1
                                                           AS FILED WITH THERegistration No. 333-
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                       SECURITIES AND EXCHANGE COMMISSION
                              ON AUGUST 28, 1996
                                                Registration No. 33-
                                                                    -----------

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.WASHINGTON, DC 20549



                                    FORM S-3


                             REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933



                      PUBLIC SERVICE COMPANY OF NEW MEXICO
             (Exact Name of Registrant as Specified in Its Charter)


            New Mexico                                         Alvarado Square                                     85-0019030
   (State or Other Jurisdiction                         Albuquerque, New Mexico 87158                           (I.R.S. Employer
 of Incorporation or Organization)                              (505) 241-2700                               Identification Number)
                                             (Address, Including Zip Code, and Telephone Number,
                                     Including Area Code, of Registrant's Principal Executive Offices)
M. H. Maerki Senior Vice President and Chief Financial Officer Public Service Company of New Mexico 85-0019030 Alvarado Square Albuquerque, New Mexico 87158 (505) 241-2700 MAX MAERKI Senior Vice President(Name, Address, Including Zip Code, and Chief Financial Officer PUBLIC SERVICE COMPANY OF NEW MEXICO Alvarado SquareTelephone Number, Including Area Code, of Agent for Service) Copies To: Charles L. Moore, Esq. Michael F. Cusick, Esq. Keleher & McLeod, P.A. Winthrop, Stimson, Putnam & Roberts 414 Silver Avenue, S.W., 12th Floor One Battery Park Plaza Albuquerque, New Mexico 8715887102 New York, New York 10004 (505) 241-2700346-4646 (212) 858-1000 Approximate date of commencement of proposed sale to the public: From time to time after the Registration Statementthis registration statement becomes effective. If the only securities being registered on this Formform are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]/ / If any of the securities being registered on this Formform 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]/X/ If this Formform 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, please 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.[ ] The commission is requested to mail signed copies of all orders, notices and communications to: C. L. MOORE KELEHER & McLEOD, P.A. 414 Silver Avenue, S. W. Albuquerque, New Mexico 87103 / / CALCULATION OF REGISTRATION FEE
Proposed Title of Proposed Maximum Securities Maximum Aggregate Amount of to be Amount Offering Price Offering Registration Registered to be Registered Per Share============================ ------------------------- -------------------------- ------------------------- ------------------------ TITLE OF CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE PER UNIT(2) PRICE (1) Price (1) Fee - --------------------------------------------------------------------------------(2) ============================ ========================= ========================== ========================= ======================== Common Stock $5.00 par value 2,000,000 Shares $ 19.625 $39,250,000 $13,534.48Senior Unsecured Notes $650,000,000 100% $650,000,000 $191,750 ============================ ========================= ========================== ========================= ========================
(1) Estimated pursuant to Rule 457Or the equivalent amount of any securities denominated in a foreign currency or composite currency. (2) Exclusive of accrued interest, if any, and estimated solely for the purpose of calculating the registration fee on the basis of the average high and low sale price of the Registrant's Common Stock on the New York Stock Exchange Composite Transaction Tape on August 23, 1996.fee. 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 WHICHTHAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 1================================================================================ 2 ---------------------------------- P R O S P E C T U S ----------------------------------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 MAY 21, 1998 PROSPECTUS $650,000,000 PUBLIC SERVICE COMPANY OF NEW MEXICO PNM DIRECT PLAN COMMON STOCK ($5 PAR VALUE) ------------- The Public Service Company of New Mexico PNM Direct Plan (the "Plan"), to be effective as of September __, 1996, is designed to provide investors with a convenient way to purchase shares of common stock, $5 par value ("Common Stock") ofSENIOR UNSECURED NOTES -------------- Public Service Company of New Mexico (the "Company") intends to issue from time to time up to $650,000,000 (or the equivalent in foreign currency or composite currency) aggregate principal amount of its senior unsecured notes (the "SUNs"), or if any SUNs are issued at an original issue discount, such greater amount as shall result in net proceeds to the Company of $650,000,000, which will be offered to the public on terms determined by market conditions at the time of sale. The SUNs may be issued in one or more series with the same or various maturities at par, at a premium or with an original issue discount. When particular SUNs are offered, a prospectus supplement (a "Prospectus Supplement"), together with this Prospectus, will be delivered setting forth the terms of such SUNs, including, where applicable, the specific designation, aggregate principal amount, denominations, maturity, rate of interest (or manner of calculation thereof) and to reinvest all or a portiontime of payment thereof, any redemption provisions, the cash dividends paid oninitial public offering price and any other specific terms in connection with the Common Stockoffering and sale of such SUNs. The SUNs will be unsecured and unsubordinated obligations of the Company ranking equally with all existing and future unsecured and unsubordinated obligations of the Company. Unless otherwise specified in shares of Common Stock. PARTICIPANTS IN THE PLAN MAY: # Reinvest all orthe applicable Prospectus Supplement, the SUNs will be represented by global certificates (each, a portion of cash dividends paid on Common Stock"Registered Global SUN") registered in their names or on Common Stock credited to their Plan accountsthe name of a nominee of The Depository Trust Company, New York, New York (the "Depositary"). Beneficial interests in shares of Common Stock. # Make an initial investment in Common Stock with a cash payment of at least $50, and additional optional investments thereafter of at least $50, up to a maximum of $60,000 per calendar year, including the initial investment. # Receive, upon written request, certificates for whole shares of Common Stock credited to their Plan accounts. # Deposit certificates representing Common Stock into the Plan for safekeeping. # Sell shares of Common Stock credited to their Plan accounts through the Plan. Shares of Common StockSUNs will be purchased under the Plan, at the option of the Company, from newly issued shares, or shares purchasedshown on, the open market. Purchasesand transfers thereof will be effected only through, an independent agent appointedrecords maintained by the Company. The Common Stock is listed on the New York Stock Exchange. The closing price of the Common Stock on September __, 1996 on the New York Stock Exchange was $_____. The purchase price of newly issued Common Stock purchased under the Plan for an Investment Date (as definedDepositary (with respect to participants' interests) and its participants. Except as described in the Plan) will be the average of the high and low sales prices of the Common Stock reported on the New York Stock Exchange Composite Tape as published in The Wall Street Journal or, for any day on which there is no such publication, in another generally accepted publication for the first business day of the relevant Investment Period (as defined in the Plan), provided that the New York Stock Exchange is open on such day. The price of shares of Common Stock purchased or sold on the open market will be the weighted average price per share (adjusted for brokerage commissions, any related service charges, and applicable taxes) of the aggregate number of shares purchased or sold, respectively, on the open market during the relevant Investment Period. The Company will pay the costs of administration of the Plan, except that Plan Participants will bear the cost of brokerage commissions, any related service charges, and applicable taxes relating to shares of Common Stock purchased or sold on the open market. 2 3 To the extent required by applicable law in certain jurisdictions, shares of Common Stock offered under the Plan to persons not presently record holders of Common Stock are offered only through a registered broker/dealer in such jurisdictions. This Prospectus contains a summary of the material provisions of the Plan and, therefore, this Prospectus, shouldSUNs in certificated form will not be retained by Participantsissued in the Plan ("Participants")exchange for future reference. -------------------------Registered Global SUNs. ------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------------------- This Prospectus may not be used to consummate sales of SUNs unless accompanied by a Prospectus Supplement. The Company may sell SUNs through underwriters, dealers or agents, or directly to one or more purchasers. The applicable Prospectus Supplement will set forth the names of the underwriters, dealers or agents, if any, the net proceeds to the Company from any such sale, and any applicable commissions or discounts. See "Plan of Distribution" for possible indemnification arrangements for underwriters, dealers, and agents. -------------- The date of this Prospectus is September __, 1996., 1998. 3 4 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information can be obtained at prescribed rates from the Public Reference Section of the Commission or may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at certain of its regional offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York 10048. The Common Stock is listed on the New York Stock Exchange. Reports, proxy material, and other information concerning the Company can be inspected at the office of this Exchange at Room 401, 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents previously filed with the Commission by the Company (File No. 1-6986) are hereby incorporated by reference in this Prospectus: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K"). 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, and June 30, 1996 (the June 10-Q). 3. The Company's Current Report on Form 8-K dated March 13, 1996. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of the June 10-Q and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold will be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein will 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 is also incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded will not be deemed, except as 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 a copy of this Prospectus has been delivered, on the oral or written request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents. Requests for such copies should be directed to Public Service Company of New Mexico, Alvarado Square, Albuquerque, New Mexico 87158, or by calling (505) 241-2650 or (800-545-4425) toll-free nationwide. THE COMPANY The Company was incorporated in 1917 under the laws of the State of New Mexico and is a public utility primarily engaged in the generation, transmission, distribution and sale of electricity and in the transmission, distribution and sale of natural gas within the State of New Mexico. The Company is also engaged in the operation and management of the City of Santa Fe's water system and in the development of new business activities in the energy and utility related services area. The principal executive offices of the Company are at Alvarado Square, Albuquerque, New Mexico 87158, and its telephone number is (505) 241-2700. 4 5 The following questions and answers describe the provisions of the Public Service Company of New Mexico PNM Direct Plan (the "Plan"). For convenience of reference, the definitions of certain key terms are included below: DESCRIPTION OF THE PLAN DEFINITIONS Administrator -- Public Service Company of New Mexico (the "Company" or "PNM"). See also "Plan Administrator". Cash Investment -- A payment made subsequent to enrollment in the Plan. The maximum aggregate Cash Investment (including the Initial Cash Investment) is $60,000 per account per calendar year. Company -- Public Service Company of New Mexico. Dividend Payment Date -- The date determined by the Company's Board of Directors on which Common Stock dividends are payable. Dividend Record Date -- The date determined by the Company's Board of Directors for establishing shareholders who are entitled to a dividend which has been declared. Eligible Investor -- An investor who makes an Initial Cash Investment of at least $50 or a Shareholder of Record. Enrollment Forms -- Forms available through the Company that the investor must complete to be able to participate in the Plan. Ex-Dividend Date -- A date prior to the Dividend Record Date, based on industry regulations, necessary to allow for the settlement of traded securities by the Dividend Record Date. Common Stock purchased between the Ex-Dividend Date and the Dividend Record Date is not entitled to the succeeding dividend. Initial Cash Investment -- A payment made to the Company to purchase shares of Common Stock to open a Plan account. The minimum initial Cash Investment is $50. Investment Date -- The date on which the purchase price for all shares of Common Stock to be purchased has been determined. The purchased shares are credited to a Participant's account on the Investment Date. Investment Period -- The period during which Common Stock is purchased. The Investment Period begins on the first business day of each month. Investment Statement -- A statement sent to a Participant after an Investment Period in which the Participant's account had investment activity. The Investment Statement includes the purchase price and number of shares of Common Stock purchased. Plan -- Public Service Company of New Mexico PNM Direct Plan. Plan Administrator -- Public Service Company of New Mexico. 5 6 Plan History Statement -- A statement sent to a Participant upon withdrawal (including by way of the sale of shares or the issuance of a certificate for shares) of all or a portion of shares from the Participant's account. Shareholder of Record -- An investor whose shares are registered on the books of the Company. PURPOSE OF THE PLAN 1. WHATNO PERSON IS THE PURPOSE OF THE PLAN? The purpose of the Plan is to provide shareholders and interested investors with a convenient and economical way to purchase shares of Common Stock with Cash Investments (including an Initial Cash Investment) or reinvested dividends. ADVANTAGES AND DISADVANTAGES OF THE PLAN 2. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF THE PLAN? THE PLAN OFFERS INVESTORS THE FOLLOWING ADVANTAGES: A. DIRECT PURCHASE OF STOCK -- Persons not presently owning shares of Common Stock may become shareholders by making an Initial Cash Investment of at least $50 (but not more than $60,000 per account per calendar year). See Question 5. Participants may invest additional funds at any time to purchase shares of Common Stock. The maximum annual Cash Investment (including the Initial Cash Investment) is $60,000 per account. B. SELL STOCK -- Participants may sell shares held in their Plan account through the Plan. See Questions 32 and 33. C. CERTIFICATE SAFEKEEPING -- Participants may deposit their Common Stock certificates with the Company, whether or not the Common Stock represented by such certificates was purchased through the Plan, and have their ownership maintained on the Company's records in their Plan account. This convenience is provided at no cost to the Participant and eliminates the possibility of loss, inadvertent destruction, or theft of certificates. Also, because shares deposited for safekeeping are treated in the same manner as shares purchased through the Plan, they may be transferred or sold through the Plan. See Question 31. D. REINVESTMENT OF DIVIDENDS -- All or a portion of Common Stock dividends may be reinvested to purchase additional shares of Common Stock. See Questions 7 through 9. E. SIMPLIFIED RECORDKEEPING -- An Investment Statement will be mailed to a Participant after an Investment Period in which the Participant's account had investment activity. The statement is cumulative, providing year-to-date Plan account activity. A Plan History Statement will be sent when shares are sold, transferred or otherwise withdrawn from the Plan. See Questions 34 and 37. F. REDUCED BROKER COMMISSIONS -- The broker commissions negotiated by the Company for buying or selling shares are typically substantially less than those paid by individual investors for this service. No commissions are paid for newly issued shares. See Questions 27 and 33. 6 7 G. TRANSFER OF SHARES -- Participants may transfer shares held in their Plan account to another individual's account at no cost. The normal transfer requirements will apply. See Questions 30 and 43. H. FULL INVESTMENT OF FUNDS -- The full amount of reinvested dividends and Cash Investments can be invested because the Plan permits fractional shares to be credited to Plan accounts. Dividends are paid on fractional shares as well as on whole shares. See Question 28. PLAN PARTICIPATION PRESENTS INVESTORSAUTHORIZED IN CONNECTION WITH THE FOLLOWING DISADVANTAGES: A. NO INTEREST ON FUNDS PENDING INVESTMENT -- No interest is paid on dividends or Cash Investments held pending investment or reinvestment. See Question 17. B. DELAY IN DETERMINING PURCHASE PRICE -- The number of shares purchased for an investor's Plan account will not be determined until all shares for the relevant Investment Period have been purchased. Therefore, investors will not know the number of shares purchased or the purchase price until the Investment Date. See Questions 25 through 29. C. RETURN OF CASH INVESTMENTS ON REQUEST -- Cash Investments (including Initial Cash Investments) sent to the Plan Administrator will not be returned to the investor unless a written request is received by the Plan Administrator by the last Company business day of the month prior to the relevant Investment Period. See Question 19. D. PERIODIC DELAYS FOR ISSUING CERTIFICATES OR SELLING SHARES -- Requests for issuance of certificates or the sale of shares from a Plan account will be delayed during the dividend processing period. This is a 13-15 business day period which begins on the Ex-Dividend Date. See Questions 30, 33, and 34. E. BROKER COMMISSIONS -- While the broker commissions negotiated by the Plan Administrator for buying or selling stock are typically less than those paid by individual investors for this service, certain investors may be able to negotiate lower commissions on an individual basis. Also, the commissions negotiated by the Plan Administrator may change from time to time. See Questions 27 and 33. F. PRICE OF SHARES -- Plan Participants cannot designate a specific price at which to sell or purchase Common Stock. Requests for the sale of Plan shares are accumulated and the Plan Administrator places a market order with the appointed agent. Similarly, a market order is placed with the independent agent to purchase stock with all funds available for investment. See Questions 24, 27, and 32. PLAN ADMINISTRATION 3. WHO ADMINISTERS THE PLAN? The Company administers the Plan. Administration duties include recordkeeping, sending periodic statements of account, and holding shares purchased through the Plan or otherwise deposited for safekeeping. See Question 32. Such shares will be registered in the name of a nominee on behalf of Plan Participants. Communications about the Plan should be directed to: Public Service Company of New Mexico Shareholder Records Department Alvarado Square, MS 0802 Albuquerque, NM 87158-0802 When writing, please include a day-time telephone number to expedite our reply. 7 8 The nationwide toll-free Shareholder Records Department telephone number is 800-545-4425. In the Albuquerque area, call 241-2650. PARTICIPATION IN THE PLAN 4. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN? Any interested investors making an Initial Cash Investment of at least $50 and all Common Stock Shareholders of Record are eligible to participate. Citizens or residents of a country other than the United States or its territories and possessions should determine whether they are subject to any governmental regulations prohibiting or restricting participation in the Plan, and must provide evidence satisfactory to the Administrator that their participation will not violate any such regulations, before enrolling in the Plan. Beneficial owners of Common Stock whose shares are held in a name other than their own (for example, a bank, broker, or trustee) may participate in the Plan with respect to such shares by transferring those shares into their own name. 5. HOW DOES AN ELIGIBLE INVESTOR ENROLL IN THE PLAN? After being furnished with a Plan Prospectus, Eligible Investors may join the Plan by completing and signing an Enrollment Form and returning it to the Company. Non-shareholder investors must also submit an Initial Cash Investment of at least $50 (but not more than $60,000). Once enrolled in the Plan, Eligible Investors will remain enrolled until they discontinue their participation or the Plan is terminated. See Questions 34, 35 and 41. 6. WHEN MAY AN ELIGIBLE INVESTOR JOIN THE PLAN? An Eligible Investor may join the Plan at any time by completing and returning an Enrollment Form. PARTICIPATION OPTIONS 7. WHAT PARTICIPATION OPTIONS ARE AVAILABLE IN THE PLAN? On the Enrollment Form, the investor is offered the following participation options: -- Full Dividend Reinvestment -- Partial Dividend Reinvestment or -- Cash Investment Only 8. HOW DOES THE "FULL DIVIDEND REINVESTMENT" OPTION OF THE PLAN WORK? Participants enrolling in the Full Dividend Reinvestment option will have dividends earned on all Common Stock, both in their Plan account and of record, reinvested to purchase additional shares of Common Stock. The reinvestment of dividends will commence with the first dividend to which the Participant is entitled payable after the next Dividend Record Date following enrollment. A Participant may also make Cash Investments of up to $60,000 per account annually to purchase Common Stock. 9. HOW DOES THE "PARTIAL DIVIDEND REINVESTMENT" OPTION OF THE PLAN WORK? Participants enrolling in the Partial Dividend Reinvestment option can designate a specific number of shares on which they wish to receive cash dividends, with dividends on the balance of shares being reinvested to purchase Common Stock. Participants may also elect to receive cash dividends on shares they hold in certificate form, with dividends on shares held in their Plan account being reinvested. The reinvestment of dividends will commence with the first dividend to which the Participant is entitled payable after the next 8 9 Dividend Record Date following enrollment. In addition, a Participant may make Cash Investments of up to $60,000 per account annually to purchase Common Stock. If a Participant has elected this option and subsequently directs that a portion of his or her shares are to be sold, transferred, or withdrawn, unless the Participant otherwise directs, all shares on which a Participant receives reinvested dividends will be sold, transferred, or withdrawn prior to the sale, transfer, or withdrawal of any shares on which a Participant receives cash dividends. 10. HOW DOES THE "CASH INVESTMENT ONLY" OPTION OF THE PLAN WORK? Participants enrolling in the Cash Investment Only option may make Cash Investments of at least $50, but not more than $60,000 per account annually. Dividends earned on all Common Stock, both in the Plan account and of record, will be paid directly to the investor in the manner in which dividends are normally paid. The Cash Investment will purchase additional shares of Common Stock. NOTE: IF PARTICIPANTS DO NOT INDICATE A PARTICIPATION OPTION ON THE ENROLLMENT FORM, THEIR ACCOUNT WILL AUTOMATICALLY BE ENROLLED INTO THE "FULL DIVIDEND REINVESTMENT" OPTION. 11. MAY PARTICIPANTS CHANGE THEIR PARTICIPATION OPTION? Yes. The participation option may be changed by completing and signing a new Enrollment Form and returning it to the Company. The change will be effective as of the next Dividend Record Date following receipt of the new Enrollment Form. 12. MAY THE COMPANY RESTRICT PARTICIPATION IN THE PLAN? Yes. The Company reserves the right to restrict participation in the Plan if it believes that such participation may be contrary to the general intent of the Plan or in violation of applicable law. INITIAL CASH INVESTMENTS AND CASH INVESTMENTS 13. WHO IS ELIGIBLE TO MAKE CASH INVESTMENTS? Any Shareholder of Record who has submitted a signed Enrollment Form is eligible to make Cash Investments regardless of the participation option chosen, subject to the maximum contribution. See Question 16. 14. WHO IS ELIGIBLE TO MAKE AN INITIAL CASH INVESTMENT? Any interested investor may submit a signed Enrollment Form and make an Initial Cash Investment, subject to the minimum and maximum contributions. See Question 16. 15. HOW ARE INITIAL CASH INVESTMENTS AND CASH INVESTMENTS MADE? Initial Cash Investments and Cash Investments must be made by check, money order, or wire transfer payable through a U.S. bank or other financial institution, in U.S. dollars, to PNM Direct Plan. Do not send cash. Initial Cash Investments must be accompanied by a completed Enrollment Form; an Enrollment Form or a Cash Investment form should accompany Cash Investments to ensure credit to the proper account. An employee of the Company may elect to make an Initial Cash Investment or Cash Investments through payroll deductions by completing and returning a Payroll Deduction Authorization Form. The Company also allows for Cash Investments to be made by electronic debit from a specified account by completing and returning an Electronic Debit Authorization Form. 9 10 16. IS THERE A MINIMUM AND MAXIMUM CASH INVESTMENT? Yes. The minimum Initial Cash Investment is $50. The minimum for subsequent Cash Investments is $50. The maximum aggregate Cash Investment (including the Initial Cash Investment) is $60,000 per account per calendar year. 17. WHEN WILL A PARTICIPANT'S INITIAL CASH INVESTMENT OR CASH INVESTMENT BE INVESTED? Initial Cash Investments and Cash Investments will be invested during the Investment Period of the calendar month immediately following the calendar month in which the funds are received. Because interest is not paid on funds pending investment, it is to your benefit to mail your Cash Investments so they are received shortly before the end of the calendar month. Funds are considered to be received when delivered, either by postal service or in person, during Company business hours to the Company's corporate headquarters (see "Shareholder Information" below for address). In the event that a check submitted for investment is returned unpaid for any reason, the Plan Administrator will consider the request for investment of such funds null and void. Any shares purchased upon the prior credit of such funds will be immediately removed from the Participant's account. The Plan Administrator will be entitled to sell those shares to satisfy any uncollected amounts. If the net proceeds of the sale of such shares are insufficient to satisfy the balance of such uncollected amounts, the Plan Administrator will be entitled to sell additional shares from the Participant's account to satisfy the uncollected balance. 18. WHEN WILL SHARES PURCHASED WITH INITIAL CASH INVESTMENTS OR CASH INVESTMENTS BE ENTITLED TO RECEIVE DIVIDENDS? Shares purchased with an Initial Cash Investment or Cash Investment will be entitled to dividends if the shares were credited to the Participant's account as of a date preceding the Dividend Record Date for payment of a dividend. 19. MAY A PARTICIPANT REQUEST THAT AN INITIAL CASH INVESTMENT OR CASH INVESTMENT BE RETURNED? Yes. A Participant may request, in writing, the return of an Initial Cash Investment or Cash Investment. The funds will be returned if the request is received by the last Company business day of the month prior to the relevant Investment Period. NOTE: INTEREST IS NOT PAID ON FUNDS HELD PENDING INVESTMENT. REINVESTMENT OF DIVIDENDS 20. IS THERE A MINIMUM OR MAXIMUM AMOUNT FOR REINVESTED DIVIDENDS? No. Dividends designated for reinvestment through the Plan are not subject to a minimum or maximum. 21. WHEN WILL A PARTICIPANT'S DIVIDENDS BE REINVESTED? A Participant's dividends will be reinvested during the Investment Period of the month following the month in which the dividend is payable. For example, November dividends will be reinvested in December. 22. WHEN WILL SHARES PURCHASED WITH REINVESTED DIVIDENDS BE ENTITLED TO RECEIVE DIVIDENDS? Shares purchased with reinvested dividends will be entitled to dividends on the Dividend Payment Date following the purchase of such shares. 10 11 PURCHASES 23. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED THROUGH THE PLAN? Common Stock purchased through the Plan will be purchased, at the discretion of the Company and in accordance with applicable law, either on the open market or directly from the Company or through a combination of the foregoing. Shares purchased from the Company will be authorized but unissued shares of the Company. The Company currently anticipates that shares will initially be purchased on the open market and not issued by the Company. Issuance of Common Stock by the Company requires approval by the New Mexico Public Utility Commission. 24. HOW IS COMMON STOCK PURCHASED ON THE OPEN MARKET? Common Stock will be purchased through an independent agent appointed by the Company. The independent agent will have full discretion in all matters related to such purchases, including the day and time of purchase, price paid, number of shares purchased, and the markets or persons through whom the purchases are made. 25. WHEN ARE SHARES PURCHASED FOR THE PLAN? Purchases of shares on the open market may begin on the first day of the relevant Investment Period and will be completed no later than 30 days thereafter. Dividends not invested in Common Stock within 30 days of the Dividend Payment Date therefor and Cash Investments not invested in Common Stock within 35 days of receipt will be promptly returned to Participants. Shares purchased by the Plan from the Company (newly issued Common Stock) will be acquired as of the first day of the relevant Investment Period, provided that the New York Stock Exchange is open on such day. See Question 26. 26. WHEN WILL SHARES BE CREDITED TO A PARTICIPANT'S ACCOUNT? Participants' shares will be credited to their Plan accounts on the Investment Date and are considered to be owned by the Participant on that day. If the Investment Date falls on a date when the New York Stock Exchange is closed, the first day immediately succeeding such day on which the New York Stock Exchange is open will be the Investment Date. 27. HOW IS THE PURCHASE PRICE OF THE COMMON STOCK DETERMINED? The purchase price of Common Stock purchased on the open market will be the weighted average price, including broker commissions, related service charges, and applicable taxes, of all shares purchased during the Investment Period. The purchase price of Common Stock purchased from the Company (newly issued Common Stock) will be the average of the high and low prices of the Common Stock reported on the New York Stock Exchange Composite Tape as published in The Wall Street Journal or, for any day on which there is no such publication, in another generally accepted publication for the first business day of the relevant Investment Period, provided that the New York Stock Exchange is open on such day. If the stock is purchased both on the open market and through the Company, the purchase price will be the weighted average price of such shares in accordance with the foregoing two paragraphs. 11 12 28. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED FOR A PARTICIPANT? The number of shares purchased for a Participant will be equal to the Participant's Cash Investments for the month plus dividends available for reinvestment (see Question 21) divided by the purchase price of the shares. The Participant's account will be credited with the whole and fractional shares on the Investment Date. 29. CAN A PARTICIPANT REQUEST THE PURCHASE OF A SPECIFIC NUMBER OF SHARES? No. Since the purchase price of the Common Stock cannot be calculated until the Common Stock is purchased, a Participant may not purchase a specific number of shares. CERTIFICATES 30. WILL CERTIFICATES BE ISSUED FOR SHARES PURCHASED THROUGH THE PLAN? No. The certificates for shares purchased through the Plan are registered in the name of a nominee on behalf of Plan Participants. A certificate will be issued to Participants only upon request. Participants requesting the issuance of a certificate for their Plan shares should submit the request in writing to the Plan Administrator, specifying the number of shares to be issued. Certificates will generally be issued within five days following the receipt of the request. However, requests received during the dividend processing period will be delayed. See "Disadvantages of the Plan -- D." Certificates cannot be issued for fractional shares. The certificate will be issued in the name(s) of the Participant(s). Requests to issue a certificate into another registration must meet the requirements for transfer of stock. See Question 43. See Question 9 for information relating to the certification of only a portion of a Participant's Plan shares when the Participant has elected the Partial Dividend Reinvestment option for his or her shares. SAFEKEEPING OF CERTIFICATES 31. CAN CERTIFICATES BE RETURNED TO THE COMPANY TO BE HELD IN THE PARTICIPANT'S PLAN ACCOUNT? Yes. Certificates for Common Stock may be returned to the Plan Administrator to take advantage of the safekeeping feature of the Plan. THE CERTIFICATES SHOULD NOT BE ENDORSED AND REGISTERED MAIL IS RECOMMENDED. The certificates should be submitted with a letter to the Plan Administrator directing the Plan Administrator to deposit the shares represented by such certificates into the Plan account of the Participant. Alternatively, the certificates can be submitted with a safekeeping authorization form. Investors may submit certificates for safekeeping at any time while participating in the Plan. COMMON STOCK SURRENDERED FOR SAFEKEEPING WILL BE TREATED AS SHARES PURCHASED THROUGH THE PLAN. SALE OF SHARES 32. HOW MAY PARTICIPANTS SELL THEIR PLAN SHARES OR TRANSFER SHARES? Participants may sell their Plan shares by submitting a written request to the Company. The request should indicate the number of shares to be sold and must be signed by ALL account owners. Shares acquired through and held in the Plan, as well as shares surrendered for safekeeping, may be sold in this manner. A request to sell shares is irrevocable after it is received by the Company. The Company's appointed agent will have full 12 13 discretion in all matters related to the sale, including the time of sale, sale price, and the markets or persons through whom the shares are sold. Participants cannot specify a price at which to sell their stock. Participants may also elect to transfer (whether by gift, private sale, or otherwise) ownership of all or a portion of their Account Shares to the Account of another Participant or establish an Account for a Person not already a Participant by delivering to the Administrator a completed account action request form to that effect and a stock assignment (stock power) acceptable to the Administrator along with such other documentation as may be required by the Administrator. No fraction of a share of Common Stock credited to the transferor's Account shall be transferred unless the Transferor's entire Account is transferred. For Participants' convenience a gift certificate is available to represent a transfer by gift. Shares held outside the Plan may not be sold through the Plan. See Question 9 for information relating to the sale of only a portion of a Participant's Plan shares when the Participant has elected the Partial Dividend Reinvestment option for his or her shares. 33. WHEN WILL PLAN SHARES BE SOLD? Plan shares will generally be sold within five business days following receipt of the sale request. However, sale requests received during the dividend processing period will be delayed until the dividend processing period is completed. See "Disadvantages of the Plan -- D." A check will be issued for the proceeds of the sale minus the broker commissions, any related service charges, and applicable taxes, and will be made payable to the registered account owners only. TERMINATION OF PLAN PARTICIPATION 34. HOW MAY A PARTICIPANT TERMINATE PARTICIPATION IN THE PLAN? Participants may terminate participation in the Plan either by selling all the shares in their Plan account or by having a certificate issued for a specific number of whole shares in their Plan account and selling the balance of shares. See Questions 30, 32, and 33. Certificates cannot be issued for fractional shares; fractional shares must be sold when terminating participation. Plan Participants must notify the Company in writing of their intention to terminate participation in the Plan, have all account owners sign the request, and indicate whether they wish to receive a stock certificate or sell their shares. Participants terminating their Plan participation will receive a Plan History Statement detailing the account history. THIS STATEMENT SHOULD BE RETAINED FOR TAX PURPOSES. Cash Investments received prior to the request to terminate Plan participation will be invested during the next Investment Period unless the Participant timely requests the return of that Cash Investment. See Question 19. The termination of Plan participation will be delayed if the request is received during the dividend processing period. See "Disadvantages of the Plan -- D." 35. MAY THE COMPANY TERMINATE A PARTICIPANT'S PLAN PARTICIPATION? Yes. If a Participant does not maintain at least one whole share of Common Stock in the Plan account or does not own any Common Stock of record for which cash dividends are designated for reinvestment pursuant to the Plan, the Participant's participation may be terminated by the Company upon written notice to the 13 14 Participant. A Participant whose participation has been terminated will receive a check for the cash value of any fractional share in the Plan account. In addition, the Company may terminate a Participant's participation in the Plan if it believes that such participation may be contrary to the general intent of the Plan or in violation of applicable law. The Participant will receive a certificate for whole shares and a check for the cash value of the fractional share in the Plan account. COSTS 36. WHAT COSTS ARE ASSOCIATED WITH PARTICIPATION IN THE PLAN? The only costs associated with Plan participation are the broker commissions, related service charges, and applicable taxes for the sale or purchase of shares for a Participant's account. All other administrative costs are borne by the Company. REPORTS TO PARTICIPANTS 37. WHAT REPORTS ARE SENT TO PARTICIPANTS? Plan Participants will receive an Investment Statement as soon as possible after each month in which an investment occurs in their Plan account, which will provide detailed account information for the current calendar year. THIS STATEMENT SHOULD BE RETAINED FOR TAX PURPOSES. Participants who have sold, transferred, or withdrawn shares from their Plan accounts will receive a Plan History Statement detailing the account history. THIS STATEMENT SHOULD BE RETAINED FOR TAX PURPOSES. Plan Participants will also receive copies of all shareholder communications such as annual reports, and notices of shareholder meetings and proxy materials. Plan Participants will receive an IRS Form 1099-DIV showing total dividends reported to the Internal Revenue Service which were paid to the Participant both on shares of record and Plan account shares. An IRS Form 1099-B will be provided for reporting the proceeds from the sale of shares through the Plan. See Question 45 for further information regarding tax reporting. OTHER INFORMATION 38. WHAT HAPPENS IF THE COMPANY DECLARES A DIVIDEND PAYABLE IN COMMON STOCK OR A STOCK SPLIT? Any dividends in the form of shares of Common Stock and any shares resulting from a Common Stock split on shares held in a Participant's Plan account will be credited to the Participant's Plan account. 39. HOW WILL A PARTICIPANT'S SHARES BE VOTED AT MEETINGS OF SHAREHOLDERS? Participants in the Plan will receive a proxy statement and a proxy card representing Plan account shares as well as any other Common Stock held of record. The Participant's shares will be voted in accordance with the instructions indicated on the proxy card. Shares for which a proxy is not received will not be voted. 40. WHAT IS THE RESPONSIBILITY OF THE COMPANY AND ITS AGENTS UNDER THE PLAN? Neither the Company, in its individual capacity or as Administrator, nor any independent agent appointed by the Company pursuant to the Plan will be liable for any act done in good faith or for any good faith omission to act with respect to the Plan, including, without limitation, any claim of liability arising out of failure to 14 15 terminate a Participant's account upon such Participant's death prior to receipt of notice in writing of such death or with respect to the prices or times at which, or sources from which, shares are purchased or sold for Participants, or with respect to any fluctuation in market value before or after any purchase or sale of shares. PARTICIPANTS MUST RECOGNIZE THAT THE COMPANY CANNOT ASSURE THEM A PROFIT, OR PROTECT THEM AGAINST LOSSES, ON SHARES PURCHASED PURSUANT TO THE PLAN. THE MARKET PRICE OF COMMON STOCK CAN FLUCTUATE SUBSTANTIALLY. PARTICIPANTS ACCEPT THE RISKS AS WELL AS THE BENEFITS OF THE PLAN. 41. MAY THE PLAN BE CHANGED OR DISCONTINUED? Yes. The Company reserves the right to suspend, modify, or terminate the Plan at any time. The Company may register additional shares from time to time. Any suspension, modification, or termination of the Plan will be communicated by the Company to all Plan Participants. 42. MAY COMMON STOCK HELD IN A PLAN ACCOUNT BE PLEDGED AS COLLATERAL? No. Common Stock held in a Plan account may not be pledged as collateral. Participants wishing to use their Common Stock as collateral must have certificates issued for the shares. The certificates can then be delivered for collateral. 43. MAY COMMON STOCK HELD IN A PLAN ACCOUNT BE TRANSFERRED OR ASSIGNED TO ANOTHER PERSON? Yes. A Participant may transfer or assign Plan shares to another person or entity by meeting the requirements for transfer of stock. Requests for stock transfer requirements should be sent to: Public Service Company of New Mexico Shareholder Records Department Alvarado Square, MS 0802 Albuquerque, NM 85158-0802 or by calling the Company at 800-545-4425 or, in Albuquerque, at 241-2650. See Question 9 for information relating to the transfer of only a portion of a Participant's Plan shares when the Participant has elected the Partial Dividend Reinvestment option for his or her shares. 44. HOW MAY INSTRUCTIONS BE GIVEN TO THE ADMINISTRATOR? Although currently all instructions from a Participant to the Administrator are required to be in writing, the Administrator may in the future allow certain instructions to be given by telephone or in any other manner as agreed to by the Administrator and the Participant. FEDERAL INCOME TAX INFORMATION 45. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PLAN PARTICIPATION? The Company believes the following is an accurate summary of the federal tax consequences of participation in the Plan. YOU ARE ADVISED TO CONSULT YOUR TAX OR FINANCIAL ADVISOR WITH RESPECT TO FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS WHICH APPLY TO YOUR SPECIFIC SITUATION. In general, the dividends paid on Common Stock, whether the shares are held in certificate form by the shareholder or held through the Plan, are considered taxable income, whether received in cash or reinvested through the Plan. The information return sent to you and the IRS at year-end will provide the information required to complete your income tax returns. 15 16 The tax basis of shares acquired through the reinvestment of dividends will be equal to the value of dividends reinvested. The tax basis of shares purchased with Cash Investments will be equal to the amount of such investments. Upon the sale of all or a portion of the shares from the Plan, a Participant may recognize a capital gain or loss based on the difference between the sales proceeds and the tax basis in the shares sold, including any fractional shares. The capital gain or loss will be long-term if the shares were held for more than one year. For Participants who are subject to U.S. withholding tax, backup withholding, or foreign taxes, the Company will withhold the required taxes from the gross dividends or proceeds from the sale of shares. The dividends or proceeds received by the Participant, or dividends reinvested on behalf of the Participant, will be net of the required taxes. USE OF PROCEEDS Since purchases of Common Stock under the Plan may be satisfied by (i) the purchase of new shares of Common Stock issued by the Company, or (ii) the purchase of shares of Common Stock in the open market, the number of shares of Common Stock, if any, that the Company ultimately will sell under the Plan is not known. If newly issued shares of Common Stock are purchased under the Plan, the proceeds from such sales will be used for general corporate purposes, including, without limitation, the redemption, repayment or retirement of outstanding indebtedness of the Company. The Company will not receive any proceeds when shares of Common Stock are purchased under the Plan in the open market. DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 10,000,000 shares of Cumulative Preferred Stock without par value, issuable in series from time to time, and 80,000,000 shares of Common Stock, par value $5 per share. The Board of Directors of the Company is authorized by the Company's Restated Articles of Incorporation to fix the designation and number of shares of each series of Cumulative Preferred Stock, the dividend rate, the redemption price, the voluntary and involuntary liquidation price, sinking fund provisions, if any, and the conversion provisions, if any. No amendment to the Restated Articles of Incorporation which would change the rights of any class of the capital stock of the Company may be made unless authorized by the holders of two-thirds of the shares of the particular class affected by the amendment. As of September __, 1996, there were outstanding: (i) 41,774,083 shares of Common Stock, and (ii) 128,000 shares of the 1965 Series, 4.58% Cumulative Preferred Stock of the Company, having a stated value (equal to the involuntary liquidation price) of $100 per share. The Common Stock is listed on the New York Stock Exchange. DIVIDEND RESTRICTIONS Dividends are payable on the Common Stock as declared by the Board of Directors from funds legally available therefor, but only after payment of all accumulated dividends for all past and current dividend periods on the shares of any series of Preferred Stock outstanding. The Company's Restated Articles of Incorporation restrict the amount of dividends payable on the Common Stock (other than dividends payable in Common Stock) so long as any shares of Preferred Stock are outstanding to (i) not more than 50% of the net income available for dividends on the Common Stock when the ratio of Common Stock equity to total capitalization (including outstanding indebtedness of a maturity of one year or more and earned surplus) is less than 20%, and (ii) not more than 75% of such income when such ratio is 20% or more but less than 25%. When the ratio is 25% or more there is no such restriction on the payment of dividends on Common Stock, except that such a payment shall not itself reduce the ratio below 25%. 16 17 The Indenture of Mortgage and Deed of Trust, under which the Company's first mortgage bonds are outstanding, and the supplemental indentures thereto contain provisions which restrict the aggregate amount of dividends payable on the Common Stock so long as certain presently outstanding bonds remain outstanding. The Company's existing secured revolving credit facility and the reimbursement agreement associated with a letter of credit supporting a series of pollution control revenue bonds also contain certain restrictions relating to the payment of dividends. The restrictions discussed above are equally applicable to the repurchase by the Company of shares of its outstanding Common Stock. VOTING RIGHTS Except as hereinafter stated, all voting rights are vested in the holders of the Common Stock who have one vote per share and have no cumulative voting rights. Three of the Company's nine directors are elected for three-year terms at each annual meeting of the Company's stockholders. The holders of shares of Preferred Stock have no voting rights except as provided by law or when four quarterly dividends on Preferred Stock have not been paid, at which time the holders of the Preferred Stock shall have the following rights until all dividends in arrears have been paid: (1) Voting as a class, to elect all three directors to be elected at the next annual meeting, and thereafter, if dividends continue to be due and unpaid, to elect two of the three directors to be elected at the next succeeding annual meeting and to continue to elect a majority of the Board of Directors in such manner; and (2) To vote on all questions in such manner that holders of Preferred Stock shall have one vote for each ten dollars of stated value, or part thereof, for each share of Preferred Stock held. In addition, the Company must secure the approval of the holders of certain percentages of Preferred Stock outstanding prior to effecting various changes in the rights of the Preferred Stock, the issuance of additional shares of Preferred Stock or the making of certain unsecured borrowings, in the last two instances, when certain conditions in the Company's capital structure exist. LIQUIDATION RIGHTS After payment to the holders of Preferred Stock of the full preferential amounts to which they are entitled, the remaining assets, if any, upon voluntary or involuntary liquidation, are distributable to the holders of Common Stock. PRE-EMPTIVE RIGHTS There are no pre-emptive rights applicable to the Common Stock or Preferred Stock. OTHER PROVISIONS There are no conversion rights, or redemption or sinking fund provisions, applicable to the Common Stock, and the Common Stock is not liable to further calls or to assessments by the Company. EXPERTS The consolidated financial statements of the Company as of December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995 included in the Company's 1995 Form 10-K incorporated by reference in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and 17 18 are incorporated herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said report. LEGAL OPINIONS Certain legal matters in connection with the Common Stock offered hereby have been passed on for the Company by Keleher & McLeod, P. A., P. O. Drawer AA, Albuquerque, NM 87103. SHAREHOLDER INFORMATION PUBLIC SERVICE COMPANY OF NEW MEXICO Corporate Headquarters: Alvarado Square, MS 0802 Albuquerque, NM 87158-0802 Mailing Address: P.O. Box 1047 Albuquerque, NM 87103-9937 Telephone Numbers: 505-241-2650 In Albuquerque 800-545-4425 Nationwide Toll-free Shareholder Account Information -- Stock Transfer Requirements: P.O. Box 1047 Albuquerque, NM 87103-9937 -- Plan and Account Information: P.O. Box 1047 Albuquerque, NM 87103-9937 Stock Listing Information -- Ticker Symbol: PSvNM on the New York Stock Exchange 18 19 ================================================================================ NO PERSON HAS BEEN AUTHORIZEDOFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONSREPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANYAN OFFER TO BUY ANY OFSECURITY OTHER THAN THE SECURITIESSUNS OFFERED HEREBY OR TO ANY PERSON IN ANY JURISDICTION TO ANY PERSON TO WHOMIN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION.SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDERHEREBY SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATIONIMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRSINFORMATION CONTAINED HEREIN IS CORRECT AS OF THE COMPANY SINCEANY DATE SUBSEQUENT TO THE DATE HEREOF. TABLE OF CONTENTS PAGE ---- Available Information . . . . . . . . . . . . . . . . . . . . . 1 IncorporationAVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement (together with all amendments thereto, the "Registration Statement") on Form S-3 under the Securities Act of 1933 (the "Securities Act"), with respect to the SUNs offered hereby. This Prospectus, filed as a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain portions of which have been omitted as permitted by the rules and regulations of the Commission. In addition, certain documents filed by the Company with the Commission have been incorporated herein by reference. See "Incorporation of Certain DocumentsInformation by Reference. . . . . . . . . . . . . . . . . . . . 1" For further information regarding the Company and the SUNs offered hereby, reference is made to the Registration Statement, including the exhibits and schedules thereto and the documents incorporated herein by reference. The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Purposeis subject to the informational requirements of the Plan . . . . . . . . . . . . . . . . . . . . . . 3 AdvantagesSecurities Exchange Act of 1934 (the "Exchange Act"), and Disadvantagesin accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission, at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549; and at the regional offices of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . 3 Plan Administration . . . . . . . . . . . . . . . . . . . . . .Commission at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such materials can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding reporting companies under the Exchange Act, including the Company, at http://www.sec.gov. The Common Stock of the Company is listed on the New York Stock Exchange. Reports, proxy statements and other information concerning the Company can be inspected and copied at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 are hereby incorporated by reference. In addition, all documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the SUNs shall be deemed to be incorporated by reference in this Prospectus and be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus, or in any other subsequently filed document that also is or is deemed to be incorporated by reference, modifies or replaces such statement. Any such statement so modified or superseded shall not be deemed, except as so modified, to constitute a part of this Prospectus. The Company undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, upon written or oral request of any such person, a copy of any or all of the documents incorporated by reference herein, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that this Prospectus incorporates. Written or oral requests for such copies should be directed to: Barbara Barsky, Vice President of Strategy, Analysis and Investor Relations, Public Service Company of New Mexico, Alvarado Square, Albuquerque, New Mexico 87158, or by telephone at (505) 241-2477. 2 4 ParticipationTHE COMPANY Public Service Company of New Mexico (the "Company") was incorporated in the Plan State of New Mexico in 1917 and has its principal offices at Alvarado Square, Albuquerque, New Mexico 87158 (telephone number 505-241-2700). The Company is a public utility primarily engaged in the generation, transmission, distribution and sale of electricity and in the transmission, distribution and sale of natural gas within the State of New Mexico. In addition, in pursuing new business opportunities, the Company is focusing on energy and utility related activities under its Energy Services Business Unit. The Company is also operating the City of Santa Fe's water system. The total population of the area served by one or more of the Company's utility services is estimated to be approximately 1.3 million, of which 52.1% live in the greater Albuquerque area. For the year ended December 31, 1997, the Company derived 63.6% of its operating revenues from electric operations, 26.0% from natural gas operations and 10.4% from energy services operations. As of December 31, 1997, the Company employed 2,789 persons. 3 5 SUMMARY FINANCIAL AND OPERATING INFORMATION The following material is qualified in its entirety by reference to the information incorporated herein by reference (as specified above). The selected data presented below under the caption "Selected Earnings Statement Data" as of the end of and for each of the years in the five year period ended December 31, 1997, are derived from the consolidated financial statements of Public Service Company of New Mexico and subsidiaries, which financial statements have been audited by Arthur Andersen LLP, independent public accountants. The consolidated financial statements as of December 31, 1997 and 1996, and for each of the years in the three-year period ended December 31, 1997, and the report thereon, are incorporated by reference elsewhere in this Prospectus. The selected unaudited data presented below under the caption "Selected Earnings Statement Data" and "Capitalization" for the three-month periods ended March 31, 1997 and 1998, and as of March 31, 1998, are derived from the unaudited consolidated financial statements of Public Service Company of New Mexico and its subsidiaries, which Arthur Andersen LLP have reviewed in accordance with professional standards for a review of such interim financial information.
Three Months Ended March 31, Year Ended December 31, --------- ----------------------- 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- (Unaudited) (Unaudited) (Dollars in thousands) SELECTED EARNINGS STATEMENT DATA: Electric, Gas, Water, Energy Services Revenues $ 329,764 $ 298,822 $ 1,135,267 $ 883,386 $ 808,465 $ 904,711 $ 873,878 Operating Expenses ........ 297,485 262,129 1,011,222 757,367 695,077 753,633 740,594 Earnings (Loss) Before Interest Charges and Income Taxes ............ 47,681 53,924 183,927 167,781 184,289 191,776 (32,741) Interest Charges, Net ..... 13,787 14,234 56,214 54,707 57,934 70,587 85,823 Income Taxes (Benefit)(1) . 12,680 14,794 46,718 40,494 50,793 40,871 (57,078) Net Income (Loss) from Continuing Operations ... 21,214 24,896 80,995 72,580 75,562 80,318 (61,486) ELECTRIC SALES (MWH) ......... 3,383,876 2,858,554 13,320,542 10,981,516 8,619,878 9,315,084 8,822,004 GAS THROUGHPUT - DECATHERMS (000'S)(2) ...... 32,540 32,099 84,610 100,096 109,594 132,071 135,332 RATIO OF EARNINGS TO FIXED CHARGES(3) ................. 2.14 2.30 2.05 1.94 1.99 1.83 0.27(4)
As of March 31, 1998 -------------------- Amount Percent ------ ------- CAPITALIZATION: (in thousands) Short-Term Debt........................................................... $ 243,860 14.8% Long-Term Debt............................................................ 574,344 34.7 Cumulative Preferred Stock, without Mandatory Redemption Requirements....................................... 12,800 0.8 Common Shareholders' Equity............................................... 822,112 49.7 ---------- ----- Total Capitalization(5)......................................... $1,653,116 100.0% ========== =====
- ------------ (1) Income Taxes (Benefit) calculated on earnings (loss) from continuing operations. (2) On June 30, 1995, the Company sold substantially all of the gas gathering and processing assets. Gas Throughput data for 1995, 1996, 1997 and the first three months of 1997 and 1998 reflect the effects of such sale. (3) For purposes of computing the Ratio of Earnings to Fixed Charges, earnings have been calculated by adding back the provision for income taxes and fixed charges. Fixed charges include total interest charges (without reduction for the allowance for borrowed funds used during construction), the interest portion of all rents and certain payments under a purchase power contract. (4) The less than 1:1 ratio for 1993 was primarily the result of the write-down of certain assets resulting from the stipulation filed with the New Mexico Public Utility Commission recommending that electric retail rates be reduced by $30 million. The fixed charge coverage deficiency aggregated approximately $119 million for 1993. (5) Total capitalization does not include the present value of the Company's lease obligations for Palo Verde Nuclear Generating Station ("PVNGS") Units 1 and 2 and Eastern Interconnection Project as debt. 4 6 USE OF PROCEEDS On April 27, 1998, the Company requested the New Mexico Public Utility Commission ("NMPUC") approval to issue up to $435 million principal amount of SUNs to provide funds to refinance the lease debt associated with the sale and leaseback portions of the Company's interests in PVNGS Units 1 and 2 ("Lease Debt"). As of May 1, 1998, the Company held $277 million principal amount of Lease Debt as an investment with the remaining $151 million principal amount of Lease Debt held by the public in the form of Lease Obligation Bonds. The net proceeds from such $435 million principal amount of SUNs would be applied in accordance with NMPUC authorization, including the repayment of short-term debt. Issuance of additional SUNs would require additional regulatory approval, and the net proceeds from the issuance of any additional SUNs are expected to be applied to general corporate purposes, except as may be set forth in the applicable Prospectus Supplement. DESCRIPTION OF SUNS The SUNs will be issued under an Indenture (the "Indenture") between the Company and The Chase Manhattan Bank, as trustee (the "Trustee"). The following description of certain provisions of the Indenture and the SUNs summarizes the material terms thereof but does not purport to be complete, and such summaries are subject to the detailed provisions of the Indenture to which reference is hereby made, including the definition of certain terms used herein and those terms made a part of the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"), and for other information regarding the SUNs. The Indenture is filed as an exhibit to the Registration Statement of which this Prospectus is a part. Numerical references in parentheses below are to sections in the Indenture. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated herein by reference as part of the statement made, and the statement is qualified in its entirety by such reference. Capitalized terms that are used and not otherwise defined herein shall have the meanings assigned to them in the Indenture. GENERAL The Indenture provides for the issuance from time to time of SUNs by the Company in an unlimited aggregate principal amount by specification in an indenture supplemental to the Indenture or in a Board Resolution, or in an Officer's Certificate pursuant to one or more indentures supplemental to the Indenture or a Board Resolution. (Section 3.01) The SUNs may be issued in one or more series, each of which series may be issued in one or more Tranches. Reference is made to the applicable Prospectus Supplement relating to the particular series of SUNs offered thereby for the following terms of the SUNs: (i) the title of the SUNs of the series, which shall distinguish the SUNs of such series from the SUNs of all other series; (ii) any limit upon the aggregate principal amount of the SUNs of such series that may be authenticated and delivered under the Indenture; (iii) the Person or Persons (without specific identification) to whom interest on SUNs of such series, or any Tranche thereof, shall be payable on any Interest Payment Date, if other than the Persons in whose names such SUNs (or one or more Predecessor SUNs) are registered at the close of business on the Regular Record Date for such interest; (iv) the date or dates on which the principal of the SUNs of such series, or any Tranche thereof, is payable or any formula or other method or other means by which such date or dates shall be determined, by reference to an index or other fact or event ascertainable outside of the Indenture or otherwise (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension); (v) the rate or rates at which the SUNs of such series, or any Tranche thereof, shall bear interest, if any (including the rate or rates at which overdue principal shall bear interest, if different from the rate or rates at which such SUNs shall bear interest prior to Maturity, and, if applicable, the rate or rates at which overdue premium or interest shall bear interest, if any), or any formula or other method or other means by which such rate or rates shall be determined, by reference to an index or other fact or event ascertainable outside of the Indenture or otherwise; the date or dates from which such interest shall accrue; and the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on such SUNs on any Interest Payment Date; (vi) the right, if any, to extend the interest payment periods and the duration of such extension; (vii) the place or places at which or methods by which (A) the principal of and premium, if any, and interest, if any, on SUNs of such series, or any Tranche thereof, shall be payable, (B) registration of transfer of SUNs of such series, or any Tranche thereof, may be effected, (C) exchanges of SUNs of such series, or any Tranche thereof, may be effected and (D) notices and demands to or upon the Company in respect of the SUNs of such series, or any Tranche thereof, and the Indenture may be served; the SUN Registrar and any Paying Agent or Agents for such series or any Tranche thereof; and if such is the case, that the principal of such SUNs shall be 5 7 payable without presentment or surrender thereof; (viii) the period or periods within which, the price or prices at which and the terms and conditions upon which any SUNs of such series, or any Tranche thereof, may be redeemed, in whole or in part, at the option of the Company and, if other than by a Board Resolution, the manner in which any election by the Company to redeem such SUNs shall be evidenced; (ix) the obligation, if any, of the Company to redeem or purchase any SUNs of such series, or any Tranche thereof, pursuant to any sinking fund or analogous provisions or at the option of the Holder (as defined herein) thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any SUNs of such series, or any Tranche thereof, shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (x) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which SUNs of such series, or any Tranche thereof, shall be issuable; (xi) if the amount of principal of or any premium or interest on any SUNs of such series, or any Tranche thereof, may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined to the extent not established pursuant to clause (v) of this paragraph; (xii) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any SUNs of such series, or any Tranche thereof, shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose; (xiii) if the principal of or any premium or interest on any SUNs of such series, or any Tranche thereof, is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such SUNs are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such SUNs as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined); (xiv) if other than the entire principal amount thereof, the portion of the principal amount of any SUNs of such series, or any Tranche thereof, which shall be payable upon declaration of acceleration of the Maturity thereof; (xv) if the principal amount payable at the Stated Maturity of any SUNs of such series, or any Tranche thereof, 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 SUNs as of any such date for any purpose under the Indenture or under such SUNs, 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 defined herein) 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); (xvi) if applicable, that the SUNs of such series, or any Tranche thereof, in whole or any specified part, shall be defeasible pursuant to the Defeasance provisions of the Indenture or that the SUNs of such series, but not Tranches thereof alone, shall be defeasible pursuant to the Covenant Defeasance provisions of the Indenture or both such sections and, if other than by a Board Resolution, the manner in which any election by the Company to defease such SUNs shall be evidenced; (xvii) if applicable, that any SUNs of such series, or any Tranche thereof, shall be issuable in whole or in part in the form of one or more Global SUNs and, in such case, the respective Depositaries for such Global SUNs, the form of any legend or legends which shall be borne by any such Global SUN and any circumstances in which any such Global SUN may be exchanged in whole or in part for SUNs registered, and any transfer of such Global SUN in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global SUN or a nominee thereof; (xviii) any addition to or change in the Events of Default which applies to any SUNs of such series, or any Tranche thereof, and any change in the right of the Trustee or the requisite Holders of such SUNs to declare the principal amount thereof due and payable pursuant to the Indenture; (xix) any addition to or change in the covenants set forth in the Indenture which applies to SUNs of such series, or any Tranche thereof; and (xx) any other terms of such series, or any Tranche thereof (which terms shall not be inconsistent with the provisions of the Indenture). (Section 3.01) All SUNs of any one series, or, if issued in Tranches thereof, any such Tranche, shall be substantially identical except as to denomination and except as may otherwise be determined in the manner provided for in the Indenture. With respect to SUNs of a series subject to a Periodic Offering, the indenture supplemental to the Indenture or the Board Resolution which establishes such series, or the Officer's Certificate pursuant to such supplemental indenture or Board Resolution, as the case may be, may provide general terms or parameters for SUNs of such series and provide either that the specific terms of SUNs of such series, or any Tranche thereof, shall be specified in a Company Order or that such terms shall be determined by the Company or its agents in accordance with procedures specified in a Company Order as contemplated by the Indenture. (Section 3.01) The Indenture does not contain any restriction on the payment of dividends or, except as set forth under " -- Certain Covenants, - Restriction on Liens and - Restrictions on Sale and Lease-Back Transactions," any financial covenants. The SUNs will be unsubordinated and unsecured obligations of the Company ranking equally with all existing and future unsubordinated and unsecured obligations of the Company. Claims of Holders of SUNs will be effectively subordinated to the claims of holders of secured debt of the Company with respect to the collateral securing 6 8 such claims. Currently the Company has outstanding $111,000,000 of first mortgage bonds secured by the Company's owned interest in PVNGS; no future bonds may be issued under the mortgage securing such bonds. REGISTERED GLOBAL SUNS Unless otherwise specified in the applicable Prospectus Supplement, the Depositary will act as securities depository for the SUNs and the SUNs will be issued only as Registered Global SUNs registered in the name of Cede & Co. (the Depositary's partnership nominee). Unless otherwise specified in the applicable Prospectus Supplement, one or more Registered Global SUNs will be issued for the SUNs representing the aggregate principal amount of such series of SUNs and will be deposited with the Depositary. If, however, the aggregate principal amount of any issue exceeds $200 million, one certificate will be issued with respect to each $200 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue. 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 (the "Direct Participants") deposit with the Depositary. The Depositary also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The Depositary is owned by a number of its Direct Participants and by The New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the Depositary's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants," and together with the Direct Participants, the "Participants"). The rules applicable to the Depositary and its Participants are on file with the Commission. Purchases of SUNs within the Depositary's system must be made by or through Direct Participants, which will receive a credit for the SUNs on the Depositary's records. The ownership interest of each actual purchaser of each SUN (a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' respective records. Beneficial Owners will not receive written confirmation from the Depositary of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the SUNs are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in SUNs except in the event that use of the book-entry system for the SUNs is discontinued. To facilitate subsequent transfers, all SUNs deposited by Direct Participants with the Depositary are registered in the name of Cede & Co. The deposit of the SUNs with the Depositary and their registration in the name of Cede & Co. effect no change in beneficial ownership. The Depositary has no knowledge of the actual Beneficial Owners of the SUNs; the Depositary's records reflect only the identity of the Direct Participants to whose accounts such SUNs are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by the Depositary to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the SUNs of a series or Tranche are being redeemed, the Depositary's practice is to determine by lot the amount of the interest of each Direct Participant in such series or Tranche to be redeemed. Neither the Depositary nor Cede & Co. will consent or vote with respect to the SUNs. Under its usual procedures, the Depositary mails an omnibus proxy (an "Omnibus Proxy") to the Participants as soon as possible after 7 9 the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the SUNs are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the SUNs will be made to Cede & Co., as nominee of the Depositary. The Depositary's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on the Depositary's records unless the Depositary has reason to believe that it will not receive payment on such payment date. Payments by participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers held in bearer form or registered in "street-name," and will be the responsibility of such Participant and not of the Depositary or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption premium, if any, and interest, if any, to Cede & Co., as nominee of the Depositary, is the responsibility of the Company or the respective trustees (with funds furnished by the Company). Disbursement of such payments to Direct Participants is the responsibility of the Depositary, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. Registered Global SUNs will settle in immediately available funds in the secondary trading market. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the SUNs. The Depositary may discontinue providing its services as securities depository with respect to the SUNs at any time by giving reasonable notice to the Company. Under such circumstances and in the event that a successor securities depository is not obtained, SUNs certificates are required to be printed and delivered. In addition, the Company may decide to discontinue use of the system of book-entry transfers through the Depositary (or a successor securities depository). . . . . . . . . . 5 Participation Options . . . . . . . . . . . . . . . . . . . . . 5 Initial Cash InvestmentsIn that event, SUNs certificates will be printed and Cash Investments. . . . . . . . . . . . . . . . . . . . . 6 Reinvestment of Dividends . . . . . . . . . . . . . . . . . . . 7 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 9 Safekeeping of Certificates . . . . . . . . . . . . . . . . . . 9 Sale of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 9 Termination of Plan Participation . . . . . . . . . . . . . . . 10 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Reportsdelivered. The Company will not have any responsibility or obligation to Participants or the persons for whom they act as nominees with respect to the accuracy of the records of the Depositary, its nominee or any Direct or Indirect Participant with respect to any ownership interest in the SUNs, or with respect to payments to or providing of notice for the Direct Participants, the Indirect Participants or the Beneficial Owners. So long as Cede & Co. is the registered owner of the SUNs, as nominee of the Depositary, references herein to Holders of the SUNs shall mean Cede & Co. or the Depositary and shall not mean the Beneficial Owners of the SUNs. The information in this section concerning the Depositary and the Depositary's book-entry system has been obtained from the Depositary. Neither the Company, the Trustee nor the underwriters, dealers or agents takes responsibility for the accuracy or completeness thereof. CERTAIN COVENANTS The following covenants apply to all series, or any Tranches thereof, of SUNs: Restrictions on Liens. The Indenture provides that so long as any SUNs are outstanding, the Company will not issue, assume, or guarantee any Debt (as defined herein) secured by any mortgage, security interest, pledge, or lien (herein referred to as a "mortgage") of or upon any Operating Property (as defined herein) of the Company, whether owned at the date of the Indenture or thereafter acquired, without in any such case effectively securing the Outstanding SUNs (as defined herein) (together with, if the Company shall so determine, any other Debt of or guaranteed by the Company ranking senior to, or equally with, the SUNs) equally and ratably with such Debt. This covenant shall not apply in the case of any Debt secured by: (i) mortgages on any property existing at the time of acquisition thereof; (ii) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with the Company, or at the time of a sale, lease, or other disposition of the properties of such corporation or a division thereof as an entirety or substantially as an entirety to the Company, provided that such mortgage as a result of such merger, consolidation, sale, lease, or other disposition is not extended to property owned by the Company immediately prior thereto; (iii) mortgages on property to secure all or part of the cost of acquiring, constructing, developing, or substantially repairing, altering, or improving such property, or to secure indebtedness incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, provided such mortgages are created or assumed contemporaneously with, or within eighteen (18) months after, such acquisition or completion of construction, development, or substantial repair, alteration, or improvement or within six (6) months thereafter pursuant 8 10 to a commitment for financing arranged with a lender or investor within such eighteen (18) month period; (iv) mortgages 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 for the benefit of holders of securities issued by any such entity, to secure any Debt incurred for the purpose of financing all or any part of the purchase price or the cost of constructing, developing or substantially repairing, altering, or improving the property subject to such mortgages; (v) mortgages on any property (x) which, at any time subsequent to January 1, 1985 through the date of the Indenture, was leased to the Company, or, (y) pursuant to the terms of any lease to the Company in effect at any time subsequent to January 1, 1985 through the date of the Indenture, title to which would not have been vested in the Company (assuming such lease remained in effect on the date of determination as such lease was in effect immediately prior to the date of the Indenture); or (vi) any extension, renewal or replacement (or successive extensions, renewals, or replacements), in whole or in part, of any mortgage referred to in the foregoing clauses (i) to (v), inclusive; provided, however, that the principal amount of Debt secured thereby and not otherwise authorized by said clauses (i) to (v), inclusive, shall not exceed the principal amount of Debt, plus any premium or fee payable in connection with any such extension, renewal, or replacement, so secured at the time of such extension, renewal, or replacement. (Section 10.05(a)) Notwithstanding the foregoing, so long as any SUNs are Outstanding, the Company may issue, assume, or guarantee Debt, or permit to exist Debt, secured by mortgages which would otherwise be subject to the foregoing restrictions up to an aggregate principal amount that, together with the principal amount of all other Debt of the Company secured by mortgages (other than mortgages permitted by the Indenture that would otherwise be subject to the foregoing restrictions) and the Value of all Sale and Lease-Back Transactions in existence at such time (other than certain Sale and Lease-Back Transactions specified in the Indenture), does not exceed at the time the greater of ten percent (10%) of Net Tangible Assets (as defined herein) or ten percent (10%) of Capitalization. (Section 10.05(b)). Taking into account the $111,000,000 of outstanding first mortgage bonds, the Company currently could secure debt of up to approximately $102,000,000 without also equally and ratably securing the SUNs. Restrictions on Sale and Lease-Back Transactions. The Indenture provides that so long as any SUNs are Outstanding, the Company will not enter into any Sale and Lease-Back Transaction with respect to any Operating Property if, in any case, the commitment by or on behalf of the purchaser is or was obtained more than eighteen (18) months after the later of (i) the completion of the acquisition, construction, or development of such Operating Property or (ii) the placing in operation of such Operating Property or of such Operating Property as constructed, developed, or substantially repaired, altered, or improved, unless (x) the Company would be entitled pursuant to the Indenture to issue, assume, or guarantee Debt secured by a mortgage on such Operating Property without equally and ratably securing the SUNs or (y) the Company would be entitled pursuant to the Indenture, after giving effect to such Sale and Lease-Back Transaction, to incur $1.00 of additional Debt secured by mortgages or (z) the Company shall apply or cause to be applied, in the case of a sale or transfer for cash, an amount equal to the net proceeds thereof (but not in excess of the net book value of such Operating Property at the date of such sale or transfer) and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair value (as determined by the Board of Directors) of the Operating Property so leased, to the retirement, within one hundred eighty (180) days after the effective date of such Sale and Lease-Back Transaction, of Debt of the Company ranking senior to, or equally with, the SUNs; provided, however, that the amount to be applied to such retirement of Debt shall be reduced by an amount equal to the principal amount, plus any premium or fee paid in connection with any redemption in accordance with the terms of Debt voluntarily retired by the Company within such one hundred eighty (180) day period, excluding retirement pursuant to mandatory sinking fund or prepayment provisions and payments at maturity. (Section 10.10) The Company's existing sale and lease-back transactions regarding Units 1 and 2 of PVNGS and certain transmission facilities, office buildings and other equipment are excluded from this provision of the Indenture. RESTRICTIONS ON MERGERS AND SALES OF ASSETS Under the Indenture, the Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (i) the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium, and interest on all the SUNs and the performance or observance of every covenant of the Indenture on the part of the Company to be 9 11 performed or observed; (ii) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company as a result of such transaction as having been incurred by the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (iii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or 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. (Section 8.01) EVENTS OF DEFAULT Events of Default defined in the Indenture with respect to the SUNs of any series are: (i) the Company defaults in the payment of any interest upon any SUN of that series when it becomes due and payable, and continuance of such default for a period of 60 days; (ii) the Company defaults in the payment of the principal of or any premium on any SUN of that series at its Maturity; (iii) the Company defaults in the deposit of any sinking fund payment, when and as due by the terms of a SUN of that series; (iv) the Company defaults in the performance of or breaches any covenant or warranty of the Company in the Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this paragraph specifically dealt with or which has expressly been included in the Indenture solely for the benefit of series of SUNs other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of a majority in principal amount of the Outstanding SUNs of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the Indenture, unless the Trustee, or the Trustee and Holders of a principal amount of SUNs of such series not less than the principal amount of SUNs the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and the Holders of such principal amount of SUNs, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued; (v) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition by one or more persons other than the Company seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; (vi) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors; or (vii) any other Event of Default provided with respect to SUNs of that series. (Section 5.01) The Indenture provides that if an Event of Default with respect to SUNs of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of a majority in principal amount of the Outstanding SUNs of that series may declare the principal amount of all the SUNs of that series (or, if any SUNs of that series are Original Issue Discount SUNs, such portion of the principal amount of such SUNs as may be specified by the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more than one series of SUNs, the Trustee or the Holders of not less than a majority in 10 12 principal amount of the Outstanding SUNs of all such series, considered as one class (and not the Holders of the SUNs of any one of such series), may make such declaration of acceleration. (Section 5.02) At any time after such a declaration of acceleration with respect to SUNs of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee, the related Event of Default and its consequences will be automatically waived, resulting in an automatic rescission and annulment of the acceleration of the SUNs if (i) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all SUNs of that series, (B) the principal of (and premium, if any, on) any SUNs of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such SUNs, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such SUNs, and (D) all amounts due to the Trustee as provided in the Indenture; and (ii) any other Event of Default with respect to SUNs of that series, other than the non-payment of the principal of SUNs of that series which have become due solely by such declaration of acceleration, has been cured or waived as provided in the Indenture. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon. (Section 5.02) The Holders of not less than a majority in principal amount of the Outstanding SUNs of any series may on behalf of the Holders of all the SUNs of such series waive any past default under the Indenture with respect to such series and its consequences, except a default (i) in the payment of the principal of or any premium or interest on any SUN of such series, or (ii) in respect of a covenant or provision of the Indenture which cannot be modified or amended by supplemental Indenture without the consent of the Holder of each Outstanding SUN of such series affected, provided, however, that if any such default shall have occurred and be continuing with respect to more than one such series of SUNs, the Holders of a majority in aggregate principal amount of the Outstanding SUNs of all such series, considered as one class, shall have the right to waive such default, and not the Holders of the SUNs of any one such series. Upon any such waiver, such default shall cease to exist, and any and all Events of Default arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. (Section 5.13) If an Event of Default shall have occurred and be continuing in respect of a series of SUNs, the Holders of a majority in principal amount of the Outstanding SUNs of such series shall 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 SUNs of such series; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more than one series of SUNs, the Holders of a majority in aggregate principal amount of the Outstanding SUNs of all such series, considered as one class, shall have the right to make such direction, and not the Holders of the SUNs of any one of such series; and provided, further, that (i) such direction shall not be in conflict with any rule of law or with the Indenture; (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (iii) subject to the provisions of the Indenture the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. (Section 5.12) The Indenture provides that no Holder of any SUN of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the SUNs of that series; (ii) the Holders of not less than a majority in aggregate principal amount of the Outstanding SUNs of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under the Indenture; (iii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding SUNs of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class. (Section 5.07) 11 13 DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE The Indenture provides that upon Company Request the Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of SUNs therein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture, when (i) either (A) all SUNs theretofore authenticated and delivered (other than (x) SUNs which have been destroyed, lost or stolen and which have been replaced or paid and (y) SUNs for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or (B) all such SUNs not theretofore delivered to the Trustee for cancellation (x) have become due and payable, or (y) will become due and payable at their Stated Maturity within one year, or (z) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (B)(x), (y) or (z) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payment, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such SUNs, money in an amount sufficient to pay and discharge the entire indebtedness on such SUNs not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of SUNs which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (ii) the Company has paid or caused to be paid all other sums payable under the Indenture by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent therein provided for relating to the satisfaction and discharge of the Indenture have been complied with. Notwithstanding the satisfaction and discharge of the Indenture, the obligations of the Company to compensate and reimburse the Trustee, the obligations of the Company to any Authenticating Agent and the obligations under the Indenture of the Trustee to apply the trust money and make repayments, shall survive. If the Company shall have paid or caused to be paid the principal of and premium, if any, and interest on any SUN, as and when the same shall have become due and payable or the Company shall have delivered to the Trustee for cancellation any outstanding SUN, such SUN shall cease to be entitled to any benefit under the Indenture. (Section 4.01) Upon the Company's exercise of its option to have the provisions described in this paragraph (Defeasance) applied to any SUNs or the SUNs of any series, or any Tranche thereof, as the case may be, the Company shall be deemed to have been discharged from its obligations with respect to such SUNs as described in this paragraph on and after the date the conditions as described in the second paragraph below are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such SUNs and to have satisfied all its other obligations under such SUNs and the Indenture insofar as such SUNs are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following provisions which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of such SUNs to receive, solely from the trust fund described in the second paragraph below and as more fully set forth in the Indenture, payments in respect of the principal of and any premium and interest on such SUNs when payments are due, (ii) the Company's obligations with respect to such SUNs under the sections of the Indenture dealing with temporary notes; registration and registration of transfer and exchange; mutilated, destroyed, lost and stolen notes; maintenance of office or agency; or money for notes payments to be held in trust, and with respect to compensation and reimbursement of the Trustee, (iii) the rights, powers, trusts, duties and immunities of the Trustee under the Indenture and (iv) the provisions described in this paragraph. Subject to compliance with the Article in the Indenture regarding Defeasance and Covenant Defeasance, the Company may exercise its option to have the provisions described in this paragraph (Defeasance) applied to any SUNs notwithstanding the prior exercise of its option to have the provisions described in the paragraph below (Covenant Defeasance) applied to such SUNs. (Section 13.02) Upon the Company's exercise of its option to have the provisions described in this paragraph (Covenant Defeasance) applied to the SUNs or the SUNs of any series, but not to Tranches thereof alone, as the case may be, (i) the Company shall be released from its obligations under the sections of the Indenture dealing with restrictions on liens, maintenance of properties and restrictions on sale and lease-back transactions, and any covenants for the benefit of the Holders of such SUNs provided pursuant to the Article of the Indenture setting forth covenants and the sections of the Indenture dealing with entering into supplemental indentures without the consent of Holders for the purpose of adding covenants, securing the SUNs and establishing the form or terms of SUNs of any series or Tranche and the section of the Indenture specifying Events of Default and (ii) the occurrence of any event specified in the section of the Indenture 12 14 dealing with default in the performance, or breach, of any covenant or warranty of the Company (with respect to specified sections of the Indenture) shall be deemed not to be or result in an Event of Default with respect to such SUNs as provided in the Indenture and described in this paragraph on and after the date the conditions described in the paragraph below are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such SUNs, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified section of the Indenture (to the extent so specified in the case of default in the performance or breach of any covenant or warranty of the Company), whether directly or indirectly by reason of any reference elsewhere therein to any such section or by reason of any reference in any such section to any other provision in the Indenture or in any other document, but the remainder of the Indenture and such SUNs shall be unaffected thereby. (Section 13.03) The Indenture provides that the following shall be the conditions to the application of the Defeasance and Covenant Defeasance provisions, as the case may be: (i) the Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such SUNs, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination of (A) and (B), in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, the principal of and any premium and interest on such SUNs on the respective Stated Maturities or on any Redemption Date established as described in clause (ix) below, in accordance with the terms of the Indenture and such SUNs. As used in this paragraph, "U.S. Government Obligation" means (x) any security which is (1) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (2) an obligation 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 (1) or (2), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, 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 depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt; (ii) in the event of an election to have the provisions of the Indenture relating to Defeasance apply to any SUNs or the SUNs of any series, or any Tranche thereof, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable Federal income tax law, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, the Holders of such SUNs will not recognize gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such SUNs and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur; (iii) in the event of an election to have the provision of the Indenture relating to Covenant Defeasance apply to the SUNs or the SUNs of any series, but not Tranches thereof alone, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such SUNs will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such SUNs and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur; (iv) the Company shall have delivered to the Trustee an Officers' Certificate to the effect that neither such SUNs nor any other SUNs of the same series, as the case may be, if then listed on any securities exchange, will be delisted as a result of such deposit; (v) no event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such SUNs or any other SUNs shall have occurred and be continuing at the time of such deposit or, with regard to certain bankruptcy Events of Default, at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day); (vi) such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all SUNs are in default within the meaning of such Act); (vii) such Defeasance or 13 15 Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound; (viii) such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940 unless such trust shall be registered under such Act or exempt from registration thereunder; (ix) if the SUNs are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments), notice of such redemption shall have been duly given pursuant to the Indenture or provision therefor satisfactory to the Trustee shall have been made; and (x) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with. (Section 13.04) MODIFICATION OF THE INDENTURE The Indenture provides that without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture, in form satisfactory to the Trustee, for any of the following purposes: (i) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company in the Indenture and in the SUNs; or (ii) to add to the covenants of the Company or other provisions for the benefit of the Holders of all or any series of SUNs, or any Tranche thereof, (and if such covenants are to be for the benefit of less than all series of SUNs or Tranches thereof, stating that such covenants are expressly being included solely for the benefit of such series or Tranche or Tranches) or to surrender any right or power conferred in the Indenture upon the Company; or (iii) to add any additional Events of Default for the benefit of the Holders of all or any series of SUNs, or any Tranche or Tranches thereof (and if such additional Events of Default are to be for the benefit of less than all series of SUNs or any Tranches thereof, stating that such additional Events of Default are expressly being included solely for the benefit of such series or Tranche or Tranches); or (iv) to add to or change any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the issuance of SUNs in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of SUNs in uncertificated form; or (v) to change or eliminate any provision of the Indenture or to add any new provision to the Indenture; provided, however, that if such change, elimination or addition shall adversely affect the interests of the Holders of SUNs of any series, or a Tranche thereof, Outstanding on the date of such indenture supplemental to the Indenture in any material respect, such change, elimination or addition shall become effective (a) with respect to such series or Tranche only pursuant to the provisions described in the succeeding paragraph or (b) when no SUN of such series or Tranche remains Outstanding; or (vi) to secure the SUNs; or (vii) to establish the form or terms of SUNs of any series or Tranche as permitted by the Indenture; or (viii) to evidence and provide for the acceptance of appointment under the Indenture of a successor Trustee with respect to the SUNs of one or more series and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee; or (ix) to cure any ambiguity, to correct or supplement any provision in the Indenture which may be defective or inconsistent with any other provision thereof, or to make any other changes to the provisions of the Indenture or to add other provisions with respect to matters or questions arising under the Indenture, provided that such other changes or additions shall not adversely affect the interests of the Holders of SUNs of any series in any material respect. Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the Indenture or at any time thereafter shall be amended and (A) if any such amendment shall require one or more changes to any provisions of the Indenture or the inclusion therein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, the Indenture shall be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental thereto to effect or evidence such changes or additional provisions; or (B) if any such amendment shall permit one or more changes to, or the elimination of, any provisions of the Indenture which, at the date of the execution and delivery of the Indenture or at any time thereafter, are required by the Trust Indenture Act to be contained therein, the Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental thereto to evidence such amendment thereof. (Section 9.01) The Indenture also contains provisions providing that with the consent of the Holders of not less than a majority in aggregate principal amount of the SUNs of all series then Outstanding, considered as one class, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, 14 16 and the Trustee may enter into one or more indentures supplemental to the Indenture for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture; provided, however, that if there shall be SUNs of more than one series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of SUNs of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding SUNs of all series so directly affected, considered as one class, shall be required; and provided further, that if the SUNs of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of SUNs of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding SUNs of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that no such supplemental indenture shall: (i) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any SUN, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount SUN or any other SUN which would be due and payable upon a declaration of acceleration of the Maturity thereof, or change the coin or currency (or other property) in which any SUN or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), without, in any such case, the consent of the Holder of such SUN, or (ii) reduce the percentage in principal amount of the Outstanding SUNs of any series or Tranche, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of the Indenture or of any default thereunder and its consequences, or reduce the requirements for quorum or voting, without, in any such case, the consent of the Holder of such SUN, or (iii) modify any of the provisions described in this paragraph and the sections of the Indenture regarding waiver of past defaults and waiver of certain covenants with respect to the SUNs of any series or any Tranche thereof, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each Outstanding SUN affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the "Trustee". (Section 9.02) A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of SUNs or one or more Tranches thereof, or which modifies the rights of the Holders of SUNs of such series or Tranches with respect to such covenant or other provision, shall be deemed not to affect the rights under the Indenture of the Holders of SUNs of any other series or Tranche. It shall not be necessary for any Act of Holders under the section of the Indenture described in this paragraph to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. A waiver by a Holder of such Holder's right to consent described in the preceding paragraph shall be deemed to be a consent of such Holder. (Section 9.02) INFORMATION CONCERNING THE TRUSTEE The Trustee under the Indenture will be The Chase Manhattan Bank. The Company maintains normal banking arrangements with The Chase Manhattan Bank. The Chase Manhattan Bank also serves as trustee under an indenture for the holders of certain other senior unsecured notes of the Company, (ii) serves as trustee for the holders of two series of bonds secured by, among other things, the Company's payments under its PVNGS leases (these bonds were issued by a party unaffiliated with the Company), as well as trustee under the lease indentures related to such leases, and (iii) has a commitment to lend the Company up to $50 million under a revolving credit agreement. The Chase Manhattan Bank also acts as administrative agent and a letter of credit issuing bank under the revolving credit agreement, and an affiliate of The Chase Manhattan Bank acted as arranger under such revolving credit agreement. In addition, affiliates of The Chase Manhattan Bank are the lessors with respect to three leases with the Company relating to the sale and leaseback of portions of Unit 1 and Unit 2 of PVNGS. Subject to the provisions in the Indenture and the applicable provisions of the Trust Indenture Act: (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned in the Indenture 15 17 shall be sufficiently evidenced by a Company Request or Company Order, or as otherwise expressly provided in the Indenture, and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (iii) whenever in the administration of the Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action under the Indenture, the Trustee (unless other evidence be specifically prescribed in the Indenture) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (iv) the Trustee may consult with counsel of its selection, and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it under the Indenture in good faith and in reliance thereon; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any Holder pursuant to the Indenture, unless such Holder shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall (subject to applicable legal requirements) be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (vii) the Trustee may execute any of the trusts or powers under the Indenture or perform any duties thereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under the Indenture; and (viii) except as otherwise provided in the Indenture the Trustee shall not be charged with knowledge of any Event of Default with respect to the SUNs of any series for which it is acting as Trustee unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of the Event of Default, or (B) written notice of such Event of Default shall have been given to the Trustee by the Company, any other obligor on the SUNs or by any Holder of such SUNs. (Section 6.03) The Indenture contains a covenant that the Company will file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such information, documents and reports to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants thereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). (Section 7.04) CERTAIN DEFINITIONS The term "Debt" as defined in the Indenture means any outstanding debt for money borrowed evidenced by notes, debentures, bonds or other securities. The term "Net Tangible Assets" as defined in the Indenture means the amount shown as total assets on the consolidated balance sheet of the Company, less the following: (i) intangible assets including, but without limitation, such items as goodwill, trademarks, trade names, patents, and unamortized debt discount and expense and other regulatory assets carried as an asset on the Company's consolidated balance sheet; and (ii) appropriate adjustments, if any, on account of minority interests. Net Tangible Assets shall be determined in accordance with generally accepted accounting principles and practices applicable to the type of business in which the Company is engaged and that are approved by the independent accountants regularly retained by the Company, and may be determined as of a date not more than sixty (60) days prior to the happening of the event for which such determination is being made. The term "Operating Property" as defined in the Indenture means (i) any interest in real property owned by the Company and (ii) any asset owned by the Company that is depreciable in accordance with generally accepted accounting principles. 16 18 The term "Original Issue Discount SUN" as defined in the Indenture means any SUN which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof. The term "Outstanding" as defined in the Indenture when used with respect to SUNs, means, as of the date of determination, all SUNs theretofore authenticated and delivered under the Indenture, except: (i) SUNs theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) SUNs 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 SUNs; provided that, if such SUNs are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor satisfactory to the Trustee has been made; (iii) SUNs as to which Defeasance has been effected pursuant to Section 13.02 of the Indenture; and (iv) SUNs which have been paid pursuant to Section 3.06 of the Indenture or in exchange for or in lieu of which other SUNs have been authenticated and delivered pursuant to the Indenture, other than any such SUNs in respect of which there shall have been presented to the Trustee proof satisfactory to it that such SUNs are held by a bona fide purchaser in whose hands such SUNs are valid obligations of the Company; provided, however, that in determining whether or not the Holders of the requisite principal amount of the SUNs Outstanding under the Indenture, or the Outstanding SUNs of any series or Tranche, have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action under the Indenture as of any date or whether or not a quorum is present at a meeting of Holders, (A) the principal amount of an Original Issue Discount SUN (as defined herein) which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 5.02 of the Indenture, (B) if, as of such date, the principal amount payable at the Stated Maturity of a SUN is not determinable, the principal amount of such SUN which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 3.01 of the Indenture, (C) the principal amount of a SUN denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 3.01 of the Indenture, of the principal amount of such SUN (or, in the case of a SUN described in clause (A) or (B) above, of the amount determined as provided in such clause), and (D) SUNs owned by the Company or any other obligor upon the SUNs or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all SUNs Outstanding under the Indenture, or all Outstanding SUNs of each such series and each such Tranche, as the case may be, determined without regard to this clause (D)) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, or upon such determination as to the presence of a quorum, only SUNs which the Trustee actually knows to be so owned shall be so disregarded. SUNs so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such SUNs and that the pledgee is not the Company or any other obligor upon the SUNs or any Affiliate of the Company or of such other obligor. The term "Sale and Lease-Back Transaction" as defined in the Indenture means any arrangement with any Person providing for the leasing to the Company of any Operating Property (except for temporary leases for a term, including any renewal thereof, of not more than forty-eight (48) months), which Operating Property has been or is to be sold or transferred by the Company to such person; provided, however, Sale and Lease-back Transaction shall not include any arrangement (i) first entered into prior to the date of the Indenture and (ii) involving the exchange of any Operating Property for any property subject to an arrangement specified in the preceding clause (i). . . . . . . . . . . . . . . 11 Other Information . . . . . . . . . . . . . . . . . . . . . . . 11 Federal Income Tax Information. . . . . . . . . . . . . . . . . 12 UsePLAN OF DISTRIBUTION GENERAL The Company may sell the SUNs being offered hereby: (i) directly to purchasers; (ii) through agents; (iii) through dealers; (iv) through underwriters; or (v) through a combination of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 13 Descriptionany such methods of Capital Stock. . . . . . . . . . . . . . . . . . 13 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . 15 Shareholder Information . . . . . . . . . . . . . . . . . . . . 15 ================================================================================ [LOGO] PUBLIC SERVICE COMPANY OF NEW MEXICO COMMON STOCK ($5 PAR VALUE) PNM DIRECT PLAN -------------------------- PROSPECTUS -------------------------- SEPTEMBER __,sale. 17 19 The distribution of the SUNs may be effected from time to time in one or more transactions either: (i) at a fixed price or prices which may be changed; (ii) at market prices prevailing at the time of sale; (iii) at prices related to such prevailing market prices; or (iv) at negotiated prices. Offers to purchase the SUNs may be solicited directly by the Company. Offers to purchase SUNs may also be solicited by agents designated by the Company from time to time. Any such agent, who may be deemed to be an "underwriter" as that term is defined in the Securities Act, involved in the offer or sale of the SUNs in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the applicable Prospectus Supplement. If a dealer is utilized in the sale of the SUNs in respect of which this Prospectus is delivered, the Company will sell such SUNs to the dealer, as principal. The dealer, who may be deemed to be an "underwriter" as that term is defined in the Securities Act, may then resell such SUNs to the public at varying prices to be determined by such dealer at the time of resale. If an underwriter or underwriters are utilized in the sales of the SUNs, the Company will execute an underwriting agreement with such underwriters at the time of such sale and the name of the underwriters will be set forth in the applicable Prospectus Supplement, which will be used by the underwriters to make resales of the SUNs in respect of which this Prospectus is delivered to the public. In connection with the sale of SUNs, such underwriters may be deemed to have received compensation from the Company in the form of underwriting discounts or commissions and may also receive commissions from purchasers of SUNs for whom they may act as agents. Underwriters may also sell SUNs to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Any underwriting compensation paid by the Company to underwriters in connection with the offering and sale of SUNs, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in the applicable Prospectus Supplement. Underwriters, dealers, agents and other persons may be entitled, under agreements that may be entered into with the Company, to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act. Underwriters and agents may engage in transactions with, or perform services for, the Company in the ordinary course of business. LEGAL OPINIONS The validity of the SUNs offered hereby will be passed upon for the Company by Keleher & McLeod, P.A., Albuquerque, New Mexico, and, it is currently anticipated, for any underwriters of SUNs by Winthrop, Stimson, Putnam & Roberts, New York, New York. In giving their opinions, Winthrop, Stimson, Putnam & Roberts and Keleher & McLeod, P.A. may rely as to matters of Arizona law upon the opinion of Snell & Wilmer L.L.P., Phoenix, Arizona. Winthrop, Stimson, Putnam & Roberts may rely as to all matters of New Mexico law upon the opinion of Keleher & McLeod, P.A., and Keleher & McLeod, PA. may relay as to all matters of New York law upon the opinion of Winthrop, Stimson, Putnam & Roberts. Winthrop, Stimson, Putnam & Roberts has rendered, and may in the future render, legal services to the Company. EXPERTS The consolidated financial statements of the Company at December 31, 1997 and 1996, 19and for each of the three years in the period ended December 31, 1997, appearing in its Annual Report on Form 10-K for the fiscal year ended December 31, 1997, have been audited by Arthur Andersen LLP, independent public accountants, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 18 20 PART II - INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. Other ExpensesOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following is a list of Issuancethe expenses the Registrant expects to pay in connection with the issuance and Distributiondistribution of the SUNs registered hereby:
ESTIMATED AMOUNT CATEGORY OF EXPENSE OF EXPENSE - ------------------- ---------- *SecuritiesFiling and Exchange Commission registration fee $13,534 Printing, engravingRegistration Fees......................................................... $ 191,750 Legal Fees and postage expenses 50,000 Legal fees 7,000Expenses*............................................................. 200,000 Cost of Printing*.................................................................... 40,000 Accounting fees 4,000Fees and Expenses*........................................................ 40,000 Rating Agency Fees................................................................... 150,000 Blue Sky Fees and Expenses*.......................................................... 3,000 NASD Filing Fee...................................................................... 65,500 Miscellaneous 10,000 ------- Total Expenses $84,534 =======Expenses*.............................................................. 20,000 ----------- *Total...................................................................... $ 710,250 ===========
--------------- *Actual, others estimated- ------------------------ * Estimated. ITEM 15. Indemnification of Directors and Officers.INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 8 of Article II of the Company's By-Laws contains the following provisionsprovision with respect to indemnification of directors and officers: Each person who shall have served as a director or an officer of the Company, or, at the request of the Company, as a director or an officer of any other corporation, partnership or joint venture, whether profit or not profit,nonprofit, in which the Company (a) owns shares of capital stock, (b) has an ownership interest, (c) is a member, or (d) is a creditor, and regardless of whether or not such person is then in office, and the heirs, executors, administrators and personal representatives of any such person shall be indemnified by the Company to the full extent of the authority of the Company to so indemnify as authorized by the law of New Mexico. Section 53-11-4.1 of the Business Corporation Act of the State of New Mexico provides that a corporation shall have power to indemnify any person made (or threatened to be made) a party to any proceeding (whether threatened, pending or completed) by reason of the fact that the person is or was a director (or, while a director, is or was serving in any of certain other capacities) if: (1) the person acted in good faith; (2) the person reasonably believed: (a) in the case of conduct in the person's official capacity with the corporation, that the person's conduct was in its best interests; and (b) in all other cases, that the person's conduct was at least not opposed to its best interests; and (3) in the case of any criminal proceeding, the person had no reasonable cause to believe the person's conduct was unlawful. Indemnification may be made against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the person in connection with the proceeding, but may be limited or unavailable with respect to certain proceedings. In some instances, indemnification of a director may be mandatory or, upon the application of a director, may be ordered by a court. Reasonable expenses incurred by a director may, under certain circumstances, be paid or reimbursed in advance of a final disposition of a proceeding. Unless limited by its articles of incorporation, a corporation may (or, as the case may be, shall) indemnify and advance expenses to an officer of the corporation to the same extent as to a director under Section 53-11-4.1. Also, unless limited by its articles of incorporation, a corporation has (1) the power to indemnify and to advance expenses to an employee or agent of the corporation to the same extent that it may indemnify and advance expenses to directors under the statute and (2) additional power to indemnify and to II-1 21 advance reasonable expenses to an officer, employee or agent who is not a director to such further extent, consistent with law, as may be provided by its articles of incorporation, bylaws, general or specific action of its Boardboard of Directors,directors, or contract. Section 53-11-4.1 was amended in 1987 to provide that the indemnification authorized thereunder shall not be deemed exclusive of any rights to which those seeking indemnification may be entitled under the articles of incorporation, the by-laws, an agreement, a resolution of shareholders or 20 21 directors or otherwise. At the Company's 1987 Annual Meeting of Stockholders, the stockholders approved certain agreements with the Company's directors and officers relating to indemnification of directors and officers. Such agreements have been entered into with each director and officer. The agreements provide for indemnification of directors and officers to the fullest extent permitted by law, including advancement of litigation expenses where appropriate. The agreements provide for the appointment of a reviewing party by the Board of Directors to make a determination whether claimed indemnification is permitted under applicable law. Insurance is maintained on a regular basis (and not specifically in connection with this offering) against liabilities arising on the part of directors and officers out of their performance in such capacities or arising on the part of the Company out of its foregoing indemnification provisions, subject to certain exclusions and to the policy limits. ITEM 16. Exhibits.
Exhibit No. Description ----------- ------------ 4.1 Restated Articles of Incorporation of the Company as amended through May 10, 1985 (incorporated by reference to Exhibit 4-(b) to Registration Statement No. 2-99990 of the Company). 4.2 Bylaws of the Company as amended through December 6, 1994 (incorporated by reference to Exhibit 3.2 to Annual Report of the Registrant on Form 10-K for fiscal year ended December 31, 1994). 4.3 Indenture of Mortgage and Deed of Trust dated as of June 1, 1947, between the Company and The Bank of New York (formerly Irving Trust Company), as Trustee, together with the Ninth Supplemental Indenture dated as January 1, 1976, the Twelfth Supplemental Indenture dated as of September 15, 1971, the Fourteenth Supplemental Indenture dated as of December 1, 1974, and the Twenty-second Supplemental Indenture dated as of October 1, 1979 thereto relating to First Mortgage Bonds of the Company (incorporated by reference to Exhibit 4-(d) to Registration Statement No,. 2-99990 of the Company). 4.4 Portions of sixteen supplemental indentures to the Indenture of Mortgage and Deed of Trust dated as of June 1, 1947, between the Company and The Bank of New York (formerly Irving Trust Company), as Trustee, relevant to the declaration or payment of dividends or the making of other distributions on or the purchase by the Company of shares of the Company's Common Stock (incorporated by reference to Exhibit 4-(e) to Registration Statement No 2-99990 of the Company). 4.5 U. S. $100,000,000 Revolving Credit Agreement dated as of December 14, 1993 among the Company and the banks and co-agents named therein (incorporated by reference to Exhibit 10.57 to Annual Report of the Registrant on Form 10-K for fiscal year ended December 31, 1993). 4.5.1 Amendment No. 1, dated June 7, 1995 to the U. S. $100,000,000 Revolving Credit Agreement dated as of December 14, 1993 among the Company and the banks and co-agents named therein (incorporated by reference to Exhibit 10.57.1 to the Quarterly Report of the Registrant on Form 10-Q for the quarter ended June 30, 1995). 4.6 Reimbursement Agreement, dated as November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial Bank of Commerce, New York Agency (incorporated by reference to Exhibit 4.5 to Registration Statement No. 33-65418 of the Company). 4.6.1 Amendment No. 1 dated as of July 1, 1994, to the Reimbursement Agreement dated as of November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial Bank of Commerce, New York agency (incorporated by reference to Exhibit 10.60.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994).
21 22 4.6.2 Amendment No. 2 dated as of October 1, 1995, to the Reimbursement Agreement dated as of November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial of Commerce, New York Agency (incorporated by reference to Exhibit 10.60.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995). 4.7 Form of PNM Direct Plan 5 Opinion of Keleher & McLeod, P.A. 15 Letter re unaudited interim financial information 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Keleher & McLeod, P. A. (included in Exhibit 5) 24 Power of attorney (See Signatures page in Part II)
EXHIBITS. See Exhibit Index. ITEM 17. Undertakings.UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers ofor sales are being made, a post-effective amendment to this registration statement: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 statementRegistration 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,Registration Statement; provided, however, that 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 a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statementRegistration Statement or any material change to such information in the registration statement; provided,Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and 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 registration statement.the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post- effectivepost-effective amendment shall be deemed to be a new registration statementRegistration 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-2 22 (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. (4) If the(b) The undersigned registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Rule 3-19 of Regulation S-X at the start of any delayed offering or throughout a continuous offering. 22 23 (5) That,hereby undertakes that, for 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 the registration statementRegistration 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. (c) 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 described under Item 15, 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 of 1933 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 of 1933 and will be governed by the final adjudication of such issue. II-3 23 24 SIGNATURES Pursuant to the requirements of the Securities Act ofPURSUANT 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 FormTHE 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 registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Albuquerque, State of New Mexico, on August 28, 1996.AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ALBUQUERQUE, STATE OF NEW MEXICO, ON THIS MAY 21, 1998. PUBLIC SERVICE COMPANY OF NEW MEXICO By: /s/Benjamin B. F. Montoya ----------------------------------------- (Benjamin------------------------------------- B. F. Montoya President and Chief Executive Officer) Pursuant to the requirements of the Securities Act ofOfficer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, THAT EACH OFFICER OR DIRECTOR OF PUBLIC SERVICE COMPANY OF NEW MEXICO WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS B. F. MONTOYA AND M. H. MAERKI EACH OF THEM SINGLY, HIS OR HER TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT, WITH FULL AND SEVERAL POWER OF SUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS, INCLUDING POST-EFFECTIVE AMENDMENTS, AND SUPPLEMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEY-IN-FACT AND AGENT FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS THEY OR HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEY-IN-FACT AND AGENT OR HIS OR HER OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE THEREOF. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, this registration statement has been signed below by the following persons in the capacities and on the date indicated. Each person whose signature appears below hereby authorizes Benjamin F. Montoya, Max Maerki, and Donna Burnett, and each of them, as attorneys-in fact, to sign in his or her name and behalf, individually and in each capacity designated below, and to file any amendments, including post-effective amendments, to this registration statement.THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
Signature CapacityTitle Date --------- ----- ---- /s/ B. F. Montoya Principal Executive Officer August 28, 1996May 21, 1998 - -------------------------------------------------------------------------------------------- and Director B. F. Montoya President and Chief Executive Officer /s/ M. H. Maerki Principal Financial Officer August 28, 1996May 21, 1998 - -------------------------------------------------------------------------------------------- M. H. Maerki Senior Vice President and Chief Financial Officer /s/ D. M. Burnett Principal Accounting Officer August 28, 1996May 21, 1998 - ------------------------------------------------------------------------------------------- and Controller D. M. Burnett Corporate Controller and Chief Accounting Officer
II-4 24
Signature Title Date --------- ----- ---- /s/ J. T. Ackerman Director August 28, 1996Chairman of the Board May 21, 1998 - ------------------------------------------------------------------------------------------- J. T. Ackerman /s/ R. G. Armstrong Director August 28, 1996May 21, 1998 - ------------------------------------------------------------------------------------------ R. G. Armstrong /s/ J.A.J. A. Godwin Director August 28, 1996May 21, 1998 - --------------------------------------------------------------------------------------------- J. A. Godwin /s/ L. H. LattmanLatterman Director August 28, 1996May 21, 1998 - -------------------------------------------------------------------------------------------- L. H. Lattman /s/ M. Lujan Jr. Director August 28, 1996May 21, 1998 - ---------------------------------------------------------------------------------------------- M. Lujan Jr. /s/ R. U. Ortiz Director August 28, 1996May 21, 1998 - ----------------------------------------------------------------------------------------------- R. U. Ortiz /s/ R. M. Price Director August 28, 1996May 21, 1998 - ---------------------------------------------------------------------------------------------- R. M. Price /s/ P. F. Roth Director August 28, 1996May 21, 1998 - ----------------------------------------------------------------------------------------------- P. F. Roth
24II-5 25 FORM S-3 PUBLIC SERVICE COMPANY OF NEW MEXICO EXHIBIT INDEX TO EXHIBITS
Sequentially Exhibit No. ExhibitNumbered Number Description Pages - ------ ----------- ------------- 4.1 1 Form of Underwriting Agreement* 3.1 Restated Articles of Incorporation of the Company, as amended through May 10, 1985 (incorporated by reference to Exhibit 4-(b) to the Company's Registration Statement, File No. 2-99990 of the Company). 4.2 Bylaws2-99990) 3.2 By-Laws of the Company as amended throughWith All Amendments to and including December 6,5, 1994 (incorporated by reference to Exhibit 3.2 to the Company's Annual Report of the Registrant on Form 10-K for fiscalthe year ended December 31, 1994). 4.31994, File No. 1-6986) 4.1 Form of Indenture, of Mortgage and Deed of Trust dated as of June 1, 1947,July __, 1998 between the Company and The Chase Manhattan Bank, of New York (formerly Irving Trust Company), as Trustee together with the Ninth4.2 Form of SUN Security (included in Exhibit 4.1 above) 4.3 Form(s) of Supplemental Indenture dated as January 1, 1976, the Twelfth Supplemental Indenture dated as of September 15, 1971, the Fourteenth Supplemental Indenture dated as of December 1, 1974, and the Twenty-second Supplemental Indenture dated as of October 1, 1979 thereto relatingRelating to First Mortgage Bonds of the Company (incorporated by reference to Exhibit 4-(d) to Registration Statement No,. 2-99990 of the Company). 4.4 Portions of sixteen supplemental indentures to the Indenture of Mortgage and Deed of Trust dated as of June 1, 1947, between the Company and The Bank of New York (formerly Irving Trust Company), as Trustee, relevant to the declaration or payment of dividends or the making of other distributions on or the purchase by the Company of shares of the Company's Common Stock (incorporated by reference to Exhibit 4-(e) to Registration Statement No 2-99990 of the Company). 4.5 U. S. $100,000,000 Revolving Credit Agreement dated as of December 14, 1993 among the Company and the banks and co-agents named therein (incorporated by reference to Exhibit 10.57 to Annual Report of the Registrant on Form 10-K for fiscal year ended December 31, 1993). 4.5.1 Amendment No. 1, dated June 7, 1995 to the U. S. $100,000,000 Revolving Credit Agreement dated as of December 14, 1993 among the Company and the banks and co-agents named therein (incorporated by reference to Exhibit 10.57.1 to the Quarterly Report of the Registrant on Form 10-Q for the quarter ended June 30, 1995). 4.6 Reimbursement Agreement, dated as November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial Bank of Commerce, New York Agency (incorporated by reference to Exhibit 4.5 to Registration Statement No. 33-65418 of the Company). 4.6.1 Amendment No. 1 dated as of July 1, 1994, to the Reimbursement Agreement dated as of November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial Bank of Commerce, New York agency (incorporated by reference to Exhibit 10.60.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994).
25 26 4.6.2 Amendment No. 2 dated as of October 1, 1995, to the Reimbursement Agreement dated as of November 1, 1992 between Public Service Company of New Mexico and Canadian Imperial of Commerce, New York Agency (incorporated by reference to Exhibit 10.60.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995). 4.7 Form of PNM Direct PlanSUNs* 5 Opinion of Keleher & McLeod, P.A. 12 Statements Regarding Computation of Ratio of Earnings to Fixed Charges 15 Letter re unaudited interim financial informationFrom Arthur Andersen LLP Regarding Unaudited Interim Financial Information 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Keleher & McLeod, P. A.P.A. (included in Exhibit 5)5 above) 24 Power of attorney (See SignaturesAttorney (see page in Part II)II-4) 25 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as Trustee under the Indenture between the Company and The Chase Manhattan Bank, on Form T-1
26* To be filed as an Exhibit by means of Form 8-K. II-6