As filed with the Securities and Exchange Commission on December 11, 1998
Registration No. 333-64215
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 75-0204070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
MICHAEL D. BLANCHARD
VICE PRESIDENT AND GENERAL COUNSEL
TEXAS-NEW MEXICO POWER COMPANY
4100 INTERNATIONAL PLAZA
P.O. BOX 2943
FORT WORTH, TEXAS 76113
(817) 731-0099
FAX: (817) 737-1333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
BRIAN D. BARNARD ROBERT B. WILLIAMS
HAYNES AND BOONE, LLP MILBANK, TWEED, HADLEY & MCCLOY
201 MAIN STREET, SUITE 2200 1 CHASE MANHATTAN PLAZA
FORT WORTH, TEXAS 76102 NEW YORK, NEW YORK 10005
(817) 347-6600 (212) 530-5000
FAX: (817) 347-6650 FAX: (212) 530-5219
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the Registration Statement becomes effective, as determined by market
conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
===========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
Senior Debt Securities ................ (1) (1) (2) N/A
First Mortgage Bonds .................. (1) (1) (2) N/A
Total ............................ $200,000,000 $59,000(3)
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(1) Not applicable pursuant to General Instruction II.D. to Form S-3.
(2) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement, other than collateral
securities, exceed $200,000,000.
(3) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as
amended. This amount was previously paid with the initial filing of this
Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
******************************************************************************
SUBJECT TO COMPLETION, DATED DECEMBER 11, 1998
PROSPECTUS
, 1998
$200,000,000
TEXAS-NEW MEXICO POWER COMPANY
SENIOR DEBT SECURITIES
_______________________________________
Texas-New Mexico Power Company ("TNMP" or the "Company") from time to time
may offer, in an aggregate principal amount not to exceed $200,000,000, in one
or more series, its senior debt securities (the "Senior Debt Securities").
Prior to the Release Date (as defined in "Overview of Securities" below), the
Senior Debt Securities will be secured by the issuance and delivery to the
Trustee (as defined below) in trust for the benefit of the holders of Senior
Debt Securities one or more series of first mortgage bonds (the "First Mortgage
Bonds") issued under the Company's Mortgage Indenture (as defined below). The
Senior Debt Securities will be issued under the indenture to be entered into
between TNMP and Chase Bank of Texas, N.A., as trustee (the "Trustee"), as
amended and supplemented by supplemental indentures thereto (collectively, the
"Indenture"). The Senior Debt Securities may be offered in amounts, at prices
and on terms to be determined at the time of sale. Certain terms of the Senior
Debt Securities including, where applicable, the specific designation, aggregate
principal amount, interest rate, interest payment dates, maturity, public
offering price, description of collateral, any redemption terms or other
specific terms of each series of the Senior Debt Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
prospectus supplement or supplements (each such supplement, a "Prospectus
Supplement").
TNMP may sell the Senior Debt Securities to or through underwriters,
through dealers or directly to purchasers. See "Plan of Distribution." Each
Prospectus Supplement will set forth the names of such underwriters or dealers,
if any, any applicable commissions or discounts and the proceeds to TNMP from
such sale.
This Prospectus may not be used to consummate sales of the Senior Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Senior Debt Securities being sold.
_______________________________________
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AVAILABLE INFORMATION
The Company and TNP Enterprises, Inc. ("TNP"), of which the Company is the
principal wholly-owned operating subsidiary, are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In accordance with the Exchange Act, the Company and TNP file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The reports, proxy statements and other
information can be inspected and copied at the public reference facilities that
the Commission maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048, and Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Copies of these materials can be obtained at prescribed
rates from the Public Reference Section of the Commission at the principal
offices of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Senior Debt Securities. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements made in the Prospectus concerning the contents of any documents
referred to herein are not necessarily complete. With respect to each such
document filed with the Commission as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description, and each such
statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
(i) Annual Report on Form 10-K for the year ended December 31, 1997;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998;
(iv) Current Report on Form 8-K dated October 9, 1998; and
(v) Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus from their respective dates of filing.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Company at 4100 International Plaza, P.O. Box 2943,
Fort Worth, Texas 76113. Telephone requests may be directed to Michael D.
Blanchard, Vice President and General Counsel of the Company, at (817) 731-0099.
STATEMENT REGARDING FORWARD LOOKING INFORMATION
The discussions in this document and incorporated by reference herein, and
in any Prospectus Supplement hereto, that are not historical facts, including,
but not limited to, the outcome of current and future rate/regulatory
proceedings, the continued application of regulatory accounting principles,
future cash flows and the potential recovery of stranded costs, are based upon
current expectations. Actual results may differ materially. Among the facts that
could cause the results to differ materially from expectations are the
following: legislation in the states TNMP serves affecting the regulation of
TNMP's business; changes in
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regulations affecting TNMP's business; results of regulatory proceedings
affecting TNMP's operations; future acquisitions or strategic partnerships;
general business and economic conditions; the effectiveness of TNMP's year 2000
mitigation plan, and the timely year 2000 compliance by TNMP's vendors; and
other factors described from time to time in TNP's and TNMP's reports filed with
the Commission. The Company wishes to caution readers not to place undue
reliance on any such forward looking statements, which are made pursuant to the
Private Securities Litigation Reform Act of 1995 and, as such, speak only as of
the date made.
THE COMPANY
TNMP is a public utility engaged in generating, purchasing, transmitting,
distributing and selling electricity to approximately 226,000 customers in 85
municipalities and adjacent rural areas through three operating regions in Texas
and New Mexico. The Company's largest division, the Gulf Coast Region, includes
the area along the Texas Gulf Coast between Houston and Galveston. This
division produced 54.3% of total operating revenues in 1997. The Company's
North-Central Region produced 24.8% of total operating revenues in 1997, and the
Company's Mountain Region produced 18.5% of total operating revenues in 1997.
The remaining 2.4% of TNMP's revenues in 1997 were generated by the Company's
power marketing activities. TNMP's predecessor was organized in 1925.
TNMP, through its subsidiaries, owns one electric generating facility, TNP
One, which is located in Robertson County, Texas. TNP One consists of two 150-
megawatt units, each of which utilizes a lignite-fueled, circulating fluidized
bed technology. The two units supply, on an annualized basis, approximately 20%
of TNMP's power requirements.
TNMP has two subsidiaries, Texas Generating Company and Texas Generating
Company II, both of which were organized to facilitate TNMP's acquisitions of
Unit 1 and Unit 2 of TNP One, in 1990 and 1991, respectively. The Company and
its subsidiaries are all Texas corporations. Their executive offices are located
at 4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113 and their
telephone number is (817) 731-0099.
The Company is subject to regulation by the Public Utility Commission of
Texas and the New Mexico Public Utility Commission. The Company is subject in
some of its activities, including the issuance of securities, to the
jurisdiction of the Federal Energy Regulatory Commission.
The Company is a wholly-owned subsidiary of TNP, a Texas corporation and a
non-utility holding company, which is listed on the New York Stock Exchange
under the ticker symbol TNP.
USE OF PROCEEDS
Except as otherwise stated in the applicable Prospectus Supplement, net
proceeds from the sale of the Senior Debt Securities offered hereby will be used
for the discharge, retirement or repayment of short or long-term debt and
borrowings made or expected to be made and for other corporate purposes.
Specific allocations of proceeds for such purposes have not been made at this
time. Funds may be borrowed in anticipation of future requirements.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth TNMP's ratio of earnings to fixed charges
for the periods indicated.
Twelve Months Year Ended December 31,
Ended ----------------------------
September 30, 1998 1997 1996 1995 1994 1993
------------------
Ratio of Earnings to Fixed Charges/(1)/ ... 2.06 2.15 1.53 1.87 * 1.24
* Earnings were insufficient to fund fixed charges in 1994. The amount of
the shortfall was $30 million.
(1) For the purpose of computing these ratios, earnings consist of net income
plus income taxes and fixed charges. Fixed charges consist of total
interest, amortization of debt discount, premium and expense and the
estimated portion of interest implicit in rentals.
3
OVERVIEW OF SECURITIES
The Senior Debt Securities may be issued from time to time and in one or
more series. Prior to the Release Date (as defined below), the Senior Debt
Securities will be secured by TNMP's First Mortgage Bonds (the "Senior Note
Mortgage Bonds"). On the Release Date, any outstanding Senior Debt Securities
will cease to be secured by the Senior Note Mortgage Bonds and will become
unsecured general obligations of TNMP.
Each series of Senior Debt Securities will be issued under the Indenture,
as supplemented by a supplemental indenture describing the particular terms of
such series. The form of Indenture is filed as an exhibit to the Registration
Statement. The new supplemental indentures will be entered into
contemporaneously with the issuance of each series of the Senior Debt Securities
to be so secured.
TNMP will issue the Senior Note Mortgage Bonds under one or more
supplemental indentures (each, a "Supplemental Mortgage Indenture") to the
Indenture of Mortgage and Deed of Trust, dated as of November 1, 1944, between
Community Public Service Co. (now known as Texas-New Mexico Power Company) and
City National Bank and Trust Company of Chicago, Chicago, Illinois (whose
current successor is U.S. Bank Trust, N.A.) (the "Mortgage Trustee"), as
supplemented and amended by the supplemental indentures thereto (collectively,
the "Mortgage Indenture").
The "Release Date" will be the date on which the Senior Debt Securities
will cease to be secured by the Senior Note Mortgage Bonds and become unsecured
general obligations of TNMP. The date will be chosen by TNMP, but will not occur
prior to the later of (i) the date as of which all First Mortgage Bonds, other
than the Senior Note Mortgage Bonds securing the Senior Debt Securities of all
series, have been retired through payment, redemption or otherwise, at, before
or after the maturity thereof, and (ii) the date as of which all Liens on any
Property of the Company or any Subsidiary (other than certain Liens permitted to
exist as described in "Decription of the Senior Debt Securities--Limitation on
Liens") have been terminated or otherwise removed.
Neither the Indenture nor the Mortgage Indenture (collectively, the
"Indentures") requires that TNMP issue future issues of debt securities under
the Indentures. Subject to certain restrictions that are described in
"Description of the Senior Debt Securities -- Limitations on Liens" and "--
Limitations on Sale and Lease-Back Transactions," the Company will be free to
employ other indentures or documentation, containing provisions different from
those included in the Indentures or applicable to one or more issues of Senior
Debt Securities, in connection with future issues of such other debt securities.
Certain capitalized terms herein are defined in the Indentures.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
The following summaries of certain provisions of the Senior Debt Securities
and the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Capitalized
terms not defined herein are defined in the Indenture.
GENERAL
Until the Release Date, the Senior Debt Securities of each series will be
secured by one or more series of Senior Note Mortgage Bonds issued under the
Mortgage Indenture and delivered to the Trustee. See "-- Security; Release
Date." ON THE RELEASE DATE, THE SENIOR DEBT SECURITIES WILL CEASE TO BE SECURED
BY THE SENIOR NOTE MORTGAGE BONDS AND WILL BECOME UNSECURED GENERAL OBLIGATIONS
OF THE COMPANY AND WILL RANK ON A PARITY WITH OTHER UNSECURED INDEBTEDNESS OF
THE COMPANY. The Indenture provides that, in addition to the Senior Debt
Securities offered hereby, TNMP may issue additional Senior Debt Securities
thereunder, without limitation as to aggregate principal amount, from time to
time, in one or more series. Prior to the Release Date, the amount of Senior
Debt Securities that TNMP may issue cannot exceed the aggregate principal amount
of First Mortgage Bonds that the Company is able to issue under its Mortgage
Indenture. As of July 31, 1998, there were two series of First Mortgage Bonds
outstanding in an aggregate principal amount equal to $108,000,000. In addition,
at July 31, 1998, there were two series of First Mortgage Bonds in an aggregate
principal amount of $130,000,000 issued as collateral to secure two debt
facilities of the Company. At July 31, 1998, the Company could have issued
approximately $131 million of additional First Mortgage Bonds at an assumed 9%
interest rate.
The Indenture does not contain any debt covenants or provisions which would
afford holders of Senior Debt Securities protection in the event of a highly
leveraged transaction.
4
Please refer to the Prospectus Supplement relating to each particular issue
of the Senior Debt Securities being offered for, among other things, the
following terms thereof:
(a) the title of the Senior Debt Securities of the series;
(b) any limit upon the aggregate principal amount of the Senior Debt
Securities of the series which may be authenticated and delivered
under the Indenture;
(c) the person to whom any interest on a Senior Debt Security of the
series shall be payable, if other than the Holder;
(d) the date or dates on which the principal or installments of principal
is payable and any rights to extend such date or dates and the
duration of such extension;
(e) the rate or rates (which may be fixed or variable) per annum at which
the Senior Debt Securities of the series will bear interest or the
method by which such rate or rates shall be determined and the date
from which such interest will accrue or the method by which such date
or dates shall be determined and the right (if any) to extend such
dates and the duration of such extension;
(f) the obligation, if any, of the Company to redeem, repay or purchase
any Senior Debt Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a holder thereof, and the
period or periods within which, the price or prices at which and the
terms and conditions upon which, any such securities shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(g) the denominations in which any Senior Debt Securities of the series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(h) if other than the principal amount thereof, the portion of the
principal amount of Senior Debt Securities of the series which shall
be payable upon declaration of acceleration of the maturity thereof;
(i) if other than such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public or
private debts, the coin or currency in which payment of the principal
of (and premium, if any) and interest, if any, on the Senior Debt
Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United
States of America for any purpose;
(j) if the principal of (and premium, if any) or interest, if any, on the
Senior Debt Securities of the series are to be payable, at the
election of the Company or a Holder thereof, in a coin or currency
other than that in which the Senior Debt Securities are stated to be
payable, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(k) if the amount of payments of principal of (and premium, if any) or
interest, if any, on the Senior Debt Securities of the series may be
determined with reference to an index based on a coin or currency
other than that in which such Senior Debt Securities are stated to be
payable or pursuant to a formula, the manner in which such amounts
shall be determined;
(l) any provisions permitted by the Indenture relating to Events of
Default or covenants of the Company with respect to such series of
Senior Debt Securities;
(m) if the principal amount payable at the stated maturity of any Senior
Debt Securities of the series will not be determinable as of any one
or more dates prior to the stated maturity, the amount which shall be
deemed to be the principal amount of such Senior Debt Securities as of
any such date for any purpose under the applicable Prospectus
Supplement or under the Indenture, including the principal amount
thereof which shall be due and payable upon any maturity other than
the stated maturity or which shall be deemed to be outstanding as of
any date prior to the stated maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
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(n) if applicable, that the Senior Debt Securities of the series, in whole
or any specified part, shall not be defeasible pursuant to the
Indenture and the manner in which any election by the Company to
defease such Senior Debt Securities shall be evidenced;
(o) if applicable, that any Senior Debt Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities (as hereinafter defined at page 13) and, in such case, the
respective Depositaries (as hereinafter defined at page 13) for such
Global Securities, the form of any legend or legends which shall be
borne by any such Global Security and any circumstances in which any
such Global Security may be exchanged in whole or in part for Senior
Debt Securities registered, and any transfer of such Global Security
in whole or in part may be registered, in the name or names of persons
other than the Depositary for such Global Security or a nominee
thereof;
(p) providing collateral to the Trustee to secure payment of the principal
of (and premium, if any) and interest on the Senior Debt Securities of
any series, and provisions for the release of any such collateral;
and
(q) any other terms of the series.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of (and premium, if any) and interest on, the Senior Debt
Securities of each series will be payable, and the Senior Debt Securities of
each series will be exchangeable and transfers thereof will be registrable, at
the Place of Payment, provided that, if the Senior Debt Securities of any
series are not Global Securities, at the option of the Company, payment of
interest with respect to such Securities may be made by check mailed or wire
transferred to the address of each Holder of such Securities.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Senior Debt Securities of each series will be issued in United States
dollars in fully registered form, without coupons, in denominations of $1,000 or
any integral multiple thereof. No service charge will be made for any transfer
or exchange of the Senior Debt Securities of each series, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
SECURITY; RELEASE DATE
Until the Release Date, each series of the Senior Debt Securities will be
secured by one or more series of Senior Note Mortgage Bonds issued and delivered
by the Company to the Trustee. See "Description of the First Mortgage Bonds."
When issuing Senior Debt Securities prior to the Release Date, the Company will
simultaneously issue and deliver Senior Note Mortgage Bonds to the Trustee as
security for such Senior Debt Securities. The Senior Note Mortgage Bonds will
have the same stated rate of interest (or interest calculated in the same
manner), interest payment dates, stated maturity date and redemption provisions
and will be in the same aggregate principal amount as the corresponding Senior
Debt Securities. The Trustee has agreed to hold the Senior Note Mortgage Bonds
in such capacity under all circumstances and not transfer such Senior Note
Mortgage Bonds until the earlier of the Release Date or the prior retirement of
the Senior Debt Securities through redemption, repurchase or otherwise. Any
payment made in respect to the Company's obligations under the Senior Debt
Securities shall be deemed a payment in respect of the Senior Note Mortgage
Bonds. The obligation of the Company to make payments with respect to the
principal of and interest on the Senior Note Mortgage Bonds shall be fully
satisfied and discharged to the extent that, at any time that any such payment
shall be due, the Company shall have paid fully the then due principal of and
interest on, and fees with respect to, the Senior Debt Securities.
ON THE RELEASE DATE, THE TRUSTEE WILL DELIVER ALL SENIOR NOTE MORTGAGE
BONDS TO THE COMPANY FOR CANCELLATION AND THE COMPANY WILL CAUSE THE TRUSTEE TO
PROVIDE NOTICE TO ALL HOLDERS OF SENIOR DEBT SECURITIES THAT THE RELEASE DATE
HAS OCCURRED. AS A RESULT, ON THE RELEASE DATE, THE SENIOR NOTE MORTGAGE BONDS
WILL CEASE TO SECURE THE SENIOR DEBT SECURITIES, AND THE SENIOR DEBT SECURITIES
WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND WILL RANK ON A
PARITY WITH OTHER UNSECURED SENIOR INDEBTEDNESS OF THE COMPANY. Each series of
Senior Note Mortgage Bonds will be secured by a lien on certain property owned
by the Company. In certain circumstances prior to the Release Date, the Company
is permitted to reduce the aggregate principal amount of an issue of Senior Note
Mortgage Bonds held by the Trustee, but in no event to an amount lower than the
aggregate outstanding principal amount of the Senior Debt Securities initially
issued contemporaneously with such Senior Note Mortgage Bonds. Following the
Release Date, the Company will cause the Mortgage Indenture to be closed, and
the Company will not issue any additional bonds under such Mortgage Indenture.
The intention of these provisions is that before the
6
Release Date the Senior Debt Securities will have the benefit of being secured
by the First Mortgage Bonds, and after the Release Date the Senior Debt
Securities will have the benefit of the same security as other secured debt of
the Company, if any, subject to specified exceptions.
LIMITATIONS ON LIENS
The Indenture provides that from and after the Release Date and as long as
any Senior Debt Securities are outstanding, the Company may not, and may not
permit any Subsidiary to, incur, issue, assume, guarantee or permit to exist
Indebtedness (as hereinafter defined at page 12), that is secured by any Liens
on any Property (each as hereinafter defined at page 12), of the Company or any
Subsidiary, whether such Property was owned by the Company or any Subsidiary, as
applicable, at the date of the Indenture or thereafter acquired, without making,
or causing such Subsidiary to make, effective provision to secure all of the
Senior Debt Securities of each series, issued under the Indenture and then
outstanding, by such Lien, equally and ratably with any and all other
Indebtedness thereby secured so long as such Indebtedness shall be so secured.
This restriction will not apply to any Indebtedness that is secured by any of
the following:
(a) Liens on any Property acquired, constructed or improved by the Company
or any Subsidiary after the date of the Indenture which are created or
assumed contemporaneously with such acquisition, construction or
improvement, or within 180 days after the completion thereof, to
secure or provide for the payment of all or any part of the cost of
such acquisition, construction or improvement (including related
expenditures capitalized for federal income tax purposes in connection
therewith) incurred after the date of the Indenture;
(b) Liens of or upon any Property existing at the time of acquisition
thereof, whether by merger, consolidation, purchase, lease or
otherwise (including Liens of or upon Property of a corporation
existing at the time such corporation becomes a Subsidiary);
(c) Liens in favor of the Company or any Subsidiary;
(d) Liens in favor of the United States of America or any State thereof,
or any department, agency or instrumentality or political subdivision
of the United States of America or any State thereof or political
entity affiliated therewith, to secure partial, progress, advance or
other payments, or other obligations, pursuant to any contract or
statute or to secure any Indebtedness incurred for the purpose of
financing all or any part of the cost of acquiring, constructing or
improving the property subject to such Liens (including Liens incurred
in connection with pollution control, industrial revenue or similar
financings);
(e) Liens on any Property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying Property, whether directly or indirectly, by way of share
disposition or otherwise; provided that 180 days from the creation of
such Liens the Company must have disposed of such Property and any
Indebtedness secured by such Liens shall be without recourse to the
Company or any Subsidiary;
(f) Liens imposed by law, such as mechanics', workmen's, repairmen's,
materialmen's, carriers', warehousemen's, vendors' or other similar
liens arising in the ordinary course of business, or governmental
(federal, state or municipal) liens arising out of contracts for the
sale of products or services by the Company or any Subsidiary, or
deposits or pledges to obtain the release of any of the foregoing;
(g) Liens arising out of pledges or deposits under workmen's compensation
laws or similar legislation and Liens of judgments thereunder which
are not currently dischargeable, or good faith deposits in connection
with bids, tenders, contracts (other than for the payment of money) or
leases to which the Company or any Subsidiary is a party, or deposits
to secure public or statutory obligations of the Company or any
Subsidiary, or deposits in connection with obtaining or maintaining
self-insurance or to obtain the benefits of any law, regulation or
arrangement pertaining to unemployment insurance, old age pensions,
social security or similar matters, or deposits of cash or obligations
of the United States of America to secure surety, appeal or customs
bonds to which the Company or any Subsidiary
7
is a party, or deposits in litigation or other proceedings such as,
but not limited to, interpleader proceedings;
(h) Liens created by or resulting from any litigation or other proceeding
which is being contested in good faith by appropriate proceedings,
including Liens arising out of judgments or awards against the Company
or any Subsidiary with respect to which the Company or such Subsidiary
is in good faith prosecuting an appeal or proceedings for review; or
Liens incurred by the Company or any Subsidiary for the purpose of
obtaining a stay or discharge in the course of any litigation or other
proceeding to which the Company or such Subsidiary is a party;
(i) Liens for taxes or assessments or governmental charges or levies not
yet due or delinquent, or which can thereafter be paid without
penalty, or which are being contested in good faith by appropriate
proceedings;
(j) Liens consisting of easements, rights-of-way, zoning restrictions,
restrictions on the use of real property, and defects and
irregularities in the title thereto, landlords' liens and other
similar liens and encumbrances none of which interferes materially
with the use of the property covered thereby in the ordinary course of
the business of the Company or such Subsidiary and which do not, in
the opinion of the Company, materially detract from the value of such
properties; and
(k) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred
to in the foregoing clauses (a), (b), or (e) to (j), inclusive;
provided that (i) such extension, renewal or replacement Lien shall be
limited to all or a part of the same Property that secured the Lien
extended, renewed or replaced (plus improvements on such Property) and
(ii) the amount of Indebtedness secured by such Lien at such time is
not increased.
The Indenture provides that notwithstanding the foregoing limitations, the
Company or its Subsidiaries may incur, issue, assume or guarantee Indebtedness
secured by Liens without equally and ratably securing the Senior Debt Securities
of each series then Outstanding, provided, that at the time of such incurrence,
issuance, assumption or guarantee of Indebtedness, after giving effect thereto
and to the retirement of any Indebtedness of the Company or of any Subsidiary
which is concurrently being retired, the sum of (i) the aggregate amount of all
outstanding Indebtedness of the Company or of any Subsidiary secured by Liens
which could not have been incurred, issued, assumed or guaranteed by the Company
or a Subsidiary without equally or ratably securing the Senior Debt Securities
of each series then Outstanding, except for the provisions of this paragraph,
plus (ii) the Attributable Value of Sale and Leaseback Transactions entered into
pursuant to the last paragraph of "-- Limitations on Sale and Lease-Back
Transactions," does not at such time exceed the greater of 10% of the Net
Tangible Assets (as hereinafter defined at page 12) or 10% of the Consolidated
Capitalization of the Company.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that after the Release Date, so long as any Senior
Debt Securities are Outstanding, neither the Company nor any Subsidiary will
enter into any arrangement under which the Company or a Subsidiary would lease
any Property which it has sold or transferred or is going to sell or transfer (a
"Sale and Leaseback Transaction") unless either: (a) the Company or such
Subsidiary would, when entering into such arrangement, be entitled, without
equally and ratably securing the Securities of each series then Outstanding, to
incur, issue, assume or guarantee Indebtedness secured by a Lien on such
property pursuant to the first paragraph of "-- Limitations on Liens" (including
clauses (a) - (k) thereof); or (b) the Company, within 180 days after such sale
or transfer applies an amount equal to the greater of (i) the net proceeds of
the sale of Property sold and leased back pursuant to such arrangement or (ii)
the fair market value of the Property so sold and leased back at the time of
entering into such arrangement (as determined by any two Officers) to the
retirement of Funded Indebtedness of the Company; provided, that the amount to
be applied to the retirement of Funded Indebtedness of the Company shall be
reduced by (i) the principal amount of any Senior Debt Securities delivered
within 120 days after such sale to the Trustee for retirement and cancellation,
and (ii) the principal amount of Funded Indebtedness, other than Senior Debt
Securities, voluntarily retired by the Company within 120 days after such sale.
This provision applies to Sale and Leaseback Transactions with primary lease
terms and possible renewal terms exceeding three years. Notwithstanding the
foregoing, the Company and its Subsidiaries, or any of them, may enter into a
Sale and Leaseback Transaction which would otherwise be prohibited; provided,
that at the time of such transaction, after giving effect thereto, the sum of
(i) the aggregate amount of the Attributable Value in respect of all Sale and
Leaseback Transactions existing at such time which could not have been entered
into except for the provisions of this paragraph plus (ii) the aggregate amount
of outstanding Debt secured
8
by Liens in reliance on the last paragraph of "--Limitations on Liens" of the
Indenture does not at such time exceed the greater of 10% of the Net Tangible
Assets or 10% of the Consolidated Capitalization of the Company. A Sale and
Leaseback Transaction shall not be deemed to result in the creation of a Lien.
VOTING OF SENIOR NOTE MORTGAGE BONDS HELD BY THE TRUSTEE
Prior to the Release Date, the Trustee, as a holder of Senior Note Mortgage
Bonds, will attend any meeting of bondholders under the Mortgage Indenture as to
which it receives due notice, or, at its option, will deliver its proxy in
connection therewith. Either at such meeting, or otherwise where the consent of
holders of Mortgage Bonds issued under the Mortgage Indenture is sought without
a meeting, the Trustee will vote all of the Senior Note Mortgage Bonds held by
it, or will consent or withhold its consent with respect thereto, as directed by
the Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities; provided, however, the Trustee may not vote the First
Mortgage Bonds pledged as collateral for any particular series in favor of, or
give consent to, any action which, in the Trustee's opinion, would materially
adversely affect such series of First Mortgage Bonds in a manner not shared
generally by all other First Mortgage Bonds, except upon notification by the
Trustee to the holders of the related series of Senior Debt Securities of such
proposal and consent thereto of the Holders of a majority in principal amount of
the Outstanding Senior Debt Securities of such series.
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time with respect to any series of Senior
Debt Securities by giving written notice thereof to the Company. The Trustee
may be removed at any time with respect to any series of Senior Debt Securities
by the Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of that series, delivered to the Trustee and to the
Company.
If at any time: (i) the Trustee fails to comply with the conflict of
interest provisions contained in Section 310(b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, with respect to any
series of Senior Debt Securities after written request therefor by the Company
or by any Holder who has been a Holder of a Senior Debt Security of that series
for at least six months, (ii) the Trustee ceases to be eligible under the
Indenture with respect to any series of Senior Debt Securities and fails to
resign after written request therefor by the Company or by any such Holder,
(iii) the Trustee becomes incapable of acting with respect to any series of
Senior Debt Securities, or (iv) the Trustee is adjudged a bankrupt or insolvent
or a receiver of the Trustee or of its property is appointed or any public
officer takes charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then, in any such
case, (1) the Company may remove the Trustee, with respect to the Senior Debt
Securities of that series, or, in the case of clause (iv), with respect to all
series, or (2) subject to the Indenture, any Holder who has been a Holder of a
Senior Debt Security of such series for at least six months may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee with respect to the series, or, in the case of clause (iv), with respect
to all series.
If the Trustee resigns, is removed or becomes incapable of acting with
respect to any series of Senior Debt Securities, or if a vacancy occurs in the
office of the Trustee with respect to any series of Senior Debt Securities for
any cause, the Company will promptly appoint a successor Trustee or Trustees
with respect to the Senior Debt Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Senior Debt Securities of one or more or all of such series and that at any time
there will be only one Trustee with respect to the Senior Debt Securities of any
particular series). If, within one year after such resignation, removal or
incapacity, or the occurrence of such vacancy, a successor Trustee with respect
to such series of Senior Debt Securities is appointed by the Holders of a
majority in aggregate principal amount of the Outstanding Senior Debt Securities
of such series delivered to the Company and the predecessor Trustee, the
successor Trustee so appointed will, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of the Indenture,
become the successor Trustee with respect to such series and supersede the
successor Trustee appointed by the Company with respect to such series. If no
successor Trustee with respect to such series has been so appointed by the
Company or the Holders of such series and accepted appointment in the manner
required by the Indenture, any Holder who has been a Holder of a Senior Debt
Security of that series for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to such series.
The Company will give notice of each resignation and each removal of the
Trustee with respect to the Senior Debt Securities of any series and each
appointment of a successor Trustee with respect to the Senior Debt Securities of
9
any series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Senior Debt Securities of that series as their names
and addresses appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Senior Debt Securities of such
series and the address of its Corporate Trust Office.
CONCERNING THE TRUSTEE
Chase Bank of Texas, N.A. is the Trustee under the Indenture. The Trustee
is not the trustee under any other indenture pursuant to which securities of the
Company are outstanding. The Company maintains banking relationships with the
Trustee and with an affiliate of the Trustee in the ordinary course of business,
and such affiliate of the Trustee is the agent for a syndicated group of banks,
which includes the Trustee, that has extended a $150,000,000 revolving line of
credit to the Company.
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to the Senior Debt
Securities of any series as: (a) default in payment of principal (or premium, if
any) of any Senior Debt Security of that series when due and payable, at its
Maturity or otherwise; (b) default in payment of any interest on any Senior Debt
Security of that series when due and payable, and continuance of such default
for a period of 30 days; (c) default in the deposit of any sinking fund payment,
when and as due by the terms of a Senior Debt Security of that series; (d)
default in the performance, or breach, of any covenant or warranty of the
Company in the Indenture (other than certain covenants or warranties) and
continuance of such default or breach by the Company for 60 days after due
notice in the performance of any covenants or warranties in the Indenture; (e)
certain events of bankruptcy, insolvency or reorganization of the Company; (f)
prior to the Release Date, a "default" under the Mortgage Indenture has occurred
and is continuing; and (g) acceleration of any Indebtedness (including Senior
Debt Securities of any other series) of the Company in an aggregate principal
amount exceeding $10 million.
The Indenture provides that, if any Event of Default with respect to Senior
Debt Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Senior Debt Securities of that series may, by notice
as provided in the Indenture, declare the aggregate principal amount, together
with all accrued and unpaid interest thereon, of all Senior Debt Securities of
that series to be due and payable immediately upon notice in writing to the
Company (and to the Trustee if given by Holders), but upon certain conditions
such declaration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal of or interest on the Senior Debt
Securities and certain other specified defaults) may be waived by the Holders of
a majority in aggregate principal amount of the Outstanding Senior Debt
Securities of that series on behalf of the Holders of all Senior Debt Securities
of such series, except that upon the occurrence of certain bankruptcy Events of
Default, such principal and interest shall become immediately payable without
any such declaration.
The Indenture provides that the Trustee will, within 90 days after the
Trustee has received written notice of a default with respect to Senior Debt
Securities of any series at the time Outstanding, give to the Holders of the
Outstanding Senior Debt Securities of such series, notice of such default known
to it if uncured or not waived, provided that, except in the case of default in
the payment of principal of (or premium, if any) or interest on any such Senior
Debt Securities, the Trustee will be protected in withholding of such notice if
the Trustee in good faith determines that the withholding of such notice is in
the interest of the Holders of the Outstanding Senior Debt Securities of such
series; and, provided further, that such notice shall not be given until 30 days
after the occurrence of a "Default" specified in clause (d) of "Event of
Default" above. The term "Default" for the purpose only of this provision means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
The Holders of a majority in aggregate principal amount of the outstanding
Senior Debt Securities of any series will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Senior Debt Securities of such series; provided that (a) the Trustee
will have the right to decline to follow any such direction if the Trustee,
being advised by counsel, determines that the action so directed may not
lawfully be taken or would conflict with the Indenture; (b) the Trustee will
have the right to decline to follow such direction if the Trustee in good faith
determines that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such
direction; (c) such direction will be presented by such Holders to the Trustee
in a timely manner; (d) such direction will not be in conflict with any rule
of law or with the Indenture; and (e) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
The Indenture includes a covenant that the Company will file at least
annually with the Trustee a certificate of no Default, or specifying any Default
that exists.
10
DISCHARGE; DEFEASANCE
The Indenture provides that the Company, at its option (to the extent
provided), (a) will be discharged from any and all obligations with respect to
the Senior Debt Securities (except for certain obligations, including
registering the transfer or exchange of the Senior Debt Securities, replacing
stolen, lost or mutilated Senior Debt Securities, maintaining paying agencies
and holding monies for payment in trust) or (b) need not comply with certain
restrictive covenants of the Indenture (and the occurrence of certain Events of
Default with respect to such restrictive covenants), upon the deposit with the
Trustee (and in the case of a defeasance, 91 days after such deposit), in trust,
of money, or U.S. Government Obligations, or a combination thereof, which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
of and interest on the Senior Debt Securities on the date such payments are due
in accordance with the terms of the Senior Debt Securities to their stated
maturities. Upon such defeasance and discharge, the Trustee will deliver to the
Company for cancellation all Senior Note Mortgage Bonds securing such Senior
Debt Securities, after which time such Senior Debt Securities will no longer be
secured by Senior Note Mortgage Bonds. To exercise any such option, the Company
is required to meet certain conditions, including delivering to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the Holders of the Senior Debt Securities to recognize income, gain or
loss for federal income tax purposes as a result of such deposit and defeasance,
and will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and defeasance
were not to occur.
MODIFICATION OF THE INDENTURE
The Indenture permits the Company and the Trustee to execute supplemental
indentures that add, change or eliminate provisions of the Indenture or modify
the rights of the Holders of Outstanding Senior Debt Securities. Such execution
may be without the consent of the Holders of the Senior Debt Securities in some
cases and in others with the consent of the Holders of at least a majority in
principal amount of Outstanding Senior Debt Securities of each series of Senior
Debt Securities affected by the supplemental indenture. No such supplemental
indenture, however, may, without the consent of Holders of 100% in Principal
Amount of Outstanding Senior Debt Securities of each series affected thereby
(a) change the Stated Maturity of any Senior Debt Security, (b) reduce the
principal amount of, or the rate of interest on, any Senior Debt Security, (c)
change the place or currency of payment on any Senior Debt Security, (d) impair
the right to institute suit for the enforcement of any payment on or after the
Stated Maturity thereof, (e) prior to the Release Date, impair the interest of
the Trustee in the Senior Note Mortgage Bonds, (f) reduce the stated percentage
of Outstanding Senior Debt Securities necessary to modify or amend the Indenture
or related documents, or (g) reduce the percentage of aggregate principal amount
of Outstanding Senior Debt Securities necessary for waiver of compliance with
certain provisions of the Indenture or for the waiver of certain covenants and
defaults.
OUTSTANDING SECURITIES
The Indenture provides that Senior Debt Securities owned by the Company or
any of its affiliates shall not be deemed to be Outstanding when determining
whether the Holders of the requisite principal amount of Outstanding Senior Debt
Securities have given any request, demand, authorization, direction, notice
consent or waiver under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may, without the consent of the
Holders of any of the Outstanding Senior Debt Securities under the Indenture,
consolidate with or merge with or into any other corporation, or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, provided that: (i) the successor is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia; (ii)
the successor corporation, if other than the Company, assumes the Company's
obligations on the Senior Debt Securities and under the Indenture, (iii) if
prior to the Release Date, the successor corporation assumes the Company's
obligations on the Senior Note Mortgage Bonds and under the Mortgage Indenture;
(iv) after giving effect to the transaction, no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing; (v) if the Company's assets would become
subject to a lien not permitted by the Indenture, the Senior Debt Securities are
secured equally and ratably with all Indebtedness secured thereby; and (vi) the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger, conveyance, transfer and
lease and such supplemental indenture comply with the Indenture and that all
conditions precedent therein provided for relating to such transaction have been
complied with.
11
CERTAIN DEFINITIONS
"Attributable Value" in respect of any Sale and Leaseback Transaction
means, as of the time of determination, the lesser of (i) the sale price of the
property so leased multiplied by a fraction the numerator of which is the
remaining portion of the base term of the lease included in such Sale and
Leaseback Transaction and the denominator of which is the base term of such
lease, and (ii) the total obligation (discounted to present value at the rate of
interest specified by the terms of such lease) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes as well as
maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
base term of the lease included in such Sale and Leaseback Transaction.
"Consolidated Capitalization" of the Company means consolidated total
assets less consolidated non-interest bearing current liabilities, all as shown
by a consolidated balance sheet of the Company and all Subsidiaries prepared in
accordance with generally accepted accounting principles at the date of such
balance sheet.
"Funded Indebtedness" means notes, bonds, debentures or other similar
evidences of Indebtedness which by its terms matures at or is extendible or
renewable at the option of the obligor to a date more than 12 months after the
date of the creation of such Indebtedness.
"Indebtedness" means, with respect to any Person (without duplication),
(a) any liability of such Person (1) for borrowed money or under any
reimbursement obligation relating to a letter of credit, financial bond or
similar instrument or agreement, (2) evidenced by a bond, note, debenture or
similar instrument or agreement (including a purchase money obligation) given in
connection with the acquisition of any business, properties or assets of any
kind (other than a trade payable or a current liability arising in the ordinary
course of business or a performance bond or similar obligation), (3) for the
payment of money relating to any obligations under any capital lease of real or
personal property or (4) any agreement or instrument in respect of an interest
rate or currency swap, exchange or hedging transaction or other financial
derivatives transaction; (b) any liability of others described in the preceding
clause (a) that the Person has guaranteed or that is otherwise its legal
liability; and (c) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses (a)
and (b) above. For the purpose of determining any particular amount of
Indebtedness under this definition, guarantees of (or obligations with respect
to letters of credit or financial bonds supporting) Indebtedness otherwise
included in the determination of such amount shall not be included.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, security interest, lien, encumbrance, or
other security arrangement of any kind or nature whatsoever on or with respect
to such Property (including any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Net Tangible Assets" means the amount shown as total assets on the
consolidated balance sheet of the Company prepared in accordance with generally
accepted accounting principles on the date of such balance sheet, less the
following: (i) intangible assets including, but without limitation, such items
as goodwill, trademarks, tradenames, patents and unamortized debt discount and
expense and other regulatory assets carried as an asset on the balance sheet;
and (ii) appropriate adjustments, if any, on account of minority interests.
"Outstanding," when used with respect to Senior Debt Securities of any
series, means, as of the date of determination, all such Senior Debt Securities
theretofore authenticated and delivered under this Indenture, except:
(a) such Senior Debt Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;
(b) such Senior Debt Securities for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Senior Debt Securities; provided
that, if such Senior Debt Securities are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture of provision
therefor satisfactory to the Trustee has been made;
(c) Senior Debt Securities as to which Defeasance has been effected
pursuant to the Indenture; and
12
(d) such Senior Debt Securities in exchange for or in lieu of which
other Senior Debt Securities have been authenticated and delivered pursuant
to the Indenture, or which shall have been paid in accordance with the
provisions of the Indenture governing mutilated, destroyed, lost or stolen
Senior Debt Securities (except with respect to any such Senior Debt
Security as to which proof satisfactory to the Trustee is presented that
such Senior Debt Security is held by a Person in whose hands such Senior
Debt Security is a legal, valid and binding obligation of the Company).
"Person" means any individual, corporation, partnership, joint venture,
association, company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Property" of any Person means all such Person's (i) property and assets
and (ii) rights to and interests in all property and assets.
"Sale and Lease-Back Transaction" means any arrangement with any Person,
providing for the leasing by the Company or a Subsidiary for a period, including
renewals, in excess of three years of any Property which has been or is to be
sold or transferred by the Company or any Subsidiary to such Person.
"Subsidiary" means any corporation or other business entity of which the
Company owns or controls (either directly or through one or more other
Subsidiaries) more than 50% of the issued share capital or other ownership
interests, in each case having ordinary voting power to elect or appoint
directors, managers or trustees of such corporation or other business entity
(whether or not capital stock or other ownership interests or any other class or
classes shall or might have voting power upon the occurrence of any
contingency).
"U.S. Government Obligations" means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof or any other
Person, and shall also include a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act), as custodian with respect to any
obligation or a specific payment of principal of or interest on any such
obligation held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the obligation or the specific payment of principal of or interest on the
obligation evidenced by such depository receipt.
BOOK-ENTRY SECURITIES
Each series of Senior Debt Securities may be issued in the form of one or
more global notes (the "Global Securities") representing all or part of such
series of Senior Debt Securities and which will be deposited with or on behalf
of The Depository Trust Company as depositary (the "Depositary") and registered
in the name of the Depositary or nominee of the Depositary. Certificated Senior
Debt Securities will not be exchangeable for Global Securities and, except under
the circumstances described below, the Global Securities will not be
exchangeable for certificated Senior Debt Securities.
The Depositary has advised the Company as follows: The Depositary 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 Exchange Act. The Depositary
holds securities that its participants ("Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its 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 Depository Trust Company 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
Participant, either directly or indirectly. The rules applicable to the
Depositary and its Participants are on file with the Commission.
Upon the issuance of the Global Securities in registered form, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Senior Debt Securities represented by the
Global Securities to the accounts of Participants. The accounts to be credited
shall be designated by the Underwriters. Ownership of beneficial interests in
the Global Securities will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests by
Participants in the Global Securities will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee. Ownership of beneficial interests in the Global
Securities by persons that hold through Participants will be shown on, and the
transfer of that ownership interest within such Participant will be effected
only through, records maintained by such Participant. Owners of beneficial
interests in the Global Securities will not receive written confirmation
providing details of the transaction, as well as periodic statements of their
holdings, from the Participants through which they purchased beneficial
interests in the Global Securities. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Securities.
So long as the Depositary, or its nominee, is the registered owner of the
Global Securities, the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the Senior Debt Securities represented
13
by the Global Securities for all purposes under the Indenture. Except as set
forth below, owners of beneficial interests in the Global Securities will not be
entitled to have Senior Debt Securities registered in their names, will not
receive or be entitled to receive physical delivery of the Senior Debt
Securities in definitive form and will not be considered the owner or Holders
thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on the Senior
Debt Securities will be made to the Depositary or its nominee, as the case may
be, as the registered owner or the Holder of the Global Securities representing
the Senior Debt Securities. None of the Company, the Trustee, any Paying Agent
or the registrar for the Senior Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Depositary has advised the Company that, upon receipt of any payment of
principal, premium or interest in respect of the Global Securities, the
Depositary will credit immediately Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Securities as shown on the records of the Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in the Global Securities held through such Participants will be
governed by standing instructions and customary practices, as is now 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 Participants.
The Global Securities may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor of the Depositary or a nominee of such successor.
If the Depositary is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within ninety days,
the Company will issue certificated notes in definitive registered form in
exchange for the Global Securities representing the Senior Debt Securities. In
addition, the Company may at any time and in its sole discretion determine not
to have any Senior Debt Securities in registered form represented by one or more
Global Securities and, in such event, will issue certificated notes in
definitive form in exchange for the Global Securities representing the Senior
Debt Securities. In any such instance, an owner of a beneficial interest in the
Global Securities will be entitled to physical delivery in definitive form of
certificated Senior Debt Securities represented by the Global Securities equal
in principal amount to such beneficial interest and to have such certificated
notes registered in its name.
DESCRIPTION OF THE FIRST MORTGAGE BONDS
First Mortgage Bonds, including any series of Senior Note Mortgage Bonds
issued as security for the Senior Debt Securities, will be issued in one or more
series under the Company's Mortgage Indenture.
The following summaries of certain provisions of the First Mortgage Bonds
and the Mortgage Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by express reference to, all the provisions of
the Mortgage Indenture, including the definitions therein of certain terms.
Certain capitalized terms herein are defined in the Mortgage Indenture.
REDEMPTION AND IMPROVEMENT FUND
Redemption provisions, if any, for each series of Senior Note Mortgage
Bonds will be described in the Prospectus Supplement relating thereto. Except
as provided below, the First Mortgage Bonds outstanding on the date of the
Indenture may not be redeemed at the option of the Company prior to maturity.
Under the Mortgage Indenture, the First Mortgage Bonds may be redeemed by
application of cash deposited with the Mortgage Trustee in connection with the
taking, purchase or sale of mortgage property, by or pursuant to the direction
of a municipal or governmental body.
As an Improvement Fund, the Company must pay to the Mortgage Trustee on or
before May 1, in each year, cash equal to the amount of the Minimum Provision
for Depreciation for the preceding calendar year (i.e., as to each full calendar
month included in such period the greater of (1) the amount recorded on the
books of the Company during such calendar month as charged to income for
depreciation of Public Utility Property or (2) 1/12 of 2% of the Book Cost of
Depreciable Public Utility Property at the beginning of such calendar month),
less credits consisting of (i) Available Additions, (ii) bonds of any series
(taken at principal amount) available as the basis for the issue of First
Mortgage Bonds under the Mortgage Indenture, and/or (iii) appropriations
required for prior lien improvement funds and improvements
14
and/or additions to Public Utility Property which is subject to Prior Liens, not
previously used under such Prior Liens. First Mortgage Bonds used as a credit as
aforesaid (or retired by the application of cash in the Improvement Fund) may be
reinstated by using credits of the character referred to in (i) and (ii) above
or by the deposit of cash. Cash in the Improvement Fund may be withdrawn by
using credits of the character referred to in (i) and (ii) above or may be
applied to the retirement of First Mortgage Bonds of any series. Cash held in
such fund may not be applied to the redemption of the First Mortgage Bonds. The
Company intends to meet future Improvement Fund requirements with Available
Additions.
The First Mortgage Bonds are not subject to any sinking or additions fund.
KIND AND PRIORITY OF LIEN
The Senior Note Mortgage Bonds will be secured equally and ratably with all
First Mortgage Bonds of other series by the first lien of the Mortgage Indenture
on Public Utility Property and other property owned by the Company (but not its
Subsidiaries), which includes substantially all the permanent physical
properties and franchises of the Company (except as stated below), subject,
however, to Permitted Encumbrances and minor exceptions. The Mortgage Indenture
requires that there shall be subjected to the lien thereof all after-acquired
property (except as to property of the character expressly excepted and subject
to certain limitations in cases of mergers and consolidations), subject,
however, to Permitted Encumbrances and Prior Liens. Prior Liens may consist
only of existing liens or purchase money liens on after-acquired property, and
the principal amount of all such liens may not exceed 10% of the principal
amount of the outstanding First Mortgage Bonds.
There are excepted from the lien of the Mortgage Indenture bills, notes,
accounts receivable, cash, contracts, shares of stock, bonds, evidences of
indebtedness and other securities, and all other choses in action, unless
specifically mortgaged and pledged or expressly required so to be; goods,
merchandise and appliances held for sale; materials and supplies; automobiles
and trucks and similar equipment; oil, coal and other minerals (other than gas)
underlying mortgaged lands; oil properties, oil leases and royalties and income
therefrom and rights under oil and gas leases to explore for and produce oil;
property used principally in the oil business; office equipment; and all other
after-acquired property which is not Public Utility Property. While wholly-
owned subsidiaries of the Company own interests in Unit 1 or Unit 2 of TNP One,
the interests owned by such subsidiaries will not be subject to the lien of the
Mortgage Indenture.
REPORTS
The Mortgage Indenture requires periodic inspections and reports to the
Mortgage Trustee by an independent engineer as to maintenance. A certificate of
the Company as to absence of default is required to be furnished to the Mortgage
Trustee annually.
ISSUANCE OF ADDITIONAL BONDS AND WITHDRAWAL OF CASH DEPOSITED AGAINST SUCH
ISSUANCE
The aggregate principal amount of First Mortgage Bonds which may be issued
under the Mortgage Indenture is unlimited. First Mortgage Bonds of any series
may be issued from time to time on the basis of (1) 60% of the amount of
Available Additions, (2) the deposit of cash, and (3) First Mortgage Bonds of
any series paid, redeemed or otherwise retired (or for whose payment or
redemption cash has been deposited with the Mortgage Trustee) other than First
Mortgage Bonds the retirement of which has previously been made the basis for
the issuance of additional First Mortgage Bonds or the withdrawal of cash or
First Mortgage Bonds retired through the operation of any sinking, improvement
or analogous fund to the extent that the terms of any such fund preclude such
use.
With certain exceptions in the case of (3) above, additional First Mortgage
Bonds may not be issued under the Mortgage Indenture unless Net Earnings
Available for Interest of the Company for 12 consecutive months out of the
preceding 15 months are at least two-and-one-half times the aggregate amount of
annual Interest Charges on Bonded Indebtedness which gives effect to the
interest on the additional First Mortgage Bonds to be issued (the "Interest
Coverage Ratio"). Based upon this requirement and assuming an interest rate of
9.0%, the Company could have issued approximately $127 million principal amount
of First Mortgage Bonds as of June 30, 1998. Assuming an interest rate of 9.0%,
and with the availability of Available Additions, the Company could have issued
approximately $131 million principal amount of First Mortgage Bonds as of June
30, 1998.
Cash deposited with the Mortgage Trustee pursuant to (2) above may be
withdrawn to the extent of 60% of Available Additions and 100% of First Mortgage
Bonds retired and not previously used exclusive of First Mortgage
15
Bonds retired through sinking fund operations, to the extent the Mortgage
Indenture precludes such use of First Mortgage Bonds, or through the Improvement
Fund.
RESTRICTIONS ON DECLARATION OF DIVIDENDS
The Mortgage Indenture provides that, so long as any First Mortgage Bonds
of Series U remain outstanding, the Company is prohibited from declaring
dividends on any shares of its common stock (other than dividends payable solely
in common stock of the Company), or making any payment on account of the
purchase, redemption, or other retirement of any shares of any class of its
stock (other than pursuant to any sinking, purchase or analogous fund for its
preferred stock) or, directly or indirectly, making any other distribution in
respect thereof (other than cash dividends on its preferred stock), unless such
dividends on common stock ("Stock Payments") are declared to be payable not more
than ninety days after the date of declaration, and unless, at the date of such
declaration of dividends on common stock or the date of such payment or
distribution (after giving effect, as if paid, to the proposed Stock Payment),
the sum of $1.5 million, plus (or minus, in the case of a deficit) the net
income of the Company computed for the period from December 31, 1969, to and
including the date of declaration (in the case of dividends on common stock) or
the making of such proposed Stock Payment, is greater than the sum of the
aggregate of all Stock Payments declared or made during such period plus the
aggregate amount of all cash dividends on, and payments pursuant to any sinking,
purchase or analogous fund for, preferred stock of the Company declared or made
during such period. At June 30, 1998, pursuant to the terms of the Mortgage
Indenture, approximately $19 million of the Company's $63 million of retained
earnings at such date was restricted.
MODIFICATION OF BONDHOLDERS' RIGHTS
The rights of the bondholders may be modified with the consent of the
holders of 75% of the First Mortgage Bonds, including not less than 60% of each
series affected. In general, no modification of the terms of maturity or
payment of principal, premium or interest is effective against any bondholder
without his consent.
THE MORTGAGE TRUSTEE
The holders of a majority in principal amount of the First Mortgage Bonds
outstanding may require the Mortgage Trustee to enforce the Mortgage Indenture,
but the Mortgage Trustee is not required to expend its own funds or incur
liability if it has reasonable grounds to believe that repayment of such funds
or liability is not reasonably assured.
No holder of any First Mortgage Bond has the right to institute suit to
enforce the Mortgage Indenture (other than with respect to the unconditional
obligation of the Company to pay the principal of, and interest accrued on,
First Mortgage Bonds to the holders thereof) unless the holders of at least 25%
in principal amount of the First Mortgage Bonds outstanding shall have filed a
request with the Mortgage Trustee for it to institute such action, together with
an offer of adequate security and indemnity.
DEFAULTS
An Event of Default is defined in the Mortgage Indenture as (a) failure to
pay principal or premium when due, (b) failure to pay interest for 30 days after
becoming due, (c) failure to discharge or satisfy any sinking or improvement
fund obligation when due, (d) failure to observe (i) the 10% restriction on
Prior Lien Indebtedness, (ii) certain restrictions on the payment of dividends,
(iii) the covenants as to sale, merger or lease, or (iv) the provisions as to
investment of certain trust funds, (e) failure to perform or observe other
covenants, agreements or conditions for 60 days after notice, (f) entry of an
order for reorganization or appointment of a trustee or receiver and continuance
of such order or appointment, unstayed, for 60 days, (g) certain adjudications,
petitions or consents in bankruptcy, insolvency or reorganization proceedings,
and (h) rendering of a judgment in excess of $100,000 and its continuance
unsatisfied for 60 days after any stay of execution thereon has been terminated.
Upon the occurrence of an Event of Default and until it shall have been
remedied, the Mortgage Trustee or the holders of not less than 25% in principal
amount of the First Mortgage Bonds outstanding may declare the principal of, and
interest accrued on, all First Mortgage Bonds to be due and payable immediately.
16
PLAN OF DISTRIBUTION
The Company may sell any series of the Senior Debt Securities (i) to or
through underwriters; (ii) to or through dealers; or (iii) directly to
purchasers. A Prospectus Supplement will set forth the terms of the offering of
each series of the Senior Debt Securities; including the name or names of any
underwriters or dealers, the purchase price of such Senior Debt Securities and
the proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchange on which such Senior Debt Securities may be listed. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time. Only firms named
in the Prospectus Supplement or a related pricing supplement, if applicable,
will be deemed to be underwriters or dealers in connection with the Senior Debt
Securities offered thereby.
If underwriters are used in the sale, the Senior Debt Securities will be
acquired by the 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.
The Senior Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Senior Debt Securities will be
named in the Prospectus relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Senior Debt Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all of such Senior
Debt Securities if any are purchased.
The Senior Debt Securities may be sold directly by the Company to investors
or others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or dealers to solicit offers from certain types of institutions to
purchase the Senior Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Underwriters and dealers may be entitled under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters or dealers may be required to
make in respect thereof. Underwriters and dealers may engage in transactions
with, or perform services for the Company in the ordinary course of business.
The Senior Debt Securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a market for
any series of the Senior Debt Securities.
VALIDITY OF SECURITIES
The validity of the Senior Debt Securities offered hereby and the Indenture
will be passed upon for the Company by Michael D. Blanchard, Vice President and
General Counsel of the Company and by Haynes and Boone, LLP. Certain other
matters will be passed upon for the Company by Haynes and Boone, LLP, Fort
Worth, Texas. Certain legal matters in connection with the offering will be
passed upon for any underwriters by Milbank, Tweed, Hadley & McCloy, New York,
New York. All matters pertaining to local laws in connection with the issuance
of the Senior Debt Securities offered hereby will be passed upon only by Haynes
and Boone, LLP as to Texas law, and Rubin, Katz, Salazar, Alley & Rouse, Santa
Fe, New Mexico, as to New Mexico law.
EXPERTS
The consolidated financial statements of Texas-New Mexico Power Company as
of and for the year ended December 31, 1997, included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of Arthur
17
Andersen LLP, independent public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Texas-New Mexico Power Company as
of December 31, 1996 and 1995, and for each of the years in the two-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, have been incorporated by reference herein
and in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the Company's consolidated
financial statements refers to a change in the method of accounting for
operating revenues in 1995.
18
===============================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to buy any securities
other than the securities described in this Prospectus or any offer to sell or a
solicitation of an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that the information contained herein or therein is correct as of
any time subsequent to the date of such information.
______________
TABLE OF CONTENTS
Page
----
Available Information .................................................... 2
Incorporation of Certain ................................................. 2
Documents by Reference ................................................... 2
Statement Regarding Forward
Looking Information .................................................... 2
The Company ............................................................... 3
Use of Proceeds ........................................................... 3
Ratio of Earnings to Fixed Charges ........................................ 3
Overview of Securities .................................................... 4
Description of the Senior Debt Securities ................................. 4
Description of the First Mortgage Bonds ................................... 14
Plan of Distribution ...................................................... 17
Validity of Securities .................................................... 17
Experts ................................................................... 17
===============================================================================
===============================================================================
$200,000,000
TEXAS-NEW MEXICO
POWER COMPANY
SENIOR DEBT SECURITIES
------------
PROSPECTUS
------------
===============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission Registration Fee .. $ 59,000
Printing Expenses .................................... 10,500
Accounting Fees and Expenses ......................... 45,000
Legal Fees and Expenses .............................. 150,000
Blue Sky Fees and Expenses ........................... 5,000
Rating Agency Fees ................................... 92,500
Trustee Fees ......................................... 20,000
Miscellaneous Expenses ............................... 20,000
--------
Total ............................................. $402,000
========
All of the above expenses except the Securities and Exchange Commission
registration fee are estimated. All of such expenses will be borne by the
Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") provides
that any director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he was, is or is threatened to be made a party by reason of
his position. With respect to any proceeding arising from actions taken in his
official capacity, as a director or officer, he may be indemnified so long as it
shall be determined that he conducted himself in good faith and that he
reasonably believed that such conduct was in the corporation's best interest.
In cases not concerning conduct in his official capacity as a director or
officer, a director or officer may be indemnified so long as it shall be
determined that he conducted himself in good faith and that he reasonably
believed that his conduct was not opposed to the corporation's best interest.
In the case of any criminal proceeding, a director or officer may be indemnified
if he had no reasonable cause to believe his conduct was unlawful. If a
director or officer is found liable to the corporation on the basis that
personal benefit was improperly received by him, the indemnification is limited
to reasonable expenses actually incurred in connection with such proceeding. No
indemnification may be made if such officer or director is found liable for
willful or intentional misconduct in the performance of his duty to the
corporation. If a director or officer is wholly successful, on the merits or
otherwise, in connection with such a proceeding, such indemnification is
mandatory.
Section 5 of Article 7 of the Company's Bylaws requires the indemnification
of officers and directors to the fullest extent permitted by the TBCA or any
other applicable law. The Company also has policies insuring its officers and
directors against certain liabilities for actions taken in such capacities,
including liabilities under the TBCA.
Article 7.06 of the Texas Miscellaneous Corporation Laws Act provides that
the articles of incorporation of a corporation may provide that a director of
the corporation shall not be liable, or shall be liable only to the extent
provided in the articles of incorporation, to the corporation or its
shareholders or members for monetary damages for an act or omission in the
director's capacity as a director, except that this article does not authorize
the elimination or limitation of the liability of a director to the extent the
director is found liable for:
(i) a breach of the director's duty of loyalty to the corporation
or its shareholders or members;
(ii) an act or omission not in good faith that constitutes a
breach of duty of the director to the corporation or an act or omission
that involves intentional misconduct or a knowing violation of the law;
(iii) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office;
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(iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute.
Article X of the Company's Articles of Incorporation provides that, to the
fullest extent allowed pursuant to the Texas Miscellaneous Corporation Laws Act,
or any other applicable laws as presently or hereafter in effect, no director of
the Company shall be personally liable to the Company or its shareholders for
monetary damages for or with respect to any acts or omissions in his capacity as
director of the Company.
ITEM 16. EXHIBITS
Exhibit
No. Description
------- -----------
1(a)** - Form of Underwriting Agreement.
4(a)* - Form of Indenture (the "Indenture") between Texas-New Mexico
Power Company and Chase Bank of Texas, N.A., related to the
Senior Debt Securities.
4(b)** - Form of First Supplemental Indenture related to Senior Debt
Securities.
4(c) - Indenture of Mortgage and Deed of Trust (the "Mortgage
Indenture") dated as of November 1, 1944 (Exhibit 2(d) to
Community Public Service Co. ("CPS") 1978 Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(d) - Seventh Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1963 (Exhibit 2(k) to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(e) - Eighth Supplemental Indenture to the Mortgage Indenture dated
as of July 1, 1963 (Exhibit 2(1), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(f) - Ninth Supplemental Indenture to the Mortgage Indenture dated
as of August 1, 1965 (Exhibit 2(m), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(g) - Tenth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1966 (Exhibit 2(n), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(h) - Eleventh Supplemental Indenture to the Mortgage Indenture
dated as of October 1, 1969 (Exhibit 2(o), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(i) - Twelfth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1971 (Exhibit 2(p), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(j) - Thirteenth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1974 (Exhibit 2(q), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(k) - Fourteenth Supplemental Indenture to the Mortgage Indenture
dated as of March 1, 1975 (Exhibit 2(r), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(l) - Fifteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1976 (Exhibit 2(e), File
No. 2-57034) and incorporated by reference herein.
4(m) - Sixteenth Supplemental Indenture to the Mortgage Indenture
dated as of November 1, 1981 (Exhibit 4(x), File No. 2-74332)
and incorporated by reference herein.
4(n) - Seventeenth Supplemental Indenture to the Mortgage Indenture
dated as of December 1, 1982 (Exhibit 4(cc), File
No. 2-80407) and incorporated by reference herein.
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4(o) - Eighteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1983 (Exhibit (a) to Form 10-Q of the
Company for the quarter ended September 30, 1983, File
No. 1-4756) and incorporated by reference herein.
4(p) - Nineteenth Supplemental Indenture to the Mortgage Indenture
dated as of May 1, 1985 (Exhibit 4(v), File No. 2-97230) and
incorporated by reference herein.
4(q) - Twentieth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1987 (Exhibit 4(o) to Form 10-K of the
Company for the year ended December 31, 1987, File
No. 2-97230) and incorporated by reference herein.
4(r) - Twenty-First Supplemental Indenture to the Mortgage
Indenture dated as of July 1, 1989 (Exhibit 4(p) to Form
10-Q of the Company for the quarter ended June 30, 1989,
File No. 2-97230) and incorporated by reference herein.
4(s) - Twenty-Second Supplemental Indenture to the Mortgage
Indenture dated as of January 15, 1992 (Exhibit 4(q) to Form
10-K of the Company for the year ended December 31, 1991,
File No. 2-97230) and incorporated by reference herein.
4(t) - Twenty-Third Supplemental Indenture to the Mortgage
Indenture dated as of September 15, 1993 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(u) - Twenty-Fourth Supplemental Indenture to the Mortgage
Indenture dated as of November 3, 1995 (Exhibit 4(s) to Form
10-K of the Company for the year ended December 31, 1993,
File No. 2-97230) and incorporated by reference herein.
4(v) - Twenty-Fifth Supplemental Indenture to the Mortgage
Indenture dated as of September 10, 1996 (Exhibit 4(t) to
Form 10-Q of the Company for the quarter ended September 30,
1996, File No. 2-97230) and incorporated by reference
herein.
4(w) - Indenture and Security Agreement for 12 1/2% Secured
Debentures dated as of January 15, 1992 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1991, File No. 2-97230) and incorporated by reference
herein.
4(x) - Indenture and Security Agreement for 10 3/4% Secured
Debentures dated as of September 15, 1993 (Exhibit 4(t) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(y)** - Form of Twenty-Sixth Supplemental Indenture to the Mortgage
Indenture, related to the Senior Note Mortgage Bonds.
5(a)** - Opinion of Haynes and Boone, LLP as to the validity of the
Senior Debt Securities.
12(a)** - Computation of Ratio of Earnings to Fixed Charges.
23(a)** - Consent of Haynes and Boone, LLP contained in the opinion
filed as Exhibit 5(a).
23(b)** - Consent of Rubin, Katz, Salazar, Alley & Rouse.
23(c)** - Consent of KPMG Peat Marwick LLP, independent auditors.
23(d)** - Consent of Arthur Andersen LLP, independent public
accountants.
24(a)* - Power of Attorney.
25(a)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Chase Bank of Texas, N.A., as
Trustee under the Indenture relating to the Senior Debt
Securities.
25(b)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of U.S. Bank Trust, N.A., as
Trustee under the Mortgage Indenture relating to the Senior
Note Mortgage Bonds.
- --------------------
* Previously filed.
** Filed herewith.
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ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement
notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Fort Worth, State of Texas, on the
11th day of December, 1998.
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ Manjit S. Cheema
-----------------------------------------
Manjit S. Cheema
Senior Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No 1. to the Registration Statement on Form S-3 has been signed by the following
persons on behalf of the Registrant in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman, President and December 11, 1998
- --------------------------------- Chief Executive Officer
Kevern R. Joyce
/s/ Manjit S. Cheema Senior Vice President and December 11, 1998
- --------------------------------- Chief Financial Officer
Manjit S. Cheema
* Controller and December 11, 1998
- --------------------------------- Chief Accounting Officer
Michael J. Ricketts
* Director December 11, 1998
- ---------------------------------
R. Denny Alexander
* Director December 11, 1998
- ---------------------------------
John A. Fanning
II-6
* Director December 11, 1998
- --------------------------------
Sidney M. Gutierrez
* Director December 11, 1998
- --------------------------------
Harris L. Kempner, Jr.
* Director December 11, 1998
- --------------------------------
J. R. Holland, Jr.
* Director December 11, 1998
- --------------------------------
Dr. Carol D. Smith Surles
* Director December 11, 1998
- --------------------------------
Larry G. Wheeler
* Director December 11, 1998
- --------------------------------
Dennis H. Withers
* By: /s/ Manjit S. Cheema
--------------------------------------
Manjit S. Cheema, pursuant to power
of attorney previously filed with
the Securities and Exchange Commission
II-7
EXHIBIT INDEX
Exhibits filed with this registration statement are denoted by "*."
Exhibit
No. Description
------- -----------
1(a)** - Form of Underwriting Agreement.
4(a)* - Form of Indenture (the "Indenture") between Texas-New Mexico
Power Company and Chase Bank of Texas, N.A., related to the
Senior Debt Securities.
4(b)** - Form of First Supplemental Indenture related to Senior Debt
Securities.
4(c) - Indenture of Mortgage and Deed of Trust (the "Mortgage
Indenture") dated as of November 1, 1944 (Exhibit 2(d) to
Community Public Service Co. ("CPS") 1978 Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(d) - Seventh Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1963 (Exhibit 2(k) to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(e) - Eighth Supplemental Indenture to the Mortgage Indenture dated
as of July 1, 1963 (Exhibit 2(1), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(f) - Ninth Supplemental Indenture to the Mortgage Indenture dated
as of August 1, 1965 (Exhibit 2(m), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(g) - Tenth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1966 (Exhibit 2(n), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(h) - Eleventh Supplemental Indenture to the Mortgage Indenture
dated as of October 1, 1969 (Exhibit 2(o), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(i) - Twelfth Supplemental Indenture to the Mortgage Indenture dated
as of May 1, 1971 (Exhibit 2(p), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(j) - Thirteenth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1974 (Exhibit 2(q), to CPS Form S-7, File
No. 2-61323) and incorporated by reference herein.
4(k) - Fourteenth Supplemental Indenture to the Mortgage Indenture
dated as of March 1, 1975 (Exhibit 2(r), to CPS Form S-7,
File No. 2-61323) and incorporated by reference herein.
4(l) - Fifteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1976 (Exhibit 2(e), File
No. 2-57034) and incorporated by reference herein.
4(m) - Sixteenth Supplemental Indenture to the Mortgage Indenture
dated as of November 1, 1981 (Exhibit 4(x), File No. 2-74332)
and incorporated by reference herein.
4(n) - Seventeenth Supplemental Indenture to the Mortgage Indenture
dated as of December 1, 1982 (Exhibit 4(cc), File
No. 2-80407) and incorporated by reference herein.
4(o) - Eighteenth Supplemental Indenture to the Mortgage Indenture
dated as of September 1, 1983 (Exhibit (a) to Form 10-Q of the
Company for the quarter ended September 30, 1983, File
No. 1-4756) and incorporated by reference herein.
4(p) - Nineteenth Supplemental Indenture to the Mortgage Indenture
dated as of May 1, 1985 (Exhibit 4(v), File No. 2-97230) and
incorporated by reference herein.
4(q) - Twentieth Supplemental Indenture to the Mortgage Indenture
dated as of July 1, 1987 (Exhibit 4(o) to Form 10-K of the
Company for the year ended December 31, 1987, File
No. 2-97230) and incorporated by reference herein.
4(r) - Twenty-First Supplemental Indenture to the Mortgage
Indenture dated as of July 1, 1989 (Exhibit 4(p) to Form
10-Q of the Company for the quarter ended June 30, 1989,
File No. 2-97230) and incorporated by reference herein.
4(s) - Twenty-Second Supplemental Indenture to the Mortgage
Indenture dated as of January 15, 1992 (Exhibit 4(q) to Form
10-K of the Company for the year ended December 31, 1991,
File No. 2-97230) and incorporated by reference herein.
4(t) - Twenty-Third Supplemental Indenture to the Mortgage
Indenture dated as of September 15, 1993 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(u) - Twenty-Fourth Supplemental Indenture to the Mortgage
Indenture dated as of November 3, 1995 (Exhibit 4(s) to Form
10-K of the Company for the year ended December 31, 1993,
File No. 2-97230) and incorporated by reference herein.
4(v) - Twenty-Fifth Supplemental Indenture to the Mortgage
Indenture dated as of September 10, 1996 (Exhibit 4(t) to
Form 10-Q of the Company for the quarter ended September 30,
1996, File No. 2-97230) and incorporated by reference
herein.
4(w) - Indenture and Security Agreement for 12 1/2% Secured
Debentures dated as of January 15, 1992 (Exhibit 4(r) to
Form 10-K of the Company for the year ended December 31,
1991, File No. 2-97230) and incorporated by reference
herein.
4(x) - Indenture and Security Agreement for 10 3/4% Secured
Debentures dated as of September 15, 1993 (Exhibit 4(t) to
Form 10-K of the Company for the year ended December 31,
1993, File No. 2-97230) and incorporated by reference
herein.
4(y)** - Form of Twenty-Sixth Supplemental Indenture to the Mortgage
Indenture, related to the Senior Note Mortgage Bonds.
5(a)** - Opinion of Haynes and Boone, LLP as to the validity of the
Senior Debt Securities.
12(a)** - Computation of Ratio of Earnings to Fixed Charges.
23(a)** - Consent of Haynes and Boone, LLP contained in the opinion
filed as Exhibit 5(a).
23(b)** - Consent of Rubin, Katz, Salazar, Alley & Rouse.
23(c)** - Consent of KPMG Peat Marwick LLP, independent auditors.
23(d)** - Consent of Arthur Andersen LLP, independent public
accountants.
24(a)* - Power of Attorney.
25(a)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Chase Bank of Texas, N.A., as
Trustee under the Indenture relating to the Senior Debt
Securities.
25(b)* - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of U.S. Bank Trust, N.A., as
Trustee under the Mortgage Indenture relating to the Senior
Note Mortgage Bonds.
- --------------------
* Previously filed.
** Filed herewith.