Public Service Company of New Mexico
$435,000,000
Senior Unsecured Notes
UNDERWRITING AGREEMENT
New York, New York
August 3, 1998
To Salomon Brothers Inc,
Chase Securities Inc.,
Morgan Stanley & Co. Incorporated,
Citicorp Securities, Inc.,
J.P. Morgan Securities Inc.,
BancAmerica Robertson Stephens and
CIBC Oppenheimer Corp.
Ladies and Gentlemen:
Public Service Company of New Mexico, a New Mexico corporation (the
"Company"), proposes to sell to the underwriters named above and in Schedule II
hereto (the "Underwriters") the principal amount of its Series A Senior
Unsecured Notes (the "Series A SUNs") and its Series B Senior Unsecured Notes
(the "Series B SUNs" and together with the Series A SUNs, the "SUNs") identified
in Schedule I hereto, to be issued under an indenture dated as of August 1,
1998, between the Company and The Chase Manhattan Bank, as trustee (the
"Trustee"), and any indentures supplemental thereto (collectively, the
"Indenture"). Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, deemed to be incorporated therein by reference.
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1. Representations and Warranties. The Company
represents and warrants to, and agrees with, each Underwriter as set
forth below in this Section 1. Certain terms used in this Section 1 are
defined in Section 17 hereof.
(a) The Company meets the requirements for the use of
Form S-3 under the Act and has filed with the Commission a
registration statement (file number 333-53367) on such Form,
including a basic prospectus, for registration under the Act
of the offering and sale of the SUNs. The Company may have
filed one or more amendments thereto, including a Preliminary
Final Prospectus, each of which has previously been furnished
to you. The Company will next file with the Commission one of
the following: (x) a final prospectus supplement relating to
the SUNs in accordance with Rules 430A and 424(b), (y) prior
to the Effective Date of such registration statement, an
amendment to such registration statement, including the form
of final prospectus supplement or (z) a final prospectus in
accordance with Rules 415 and 424(b). In the case of clause
(x), the Company has included in such registration statement,
as amended at the Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and
the Final Prospectus. As filed, such final prospectus
supplement or such amendment and form of final prospectus
supplement shall contain all Rule 430A Information, together
with all other such required information, and, except to the
extent the Underwriters shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final
Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement
did or will, and when the Final Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Closing
Date, the Final Prospectus (and any supplement thereto) will,
comply in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder; on the
Effective Date, the Registration Statement did not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; on the Effective
Date and on the Closing Date the Indenture did or will comply
in all material respects with the requirements of the Trust
Indenture Act and the rules thereunder; and, on the Effective
Date, the Final Prospectus, if not filed pursuant to Rule
424(b), will not, and on the date of any filing pursuant to
Rule 424(b) and on the Closing Date, the Final Prospectus
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(together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company
makes no representations or warranties as to (i) that part of
the Registration Statement which shall constitute the
Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of the Trustee or (ii) the information
contained in or omitted from the Registration Statement or the
Final Prospectus (or any supplement thereto) in reliance upon
and in conformity with information furnished herein or in
writing to the Company by or on behalf of any Underwriter
through Salomon Brothers Inc specifically for inclusion in the
Registration Statement or the Final Prospectus (or any
supplement thereto).
(c) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own its properties
and conduct its business as described in the prospectus, and
is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction which
requires such qualification where the failure to be so
qualified would, individually or in the aggregate, have a
material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole.
(d) The Company and its subsidiaries are not subject
to regulation under the provisions of the Public Utility
Holding Company Act, except for the provisions of Section
9(a)(2) thereof.
(e) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance
with its terms.
(f) The Company is not and, after giving effect to
the offering and sale of the SUNs and the application of the
proceeds thereof as described in the Final Prospectus, will
not be an "investment company" as defined in the Investment
Company Act;
(g) An appropriate order or orders have been entered
by the New Mexico Public Utility Commission authorizing the
issuance and sale of the SUNs; said order or orders are in
full force and effect and are not subject to any pending
appeal or request for rehearing or reconsideration; such order
or orders are sufficient to authorize the issuance and sale of
the SUNs by the Company pursuant to this Agreement; and no
further consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except
such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the SUNs by
the Underwriters in the manner contemplated herein and in the
Final Prospectus.
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(h) Neither the issue and sale of the SUNs nor the
consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition
of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, (i) the
charter or by-laws of the Company or any of its subsidiaries
or (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries is a party or
bound or to which its or their property is subject, or (iii)
any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company or any of its subsidiaries or any of its or their
properties;
(i) The consolidated financial statements and
schedules of the Company and its consolidated subsidiaries
included in the Final Prospectus and the Registration
Statement present fairly in all material respects the
financial condition, results of operations and cash flows of
the Company as of the dates and for the periods indicated,
comply as to form with the applicable accounting requirements
of the Act and the rules and regulations thereunder and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein). The
selected financial data set forth under the caption "Summary
Financial and Operating Information" in the Final Prospectus
and Registration Statement fairly present, on the basis stated
in the Final Prospectus and the Registration Statement, the
information included therein.
(j) No action, suit or proceeding by or before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected
to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to
have a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto) (except, in the case of
this clause (ii), for those that have been disclosed in the
Final Prospectus); and no labor disturbance by or dispute with
the employees of the Company exists or is, to the best
knowledge of the Company, threatened or is imminent that could
reasonably be expected to have a material adverse change in
the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus (exclusive of any
supplement thereto).
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(k) The Company owns or leases all such properties as
are necessary to the conduct of its operations as presently
conducted; the Company is not in violation of any law, rule or
regulation of any Federal, state or local governmental or
regulatory authority applicable to it or is not in
non-compliance with any term or condition of, or has failed to
obtain and maintain in effect, any license, certificate,
permit or other governmental authorization required for the
ownership or lease of its property or the conduct of its
business, which violation, non-compliance or failure would
individually or in the aggregate have a material adverse
change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus (exclusive of
any supplement thereto); and the Company has not received
notice of any proceedings relating to the revocation or
material modification of any such license, certificate, permit
or other authorization.
(l) The Company is not in violation or default of (i)
any provision of its charter or bylaws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or
bound or to which its property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties, as
applicable.
(m) Arthur Andersen LLP, who have certified certain
financial statements of the Company and its consolidated
subsidiaries and delivered their report with respect to the
audited consolidated financial statements and schedules
included in the Final Prospectus, are independent public
accountants with respect to the Company within the meaning of
the Act and the applicable published rules and regulations
thereunder.
(n) The Company is not in violation of any federal or
state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of
hazardous or toxic materials and the Company has received all
permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health
and environmental laws and regulations to conduct their
respective businesses, and the Company is in compliance with
all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals which would not, singly
or in the aggregate, result in a material adverse change in
the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus (exclusive of any
supplement thereto).
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(o) The Company is in compliance with the
Commission's staff legal bulletin No. 5 revised January 12,
1998 related to Year 2000 compliance.
Any certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters in
connection with the offering of the SUNs shall be deemed a
representation and warranty by the Company, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from
the Company, at the purchase price set forth in Schedule I hereto the
principal amount of the SUNs set forth opposite such Underwriter's name
in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for
the SUNs shall be made on the date and at the time specified in
Schedule I hereto (or at such time on such later date not more than
three Business Days after the foregoing date as the Underwriters shall
designate), which date and time may be postponed by agreement between
the Underwriters and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the SUNs being herein
called the "Closing Date"). Delivery of the SUNs shall be made through
Salomon Brothers Inc to the respective accounts of the several
Underwriters against payment by the several Underwriters through
Salomon Brothers Inc of the purchase price thereof to or upon the order
of the Company by wire transfer payable in same-day funds to an account
specified by the Company. Delivery of the SUNs shall be made through
the facilities of The Depository Trust Company ("DTC") unless the
Underwriters shall otherwise instruct.
The Company agrees to have the SUNs available for inspection,
checking and packaging by the Underwriters in New York, New York, not
later than 1:00 PM on the Business Day prior to the Closing Date if the
SUNs are not being delivered through the facilities of DTC.
4. Offerings by Underwriters. It is understood that
the several Underwriters propose to offer the SUNs for sale to the
public as set forth in the Final Prospectus.
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5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause
the Registration Statement, if not effective at the Execution
Time, and any amendment thereto, to become effective. Prior to
the termination of the offering of the SUNs, the Company will
not file any amendment of the Registration Statement or
supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, the Company will
cause the Final Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to
the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the
Underwriters of such timely filing. The Company will promptly
advise the Underwriters (i) when the Registration Statement,
if not effective at the Execution Time, shall have become
effective, (ii) when the Final Prospectus, and any supplement
thereto, shall have been filed with the Commission pursuant to
Rule 424(b) or when any Rule 462(b) Registration Statement
shall have been filed with the Commission, (iii) when, prior
to termination of the offering of the SUNs, any amendment to
the Registration Statement shall have been filed or become
effective, (iv) of any request by the Commission or its staff
for any amendment of the Registration Statement, or any Rule
462(b) Registration Statement, or for any supplement to the
Final Prospectus or of any additional information, (v) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution
or threatening of any proceeding for that purpose and (vi) of
the receipt by the Company of any notification with respect to
the suspension of the qualification of the SUNs for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
SUNs is required to be delivered under the Act, any event
occurs as a result of which the Final Prospectus as then
supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange
Act or the respective rules thereunder, the Company promptly
will (i) prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or
omission or effect such compliance and (ii) supply any
supplemented Final Prospectus to you in such quantities as you
may reasonably request.
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(c) As soon as practicable, the Company will make
generally available to its security holders and to the
Underwriters an earning statement or statements of the Company
and its subsidiaries which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Underwriters and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, as many copies of any Preliminary
Final Prospectus and the Final Prospectus and any supplement
thereto as the Underwriters may reasonably request. The
Company will pay the expenses of printing or other production
of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the
qualification of the SUNs for sale under the laws of such
jurisdictions as the Underwriters may designate, will maintain
such qualifications in effect so long as required for the
distribution of the SUNs, will arrange for the determination
of the legality of the SUNs for purchase by institutional
investors, will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the
offering and will pay any counsel fees incurred on behalf of
or disbursements by Morgan Stanley & Co Incorporated ("Morgan
Stanley") in its capacity as "qualified independent
underwriter"; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those
arising out of the offering or sale of the SUNs, in any
jurisdiction where it is not now so subject.
6. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Underwriters' SUNs
shall be subject to the accuracy of the representations and warranties
on the part of the Company contained herein as of the Execution Time
and the Closing Date, to the accuracy of the statements of the Company
made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Underwriters
agree in writing to a later time, the Registration Statement
will become effective not later than (i) 6:00 PM New York City
time, on the date of determination of the public offering
price, if such determination occurred at or prior to 3:00 PM
New York City time on such date or (ii) 9:30 AM on the
Business Day following the day on which the public offering
price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the
Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such
supplement, shall have been filed in the manner and within the
time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.
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(b) The Company shall have furnished to the
Underwriters the opinion of Keleher & McLeod, P.A., counsel
for the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which
it is chartered or organized, with full corporate
power and authority to own its properties and conduct
its business as described in the Final Prospectus,
and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of
each jurisdiction which requires such qualification
where the failure to be so qualified would,
individually or in the aggregate, have a material
adverse change in the condition (financial or
otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken
as a whole;
(ii) the Indenture has been duly authorized,
executed and delivered, has been duly qualified under
the Trust Indenture Act, and constitutes a legal,
valid and binding instrument enforceable against the
Company in accordance with its terms (subject to
applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent transfer or other laws
affecting creditors' rights generally from time to
time in effect); and the SUNs have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters
pursuant to this Agreement, will constitute legal,
valid and binding obligations of the Company entitled
to the benefits of the Indenture;
(iii) to the knowledge of such counsel,
there is no pending or threatened action, suit or
proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries, of a
character required to be disclosed in the
Registration Statement which is not adequately
disclosed in the Final Prospectus, and there is no
franchise, contract or other document of a character
required to be described in the Registration
Statement or Final Prospectus, or to be filed as an
exhibit thereto, which is not described or filed as
required; and the statements included or incorporated
in the Final Prospectus describing any legal
proceedings or material contracts or agreements
relating to the Company fairly summarize such
matters;
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(iv) the Registration Statement has become
effective under the Act; any required filing of the
Basic Prospectus, any Preliminary Final Prospectus
and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule
424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the
Registration Statement has been issued, no
proceedings for that purpose have been instituted or
threatened, and the Registration Statement, at the
Effective Date, and the Final Prospectus, as of the
date of its filing with the Commission under Rule
424(b) (in each case other than the financial
statements and other financial information contained
therein, as to which such counsel need express no
opinion) complied as to form in all material respects
with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the
respective rules thereunder; and such counsel has no
reason to believe that on the Effective Date the
Registration Statement contained any untrue statement
of a material fact or omitted to state any material
fact required to be stated therein or necessary in
order to make the statements therein not misleading
or that the Final Prospectus as of its date and on
the Closing Date includes any untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading (in each case, other than the
financial statements and other financial information
contained therein, as to which such counsel need
express no opinion);
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the Company is not and, after giving
effect to the offering and sale of the SUNs and the
application of the proceeds thereof as described in
the Final Prospectus, will not be an "investment
company" as defined in the Investment Company Act;
(vii) no consent, approval, authorization,
filing with or order of any court or governmental
agency or body is required in connection with the
transactions contemplated herein, except such as have
been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of
the SUNs by the Underwriters in the manner
contemplated in this Agreement and in the Final
Prospectus and such other approvals (specified in
such opinion) as have been obtained; and
(viii) neither the execution and delivery of
the Indenture, the issue and sale of the SUNs, nor
the consummation of any other of the transactions
herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company pursuant to, (i) the charter or by-laws of
the Company, or (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument and to
which the Company is a party or bound or to which its
property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to
the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the
Company or any of its properties.
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In rendering such opinion, such counsel may rely (A)
as to matters of Arizona law upon the opinion of Snell &
Wilmer L.L.P., Phoenix, Arizona, which shall have been
furnished and dated the Closing Date, and as to matters of New
York law upon the opinion of Winthrop, Stimson, Putnam &
Roberts and (B) as to matters of fact, to the extent deemed
proper, on certificates of responsible officers of the Company
and public officials. References to the Final Prospectus in
this paragraph (b) include any supplements thereto at the
Closing Date.
(c) The Underwriters shall have received from
Winthrop, Stimson, Putnam & Roberts, counsel for the
Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the SUNs, the
Indenture, the Registration Statement, the Final Prospectus
(together with any supplement thereto) and other related
matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon
such matters.
(d) The Company shall have furnished to the
Underwriters a certificate of the Company, signed by the
President or the Executive Vice President or any Senior Vice
President and the principal financial or accounting officer of
the Company or the Treasurer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Final
Prospectus, any supplements to the Final Prospectus and this
Agreement and that:
(i) the representations and warranties of
the Company in this Agreement are true and correct in
all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date
and the Company has complied with all the agreements
and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent
financial statements included in the Final Prospectus
(exclusive of any supplement thereto), there has been
no material adverse change in the condition
(financial or otherwise), prospects, earnings,
business or properties of the Company and its
subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of
business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement
thereto).
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(e) At the Closing Date, Arthur Andersen LLP shall
have furnished to the Underwriters letters (which may refer to
letters previously delivered to one or more of the
Underwriters), dated as of the Closing Date, in form and
substance satisfactory to the Underwriters, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information
contained in or incorporated by reference into the
Registration Statement and Final Prospectus. In addition,
except as provided in Schedule I hereto, at the Execution
Time, Arthur Andersen LLP shall have furnished to the
Underwriters a letter or letters, dated as of the Execution
Time, in form and substance satisfactory to the Underwriters,
to the effect set forth above.
(f) Subsequent to the Execution Time or, if earlier,
the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Final
Prospectus (exclusive of any supplement thereto), there shall
not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (e) of this Section
6 or (ii) any change, or any development involving a
prospective change, in or affecting the condition (financial
or otherwise), earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto) the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the
sole judgment of the Underwriters, so material and adverse as
to make it impractical or inadvisable to proceed with the
offering or delivery of the SUNs as contemplated by the
Registration Statement (exclusive of any amendment thereof)
and the Final Prospectus (exclusive of any supplement
thereto).
(g) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of any of the Company's
debt securities by any "nationally recognized statistical
rating organization" (as defined for purpose of Rule 436(g)
under the Act) or any notice given of any intended or
potential decrease in any such rating or of a possible change
in any such rating that does not indicate the direction of the
possible change.
(h) Prior to the Closing Date, the Company shall have
furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably
request.
12
If any of the conditions specified in this Section 6
shall not have been fulfilled in all material respects when and as
provided in this Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date
by the Underwriters. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this
Section 6 shall be delivered at the office of Winthrop, Stimson, Putnam
& Roberts, counsel for the Underwriters, at One Battery Park Plaza, New
York, New York, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the
sale of the SUNs provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 6
hereof is not satisfied, because of any termination pursuant to Section
10 hereof or because of any refusal, inability or failure on the part
of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally
through Salomon Brothers Inc on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and
sale of the SUNs.
8. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person who
controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement for the registration of the SUNs as originally filed or in
any amendment thereof, or in the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through Salomon Brothers Inc specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
13
(b) Each Underwriter severally agrees to indemnify
and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who
controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through Salomon Brothers Inc specifically
for inclusion in the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained
by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
14
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party for any reason, the
Company and the Underwriters agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or
more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company
and by the Underwriters from the offering of the SUNs; provided,
however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering
of the SUNs) be responsible for any amount in excess of the
underwriting discount or commission applicable to the SUNs purchased by
such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the
Company and the Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and of the Underwriters in connection
with the statements or omissions which resulted in such Losses as well
as any other relevant equitable considerations. Benefits received by
the Company shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses) received by it, and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on
the cover page of the Final Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or
any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this paragraph (d) are several
in proportion to their respective underwriting commitments and not
joint. For purposes of this Section 8, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall
have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of either the Act or
the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
15
(e) The Company also agrees to indemnify and hold
harmless Morgan Stanley and each person, if any who controls Morgan
Stanley within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims
damages, liabilities and judgments incurred as a result of Morgan
Stanley's participation as a "qualified independent underwriter" within
the meaning of Rule 2720 of the National Association of Securities
Dealers' Conduct Rules in connection with the offering of the SUNs,
except for any losses, claims, damages, liabilities and judgments
resulting from Morgan Stanley's or such controlling person's willful
misconduct.
(f) Notwithstanding anything contained herein to the
contrary, if indemnity may be sought pursuant to Section 8, paragraph
(e) hereof in respect of such action or proceeding, then in addition to
such separate firm for the indemnified parties, the indemnifying party
shall be liable for the reasonable fees and expenses of not more than
one separate firm (in addition to any local counsel) for Morgan Stanley
in its capacity as a "qualified independent underwriter" and all
persons, if any, who control Morgan Stanley within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act.
9. Default by an Underwriter. If any one or more
Underwriter or Underwriters shall fail to purchase and pay for any of
the SUNs agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in
the performance of its or their obligations under this Agreement, the
remaining Underwriters shall be obligated severally to take up and pay
for (in the respective proportions which the amount of SUNs set forth
opposite their names in Schedule II hereto bears to the aggregate
amount of SUNs set forth opposite the names of all the remaining
Underwriters) the SUNs which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event
that the aggregate amount of SUNs which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the
aggregate amount of SUNs set forth in Schedule II hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the SUNs, and if such
nondefaulting Underwriters do not purchase all the SUNs, this Agreement
will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth
in this Section 9, the Closing Date shall be postponed for such period,
not exceeding five Business Days, as the Underwriters shall determine
in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice
given to the Company prior to delivery of and payment for the SUNs, if
at any time prior to such time (i) trading in the Company's Common
Stock shall have been suspended by the Commission, the New York Stock
Exchange or the NASDAQ National Market or trading in securities
generally on the New York Stock Exchange, the American Stock Exchange,
the NASDAQ National Market, the Chicago Board of Options Exchange, the
16
Chicago Mercantile Exchange or the Chicago Board of Trade shall have
been suspended or limited or minimum prices shall have been established
on such Exchanges, National Market or Board of Trade, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole judgment
of the Underwriters, impractical or inadvisable to proceed with the
offering or delivery of the SUNs as contemplated by the Final
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and
other statements of the Company or its officers and of the Underwriters
set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the SUNs. The provisions of Sections 7 and
8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the
Underwriters, will be mailed, delivered or telefaxed to Salomon
Brothers Inc General Counsel (fax no.: (212) 816-7912) and confirmed to
the General Counsel, care of Brad Gans, 388 Greenwich Street, 32nd
Floor, New York, NY 10013, Attention: General Counsel; or, if sent to
the Company, will be mailed, delivered or telefaxed to (505) 241-2369
and confirmed to it at Public Service Company of New Mexico, Alvarado
Square, Albuquerque, New Mexico 87158, Attention: Treasurer.
13. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons
referred to in Section 8 hereof, and no other person will have any
right or obligation hereunder.
14. Applicable Law. This Agreement will be governed
by and construed in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one
or more counterparts, each of which shall constitute an original and
all of which together shall constitute one and the same agreement.
16. Headings. The section headings used herein are
for convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in
this Agreement, shall have the meanings indicated.
17
"Act" shall mean the Securities Act of 1933.
"Basic Prospectus" shall mean the prospectus referred
to in Section 1(a) above contained in the Registration
Statement at the Effective Date including, any Preliminary
Final Prospectus.
"Business Day" shall mean any day other than a
Saturday, a Sunday or a legal holiday or a day on which
banking institutions or trust companies are authorized or
obligated by law to close in New York City.
"Closing Date" shall have the meaning set forth in
Section 3 hereof.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that
the Registration Statement, any post-effective amendment or
amendments thereto and any Rule 462(b) Registration Statement
became or become effective.
"Exchange Act" shall mean the Securities Exchange Act
of 1934.
"Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties
hereto.
"Final Prospectus" shall mean the form of final
prospectus relating to the SUNs, including the Basic
Prospectus, included in the Registration Statement at the
Effective Date.
"Investment Company Act" shall mean the Investment
Company Act of 1940.
"Losses" shall have the meaning set forth in section
8(d) hereof.
"Preliminary Final Prospectus" shall mean any
preliminary prospectus supplement to the Basic Prospectus
which describes the SUNs and the offering thereof and is used
prior to filing of the Final Prospectus.
"Public Utility Holding Company Act" shall mean the
Public Utility Holding Company Act of 1935.
"Registration Statement" shall mean the registration
statement referred to in Section 1(a) above, including
exhibits and financial statements, as amended at the Execution
Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such
registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
18
"Rule 415," "Rule 424," "Rule 430A" and "Rule 462"
refer to such rules under the Act.
"Rule 430A Information" shall mean information with
respect to the SUNs and the offering thereof permitted to be
omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a
registration statement and any amendments thereto filed
pursuant to Rule 462(b) relating to the offering covered by
the initial registration statement.
"Trust Indenture Act" shall mean the Trust Indenture
Act of 1939.
19
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By: ____________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date specified in Schedule I
hereto.
Salomon Brothers Inc
Chase Securities Inc.,
Morgan Stanley & Co. Incorporated,
Citicorp Securities, Inc.,
J.P. Morgan Securities Inc.,
BancAmerica Robertson Stephens and
CIBC Oppenheimer Corp.
By: SALOMON BROTHERS INC
By: __________________________
Name:
Title:
For itself and the other several
Underwriters named in Schedule II
to the foregoing Agreement.
20
63049424.08
SCHEDULE I
Underwriting Agreement dated August 3, 1998
Registration Statement No. 333-53367
Title, Purchase Price and Description of Securities:
Title: 7.10% Series A Senior Unsecured Notes Due 2005 ("Series A SUNs")
7.50% Series B Senior Unsecured Notes Due 2018 ("Series B SUNs"
and together with the Series A SUNs, the "SUNs")
Principal $300,000,000 Aggregate Principal Amount of Series A SUNs
Amount: $135,000,000 Aggregate Principal Amount of Series B SUNs
$435,000,000 Total Aggregate Principal Amount of SUNs
Interest: The 7.10% Series A SUNs and the 7.50% Series B SUNs
will bear interest at their respective rates set
forth in their respective titles from August 6, 1998
payable semiannually on each February 1 and August 1,
commencing February 1, 1999.
Maturity: The Series A SUNs will mature on August 1, 2005 and the Series B
SUNs will mature on August 1, 2018.
Purchase Price:
Per Series A SUNs 98.893%
Per Series B SUNs 98.299%
Sinking Fund Provisions: None
Redemption Each series of Offered SUNs will be redeemable at the option of
Provisions: the Company in whole at any time or in part from time to time,
at a redemption price equal to the greater of (i) 100% of their
principal amount or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon
discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Yield as defined in the Prospectus Supplement plus
50 basis points, plus in each case accrued interest to the date
of redemption. See "Description of Offered SUNs" in the
Prospectus Supplement and "Description of SUNs" in the
Prospectus.
Other provisions:
Closing Date, Time and Location: August 6, 1998, 10:00 a.m.(New York
City City time), at the offices of Winthrop, Stimson, Putnam &
Roberts, One Battery Park Plaza, New York, New York 10004.
Type of Offering: Shelf Debt Offering
63049424.08
SCHEDULE II
Principal Principal Total Principal
Amount of Amount of Amount of
Underwriters Series A SUNs Series B SUNs Offered SUNs
- ------------ ------------- ------------- ---------------
Salomon Brothers Inc............... $ 96,000,000 $ 43,200,000 $139,200,000
Chase Securities Inc............... 52,500,000 23,625,000 76,125,000
Morgan Stanley & Co. Incorporated.. 52,500,000 23,625,000 76,125,000
Citicorp Securities, Inc........... 42,000,000 18,900,000 60,900,000
J.P. Morgan Securities Inc......... 42,000,000 18,900,000 60,900,000
BancAmerica Robertson Stephens..... 7,500,000 3,375,000 10,875,000
CIBC Oppenheimer Corp.............. 7,500,000 3,375,000 10,875,000
------------ ------------ ------------
Total ...................... $300,000,000 $135,000,000 $435,000,000
============