-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UsZHHEDN6EzBmqJdcdyyXIm+t4hvNTQKAfkcjgeD2qbzuUDPwwG47VsNNQbw8V7Z PKNkrg+KnyYM7byT+LyYRA== 0000930661-98-002599.txt : 19981214 0000930661-98-002599.hdr.sgml : 19981214 ACCESSION NUMBER: 0000930661-98-002599 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19981211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS NEW MEXICO POWER CO CENTRAL INDEX KEY: 0000022767 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 750204070 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-64215 FILM NUMBER: 98768533 BUSINESS ADDRESS: STREET 1: 4100 INTERNATIONAL PLZ STREET 2: PO BOX 2943 CITY: FORT WORTH STATE: TX ZIP: 76113 BUSINESS PHONE: 8177310099 MAIL ADDRESS: STREET 1: 4100 INTERNATIONAL PLAZA STREET 2: PO BOX 2943 CITY: FORT WORTH STATE: TX ZIP: 76113 FORMER COMPANY: FORMER CONFORMED NAME: COMMUNITY PUBLIC SERVICE CO DATE OF NAME CHANGE: 19810617 S-3/A 1 AMENDMENT NO. 1 TO FORM S-3 As filed with the Securities and Exchange Commission on December 11, 1998 Registration No. 333-64215 ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ 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 ------------------------ 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) ===========================================================================================================
(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. ============================================================================== ****************************************************************************** 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 2 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); 5 (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; II-1 (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. II-2 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. II-3 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. EX-1.(A) 2 FORM OF UNDERWRITING AGREEMENT EXHIBIT 1(a) $ ,000,000 TEXAS-NEW MEXICO POWER COMPANY % SENIOR NOTES DUE UNDERWRITING AGREEMENT , 1999 Dear Sirs: Texas-New Mexico Power Company, a Texas corporation (the "Company"), proposes to issue and sell $ ,000,000 aggregate principal amount of its % Senior Notes due (the "Securities") to the several underwriters named in Schedule I hereto (the "Underwriters"). The Securities are described in the Prospectus which is referred to below and are to be issued pursuant to the provisions of an indenture (the "Indenture") to be dated as of January 1, 1999 between the Company and Chase Bank of Texas, National Association, as trustee (the "Trustee"). Until the Release Date (as defined in the Indenture), the Securities will be secured as to payment of principal and interest by one or more series of First Mortgage Bonds (the "First Mortgage Bonds") issued, pledged and delivered by the Company to the Trustee. The First Mortgage Bonds will be issued pursuant to the provisions of the Company's Indenture of Mortgage and Deed of Trust dated as of November 1, 1944 between Community Public Service Co., a Delaware corporation (which was merged into and whose obligations were assumed by the Company), and City National Bank and Trust Company of Chicago, Chicago, Illinois (the current successor of which is U.S. Bank Trust, N.A.) (the "Mortgage Trustee"), as heretofore supplemented and modified, and as supplemented by the Twenty-Sixth Supplemental Indenture (herein so called) thereto, dated as of , 1999 between the Company and the Mortgage Trustee (as so supplemented and modified, the "Mortgage Indenture"). Section 1. Registration Statement and Prospectus. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Act"), a registration statement on Form S-3 (Registration No. 333-64215), including a prospectus subject to completion, relating to the Securities, which will be amended from time to time. The registration statement, as amended at the time it became effective, including all documents or information incorporated or deemed to be incorporated by reference therein is referred to as the "Registration Statement"; and the prospectus in the form first used to confirm sales of Securities (including (a) the information contained in any prospectus supplement relating to the securities or deemed to be part of the Registration Statement at effectiveness pursuant to Rule 430A or Rule 434 of the Act, and (b) any documents or information incorporated or deemed to be incorporated by reference into such prospectus), is hereinafter referred to as the "Prospectus". Any registration statement (including any amendment or supplement thereto or information which is deemed to be a part thereof) filed by the Company under Rule 462(b) of the Act (a "Rule 462(b) Registration Statement") shall be deemed to be part of the Registration Statement. If the Company elects to rely on Rule 434 under the Act, all references to the Prospectus shall be deemed also to include, without limitation, the form of prospectus and term sheet (a "Term Sheet"), taken together, provided to the Underwriters by the Company in reliance on Rule 434 under the Act (the "Rule 434 Prospectus"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included," "described" or "stated" in the Registration Statement or the Prospectus (and all references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include, without limitation, even though not specifically stated, any document filed under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (the "Exchange Act") which, upon filing, is or is deemed to be incorporated by reference in the Registration Statement or the Prospectus after the effective date, as the case may be. Section 2. Agreements to Sell and Purchase. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell, and each Underwriter agrees, severally and not jointly, to purchase from the Company the principal amount of Securities set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price of % of the principal amount thereof (the "Purchase Price"), plus accrued interest from the date of issuance to the date of delivery. Section 3. Terms of Public Offering. The Company is advised by you that the Underwriters propose (i) to make a public offering of their respective portions of the Securities as soon after this Agreement has become effective as in your judgment is advisable and (ii) initially to offer the Securities upon the terms set forth in the Prospectus. Section 4. Delivery and Payment. Delivery to the Underwriters of and payment for the Securities shall be made at 10:00 A.M., New York City time, on the third or fourth business day after the purchase of the Securities unless otherwise permitted by the Commission pursuant to Rule 15c6-1 of the Exchange Act (the "Closing Date") following the date of this Agreement at such place as you shall designate. The Closing Date and the location of delivery of and payment for the Securities may be varied by agreement between you and the Company. The Securities shall be registered in such names and issued in such denominations as you shall request in writing not later than two full business days prior to the Closing Date. A global certificate for the Securities shall be made available to you for inspection not later than 9:30 A.M., New York City time, on the business day next preceding the Closing Date. A global certificate for the Securities in definitive form evidencing the Securities will be delivered to you on the Closing Date with any transfer taxes thereon duly paid by the Company, for the respective accounts of the several Underwriters, against payment of the Purchase Price therefor by wire transfer in same day funds to an account specified by the Company. Section 5. Agreements of the Company. The Company agrees with you: (a) Immediately following the determination of the Purchase Price, to prepare, and file or transmit for filing with the Commission in accordance with Rule 424(b) of the Act, copies of a prospectus supplement relating to the Securities and containing all the information required under the Act. (b) To advise you promptly and, if requested by you, to confirm such advice in writing, (i) when the Registration Statement has become effective, if it is not effective on the date hereof, and when any post- effective amendment to it becomes effective, (ii) of the receipt of comments, if any, from the Commission relating to the Registration Statement, (iii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for such purposes, (v) if the Company is required to file a Rule 2 462(b) Registration Statement, when the Rule 462(b) Registration Statement has become effective and (vi) of the happening of any event during the period referred to in paragraph (e) below which makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or which requires any additions to or changes in the Registration Statement or the Prospectus (as then amended or supplemented) in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (c) To furnish to you, without charge, five signed copies of the Registration Statement as first filed with the Commission and of each amendment thereto, including all exhibits, and to furnish to you and each Underwriter designated by you such number of conformed copies of the Registration Statement as so filed and of each amendment thereto, without exhibits, as you may reasonably request. (d) Prior to the termination of the offering of Securities, (A) not to (i) file any Rule 462(b) Registration Statement, (ii) file any amendment or supplement to the Registration Statement, (iii) file any document under the Exchange Act which shall be deemed to be incorporated by reference into the Prospectus, or (iv) make any amendment or supplement to the Prospectus (including the issuance or filing of any Term Sheet), of which you shall not previously have been advised or to which you shall reasonably object; and (B) to prepare and file with the Commission, promptly upon your reasonable request, any Rule 462(b) Registration Statement, Term Sheet or amendment or supplement to the Registration Statement or the Prospectus which may be necessary or advisable in connection with the distribution of the Securities by you, and which, in the judgment of the Company or in the opinion of counsel for the Underwriters, is required by law, and to use its reasonable best efforts to cause any such amendment to the Registration Statement to become promptly effective. (e) From time to time for such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, to furnish in New York City to each Underwriter and any dealer as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter or dealer may reasonably request. (f) If during the period specified in paragraph (e), any event shall occur or condition exist as a result of which, in the judgment of the Company or in the opinion of counsel for the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the judgment of the Company or in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare and file with the Commission an appropriate amendment or supplement to the Prospectus so that the statements in the Prospectus, as so amended or supplemented, will not in the light of the circumstances when it is so delivered, be misleading in any material respect, or so that the Prospectus will comply with applicable law, and to furnish to each Underwriter and to any dealer as you shall specify, such number of copies thereof as such Underwriter or dealers may reasonably request. (g) Prior to any public offering of the Securities, to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Securities for offer and sale by the several Underwriters and by dealers under the state securities or Blue Sky laws of such jurisdictions as you may request, to continue such registration or qualification in effect so long as required for distribution of the Securities and to file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided, however, that the Company shall not be required to qualify as a foreign corporation or to consent to the service of process under the laws of any such jurisdiction (other than as to 3 matters and transactions relating to the Prospectus and the Registration Statement); and to promptly advise the Underwriters of the receipt by the Company of any notification with respect to the suspension of qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. (h) To make generally available to the holders of the Securities as soon as reasonably practicable a consolidated earnings statement that need not be audited covering a period of at least twelve months after the Closing Date (but in no event commencing later than 90 days after such date) which consolidated earnings statement shall satisfy the provisions of Section 11(a) of the Act, and to advise you in writing when such statement has been so made available. (i) So long as any of the Securities are outstanding, to furnish to you as soon as available a copy of each report of the Company mailed to the holders of the Securities or filed with the Commission and such other publicly available information concerning the Company and its Subsidiaries as you may reasonably request. (j) To pay or cause to be paid all costs, expenses, fees and taxes incident to (i) the preparation, printing, filing and distribution under the Act of the Registration Statement (including financial statements and exhibits), each preliminary prospectus relating to the Securities and all amendments and supplements to any of them prior to or during the period specified in paragraph (e), (ii) the printing and delivery of the Prospectus and all amendments or supplements to it during the period specified in paragraph (e), (iii) the word processing, printing and delivery of this Agreement and the Indenture and other agreements or documents in connection with the Securities, (iv) the registration or qualification of the Securities for offer and sale under the securities or Blue Sky laws of the several states (including in each case the reasonable fees and disbursements of counsel for the Underwriters relating to such registration or qualification and memoranda or surveys relating thereto), and the printing and furnishing of copies of any blue sky or legal investment memoranda or surveys to the Underwriters and to dealers, (v) the rating of the Securities by securities rating agencies or services for rating the Securities, (vi) any filing fees of the National Association of Securities Dealers, Inc., (vii) all costs and expenses related to the transfer and delivery of the Securities to the Underwriters, including any transfer or other taxes payable thereon, (viii) the cost of printing certificates representing the Securities, (ix) the fees and expenses of the Trustee and the Mortgage Trustee in connection with the Indenture, the Mortgage Indenture, the Securities and the First Mortgage Bonds, (x) furnishing such copies of the Registration Statement, the Prospectus and all amendments and supplements thereto as may be reasonably requested for use in connection with the offering or sale of the Securities by the Underwriters or by dealers to whom Securities may be sold, and (xi) the performance of the Company's other obligations hereunder. (k) To use its reasonable best efforts to do and perform all things required or necessary to be done and performed under this Agreement by the Company prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Securities. (l) To use the net proceeds received by it from the sale of Securities in the manner specified in the Prospectus under "Use of Proceeds." (m) During the period beginning on the date hereof and continuing to and including the Closing Date, not to offer, sell, contract to sell or otherwise transfer or dispose of any debt securities of the Company or any warrants to purchase debt securities of the Company substantially similar to the Securities, other than (i) the Securities, (ii) commercial paper issued in the ordinary course of business, (iii) securities issued under the Mortgage Indenture, and (iv) promissory notes issued for working capital purposes under the Company's existing bank credit facilities, without your prior written consent. 4 (n) If the Securities are not delivered for any reason other than the termination of this Agreement pursuant to the third paragraph of Section 9 hereof or the default by an Underwriter in its obligation hereunder, the Company shall reimburse the Underwriters for all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of their counsel. Section 6. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters that: (a) The Company meets the requirements for use of Form S-3; the Registration Statement has become effective (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement); no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or have been threatened by the Commission. (b)(i) The Registration Statement (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement), when it became effective, did not contain and, as amended, if applicable, will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement) and the Prospectus comply and, as amended or supplemented, if applicable, will, as of the Closing Date, comply in all material respects with the Act, (iii) if the Company is required to file a Rule 462(b) Registration Statement after the effectiveness of this Agreement, such Rule 462(b) Registration Statement and any amendments thereto, when they become effective (A) will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (B) will comply in all material respects with the Act and (iv) the Prospectus does not contain and, as amended or supplemented, if applicable, will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no warranty or representation with respect to (i) any statement contained in the Registration Statement, any post-effective amendment or the Prospectus or the Prospectus as amended or supplemented in reliance upon and in conformity with information concerning the Underwriters and furnished in writing by or on behalf of an Underwriter to the Company expressly for use therein or (ii) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee. (c) The documents incorporated or deemed to be incorporated by reference in the Prospectus pursuant to Item 12(b) of Form S-3 under the Act, at the time they were filed with the Commission, complied when so filed in all material respects with the requirements of the Exchange Act, and, when read together with other information in the Prospectus, at the time the Registration Statement became effective and as of the Closing Date, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Act, and each Rule 462(b) Registration Statement, if any, complied when so filed in all material respects with the Act, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or 5 omissions in any preliminary prospectus based upon information relating to you furnished to the Company in writing by you expressly for use therein. (e) The documents incorporated by reference into any preliminary prospectus or Prospectus, at the time they were filed with the Commission, complied in all material respects with the requirements of the Act and the Exchange Act, and at such time did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and all such documents have been timely filed as required by the Act. (f) The capitalization of the Company is, as of the date specified, as set forth in the section of the Registration Statement and the Prospectus, or any amendment or supplement thereto, entitled "Capitalization"; all of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; all of the outstanding shares of capital stock of Texas Generating Company and Texas Generating Company II (collectively, the "Subsidiaries") have been duly authorized and are validly issued and owned by the Company, free and clear of any liens, security interests, claims, charges or encumbrances (collectively, the "Liens") except as otherwise disclosed in writing to the Underwriters prior to the date hereof; and each of the Company and its Subsidiaries is a corporation duly incorporated and validly existing as a corporation in good standing under the laws of the State of Texas, with full corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus, and, in the case of the Company, to execute and deliver this Agreement and the Indenture and to issue and sell the Securities as herein and therein contemplated. (g) The Indenture has been duly authorized and, when executed by the Company and delivered, will constitute a legal, valid and binding obligation of the Company (assuming the due and valid authorization, execution and delivery thereof by the Trustee), enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting the rights of creditors generally, and to general principles of equity (regardless of whether the enforcement of remedies is considered in a proceeding in equity or at law); and the issuance of the Securities has been duly authorized and when executed by the Company, authenticated by the Trustee in accordance with the Indenture and delivered and paid for by the Underwriters pursuant to this Agreement, the Securities will be duly issued and will constitute legal, valid and binding obligations of the Company, entitled to the benefits and security afforded by the Indenture and enforceable in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting the rights of creditors generally, and to general principles of equity (regardless of whether the enforcement of remedies is considered in a proceeding in equity or at law). (h) The Mortgage Indenture has been duly authorized and, when executed by the Company and delivered, will constitute a legal, valid and binding obligation of the Company (assuming the due and valid authorization, execution and delivery thereof by the Trustee), enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting the rights of creditors generally, and to general principles of equity (regardless of whether the enforcement of remedies is considered in a proceeding in equity or at law); and the issuance of the First Mortgage Bonds has been duly authorized and when executed by the Company, authenticated by the Trustee in accordance with the Indenture and delivered to the Trustee as security for the Securities, the First Mortgage Bonds will be duly issued and will constitute legal, valid and binding obligations of the Company, entitled to the benefits and security afforded by the Mortgage Indenture and enforceable in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting the rights of creditors generally, and to general principles of 6 equity (regardless of whether the enforcement of remedies is considered in a proceeding in equity or at law). (i) Each of the Company and its Subsidiaries is duly qualified by and is in good standing in each jurisdiction in which it conducts its business and in which the failure, individually or in the aggregate, to be so qualified and in good standing could have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, and each of the Company and its Subsidiaries is in compliance in all material respects with the laws, orders, rules, regulations and directives issued or administered by such jurisdictions. (j) Neither the Company nor any of its Subsidiaries is in breach of, or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) its respective corporate charter or by-laws or in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, bank loan or credit agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound (except for any default or breach that would not, singly or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole), and the execution, delivery and performance of this Agreement and the Indenture and the consummation of the transactions contemplated hereby and by the Prospectus will not conflict with, or result in any breach of or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under) or result in the creation or imposition of any Lien upon any of the assets of the Company or any of its Subsidiaries pursuant to any provisions of the corporate charter or by- laws of the Company or any of its Subsidiaries or under any provision of any license, indenture, mortgage, deed of trust, bank loan or credit agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or their respective properties may be bound or affected, or under any federal, state or local law, regulation or rule or any decree, judgment or order applicable to the Company or any of its Subsidiaries (except for any default or breach that would not, singly or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole). (k) Neither the Company nor any of its Subsidiaries is in violation of any law, ordinance, governmental rule or regulation or court decree to which it may be subject (including any federal, state, or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, "Environmental Laws")), which violation might have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. (l) In the ordinary course of its business, the Company and its Subsidiaries conduct a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company and its Subsidiaries, in the course of which they identify and evaluate associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, except to the extent properly accrued for in the Company's financial statements, singly or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. 7 (m) The Company is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (n) The filing of the Registration Statement and the consummation of the transactions contemplated hereby and by the Prospectus have been duly authorized by the Company; and this Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding obligation of the Company. (o) The Indenture and the Mortgage Indenture filed as exhibits to the Registration Statement conform, and the Securities and the First Mortgage Bonds will conform, in all material respects to the description thereof contained in the Registration Statement and Prospectus. (p) The Company has obtained the approval of the Federal Energy Regulatory Commission and the New Mexico Public Utility Commission with respect to the issuance and sale of the Securities; and no other approval, authorization, consent or order of or filing with any federal, state or local governmental or regulatory commission, court, board, body, authority or agency is required of the Company for the execution, delivery and performance of this Agreement, the Indenture and the Securities, or the pledge of the First Mortgage Bonds or the consummation of the transactions related to the issuance and sale of the Securities as contemplated hereby other than those obtained under the Act or the Trust Indenture Act and any necessary qualification under the securities or Blue Sky laws of the various jurisdictions in which the Securities are being offered by the Underwriters. (q) No person has the right, contractual or otherwise, to cause the Company to issue to it, or register pursuant to the Act, securities held by it who has not been notified of such right in respect of the Registration Statement. (r) Arthur Andersen LLP, and KPMG Peat Marwick, whose reports on the consolidated financial statements of the Company are filed with the Commission as part of the Registration Statement and Prospectus, are independent public accountants with respect to the Company and its Subsidiaries as required by the Act and the applicable published rules and regulations thereunder. (s) Each of the Company and its Subsidiaries has all licenses, authorizations, consents and approvals (each, an "Authorization") and has made all filings required under any federal, state or local law, regulation or rule, and has obtained all Authorizations from other persons, in order to conduct its business, except where the failure to have any such Authorization or to make any such filing would not, singly or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; and neither the Company nor any of its Subsidiaries is in violation of, or in default under, any such Authorization or any federal, state or local law, regulation or rule or any decree, order or judgment applicable to the Company or any of its Subsidiaries the effect of which could have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. (t) All legal or governmental proceedings, contracts or documents required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement have been so described or filed as required or incorporated therein by reference as permitted by the rules and regulations of the Commission. (u) Except as disclosed in the Registration Statement and the Prospectus, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties, at law or in equity, or before or by any federal, state, local or foreign governmental or regulatory commission, 8 board, body, authority or agency which could result in a judgment, decree or order having a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or which, to the best knowledge of the Company, after due inquiry, could affect the transactions contemplated by this Agreement and the Prospectus. (v) The consolidated financial statements included or incorporated by reference in the Registration Statement and the Prospectus present and (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will present fairly, as of the Closing Date and at all times during which a Prospectus is required to be delivered under the Act, the consolidated financial condition of the Company and its Subsidiaries as of the dates indicated, consolidated results of operations and the cash flows of the Company and its Subsidiaries for the periods indicated; and such financial statements have been and (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will be, as of the Closing Date and at all times during which a Prospectus is required to be delivered under the Act, prepared in conformity with generally accepted accounting principles. (w) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus, and except as may be otherwise stated in the Registration Statement or Prospectus, there has not occurred (A) any material adverse change or any development involving a prospective material adverse change in the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, (B) any transaction, which is material to the Company and its Subsidiaries, taken as a whole entered into by the Company or any of its Subsidiaries or (C) any obligation, contingent or otherwise, directly or indirectly incurred by the Company or any of its Subsidiaries which is material to the Company and its Subsidiaries, taken as a whole. (x) Each of the Company and its Subsidiaries has good and marketable title to all properties and assets described in the Prospectus as owned by it, free and clear of all Liens, except such as are described in the Prospectus or are not material to the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; and each of the Company and its Subsidiaries has valid, subsisting and enforceable leases for the properties described in the Prospectus as leased by it, with such exceptions as are not material to the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole and do not materially interfere with the use made and proposed to be made of such properties by the Company and its Subsidiaries. Section 7. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter, its directors, its officers and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and judgments (including, without limitation, any reasonable legal or other expenses incurred in connection with investigating or defending any matter, including any action, that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), the Prospectus (as amended or supplemented if the Company shall have furnished any amendment or supplement thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished in writing to the Company by or on behalf of the Underwriters through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the 9 benefit of any Underwriter (or to the benefit of any person controlling, or controlled by, such Underwriter) who failed to deliver a Prospectus, as then amended or supplemented (so long as the Prospectus and any amendment or supplement thereto was provided by the Company to the several Underwriters in the requisite quantity and on a timely basis to permit proper delivery on or prior to the Closing Date) to the person asserting any losses, claims, damages, liabilities or judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in the Prospectus, as so amended or supplemented, and such Prospectus was required by law to be delivered at or prior to the written confirmation of sale to such person. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to such Underwriter but only with respect to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement (or any amendment thereto), the Prospectus (or any amendment or supplement thereto) or any preliminary prospectus and in respect of which indemnity may be sought against any Underwriter, the Underwriter shall have the rights and duties given to the Company (except that if the Company shall have assumed the defense thereof, such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Underwriter), and the Indemnified Party shall have the rights and duties given to the Underwriter, by Section 7(c) hereof. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the "Indemnified Party"), the Indemnified Party shall promptly notify the person from whom such indemnity may be sought (the "Indemnifying Party") in writing and the Indemnifying Party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 7(a) and 7(b), the Underwriter shall not be required to assume the defense of such action pursuant to this Section 7(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of such Underwriter). Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (i) the employment of such counsel shall have been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party, and the Indemnified Party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to assume the defense of such action on behalf of the Indemnified Party). In any such case, the Indemnifying Party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by , in the case of parties indemnified pursuant to Section 7(a), and by the Company, in the case of parties indemnified pursuant to Section 7(b). The Indemnifying Party shall indemnify and hold harmless the Indemnified Party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty business days after the Indemnifying Party shall have received a request from the Indemnified Party for reimbursement of the fees and expenses of counsel (in any case where 10 such fees and expenses are at the expense of the Indemnifying Party) and, prior to the date of such settlement, the Indemnifying Party shall have failed to comply with such reimbursement request. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the Indemnified Party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the Indemnified Party, unless such settlement, compromise or judgment (i) includes an unconditional release of the Indemnified Party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the Indemnified Party. No Indemnifying Party will be liable for the costs and expenses of any settlement of any pending or threatened action effected by the Indemnified Party without the consent of the Indemnifying Party. (d) To the extent the indemnification provided for in this Section 7 is unavailable to an Indemnified Party or insufficient in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities or (ii) if the allocation provided by clause 7(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7(d)(i) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (after deducting underwriting discounts and commissions but before deducting expenses) received by the Company, and the total underwriting discounts and commissions received by the Underwriters, bear to the total price to the public of the Securities, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages, liabilities or judgments referred in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any matter, including any action, that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective principal amount of Securities purchased by each of the Underwriters hereunder and not joint. (e) The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or in equity. 11 Section 8. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Securities under this Agreement are subject to the satisfaction of each of the following conditions: (a) All the representations and warranties of the Company contained in this Agreement shall be true and correct on the date hereof and on the Closing Date with the same force and effect as if made on and as of such dates. (b) On or after the date hereof, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading, suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Company or any securities of the Company (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change, nor shall any notice have been given of any potential or intended change, in the outlook for any rating of the Company or any securities of the Company by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Securities than that on which the Securities were marketed. (c) You shall have received on the Closing Date a certificate dated the Closing Date, signed by Patrick Bridges and Paul Talbot, in their capacities as the Treasurer and Corporate Secretary of the Company, respectively, confirming the matters set forth in Sections 6(x), 8(a) and 8(b) and that the Company has complied with all of the agreements and has satisfied all of the conditions herein contained and required to be complied with or to be satisfied by the Company on or prior to the Closing Date. (d) Since the respective dates as of which information is given in the Prospectus other than as set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), (i) there shall not have occurred any change or any development involving a prospective change in the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, (ii) there shall not have been any change or any development involving a prospective change in the capital stock or in the long-term debt of the Company or any of its Subsidiaries and (iii) neither the Company nor any of its Subsidiaries shall have incurred any liability or obligation, direct or contingent, the effect of which, in any such case described in clause 8(d)(i), 8(d)(ii) or 8(d)(iii), in your judgment, is material and adverse and, in your judgment, makes it impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus. (e) You shall have received on the Closing Date an opinion (reasonably satisfactory to you and counsel for the Underwriters), dated the Closing Date, of the General Counsel of the Company, in form and substance satisfactory to you, to the effect set forth in Annex I hereto. (f) You shall have received on the Closing Date an opinion (reasonably satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Haynes and Boone, LLP, counsel for the Company, in form and substance satisfactory to you, to the effect set forth in Annex II hereto. The opinion of Haynes and Boone, LLP described in this Section 8(g) shall be rendered to you at the request of the Company and shall so state therein. (g) You shall have received on the Closing Date an opinion (reasonably satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Rubin, Katz, Salazar, Alley & Rouse, special New Mexico counsel for the Company, in form and substance satisfactory to you, to the effect set forth in Annex III hereto. 12 (h) You shall have received on the Closing Date an opinion (reasonably satisfactory to you and counsel for the Underwriters), dated the Closing Date, of Fennemore Craig, special Arizona counsel for the Company, in form and substance satisfactory to you, to the effect set forth in Annex IV hereto. The opinion of Fennemore Craig described in this Section 8(h) shall be rendered to you at the request of the Company and shall so state therein. (i) You shall have received on the Closing Date a favorable opinion, dated the Closing Date, of Milbank, Tweed, Hadley & McCloy, counsel for the Underwriters, in form and substance satisfactory to you, to the effect set forth in Annex V hereto, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (j) You shall have received on the Closing Date letters, dated the Closing Date, in form and substance satisfactory to you, from Arthur Andersen LLP and KPMG Peat Marwick, independent public accountants, containing the information and statements of the type ordinarily included in accountants' "comfort letters" to Underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Registration Statement and the Prospectus. (k) The Underwriters shall have received a counterpart, conformed as executed, of the Indenture which shall have been entered into by the Company and the Trustee. (l) The Company shall not have failed on or prior to the Closing Date to perform or comply with any of the agreements herein contained and required to be performed or complied with by the Company on or prior to the Closing Date. (m) Subsequent to the execution and delivery of this Agreement and as of the Closing Date, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor any notice have been given of any potential or intended down grading, suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Company or any securities of the Company (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction ) by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act and (ii) there shall not have occurred any change, nor shall any notice have been given of any potential or intended change, in the outlook for any rating of the Company or any securities of the Company by any such rating organization. Section 9. Effectiveness of Agreement and Termination. This Agreement shall become effective upon the later of (i) execution and delivery of this Agreement by the parties hereto and (ii) when notification of the effectiveness of the Registration Statement has been released by the Commission. This Agreement may be terminated at any time on or prior to the Closing Date by you by written notice to the Company if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any adverse change or development involving a prospective adverse change in the condition, financial or otherwise, of the Company or any of its Subsidiaries or the earnings, affairs or business prospects of the Company or any of its Subsidiaries, whether or not arising in the ordinary course of business, which would, in your judgment, make it impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities or other national or international calamity or crisis or change in economic conditions or in the financial markets of the United States or elsewhere that, in your judgment, is material and adverse and would, in your judgment, make it impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus, (iii) the suspension or material limitation of trading in securities on the New York Stock Exchange, the American Stock 13 Exchange or the Nasdaq National Market System or limitation on prices for securities on any such exchange or National Market System, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects, or will result in an material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by either federal or New York State authorities, (vi) the taking of any action by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your opinion has a material adverse effect on the financial markets in the United States or (vii) the suspension or (vii) the suspension or material limitation of trading in securities of TNP Enterprises, Inc. ("TNPE") on the New York Stock Exchange or limitation on prices for TNPE's securities on such exchange. If on the Closing Date any one or more of the Underwriters shall fail or refuse to purchase the Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of Securities to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which the principal amount of Securities set forth opposite its name in Schedule I bears to the aggregate principal amount of Securities which all the non-defaulting Underwriters have agreed to purchase, or in such other proportion as you may specify, to purchase the Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date, provided that in no event shall the aggregate principal amount of Securities which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail or refuse to purchase Securities and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the total principal amount of Securities to be purchased by all Underwriters and arrangements satisfactory to the non-defaulting Underwriters and the Company for purchase of such Securities are not made within 36 hours after such default, this Agreement will terminate without liability on the part of the non-defaulting Underwriters and the Company. In any such case which does not result in termination of this Agreement, either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement. Section 10. Miscellaneous. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, to Texas- New Mexico Power Company, 4100 International Plaza, P.O. Box 2943, Fort Worth, TX 76113, Attention: Michael B. Blanchard, (ii) if to any Underwriter, c/o or (iii) in any case, to such other address as the person to be notified may have requested in writing. The respective indemnities, contribution agreements, representations, warranties and other statements of the Company and the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Securities, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the officers or directors of any Underwriter, any person controlling any Underwriter, the Company, the officers or directors of the Company or any person controlling the Company, (ii) acceptance of the Securities and payment for them hereunder and (iii) termination of this Agreement. If this Agreement is terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company agrees to reimburse the several Underwriters for all out-of-pocket expenses (including the fees and disbursements of counsel) reasonably incurred by them. 14 Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, the Underwriters' directors and officers, any controlling persons referred to herein, the Company's directors and the Company's officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Securities from any of the several Underwriters merely because of such purchase. This Agreement shall be governed and construed in accordance with the laws of the State of New York. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. 15 If the foregoing correctly sets forth the understanding among each of the Company and the Underwriters, please so indicate in the space provided below for the purpose, whereupon this letter and the Underwriters' acceptance shall constitute a binding agreement among the Company and the Underwriters, severally. Very truly yours, TEXAS-NEW MEXICO POWER COMPANY By -------------------------------------- Title: Accepted and agreed to as of the date first above written By: By -------------------------------------- Title: SCHEDULE I Principal Amount Underwriter of Senior Notes - ----------- --------------- EX-4.(B) 3 FORM OF FIRST SUPPLEMENTAL INDENTURE EXHIBIT 4(b) ================================================================================ TEXASNEW MEXICO POWER COMPANY to CHASE BANK OF TEXAS, N.A., as Trustee _________________________ FIRST SUPPLEMENTAL INDENTURE Dated as of , 1999 Supplemental to the Indenture dated as of January 1, 1999 Establishing a series of Securities designated % Senior Notes Due ================================================================================ FIRST SUPPLEMENTAL INDENTURE, dated as of , 1999 (herein called the "First Supplemental Indenture"), between Texas-New Mexico Power Company, a corporation duly organized and existing under the laws of the State of Texas (hereinafter called the "Company") and Chase Bank of Texas, N.A., as Trustee under the Original Indenture referred to below (hereinafter called the "Trustee"). WITNESSETH: WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture dated as of January 1, 1999 (hereinafter called the "Original Indenture"), to provide for the issuance from time to time in one or more series of its debentures, notes, bonds or other evidences of indebtedness (herein called the "Securities"), the form and terms of which are to be established as set forth in Sections 2.1 and 3.1 of the Original Indenture; WHEREAS, Section 9.1 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among purposes, (1) securing the Securities in accordance with Section 3.1 and (2) establishing the form and terms of the Securities of any series as permitted in Sections 2.1 and 3.1 of the Original Indenture; WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $ ,000,000 to be designated the " % Senior Notes Due " (the "Senior Notes"), and all action on the part of the Company necessary to authorize the issuance of the Senior Notes under the Original Indenture and this First Supplemental Indenture has been duly taken; WHEREAS, subject to the provisions hereof, the Company may issue one or more series of Senior Note Mortgage Bonds (as hereinafter defined) and deliver such series to the Trustee to hold in trust for the benefit of the respective Holders from time to time of the Related Series of Securities (as defined herein) and any payment by the Company of principal of, premium, if any, and interest on, the Senior Notes will be applied by the Trustee to satisfy the Company's obligations with respect to the principal of, premium, if any, and interest on, the Related Series of Senior Note Mortgage Bonds; and, pursuant to the terms and provisions hereof, the Company may require the Trustee to deliver to the Company for cancellation any and all Senior Note Mortgage Bonds held by the Trustee; and WHEREAS, all acts and things necessary to make the Senior Notes, when executed by the Company and completed, authenticated and delivered by the Trustee as provided in the Original Indenture and this First Supplemental Indenture, the valid and binding obligations of the Company and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed; NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: That in consideration of the premises and of the acceptance and purchase of the Senior Notes by the holders thereof and of the acceptance of this trust by the Trustee, the Company covenants and agrees with the Trustee, for the equal benefit of holders of the Senior Notes, as follows: ARTICLE ONE Definitions The use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture, as amended and supplemented hereby, and the form of Senior Notes attached hereto as Exhibit A. ARTICLE TWO Terms and Issuance of the % Senior Notes Due Section 2.1. Issue of Senior Notes. A series of Securities which shall be designated the " % Senior Notes Due " shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of, the Original Indenture, as amended, and this First Supplemental Indenture (including the form of Senior Note set forth in Exhibit A). The aggregate principal amount of the Senior Notes which may be authenticated and delivered under this First Supplemental Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $ ,000,000. Section 2.2. Form of Senior Notes; Incorporation of Terms. The form of the Senior Notes shall be substantially in the form of Exhibit A attached hereto. The terms of such Senior Notes are herein incorporated by reference and are part of this First Supplemental Indenture. Section 2.3. Depositary for Global Securities. The Depositary for any Global Securities of the series of which this Security is a part shall be The Depository Trust Company in the City of New York. Section 2.4. Place of Payment. The Place of Payment in respect of the Senior Notes will be at the principal office or agency of the Company in the City of New York, State of New York or at the principal office or place of business of the Trustee or its successor in trust under the Original Indenture, which, at the date hereof, is located at . Section 2.5. Related Series of Senior Note Mortgage Bonds. The Related Series of Senior Note Mortgage Bonds for the Senior Notes shall be the Company's First Mortgage Bonds, Series , % due . Section 2.6. Restrictions on Liens. The covenant provided by Section 10.10 of the Original Indenture shall be applicable to the Senior Notes from and after the Release Date, provided, that no Event of Default has occurred and at such -------- time is continuing under the Original Indenture. Section 2.7. Restrictions on Sale and Leaseback Transactions. The covenant provided by Section 10.11 of the Original Indenture shall be applicable to the Senior Notes after the Release Date. ARTICLE THREE Amendments to Original Indenture Section 3.1. Section 1.1 of the Original Indenture is hereby amended by adding the following definitions: "Expert" means any officer of the Company familiar with the terms of the First Mortgage Indenture and this Indenture, any law firm, any investment banking firm, or any other Person reasonably acceptable to the Trustee. "First Mortgage Bonds" means all first mortgage bonds issued by the Company and outstanding under the First Mortgage Indenture, other than Senior Note Mortgage Bonds. "First Mortgage Indenture" means the Indenture of Mortgage and Deed of Trust, dated November 1, 1944, by and between the Community Public Service Co. (now known as the Company) and City National Bank and Trust Company of Chicago, Chicago, Illinois (whose current successor is U.S. Bank Trust, N.A.) 2 (as of the date hereof, the "First Mortgage Trustee"), as supplemented and modified from time to time. "First Mortgage Trustee" means the Person serving as trustee at the time under the First Mortgage Indenture. "Related Series of Securities", when used in reference to any series of Senior Note Mortgage Bonds, means the series of Securities which, in connection with its original authentication and issuance pursuant to Section 3.3 hereof, such series of Senior Note Mortgage Bonds were delivered to the Trustee pursuant to Section 14.1 hereof. "Related Series of Senior Note Mortgage Bonds", when used in reference to any series of Securities, shall mean the series of Senior Note Mortgage Bonds delivered to the Trustee pursuant to Section 14.1 hereof in connection with the initial authentication and issuance of such series of Securities pursuant to Section 3.3 hereof. "Release Date" means a date chosen by the Company which shall be not earlier than the later of (i) the date as of which all First Mortgage Bonds, other than the Senior Note Mortgage Bonds, have been retired through payment, redemption, or otherwise (including those First Mortgage Bonds "deemed to be paid" or as to which the entire indebtedness is paid and discharged within the meaning used in Article 18 of the First Mortgage Indenture) at, before or after the maturity thereof, and (ii) the date as of which no Liens on any Property of the Company or any Subsidiary exists (whether such Liens secure Indebtedness of the Company or any Subsidiary or any other Person), except that this clause (ii) shall not apply to any Lien to the extent described in clauses (a) through (k) of Section 10.10 of the Original Indenture or in the last paragraph of such Section 10.10. "Senior Note Mortgage Bonds" shall mean any bonds issued by the Company under the First Mortgage Indenture and delivered to the Trustee pursuant to Section 14.1 hereof. Section 3.2. Prior to the Release Date, Section 1.5(a) of the Original Indenture is hereby amended by inserting the words ", the First Mortgage Trustee" following the words "by any Holder". Section 3.3. Prior to the Release Date, Section 3.1 of the Original Indenture is hereby amended in the following manner: 1. Section 3.1(l) is amended by the ";" after the word "Securities" and adding "and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 5.2;" 2. Section 3.1(p) is amended by deleting the word "and" at the end of the Section; 3. The following Section 3.1(q) is added, to follow Section 3.1(p): "(q) if prior to the Release Date, the designation of the series of Senior Note Mortgage Bonds being delivered to the Trustee in connection with such series of Securities, if any; and" 4. Former Section 3.1(q) is relettered as Section 3.1(r). Section 3.4. Prior to the Release Date, the third paragraph of Section 3.3 of the Original Indenture is hereby amended by (a) adding "(i)" before the words "a Company Order" on the [third] line of the 3 paragraph, and (b) by adding, after the words "so offered;" on the [tenth] line of such paragraph, the following words: "(ii) an Officers' Certificate stating that (x) the Company is not, and upon the authentication by the Trustee of the series of Securities, will not be in default under any of the terms or covenants contained in the Indenture, (y) all conditions that must be met by the Company to issue Securities under the Indenture have been met, and (z) if prior to the Release Date, the series of Senior Note Mortgage Bonds being delivered to the Trustee meets the requirements of Section 14.10 hereof, (iii) if prior to the Release Date, a certificate of an Expert meeting the requirements of Section 14.06(a) hereof, and (iv) if prior to the Release Date, a series of Senior Note Mortgage Bonds meeting the requirements of Section 14.09 hereof;" Section 3.5. Prior to the Release Date, the fourth paragraph of Section 3.3 of the Original Indenture is hereby amended in the following manner: 1. Clause (b) of the fourth paragraph is amended by deleting the word "and" at the end of the clause. 2. Clauses (d) and (e) are added after clause (c), as follows: "(d) if prior to the Release Date, that the Senior Note Mortgage Bonds to be delivered to the Trustee in connection with the issuance of such series of Securities have been duly authorized, and that such Senior Note Mortgage Bonds, when authenticated and delivered by the First Mortgage Trustee and issued by the Company in accordance with the terms of the First Mortgage Indenture, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability thereof is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing, and except as enforcement of remedial and procedural provisions thereof may be limited by state laws affecting the remedies for the enforcement of the security provided for in the First Mortgage Indenture; and that such Senior Note Mortgage Bonds will be entitled to the benefit of the First Mortgage Indenture, equally and ratably, with all other First Mortgage Bonds outstanding thereunder, except as to any sinking fund provisions; and (e) if prior to the Release Date, that the First Mortgage Indenture and any required financing statements have been duly filed and recorded in all places where such filing or recording is necessary for the perfection or preservation of the lien of the First Mortgage Indenture, and the First Mortgage Indenture constitutes a valid and perfected first lien upon the property purported to be covered thereby, subject only to permissible encumbrances (as defined in the First Mortgage Indenture);" 3. The flush language following clause (e) is amended (1) by adding after the words "Opinion of Counsel" the words ", the Officers' Certificate, the certificate of an Expert and the Senior note Mortgage Bonds"; and (2) by replacing "clauses (b) and (c)" with "clauses (b), (c), (d) and (e)". 4. The word "and" at the end of subclause (i) is deleted, and the following subclauses (iii) and (iv) are inserted after subclause (ii): 4 "(iii) if prior to the Release Date, when the terms of the Senior Note Mortgage Bonds have been established in accordance with the instrument or instruments creating the series of which such Senior Note Mortgage Bonds are a part, that the Senior Note Mortgage Bonds to be delivered to the Trustee in connection with the issuance of such series of Securities will have been duly authorized, and that such Senior Note Mortgage Bonds, when authenticated and delivered by the First Mortgage Trustee and issued by the Company in accordance with the terms of the First Mortgage Indenture, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability thereof is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing, and except as enforcement of remedial and procedural provisions thereof may be limited by state laws affecting the remedies for the enforcement of the security provided for in the First Mortgage Indenture; and that such Senior Note Mortgage Bonds will be entitled to the benefit of the First Mortgage Indenture, equally and ratably, with all other First Mortgage Bonds outstanding thereunder, except as to any sinking fund provisions; and (iv) if prior to the Release Date, that when the First Mortgage Indenture and any required financing statements have been duly filed and recorded in all places where such filing or recording is necessary for the perfection or preservation of the lien of the First Mortgage Indenture, the First Mortgage Indenture will constitute a valid and perfected first lien upon the property purported to be covered thereby, subject only to Permitted Encumbrances (as defined in the First Mortgage Indenture);" Section 3.6. Prior to the Release Date, Article 3 of the Original Indenture is hereby amended by adding, after Section 3.12, the following Section 3.13: "Section 3.13. Payment of Securities. The Trustee shall receive the Senior Note Mortgage Bonds from the Company as provided in this Indenture and shall hold the Senior Note Mortgage Bonds, and any and all sums payable thereon or with respect thereto or realized therefrom, in trust for the benefit of the Holders of the Securities, as herein provided. Subject to Article Five hereof, all payments made by the Company to the Trustee on a series of Senior Note Mortgage Bonds, if any, shall be applied by the Trustee to pay, when due, principal of, premium, if any, and interest on the Related Series of Securities and, to the extent so applied, shall satisfy the Company's obligations on such Securities. Notwithstanding the foregoing, the Company's obligation to make payments of principal of, premium, if any, and interest on any series of Senior Note Mortgage Bonds shall be fully satisfied by making timely payments of principal of, premium, if any, and interest on the Related Series of Securities." Section 3.7. Prior to the Release Date, Article 4 of the Original Indenture is hereby amended by adding, after Section 4.2, the following Section 4.3: "Section 4.3. Release of Related Series of Senior Note Mortgage Bonds. (a) If the obligations of the Company to make payment with respect to any series of Securities are satisfied and discharged, in whole or in part, pursuant to this Article Four, the Related Series of Senior Note Mortgage Bonds shall be deemed to be paid and discharged in a principal amount equal to the principal amount of the Related Series of Securities paid and discharged pursuant hereto. 5 (b) If the Company shall have paid or caused to be paid the principal of and premium, if any, and interest on any Security (or portion thereof), as and when the same shall have become due and payable or the Company shall have delivered to the Trustee for cancellation any Outstanding Security (or portion thereof), such Security (or portion thereof) shall cease to be entitled to any lien, benefit or security under this Indenture. Upon a Security of any series (or portion thereof) ceasing to be entitled to any lien, benefit or security under this Indenture, the obligation of the Company to make payment with respect to principal of and premium, if any, and interest on a principal amount of the Related Series of Senior Note Mortgage Bonds equal to the principal amount of such Security (or portion thereof) shall be satisfied and discharged and such Senior Note Mortgage Bonds (or portion thereof) shall cease to secure the Securities in any manner, and the Trustee shall release and deliver to the Company such Senior Note Mortgage Bonds (or portion thereof). (c) Upon the satisfaction and discharge of this Indenture, the Trustee shall at the request of the Company return to the Company all Senior Note Mortgage Bonds and all other property and money held by it under this Indenture and determined by it to be in excess of the amount required to be held under Section 4.1 hereof." Section 3.8. Prior to the Release Date, Sections 5.1 of the Original Indenture is hereby amended by replacing the "." at the end of clause (h) with "; or" and by adding, after such clause (h), the following clauses (i) and (j): "(i) a "default" as defined in the First Mortgage Indenture has occurred and is continuing, and the First Mortgage Trustee, the Company or Holders of at least 33% in aggregate principal amount of the Securities at the time outstanding shall have given written notice thereof to the Trustee; or (j) any Event of Default under any series of Securities issued pursuant to this Indenture or any event of default, as defined in any other indenture, mortgage or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company (whether such Indebtedness now exists or shall hereafter be created or incurred) shall occur and shall consist of default in the payment of such Indebtedness at the maturity thereof (after giving effect to any applicable grace period) or shall result in Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such default in payment is not cured or such acceleration shall not be rescinded or annulled within 10 days after written notice to the Company from the Trustee or to the Company and to the Trustee from the Holders of at least 10% in aggregate principal amount of the Securities of that series at the time Outstanding; provided that if, prior to the declaration of acceleration of the maturity of the Securities of that series or the entry of judgment in favor of the Trustee in a suit pursuant to Section 5.3, such default shall be remedied or cured by the Company or waived by the holders of such Indebtedness, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action on the part of either the Trustee or any of the Holders of the Securities of that series, and provided further, that, subject to Section 6.1 and 6.2, the Trustee shall not be charged with knowledge of any such default unless written notice of such default shall have been given to the Trustee by the Company, by a holder or an agent of a holder of any such Indebtedness, by the trustee then acting under any indenture or other instrument under which such default shall have occurred, or by the Holders of at least five percent in aggregate principal amount of the Securities of that series at the time Outstanding." Section 3.9. Prior to the Release Date, Section 5.2 of the Original Indenture is hereby amended as follows: 1. A new paragraph is added, to follow the first paragraph of Section 5.2, as follows: 6 "Upon the Securities being declared to be or becoming due and payable, the Trustee can immediately file with the First Mortgage Trustee a written demand for redemption of all Senior Note Mortgage Bonds pursuant to the applicable provisions of the supplemental indenture to the First Mortgage Indenture." 2. The paragraph following the new second paragraph of Section 5.2 is amended (i) by adding after the word "provided," the words "and prior to the mailing to the Trustee by the First Mortgage Trustee of a firm, valid and unconditional notice to the Trustee of the acceleration of all of the First Mortgage Bonds issued and outstanding under the First Mortgage Indenture," and (ii) by adding after the word "consequences" the words "(including if given the written demand for redemption of all Senior Note Mortgage Bonds)". 3. Clause (b) of Section 5.2 is amended by deleting the "." at the end of such clause (b) and replacing it with "(including any defaults under the First Mortgage Indenture, as evidenced by notice thereof from the First Mortgage Trustee to the Trustee).". Section 3.10. Prior to the Release Date, Section 5.3 of the Original Indenture is hereby amended in the following manner: 1. By adding after the word "unpaid" in the second paragraph of Section 5.3 the following words: "(including, prior to the Release Date, to exercise any rights to that end it may have as holder of the Senior Note Mortgage Bonds)". 2. By adding after the first occurrence of the word "rights" in the third paragraph of Section 5.3 the following words: "(including, prior to the Release Date, its rights as holder of the Senior Note Mortgage Bonds)". Section 3.11. Prior to the Release Date, subclause (a) of the first paragraph of Section 5.4 of the Original Indenture is hereby amended by adding, after the word "(including" the words ", prior to the Release Date, any claims of the Trustee as holder of Senior Note Mortgage Bonds and including". Section 3.12. Prior to the Release Date, Section 5.5 of the Original Indenture is hereby amended by adding, after the words "Securities of any series" on the second line of such Section 5.5, the words "(including, prior to the Release Date, its rights as holder of the Senior Note Mortgage Bonds),". Section 3.13. Prior to the Release Date, Section 7.3 of the Original Indenture is hereby amended as follows: 1. The word "and" at the end of Section 7.3(a)(6) is deleted. 2. The "." at the end of Section 7.3(a)(7) is replaced with "; and". 3. The following Section 7.3(a)(8) is added after Section 7.3(a)(7): "(8) any release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any) which it has not previously reported." 4. Section 7.3(b) is amended by adding, before the words "the character" on the [third] line of such Section 7.3, the words "(1) the release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any) unless the fair value of such property, as set forth in the certificate required by Section 14.6 hereof, is less than 10% of the principal amount of Securities outstanding at the time of such release, or release and substitution, and". 7 Section 3.14. Prior to the Release Date, Section 8.1(a) of the Original Indenture is hereby amended in the following manner: 1. The letter "(i)" is added after the word "assume,". 2. The ";" at the end of Section 8.1(a) is replaced by "," followed by the words: "and (ii) if such consolidation, merger, conveyance, sale or other transfer occurs prior to the Release Date, by an indenture supplemental to the First Mortgage Indenture, executed and delivered to the Trustee and the First Mortgage Trustee, in form satisfactory to the Trustee and the First Mortgage Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all of the Senior Note Mortgage Bonds and the performance of every covenant of the First Mortgage Indenture on the part of the Company to be performed or observed;". Section 3.15. Section 9.1(j) of Article 9 of the Indenture is hereby amended by deleting the "." after the words "fully registered form" and inserting in its place the word "; and" and by adding the following new paragraph (k) after paragraph (j): "(k) after the Release Date, to amend this Indenture to eliminate any provisions related to the Senior Note Mortgage Bonds which are no longer applicable." Section 3.16. Prior to the Release Date, Section 9.2(l) of the Original Indenture is hereby amended by replacing the ";" at the end of such Section with "," followed by the words: "or impair the interest hereunder of the Trustee in the Senior Note Mortgage Bonds, or prior to the Release Date, reduce the principal amount of any series of Senior Note Mortgage Bonds to an amount less than the principal amount of the Related Series of Securities or alter the payment provisions of such Senior Note Mortgage Bonds in a manner adverse to the Holders of the Securities;". Section 3.17. Prior to the Release Date, Article 10 of the Original Indenture is hereby amended by adding, after Section 10.13, the following Section 10.14: "Section 10.14. Opinions of Counsel. The Company shall deliver to the Trustee: (a) promptly after the execution and delivery of this Indenture and of any indenture supplemental to this Indenture but prior to the Release Date, an Opinion of Counsel either stating that, in the opinion of such counsel, this Indenture or such supplemental indenture and any financing or continuation statements have been properly recorded and filed so as to make effective and to perfect the security interest of the Trustee intended to be created by this Indenture for the benefit of the Holders from time to time of the Securities in the Senior Note Mortgage Bonds, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to perfect or make such security interest effective and stating what, if any, action of the foregoing character may reasonably be expected to become necessary prior to the next succeeding March 1 to maintain, perfect and make such security interest effective; and (b) on or before March 1 of each year, beginning in 1999, and prior to the Release Date, an Opinion of Counsel either stating that in the opinion of such counsel such action has been taken, since the date of the most recent Opinion of Counsel furnished pursuant to this Section 10.12(b) or the first Opinion of Counsel furnished pursuant to Section 10.12(a) hereof, with respect to the recording, filing, rerecording, or refiling of this Indenture, each supplemental indenture and any financing or continuation statements, as is necessary to maintain and perfect the security interest of the Trustee intended to be created by this Indenture for the benefit of the Holders from time to time of the Securities in the Senior Note Mortgage Bonds, and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain and perfect such security interest and stating what, if any, action of the foregoing 8 character may reasonably be expected to become necessary prior to the next succeeding March 1 to maintain, perfect and make such security interest effective." Section 3.18. Prior to the Release Date, Section 13.2 of the Original Indenture is hereby amended by replacing the "." after the word "Defeasance")" in the first sentence of such Section with the following words: "and the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on the Senior Note First Mortgage Bonds shall be satisfied and discharged, as provided in the supplemental indenture or indentures to the First Mortgage creating such Senior Note First Mortgage Bonds and the Senior Note First Mortgage Bonds shall cease to secure the related Securities in any manner.". Section 3.19. The Original Indenture is hereby amended by adding, after Section 13.6, the following Article 14: ARTICLE 14 Senior Note Mortgage Bonds Section 14.1. Delivery of Senior Note Mortgage Bonds to the Trustee. Subject to the provisions of Section 4.1 and Section 14.10 hereof, the Company (a) shall, from time to time prior to the Release Date, deliver to the Trustee, upon the issuance of a series of Securities hereunder, Senior Note Mortgage Bonds conforming to the requirements of Section 14.9 hereof, fully registered in the name of the Trustee, in trust for the benefit of the Holders from time to time of the Securities issued under this Indenture as security for any and all obligations of the Company under the Securities, including, but not limited to, (1) the full and prompt payment of the principal of the Securities when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Securities, either at the stated maturity thereof, upon acceleration of the maturity thereof or upon redemption, and (2) the full and prompt payment of any interest on the Securities when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Securities and (b) shall deliver concurrently therewith to the Trustee the certificate of the Expert required by Section 14.6 hereof. Section 14.2. Receipt. The Trustee shall accept and acknowledge receipt of the Senior Note Mortgage Bonds and Expert certificate described in Section 14.1 hereof upon the delivery thereof in accordance with said Section 14.1. Section 14.3. Senior Note Mortgage Bonds Held by the Trustee. The Trustee, as holder of the Senior Note Mortgage Bonds, shall attend any meeting of bondholders under the First Mortgage Indenture as to which it receives due notice, or, at its option, shall deliver its proxy in connection therewith. Either at such meeting, or otherwise where consent of holders of first mortgage bonds issued under the First Mortgage Indenture is sought without a meeting, the Trustee shall vote all of the Senior Note Mortgage Bonds held by it, or shall consent or withhold its consent with respect thereto, as directed by the Holders of not less than a majority in the aggregate principal amount of the outstanding Securities; provided, however, the Trustee shall not vote as such holder of any particular series of Senior Note Mortgage Bonds in favor of, or give its consent to, any action which, in the Trustee's opinion, would materially adversely affect such series of Senior Note Mortgage Bonds in a manner not shared generally by all other Senior Note Mortgage Bonds, except upon notification by the Trustee to the Holders of the Related Series of Securities of such proposal and consent thereto of 9 the Holders of not less than a majority in aggregate principal amount of the outstanding Securities of such series. Section 14.4. No Transfer of Senior Note Mortgage Bonds; Exception. Except as required to effect an assignment to a successor trustee under this Indenture or pursuant to Section 14.5 or Section 14.8 hereof, the Trustee shall not sell, assign or transfer the Senior Note Mortgage Bonds and the Company shall issue stop transfer instructions to the First Mortgage Trustee and any transfer agent under the First Mortgage Indenture to effect compliance with this Section 14.4. Section 14.5. Delivery to the Company of All Senior Note Mortgage Bonds. When the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on the Senior Note Mortgage Bonds shall be satisfied or deemed satisfied pursuant to Section 4.1 or Section 14.10 hereof, the Trustee shall, upon written request of the Company and receipt of the certificate of the Expert described in Section 14.6(b) hereof (if such certificate is then required by Section 14.6(b) hereof), deliver to the Company without charge therefor all of the Senior Note Mortgage Bonds, together with such appropriate instruments of transfer or release as may be reasonably requested by the Company. All Senior Note Mortgage Bonds delivered to the Company in accordance with this Section 14.5 shall be delivered by the Company to the First Mortgage Trustee for cancellation. Section 14.6. Fair Value Certificate. (a) Upon the delivery by the Company to the Trustee of Senior Note Mortgage Bonds pursuant to Section 14.1 hereof and subject to Section 3.3 hereof, the Company shall simultaneously therewith deliver to the Trustee a certificate of an Expert (1) stating that it is familiar with the provisions of such Senior Note Mortgage Bonds and of this Indenture, (2) stating the principal amount of such Senior Note Mortgage Bonds so delivered, the stated interest rate (or method of calculation of interest) of such Senior Note Mortgage Bonds and the stated maturity date of such Senior Note Mortgage Bonds, (3) identifying the Securities being issued contemporaneously therewith, and (4) stating the fair value to the Company of such Senior Note Mortgage Bonds. If the fair value to the Company of the Senior Note Mortgage Bonds so delivered, as described in the certificate to be delivered pursuant to this Section 14.6(a), both (l) is equal to or exceeds (A) $25,000 and (B) 1% of the principal amount of the Securities outstanding at the date of delivery of such Senior Note Mortgage Bonds and (2) together with the fair value to the Company, as described in the certificates to be delivered pursuant to this Section 14.6(a), of all other Senior Note Mortgage Bonds delivered to the Trustee since the commencement of the then current calendar year, is equal to or exceeds 10% of the principal amount of the Securities outstanding at the date of delivery of such Senior Note Mortgage Bonds, then the certificate required by this Section 14.6(a) shall (1) be delivered by an Expert who shall be independent of the Company and satisfactory to the Trustee in its reasonable judgment and (2) shall, in addition to the certifications described above, state the fair value to the Company of all Senior Note Mortgage Bonds delivered to the Trustee pursuant to Section 14.1 hereof since the commencement of the then current year as to which a certificate was not delivered by an Expert independent of the Company. (b) If Senior Note Mortgage Bonds are delivered or surrendered to the Company pursuant to Section 14.5 or 14.8 hereof, the Company shall simultaneously therewith deliver to the Trustee a certificate of an Expert (1) stating that it is familiar with the provisions of such Senior Note Mortgage Bonds and of this Indenture, (2) stating the principal amount of such Senior Note Mortgage Bonds so delivered, the stated interest rate (or method of calculation of interest) of such Senior Note Mortgage Bonds and the stated maturity date of such Senior Note Mortgage Bonds, (3) if applicable, identifying the Securities, the payment of the interest on and principal of which has been discharged hereunder, and (4) stating that such delivery and release 10 will not impair the lien of this Indenture in contravention of the provisions of this Indenture. If, prior to the Release Date, the fair value of the Senior Note Mortgage Bonds so delivered and released, as described in the certificate to be delivered pursuant to this Section 14.6(b), both (l) is equal to or exceeds (A) $25,000 and (B) 1% of the principal amount of the outstanding Securities at the date of release of such Senior Note Mortgage Bonds and (2) together with the fair value, as described in the certificates to be delivered pursuant to this Section 14.6(b), of all other Senior Note Mortgage Bonds released from the lien of this Indenture since the commencement of the then current calendar year, is equal to or exceeds 10% of the principal amount of the Securities outstanding at the date of release of such Senior Note Mortgage Bonds, then the certificate required by this Section 14.6(b) shall be delivered by an Expert who shall be independent of the Company and satisfactory to the Trustee in its reasonable judgment. If, in connection with a delivery or release of outstanding Senior Note Mortgage Bonds, the Company provides to the Trustee an Opinion of Counsel stating that the certificate described by this Section 14.6 is not required by law, such certificate shall not be required to be delivered hereunder in connection with such delivery or release. Section 14.7. Further Assurances. The Company shall cause this Indenture, any indentures supplemental to this Indenture, and any financing or continuation statements to be promptly recorded and filed and rerecorded and refiled in such a manner and in such places, as may be required by law in order fully to preserve, protect and perfect the security of the Holders and all rights of the Trustee, and, at its own expense, shall do such further lawful acts and things, and execute and deliver such additional conveyances, assignments, assurances, agreements, financing statements and instruments, as may be necessary in order to better assign, assure, perfect and confirm to the Trustee its security interest in the Senior Note Mortgage Bonds and for maintaining, protecting and preserving such security interest. Section 14.8. Exchange and Surrender of Senior Note Mortgage Bonds. At any time at the written direction of the Company, the Trustee shall surrender to the Company all or part of the Senior Note Mortgage Bonds in exchange for Senior Note Mortgage Bonds equal in aggregate outstanding principal amounts to, in different denominations than but of the same series and with all other terms identical to, the Senior Note Mortgage Bonds so surrendered to the Company. In addition, at any time a Security shall cease to be entitled to any lien, benefit or security under this Indenture pursuant to Section 4.4 hereof, the Trustee shall surrender Senior Note Mortgage Bonds as provided in this Section to the Company for cancellation. The Trustee shall, together with such Senior Note Mortgage Bonds, deliver to the Company such appropriate instruments of transfer or release as the Company may reasonably request. Prior to the surrender required by this paragraph, the Trustee shall receive from the Company the following, and (subject to Section 6.1 hereof) shall be fully protected in relying upon, (a) an Officers' Certificate stating (i) the aggregate outstanding principal amount of the Senior Note Mortgage Bonds of the series surrendered by the Trustee, after giving effect to such surrender, (ii) the aggregate outstanding principal amount of the Related Series of Securities, (iii) that the surrender of the Senior Note Mortgage Bonds will not result in any default under this Indenture, and (iv) that any Senior Note Mortgage Bonds to be received in exchange for the Senior Note Mortgage Bonds being surrendered comply with the provisions of this Section 14.8. The Company shall not be permitted to cause the surrender or exchange of all or any part of a series of Senior Note Mortgage Bonds contemplated in this Section 14.8, if, after such surrender or exchange, the aggregate outstanding principal amount of the Related Series of Securities would exceed the aggregate outstanding principal amount of such series of Senior Note Mortgage Bonds held by the Trustee. Any Senior Note Mortgage Bonds received by the Company pursuant to this Section 14.8 shall be delivered to the First Mortgage Trustee for cancellation. 11 Section 14.9. Terms of Senior Note Mortgage Bonds. Each series of Senior Note Mortgage Bonds delivered to the Trustee pursuant to Section 14.1 hereof shall have the same stated rate or rates of interest (or interest calculated in the same manner), Interest Payment Dates, Stated Maturity, and redemption provisions, and shall be in the same aggregate principal amount, as the Related Series of Securities being issued. Section 14.10. Senior Note Mortgage Bonds as Security for Securities. Until the Release Date and subject to Article Four hereof, Senior Note Mortgage Bonds delivered to the Trustee, for the benefit of the Holders of the Securities, shall serve as security for any and all obligations of the Company under the Securities, including, but not limited to (1) the full and prompt payment of the principal of such Securities when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Securities, either at the Stated Maturity thereof, upon acceleration of the maturity thereof or upon redemption, and (2) the full and prompt payment of any interest on such Securities when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Securities. Notwithstanding anything in this Indenture to the contrary, from and after the Release Date, the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on the Senior Note Mortgage Bonds shall be deemed satisfied and discharged as provided in the supplemental indenture or indentures to the First Mortgage Indenture creating such Senior Note Mortgage Bonds and the Senior Note Mortgage Bonds shall cease to secure in any manner Securities theretofore or subsequently issued. From and after the Release Date, all Senior Notes, whether theretofore or subsequently issued, shall be unsecured, and any conditions to the issuance of Securities that refer or relate to Senior Note Mortgage Bonds or the First Mortgage Indenture shall be inapplicable. From and after the Release Date, the Company shall cause the First Mortgage Indenture to be closed and the Company shall not issue any additional First Mortgage Bonds or Senior Note Mortgage Bonds under the First Mortgage Indenture. Notice of the occurrence of the Release Date shall be given by the Trustee to the Holders of the Securities in the manner provided in Section 1.6 hereof not later than 30 days after the Company notifies the Trustee of the occurrence of the Release Date." ARTICLE FOUR Miscellaneous Section 4.1. Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this First Supplemental Indenture forms a part thereof. Section 4.2. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof, or with a provision of the Original Indenture, which is required to be included in this First Supplemental Indenture, or in the Original Indenture, respectively, by any of the provisions of the Trust Indenture Act, such required provision shall control. Section 4.3. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 4.4. Successors and Assigns. All covenants and agreements by the Company in this First Supplemental Indenture shall bind its successors and assigns, whether so expressed or not. 12 Section 4.5. Separability Clause. In case any provision in this First Supplemental Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 4.6. Benefits of First Supplemental Indenture. Nothing in this First Supplemental Indenture or in the Senior Notes, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this First Supplemental Indenture. Section 4.7. Execution and Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 13 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. [CORPORATE SEAL] TEXAS-NEW MEXICO POWER COMPANY By ------------------------ Name: Title: Attest: By ------------------------ Name: Title: [SEAL] CHASE BANK OF TEXAS, N.A., As Trustee By ------------------------ Name: Title: Attest: By ------------------------ Name: Title: 14 STATE OF NEW YORK) :ss COUNTY OF NEW YORK) On this day of , 1999, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is a of Texas-New Mexico Power Company, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ---------------------------- STATE OF NEW YORK) :ss COUNTY OF NEW YORK) On this day of , 1999 before me personally came , to me known, who, being by me duly sworn, did depose and say that he is a of , one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ---------------------------- 15 EXHIBIT A [If the Security is to be a Global Security, insert -- Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE HEREINAFTER REFERENCED AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY 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 DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.] TEXAS-NEW MEXICO POWER COMPANY % SENIOR NOTES DUE $ No. CUSIP TEXAS-NEW MEXICO POWER COMPANY, a corporation duly organized and existing under the laws of the State of Texas (herein called the "Company," which term includes any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to or registered assigns, the principal sum of $ on , and to pay interest thereon from , or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on and in each year, commencing , at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment [if applicable, insert -- , and, subject to the terms of the Indenture, at the rate of % per annum on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue installment of interest, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the or (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in , in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts; [if this Security is not a Global Security, insert -- provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register]. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Security shall not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused this Security to be duly executed. Dated: TEXAS-NEW MEXICO POWER COMPANY BY ---------------------------------- Name: Title: A-2 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Date: --------------------, as Trustee, by ------------------------- Authorized Signatory A-3 [REVERSE OF NOTE] This Security is one of the duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Company (hereinafter called the "Securities"), of the series hereinafter specified, all issued or to be issued under and pursuant to the Indenture dated as of January 1, supplemented by the First Supplemental Indenture, dated as of , 1999 (as so supplemented, the "Indenture"), duly executed and delivered by the Company and , as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and any other indentures supplemental thereto reference is hereby made for a statement of the respective rights, obligations, duties and immunities thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the Company and the Holders of the Securities and of the terms upon which the Securities are issued and are to be authenticated and delivered. This Security is one of the series designated on the face hereof, which series is limited in aggregate principal amount to $ . By the terms of the Indenture, additional Securities of other separate series, which may vary as to date, aggregate principal amount, Stated Maturity, interest rate or method of calculating the interest rate, redemption provisions and in other respects as therein provided, may be issued in an unlimited amount. Prior to the Release Date (as hereinafter defined), the Securities of this series will be secured by first mortgage bonds (the "Senior Note Mortgage Bonds") delivered by the Company to the Trustee for the benefit of the Holders of the Securities, issued under the Indenture of Mortgage and Deed of Trust, dated November 1, 1944, by and between the Company and U.S. Bank Trust, National Association (which is successor trustee to First Trust of Illinois, National Association, which is successor trustee to Bank of America, Illinois, a banking corporation organized under the laws of Illinois, which was formerly known, at various times, as Continental Bank, a banking corporation organized under the laws of Illinois, Continental Bank, National Association, and Continental Illinois National Bank and Trust Company of Chicago (the "First Mortgage Trustee"), as supplemented and modified (the "First Mortgage Indenture") pursuant to the Supplemental Indenture dated , 1999. Reference is made to the First Mortgage Indenture and the Indenture for a description of property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the first mortgage bonds under the First Mortgage Indenture and of the First Mortgage Trustee in respect thereof, the duties and immunities of the First Mortgage Trustee and the terms and conditions upon which the Senior Note Mortgage Bonds are secured and the circumstances under which additional first mortgage bonds may be issued. FROM AND AFTER THE DATE CHOSEN BY THE COMPANY WHICH IS NOT EARLIER THAN THE LATER OF (I) SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN SENIOR NOTE MORTGAGE BONDS) ISSUED UNDER THE FIRST MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE FIRST MORTGAGE BONDS "DEEMED TO BE PAID" OR AS TO WHICH THE ENTIRE INDEBTEDNESS IS PAID AND DISCHARGED WITHIN THE MEANING USED IN ARTICLE 18 OF THE FIRST MORTGAGE INDENTURE) AT, BEFORE OR AFTER THE MATURITY THEREOF AND (II) THE DATE AS OF WHICH NO LIENS ON ANY PROPERTY OF THE COMPANY OR ANY SUBSIDIARY EXISTS (WHETHER SUCH LIENS SECURE INDEBTEDNESS OF THE COMPANY OR ANY SUBSIDIARY OR ANY OTHER PERSON), EXCEPT THAT THIS CLAUSE (II) SHALL NOT APPLY TO ANY LIEN TO THE EXTENT DESCRIBED IN CLAUSES (A) THROUGH (K) OF SECTION 10.10 OF THE ORIGINAL INDENTURE OR I THE LAST PARAGRAPH OF SUCH SECTION 10.10 (THE "RELEASE DATE"), THE SENIOR NOTE MORTGAGE BONDS SHALL, AT THE OPTION OF THE COMPANY, CEASE TO SECURE THE SECURITIES OF THIS SERIES IN ANY MANNER; PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH TIME IS CONTINUING UNDER THE INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE AS PROVIDED IN THE INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF SENIOR NOTE MORTGAGE BONDS HELD BY THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF SECURITIES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH SENIOR NOTE MORTGAGE BONDS. A-4 These Securities will be redeemable, in whole or in part, at the option of the Company, upon not less than 30 or more than 60 days' notice by mail to the Holders of such Securities at their addresses in the Security Register for such series, on any date (a "Redemption Date") at a redemption price equal to the greater of (a) 100% of their principal amount of the Securities to be redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to such Redemption Date) discounted to such Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus [__] basis points, plus accrued and unpaid interest on the principal amount being redeemed to such Redemption Date; provided, however, that installments of interest on Securities that are due and payable on an Interest Payment Date falling on or prior to the relevant Redemption Date shall be payable to the holders of such Securities, registered as such at the close of business on the relevant Record Date according to their terms and provisions of the Indenture. "Treasury Rate" means, with respect to any Redemption Date for the Securities, (a) the yield, under the heading that represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities" for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Maturity Date, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date. "Comparable Treasury Issue" means, the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities. "Independent Investment Banker" means or, if such firms are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. "Comparable Treasury Price" means, with respect to any Redemption Date, (a) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer" means each of and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company will substitute therefor another Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with respect to the Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. A-5 In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for defeasance of (a) the entire indebtedness of this Security and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein. If an Event of Default with respect to Securities of this series shall occur and be continuing, the unpaid principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture and, upon such declaration, the Trustee can demand the redemption of the Senior Note Mortgage Bonds as provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. A-6 This Security shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. A-7 EX-4.(Y) 4 FORM OF TWENTY-SIXTH SUPPLEMENTAL INDENTURE Exhibit 4(y) ================================================================================ This Instrument Contains After-Acquired Property Provisions This Instrument Grants a Security Interest by a Utility TEXAS-NEW MEXICO POWER COMPANY (FORMERLY COMMUNITY PUBLIC SERVICE COMPANY) To U.S. BANK TRUST, NATIONAL ASSOCIATION, TRUSTEE Twenty-Sixth Supplemental Indenture Dated as of _____________________ _____________________ Supplemental to and Modifying Indenture of Mortgage and Deed of Trust Dated as of November 1, 1944 (as supplemented and modified) ================================================================================ 1 This Instrument Contains After-Acquired Property Provisions. __________________ This Instrument Grants a Security Interest by a Utility. __________________ This is a Security Agreement granting a Security Interest in Chattels including Chattels affixed to Realty as well as a Mortgage and Deed of Trust upon Real Estate and Other Property THIS TWENTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of , 1999, between Texas-New Mexico Power Company (formerly Community Public Service Company), as debtor, a Texas corporation (the "COMPANY"), whose mailing address and address of its principal place of business is 4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113, and U.S. Bank Trust, National Association (successor by merger to First Trust of Illinois, National Association) (the "TRUSTEE"), (which is successor trustee to Bank of America Illinois, a banking corporation organized under the laws of Illinois, which was formerly known, at various times, as Continental Bank, a banking corporation organized under the laws of Illinois, Continental Bank, National Association, and Continental Illinois National Bank and Trust Company of Chicago (the "PREDECESSOR TRUSTEE")), as Trustee and secured party, and having its principal place of business and mailing address at 400 North Michigan Avenue, Chicago, Illinois 60611: WHEREAS, Community Public Service Company, a Delaware corporation the "PREDECESSOR COMPANY"), has heretofore executed and delivered to the City National Bank and Trust Company of Chicago (the "ORIGINAL TRUSTEE"), an Indenture of Mortgage and Deed of Trust dated as of November 1, 1944 (the "ORIGINAL INDENTURE," capitalized terms used herein and not otherwise defined herein shall have the same meaning as set forth in the Original Indenture), to secure as provided therein, its bonds (in the Original Indenture and herein called the "BONDS") to be designated generally as its "FIRST MORTGAGE BONDS" and to be issued in one or more series as provided in the Original Indenture; and WHEREAS, the Predecessor Company has heretofore executed and delivered to the Original Trustee six indentures supplemental to the Original Indenture, which supplemental indentures were dated as of March 1, 1947, January 1, 1949, January 1, 1952, March 1, 1954, June 1, 1957 and June 1, 1961, respectively; and WHEREAS, simultaneously with the merger of the Predecessor Company into the Company, the Company has executed and delivered a Seventh Supplemental Indenture, dated as of May 1, 1963, to Continental Illinois National Bank and Trust Company of Chicago (into which on September 1, 1961, the Original Trustee was merged) as Predecessor Trustee; and WHEREAS, the Company has executed and delivered to the Predecessor Trustee an Eighth Supplemental Indenture dated as of July 1, 1963; a Ninth Supplemental Indenture dated as of August 1, 1965; a Tenth Supplemental Indenture dated as of May 1, 1966; an Eleventh Supplemental Indenture dated as of October 1, 1969; a Twelfth Supplemental Indenture dated as of May 1, 1971; a Thirteenth Supplemental Indenture dated as of July 1, 1974; a Fourteenth Supplemental Indenture dated as of March 1, 1975; a Fifteenth Supplemental Indenture dated as of September 1, 1976; a Sixteenth Supplemental Indenture dated as of November 1, 1981; a Seventeenth Supplemental Indenture dated as of December 1, 1982; an Eighteenth Supplemental Indenture dated as of September 1, 1983; a Nineteenth Supplemental Indenture dated as of May 1, 1985; a Twentieth Supplemental Indenture dated as of July 1, 1987; a Twenty-First Supplemental Indenture dated as of July 1, 1989; a Twenty-Second Supplemental Indenture dated as of January 15, 1992; a Twenty- Third Supplemental Indenture dated as of September 15, 1993; a Twenty-Fourth Supplemental Indenture dated as of November 3, 1995 and a Twenty-Fifth Supplemental Indenture dated as of September 10, 1996; WHEREAS, pursuant to the Original Indenture, as heretofore supplemented and modified, there have been executed, authenticated, and delivered $100,000,000 in original principal amount of First Mortgage Bonds of Series U, 9 1/4% due 2000, of which $100,000,000 in principal amount remain outstanding; and WHEREAS, Continental Illinois National Bank and Trust Company of Chicago changed its name to Continental Bank, National Association, effective December 12, 1988; Continental Bank, National Association changed its name to Continental Bank, effective June 29, 1994; and Continental Bank changed its name to Bank of America Illinois effective September 1, 1994; and WHEREAS, on August 21, 1995 Bank of America Illinois and certain of its affiliates and First Bank National Association (the parent of First Trust of Illinois, National Association) and certain of its affiliates, entered into a Purchase and Assumption Agreement, as supplemented, which provided for the purchase by the Trustee (or an affiliate) of substantially all of the Illinois trust and agency appointments of the Predecessor Trustee, including the appointment under the Original Indenture, as supplemented and modified; and WHEREAS, on U.S. Bank Trust, National Association acquired First Trust of Illinois, National Association; and WHEREAS, pursuant to Section 3-3 of the Illinois Corporate Fiduciary Act (the "ACT") and the No-Objection letter No. 95-1021 dated July 21, 1995 from the Illinois Commissioner of Banks and Trust Companies, the sale of the Predecessor Trustee's corporate trust business to another corporate fiduciary will result in automatic succession of the transferred accounts pursuant to the provisions of the Act, provided such succession is not prohibited by the trust instrument's provisions; and WHEREAS, the Trustee is qualified and eligible to act as trustee pursuant to the Original Indenture, as supplemented and modified, and the automatic succession is not prohibited by the Original Indenture; and 2 WHEREAS, to complete the transfer under the Act, the Trustee and the Predecessor Trustee entered into an Instrument of Transfer and Assignment of Certain Illinois Appointments dated December 8, 1995 whereby the Trustee became the trustee under the Original Indenture, as supplemented and modified; and WHEREAS, it is provided in the Original Indenture, among other things, that the Company and the Trustee may, and when so required by the Original Indenture shall, enter into such indentures supplemental thereto as may or shall by them be deemed necessary or desirable and which shall thereafter form a part thereof for the purposes, among others, of (a) subjecting to the lien of the Original Indenture additional property acquired by the Company, (b) providing for the creation of any new series of Bonds, designating the series to be created and specifying the form and provisions of the Bonds of such series, (c) providing for a sinking, amortization, improvement or other analogous funds for the benefit of all or any of the Bonds of any one or more series, of such character and of such amount and upon such terms and conditions as shall be contained in such supplemental indenture; and (d) providing for modifications in the Original Indenture, subject to certain conditions; and WHEREAS, the Company has executed and delivered to Chase Bank of Texas, N.A. (the "SENIOR DEBT TRUSTEE") an indenture dated as of January 1, 1999 (the "SENIOR DEBT INDENTURE") to provide for the issuance from time to time of its debentures, notes, bonds or other evidences of indebtedness; and WHEREAS, the Company is entering into an Indenture supplemental to the Senior Debt Indenture dated as of [January 1, 1999] (the "FIRST SUPPLEMENTAL INDENTURE") with the Senior Debt Trustee for the purpose of issuing a series of securities in an aggregate principal amount of $ to be designated the " % Senior Notes Due " (the "SENIOR NOTES"); and WHEREAS, the First Supplemental Indenture requires, as a condition precedent to the issuance and effectiveness of the Senior Notes, that the Company issue a new series of First Mortgage Bonds to the Senior Debt Trustee in an aggregate principal amount of up to $ to secure the payment when due of the Senior Notes until the RELEASE DATE (as such term is defined in the First Supplemental Indenture); and WHEREAS, the agreements of the parties to the First Supplemental Indenture constitute consideration for the issuance of such First Mortgage Bonds to the Senior Debt Trustee; and WHEREAS, the Company desires to, and as required by the First Supplemental Indenture proposes to, create under the Original Indenture a new issue of First Mortgage Bonds, to be designated as First Mortgage Bonds, Series X (the "BONDS OF SERIES X") to be due on , 20 , in an aggregate principal amount of up to $ and proposes to issue the same upon the execution of this Twenty-Sixth Supplemental Indenture; and WHEREAS, it is the intent of the Company and the Senior Debt Trustee that any payment made in respect to the Company's obligations under the Senior Notes shall be deemed a payment in respect of the Bonds of Series X and all payments which are applied to payment of the 3 outstanding principal balance of the Senior Notes shall be deemed to be payments of principal of the Bonds of Series X and the balance of such Bonds of Series X shall be reduced concurrently with such payment; and WHEREAS, it is the intent of the Company and the Senior Debt Trustee that there be no duplication in the obligations paid by the Company under the Senior Notes and the Bonds of Series X, but the payments, if any, of principal of or interest on the Bonds of Series X be applied to payment of the Senior Notes and that the benefits and security of the lien of the Original Indenture, as supplemented and amended, be extended to the Senior Notes until the Release Date by means of the issuance and delivery of the Bonds of Series X to the Senior Debt Trustee for the benefit of the holders of the Senior Notes; and WHEREAS, the Company is required to execute this Twenty-Sixth Supplemental Indenture and hereby requests the Trustee to join in this Twenty-Sixth Supplemental Indenture for the purpose, among others, of (i) creating and describing the terms of the Bonds of Series X and (ii) subjecting to the lien of the Original Indenture, as supplemented and modified, additional property (the "ADDITIONAL PROPERTY") acquired by the Company since the execution and delivery of the Twenty-Fifth Supplemental Indenture dated as of September 16, 1996 (the Original Indenture as heretofore supplemented and modified and as supplemented and modified by this Twenty-Sixth Supplemental Indenture being herein sometimes called the "INDENTURE"); and WHEREAS, all acts and proceedings required by law and by the Restated Articles of Incorporation and By-Laws of the Company necessary to make the Bonds of Series X, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, and to constitute the Indenture a valid and binding mortgage and deed of trust for the security of all of the First Mortgage Bonds in accordance with its and their terms, have been done and taken; and the execution and delivery of this Twenty-Sixth Supplemental Indenture have been in all respects duly authorized. NOW, THEREFORE, THIS TWENTY-SIXTH SUPPLEMENTAL INDENTURE, WITNESSETH, that, in order to secure the payment of the principal of, premium, if any, and interest on all Bonds at any time issued and outstanding under the Indenture, to indirectly secure payment of the principal of, premium, in any, and interest on all Senior Notes at any time issued and outstanding under the Senior Debt Indenture, according to their tenor, purport and effect, to expressly subject the Additional Property to the lien of the Indenture, and to secure the performance and observance of all the covenants and conditions contained in the Senior Notes and in the Senior Debt Indenture, and to declare the terms and conditions upon and subject to which the Bonds of Series X are to be issued and secured, and for the purpose of confirming the lien of the Original Indenture, as heretofore supplemented and modified, and for and in consideration of the premises and of the mutual covenants contained in the Indenture and of the acceptance of the Bonds of Series X by the holders thereof, and of the sum of $1 to the Company paid by the Trustee at or before the execution and delivery hereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Company has executed and delivered this Twenty-Sixth Supplemental Indenture, and by these presents does grant, bargain, sell, convey, assign, transfer, 4 mortgage, pledge, hypothecate, set over and confirm unto the Trustee, the following property, rights, privileges and franchises, to wit: CLAUSE I. All the property, real, personal or mixed, tangible or intangible (other than that Excepted Property as defined in the Granting Clauses of the Original Indenture) of every kind, character and description which is described in Article Five hereof. CLAUSE II. Without in any way limiting anything in Article Five hereof or hereinafter described, all and singular the lands, real estate, chattels real, interests in lands, leaseholds, ways, rights-of-way, easements, servitudes, permits and licenses, lands under water, riparian rights, franchises, privileges, gas or electric generating plants, natural gas plants, gas storage plants and facilities, gas or electric transmission and distribution systems, gas gathering systems and tap lines, and all apparatus and equipment appertaining thereto, offices, buildings, warehouses and other structures, machine shops, tools, materials and supplies and all property of any nature appertaining to any of the plants, systems, business or operations of the Company, whether or not affixed to the realty, used in the operation of any of the premises or plants or systems or otherwise, which are now owned or which may hereafter be owned or acquired by the Company, other than Excepted Property as defined in the Granting Clauses of the Original Indenture. CLAUSE III. All corporate, Federal, state, municipal and other permits, consents, licenses, bridge licenses, bridge rights, river permits, franchises, grants, privileges and immunities of every kind and description, now belonging to or which may hereafter be owned, held, possessed or enjoyed by the Company (including those described in Article Five hereof and other than Excepted Property as defined in the Granting Clauses of the Original Indenture) and all renewals, extensions, enlargements and modifications of any of them. CLAUSE IV. Also all other property, real, personal or mixed, tangible or intangible (other than Excepted Property as defined in the Granting Clauses of the Original Indenture) of every kind, character and description and wheresoever situated, whether or not useful in the generation, manufacture, production, transportation, distribution or sale of gas or electricity, now owned or which may hereafter be acquired by the Company, it being the intention hereof that all property, rights and franchises acquired by the Company after the date hereof (other than Excepted Property as defined in the Granting Clauses of the Original Indenture) shall be as fully embraced within and subjected to the lien hereof as if such property were now owned by the Company and were specifically described herein and conveyed hereby. 5 CLAUSE V. Together with all and singular the plants, buildings, improvements, additions, tenements, hereditaments, easements, rights, privileges, licenses and franchises and all other appurtenances whatsoever belonging or in anywise appertaining to any of the property hereby mortgaged or pledged, or intended so to be, or any part thereof, and the reversion and reversions, remainder and remainders, and the rents, revenues, issues, earnings, income, products and profits thereof, and of every part and parcel thereof, and all the estate, right, title, interest, property, claim and demand of every nature whatsoever of the Company at law, in equity or otherwise howsoever, in, of and to such property and every part and parcel thereof. CLAUSE VI. Also any and all property, real, personal, or mixed (including Excepted Property as defined in the Granting Clauses of the Original Indenture), that may, from time to time hereafter, by delivery or by writing of any kind, for the purpose hereof be in anywise subjected to the lien hereof or be expressly conveyed, mortgaged, assigned, transferred, deposited and/or pledged by the Company or by anyone in its behalf or with its consent, to and with the Trustee, which is hereby authorized to receive the same at any and all times as and for additional security and also, when and as in the Indenture provided, as substituted security hereunder, to the extent permitted by law. Such conveyance, mortgage, assignment, transfer, deposit and/or pledge or other creation of lien by the Company or by anyone in its behalf or with its consent of or upon any property as and for additional security may be made subject to any reservations, limitations, conditions and provisions which shall be set forth in an instrument or agreement in writing executed by the Company or the person or corporation conveying, assigning, mortgaging, transferring, depositing and/or pledging the same and/or by the Trustee, respecting the use, management and disposition of the property so conveyed, assigned, mortgaged, transferred, deposited and/or pledged, or the proceeds thereof. EXCEPTED PROPERTY There is, however, expressly excepted and excluded from the lien and operation of the Indenture all property specifically excepted under the heading "EXCEPTED PROPERTY" of the Granting Clauses of the Original Indenture and all property released or otherwise disposed of pursuant to the provisions of Article Seven of the Original Indenture. The Company may, however, pursuant to the provisions of Granting Clause VI above, subject to the lien and operation of the Indenture, all or any part of the Excepted Property as defined in the Granting Clauses of the Original Indenture. TO HAVE AND TO HOLD the Trust Estate (as defined in Paragraph A of Section 1.06 of the Original Indenture) and all and singular the lands, properties, estates, rights, franchises, privileges and appurtenances hereby mortgaged, conveyed, pledged or assigned, or intended so to be, together with all the appurtenances thereto appertaining, unto the Trustee and its successors and assigns, forever: 6 SUBJECT, HOWEVER, to (i) the exceptions, reservations, restrictions, conditions, limitations, covenants and matters recited in Article [ ] hereof, (ii) Permitted Encumbrances as defined in Paragraph G of Section 1.07 of the Original Indenture, and (iii) with respect to any property which the Company may hereafter acquire, all terms, conditions, agreements, covenants, exceptions and reservations expressed or provided in the deeds or other instruments, respectively, under and by virtue of which the Company shall hereafter acquire the same and to any liens thereon existing, and to any liens for unpaid portions of the purchase money placed thereon, at the time of such acquisitions; BUT IN TRUST, NEVERTHELESS, for the equal and proportionate use, benefit, security and protection of those who from time to time shall hold the Bonds and coupons authenticated and delivered under the Indenture and duly issued by the Company, without any discrimination, preference or priority of any one Bond or coupon over any other by reason of priority in the time of issue, sale or negotiation thereof or otherwise, except as provided in Section 10.02 of the Original Indenture, so that, subject to said Section 10.02 of the Original Indenture, each and all of said Bonds and coupons shall have the same right, lien and privilege under the Original Indenture, as heretofore supplemented and as supplemented by this Twenty-Sixth Supplemental Indenture, and shall be equally secured thereby and hereby and shall have the same proportionate interest and share in the Trust Estate, with the same effect as if all of the Bonds and coupons had been issued, sold and negotiated simultaneously; and in trust for enforcing payment of the principal of the Bonds and of the premium, if any, and interest thereon, according to the tenor, purport and effect of the Bonds and coupons and of the Indenture, and for enforcing the terms, provisions, covenants and stipulations in the Indenture and in the Bonds set forth; UPON CONDITION that, until the happening of an Event of Default (as defined in Section 14.01 of the Original Indenture), the Company shall be suffered and permitted to possess, use and enjoy the Trust Estate, except money, securities and other personal property pledged or deposited with or required to be pledged or deposited with the Trustee under the Indenture, and to receive and use the rents, revenues, issues, earnings, income, products and profits therefrom: ARTICLE ONE BONDS OF SERIES X AND CERTAIN PROVISIONS RELATING THERETO SECTION 1.01. Terms of Bonds of Series X. There shall be, and hereby is, created a new series of Bonds, known as and entitled "FIRST MORTGAGE BONDS, SERIES X, DUE " (herein referred to as the "BONDS OF SERIES X"), and the form thereof shall be substantially as hereinafter set forth in Section 1.02 hereof. The principal amount of the Bonds of Series X shall not be limited except as provided in Section 2.01 of the Original Indenture (as amended by Section 1.01 of the Thirteenth Supplemental Indenture dated as of July 1, 1974) and except as may be provided in any indenture supplemental thereto. The definitive Bonds of Series X shall be issued only as registered Bonds without coupons of the denomination of $1,000 or any multiple thereof, and of such respective amounts of each of said denominations as may be executed by the Company and delivered to the Trustee for authentication and delivery. 7 The Bonds of Series X shall be registered in the name of the Senior Debt Trustee or to any successor trustee under the Senior Debt Indenture for the benefit of the holders of the Senior Notes. The Bonds of Series X are to be issued to the Senior Debt Trustee to secure the payment when due of all obligations of the Company under the Senior Notes. The Bonds of Series X are to be dated as of the date hereof, are to be issued in the aggregate principal amount of $ and are to mature on [ ], 20 . The principal of the Bonds of Series X shall be payable in whole or in installments on such date or dates as the Company has any obligation to make any principal payment under the Senior Notes, but not later than [the maturity date of the Senior Notes]. The Bonds of Series X will have the same stated rates of interest (and interest shall be calculated in the same manner) and "INTEREST PAYMENT DATES" (herein so called) as the Senior Notes. Any payment made in respect to the Company's obligations under the Senior Notes shall be deemed a payment in respect of the Company's related obligations under the Bonds of Series X. The obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on the Bonds of Series X 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, premium, if any, and interest on, and fees with respect to, the Senior Notes. Until such time as the Trustee shall have received notice from the Senior Debt Trustee that an "EVENT OF DEFAULT" under the First Supplemental Indenture has occurred and is continuing, the Trustee shall be entitled to assume that all such payments have been made. Any such notice shall provide the Trustee with information on the principal and interest payments due thereafter on the Bonds of Series X. Any payments of the principal of, premium, if any, and the interest on the Bonds of Series X shall be payable, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, at the principal office of the Trustee in the City of Chicago, State of Illinois. Interest on Bonds of Series X shall be payable in each case to the holder of record on the record date as set forth below. On the Release Date, the Bonds of Series X shall be surrendered to the Company pursuant to the terms of the First Supplemental Indenture and the Company's obligations under the Bonds of Series X from the Release Date forward shall be discharged and deemed satisfied. The definitive Bonds of Series X may be issued in the form of Bonds engraved, printed, lithographed on steel engraved borders or typed on safety paper. The person in whose name any Bond of Series X is registered at the close of business on any record date (as hereinbelow defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Bond of Series X upon any transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except that, if and to the extent that the Company defaults in the payment of the interest due on such interest payment date, then the registered holders of Bonds of Series X on 8 such record date shall have no further right to or claim in respect of such defaulted interest as such registered holders on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any Bonds of Series X shall be the registered holders of such Bonds of Series X on the record date for payment of such defaulted interest. The term "RECORD DATE" as used in this Section 1.01, and in the form of the Bonds of Series X, with respect to any interest payment date applicable to the Bonds of Series X, shall mean the date fifteen days prior to such interest payment date (or the preceding business day if a holiday or other day on which the office of the Trustee is closed), or such record date established for defaulted interest as hereinafter provided. Subject to the provisions of Section 2.11 of the Original Indenture, all definitive Bonds of Series X, upon surrender at the principal office of the Trustee, shall be exchangeable for other Bonds of Series X of a different denomination or denominations, as requested by the holder surrendering the same. The Company shall execute, and the Trustee shall authenticate and deliver, Bonds of Series X whenever the same shall be required for any such exchange. Notwithstanding the provisions of Section 2.11 of the Original Indenture, no charge shall be made for any exchange of Bonds of Series X for other Bonds of Series X of different authorized denominations or for any transfer of Bonds of Series X, except that the Company at its option may require the payment of a sum sufficient to reimburse it for any stamp tax or other governmental charge incident thereto. The Bonds of Series X shall be redeemed by the Company in whole at any time prior to maturity at a redemption price of 100% of the principal amount to be redeemed, plus any accrued and unpaid interest to the redemption date, but only if the Trustee shall receive a written demand from the Senior Debt Trustee for redemption of all Bonds of Series X held by the Senior Debt Trustee stating that an "EVENT OF DEFAULT" under the First Supplemental Indenture has occurred and is continuing and that payment of the principal amount outstanding under the Senior Notes, all interest thereon and all other amounts payable thereunder are immediately due and payable and demanding payment thereof; provided, however, that the Bonds of Series X shall not be redeemed in the event that prior to the date of such redemption the Trustee shall have received a certificate of the Senior Debt Trustee (a) stating that there has been a waiver of such Event of Default, or (b) withdrawing said written demand. The redemption of the Bonds of Series X shall be made forthwith upon receipt of such demand by the Company from the Senior Debt Trustee on behalf of the holders of the Senior Notes or the Trustee. The Trustee hereunder shall, by virtue of its office as such Trustee, be a paying agent of the Company for the purpose of the payment of the principal of and premium, if any, and interest on the Bonds of Series X and the registrar and transfer agent of the Company for the purpose of registering and transferring Bonds of Series X. Neither the Company nor the Trustee shall be required to make transfers or exchanges of Bonds of Series X for a period of ten days next preceding the mailing of notice of redemption of Bonds of Series X to be redeemed and neither the Company nor the Trustee shall be required to make transfers or exchanges of any Bonds of Series X designated in whole for redemption or that part of any Bond of Series X designated in part for redemption. 9 SECTION 1.02. Form of Bonds of Series X. The Bonds of Series X shall be in substantially the following form: THIS BOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TRUSTEE UNDER THE INDENTURE DATED JANUARY 1, 1999, AS SUPPLEMENTED, BETWEEN TEXAS-NEW MEXICO POWER COMPANY AND CHASE BANK OF TEXAS, N.A., TRUSTEE [FORM OF BOND OF Series X] No. X $ TEXAS-NEW MEXICO POWER COMPANY First Mortgage Bond, Series X, % Due 20 Texas-New Mexico Power Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Chase Bank of Texas, N.A. as Senior Debt Trustee (as hereinafter defined) under the Senior Debt Indenture (as hereinafter defined), or to any successor Trustee under the Senior Debt Indenture, Million Dollars ($ ) or such lesser amount as is equal to the aggregate principal amount of the outstanding Senior Notes (as defined in the First Supplemental Indenture hereinafter defined), in whole or in installments on such date or dates as the Company has any obligation to make payments under the First Supplemental Indenture, but not later than the Maturity Date (as defined in the First Supplemental Indenture), and to pay interest on the unpaid principal amount hereof to the registered owner hereof at such rate per annum on each interest payment date (as hereinafter defined) and at maturity as shall cause the amount of interest payable on such interest payment date (as hereinafter defined) on this Bond to equal the amount of interest and fees payable on such interest payment date (as hereinafter defined) under the First Supplemental Indenture as provided below. The principal of, premium, if any, and interest on this Bond are payable at the principal corporate trust office mentioned on the reverse hereof of First Trust of Illinois, National Association (the "Trustee"), or its successor in trust under the Indenture (as hereinafter defined), in the City of Chicago, Illinois, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The Bonds of Series X have been issued to the Senior Debt Trustee in connection with the issuance of the Senior Notes, to secure the payment when due of all obligations of the Company under the Senior Notes issued under an indenture supplemental (the "First Supplemental Indenture") to the Original Senior Debt Indenture (hereinafter defined) with the Senior Debt Trustee for the purpose of issuing a series of securities in an aggregate principal amount of $ to be designated the " % Senior Notes Due " (the "Senior Notes"). The Company has executed and delivered to Chase Bank of Texas, N.A. (the "Senior Debt Trustee") an indenture dated as of January 1, 1999 (the "Original Senior Debt Indenture" and 10 together with the First Supplemental Indenture, the "Senior Debt Indenture") to provide for the issuance from time to time of its debentures, notes, bonds or other evidences of indebtedness. The interest on this Bond shall be payable on the same dates (each, an "interest payment date") as interest is payable from time to time pursuant to the Senior Notes until maturity of this Bond, or until the occurrence of the Release Date, or, if the Company defaults in the payment of principal due on this Bond, until such principal and interest shall have been paid in full and the Company's obligations with respect thereto discharged as provided in the Indenture (as hereinafter defined). The amount of interest payable from time to time under the Senior Notes, the basis on which such interest is computed and the dates on which such interest is payable are set forth in the First Supplemental Indenture. Any payment of the principal of, premium, if any, and interest made in respect of the Company's obligations under the Senior Notes shall be deemed a payment in respect of the respective obligations under the Bonds of Series X. The obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on the Bonds of Series X 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, premium, if any, and interest on, the Senior Notes. On the Release Date (as defined in the First Supplemental Indenture), and subject to the terms and conditions of the First Supplemental Indenture, this Bond shall be surrendered to the Company and the Company's obligations hereunder from the Release Date forward shall be discharged and deemed satisfied. This Bond shall not become or be valid or obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee. The provisions of this Bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. In Witness Whereof, Texas-New Mexico Power Company has caused this Bond to be executed in its corporate name by the manual or facsimile signature of its President or one of its Vice Presidents and its corporate seal to be impressed or imprinted hereon, attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, and this Bond to be dated. Texas-New Mexico Power Company, By: ---------------------------- President Attest: 11 - ------------------------- Secretary (Seal) Date of Authentication: ___________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture. FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, as Trustee ------------------------------------ Authorized Officer 12 [FORM OF REVERSE OF BOND OF SERIES X] This Bond is one of an authorized issue of Bonds of the Company known as its "First Mortgage Bonds," limited as provided in the Indenture hereinafter mentioned, issued and to be issued in one or more series under, and all equally and ratably secured (except as any sinking, amortization, improvement, renewal, replacement or other analogous fund established under the Indenture hereinafter mentioned, may afford additional security for the Bonds of any particular series) by an Indenture of Mortgage and Deed of Trust dated as of November 1, 1944, executed to City National Bank and Trust Company of Chicago, as to which Continental Illinois National Bank and Trust Company of Chicago (which later changed its name to Continental Bank, National Association, then to Continental Bank, a banking corporation organized under the laws of Illinois, and then to Bank of America Illinois, a banking corporation organized under the laws of Illinois, who was succeeded by First Trust of Illinois, National Association), as successor trustee, as Trustee, as supplemented by twenty-five supplemental indentures thereto, including the Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third, Twenty-Fourth and Twenty-Fifth Supplemental Indentures which also modified the Original Indenture and the Twenty-Sixth Supplemental Indenture (the "Twenty-Sixth Supplemental Indenture") dated as of January 1, 1999 (said Indenture of Mortgage and Deed of Trust, as so supplemented and modified, being herein called the "Indenture"), to which Indenture reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the holders of the Bonds and the appurtenant coupons and of the Trustee and of the Company in respect of such security, and the terms and conditions upon which the Bonds are and are to be secured. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than seventy-five per cent in principal amount of the Bonds (exclusive of Bonds disqualified by reason of the Company's interest therein) at the time outstanding, including, if more than one series of Bonds shall be at the time outstanding, not less than sixty per cent in principal amount of each series affected, to execute supplemental indentures amending the Indenture; provided, however, that no such supplemental indenture shall extend the fixed maturity of this Bond or reduce the rate or extend the time of payment of interest hereon or reduce the amount of the principal hereof or reduce any premium payable on the redemption hereof, without the consent of the holder hereof. As provided in the Indenture, the Bonds are issuable in Series which may vary as in the Indenture provided or permitted. This Bond is one of a series entitled "First Mortgage Bonds, Series X, due " (hereinafter called the "Bonds of Series X"). Bonds of this series may, upon surrender thereof at the principal office of the Trustee, be exchanged for several Bonds of the same series for a like aggregate principal amount in authorized denominations; and several Bonds of this series, registered in the same name, may, upon surrender thereof at said principal office of the Trustee, be exchanged for one Bond of the same series for a like aggregate principal amount in authorized denominations. No charge shall be made for any exchange of Bonds of this series for other Bonds of different authorized denominations or 13 for any transfer of this Bond, except that the Company at its option may require the payment of a sum sufficient to reimburse it for any stamp tax or other governmental charge incidental thereto. The Company and the Trustee may deem and treat the person in whose name this Bond shall be registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Bond shall be overdue; and all such payments shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid. If an event of default as defined in the Indenture shall occur, the principal of all the Bonds of Series X may become or be declared due and payable upon the conditions and in the manner and with the effect provided in the Indenture and the First Supplemental Indenture. No recourse shall be had for the payment of the principal of or the interest on this Bond or for any claim based hereon or otherwise in respect hereof or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty, or otherwise, all such liability being by the acceptance hereof and as part of the consideration for the issue hereof expressly waived and released, as provided in the Indenture; provided, however, that nothing herein or in the Indenture contained shall be taken to prevent recourse to and the enforcement of the liability, if any, of any shareholder or any stockholder or subscriber to capital stock upon or in respect of shares of capital stock not fully paid. This Bond is nontransferable except to effect transfer to any successor to the Senior Debt Trustee under the First Supplemental Indenture, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this Bond and the payment of any applicable taxes and fees required by law, and upon any such transfer or exchange a new registered bond or bonds or the same series and tenor, will be issued to the authorized transferee, or the registered holder, as the case may be. Upon notice being given of the redemption of all or part of the Senior Notes in accordance with the Senior Debt Indenture and such Senior Notes becoming due and payable in accordance with such notice of redemption, the Company shall redeem, on the redemption date specified in such notice a principal amount of Bonds of Series X equal to the principal amount of Senior Notes to be redeemed, at a redemption price equal to the principal amount of such Bonds of Series X to be redeemed, plus a premium, if any, equal to the premium payable on the redemption of such Senior Notes, if any, plus accrued interest to such redemption date. Upon payment by the Company of principal, premium, if any, and interest in satisfaction of amounts due and payable in accordance with such notice of redemption of all or part of the Senior Notes, as the case may be, the Company's obligations to make payment with respect to the 14 amounts due and payable with respect to the principal amount of Bonds of Series X to be redeemed shall be satisfied. The Company covenants that, prior to the Release Date, it will not take any action that would cause the outstanding principal amount of the Bonds of Series X to be less than the then outstanding principal amount of the Senior Notes. ARTICLE TWO AMOUNT OF BONDS OUTSTANDING The aggregate principal amount of Bonds of the Company outstanding and presently to be issued and outstanding under the provisions of, and secured by the Indenture, will be $ consisting of $100,000,000 principal amount of First Mortgage Bonds, Series U, 9 1/4% due 2000, due September 15, 2000 and $ principal amount of First Mortgage Bonds, Series X, due , due to be issued pursuant to Article Four of the Original Indenture as provided for in this Twenty-Sixth Supplemental Indenture. Additional Bonds of Series U and X and of subsequent series created after the execution and delivery of this Twenty-Sixth Supplemental Indenture, may, from time to time, be authenticated, delivered and issued pursuant to the terms of the Indenture. ARTICLE THREE ADDITIONAL COVENANTS OF COMPANY The Company covenants and agrees with the Trustee, for the benefit of the Trustee and all the present and future holders of the Bonds, that the Company will pay the principal of, premium, if any, and interest on all Bonds issued or to be issued and secured by the Indenture, as well as all Bonds which may be hereafter issued in exchange or substitution therefor, and will perform and fulfill all of the terms, covenants and conditions of the Original Indenture, with respect to the additional Bonds to be issued under the Indenture. ARTICLE FOUR MISCELLANEOUS This instrument is executed and shall be construed as an indenture supplemental to the Original Indenture as heretofore supplemented and shall form a part thereof, and the Original Indenture as heretofore supplemented is hereby confirmed. The recitals in this Twenty-Sixth Supplemental Indenture are made by the Company only and not by the Trustee; and all of the provisions contained in the Original Indenture in respect of 15 the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect hereof as fully and with like effect as if set forth herein in full. Although this Twenty-Sixth Supplemental Indenture is dated for convenience and for the purpose of reference as of [ ], 1999, the actual date or dates of execution thereof by the Company and the Trustee are as indicated by their respective acknowledgments hereto annexed. In order to facilitate the recording or filing of this Twenty-Sixth Supplemental Indenture, the same may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. ARTICLE FIVE FIRST Land The following described lots, pieces, or parcels of land acquired by the Company since the execution and delivery of the Twenty-Fifth Supplemental Indenture dated as of September 10, 1996, are located in the States and in the Counties designated and hereinafter set forth: FOURTH Franchises All and singular, the corporate, federal, state, municipal and other franchises, permits, consents, licenses, grants, immunities, privileges, and rights owned by the Company and now held by the Company for the construction, maintenance, and operation of electric light, heat, and power plants and systems; for the construction, maintenance; as well as all franchises, grants, immunities, privileges, and rights of the Company used or useful in the operation of the Trust Estate, including all and singular the franchises, grants, immunities, privileges, and rights of the Company granted by the governing authorities of the cities and towns enumerated in the schedule below, and by all other municipalities or political subdivisions, and all renewals, extensions, and modifications of said franchises, grants, privileges, and rights, or any of them, including: - ------------------------------------------------------------------------------- | THE FOLLOWING DESCRIPTIONS ARE TO BE UPDATED AND PROVIDED BY TNP. | - ------------------------------------------------------------------------------- A. STATE OF NEW MEXICO Municipality Expiration Date ------------ --------------- Dona Ana County November 1, 2019 16 B. STATE OF TEXAS Municipality Expiration Date ------------ ---------------------------- Alvin Extended to October 21, 1996 Cross Roads May 28, 2026 Nocona Extended to April 8, 2015 Texas City Extended to March 31, 1999 IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused this Twenty- Sixth Supplemental Indenture to be signed in its corporate name by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary, and, in token of its acceptance of the trust created hereby, First Trust of Illinois, National Association has caused this Twenty-Sixth Supplemental Indenture to be signed in its corporate name by one of its Vice Presidents and its corporate seal to be hereunto affixed and attested by one of its Assistant Secretaries, all as of the day and year first above written. TEXAS-NEW MEXICO POWER COMPANY, (Corporate Seal) By: ---------------------------------------- M. S. Cheema Senior Vice President Attest: B. Jan Adkins Assistant Secretary FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, as Trustee (Corporate Seal) By: ---------------------------------------- Vice President Attest: - ------------------------ Assistant Secretary 17 STATE OF TEXAS (S) (S) ss.: COUNTY OF TARRANT (S) On this day of , 1999, before me, , Notary Public in and for the County and State aforesaid, personally appeared M. S. Cheema, to me personally known, and known to me to be the person whose name is subscribed to the foregoing instrument and known to me to be Senior Vice President of Texas-New Mexico Power Company, a Texas corporation, who being by me duly sworn, did say that he resides in Weatherford, Texas, that he is Senior Vice President of said Texas-New Mexico Power Company and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors; and said M. S. Cheema acknowledged said instrument to be the free act and deed of said corporation, and acknowledged to me that he executed said instrument for the purposes and consideration therein expressed and as the act of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this day of , 1998. ---------------------------------- (NOTARIAL SEAL) 18 STATE OF ILLINOIS (S) (S) ss.: COUNTY OF COOK (S) On this day of , 1999, before me, , Notary Public in and for the County and State aforesaid, personally appeared, to me personally known, and known to me to be the person whose name is subscribed to the foregoing instrument and known to me to be a Vice President of First Trust of Illinois, National Association, who, being by me duly sworn, did say that he resides in Chicago, Illinois; that he is a Vice President of said First Trust of Illinois, National Association, and that the seal affixed to said instrument is the corporate seal of said banking corporation, and that said instrument was signed and sealed in behalf of said association by authority of its Board of Directors; and said , acknowledged said instrument to be the free act and deed of said association, and acknowledged to me that he executed said instrument for the purposes and consideration therein expressed and as the act of said association. IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this day of , 1999. ---------------------------------- (NOTARIAL SEAL) 19 STATE OF TEXAS (S) (S) ss.: COUNTY OF TARRANT (S) M. S. Cheema, being duly sworn, deposes and says: 1. That he is Senior Vice President of Texas-New Mexico Power Company, a Texas corporation, one of the corporations described in, and which executed the foregoing instrument, and is one of the officers who executed the foregoing instrument in behalf of Texas-New Mexico Power Company. 2. That Texas-New Mexico Power Company, one of the corporations which executed the aforementioned instrument, is a corporation engaged in the States of Texas and New Mexico in the generation, purchase, transmission, distribution and sale of electricity to the public and, consequently, is a utility as described in Section 35.01, Texas Business and Commerce Code, Revised Civil Statutes of Texas. Subscribed and sworn to before me this day of , 1999. ---------------------------------- (NOTARIAL SEAL) 20 EX-5.(A) 5 OPINION OF HAYNES AND BOONE, LLP EXHIBIT 5(a) [HAYNES AND BOONE, LLP LETTERHEAD] December 11, 1998 Texas-New Mexico Power Company 4100 International Plaza P.O. Box 2943 Fort Worth, Texas 76113 Re: Registration of $200,000,000 in Aggregate Principal Amount of Senior Notes and First Mortgage Bonds Gentlemen: We have acted as counsel to Texas-New Mexico Power Company, a Texas corporation (the "Company"), in connection with the registration and sale under the Securities Act of 1933, as amended (the "Securities Act"), of up to $200,000,000 in aggregate principal amount of senior notes (the "Notes") pursuant to an Indenture to be entered into between Chase Bank of Texas, N.A. (the "Trustee") and the Company (the "Indenture"), which Notes are to be secured by First Mortgage Bonds of one or more series (the "Senior Note Mortgage Bonds") to be issued under one or more supplemental indentures thereto (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 the 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 Mortgage Indentures thereto (collectively, the "Mortgage Indenture"). The Notes and the Senior Note Mortgage Bonds are being registered pursuant to a Registration Statement on Form S-3 filed with the Securities and Exchange Commission under the Securities Act of 1933, as subsequently amended or supplemented (the Registration Statement, as amended or supplemented, is hereinafter referred to as the "Registration Statement"). In connection therewith, we have examined and relied upon the original, or copies certified to our satisfaction, of (i) the Articles of Incorporation and the Bylaws of the Company; (ii) minutes and records of the corporate proceedings of the Company with respect Texas-New Mexico Power Company December 11, 1998 Page 2 to the issuance by the Company of the Notes and the Senior Note Mortgage Bonds; (iii) the Registration Statement and all exhibits thereto; (iv) the form of Indenture and the Supplemental Mortgage Indenture; and (v) such other documents and instruments as we have deemed necessary for the expression of the opinions contained herein. In making the foregoing examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies thereof and the authenticity of the originals of such latter documents. As to various questions of fact material to this opinion, where such facts have not been independently established, and as to the content and form of the Articles of Incorporation, the Bylaws, certain minutes, records, resolutions and other documents or writings of the Company, we have relied, to the extent we have deemed reasonably appropriate, upon representations or certificates of officers, directors and agents of the Company, upon documents, records and instruments furnished to us by the Company, without independent check or verification of their accuracy, and upon governmental officials. In rendering the opinions expressed below, we have assumed (i) that the Indenture and the Supplemental Mortgage Indenture will be executed in substantially the same form submitted to us, (ii) the due execution and delivery of the Indenture and the Supplemental Mortgage Indenture by the Trustee and the Mortgage Trustee, respectively, and (iii) that the Indenture and the Supplemental Mortgage Indenture, when executed and delivered, will constitute the legal, valid and binding obligation of the Trustee and the Mortgage Trustee, respectively. Based upon the foregoing, and having due regard for such legal considerations as we deem relevant, we are of the opinion that when (a) the Indenture and the Supplemental Mortgage Indenture have been duly executed by the parties thereto, and (b) the Notes and the Senior Note Mortgage Bonds have been duly executed and delivered by the Company, authenticated by the Trustee and the Mortgage Trustee, respectively, and issued in accordance with the terms of the Indenture and the Mortgage Indenture, respectively, the Notes and the Senior Note Mortgage Bonds will be valid and legally binding obligations of the Company, enforceable in accordance with their terms except as enforceability may be limited by (1) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting the rights of creditors generally, (2) provisions of applicable law pertaining to the voidability of preferential or fraudulent transfers and conveyances and (3) the fact that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. In rendering the opinions expressed herein, we express no opinion as to the enforceability of provisions of the Indenture, the Mortgage Indenture, the Notes and the Senior Note Mortgage Bonds to the Texas-New Mexico Power Company December 11, 1998 Page 3 extent that such provisions (i) state that the delay or omission of the Trustee or the Mortgage Trustee, as applicable, or of any holder of any Note or Senior Note Mortgage Bond, as applicable, in the exercise of any right or remedy accruing upon any Event of Default (as defined in the Indenture or the Mortgage Indenture, as applicable) will not impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein or (ii) state that the invalidity, illegality or unenforceability of any provision of the Indenture, the Mortgage Indenture, the Notes or the Senior Note Mortgage Bonds will not affect or impair the validity, legality or enforceability of the remaining provisions of the Indenture, the Mortgage Indenture, the Notes or the Senior Note Mortgage Bonds, as applicable, to the extent that the enforcement of the remaining provisions would frustrate the fundamental intent of the parties to such documents. In addition, certain other provisions of the Notes and the Senior Note Mortgage Bonds may be unenforceable in whole or in part under the laws (including judicial decisions) of the State of New York or the United States of America; provided, however, that the inclusion of any such provisions and any limitations imposed by such laws on the enforceability of the Notes and the Senior Note Mortgage Bonds will not affect the validity or enforceability as a whole of any of the Notes or the Senior Note Mortgage Bonds, as applicable, and will not prevent the holders thereof from the ultimate realization of the practical rights and benefits afforded by such documents, except for the economic consequences of any judicial, administrative or other procedural delay which may result from the application of any such law. The opinions expressed above are specifically limited to the laws of the State of New York, the laws of the State of Texas, and the federal laws of the United States of America. This opinion (i) is rendered solely for your benefit in connection with the issuance of the Notes and the Senior Note Mortgage Bonds, (ii) may not be used or relied upon by any other person and may not be disclosed, quoted, filed with a governmental agency or otherwise referred to without our prior written consent, (iii) is rendered as of the date hereof, and we undertake no, and hereby disclaim any kind of, obligation to advise you of any change or any new developments that might affect any matters or opinions set forth herein, and (iv) is limited to the matters stated herein and no opinions may be inferred or implied beyond the matters expressly stated herein. Texas-New Mexico Power Company December 11, 1998 Page 4 We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and the references to our firm under the caption "Legal Matters" in the Prospectus forming a part of such Registration Statement. Very truly yours, /s/ Haynes and Boone, LLP ------------------------- Haynes and Boone, LLP EX-12.(A) 6 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12(a) TEXAS-NEW MEXICO POWER COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - CONSOLIDATED (THOUSANDS OF DOLLARS)
12 MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------------------------------- SEPTEMBER 30, 1998 1997 1996 1995 1994 1993 ------------------ ---- ---- ---- ---- ---- EARNINGS AS DEFINED (1) Net Income $ 38,094 $ 43,918 $ 26,862 $ 41,809 $(16,634) $ 11,523 Income Taxes 19,085 21,805 9,611 22,189 (11,932) 4,916 Fixed Charges 54,268 57,057 69,513 74,115 75,412 68,109 -------- -------- -------- -------- -------- -------- Earnings as defined 111,268 122,780 105,986 138,113 46,846 84,548 -------- -------- -------- -------- -------- -------- FIXED CHARGES AS DEFINED (2) Interest 49,442 52,557 64,654 70,544 71,568 63,833 Amortization of debt discount, premium, & expense 4,504 4,355 4,709 3,416 3,680 4,108 Estimated portion of interest implicit in rentals (3) 143 145 150 155 164 168 -------- -------- -------- -------- -------- -------- Fixed charges as defined 54,089 57,057 69,513 74,115 75,412 68,109 -------- -------- -------- -------- -------- -------- RATIO OF EARNINGS TO FIXED CHARGES 2.06 2.15 1.52 1.86 * 1.24
* Earnings were insufficient to fund fixed charges by $28.6 million. (1) Earnings are defined as net income plus income taxes plus fixed charges. (2) Fixed charges consist of total interest; amortization of debt discount, premium, and expense; and the estimated portion of interest implicit in rentals. (3) This amount is estimated to be a reasonable approximation of the interest portion of rentals. EX-23.(B) 7 CONSENT OF RUBIN, KATZ, SALAZAR, ALLEY & ROUSE EXHIBIT 23(b) [RUBIN, KATZ, SALAZAR, ALLEY & ROUSE LETTERHEAD] October 19, 1998 VIA FACSIMILE (817) 348-2303 Texas New Mexico Power Company 4100 International Plaza P.O. Box 2943 Fort Worth, Texas 76113 RE: REGISTRATION OF UP TO $200,000,000 AGGREGATE PRINCIPAL AMOUNT OF SENIOR DEBT SECURITIES Dear Ladies and Gentlemen: We have acted as special counsel to Texas-New Mexico Power Company, a Texas Corporation (the "Company"), in connection with the preparation of the Company's Registration Statement on Form S-3 and the amendments thereto (as amended, the "Registration Statement") originally filed on September 24, 1998, with the Securities and Exchange Commission under the Securities Act of 1993, as amended. The Registration Statement relates to the registration of up to $200,000,000 of Senior Debt Securities to be offered on a continuous or delayed basis pursuant to the provisions of Rule 415 under the Securities Act of 1933, as amended. We hereby consent to the filing of this consent with the Securities and Exchange Commission as an exhibit to the Registration Statement and to the reference to this firm under "Validity of Securities" in the Prospectus forming a part of such Registration Statement. Sincerely, RUBIN, KATZ, SALAZAR, ALLEY & ROUSE A PROFESSIONAL CORPORATION BY /s/ Donald M. Salazar DONALD M. SALAZAR, ESQ. EX-23.(C) 8 CONSENT OF KPMG PEAT MARWICK, LLP [LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE] EXHIBIT 23(c) Independent Auditors' Consent ----------------------------- The Board of Directors Texas-New Mexico Power Company: We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. Our report refers to a change in the method of accounting for operating revenues in 1995. /s/ KPMG PEAT MARWICK LLP Fort Worth, Texas December 11, 1998 EX-23.(D) 9 CONSENT OF ARTHUR ANDERSEN LLP Exhibit 23(d) [LETTERHEAD OF ARTHUR ANDERSEN LLP APPEARS HERE] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports (and to all references to our firm) included in or made a part of this Amendment I to Registration Statement on Form S-3 File No. 333-64215. /s/ Arthur Andersen LLP Fort Worth, Texas, December 11, 1998 -----END PRIVACY-ENHANCED MESSAGE-----