Securities (x) may, but need not, bear interest,
any such interest to be payable at the same times as interest on the Mortgage
Securities of such series or tranche and (y) may, but need not, contain
provisions for the redemption thereof at the option of the Company, any such
redemption to be made at a redemption price or prices not less than the
principal amount of such Class A Bonds. (See Sections 402 and 701.) To the
extent that Class A Bonds issued as the basis for the authentication and
delivery of New Bonds do not bear interest, holders of Mortgage Securities will
not have the benefit of the lien of the
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1939 Mortgage in respect of an amount equal to accrued interest, if any, on such
New Bonds; however, such holders will nevertheless have the benefit of the lien
of the Mortgage in respect of such amount.
Any payment by the Company of principal of or premium or interest on the
Class A Bonds held by the Trustee will be applied by the Trustee to the payment
of any principal, premium or interest, as the case may be, in respect of the
Mortgage Securities which is then due and, to the extent of such application,
the obligation of the Company under the Mortgage to make such payment in respect
of the Mortgage Securities will be deemed satisfied and discharged. If, at the
time of any such payment of principal of Class A Bonds, there shall be no
principal then due in respect of the Mortgage Securities, such payment in
respect of the Class A Bonds will be deemed to constitute Funded Cash and will
be held by the Trustee as part of the Mortgaged Property, to be withdrawn, used
or applied as provided in the Mortgage; and thereafter the Mortgage Securities
authenticated and delivered on the basis of such Class A Bonds will, to the
extent of such payment of principal, be deemed to have been authenticated and
delivered on the basis of the deposit of cash. If, at the time of any such
payment of premium or interest on Class A Bonds, there shall be no premium or
interest, as the case may be, then due in respect of the Mortgage Securities,
such payment will be remitted to the Company at its request; provided, however,
that, if an Event of Default, as described below, shall have occurred and be
continuing, such payment shall be held as part of the Mortgaged Property until
such Event of Default shall have been cured or waived. (See Section 702 and
"Withdrawal of Cash" below.) Any payment by the Company of principal of or
premium or interest on Mortgage Securities authenticated and delivered on the
basis of the issuance and delivery to the Trustee of Class A Bonds (other than
by application of the proceeds of a payment in respect of such Class A Bonds)
will, to the extent thereof, be deemed to satisfy and discharge the obligation
of the Company, if any, to make a payment of principal, premium or interest, as
the case may be, in respect of such Class A Bonds which is then due. (See
Section 702 and Article One of the Supplemental Indenture(s) to the 1939
Mortgage creating the Class A Bonds to be delivered in connection with the
issuance of the New Bonds.)
The Trustee may not sell, assign or otherwise transfer any Class A Bonds
except to a successor trustee under the Mortgage. (See Section 704.) At the time
any Mortgage Securities of any series or tranche, which have been authenticated
and delivered upon the basis of the issuance and delivery to the Trustee of
Class A Bonds, cease to be Outstanding (other than as a result of the
application of the proceeds of the payment or redemption of such Class A Bonds),
the Trustee will surrender to or upon the order of the Company an equal
principal amount of such Class A Bonds. (See Section 703.)
At the date of this Prospectus, the only Class A Mortgage is the 1939
Mortgage and the only Class A Bonds issuable at this time are first mortgage
bonds issuable thereunder. The Mortgage provides that in the event that a
corporation has merged into or consolidated with the Company which was a
mortgagor under an existing mortgage, or has conveyed or otherwise transferred
property to the Company subject to the lien of an existing mortgage all the
obligations of the mortgagor under which have been assumed by the Company, and
in either case such existing mortgage constitutes a lien on properties of such
other company or on such transferred properties, as the case may be, prior to
the lien of the Mortgage, such existing mortgage may be designated by the
Company as an additional Class A Mortgage. Bonds thereafter issued under such
additional mortgage would be Class A Bonds and could provide the basis for the
authentication and delivery of Mortgage Securities under the Mortgage. (See
Section 706.) When no Class A Bonds are Outstanding under a Class A Mortgage
except for Class A Bonds held by the Trustee, then, at the request of the
Company and subject to satisfaction of certain conditions, the Trustee will
surrender such Class A Bonds for cancellation and the related Class A Mortgage
will be
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satisfied and discharged, the lien of such Class A Mortgage on the Company's
property will cease to exist and the priority of the lien of the Mortgage will
be increased accordingly. (See Section 707.)
The Mortgage contains no restrictions on the issuance of Class A Bonds in
addition to Class A Bonds issued to the Trustee as the basis for the
authentication and delivery of Mortgage Securities. Class A Bonds may currently
be issued under the 1939 Mortgage on the basis of property additions,
retirements of bonds previously issued under the 1939 Mortgage and cash
deposited with the 1939 Mortgage Trustee. (See "DESCRIPTION OF THE 1939
MORTGAGE--Issuance of Additional Bonds Under the 1939 Mortgage.")
Lien of the Mortgage. In the opinion of counsel for the Company (see
"EXPERTS") based on information obtained from public records and from the
Company, the Mortgage constitutes a mortgage lien on the property specifically
or generally described or referred to therein as subject to the lien thereof,
except such property as may have been disposed of or released from the lien
thereof in accordance with the terms thereof, subject to no liens prior to the
lien of the Mortgage other than the lien of the 1939 Mortgage (so long as the
1939 Mortgage remains in effect), the liens of any other Class A Mortgages and
Permitted Liens; and the Mortgage effectively subjects to the lien thereof
property (other than excepted property) acquired by the Company after the date
of the execution and delivery thereof to the extent, and subject to the
qualifications, hereinafter described. So long as such 1939 Mortgage is in
effect, the Bonds will have the benefit of the first mortgage lien of the 1939
Mortgage on such property, and the benefit of the prior lien of any additional
Class A Mortgage on any property subject thereto, to the extent of the aggregate
principal amount of Class A Bonds issued under the respective Class A Mortgages
and held by the Trustee. The properties subject to the lien of the Mortgage,
whether currently owned or hereafter acquired, are the Company's properties used
or to be used in or in connection with the Electric Utility Business (whether or
not such is the sole use of such properties). Properties relating to the
Company's gas and steam businesses are not subject to the lien of the Mortgage.
The lien of the Mortgage is subject to Permitted Liens which include among
other things tax liens and other governmental charges which are not delinquent
or which are being contested in good faith, certain workmen's, materialmen's and
other liens, certain judgment liens and attachments, certain easements, leases,
reservations or other rights of others (including governmental entities) in, on,
over, and/or across, and laws, regulations and restrictions affecting, and
defects, irregularities, exceptions and limitations in title to, certain
property of the Company, certain leasehold interests, certain rights and
interests of others which relate to common ownership or joint use of property
and liens on the interests of others in such property, certain non-exclusive
rights and interests retained by the Company with respect to property used or to
be used in or in connection with both the businesses in which the Mortgaged
Property is used and any other businesses, and certain other liens and
encumbrances. (See Granting Clauses and Section 101.)
There are excepted from the lien of the Mortgage, among other things, cash
and securities not paid or delivered to, deposited with or held by the Trustee
under the Mortgage; contracts, leases and other agreements of all kinds,
contract rights, bills, notes and other instruments, accounts receivable,
claims, governmental and other permits, allowances and franchises, certain
intellectual property rights and other intangibles; automobiles, other vehicles,
movable equipment and aircraft; all goods, stock in trade, wares and merchandise
held for sale or lease in the ordinary course of business; materials, supplies
and other personal property consumable in the operation of the Mortgaged
Property; fuel, including nuclear fuel, whether or not consumable in the
operation of the Mortgaged Property; all furniture and furnishings; computers,
machinery and telecommunication and other equipment used exclusively for
corporate administrative or clerical purposes; coal, ore, gas, oil and other
minerals and timber, and all
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rights and interests in any such minerals or timber, whether or not such
minerals or timber have been mined or extracted from the land; electric energy,
gas (natural or artificial), steam, water and other products generated,
produced, manufactured, purchased or otherwise acquired by the Company;
leasehold interests held by the Company as lessee; and all property that is
located outside of the State of Colorado.
(See "Excepted Property.")
Without the consent of the Holders, the Company and the Trustee may enter
into supplemental indentures in order to subject to the lien of the Mortgage
additional property, whether or not used or to be used in or in connection with
the Electric Utility Business (including property which would otherwise be
excepted from such lien). (See Section 1401.) Such property would thereupon
constitute Property Additions (so long as it would otherwise qualify as Property
Additions as described below) and be available as a basis for the issuance of
Mortgage Securities. (See "Issuance of Additional Mortgage Securities.")
The Mortgage contains provisions subjecting to the lien thereof
after-acquired property used or to be used in the Electric Utility Business,
subject to the prior lien of the 1939 Mortgage (for as long as such prior lien
is in effect). These provisions are limited in the case of consolidation or
merger (whether or not the Company is the surviving corporation) or transfer of
the Mortgaged Property as or substantially as an entirety. In the event of
consolidation or merger or the transfer of the Mortgaged Property as or
substantially as an entirety, the Mortgage will not be required to be a lien
upon any of the properties then owned or thereafter acquired by the successor
corporation except properties acquired from the Company in or as a result of
such transaction and improvements, extensions and additions to such properties
and renewals, replacements and substitutions of or for any part or parts of such
properties. (See Article Thirteen and "Consolidation, Merger, etc.") In
addition, after-acquired property may be subject to liens existing or placed
thereon at the time of acquisition thereof, including, but not limited to,
purchase money liens and the lien of any Class A Mortgage.
The Mortgage provides that the Trustee will have a lien, prior to the lien
on behalf of the holders of Mortgage Securities, upon the Mortgaged Property for
the payment of its reasonable compensation and expenses and for indemnity
against certain liabilities. (See Section 1107.)
Issuance of Additional Mortgage Securities: The aggregate principal amount
of Mortgage Securities which may be authenticated and delivered under the
Mortgage is unlimited. (See Section 301.) Bonds of any series may be issued from
time to time on the basis of, and in an aggregate principal amount not
exceeding:
(1) the aggregate principal amount of Class A Bonds issued and
delivered to the Trustee;
(2) 70% of the Cost or Fair Value to the Company (whichever is less)
of Property Additions (as described below) which do not constitute Funded
Property (generally, Property Additions which have been made the basis of
the authentication and delivery of Mortgage Securities, the release of
Mortgaged Property or cash withdrawals, which have been substituted for
retired property or which have been used as the basis of a credit against,
or otherwise in satisfaction of any sinking, improvement, maintenance,
replacement or similar fund, provided that Mortgage Securities of the
series or tranche to which such fund relates remain Outstanding) after
certain deductions and additions, primarily including adjustments to
offset property retirements;
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(3) the aggregate principal amount of Retired Securities (which
consist of Mortgage Securities no longer outstanding under the Mortgage
which have not been used for certain other purposes under the Mortgage and
which have not been paid, redeemed or otherwise retired by the application
of Funded Cash), but if Class A Bonds had been made the basis for the
authentication and delivery of such Retired Securities, only if such
Retired Securities became Retired Securities after the discharge of the
related Class A Mortgage; and
(4) an amount of cash deposited with the Trustee.
(See Article Four.)
In general, the issuance of Mortgage Securities is subject to Adjusted Net
Earnings of the Company for 12 consecutive months within the preceding 18 months
being at least twice the Annual Interest Requirements on all Mortgage Securities
at the time outstanding, new Mortgage Securities then applied for, all
outstanding Class A Bonds other than Class A Bonds held by the Trustee under the
Mortgage, and all other indebtedness (with certain exceptions) secured by a lien
prior to the lien of the Mortgage, except that no such net earnings requirement
need be met if the additional Mortgage Securities to be issued are to have no
Stated Interest Rate prior to Maturity. Adjusted Net Earnings are calculated
before, among other things, provisions for income taxes; depreciation or
amortization of property; interest and amortization of debt discount and
expense; any non-recurring charge to income or retained earnings of whatever
kind or nature (including without limitation the recognition of expense due to
the non- recoverability of investment or expense), whether or not recorded as a
non-recurring item in the Company's books of account; and any refund of revenues
previously collected or accrued by the Company subject to possible refund. The
calculation of Adjusted Net Earnings also does not, or, in the case of losses or
expense, is not required to, include profits or losses from the sale or other
disposition of property, or non-recurring items of revenue, income or expense of
any kind or nature. (See Sections 103 and 401.)
The Company is not required to satisfy the net earnings requirement prior
to issuance of Mortgage Securities (a) as provided in (1) above if the Class A
Bonds issued and delivered to the Trustee as the basis for such issuance have
been authenticated and delivered under the related Class A Mortgage on the basis
of retired Class A Bonds or (b) as provided in (3) above. In general, the
interest requirement with respect to variable interest rate indebtedness, if
any, is determined with reference to the rate or rates in effect on the date
immediately preceding such determination or the rate to be in effect upon
initial authentication. With respect to Mortgage Securities of a series subject
to a Periodic Offering (such as a medium-term note program), the Trustee will be
entitled to receive a certificate evidencing compliance with the net earnings
requirements only once, at or prior to the time of the first authentication and
delivery of the Mortgage Securities of such series. (See Article Four.)
Property Additions generally include any property which is owned by the
Company and is subject to the lien of the Mortgage except (with certain
exceptions) goodwill, going concern value rights or intangible property, or any
property the cost of acquisition or construction of which is properly chargeable
to an operating expense account of the Company. (See Section 104.)
Unless otherwise provided in the applicable Prospectus Supplement or
supplement thereto, until the 1939 Mortgage has been discharged, the Company
will issue the New Bonds on the basis of Class A Bonds issued under its 1939
Mortgage.
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Release of Property: Unless an Event of Default has occurred and is
continuing, the Company may obtain the release from the lien of the Mortgage of
any Funded Property, except for cash held by the Trustee, upon delivery to the
Trustee of cash equal in amount to the amount, if any, that the Cost of the
property to be released (or, if less, the Fair Value to the Company of such
property at the time it became Funded Property) exceeds the aggregate of:
(1) the aggregate principal amount, subject to certain limitations,
of obligations secured by purchase money lien upon the property to be
released and delivered to the Trustee;
(2) the Cost or Fair Value to the Company (whichever is less) of
certified Property Additions not constituting Funded Property after
certain deductions and additions, primarily including adjustments to
offset property retirements (except that such adjustments need not be made
if such Property Additions were acquired or made within the 90-day period
preceding the release);
(3) an amount equal to 10/7ths of the principal amount of Mortgage
Securities the Company would be entitled to issue on the basis of Retired
Securities (with such entitlement being waived by operation of such
release);
(4) an amount equal to 10/7ths of the principal amount of Mortgage
Securities delivered to the Trustee (with such Mortgage Securities to be
canceled by the Trustee);
(5) the deposit of cash or, to a limited extent, the principal
amount of obligations secured by purchase money lien upon the property
released delivered to the trustee or other holder of a lien prior to the
lien of the Mortgage; and
(6) any taxes and expenses incidental to any sale, exchange,
dedication or other disposition of the property to be released.
Property which is not Funded Property may generally be released from the
Lien of the Mortgage without depositing any cash or property with the Trustee as
long as (a) the aggregate amount of Cost or Fair Value to the Company (whichever
is less) of all Property Additions which do not constitute Funded Property
(excluding the property to be released) after certain deductions and additions,
primarily including adjustments to offset property retirements, is not less than
zero or (b) the Cost or Fair Value (whichever is less) of property to be
released does not exceed the aggregate amount of the Cost or Fair Value to the
Company (whichever is less) of Property Additions acquired or made within the
90-day period preceding the release.
The Mortgage provides simplified procedures for the release of property
which has been released from the lien of a Class A Mortgage, minor properties
and property taken by eminent domain, and provides for dispositions of certain
obsolete property and grants or surrender of certain rights without any release
or consent by the Trustee.
If any property released from the lien of the Mortgage continues to be
owned by the Company after such release, the Mortgage will not become a lien on
any improvement, extension or addition to such property or renewals,
replacements or substitutions of or for any part or parts of such property.
(See Article Eight.)
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Withdrawal of Cash: Unless an Event of Default has occurred and is
continuing and subject to certain limitations, cash held by the Trustee may (1)
be withdrawn by the Company (a) to the extent of the Cost or Fair Value to the
Company (whichever is less) of Property Additions not constituting Funded
Property, after certain deductions and additions, primarily including
adjustments to offset retirements (except that such adjustments need not be made
if such Property Additions were acquired or made within the 90-day period
preceding the release) or (b) in an amount equal to 10/7ths of the aggregate
principal amount of Mortgage Securities that the Company would be entitled to
issue on the basis of Retired Securities (with the entitlement to such issuance
being waived by operation of such withdrawal) or (c) in an amount equal to
10/7ths of the aggregate principal amount of any Outstanding Mortgage Securities
delivered to the Trustee, or (2) upon the request of the Company, be applied to
(a) the purchase of Mortgage Securities (at prices not exceeding 10/7ths of the
principal amount thereof) or (b) the payment (or provision therefor for the
satisfaction and discharge of any Mortgage Securities) at Stated Maturity of any
Mortgage Securities or the redemption (or similar provision therefor) of any
Mortgage Securities which are redeemable (with any Mortgage Securities received
by the Trustee pursuant to these provisions being canceled by the Trustee) (see
Section 806); provided, however, that cash deposited with the Trustee as the
basis for the authentication and delivery of Mortgage Securities, as well as
cash representing a payment of principal of Class A Bonds, may only be withdrawn
in an amount equal to the aggregate principal amount of Mortgage Securities the
Company would be entitled to issue on any basis (with the entitlement to such
issuance being waived by operation of such withdrawal), or may, upon the request
of the Company, be applied to the purchase, redemption or payment of Mortgage
Securities at prices not exceeding, in the aggregate, the principal amount
thereof. (See Sections 405 and 702.)
Consolidation, Merger, etc.: The Company may not consolidate with or merge
into any other corporation or convey, otherwise transfer or lease the Mortgaged
Property as or substantially as an entirety to any Person unless (a) such
transaction is on such terms as will fully preserve the lien and security of the
Mortgage and the rights and powers of the Trustee and the Holders, (b) the
corporation formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or other transfer, or which leases, the
Mortgaged Property as or substantially as an entirety is a corporation organized
and existing under the laws of the United States of America or any State or
Territory thereof or the District of Columbia, and such corporation executes and
delivers to the Trustee a supplemental indenture which contains an assumption by
such corporation of the due and punctual payment of the principal of and
premium, if any, and interest, if any, on the Mortgage Securities and the
performance of all of the covenants and conditions of the Company under the
Mortgage and which contains a grant, conveyance, transfer and mortgage by such
corporation confirming the lien of the Mortgage on the Mortgaged Property and
subjecting to such lien all property thereafter acquired by such corporation
which shall constitute an improvement, extension or addition to the Mortgaged
Property or a renewal, replacement or substitution of or for any part thereof,
and, at the election of such corporation, subjecting to the lien of the Mortgage
such other property then owned or thereafter acquired by such corporation as
such corporation shall specify and (c) in the case of a lease, such lease is
made expressly subject to termination by the Company or by the Trustee at any
time during the continuance of an Event of Default. (See Section 1301.)
Modification of Mortgage: Without the consent of any Holders, the Company
and the Trustee may enter into one or more supplemental indentures for any of
the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company in the
Mortgage and in the Mortgage Securities; or
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(b) to add one or more covenants of the Company or other provisions
for the benefit of all Holders or for the benefit of the Holders of, or to
remain in effect only so long as there shall be outstanding, Mortgage
Securities of one or more specified series, or one or more tranches
thereof, or to surrender any right or power conferred upon the Company by
the Mortgage; or
(c) to correct or amplify the description of any property at any
time subject to the lien of the Mortgage; or better to assure, convey and
confirm to the Trustee any property subject or required to be subjected to
the lien of the Mortgage; or to subject to the lien of the Mortgage
additional property (including property of others), to specify any
additional Permitted Liens with respect to such additional property and to
modify the provisions in the Mortgage for dispositions of certain types of
property without release in order to specify any additional items with
respect to such additional property; or
(d) to change or eliminate any provision of the Mortgage or to add
any new provision to the Mortgage, provided that if such change,
elimination or addition adversely affects the interests of the Holders of
the Mortgage Securities of any series or tranche in any material respect,
such change, elimination or addition will become effective with respect to
such series or tranche only when no Mortgage Security of such series or
tranche remains outstanding under the Mortgage; or
(e) to establish the form or terms of the Mortgage Securities of any
series or tranche as permitted by the Mortgage; or
(f) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest, if any,
thereon and for the procedures for the registration, exchange and
replacement thereof and for the giving of notice to, and the solicitation
of the vote or consent of, the holders thereof, and for any and all other
matters incidental thereto; or
(g) to evidence and provide for the acceptance of appointment by
a successor trustee or by a co-trustee or separate trustee; or
(h) to provide for the procedures required to permit the
utilization of a non-certificated system of registration for all, or any
series or tranche of, the Mortgage Securities; or
(i) to change any place or places where (1) the principal of and
premium, if any, and interest, if any, on all or any series of Mortgage
Securities, or any tranche thereof, will be payable, (2) all or any series
of Mortgage Securities, or any tranche thereof, may be surrendered for
registration of transfer, (3) all or any series of Mortgage Securities, or
any tranche thereof, may be surrendered for exchange and (4) notices and
demands to or upon the Company in respect of all or any series of Mortgage
Securities, or any tranche thereof, and the Mortgage may be served; or
(j) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other provision
therein, or to make any other changes to the provisions thereof or to add
other provisions with respect to matters and questions arising under the
Mortgage, so long as such other changes or additions do not adversely
affect the interests of the Holders of Mortgage Securities of any series
or tranche in any material respect.
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(See Section 1401.)
Without limiting the generality of the foregoing, if the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date
of the Original Mortgage in such a way as to require changes to the Mortgage or
the incorporation therein of additional provisions or so as to permit changes
to, or the elimination of, provisions which, at the date of the Original
Mortgage or at any time thereafter, were required by the Trust Indenture Act to
be contained in the Mortgage, the Mortgage will be deemed to have been amended
so as to conform to such amendment or to effect such changes or elimination, and
the Company and the Trustee may, without the consent of any Holders, enter into
one or more supplemental indentures to evidence or effect such amendment. (See
Section 1401.)
Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the Mortgage Securities of all series
then Outstanding, considered as one class, is required for the purpose of adding
any provisions to, or changing in any manner, or eliminating any of the
provisions of, the Mortgage pursuant to one or more supplemental indentures;
provided, however, that if less than all of the series of Mortgage Securities
Outstanding are directly affected by a proposed supplemental indenture, then the
consent only of the Holders of a majority in aggregate principal amount of
Outstanding Mortgage Securities of all series so directly affected, considered
as one class, will be required; and provided, further, that if the Mortgage
Securities of any series have been issued in more than one tranche and if the
proposed supplemental indenture directly affects the rights of the Holders of
one or more, but less than all, such tranches, then the consent only of the
Holders of a majority in aggregate principal amount of the Outstanding Mortgage
Securities of all tranches so directly affected, considered as one class, will
be required; and provided, further, that no such amendment or modification may,
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Mortgage Security, or reduce the principal
amount thereof or the rate of interest thereon (or the amount of any installment
of interest thereon) or change the method of calculating such rate or reduce any
premium payable upon the redemption thereof, or reduce the amount of the
principal of any Discount Security that would be due and payable upon a
declaration of acceleration of Maturity or change the coin or currency (or other
property) in which any Mortgage Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity of any Mortgage Security (or, in
the case of redemption, on or after the redemption date) without, in any such
case, the consent of the Holder of such Mortgage Security, (b) permit the
creation of any lien not otherwise permitted by the Mortgage ranking prior to
the lien of the Mortgage with respect to all or substantially all of the
Mortgaged Property or terminate the lien of the Mortgage on all or substantially
all of the Mortgaged Property, or deprive the Holders of the benefit of the lien
of the Mortgage, without, in any such case, the consent of the Holders of all
Mortgage Securities then Outstanding, (c) reduce the percentage in principal
amount of the Outstanding Mortgage Securities of any series, or any tranche
thereof, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with any provision of the Mortgage or of any default
thereunder and its consequences, or reduce the requirements for quorum or
voting, without, in any such case, the consent of the Holder of each Outstanding
Mortgage Security of such series or tranche, or (d) modify certain of the
provisions of the Mortgage relating to supplemental indentures, waivers of
certain covenants and waivers of past defaults with respect to the Mortgage
Securities of any series, or any tranche thereof, without the consent of the
Holder of each Outstanding Mortgage Security of such series or tranche. A
supplemental indenture which changes or eliminates any covenant or other
provision of the Mortgage which has expressly been included solely for the
benefit of the Holders of, or which is to remain in effect only so long as there
shall be Outstanding Mortgage Securities of one or more specified series, or one
or more tranches thereof, or modifies the
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rights of the Holders of Mortgage Securities of such series or tranches with
respect to such covenant or other provision, will be deemed not to affect the
rights under the Mortgage of the Holders of the Mortgage Securities of any other
series or tranche. (See Section 1402.)
Voting of Class A Bonds: The Mortgage provides that the Trustee will, as
holder of Class A Bonds issued under the 1939 Mortgage as the basis for the
issuance of Bonds, attend such meetings of bondholders under the related Class A
Mortgage, or deliver its proxy in connection therewith, as relate to matters
with respect to which it is entitled to vote or consent. The Mortgage provides
that, so long as no Event of Default as defined in the Mortgage has occurred and
is continuing, the Trustee will, as holder of such Class A Bonds (a) vote in
favor of the amendments and modifications to the 1939 Mortgage described under
"DESCRIPTION OF THE 1939 MORTGAGE -- Voting of Class A Bonds Issued Under the
1939 Mortgage," and (b) with respect to any amendments or modifications to any
Class A Mortgage other than those amendments or modifications referred to in
(a), vote all Class A Bonds Outstanding under such Class A Mortgage then held by
it, or consent with respect thereto, proportionately with the vote or consent of
holders of all other Class A Bonds Outstanding under such Class A Mortgage the
holders of which are eligible to vote or consent, as evidenced by a certificate
delivered by the trustee under such Class A Mortgage; provided, however, that
the Trustee will not vote in favor of, or consent to, any amendment or
modification of a Class A Mortgage which, if it were an amendment or
modification of the Mortgage, would require the consent of Holders of Mortgage
Securities as described under "Modification of the Mortgage," without the prior
consent of Holders of Mortgage Securities which would be required for such an
amendment or modification of the Mortgage. (See Section 705.)
Waiver: The Holders of at least a majority in aggregate principal amount
of all Mortgage Securities may waive the Company's obligations to comply with
certain covenants, including the covenants to maintain its corporate existence
and properties, pay taxes and discharge liens, maintain certain insurance and
make such recordings and filings as are necessary to protect the security of the
Holders and the rights of the Trustee and its covenant with respect to merger,
consolidation or the transfer or lease of the Mortgaged Property as or
substantially as an entirety, described above, provided that such waiver occurs
before the time such compliance is required. The Holders of at least a majority
of the aggregate principal amount of Outstanding Mortgage Securities of all
affected series or tranches, considered as one class, may waive, before the time
for such compliance, compliance with any covenant specified with respect to
Mortgage Securities of such series or tranches. (See Section 609.)
Events of Default: Each of the following events constitutes an Event of
Default under the Mortgage:
(1) failure to pay interest on any Mortgage Security within 60 days
after the same becomes due;
(2) failure to pay principal of or premium, if any, on any Mortgage
Security within 3 business days after its Maturity;
(3) failure to perform or breach of any covenant or warranty of the
Company in the Mortgage (other than a covenant or warranty a default in the
performance of which or breach of which is dealt with elsewhere under this
paragraph) for a period of 90 days after there has been given to the
Company by the Trustee, or to the Company and the Trustee by the Holders of
at least 33% in principal amount of Outstanding Mortgage Securities, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice
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of Default," unless the Trustee, or the Trustee and the Holders of a
principal amount of Mortgage Securities not less than the principal amount
of Mortgage Securities the Holders of which gave such notice, as the case
may be, agree in writing to an extension of such period prior to its
expiration; provided, however, that the Trustee, or the Trustee and such
Holders, as the case may be, will be deemed to have agreed to an extension
of such period if corrective action has been initiated by the Company
within such period and is being diligently pursued;
(4) certain events relating to reorganization, bankruptcy and
insolvency of the Company or appointment of a receiver or trustee for its
property; and
(5) the occurrence of a matured event of default under any Class A
Mortgage (other than any such matured event of default which is of similar
kind or character to the Event of Default described in (3) above and which
has not resulted in the acceleration of the Class A Bonds Outstanding under
such Class A Mortgage); provided that the waiver or cure of any such event
of default and the rescission and annulment of the consequences thereof
shall constitute a waiver of the corresponding Event of Default under the
Mortgage and a rescission and annulment of the consequences thereof. (See
Section 1001.)
Remedies: If an Event of Default occurs and is continuing, then the
Trustee or the Holders of not less than 33% in principal amount of Mortgage
Securities then Outstanding may declare the principal amount (or if the Mortgage
Securities are Discount Securities, such portion of the principal amount as may
be provided for such Discount Securities pursuant to the terms of the Mortgage)
of all of the Mortgage Securities then Outstanding, together with premium, if
any, and accrued interest, if any, thereon to be immediately due and payable. At
any time after such declaration of acceleration of the Mortgage Securities then
Outstanding, but before the sale of any of the Mortgaged Property and before a
judgment or decree for payment of money shall have been obtained by the Trustee
as provided in the Mortgage, the Event or Events of Default giving rise to such
declaration of acceleration will, without further act, be deemed to have been
waived, and such declaration and its consequences will, without further act, be
deemed to have been rescinded and annulled, if
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(1) all overdue interest, if any, on all Mortgage Securities then
Outstanding;
(2) the principal of and premium, if any, on any Mortgage
Securities then Outstanding which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Mortgage Securities; and
(3) all amounts due to the Trustee as compensation and
reimbursement as provided in the Mortgage; and
(b) any other Event or Events of Default, other than the non-payment
of the principal of Mortgage Securities which shall have become due solely
by such declaration of acceleration, shall have been cured or waived as
provided in the Mortgage. (See Sections 1002 and 1017.)
The Mortgage provides that, under certain circumstances and to the extent
permitted by law, if an Event of Default occurs and is continuing, the Trustee
has the power to take possession of, and to
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hold, operate and manage, the Mortgaged Property, or with or without entry, sell
the Mortgaged Property. If the Mortgaged Property is sold, whether by the
Trustee or pursuant to judicial proceedings, the principal of the Outstanding
Mortgage Securities, if not previously due, will become immediately due,
together with premium, if any, and any accrued interest. (See Sections 1003,
1004 and 1005.)
If an Event of Default occurs and is continuing, the Holders of a majority
in principal amount of the Mortgage Securities then Outstanding will have the
right to direct the time, method and place of conducting any proceedings for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee, provided that (a) such direction does not conflict with any rule of
law or with the Mortgage, and could not involve the Trustee in personal
liability in circumstances where indemnity would not, in the Trustee's sole
discretion, be adequate and (b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction. (See
Section 1016.)
The Mortgage provides that no Holder of any Mortgage Security will have
any right to institute any proceeding, judicial or otherwise, with respect to
the Mortgage or for the appointment of a receiver or for any other remedy
thereunder unless (a) such Holder has previously given to the Trustee written
notice of a continuing Event of Default; (b) the Holders of not less than a
majority in aggregate principal amount of the Mortgage Securities then
Outstanding have made written request to the Trustee to institute proceedings in
respect of such Event of Default and have offered the Trustee reasonable
indemnity against costs and liabilities to be incurred in complying with such
request; and (c) for sixty days after receipt of such notice, the Trustee has
failed to institute any such proceeding and no direction inconsistent with such
request has been given to the Trustee during such sixty day period by the
Holders of a majority in aggregate principal amount of Mortgage Securities then
Outstanding. Furthermore, no Holder will be entitled to institute any such
action if and to the extent that such action would disturb or prejudice the
rights of other Holders. (See Section 1011.) Notwithstanding that the right of a
Holder to institute a proceeding with respect to the Mortgage is subject to
certain conditions precedent, each Holder of a Mortgage Security has the right,
which is absolute and unconditional, to receive payment of the principal of and
premium, if any, and interest, if any, on such Mortgage Security when due and to
institute suit for the enforcement of any such payment, and such rights may not
be impaired without the consent of such Holder. (See Section 1012.) The Mortgage
provides that the Trustee give the Holders notice of any default under the
Mortgage to the extent required by the Trust Indenture Act, unless such default
shall have been cured or waived, except that no such notice to Holders of a
default of the character described in clause (3) under "Events of Default" may
be given until at least 75 days after the occurrence thereof. For purposes of
the preceding sentence, the term "default" means any event which is, or after
notice or lapse of time, or both, would become, an Event of Default. (See
Section 1102.) The Trust Indenture Act currently permits the Trustee to withhold
notices of default (except for certain payment defaults) if the Trustee in good
faith determines the withholding of such notice to be in the interests of the
Holders.
As a condition precedent to certain actions by the Trustee in the
enforcement of the lien of the Mortgage and institution of action on the Bonds,
the Trustee may require adequate indemnity against costs, expenses and
liabilities to be incurred in connection therewith. (See Sections 1011 and
1101.)
In addition to every other right and remedy provided in the Mortgage, the
Trustee may exercise any right or remedy available to the Trustee in its
capacity as owner and holder of Class A Bonds which arises as a result of a
default or matured event of default under any Class A Mortgage, whether or not
an Event of Default under the Mortgage has occurred and is continuing. (See
Section 1020.)
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Defeasance: Any Bond or Bonds, or any portion of the principal amount
thereof, will be deemed to have been paid for purposes of the Mortgage, and, at
the Company's election, the entire indebtedness of the Company in respect
thereof will be deemed to have been satisfied and discharged, if there has been
irrevocably deposited with the Trustee or any Paying Agent (other than the
Company), in trust: (a) money (including Funded Cash not otherwise applied
pursuant to the Mortgage) in an amount which will be sufficient, or (b) Eligible
Obligations (as described below), which do not contain provisions permitting the
redemption or other prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any regard to
reinvestment thereof, will provide monies which, together with the money, if
any, deposited with or held by the Trustee or such Paying Agent, will be
sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay
when due the principal of and premium, if any, and interest, if any, due and to
become due on such Bond or Bonds or portions thereof. (See Section 901.) For
this purpose, Eligible Obligations include direct obligations of, or obligations
unconditionally guaranteed by, the United States of America, entitled to the
benefit of the full faith and credit thereof, and certificates, depositary
receipts or other instruments which evidence a direct ownership interest in such
obligations or in any specific interest or principal payments due in respect
thereof.
It is possible that for Federal income tax purposes any deposit
contemplated in the preceding paragraph could be treated as a taxable exchange
of the related Bonds for an issue of obligations of the trust or a direct
interest in the cash and securities held in the trust. In that case, Holders of
such Bonds would recognize gain or loss as if the trust obligations or the cash
or securities deposited, as the case may be, had actually been received by them
in exchange for their Bonds. Such gain or loss, generally, would be capital in
nature to holders for whom the Bonds are held as capital assets and any
deductions for losses would be subject to certain limitations. Such Holders
thereafter would be required to include in income a share of the income, gain or
loss of the trust or the income from the securities held in trust, as the case
may be. The amount so required to be included in income could be different from
the amount that would be includible in the absence of such deposit. Prospective
investors are urged to consult their own tax advisors as to the specific
consequences to them of such deposit.
Resignation of the Trustee: The Trustee may resign at any time by giving
written notice thereof to the Company or may be removed at any time by Act of
the Holders of a majority in principal amount of Mortgage Securities then
Outstanding delivered to the Trustee and the Company. No resignation or removal
of the Trustee and no appointment of a successor trustee will become effective
until the acceptance of appointment by a successor trustee in accordance with
the requirements of the Mortgage. So long as no Event of Default or event which,
after notice or lapse of time, or both, would become an Event of Default has
occurred and is continuing, if the Company has delivered to the Trustee a
resolution of its Board of Directors appointing a successor trustee and such
successor has accepted such appointment in accordance with the terms of the
Mortgage, the Trustee will be deemed to have resigned and the successor will be
deemed to have been appointed as trustee in accordance with the Mortgage. (See
Section 1110.)
Evidence to be Furnished to the Trustee: Compliance with Mortgage
provisions is evidenced by written statements of Company officers or persons
selected or paid by the Company. In certain cases, opinions of counsel and
certification of an engineer, accountant, appraiser or other expert (who in some
cases must be independent) must be furnished. In addition, the Mortgage requires
that the Company give the Trustee, not less often than annually, a brief
statement as to the Company's compliance with the conditions and covenants under
the Mortgage.
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Concerning the Trustee: The Company conducts banking transactions with
affiliates of the Trustee in the normal course of the Company's business and
uses the Trustee or its affiliates as trustee for various debt issues.
DESCRIPTION OF THE 1939 MORTGAGE
General: The summaries under this heading do not purport to be complete
and are subject to the detailed provisions of the 1939 Mortgage, a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus is
a part. Capitalized terms used under this heading which are not otherwise
defined in this Prospectus shall have the meanings ascribed thereto in the 1939
Mortgage. Wherever particular provisions or terms defined therein are referred
to, such provisions or definitions are incorporated by reference as part of the
statements made herein and such statements are qualified in their entirety by
such reference. References to article and section numbers herein, unless
otherwise indicated, are references to article and section numbers of the
Original 1939 Mortgage.
Security: Class A Bonds issued under the 1939 Mortgage will rank pari
passu, except as to any sinking fund or similar fund provided for a particular
series, with all bonds at any time outstanding under the 1939 Mortgage. In the
opinion of counsel for the Company (See "EXPERTS"), the 1939 Mortgage
constitutes a first mortgage lien on the property specifically or generally
described therein as subject to the lien thereof, except such property as may
have been disposed of or released from the lien thereof in accordance with the
terms thereof, subject to no liens prior to the lien of the 1939 Mortgage other
than Permitted Encumbrances, as defined therein; and the 1939 Mortgage by its
terms effectively subjects to the lien thereof all property (except property of
the kinds specifically excepted from the lien thereof) acquired by the Company
after the date of the execution and delivery thereof, subject to Permitted
Encumbrances, to any lien thereon existing, and to any liens for unpaid portions
of the purchase money placed thereon, at the time of such acquisition, and also
subject to certain limitations in the case of consolidation, merger or sale of
substantially all the mortgaged property. The principal properties subject to
the lien of the 1939 Mortgage are the electric and gas properties owned by the
Company and securities of certain subsidiaries. (See Granting and Habendum
Clauses, Sections 2 and 3 of Article I, and Section 3 of Article XI of the 1939
Mortgage.)
The 1939 Mortgage provides that the 1939 Mortgage Trustee shall have a
lien prior to the bonds on the mortgaged property for payment of its
compensation, expenses and disbursements and for indemnity against certain
liabilities. (See Section 10 of Article XII of the 1939 Mortgage.)
Issuance of Additional Bonds Under the 1939 Mortgage: Additional bonds may
be issued under the 1939 Mortgage in a principal amount equal to (a) 60% of net
property additions (as defined in the 1939 Mortgage) acquired or constructed
within five years of certification to the 1939 Mortgage Trustee, (b) the
principal amount of certain retired bonds or prior lien bonds or (c) deposited
cash (in certain cases 60% thereof). See "Voting of Class A Bonds Issued Under
the 1939 Mortgage".
No bonds may be issued under the 1939 Mortgage, as provided in clauses (a)
and (c) above, unless the net earnings of the Company (as defined in Section 5
of Article I of the 1939 Mortgage and as discussed below) are at least 2-1/2
times the annual interest on all bonds issued and outstanding under the 1939
Mortgage, including the bonds applied for (but excluding any bonds to be paid,
retired or redeemed with the proceeds of the bonds applied for), and
indebtedness secured by prior liens. Such net earnings test generally need not
be satisfied prior to the issuance of bonds as provided in clause (b) above
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unless (x) (i) the new bonds are issued more than two years prior to the stated
maturity of the retired bonds and (ii) the new bonds bear a greater rate of
interest than the retired bonds or (y) the new bonds are issued in respect of
retired bonds the interest charges on which have been excluded from any net
earnings certificate filed with the 1939 Mortgage Trustee since the retirement
of such bonds. (See Article III of the 1939 Mortgage.) See "Voting of Class A
Bonds Issued Under the 1939 Mortgage".
Cash deposited under clause (c) above may be withdrawn by the Company in
an amount equal to the principal amounts of bonds issuable pursuant to clauses
(a) and (b) above (in certain cases 166- 2/3% thereof) without regard to
earnings or may be applied to the purchase or redemption of bonds of one or more
series selected by the Company. (See Sections 8, 9 and 10 of Article III of the
1939 Mortgage.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
Net earnings are computed before provision for depreciation and
amortization of property, income and profits taxes (as defined in the 1939
Mortgage), interest on any indebtedness and amortization of debt discount and
expense and do not take into account any profits or losses from the sale or
disposal of capital assets or securities. (See Section 5 of Article I of the
1939 Mortgage.)
Property additions under the 1939 Mortgage consist of property used or
useful in the electric, gas or steam business (with certain exceptions) acquired
or constructed by the Company within five years next preceding the certification
thereof to the 1939 Mortgage Trustee. (See Section 4 of Article I of the 1939
Mortgage.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
The approximate amount of net property additions and the amount of retired
bonds as of March 31, 1996, available for use as the basis for the issuance of
Class A Bonds under the 1939 Mortgage, subject to the net earnings restrictions
discussed above, were $581,597,155 and $905,180,000, respectively. The Company
will determine, at the time of each issuance of Class A Bonds under the 1939
Mortgage which are to be the basis for the issuance of Bonds, whether such Class
A Bonds will be issued upon the basis of property additions or retired bonds. As
of March 31, 1996, $1,082,917,000 in aggregate principal amount of bonds were
outstanding under the 1939 Mortgage.
The 1939 Mortgage contains restrictions on (1) the acquisition of property
securing prior lien indebtedness in excess of 60% of the fair value of the
property and (2) the issuance of bonds, withdrawal of cash or release of
property on the basis of property subject to prior lien. Prior lien indebtedness
secured by property theretofore acquired may not be increased unless the
evidence thereof is pledged with the 1939 Mortgage Trustee. (See Section 4 of
Article I and Sections 15, 17 and 19 of Article IV of the 1939 Mortgage.) See
"Voting of Class A Bonds Issued Under the 1939 Mortgage".
Maintenance and Replacement Fund for Bonds Outstanding Under the 1939
Mortgage: Although there will be no provision for a maintenance and replacement
fund with respect to Class A Bonds issued under the 1939 Mortgage as the basis
for the issuance of Bonds, the Company has covenanted, with respect to various
series of outstanding bonds issued under the 1939 Mortgage, that, so long as any
bond of such series remains outstanding, the Company will, for each calendar
year (herein called the "accounting period"), pay to the 1939 Mortgage Trustee
as a maintenance and replacement fund, an amount in cash not less than the sum
of 15% of the gross electric operating revenues and 10% of the gross gas and
steam operating revenues (as defined in the 1939 Mortgage, which, among other
things, provides for deducting therefrom the cost of purchased electric current,
gas and steam) derived from the mortgaged property during the accounting period,
less, however, the following optional credits: (a) expenditures during the
accounting period for repairs and maintenance of the mortgaged property; (b)
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the cost of property additions during the accounting period deemed to renew or
replace retired or abandoned property, subject to adjustment for any outstanding
prior lien bonds secured by such property additions; (c) the principal amount of
all bonds and/or 166-2/3% of the principal amount of all prior lien bonds,
retired or redeemed and for which no bonds have been issued, credit taken or
cash withdrawn under the 1939 Mortgage; and (d) net property additions to the
extent of 100% thereof. Cash so deposited may be applied to the purchase or
redemption of such bonds as the Company may designate, which by their terms are
redeemable prior to maturity (including any of the Class A Bonds issued under
the 1939 Mortgage that are so redeemable and that were issued as the basis for
the issuance of Bonds) at a price not exceeding the then current redemption
price as set forth in the relevant Supplemental Indenture and the accrued
interest on such bonds, or may be withdrawn upon the basis of certain property
additions or certain retired bonds or prior lien bonds. (See Section 8 of
Article IV of the 1939 Mortgage and Article Two of certain supplemental
indentures.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
The series of outstanding bonds which contain maintenance and replacement
fund covenants mature through November 1, 1998, but may be redeemed prior to
their stated maturity. The Company does not anticipate issuing any additional
series of bonds which will contain such covenants. The Company will no longer be
bound by such covenants after all the bonds of such series have been retired.
Modification of the 1939 Mortgage: The 1939 Mortgage and the rights of
bondholders thereunder may be modified with the consent of the Company, and of
the 1939 Mortgage Trustee if deemed affected, and the consent of the holders of
not less than 75% in principal amount of the bonds then outstanding, or of not
less than 75% in principal amount of the outstanding bonds of any one or more
series which may be affected by any such modification; except that the
bondholders, without the consent of the holder of each bond affected, have no
power to (a) extend the time of payment of the principal of or interest on any
bonds; (b) reduce the principal amount thereof or the rate of interest thereon,
or otherwise modify the terms of payment of principal or interest; (c) permit
the creation of any lien ranking prior to or on a parity with the lien of the
1939 Mortgage with respect to any of the mortgaged property; (d) deprive any
nonassenting bondholder of a lien upon the mortgaged property for the security
of his/her bonds; or (e) reduce the percentage of bondholders authorized to take
such action. (See Article XIV of the 1939 Mortgage.) The Company has reserved
the right to amend the 1939 Mortgage without any consent or other action by
holders of any series of bonds created after October 31, 1975 (including Class A
Bonds issued under the 1939 Mortgage as the basis for the issuance of Bonds) to
reduce the required consent of bondholders described above from 75% to 60%. (See
Article Five of the Supplemental Indenture dated as of November 1, 1977.)
Voting of Class A Bonds Issued Under the 1939 Mortgage: The Mortgage
provides that, so long as no Event of Default as defined in the Mortgage has
occurred and is continuing thereunder, the Trustee will, as holder of Class A
Bonds issued under the 1939 Mortgage and delivered as the basis for the issuance
of Bonds,
(a) vote or consent in favor of amendments or modifications to the
1939 Mortgage of substantially the same tenor and effect as follows:
(i) to expand the definition of property additions to eliminate
geographical restrictions to certain states and allow the inclusion
of properties located anywhere in the United States, Canada and
Mexico, or their coastal waters; to include space satellites and
stations, solar power satellites and other analogous facilities; to
include nuclear fuel and
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other analogous devices or substances and to establish other
provisions as to such fuel; to include properties located on leased
real property, subject to certain limitations; to include goodwill
when acquired with a public utility system, subject to certain
limitations; and to delete the requirement that property additions
have been acquired or constructed within five years;
(ii) to remove the requirement that certificates delivered to the
1939 Mortgage Trustee be verified;
(iii) to liberalize the requirements for publication of notices
of redemption and other notices;
(iv) to eliminate the maintenance and replacement fund or, in the
alternative,
(A) to change the amount of cash deliverable to the 1939
Mortgage Trustee to the lower of (x) 10% of the combined
electric, gas and steam gross operating revenues of the
Company or (y) 2% of the cost of the depreciable property of
the Company, less the accumulated provision for depreciation;
and
(B) to change the definition of gross operating revenues to
deduct the cost of fuel used to provide electric, gas and
steam services;
(v) to change the opinion of counsel required to be delivered
upon the certification of property additions to delete the
requirement that the Company have all necessary permission from
governmental authorities to use and operate such property
additions;
(vi) to specifically allow the inclusion of earnings collected
subject to refund in net earnings for purposes of the interest
coverage requirement for the issuance of bonds;
(vii) to specifically permit the debt component, in addition to
the equity component, of the allowance for funds used during
construction to be included in net earnings for purposes of the
interest coverage requirement for the issuance of bonds;
(viii) (A) to reduce the interest coverage requirement for the
issuance of bonds to 2 times from 2-1/2 times annual
interest charges on outstanding bonds, including bonds
applied for, and prior lien indebtedness; or, in the
alternative,
(B) to change such coverage requirement to a requirement
that net earnings be at least equal to either (x) 2 (or
any higher amount) times annual interest charges on, or
(y) 15% (or any higher percentage) of the aggregate
principal amount of, outstanding bonds, including the
bonds applied for, and prior lien indebtedness;
(ix) to remove the restrictions on acquiring property subject to
a prior lien (retaining, however, the restrictions on certifying
such property as property additions);
(x) to raise the minimum dollar amount of fire and other losses
that must be payable to the 1939 Mortgage Trustee from $50,000 to
3% (or any lower percentage) of the principal amount of
outstanding bonds; and to specifically permit the Company to
carry
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insurance policies with deductible provisions equal to 3% (or any
lower percentage) of the principal amount of outstanding bonds or
any higher deductible amount usually contained in the policies of
other companies owning and operating similar properties;
(xi) to delete the covenant of the Company to "observe and
conform to all valid requirements of any governmental authority
relative to any of the mortgaged property";
(xii) to delete the requirement that the 1939 Mortgage Trustee be
located in New York, New York and that the Company maintain an
office in New York, New York, to make payments on bonds and
register transfers thereof;
(xiii) to modify the special release provision of the 1939
Mortgage to increase the amount of the aggregate value of
property which may be released from the lien of the 1939 Mortgage
within any period of 12 consecutive calendar months without
compliance with all the conditions of the general release
provision from $25,000 to (A) the greater of $25,000 or 1% of the
aggregate principal amount of outstanding bonds or (B) the
greater of $10,000,000 or 3% of the aggregate principal amount of
outstanding bonds (or any lower amount or percentage);
(xiv) to permit bonds to be issued under the 1939 Mortgage in a
principal amount equal to 70% of net property additions instead
of 60% and to make correlative changes in provisions relating to,
among other things, the release of property from the lien of the
1939 Mortgage, the withdrawal of cash held by the 1939 Mortgage
Trustee, the acquisition and use under the 1939 Mortgage of
property securing prior lien indebtedness, and the use of retired
prior lien bonds; and
(xv) to modify the definition of all defaults under the 1939
Mortgage to be substantially identical to the Events of Default
under the Mortgage; and
(b) with respect to any amendments or modifications to the 1939
Mortgage other than those referred to in (a) above, vote all Class A Bonds
Outstanding under the 1939 Mortgage then held by it, or consent with
respect thereto, in the manner as described under "DESCRIPTION OF THE
BONDS -- Voting of Class A Bonds". (See Section 705 of the Mortgage.)
The Company has reserved the right to make any or all of the modifications
to the 1939 Mortgage described in (a)(i) through (a)(xiii)(A) above without
consent or other action of the holders of certain outstanding series of bonds
previously issued under the 1939 Mortgage (not including the Class A Bonds
issued thereunder as the basis of the issuance of Bonds) aggregating
$461,500,000 in principal amount. (See Article Three of the Supplemental
Indenture dated as of March 1, 1980 and Article Four of the Supplemental
Indentures dated as of July 1, 1990, December 1, 1990, and March 1, 1992,
respectively).
The indentures under which certain pollution control revenue bonds of
Morgan County, Colorado and Adams County, Colorado were issued provide that the
trustees thereunder, as holders of bonds issued under the 1939 Mortgage having a
principal amount of $156,750,000 in the aggregate, shall vote in favor of, or
consent with respect to, any or all of the possible modifications described in
(a)(i) through (a)(xiii)(A) above.
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Default Under the 1939 Mortgage: An event of default under the 1939
Mortgage includes a failure to pay interest on any bond, or to pay a sinking
fund installment, for 60 days after such payment becomes due, a failure to pay
the principal of or premium, if any, on any bond when the same becomes due, a
default with respect to the payment of principal of or interest on any prior
lien bonds, a failure to perform any other covenant in the 1939 Mortgage for 90
days after notice given to the Company by the 1939 Mortgage Trustee or by the
holders of 10% in principal amount of outstanding bonds, certain events in
bankruptcy, and an Event of Default under the Mortgage and/or certain matured
events of default under any other Class A Mortgage. (See Section 1 of Article
VIII of the 1939 Mortgage and Article Five of the Supplemental Indenture dated
as of November 1, 1993 creating the First Mortgage Bonds, Collateral Series A.)
The 1939 Mortgage Trustee may withhold notice of default (except default in the
payment of principal of or premium, if any, or interest on the bonds or in the
payment of a sinking fund installment) if it determines such withholding to be
in the interests of the bondholders. (See Section 2 of Article VIII of the 1939
Mortgage.) The Company is required to report annually to the 1939 Mortgage
Trustee as to compliance with the covenants contained in the 1939 Mortgage. (See
Section 24 of Article IV of the 1939 Mortgage.)
Upon the occurrence of a default under the 1939 Mortgage, the 1939
Mortgage Trustee or the holders of 25% in principal amount of outstanding bonds
may declare the principal of and interest accrued on all outstanding bonds due
and payable immediately; provided, however, that if such default has been cured,
(a) the holders of a majority in principal amount of outstanding bonds may annul
such declaration or (b) if, in making such declaration, the 1939 Mortgage
Trustee shall have acted without a direction from the holders of a majority in
principal amount of outstanding bonds, or if such declaration was made by the
holders of 25% in principal amount of outstanding bonds and the holders of a
majority in principal amount of outstanding bonds shall not have theretofore
delivered a written notice to the contrary, then such declaration shall ipso
facto be deemed to be annulled. (See Section 1 of Article VIII of the 1939
Mortgage.)
Action by 1939 Mortgage Trustee: Except as otherwise provided in the 1939
Mortgage, the holders of a majority in principal amount of bonds outstanding
under the 1939 Mortgage have the right to require the 1939 Mortgage Trustee to
enforce the lien of the 1939 Mortgage and direct the time, method and place of
conducting any proceedings for any remedy available to the 1939 Mortgage Trustee
under the 1939 Mortgage. (See Section 15 of Article VIII of the 1939 Mortgage.)
No holder of bonds outstanding under the 1939 Mortgage has the right to enforce
the lien of the 1939 Mortgage without giving to the 1939 Mortgage Trustee
written notice of default and unless the holders of a majority in principal
amount of outstanding bonds shall have requested the 1939 Mortgage Trustee to
act and have offered the 1939 Mortgage Trustee security and indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred
thereby and the 1939 Mortgage Trustee shall have failed to take action within 60
days. (See Section 16 of Article VIII of the 1939 Mortgage.)
Concerning the 1939 Mortgage Trustee: The Company conducts banking
transactions with affiliates of the 1939 Mortgage Trustee in the normal course
of the Company's business and uses the 1939 Mortgage Trustee or its affiliates
as trustee for various debt issues.
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DESCRIPTION OF PREFERRED STOCK
The following is a summary of certain rights and privileges of the holders
of the New Preferred Stock and all other shares of $100 Cumulative Preferred
Stock or $25 Cumulative Preferred Stock heretofore issued by the Company
(collectively referred to as the "Preferred Stock"). This summary does not
purport to be complete. Reference is made to the Restated Articles of
Incorporation, as amended, of the Company and the laws of the State of Colorado,
the following information being qualified in its entirety by such reference.
The Company is currently authorized by its Restated Articles of
Incorporation, as amended, to issue 3,000,000 shares of $100 Cumulative
Preferred Stock and 4,000,000 shares of $25 Cumulative Preferred Stock, of which
1,488,652 shares and 1,400,000 shares, respectively, are outstanding on the date
of this Prospectus. The two classes of preferred stock rank equally with each
other with respect to dividend rights and rights on liquidation, dissolution or
winding up of the Company.
Reference is made to the Prospectus Supplement, or a supplement thereto,
for a description of the following terms of the series of New Preferred Stock in
respect of which this Prospectus is being delivered: (i) the designation of such
series of New Preferred Stock; (ii) the number of shares of New Preferred Stock
of such series; (iii) the purchase price and initial public offering price, if
any, of the shares of such series; (iv) the dividend rate or rates of such New
Preferred Stock and the date or dates from which dividends thereon shall be
cumulative; (v) the terms and conditions, if any, pursuant to which, and the
prices at which, the Company may, at its option, redeem shares of such series;
(vi) the terms and conditions of any sinking fund or provisions for the
mandatory redemption or purchase of shares of such series; (vii) the amount or
amounts payable to the holders thereof on any voluntary liquidation, dissolution
or winding up of the Company; (viii) whether such New Preferred Stock is to be
issued in book-entry form and represented by one or more global New Preferred
Stock certificates and, if so, the identity of the depositary for such global
New Preferred Stock certificates; (ix) whether such New Preferred Stock is to be
listed on any stock exchange; and (x) any other terms of such series not
inconsistent with the Restated Articles of Incorporation, as amended.
General: The Board of Directors is authorized by the Restated Articles of
Incorporation, as amended, to provide for the issuance from time to time of
Preferred Stock in series, and as to each series to fix, in any appropriate
manner permitted by law, the designation, dividend rate, voluntary liquidation
prices, redemption prices, sinking fund provisions, if any, number of shares,
conversion rights, if any, and other provisions not inconsistent with the
Restated Articles of Incorporation, as amended, and as may be permitted by law.
Dividend Rights: The holders of Preferred Stock are entitled to receive,
when and as declared by the Board of Directors, out of legally available funds,
cumulative cash dividends at the annual rates fixed for the respective series,
payable on the first days of March, June, September and December in each year.
Dividends on the New Preferred Stock will be payable at the rate set forth on
the cover page of the Prospectus Supplement related to such series and will be
cumulative from the date of original issuance thereof.
No dividends shall at any time be paid on or set apart for any shares of
Preferred Stock unless at the same time there shall be paid on or set apart for
all shares of Preferred Stock then outstanding
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dividends in such amount that the holders of all shares of Preferred Stock shall
receive or have set apart for them a uniform percentage of the full annual
dividend to which they are respectively entitled.
Unless and until full cumulative dividends on the Preferred Stock for all
past dividend periods and for the current dividend period shall have been paid
or declared and set apart for payment, no dividends (other than dividends
payable in Common Stock) shall be paid or declared on the Common Stock of the
Company and no money (other than the net proceeds from the sale of Common Stock)
shall be set aside or applied to the purchase of Common Stock.
Liquidation Rights: The holders of the Preferred Stock, upon liquidation
of the Company (statutory consolidation or merger not to be considered as such),
whether voluntary or involuntary, shall be entitled to be paid the par value of
their shares plus an amount equal to accrued dividends to the date of
distribution and, in the event of voluntary liquidation, such premium, if any,
as may be fixed for the shares of the respective series. Unless and until such
payment in full is made to the holders of the Preferred Stock, no distribution
shall be made to the holders of the Common Stock. If upon any liquidation,
dissolution or winding up, the assets distributable among the holders of
Preferred Stock of all series shall be insufficient to permit payment of the
full preferential amounts to which such holders shall be entitled, then the
entire assets of the Company shall be distributed among the holders of Preferred
Stock of all series then outstanding ratably in proportion to the full
preferential amounts to which such holders are respectively entitled. The
voluntary liquidation premiums, if any, for the New Preferred Stock will be set
forth in a Prospectus Supplement.
Redemption Provisions: The Preferred Stock may be redeemed as a whole, or
in part by lot, at any time upon not less than 30 nor more than 60 days prior
written notice, by payment to the holders of the shares to be redeemed of the
redemption price fixed for the shares of the respective series which are to be
redeemed, plus an amount equal to the accrued dividends to the date fixed for
redemption. The redemption prices, if any, for the New Preferred Stock and any
restriction on the redemption thereof will be set forth in a Prospectus
Supplement. The Company's Restated Articles of Incorporation, as amended,
contain no restrictions on the repurchase or redemption of shares of Preferred
Stock by the Company while dividends are in default.
Voting Rights: All voting power is vested exclusively in the holders of
the Common Stock, except to the extent that the Restated Articles of
Incorporation, as amended, or the laws of the State of Colorado confer voting
rights upon the holders of the Preferred Stock.
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of $100 Cumulative Preferred Stock and $25 Cumulative
Preferred Stock, voting as separate classes, is necessary to: (A) authorize or
issue any stock ranking prior in any respect to the Preferred Stock; or (B)
change the terms and provisions of the Preferred Stock so as to affect adversely
the rights and preferences of the holders thereof. If, however, only one class
of Preferred Stock is so affected, the consent only of the holders of two-thirds
of the shares of the affected class need be obtained. If one or more but less
than all of the series of either class are so affected, the consent only of the
holders of two-thirds of the total number of shares of the affected series need
be obtained.
The affirmative vote of at least two-thirds of the voting power of the
outstanding Preferred Stock, voting for such purpose as a single class in such
manner that the holders of the $100 Cumulative Preferred Stock shall have four
(4) votes per share and the holders of the $25 Cumulative Preferred Stock shall
have one (1) vote per share, is necessary to issue any additional shares of
Preferred Stock or any
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<PAGE>
stock ranking on a parity therewith unless (i) gross income available for
interest charges for twelve consecutive months out of the fifteen calendar
months preceding such issue has been at least one and one-half (1-1/2) times the
annual interest charges on funded indebtedness and notes payable by the Company
maturing more than twelve months thereafter plus annual dividend requirements on
the Preferred Stock and stock, if any, ranking prior thereto or on a parity
therewith outstanding thereafter, and (ii) capital represented by Common Stock
and surplus is not less than the amount payable in the event of involuntary
liquidation on the Preferred Stock and all other stock, if any, ranking prior
thereto or on a parity therewith outstanding thereafter.
The affirmative vote of more than one-half of the voting power of the
outstanding Preferred Stock, voting as one class for such purpose in such manner
that the holders of the $100 Cumulative Preferred Stock shall have four (4)
votes per share and the holders of the $25 Cumulative Preferred Stock shall have
one (1) vote per share, is necessary to: (A) issue or assume any securities
representing unsecured indebtedness for any purpose other than the refunding of
any indebtedness or the retiring of Preferred Stock or any stock ranking prior
thereto or on a parity therewith, if immediately after such issue or assumption
the total principal amount of all such unsecured securities then outstanding
would exceed 15% of the total principal amount of securities representing
secured indebtedness issued or assumed by the Company and then outstanding plus
the total capital and surplus of the Company; or (B) merge or consolidate with
any corporation, other than a subsidiary, or sell, other than to a subsidiary,
the property of the Company as or substantially as an entirety (an acquisition
or mortgage of assets not to be considered a merger or consolidation, or a sale,
respectively), unless such merger, consolidation or sale or the issuance or
assumption of all securities to be issued or assumed in connection therewith
shall have been ordered, approved or permitted by a regulatory authority then
having jurisdiction, in which event, in the case of a merger or consolidation,
the holders of the Preferred Stock shall be entitled to vote together with the
holders of the Common Stock.
If dividends payable on the outstanding Preferred Stock shall be
accumulated and unpaid in an amount equal to four (4) quarterly dividends, the
holders of such stock are entitled, thereafter and until all such accumulated
and unpaid dividends shall have been fully paid or declared and set apart for
payment, (a) voting for such purpose as a single class at each succeeding annual
meeting of shareholders in such manner that the holders of $100 Cumulative
Preferred Stock shall have four (4) votes per share and the holders of the $25
Cumulative Preferred Stock shall have one (1) vote per share, to elect the
smallest number of directors necessary to constitute a majority of the Board of
Directors, the remaining directors to be elected as usual by the holders of the
Common Stock; and (b) to vote on all questions other than for the election of
directors in such manner that the holders of the $100 Cumulative Preferred Stock
shall have twenty (20) votes per share and the holders of the $25 Cumulative
Preferred Stock shall have five (5) votes per share, the holders of the Common
Stock having one (1) vote per share.
Miscellaneous: The holders of the outstanding Preferred Stock do not have,
and the holders of the New Preferred Stock will not have, any conversion rights
or any preemptive or other subscription rights. There are no sinking fund or
similar provisions for the benefit of any of the outstanding Preferred Stock,
except the 7.50% and 8.40% $100 Cumulative Preferred Stock. The outstanding
Preferred Stock is, and the New Preferred Stock when issued and paid for as
herein contemplated will be, fully paid and non-assessable.
Transfer Agents and Registrars: First Chicago Trust Company of New York
acts as the Transfer Agent and Registrar of the Preferred Stock.
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LEGAL OPINIONS
The validity of the New Bonds and the New Preferred Stock will be passed
upon for the Company by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited
liability partnership including professional corporations, New York, New York
and Denver, Colorado, and for any underwriters, agents or dealers by Brown &
Wood, New York, New York. All legal matters pertaining to titles and the
respective liens of the Mortgage and the 1939 Mortgage will be passed upon only
by LeBoeuf, Lamb, Greene & MacRae, L.L.P. In giving its opinion, Brown & Wood
may rely as to all matters of Colorado law upon the opinion of LeBoeuf, Lamb,
Greene & MacRae, L.L.P.
EXPERTS
Reference is made to the Incorporated Documents for specification of
certain information incorporated herein by reference upon the authority of
experts. In addition, the statements made in "Security" under "DESCRIPTION OF
THE BONDS" and "DESCRIPTION OF THE 1939 MORTGAGE" and the statements made in
"DESCRIPTION OF PREFERRED STOCK" herein, insofar as they are, or refer to,
statements of law or legal conclusions, have been reviewed by LeBoeuf, Lamb,
Greene & MacRae, L.L.P., and have been set forth herein on the authority of said
firm as experts.
PLAN OF DISTRIBUTION
The Company may sell each type and series of Securities as applicable in
any of three ways: (i) directly to a limited number of institutional purchasers
or to a single purchaser; (ii) through agents or (iii) through underwriters or
dealers. The Prospectus Supplement relating to each series of Securities will
set forth the terms of the offering of such Securities, including the name or
names of any such agents, underwriters or dealers, the purchase price of such
Securities and the net proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, the initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If underwriters are used in any sale of a series of Securities, such
Securities will be acquired by such underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Unless otherwise set forth in the Prospectus Supplement
relating to a series of Securities, the obligations of any underwriter or
underwriters to purchase such Securities will be subject to certain conditions
precedent and such underwriter or underwriters will be obligated to purchase all
of such Securities if any are purchased, except that, in certain cases involving
a default by one or more underwriters, less than all of such Securities may be
purchased.
If an agent of the Company is used in any sale of a series of Securities,
any commission payable by the Company to such agent will be set forth in the
Prospectus Supplement relating to such series of Securities. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
effort basis for the period of its appointment.
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<PAGE>
Any underwriters, dealers or agents participating in the distribution of
the Securities may be deemed to be underwriters, and any discount or commissions
received by them on the sale or resale of Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended (the "1933 Act"). Agents, underwriters and dealers may be entitled under
agreements entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the 1933 Act.
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No dealer, salesperson or other
individual has been authorized to give
any information or to make any $125,000,000
representations other than those
contained or incorporated by reference
in this Prospectus Supplement or the
Prospectus in connection with the offer
made by this Prospectus Supplement and
the Prospectus and, if given or made,
such information or representations must PUBLIC SERVICE COMPANY
not be relied upon as having been OF COLORADO
authorized by the Company or by any
Underwriter. This Prospectus Supplement
and the Prospectus are not an offer to
sell or a solicitation of an offer to
buy any securities other than those
specifically offered hereby, nor are
they an offer or solicitation by anyone
in any jurisdiction in which such offer
or solicitation is not authorized or in
which the person making such offer or First Collateral Trust Bonds,
solicitation is not qualified to do so Series No. 3
or to any person to whom it is unlawful
to make such an offer or solicitation.
Neither the delivery of this Prospectus 7-1/8% Bonds due 2006
Supplement and the Prospectus nor any
sale hereunder shall under any
circumstances create any implication
that there has been no change in the
affairs of the Company or its
subsidiaries since the date hereof.
---------
TABLE OF CONTENTS
Prospectus Supplement ---------------------
Page PROSPECTUS SUPPLEMENT
---- ---------------------
Recent Developments.............S-2
Certain Terms of the
Offered Bonds .................S-2
Application of Proceeds ........S-6
Underwriting ...................S-6
Prospectus
Available Information ............2 Merrill Lynch & Co.
Incorporation of Certain Goldman, Sachs & Co.
Documents by Reference ..........2 PaineWebber Incorporated
The Company ......................3
Ratio of Consolidated Earnings
to Consolidated Fixed
Charges and Ratio of
Consolidated Earnings
to Consolidated Combined
Fixed Charges and Preferred
Stock Dividend
Requirements ..................3 May 28, 1996
Application of Proceeds ..........3
Description of the Bonds .........3
Description of the 1939 Mortgage.19
Description of Preferred Stock...25
Legal Opinions ..................28
Experts..........................28
Plan of Distribution ............28
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