SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 10, 1999
TNP ENTERPRISES, INC.
Texas 001-08847 75-1907501
(State of incorporation) (Commission File No.) (IRS Employer Identification No.)
4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 731-0099
<PAGE>
Item 5. Other Events
On May 24, 1999, TNP Enterprises, Inc., a Texas corporation ("TNP"), SW
Acquisition , L.P., a limited partnership organized and existing under the laws
of Texas ("Parent"), and ST Acquisition Corp., a Texas corporation wholly owned
by Parent ("Sub"), entered into an Agreement and Plan of Merger, dated as of May
24, 1999 (the"Merger Agreement"), which provides for a merger of TNP with and
into ST Corp., with TNP being the surviving corporation (the "Merger"). Under
the terms of the Merger Agreement, each issued and outstanding share of Common
Stock, no par value, of TNP will be canceled and converted automatically into
the right to receive $44.00 in cash (the "Merger Consideration").
On August 9, 1999, TNP, Parent and Sub entered into the First Amendment
to the Merger Agreement (the "Amendment"). The Amendment provides, among other
things, that the Texas-New Mexico Power Company Thrift Plan for Employees will
not be terminated but will be amended effective as of the effective time of the
Merger to prohibit the issuance by TNP or any of its subsidiaries of any capital
stock of TNP or its subsidiaries.
The total financing for the Merger (including related costs and
expenses) will be approximately $1.068 billion. Of this amount, approximately
$590 million will be required to pay the Merger Consideration and up to
approximately $428 million may be required to refinance certain indebtedness of
TNP's wholly-owned subsidiary, Texas-New Mexico Power Company ("TNMP"), that may
become due or that TNMP may be required to repurchase as a result of the change
of control of TNP contemplated by the Merger. Sub intends to obtain all funds
needed for the consummation of the Merger through capital contributions from
Parent and through borrowing under credit facilities more fully described below.
Parent and Sub have received commitment letters with respect to such facilities
(the "Commitment Letters") to provide funding on the terms and conditions
specified therein. Because financing is a condition to the Merger, each
condition to funding set forth in the Commitment Letters is effectively a
condition to Parent's and Sub's obligations to effect the Merger. There are
numerous conditions to these financings, and there can be no assurance that such
conditions will be satisfied or waived or that such financings will be made
available to Parent or Sub, as the case may be.
When they executed the Merger Agreement, Parent and Sub delivered to
TNP executed copies of (1) subscription agreements (the "Partnership
Subscription Agreements") from the general partner of Parent, Canadian Imperial
Bank of Commerce (collectively with its affiliates, "CIBC"), Caravelle
Investment Fund, L.L.C., an investment fund managed by CIBC ("Caravelle"),
Continental Casualty Company, an indirect subsidiary of Loews Corporation
("CCC"), and Laurel Hill Capital Partners, LLC ("Laurel Hill") (collectively,
the "Partnership Investors") to commit the equity financing in the amount of
$100 million to provide Parent and Sub with a portion of the funds necessary to
consummate the transactions contemplated by the Merger Agreement, (2) a
commitment letter (the "Preferred Stock Bridge Commitment Letter") from CIBC,
The Chase Manhattan Bank ("Chase"), CCC and Laurel Hill (the "Preferred Stock
Investors" and, together with the Partnership Investors, the "Equity Investors")
to commit preferred equity financing in an additional amount of $100 million to
provide Parent and Sub with a portion of the funds necessary to consummate the
transactions contemplated by the Merger Agreement, (3) commitment letters from
CIBC, Chase and Chase Securities, Inc. ("CSI") to commit debt financing (as
amended, the "Debt Financing") in an amount up to $868 million to provide Parent
and Sub with all remaining funds necessary to consummate the transactions
contemplated by the Merger Agreement. The Debt Financing would consist of:
borrowings by Sub of $275 million either from (1) the
issuance by Sub of "high yield" Senior Subordinated Notes to
be marketed through a public offering or a private placement
to certain institutional investors with terms and conditions
consistent with then current market conditions or (2) CIBC and
Chase (the "Senior Subordinated Lenders") on the terms set
forth in a commitment letter (the "Senior Subordinated Bridge
Loan Commitment Letter");
borrowings by Sub of $165 million from CIBC, Chase and CSI
(the "Senior Debt Lenders") on the terms set forth in a
commitment letter (the "Senior Debt Commitment Letter"); and
borrowings of up to $428 million by TNMP from CIBC, Chase and
CSI (the "Backstop Lenders"), on the terms set forth in a
commitment letter (the "Backstop Commitment Letter") to
refinance any debt of TNMP that may become due or that TNMP
may be required to repurchase as a result of the change of
control of TNP contemplated by the merger.
The Preferred Stock Bridge Commitment Letter and the Commitment Letters
for the Debt Financing expire in February 2000. To the extent necessary and
subject to certain conditions contained in the Merger Agreement, Parent will use
its best efforts to extend these Commitment Letters for an additional six
months. However, there can be no assurance that the Merger can be consummated by
February 2000 or that these Commitment Letters will be extended beyond such
date.
On July 9, 1999, the Senior Subordinated Bridge Loan Commitment Letter
was amended to remove a requirement concerning the use of proceeds from certain
sales of securities. The removed provision required generally that Parent use
proceeds of sales of debt or equity securities by the Parent's subsidiaries to
prepay outstanding loans under the Bridge Loan Commitment Letter, plus accrued
interest and any other amounts payable thereunder.
On July 13, 1999, the Senior Debt Commitment Letter was amended to
modify a requirement concerning mandatory prepayments and commitment reductions.
Under the amendment, Sub will be generally required to use 100% of the net
proceeds of sales or other dispositions of assets by Sub or its subsidiaries to
prepay loans provided under the Senior Debt Commitment Letter. This requirement
is subject to certain exceptions and limitations. It does not apply to net
proceeds from sales in the ordinary course of business of inventory, receivables
or obsolete or worn-out property, or in certain other customary situations.
Further, the amount of net proceeds that must be so applied shall be limited (a)
to the portion of such proceeds that remain after they are first used to make
any applicable mandatory prepayments or redemptions and (b) to an amount that
can be paid as a dividend by the subsidiary to Sub (after receipt of any
required governmental approvals). Sub has agreed to use its best efforts to
cause such a dividend to be so paid.
On July 21, 1999, the Senior Debt Commitment Letter was further amended
to extend the period during which definitive documentation must be negotiated,
executed and delivered from within 60 days of the acceptance of the Senior Debt
Commitment Letter to within 120 days of the acceptance of the Senior Debt
Commitment Letter.
Copies of the Amendment, the Preferred Stock Bridge Commitment Letter,
the Commitment Letters for the Debt Financing and the Partnership Subscription
Agreements have been filed with the Securities and Exchange Commission as an
Exhibit to this Form 8-K. This summary description of the Amendment, the
Preferred Stock Bridge Commitment Letter, the Commitment Letters for the Debt
Financing and the Partnership Subscription Agreements does not purport to be
complete and is qualified in its entirety by reference to such documents, which
are incorporated by reference herein.
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.01 General Partner Subscription Agreement for SW Acquisition, L.P.
99.02 Subscription Agreement for SW Acquisition, L.P.
99.03 Bridge Loan Commitment Letter from CIBC World Markets Corp. and The
Chase Manhattan Bank to SW Acquisition, L.P., dated May 24, 1999.
99.04 Amendment to Bridge Loan Commitment Letter from CIBC World Markets
Corp. and The Chase Manhattan Bank to SW Acquisition, L.P., dated
July 9, 1999.
99.05 Bridge Preferred Commitment Letter from CIBC World Markets Corp., The
Chase Manhattan Bank, Continental Casualty Company and Laurel Hill
Capital Partners LLC to SW Acquisition, L.P., dated May 24, 1999.
99.06 Senior Secured Credit Facilities Commitment Letter from Canadian
Imperial Bank of Commerce, CIBC World Markets Corp., The Chase
Manhattan Bank and Chase Securities Inc. to SW Acquisition Corp., dated
May 24, 1999.
99.07 First Amendment to Senior Secured Credit Facilities Commitment Letter
from Canadian Imperial Bank of Commerce, CIBC World Markets Corp., The
Chase Manhattan Bank and Chase Securities Inc. to SW Acquisition Corp.,
dated July 13, 1999.
99.08 Second Amendment to Senior Backstop Credit Facility Commitment Letter
from Canadian Imperial Bank of Commerce, CIBC World Markets Corp., The
Chase Manhattan Bank and Chase Securities Inc. to SW Acquisition Corp.,
dated July 21, 1999.
99.09 Senior Backstop Credit Facility Commitment Letter from Canadian
Imperial Bank of Commerce, CIBC World Markets Corp., The Chase
Manhattan Bank and Chase Securities Inc. to SW Acquisition Corp., dated
May 24, 1999.
99.10 First Amendment to Agreement and Plan of Merger, by and among
SW Acquisition, L.P., ST Acquisition Corp., and TNP Enterprises, Inc.,
dated August 9, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
TNP ENTERPRISES, INC.
August 10, 1999 By: /s/ PAUL W. TALBOT
-------------------------------------
Paul W. Talbot
Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ----------- -----------
99.01 General Partner Subscription Agreement for SW Acquisition, L.P.
99.02 Subscription Agreement for SW Acquisition, L.P.
99.03 Bridge Loan Commitment Letter from CIBC World Markets Corp. and
The Chase Manhattan Bank to SW Acquisition, L.P., dated May 24,
1999.
99.04 Amendment to Bridge Loan Commitment Letter from CIBC World
Markets Corp. and The Chase Manhattan Bank to SW Acquisition,
L.P., dated July 9, 1999.
99.05 Bridge Preferred Commitment Letter from CIBC World Markets
Corp., The Chase Manhattan Bank, Continental Casualty Company
and Laurel Hill Capital Partners LLC to SW Acquisition, L.P.,
dated May 24, 1999.
99.06 Senior Secured Credit Facilities Commitment Letter from
Canadian Imperial Bank of Commerce, CIBC World Markets Corp.,
The Chase Manhattan Bank and Chase Securities Inc. to SW
Acquisition Corp., dated May 24, 1999.
99.07
First Amendment to Senior Secured Credit Facilities Commitment
Letter from Canadian Imperial Bank of Commerce, CIBC World
Markets Corp., The Chase Manhattan Bank and Chase Securities
Inc. to SW Acquisition Corp., dated July 13, 1999.
99.08 Second Amendment to Senior Backstop Credit Facility Commitment
Letter from Canadian Imperial Bank of Commerce, CIBC World
Markets Corp., The Chase Manhattan Bank and Chase Securities
Inc. to SW Acquisition Corp., dated July 21, 1999.
99.09 Senior Backstop Credit Facility Commitment Letter from Canadian
Imperial Bank of Commerce, CIBC World Markets Corp., The Chase
Manhattan Bank and Chase Securities Inc. to SW Acquisition
Corp., dated May 24, 1999.
99.10 First Amendment to Agreement and Plan of Merger, by and among
SW Acquisition, L.P., ST Acquisition Corp., and TNP
Enterprises, Inc., dated August 9, 1999.
EXHIBIT-99.01
GENERAL PARTNER
SUBSCRIPTION AGREEMENT
FOR
SW ACQUISITION, L.P.
----------------
THE PARTNERSHIP INTERESTS REFERRED TO HEREIN HAVE NOT BEEN REGISTERED,
QUALIFIED, APPROVED OR DISAPPROVED UNDER ANY FEDERAL OR STATE SECURITIES LAWS,
NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
FEDERAL OR STATE REGULATORY AUTHORITY PASSED ON OR ENDORSED THE MERITS OF THE
OFFERING OF SUCH INTERESTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE
PARTNERSHIP INTERESTS REFERRED TO HEREIN ARE SUBJECT TO RESTRICTIONS ON TRANSFER
SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF SW ACQUISITION, L.P. DATED
AS OF MAY 24, 1999 AND THE PARTNERSHIP INTERESTS MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS THEY ARE REGISTERED UNDER FEDERAL
SECURITIES LAWS AND, WHERE REQUIRED, UNDER THE LAWS OF OTHER JURISDICTIONS,
UNLESS SUCH PROPOSED SALE, TRANSFER OR DISPOSITION IS EXEMPT FROM SUCH
REGISTRATION. EXCEPT AS SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP, THERE
IS NO OBLIGATION OF THE ISSUER TO REGISTER THE PARTNERSHIP INTERESTS.
ACCORDINGLY, A PURCHASER OF A PARTNERSHIP INTEREST MUST BE PREPARED TO BEAR THE
ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
----------------
SW Acquisition, L.P.
2 Robbins Lane
Suite 201
Jericho, NY 11753
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for a partnership interest (an "Interest") in SW Acquisition,
L.P. (the "Partnership"), a Texas limited partnership. The undersigned
understands that the Partnership is relying upon the accuracy and completeness
of the information contained herein in complying with its obligations under
federal and state securities and other applicable laws. Capitalized terms used
but not defined herein have the same meanings as in the Agreement of Limited
Partnership of the Partnership, dated as of May 24, 1999 (the "Partnership
Agreement"), a copy of which is attached as Exhibit A hereto.
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Partnership and the limited partners
in the Partnership (the "Limited Partners") as follows:
1. Subscription.
(a) Subject to the terms and conditions of this Agreement, the
undersigned hereby irrevocably subscribes for Interests in the Partnership and
agrees to make an aggregate Capital Contribution (the "Aggregate Capital
Contribution") to the Partnership in respect thereof in the amount set forth on
the signature page hereof and agrees to pay such Aggregate Capital Contribution
to the Partnership in accordance with the terms of the Partnership Agreement and
this Agreement. Upon the execution of this Agreement and the Partnership
Agreement, the undersigned is paying to the Partnership an amount equal to
.0001% of the Aggregate Capital Contribution. At the closing of the merger under
the Merger Agreement (the "Closing"), the undersigned shall make an additional
Capital Contribution to the Partnership of an amount equal to 99.999% of the
Aggregate Capital Contribution, less any Capital Contributions made pursuant to
paragraph (b) below.
(b) To the extent that, from time to time prior to the
Closing, all Partners are notified that the Partnership has incurred actual
reasonable out-of-pocket expenses (the "Expenses") in connection with (i)
obtaining the insurance required by Section 8.8(c) of the Partnership Agreement,
(ii) leasing office space for the General Partner, and reasonable overhead
expenses in connection therewith, and (iii) payments to unrelated third parties
in connection with satisfying the conditions under the financing agreements
entered into in connection with the Merger Agreement, the undersigned will make
an additional Capital Contribution (an "Expense Capital Contribution") to the
Partnership, within five days of such notice, in an amount equal to its pro rata
portion (based on the relative actual Capital Contributions of all Partners) of
the Expenses, and any such Expense Capital Contribution shall be treated as an
advance payment of a portion of the Aggregate Capital Contribution required to
be paid at the Closing pursuant to paragraph (a); provided that the aggregate
Capital Contributions required to be made by all Partners for such Expenses
shall in no event exceed $600,000; provided further that in no event shall any
such Expense Capital Contribution increase the Aggregate Capital Contribution
which the undersigned has agreed to make under this Agreement.
(c) The undersigned herewith tenders two signed copies of this
Agreement and an executed signature page of the Partnership Agreement.
2. General Partner Acceptance. Upon execution of this Agreement by the
general partner of the Partnership (the "General Partner") on behalf of this
Partnership, this Agreement shall become a binding agreement between the
Partnership and the undersigned.
3. Other Subscription Agreements. The Partnership has heretofore
entered into, and expects to enter into, separate but substantially identical
subscription agreements (the "Other Subscription Agreements" and, together with
this Agreement, the "Subscription Agreements") with other purchasers (the "Other
Purchasers"), providing for the subscription by the Other Purchasers of
Interests for an aggregate Capital Contribution to the Partnership of
$100,000,000 (including the Capital Contributions subscribed for hereunder).
This Agreement and the Other Subscription Agreements are separate and several
agreements, and the sales of Interests to the undersigned and to the Other
Purchasers are to be separate and several sales.
4. Representations and Warranties of the Undersigned. The undersigned
hereby represents and warrants to the Partnership as follows:
(a) Organization and Qualification. The undersigned is duly
organized or formed, validly existing and in good standing under the
laws of the state of its organization or formation, except for such
failures to be so formed, existing and in good standing which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the
undersigned and its subsidiaries taken as a whole.
(b) Authority. The undersigned has the requisite power and
authority to enter into this Agreement and the Partnership Agreement,
to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Partnership
Agreement by the undersigned and the consummation by the undersigned of
the transactions contemplated hereby and thereby have been duly and
validly approved by all necessary action, and no other proceedings on
the part of the undersigned are necessary to authorize the execution,
delivery and performance of this Agreement by the undersigned and the
consummation by the undersigned of the transactions contemplated hereby
and thereby. Each of this Agreement and the Partnership Agreement has
been duly and validly executed and delivered by the undersigned and,
assuming the due authorization, execution and delivery of this
Agreement and the Partnership Agreement by the Partnership, constitutes
a legal, valid and binding obligation of the undersigned enforceable
against the undersigned in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement and
the Partnership Agreement by the undersigned do not, and the
performance by the undersigned of its obligations hereunder
and thereunder and the consummation of the transactions
contemplated hereby and thereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) default under, result
in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of
any Lien upon any of the assets or properties of the
undersigned or any of the undersigned's subsidiaries under,
any of the terms, conditions or provisions of (1) the
certificates or articles of incorporation or bylaws (or other
comparable charter documents) of the undersigned or any of its
subsidiaries, or (2) subject to the taking of the actions
described in paragraph (ii) of this Section, (x) any laws
existing on the date hereof or orders of any Governmental or
Regulatory Authority applicable to the undersigned or any of
its subsidiaries or any of their respective assets or
properties, or (y) any Contracts to which the undersigned or
any of its subsidiaries is a party or by which the undersigned
or any of its subsidiaries or any of their respective assets
or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse
effect on the ability of the undersigned to consummate the
transactions contemplated by this Agreement.
(ii) Except as disclosed on Schedule 4(c) hereto, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the
terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which
the undersigned or any of its subsidiaries is a party or by
which the undersigned or any of its subsidiaries or any of
their respective assets or properties is bound for the
execution and delivery of this Agreement or the Partnership
Agreement by the undersigned, the performance by the
undersigned of its obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or
thereby, other than such consents, approvals, actions, filings
and notices which the failure to make or obtain, as the case
may be, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the
ability of the undersigned to consummate the transactions
contemplated by this Agreement or the Partnership Agreement.
(d) Residence. The principal place of business address set
forth on the signature page hereof is the undersigned's true and
correct principal place of business and is the only jurisdiction in
which an offer to sell the Interests was made to the undersigned and
the undersigned has no present intention of moving its principal place
of business to any other state or jurisdiction;
(e) No Registration. The undersigned understands that the
Interests have not been registered under the Act, or under the laws of
any other jurisdiction, and that except as otherwise contemplated
pursuant to the Partnership Agreement, the Partnership does not
contemplate and is under no obligation to so register the Interests.
The undersigned understands and agrees that the Interests must be held
indefinitely unless they are subsequently transferred (i) pursuant to
an effective registration statement under the Act and, where required,
under the laws of other jurisdictions or (ii) pursuant to an exemption
from applicable registration requirements. Even if such exemption is
available, the undersigned agrees that the assignment and
transferability of the Interests will be governed by the Partnership
Agreement. The Partnership Agreement imposes substantial restrictions
on assignment or transfer of Interests. The undersigned recognizes that
there is no established trading market for the Interests and that it is
unlikely that any public market for the Interests will develop for at
least five years. The undersigned will not offer, sell, transfer or
assign its Interest or any interest therein in contravention of this
Agreement, the Partnership Agreement, the Act or any state or federal
law;
(f) Purchase for Investment. The Interests for which the
undersigned hereby subscribes are being acquired solely for the
undersigned's own account for investment and are not being purchased
with a view to or for resale, distribution or other disposition, and
the undersigned has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution
or other disposition;
(g) Knowledge. The undersigned has been furnished and has
carefully read the Partnership Agreement. The undersigned understands,
acknowledges and agrees that:
(i) the Partnership has recently been organized
and therefore has no financial or operating history;
(ii) the undersigned is not entitled to cancel,
terminate or revoke this Agreement or any of the powers
conferred herein;
(iii) various conflicts of interest may arise out
of transactions between the Partnership, the Limited Partners
and the General Partner and their respective Affiliates; and
(iv) the Interests are speculative investments
which involve a high degree of risk.
(h) Information. The undersigned has been granted the
opportunity to ask questions of, and receive answers from, the sponsors
of the Partnership concerning the terms and conditions of the sale of
the Interests, the Merger Agreement and the transactions contemplated
thereby, and to obtain any additional information which the undersigned
deems necessary to make an informed investment decision. The
undersigned has received or has had access to other documents requested
from the Partnership relating to the Interests and the purchase
thereof, and the Partnership has afforded the undersigned the
opportunity to discuss the undersigned's investment in the Partnership
and to ask and receive answers to any questions relating to the
investment in the Interests, the Merger Agreement and the transactions
contemplated thereby. The undersigned understands and has evaluated the
risks of a purchase of the Interests;
(i) Accredited Investor. The undersigned has read the text
of Rule 501(a)(1) - (8) of Regulation D under the Act and confirms that
it is an "accredited investor" as described thereby;
(j) Plan Assets.
(i) By checking below, the undersigned has indicated
whether or not it is, or is acting on behalf of, a "benefit
plan investor", as defined in 29 C.F.R. ss. 2510.3-101. The
undersigned acknowledges that (A) a benefit plan investor
includes (x) an "employee benefit plan" within the meaning of
Section 3(3) of the U.S. Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not such plan is
subject to ERISA, or (y) a plan or arrangement subject to
Section 4975 of the Code or (iii) an entity which is deemed to
hold the assets of any such employee benefit plan, plan or
arrangement described in (x) or (y) above pursuant to 29
C.F.R. ss. 2510.3-101 or otherwise, (B) a plan which is
maintained by a foreign corporation, governmental entity or
church, a Keogh plan covering no common-law employees and an
individual retirement account would each be a benefit plan
investor for this purpose, even though they are generally not
subject to ERISA and (C) a foreign or U.S. entity which is not
an operating company and which is not publicly traded or
registered as an investment company under the Investment
Company Act of 1940, as amended, and in which 25% or more of
the value of any class of equity interests is held by benefit
plan investors, would be deemed to hold the assets of one or
more employee benefit plans pursuant to 29 C.F.R. 2510.3-101.
The undersigned further understands that for purposes of
determining whether this 25% threshold has been met or
exceeded, the value of any equity interests held by a person
(other than a benefit plan investor) who has discretionary
authority or control with respect to the assets of the entity,
or any person who provides investment advice for a fee (direct
or indirect) with respect to such assets, or any affiliate of
such a person, is disregarded:
___ Yes ___ No
(ii) By checking below, the undersigned has indicated
whether it is, or is acting on behalf of, such an employee
benefit plan, plan or arrangement described in the preceding
question, or is an entity deemed to hold the assets of any
such employee benefit plan, plan or arrangement that is
subject to ERISA and/or Section 4975 of the Code"
___ Yes ___ No
(iii) By checking below, the undersigned has
indicated whether it is an insurance company using assets of
its general account?
___ Yes ___ No
If the answer to the above question is yes, please indicate
the percentage of the general account that is attributable to
benefit plan investors subject to ERISA and/or Section 4975 of
the Code: _______%;
(k) Holding Company Acts and FPA. On the date hereof, the
undersigned is not a "public utility company", a "holding company", a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended,
("PUCHA") or a "public utility" as such term is defined in the Federal
Power Act ("FPA"); and
(l) Ownership of Company Common Stock. As of the date hereof,
except as set forth in Schedule 4(l) attached hereto, the undersigned
does not, either individually or as part of a group for purposes of
Rule 13-d under the Securities Exchange Act of 1934, as amended,
beneficially own any shares of Company Common Stock (as defined in the
Merger Agreement).
5. Conditions to Closing. The undersigned's obligation to purchase
and deliver the Capital Contribution for the Interest to be sold by the
Partnership at the Closing is subject to the fulfillment on or prior to the
Closing of the following conditions:
(i) Merger Agreement. As of the Closing all conditions to the
consummation of the transactions contemplated by the Merger Agreement
shall have satisfied or waived and the closing of the transactions
contemplated by the Merger Agreement shall occur simultaneously with
the payment of the Capital Contribution hereunder.
(ii) No Orders. As of the Closing, there shall not be
outstanding any rule or order of any court, administrative agency or
governmental body which in any way restrains or prevents the carrying
out of the transactions contemplated by this Agreement.
(iii) Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental
or Regulatory Authority or any other public or private third parties
necessary to permit the undersigned and the Partnership to perform
their obligations under this Agreement and the Merger Agreement and to
consummate the transactions contemplated hereby and thereby shall have
been duly obtained, made or given and shall be in full force and
effect, and all terminations or expirations of waiting periods imposed
by any Governmental or Regulatory Authority necessary for the
consummation of the transaction contemplated by this Agreement,
including under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder,
shall have occurred.
6. Partnership Agreement. The undersigned agrees to enter into the
Partnership Agreement upon acceptance of this Subscription Agreement by the
General Partner.
7. Indemnification. The undersigned agrees to indemnify and hold
harmless the Partnership, each Limited Partner, or any officer, director or
control person (within the meaning of Section 15 of the Act) of any such
entity from and against any and all loss, damage or liability due to or
arising out of a breach of any representation or warranty of the undersigned
contained in any document furnished by the undersigned in connection with
the offering and sale of the Interests, including, without limitation, this
Agreement, or failure by the undersigned to comply with any covenant or
agreement made by the undersigned herein or in any other document furnished
by the undersigned to any of the foregoing in connection with this
transaction.
8. Survival; Binding Effect. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and delivery of the Interests and payment
therefore and, notwithstanding any investigation heretofore or hereafter
made by the undersigned or on the undersigned's behalf, shall continue in
full force and effect. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and
agreements in this Agreement by or on behalf of the Partnership, or by or
on behalf of the undersigned, shall bind and inure to the benefit of the
successors and assigns of such parties hereto.
9. Termination. (a) This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned (i) at any time before
the Closing, by mutual written agreement of the Partnership (following
action by the Advisory Committee) and the undersigned or (ii) at any time
before the Closing, by the Partnership or the undersigned, in the event
that any order or law becomes effectiv restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or the Partnership, upon notification to the
non-terminating party by the terminating party.
(b) This Agreement shall automatically terminate, with no
further action being required on the part of either party hereto, upon any
termination of the Merger Agreement in accordance with its terms.
(c) This Agreement may be terminated by the undersigned if any
occurrence or circumstance results in a failure to satisfy the conditions
in Sections 5(ii) or (iii) hereof.
(d) If this Agreement is validly terminated pursuant to this
Section, this Agreement will forthwith become null and void, and there will
be no liability or obligation on the part of the undersigned or the
Partnership (or any of their respective partners, officers, directors,
employees, agents or other representatives or affiliates). Notwithstanding
the foregoing, no such termination shall affect the obligations of the
undersigned pursuant to Section 1(b) and Section 7, which shall survive any
such termination.
10. Notices. All notices, statements, instructions or other documents
required to be given hereunder shall be in writing and shall be given
either personally, by overnight courier or by facsimile, addressed to the
Partnership at its principal offices and to the other parties at their
addresses or facsimile numbers reflected in the records of the Partnership.
The undersigned, by written notice given to the Partnership in accordance
with this Section 10 may change the address to which notices, statements,
instructions or other documents are to be sent to the undersigned. All
notices, statements, instructions and other documents hereunder that are
mailed shall be deemed to have been given on the date of delivery. Whenever
pursuant to this Agreement any notice is required to be given by the
undersigned to any other Partner, the undersigned may request from the
Partnership a list of addresses of all Partners of the Partnership, which
list shall be promptly furnished to the undersigned.
11. Complete Agreement; Counterparts. This Agreement constitutes the
entire agreement and supersedes all other agreements and understandings,
both written and oral, among the parties or any of them, with respect to
the subject matter hereof. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
12. Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto and any attempt to
do so will be void, except that the undersigned may assign any or all
of its rights, interests and obligations hereunder to a Permitted
Transferee that agrees in writing to be bound by all of the terms,
conditions and provisions contained herein, but no such assignment shall
relieve the undersigned of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and shall be enforceable by the parties hereto and their
respective successors and assigns.
13. Amendment and Waiver. This Agreement may be amended or modified
only by an instrument signed by the parties hereto. A waiver of any
provision of this Agreement must be in writing, designated as such, and
signed by the party against whom enforcement of that waiver is sought. The
waiver by a party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent or other breach
thereof.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
SW I Acquisition GP, L.P. 2 Robbins Lane, Suite 201
----------------------------------- -------------------------
Name of Entity (Print) Mailing Address -- Street
By: SW II Acquisition LLC Jericho NY 11753
------------------------------- -------------------------
as General Partner City State Zip Code
By: /s/ W. J. Catacosinos
------------------------------- -------------------------
Tax Identification Number
William J. Catacosinos
-----------------------------------
Name (Print)
Manager
-----------------------------------
Title
Total amount of Interest subscribed for: 0.1% Interest in the Partnership
for $100,001 contributed.
516-933-3108
-----------------------------------
Telecopy No.
516-933-3100
-----------------------------------
Telephone No.
SUBSCRIPTION ACCEPTED AS OF MAY 24, 1999
SW Acquisition, L.P.
By: SW I Acquisition GP, L.P.
as General Partner
By: SW II Acquisition, LLC
as General Partner
By: /s/ William J. Catacosinos
-----------------------------------
Name: William J. Catacosinos
Title: Manager
EXHIBIT-99.02
SUBSCRIPTION AGREEMENT
FOR
SW ACQUISITION, L.P.
----------------
THE LIMITED PARTNERSHIP INTERESTS REFERRED TO HEREIN HAVE NOT BEEN
REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER ANY FEDERAL OR STATE
SECURITIES LAWS, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR
ANY OTHER FEDERAL OR STATE REGULATORY AUTHORITY PASSED ON OR ENDORSED THE MERITS
OF THE OFFERING OF SUCH INTERESTS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL. THE LIMITED PARTNERSHIP INTERESTS REFERRED TO HEREIN ARE SUBJECT TO
RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF SW
ACQUISITION, L.P. DATED AS OF MAY 24, 1999 AND THE LIMITED PARTNERSHIP INTERESTS
MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS
THEY ARE REGISTERED UNDER FEDERAL SECURITIES LAWS AND, WHERE REQUIRED, UNDER THE
LAWS OF OTHER JURISDICTIONS, UNLESS SUCH PROPOSED SALE, TRANSFER OR DISPOSITION
IS EXEMPT FROM SUCH REGISTRATION. EXCEPT AS SET FORTH IN THE AGREEMENT OF
LIMITED PARTNERSHIP, THERE IS NO OBLIGATION OF THE ISSUER TO REGISTER THE
LIMITED PARTNERSHIP INTERESTS. ACCORDINGLY, A PURCHASER OF A LIMITED PARTNERSHIP
INTEREST MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
----------------
SW Acquisition, L.P.
2 Robbins Lane
Suite 201
Jericho, NY 11753
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for a limited partnership interest (an "Interest") in SW
Acquisition GP, L.P. (the "Partnership"), a Texas limited partnership in which
SW I Acquisition, L.P., a Texas limited partnership, is the general partner (the
"General Partner"). The undersigned understands that the Partnership and the
General Partner are relying upon the accuracy and completeness of the
information contained herein in complying with their obligations under federal
and state securities and other applicable laws. Capitalized terms used but not
defined herein have the same meanings as in the Agreement of Limited Partnership
of the Partnership, dated as of May 24, 1999 (the "Partnership Agreement"), a
copy of which is attached as Exhibit A hereto.
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Partnership, the General Partner and
the limited partners in the Partnership (the "Limited Partners") as follows:
1. Subscription.
(a) Subject to the terms and conditions of this Agreement, the
undersigned hereby irrevocably subscribes for Interests in the Partnership and
agrees to make an aggregate Capital Contribution (the "Aggregate Capital
Contribution") to the Partnership in respect thereof in the amount set forth on
the signature page hereof and agrees (i) to become a Limited Partner and (ii) to
pay such Aggregate Capital Contributions to the Partnership in accordance with
the terms of the Partnership Agreement and this Agreement. Upon the execution of
this Agreement and the Partnership Agreement, the undersigned is paying to the
Partnership an amount equal to .0001% of the Aggregate Capital Contribution. At
the closing of the merger under the merger agreement (the "Closing"), the
undersigned shall make an additional Capital Contribution to the Partnership of
an amount equal to 99.999% of the Aggregate Capital Contribution, less any
Capital Contributions made pursuant to paragraph (b) below.
(b) To the extent that, from time to time prior to the
Closing, the General Partner notifies the undersigned, together with all other
Partners, that the Partnership has incurred actual reasonable out-of-pocket
expenses (the "Expenses"), in connection with (i) obtaining the insurance
required by Section 8.8(c) of the Partnership Agreement, (ii) leasing office
space for the General Partner, and reasonable overhead expenses in connection
therewith, and (iii) payments to unrelated third parties in connection with
satisfying the conditions under the financing agreements entered into in
connection with the Merger Agreement, the undersigned will make an additional
Capital Contribution (an "Expense Capital Contribution") to the Partnership,
within five days of such notice, in an amount equal to its pro rata portion
(based on the relative actual Capital Contributions of all Partners) of the
Expenses, and any such Expense Capital Contribution shall be treated as an
advance payment of a portion of the Aggregate Capital Contribution required to
be paid at the Closing pursuant to paragraph (a); provided that the aggregate
Capital Contributions required to be made by all Partners for such Expenses
shall in no event exceed $600,000; provided further that in no event shall any
such Expense Capital Contribution increase the Aggregate Capital Contribution
which the undersigned has agreed to make under this Agreement.
(c) The undersigned herewith tenders two signed copies of this
Agreement and an executed signature page of the Partnership Agreement.
2. General Partner Acceptance. Upon acceptance of this Agreement by the
General Partner, this Agreement shall become a binding agreement between the
Partnership and the undersigned and the General Partner shall deliver one
original fully executed copy of this Agreement and a fully executed copy of the
Partnership Agreement to the undersigned.
3. Other Subscription Agreements. The Partnership has heretofore
entered into, and expects to enter into, separate but substantially identical
subscription agreements (the "Other Subscription Agreements" and, together with
this Agreement, the "Subscription Agreements") with other purchasers (the "Other
Purchasers"), providing for the subscription by the Other Purchasers of
Interests for an aggregate Capital Contribution to the Partnership of
$100,000,000 (including the Capital Contributions subscribed for hereunder).
This Agreement and the Other Subscription Agreements are separate and several
agreements, and the sales of Interests to the undersigned and to the Other
Purchasers are to be separate and several sales.
4. Representations and Warranties of the General Partner and the
Partnership. The General Partner and the Partnership hereby represent and
warrant to the undersigned that the following statements are true and correct as
of the date hereof (unless another date is specified) with respect to the
General Partner and the Partnership, as applicable:
(a) Organization and Qualification. Each of the Partnership
and the General Partner is duly formed, validly existing and in good
standing under the laws of the State of Texas and has full power and
authority to conduct its business as and to the extent now conducted
and to own, use and lease its assets and properties, except for such
failures to be so formed, existing and in good standing or to have such
power and authority which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse
effect (as defined in the Merger Agreement) on the General Partner or
on the Partnership and its subsidiaries taken as a whole. Each of the
Partnership and the General Partner was formed solely for the purpose
of engaging in the transactions contemplated by the Partnership
Agreement and Merger Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated
thereby.
(b) Authority. Each of the Partnership and the General Partner
(in its capacity as such) has the requisite partnership, power and
authority to execute this Agreement, the Partnership Agreement and the
Merger Agreement, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby.
Except as set forth in the Merger Agreement, the execution, delivery
and performance of this Agreement, the Partnership Agreement and the
Merger Agreement by each of the Partnership and the General Partner (in
its capacity as such) and the consummation by each of the Partnership
and the General Partner of the transactions contemplated hereby and
thereby have been duly and validly approved by all necessary
partnership action and by the General Partner (in its capacity as
such), and no other proceedings on the part of the Partnership or the
General Partner are necessary to authorize the execution, delivery and
performance of this Agreement, the Partnership Agreement or the Merger
Agreement by the Partnership and the General Partner and the
consummation by the Partnership and the General Partner of the
transactions contemplated hereby and thereby. Each of this Agreement,
the Partnership Agreement and the Merger Agreement has been duly and
validly executed and delivered by each of the Partnership and the
General Partner (in its capacity as such), as applicable, and, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
each of the Partnership and the General Partner enforceable against
each of the Partnership and the General Partner in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) Non-Contravention; Approvals and Consents. (i) The
execution and delivery of this Agreement, the Partnership Agreement and
the Merger Agreement by each of the Partnership and the General Partner
(in its capacity as such) do not, and the performance by each of the
Partnership and the General Partner (in its capacity as such) of its
obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice
or lapse of time or both) default under, result in or give to any
person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien (as defined in the Merger Agreement)
upon any of the assets or properties of the General Partner or of the
Partnership or any of the Partnership's subsidiaries under, any of the
terms, conditions or provisions of (1) the certificate of formation of
the Partnership or the General Partner or the certificates or articles
of incorporation or bylaws (or other comparable charter documents) of
any of the Partnership's subsidiaries, or (2) subject to the taking of
the actions described in paragraph (ii) of this Section, (x) any laws
existing on the date hereof or orders of any Governmental or Regulatory
Authority (as defined in the Merger Agreement) applicable to the
Partnership or any of the Partnership's subsidiaries or any of their
respective assets or properties, or (y) any Contracts to which the
General Partner or the Partnership or any of the Partnership's
subsidiaries is a party or by which the General Partner or the
Partnership or any of Partnership's subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on the ability
of the Partnership and the General Partner to consummate the
transactions contemplated by this Agreement or the Merger Agreement.
(ii) Except for the approvals required in connection with the
Merger as described in the Merger Agreement, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any law or
order of any Governmental or Regulatory Authority or any Contract to
which the General Partner or the Partnership or any of the Partnership
subsidiaries is a party or by which the General Partner or the
Partnership or any of the Partnership's subsidiaries or any of their
respective assets or properties is bound for the execution and delivery
of this Agreement or the Merger Agreement by each of the General
Partner and the Partnership, the performance by each of the General
Partner and the Partnership of its obligations hereunder or thereunder
or the consummation of the transactions contemplated hereby and
thereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, could not be reasonably expected to
have a material adverse effect on the ability of the General Partner
and the Partnership to consummate the transactions contemplated by this
Agreement, the Partnership Agreement or the Merger Agreement.
(d) Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of the General
Partner or the Partnership, threatened against, relating to or
affecting, nor to the knowledge of the General Partner or the
Partnership are there any Governmental or Regulatory Authority (as
defined in the Merger Agreement) investigations or audits pending or
threatened against, relating to or affecting, the Partnership or any of
its subsidiaries or any of their respective assets and properties
which, individually or in the aggregate, could be reasonably expected
to have a material adverse effect on the ability of the Partnership to
consummate the transactions contemplated by this Agreement, the
Partnership Agreement or the Merger Agreement, and neither the
Partnership nor any of its subsidiaries is subject to any order of any
Governmental or Regulatory Authority which, individually or in the
aggregate, could be reasonably expected to have a material adverse
effect on the ability of the Partnership to consummate the transactions
contemplated by this Agreement, the Partnership Agreement or the Merger
Agreement.
(e) Offer of Interests. None of the General Partner, the
Partnership or any agent acting on behalf of the General Partner or the
Partnership has, directly or indirectly, offered the Interests or
solicited an offer to acquire the Interests from any person so as to
require registration of the issuance and sale of the Interests sold to
the undersigned or the Other Purchasers under the provisions of Section
5 of the Securities Act of 1933, as amended (the "Act"). Assuming the
representations and warranties of the undersigned contained herein are
true and correct, the sale of the Interests under this Agreement is
exempt from the registration and prospectus delivery requirements of
the Act. No form of general solicitation or general advertising was
used by the Partnership or its representatives in connection with the
offer or sale of the Interests hereunder.
(f) Capitalization. On the date hereof, after giving effect to
the Initial Capital Contributions of all subscribers, the aggregate
capital of the Partnership is $1,000. After giving effect to the Other
Subscription Agreements and the transactions contemplated hereby, the
aggregate Capital Contributions to the Partnership will, upon
consummation of the transactions contemplated by the Merger Agreement,
be not less than $100,000,000. All of the Interests subscribed for
hereby will be validly issued, fully paid and nonassessable and, when
delivered by the Partnership on the Closing Date, shall be free and
clear of all liens, claims, options, charges or other security
interests or encumbrances.
(g) Holding Company Regulation. The Partnership is not, and as
a result of the consummation of the transactions contemplated by this
Agreement and the Merger Agreement, is not reasonably expected to be,
and, upon consummation of the Merger, the Surviving Corporation (as
defined in the Merger Agreement) is not reasonably expected to be
subject to regulation (i) as a registered public utility holding
company under Public Utility Holding Company Act of 1935, as amended
("PUHCA"), (ii) as a public utility holding company under (x) the New
Mexico Public Utility Act (other than under Section 62-6-12 thereof),
or (y) the Texas Public Utility Act or (iii) as a public utility under
the Federal Power Act (the "FPA").
5. Representations and Warranties of the Undersigned. The
undersigned hereby represents and warrants to the General Partner and the
Partnership as follows:
(a) Organization and Qualification. The undersigned is duly
organized or formed, validly existing and in good standing under the
laws of the state of its organization or formation, except for such
failures to be so formed, existing and in good standing which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the
undersigned and its subsidiaries taken as a whole.
(b) Authority. The undersigned has the requisite power and
authority to enter into this Agreement and the Partnership Agreement,
to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Partnership
Agreement by the undersigned and the consummation by the undersigned of
the transactions contemplated hereby and thereby have been duly and
validly approved by all necessary action, and no other proceedings on
the part of the undersigned are necessary to authorize the execution,
delivery and performance of this Agreement by the undersigned and the
consummation by the undersigned of the transactions contemplated hereby
and thereby. Each of this Agreement and the Partnership Agreement has
been duly and validly executed and delivered by the undersigned and,
assuming the due authorization, execution and delivery of this
Agreement and the Partnership Agreement by the Partnership and the
General Partner in its capacity as such, constitutes a legal, valid and
binding obligation of the undersigned enforceable against the
undersigned in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement and
the Partnership Agreement by the undersigned do not, and the
performance by the undersigned of its obligations hereunder
and thereunder and the consummation of the transactions
contemplated hereby and thereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) default under, result
in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of
any Lien upon any of the assets or properties of the
undersigned or any of the undersigned's subsidiaries under,
any of the terms, conditions or provisions of (1) the
certificates or articles of incorporation or bylaws (or other
comparable charter documents) of the undersigned or any of its
subsidiaries, or (2) subject to the taking of the actions
described in paragraph (ii) of this Section, (x) any laws
existing on the date hereof or orders of any Governmental or
Regulatory Authority applicable to the undersigned or any of
its subsidiaries or any of their respective assets or
properties, or (y) any Contracts to which the undersigned or
any of its subsidiaries is a party or by which the undersigned
or any of its subsidiaries or any of their respective assets
or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse
effect on the ability of the undersigned to consummate the
transactions contemplated by this Agreement.
(ii) Except as disclosed on Schedule 5(c) hereto, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the
terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which
the undersigned or any of its subsidiaries is a party or by
which the undersigned or any of its subsidiaries or any of
their respective assets or properties is bound for the
execution and delivery of this Agreement or the Partnership
Agreement by the undersigned, the performance by the
undersigned of its obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or
thereby, other than such consents, approvals, actions, filings
and notices which the failure to make or obtain, as the case
may be, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the
ability of the undersigned to consummate the transactions
contemplated by this Agreement or the Partnership Agreement.
(d) Residence. The principal place of business address set
forth on the signature page hereof is the undersigned's true and
correct principal place of business and is the only jurisdiction in
which an offer to sell the Interests was made to the undersigned and
the undersigned has no present intention of moving its principal place
of business to any other state or jurisdiction;
(e) No Registration. The undersigned understands that the
Interests have not been registered under the Act, or under the laws of
any other jurisdiction, and that except as otherwise contemplated
pursuant to the Partnership Agreement, the Partnership does not
contemplate and is under no obligation to so register the Interests.
The undersigned understands and agrees that the Interests must be held
indefinitely unless they are subsequently transferred (i) pursuant to
an effective registration statement under the Act and, where required,
under the laws of other jurisdictions or (ii) pursuant to an exemption
from applicable registration requirements. Even if such exemption is
available, the undersigned agrees that the assignment and
transferability of the Interests will be governed by the Partnership
Agreement. The Partnership Agreement imposes substantial restrictions
on assignment or transfer of Interests. The undersigned recognizes that
there is no established trading market for the Interests and that it is
unlikely that any public market for the Interests will develop for at
least five years. The undersigned will not offer, sell, transfer or
assign its Interest or any interest therein in contravention of this
Agreement, the Partnership Agreement, the Act or any state or federal
law;
(f) Purchase for Investment. The Interests for which the
undersigned hereby subscribes are being acquired solely for the
undersigned's own account for investment and are not being purchased
with a view to or for resale, distribution or other disposition, and
the undersigned has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution
or other disposition, except, in the case that the undersigned is a
Distributing Partner (as defined in Section 7(c)), as contemplated by
Section 7(c) and permitted under the Partnership Agreement;
(g) Knowledge. The undersigned has been furnished and has
carefully read the Partnership Agreement. The undersigned understands,
acknowledges and agrees that:
(i) the Partnership has recently been organized
and therefore has no financial or operating history;
(ii) the undersigned is not entitled to cancel,
terminate or revoke this Agreement or any of the powers
conferred herein;
(iii) various conflicts of interest may arise out
of transactions between the Partnership, the Limited Partners
and the General Partner and their respective Affiliates;
(iv) the Interests are speculative investments
which involve a high degree of risk; and
(v) the General Partner and its Affiliates will
receive substantial compensation in connection with the
management of and investment in the Partnership;
(h) Information. The undersigned has been granted the
opportunity to ask questions of, and receive answers from, the General
Partner and the sponsors of the Partnership concerning the terms and
conditions of the sale of the Interests, the Merger Agreement and the
transactions contemplated thereby, and to obtain any additional
information which the undersigned deems necessary to make an informed
investment decision. The undersigned has received or has had access to
other documents requested from the Partnership relating to the
Interests and the purchase thereof, and the Partnership has afforded
the undersigned the opportunity to discuss the undersigned's investment
in the Partnership and to ask and receive answers to any questions
relating to the investment in the Interests, the Merger Agreement and
the transactions contemplated thereby. The undersigned understands and
has evaluated the risks of a purchase of the Interests;
(i) Accredited Investor. The undersigned has read
the text of Rule 501(a)(1) - (8) of Regulation D under the Act and
confirms that it is an "accredited investor" as described thereby;
(j) Plan Assets.
(i) By checking below, the undersigned has indicated
whether or not it is, or is acting on behalf of, a "benefit
plan investor", as defined in 29 C.F.R. ss. 2510.3-101. The
undersigned acknowledges that (A) a benefit plan investor
includes (x) an "employee benefit plan" within the meaning of
Section 3(3) of the U.S. Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not such plan is
subject to ERISA, or (y) a plan or arrangement subject to
Section 4975 of the Code or (iii) an entity which is deemed to
hold the assets of any such employee benefit plan, plan or
arrangement described in (x) or (y) above pursuant to 29
C.F.R. ss. 2510.3-101 or otherwise, (B) a plan which is
maintained by a foreign corporation, governmental entity or
church, a Keogh plan covering no common-law employees and an
individual retirement account would each be a benefit plan
investor for this purpose, even though they are generally not
subject to ERISA and (C) a foreign or U.S. entity which is not
an operating company and which is not publicly traded or
registered as an investment company under the Investment
Company Act of 1940, as amended, and in which 25% or more of
the value of any class of equity interests is held by benefit
plan investors, would be deemed to hold the assets of one or
more employee benefit plans pursuant to 29 C.F.R. 2510.3-101.
The undersigned further understands that for purposes of
determining whether this 25% threshold has been met or
exceeded, the value of any equity interests held by a person
(other than a benefit plan investor) who has discretionary
authority or control with respect to the assets of the entity,
or any person who provides investment advice for a fee (direct
or indirect) with respect to such assets, or any affiliate of
such a person, is disregarded:
___ Yes ___ No
(ii) By checking below, the undersigned has indicated
whether it is, or is acting on behalf of, such an employee
benefit plan, plan or arrangement described in the preceding
question, or is an entity deemed to hold the assets of any
such employee benefit plan, plan or arrangement that is
subject to ERISA and/or Section 4975 of the Code"
___ Yes ___ No
(iii) By checking below, the undersigned has
indicated whether it is an insurance company using assets of
its general account?
___ Yes ___ No
If the answer to the above question is yes, please indicate
the percentage of the general account that is attributable to
benefit plan investors subject to ERISA and/or Section 4975 of
the Code: _______%;
(k) Holding Company. The undersigned is not a "public
utility company", a "holding company", a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company", as such terms are defined in the PUHCA or
a "public utility" as such term is defined in the FPA; and
(l) Ownership of Company Common Stock. As of the date hereof,
except as set forth in Schedule 5(l) attached hereto, the undersigned
does not, either individually or as part of a group for purposes of
Rule 13-d under the Securities Exchange Act of 1934, as amended,
beneficially own any shares of Company Common Stock (as defined in the
Merger Agreement).
6. Conditions to Closing. (a) The undersigned's obligation to
purchaseand deliver the Capital Contribution for the Interest to be sold
by the Partnership at the Closing is subject to the fulfillment on or prior
to the Closing of the following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the Partnership in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on the Closing Date,
and any representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all material
respects on and as of such earlier date, and the Partnership shall have
delivered to the undersigned a certificate, dated the Closing Date and
executed in the name and on behalf of the Partnership by its General
Partner, to such effect.
(ii) Performance. The Partnership shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied
with by the Partnership at or before the Closing Date, and the
Partnership shall have delivered to the undersigned a certificate,
dated the Closing Date and executed in the name and on behalf of the
Partnership by its General Partner, to such effect.
(iii) Merger Agreement. As of the Closing all conditions to
the consummation of the transactions contemplated by the Merger
Agreement shall have been satisfied or waived and the closing of the
transactions contemplated by the Merger Agreement shall occur
simultaneously with the payment of the Capital Contribution hereunder.
(iv) No Orders. As of the Closing Date, there shall not be
outstanding any rule or order of any court, administrative agency or
governmental body which in any way restrains or prevents the carrying
out of the transactions contemplated by this Agreement.
(v) Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or
Regulatory Authority or any other public or private third parties
necessary to permit the undersigned and the Partnership to perform
their obligations under this Agreement and to consummate the
transactions contemplated hereby shall have been duly obtained, made or
given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transaction
contemplated by this Agreement, including under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and the rules and
regulations promulgated thereunder (the "HSR Act"), shall have
occurred.
(vi) Holding Company Acts and FPA. As a result of consummation
of the transactions contemplated by this Agreement and the Merger
Agreement, neither the undersigned nor the Partnership would reasonably
be expected to be subject to regulation (x) as a registered public
utility holding company under PUHCA, (y) as a public utility holding
company under the New Mexico Public Utility Act (other than, in the
case of the Partnership, under Section 62-6-12 thereof) or the Texas
Public Utility Act or (z) as a public utility under the FPA.
(b) In connection with any purchase of Interests as contemplated by
Section 7(c), the Partnership and the General Partner's obligation to accept the
undersigned's Capital Contribution and admit the undersigned as a Limited
Partner in the Partnership at the Closing is subject to the fulfillment on or
prior to the Closing Date of the following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the undersigned in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on the Closing Date,
and any representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all material
respects on and as of such earlier date, and the undersigned shall have
delivered to the Partnership a certificate, dated the Closing Date and
executed in the name and on behalf of the undersigned, to such effect;
and
(ii) Performance. The undersigned shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied
with by the undersigned at or before the Closing Date, and the
undersigned shall have delivered to the Partnership a certificate,
dated the Closing Date and executed in the name and on behalf of the
undersigned, to such effect.
7. Covenants. Each of the General Partner and the undersigned covenants
and agrees with the other that, at all times from and after the date hereof
until the Closing Date, it will comply with all covenants and provisions of this
Section 7, except to the extent the other party may otherwise consent in
writing.
(a) Covenant to Update Information. The undersigned
covenants to advise the General Partner by telephone and in writing if
any representation and warranty contained in Section 5 or 6 hereof
becomes untrue prior to the Closing Date.
(b) Regulatory and Other Approvals.
(i) Subject to the terms and conditions of this
Agreement, each of the General Partner, the Partnership and
the undersigned will proceed diligently and in good faith to,
as promptly as practicable (x) obtain all consents, approvals
or actions of, make all filings with and give all notices to
governmental or regulatory authorities or any public or
private third parties required of the General Partner, the
Partnership and the undersigned to consummate the transactions
contemplated hereby and by the Merger Agreement, and (y)
provide such other information and communications to such
governmental or regulatory authorities or other public or
private third parties as the other party or such governmental
or regulatory authorities or other public or private third
parties may reasonably request in connection therewith. In
addition to and not in limitation of the foregoing, each of
the parties will (1) take promptly all actions necessary to
make the filings required of General Partner and the
undersigned under the HSR Act, (2) comply at the earliest
practicable date with any request for additional information
received by such party or its affiliates from the Federal
Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division"), pursuant to
the HSR Act, and (3) cooperate with the other party in
connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement
commenced by either the FTC or the Antitrust Division or state
attorneys general.
(ii) Each of the General Partner and the Partnership
further agrees that, promptly following any good faith request
by either Continental Casualty Company or Caravelle Investment
Fund, L.L.C. (x) it will cause to be filed with the Securities
and Exchange Commission (the "SEC"), on behalf of the
Partnership, a request for a "no-action letter" substantially
in the form of the draft thereof provided to the undersigned
prior to the date of this Agreement, with such changes therein
as may reasonably be advisable to obtain from the SEC such
"no-action letter", and (y) thereafter use its reasonable best
efforts to obtain such "no-action" letter.
(c) Sale of Interests.
(i) The Partnership, the General Partner and the
undersigned acknowledge and agree that, notwithstanding the
transfer restrictions contained in the Partnership Agreement,
certain Partners will be permitted to transfer all or any
portion of their respective Interests and rights hereunder in
accordance with Section 9.14 of the Partnership Agreement (the
"Distributing Partners"). The undersigned hereby agrees that,
to the extent it is a Distributing Partner, any such transfer
by it may only be made to a limited number of institutions,
each of which is reasonably believed by the Distributing
Partners to be an "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Act or an entity in
which all of the equity owners are accredited investors within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Act
(each, an "Institutional Accredited Investor"), and that each
such Institutional Accredited Investor shall, to the extent
such transfer is completed prior to the Closing Date, execute
and deliver to the Partnership, prior to the consummation of
any transfer of rights to subscribe for Interests to such
Institutional Accredited Investor, a Subscription Agreement
substantially in the form hereof. In no event will any such
transfer relieve the undersigned from its obligations under
this Subscription Agreement. The undersigned acknowledges and
agrees that, pursuant to the engagement letter dated the date
hereof between the Partnership, on behalf of the Distributing
Partners, and CIBC World Markets Corp. (the "Engagement
Letter"), any offering and sale of Interests or rights to
subscribe for Interests shall be made by the Distributing
Partners in accordance with this paragraph (c) and in
accordance with the terms of the Engagement Letter. The
undersigned will, to the extent it is a Distributing Partner,
cooperate with the Underwriters (as defined in the Engagement
Letter) in accordance with Section 4 of the Engagement Letter.
The Partnership hereby agrees not to agree to any material
amendment to the Engagement Letter without the prior written
consent of the undersigned. Neither the undersigned nor any of
its affiliates has entered into, or will without the prior
written consent of the Partnership enter into, any contractual
arrangement with respect to a distribution of the Interests
contrary to the provisions of this Agreement or the
Partnership Agreement;
(ii) The General Partner shall take all such actions
as shall be necessary to admit to the Partnership each
purchaser of an Interest hereunder; provided, however, that
notwithstanding anything herein to the contrary, none of the
Distributing Partners shall cause to be completed, and the
General Partner and the Partnership may refuse to accept and
register, any assignment, transfer or sale pursuant to this
paragraph (c) if such assignment, transfer or sale would
result in a breach by the Partnership of any of the
representations or warranties made by the Partnership in, or
of any of the covenants or agreements to be performed by the
Partnership pursuant to, of the Merger Agreement.
(d) Notice and Cure. Each of the General Partner and the
undersigned will promptly notify the other in writing of, and
contemporaneously will provide the other with true and complete copies
of any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing Date, any
event, transaction or circumstance, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of either
such party under this Agreement to be breached or that renders or will
render untrue any representation or warranty of either such party
contained in this Agreement as if the same were made on or as of the
date of such event, transaction or circumstance.
(e) Fulfillment of Conditions. Each of the General Partner and
the undersigned will take all commercially reasonable steps necessary
or desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of such party contained in this Agreement
and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
8. Partnership Agreement. The undersigned agrees to enter into
the Partnership Agreement upon acceptance of this Subscription Agreement by the
General Partner.
9. Indemnification. The undersigned agrees to indemnify and hold
harmless the Partnership, the General Partner, each other Limited Partner, or
any officer, director or control person (within the meaning of Section 15 of the
Act) of any such entity from and against any and all loss, damage or liability
due to or arising out of a breach of any representation or warranty of the
undersigned contained in any document furnished by the undersigned in connection
with the offering and sale of the Interests, including, without limitation, this
Agreement, or failure by the undersigned to comply with any covenant or
agreement made by the undersigned herein or in any other document furnished by
the undersigned to any of the foregoing in connection with this transaction.
10. Survival; Binding Effect. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and delivery of the Interests and payment therefor
and, notwithstanding any investigation heretofore or hereafter made by the
undersigned or on the undersigned's behalf, shall continue in full force and
effect. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements in this Agreement by or on
behalf of the Partnership, or by or on behalf of the undersigned, shall bind and
inure to the benefit of the successors and assigns of such parties hereto.
11. Termination. (a) This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned (i) at any time before the
Closing, by mutual written agreement of the General Partner (following action by
the Advisory Committee) and the undersigned or (ii) at any time before the
Closing, by the General Partner or the undersigned, in the event that any order
or law becomes effective restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or the Partnership, upon notification of the non-terminating party by
the terminating party.
(b) This Agreement shall automatically terminate, with no
further action being required on the part of either party hereto, upon any
termination of the Merger Agreement in accordance with its terms.
(c) This Agreement may be terminated by the undersigned if any
occurrence or circumstance results in a failure to satisfy the conditions in
Section 6(a)(iv), (v) or (vi) hereof.
(d) If this Agreement is validly terminated pursuant to this
Section, this Agreement will forthwith become null and void, and there will be
no liability or obligation on the part of the undersigned or the Partnership (or
any of their respective partners, officers, directors, employees, agents or
other representatives or affiliates). Notwithstanding the foregoing, no such
termination shall affect the obligations of the undersigned pursuant to Section
1(b) or Section 9, which shall survive any such termination.
12. Notices. All notices, statements, instructions or other documents
required to be given hereunder shall be in writing and shall be given either
personally, by overnight courier or by facsimile, addressed to the Partnership
at its principal offices and to the other parties at their addresses or
facsimile numbers reflected in the records of the Partnership. The undersigned,
by written notice given to the Partnership in accordance with this Section 12
may change the address to which notices, statements, instructions or other
documents are to be sent to the undersigned. All notices, statements,
instructions and other documents hereunder that are mailed shall be deemed to
have been given on the date of delivery. Whenever pursuant to this Agreement any
notice is required to be given by the undersigned to any other Partner, the
undersigned may request from the Partnership a list of addresses of all Partners
of the Partnership, which list shall be promptly furnished to the undersigned.
13. Complete Agreement; Counterparts. This Agreement constitutes the
entire agreement and supersedes all other agreements and understandings, both
written and oral, among the parties or any of them, with respect to the subject
matter hereof. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
14. Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto and any attempt to do
so will be void, except that the undersigned may assign any or all of its
rights, interests and obligations hereunder to a Permitted Transferee that
agrees in writing to be bound by all of the terms, conditions and provisions
contained herein, but no such assignment shall relieve the undersigned of its
obligations hereunder. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and shall be enforceable by the parties
hereto and their respective successors and assigns.
15. Amendment and Waiver. This Agreement may be amended or modified
only by an instrument signed by the parties hereto. A waiver of any provision of
this Agreement must be in writing, designated as such, and signed by the party
against whom enforcement of that waiver is sought. The waiver by a party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach thereof.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
Caravelle Investment Fund, L.L.C. 425 Lexington Avenue, 2nd Floor
- ---------------------------------------- -------------------------------
Name of Entity (Print) Mailing Address -- Street
By: Caravelle Advisors, L.L.C., New York NY 10017
----------------------------------- -------------------------------
as Investment Manager Attorney-in-Fact City State Zip Code
By: /s/ Nigel Ekern 52-210-7241
----------------------------------- -------------------------------
Signature Tax Identification Number
Nigel Ekern
-----------------------------------
Name (Print)
Executive Director
-----------------------------------
Title
Total amount of Interest subscribed for: 24.375% Interest in the
Partnership for $24,375,000 contributed, less the amount, if any, of
Capital Contributions actually received by the Partnership from all
subscribers which have agreed to subscribe for the Interests referred to
above in accordance with the provisions of Section 7(c) of this
Subscription Agreement.
212-885-4525
----------------------------------
Telecopy No.
212-885-4505
----------------------------------
Telephone No.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
CIBC WG Argosy Merchant Fund 2, L.L.C. 425 Lexington Avenue
------------------------------------ ---------------------------------
Name of Entity (Print) Mailing Address -- Street
By: /s/ Jay Levine New York NY 10017
------------------------------------ --------------------------------
Signature City State Zip Code
Jay Levine 13-3858644
------------------------------------ ---------------------------------
Name (Print) Tax Identification Number
Managing Director
-----------------------------------
Title
Total amount of Interest subscribed for: 21.9375% Interest in the
Partnership for $21,937,500 contributed, less the amount, if any, of
Capital Contributions actually received by the Partnership from all
subscribers which have agreed to subscribe for the Interests referred to
above in accordance with the provisions of Section 7(c) of this
Subscription Agreement.
(212) 885-4998
---------------------------------
Telecopy No.
(212) 885-4400
---------------------------------
Telephone No.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
Co-Investment Merchant Fund 3, LLC 425 Lexington Avenue
----------------------------------- ------------------------------
Name of Entity (Print) Mailing Address -- Street
By: /s/ Jay Levine New York NY 10017
------------------------------ ------------------------------
Signature City State Zip Code
Jay Levine 52-2139015
----------------------------------- ------------------------------
Name (Print) Tax Identification Number
Managing Director
-----------------------------------
Title
Total amount of Interest subscribed for: 2.4375% Interest in the
Partnership for $2,437,500 contributed, less the amount, if any, of
Capital Contributions actually received by the Partnership from all
subscribers which have agreed to subscribe for the Interests referred to
above in accordance with the provisions of Section 7(c) of this
Subscription Agreement.
(212) 885-4998
-----------------------------------
Telecopy No.
(212) 885-4400
-----------------------------------
Telephone No.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
Continental Casualty Company CNA Plaza, 23-S
------------------------------------ ----------------------------
Name of Entity (Print) Mailing Address -- Street
By: /s/ Marilou R. McGirr Chicago IL 60685
------------------------------- ----------------------------
Signature City State Zip Code
Marilou R. McGirr 36-2114545
------------------------------------ ----------------------------
Name (Print) Tax Identification Number
Vice President
------------------------------------
Title
Total amount of Interest subscribed for: 48.75% Interest in the
Partnership for $48,750,000 contributed, less the amount, if any, of
Capital Contributions actually received by the Partnership from all
subscribers which have agreed to subscribe for the Interests referred to
above in accordance with the provisions of Section 7(c) of this
Subscription Agreement.
(212) 521-8258
------------------------------------
Telecopy No.
(212) 521-2861
------------------------------------
Telephone No.
<PAGE>
Signature Page for Corporate, Partnership or Trust Subscribers
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 24th day of May, 1999.
Laurel Hill Capital Partners, LLC 2 Robbins Lane, Suite 201
------------------------------------- ------------------------------
Name of Entity (Print) Mailing Address -- Street
By: /s/ W. J. Catacosinos Jericho NY 11753
-------------------------------- ------------------------------
Signature City State Zip Code
William J. Catacosinos 11-3475372
------------------------------------- ------------------------------
Name (Print) Tax Identification Number
Manager
-------------------------------------
Title
Total amount of Interest subscribed for: 2.4% Interest in the Partnership
for $2,399,999 contributed, less the amount, if any, of Capital
Contributions actually received by the Partnership from all subscribers
which have agreed to subscribe for the Interests referred to above in
accordance with the provisions of Section 7(c) of this Subscription
Agreement.
516-933-3108
------------------------------------
Telecopy No.
516-933-3100
------------------------------------
Telephone No.
<PAGE>
SUBSCRIPTION ACCEPTED AS OF MAY 24, 1999
SW Acquisition, L.P.
By: SW I Acquisition GP, L.P.
as General Partner
By: SW II Acquisition, LLC
as General Partner
By: /s/ W. J. Catacosinos
----------------------------
Name: William J. Catacosinos
Title: Manager
EXHIBIT-99.03
[Bridge Loan Commitment Letter]
CIBC WORLD MARKETS CORP. THE CHASE MANHATTAN BANK
425 LEXINGTON AVENUE 270 PARK AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NY 10017
May 24, 1999
SW Acquisition, L.P.
c/o CIBC World Markets Corp.
425 Lexington Avenue, 7th Floor
New York, NY 10017
Attention:
Re: Texas-New Mexico Power Company Acquisition Financing
Ladies and Gentlemen:
We understand that CIBC World Markets Corp. ("CIBC") and
certain other investors (the "Equity Investors") through SW Acquisition, L.P.
(the "Partnership") has formed an acquisition subsidiary, ST Acquisition Corp.
("Newco"), which intends to enter into a transaction pursuant to which Newco
will merge (the "Merger") with and into TNP Enterprises, Inc. ("XYZ"), a holding
company that owns Texas-New Mexico Power Company ("ABC"). In connection with the
Merger, the former shareholders of XYZ will become entitled to receive
approximately $590.0 million (or $44.00 per share, net to the seller) in cash
and the Partnership will become the owner of all the issued and outstanding
capital stock of XYZ. We further understand that the funding requirements for
the Merger (including related fees and expenses) will be approximately $640.0
million and such amount, together with ongoing working capital needs, will be
provided solely from (i) a senior secured term loan and revolving credit
facility of Newco (the "Credit Facilities") of up to $165.0 million
(approximately $25.0 million of the revolving credit portion of the Credit
Facilities to be drawn on the closing date of the Merger (the "Closing Date"),
(ii) a backstop facility of ABC with aggregate availability of $428.0 million
(the "Backstop Facility"), (iii) not less than a $100.0 million common equity
investment by the Equity Investors in the Partnership and the investment by the
Partnership in Newco of a portion of such amount which, together with the other
financing, is sufficient to consummate the Merger (the "Equity Financing"), (iv)
the issuance and sale of not less than $100.0 million of preferred equity
securities of Newco (the "Preferred Equity") and (v) the issuance and sale of
Debt Securities (as defined below). The Merger, the Credit Facilities, the
Backstop Facility, the Equity Financing, the bridge loan contemplated by this
letter, the issuance and sale of bridge preferred stock contemplated by the
commitment letter among CIBC, The Chase Manhattan Bank ("CMB"), Continental
Casualty Company, Laurel Hill Capital Partners LLC, the Partnership and Newco
(the "Bridge Preferred Stock") and the issuance and sale of the Preferred Stock
and the Debt Securities are herein collectively referred to as the
"Transaction".
In connection with the Transaction, you have engaged one or
more investment banks reasonably satisfactory to the Lenders (as defined below)
to sell or place senior debt securities of Newco (the "Debt Securities").
You have requested that each of CIBC and CMB (collectively,
the "Lenders") commit to provide to Newco funds in the amount of up to $137.5
million ($275.0 million in the aggregate) in the form of a senior subordinated
increasing rate bridge loan (the "Bridge Loan"), as described in Section 1
hereof.
Accordingly, subject to the terms and conditions set forth or
incorporated in this letter, the Lenders agree with you as follows:
Section 1. Bridge Loan. The Lenders hereby commit, on an
equal, but not joint and several, basis subject to the terms and conditions
hereof and in the Summary Term Sheet attached hereto as Exhibit A (collectively,
the "Term Sheet"), to provide to Newco a senior subordinated increasing rate
bridge loan on the Closing Date in the aggregate principal amount of up to
$275.0 million. The proceeds of the Bridge Loan shall be used solely to finance
the Merger and to pay fees and expenses incurred in connection therewith. The
principal terms of the Bridge Loan are summarized in the Term Sheet.
Unless the Lenders' commitment hereunder shall have been
terminated pursuant to Section 7, the Lenders or their Affiliates shall have the
exclusive right to provide the Bridge Loan or other bridge or interim financing
required in connection with the Transaction; provided, that Continental Casualty
Company shall have the right to purchase Bridge Preferred Stock as provided in
the Commitment Letter relating to the Bridge Preferred Stock.
You hereby represent and covenant that based on your review
and analysis, (a) all information other than Projections (as defined below)
which has been or is hereafter made available to the Lenders by you or your
representatives, advisors or affiliates in connection with the transactions
contemplated hereby (the "Information") has been reviewed and analyzed by you in
connection with the performance of your own due diligence and, to the best of
your knowledge, is, or in the case of Information made available after the date
hereof will be, correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
known to you and necessary to make the statements contained therein, in the
light of the circumstances under which such statements were or are made, not
misleading, (b) to the best of your knowledge, the consolidated EBITDA of XYZ,
ABC and their consolidated subsidiaries for the year ended December 31, 1998 was
at least $135.0 million and (c) all financial projections concerning ABC, XYZ
and Newco that have been or are hereafter made available to the Lenders by you
or your representatives, advisors or affiliates in connection with the
transactions contemplated hereby (the "Projections") have been or, in the case
of Projections made available after the date hereof, will be prepared in good
faith based upon reasonable assumptions (it being understood that the
Projections are subject to significant uncertainties and contingencies, many of
which are beyond your control and that no assurance can be given that such
Projections will be realized). You agree to supplement the Information and the
Projections from time to time until the termination of the Lenders' commitment
hereunder so that the representation and warranty made in the preceding sentence
is correct as of such date. In arranging and syndicating the Bridge Loan, the
Lenders will be using and relying on the Information and the Projections. The
representations and covenants contained in this paragraph shall remain effective
until definitive financing agreements are executed and thereafter the disclosure
representations contained herein shall be terminated and of no further force and
effect. For purposes of this Agreement, "EBITDA" means, for any period, the
aggregate amount of Consolidated Net Income (as defined), after adding thereto
interest charges, interest income, income taxes, depreciation and amortization,
amortization of regulatory assets, amortization or intangibles, non-cash
regulatory deferrals and other amortizations, extraordinary items, and any other
non-cash non-recurring items.
The Lenders or their respective affiliates will act as the
exclusive administrative agents, advisors and arrangers in respect of the Bridge
Loan and will, in such capacities, perform the duties and exercise the authority
customarily performed and exercised by it in such roles. The Lenders shall
consider your reasonable suggestions for co-agents and co-arrangers; provided,
however, that you shall not (i) appoint other agents, co-agents or arrangers,
(ii) award any other titles or (iii) pay compensation (other than that expressly
contemplated by the Term Sheet), in connection with the Bridge Loan.
The Lenders shall be entitled to change the structure and/or
pricing of the Credit Facilities, the Backstop Facility or the Bridge Loan if
they determine that such changes are advisable in order to ensure a successful
syndication; provided, however, that in no event shall the amount of the Credit
Facilities, the Bridge Loan or the Backstop Facility be lowered nor shall any
change in structure create the requirement for any material regulatory approval
not envisioned at the time the Merger Agreement was executed.
Section 2. Financing Documentation. The making of the
Bridge Loan will be governed by definitive loan and related agreements
and documentation (collectively, the "Financing Documentation") in form and
substance reasonably satisfactory to the Lenders and to you. The Financing
Documentation shall be prepared by Cahill Gordon & Reindel, special counsel
to the Lenders. The Financing Documentation shall contain such covenants, terms
and conditions as are consistent with this letter and the Term Sheet and such
other covenants, terms, conditions, representations, warranties, events of
default and remedies provisions as shall be satisfactory to the Lenders and you.
Section 3. Conditions. The obligation of the Lenders under
Section 1 of this letter to provide the Bridge Loan is subject to fulfillment of
the following conditions:
(a) Merger Agreement. The Partnership and Newco shall have
entered into an agreement relating to the Merger (the "Merger
Agreement") on terms and in form and substance substantially
consistent with the terms of the Merger Agreement reviewed by the
Lenders prior to the execution by the Partnership of this letter
including, without limitation, the payment to the former shareholders
of XYZ of not more than $44.00 per share, net to the seller in cash.
The Merger Agreement shall not have been amended in any material
respect without the Lenders' written consent, which consent shall not
be unreasonably withheld. All conditions precedent to the Merger
contained in the Merger Agreement shall have been performed or
complied with substantially on the terms set forth therein and not
waived without the Lenders' written consent, which consent shall not
be unreasonably withheld and simultaneously with any drawing under the
Credit Facilities or the making of the Bridge Loan, the Merger shall
have been consummated.
(b) Financing Documentation. Newco, ABC and the Lenders shall
have entered into the Financing Documentation relating to the Bridge
Loan and the transactions contemplated thereby on terms and in form
and substance reasonably satisfactory to the Lenders and Newco.
(c) The Credit Facilities and the Backstop Facility. Newco, ABC
and the lenders applicable hereto shall have entered into
documentation with respect to the Credit Facilities and the Backstop
Facility (the "Senior Documentation")on terms and conditions
(including with respect to funding) and in form and substance
reasonably satisfactory to the Lenders. All conditions to funding
thereunder shall have been satisfied or waived only with the consent
of the Lenders, not to be unreasonably withheld. The Senior
Documentation shall not have been amended, without Lenders' consent,
which consent shall not be unreasonably withheld.
(d) Equity Financing. On or prior to the Closing Date, Newco
shall have received a common equity investment of not less than $100.0
million, which shall be provided by the Equity Investors through the
Partnership. In addition, on or prior to the Closing Date, Newco shall
have received a preferred equity investment of not less than $100.0
million, which shall be provided through the sale and issuance of the
Bridge Preferred Stock or the Preferred Equity. The terms and
conditions of the Equity Financing and the Bridge Preferred Stock or
the Preferred Equity and any tax sharing arrangement shall be
satisfactory to the Lenders.
(e) No Adverse Change or Development, Etc. (i) There shall not
have occurred since the date of the most recent financial statements
of XYZ a material adverse effect on the rights or remedies of the
Lenders, or on the ability of ABC, XYZ and Newco to perform their
obligations to the Lenders or on the business, property, assets,
nature of assets, liabilities, condition (financial or otherwise),
results of operations or prospects of ABC; (ii) trading in securities
generally on the New York or American Stock Exchange shall not have
been suspended; minimum or maximum prices shall not have been
established on any such exchange; (iii) a banking moratorium shall not
have been declared by New York or United States authorities; and (iv)
there shall not have been (A) an outbreak or escalation of material
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other material insurrection or armed
conflict involving the United States or any other national or
international calamity or emergency, or (C) any material change or
disruption in the general financial banking or capital markets of the
United States which, in each case, in the reasonable judgment of the
Lenders would materially and adversely affect or impair the ability to
sell or place the Debt Securities or syndicate the Bridge Loan.
(f) Capital Structure. The pro forma consolidated capital
structure of Newco, ABC and XYZ, after giving effect to the
Transaction (including all adjustments permitted by Regulation S-X
under the Securities Act of 1933), shall be consistent in all material
respects with the Projections and capital structure contemplated
herein.
(g) Governmental and Third Party Approvals. All governmental and
third party approvals required by the Merger Agreement and any other
material governmental and third party approvals required in connection
with the financing contemplated hereby shall have been obtained on
reasonably satisfactory terms and shall be in full force and effect,
and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would
materially restrain, prevent or otherwise impose material adverse
conditions on the financing thereof.
(h) Financial Statements. The Lenders shall have received (i)
satisfactory audited financial statements of XYZ and ABC for the three
most recent fiscal years for which such financial statements are
available and (ii) satisfactory unaudited interim consolidated
financial statements of XYZ and ABC for each fiscal month and
quarterly period ended after the latest fiscal year referred to in
clause (i) above as to which such financial statements are available
and such financial statements shall not reflect any material adverse
change in the consolidated financial conditions of XYZ and ABC and
their respective subsidiaries from what was reflected in the financial
statements or projections previously furnished to the Lenders.
(i) Minimum EBITDA. The Lenders shall be satisfied that
Consolidated EBITDA of XYZ, ABC and their consolidated subsidiaries
for the latest twelve month period for which the relevant financial
information is available shall equal at least $ 135.0 million and the
Partnership shall provide support for such calculation of a nature
that is satisfactory to the Lenders.
(j) Solvency. The Lenders shall have received a certificate of
Newco satisfactory in form and substance to the Lenders, executed by
the Chief Executive Officer or Chief Financial Officer of Newco, that
shall certify the solvency of Newco and its subsidiaries after giving
effect to the Merger and the other transactions contemplated hereby.
(k) Power Market Study. The Lenders shall have received within
120 days of the date hereof a power market study by a satisfactory
independent power marketing consultant, in form and substance
satisfactory to the Lenders.
(l) Environmental Audit. The Lenders shall have received within
120 days of the date of the Commitment Letter to which this term sheet
is attached an environmental audit with respect to certain real
property owned or leased by XYZ, ABC and their subsidiaries from a
firm acceptable to the Lenders, which audit shall not reveal any
material adverse change in XYZ, ABC and their subsidiaries.
(m) Opinions, Representations and Warranties. The Lenders shall
be entitled to rely on all representations, warranties and opinions
given in connection with the Merger Agreement and shall have received
representations, warranties and legal opinions covering matters
customary for high yield financings of the type contemplated.
(n) Take-Out Banks. You shall have engaged one or more investment
banks satisfactory to the Lenders (the "Take-Out Banks") to publicly
offer or privately place the Debt Securities, the proceeds of which
will be used either, in lieu of the Bridge Loan, to fund the Merger
or, if the Bridge Loan is outstanding, to prepay in whole or in part
the Bridge Loan. You and Newco shall have prepared (and shall have
obtained the agreement of XYZ and ABC to assist in the preparation of)
an offering memorandum relating to the issuance of the Debt Securities
(which offering memorandum shall contain audited, unaudited and pro
forma financial statements meeting the requirements of Regulation S-X
under the Securities Act of 1933, as amended, of ABC for the periods
required of a registrant on Form S-1) at least 30 days prior to
funding and the Take-Out Banks shall have been afforded the
opportunity to market and shall have marketed such Debt Securities
pursuant to such offering memorandum for such a period as is customary
to complete the sale of securities such as the Debt Securities. You
and Newco shall have used all reasonable commercial efforts to assist
(and shall have obtained the agreement of XYZ and ABC to assist) the
Take-Out Banks in marketing the Debt Securities, including, without
limitation, having prepared the offering memorandum relating thereto,
having made senior management of XYZ and ABC and other representatives
of the Partnership, XYZ and ABC available (at mutually agreeable
times) to participate in meetings with prospective investors and
having provided such information and assistance as the Take-Out Banks
shall have reasonably requested during the course of such marketing
process.
Section 4. Securities Demand. The Financing Documentation will
provide that upon request (a "Request") from the Take-Out Banks made at any time
after the Closing Date while any portion of the Bridge Loan is outstanding,
the Partnership, Newco, XYZ and ABC shall take all reasonable actions necessary
or desirable, to the extent within their power, so that the Take-Out Banks
can, as soon as practicable after such Request, publicly offer or privately
place Debt Securities (the "Initial Request Date"). The Financing Documentation
will also provide that upon notice by the Take-Out Banks (a "Take-Out Securities
Notice"), at any time and from time to time following the Initial Request Date,
Newco, XYZ and ABC will issue and sell Debt Securities upon such terms and
conditions as specified in the Take-Out Securities Notice; provided, however,
that for either a Request or a Take-Out Securities Notice (i) fixed interest
rates shall be determined by the Take-Out Banks in light of the then
prevailing market conditions, but in no event shall the interest rate on
the Debt Securities exceed 17.00% per annum; (ii) the maturity of any Debt
Securities shall not be earlier than six months after the scheduled maturity
of the Credit Facilities (as in effect on the Closing Date); (iii) the Debt
Securities will contain such terms, conditions and covenants as are customary
for similar high yield financings and as are satisfactory in all respects to
the Take-Out Banks, Newco and ABC; and (iv) all other arrangements with
respect to the Debt Securities shall be reasonably satisfactory in all respects
to the Take-Out Banks, Newco, XYZ and ABC in light of the then prevailing
market conditions. CIBC and CMB agree that if one of the Take-Out Banks (the
"Electing Bank") provides notice to the other Take-Out Bank (the "Receiving
Bank") that it desires to deliver a Request and Take-Out Securities Notice and
the Receiving Bank does not desire to do so, no Request or Take-Out Securities
Notice will be delivered for 30 days, at which time the Electing Bank may
require the Receiving Bank to join in the delivery of a Request and Take-Out
Securities Notice. The foregoing shall not limit the ability of Newco, XYZ or
ABC to refinance the Bridge Loan by other means.
In addition, the Partnership, Newco, XYZ and ABC covenant and
agree subsequent to the funding date of any portion of the Bridge Loan to use
reasonable best efforts to assist the Take-Out Banks in marketing the Debt
Securities to refinance the Bridge Loan, including, without limitation,
preparing an offering memorandum relating thereto, making senior management of
ABC and other representatives of the Partnership, XYZ and ABC available (at
mutually agreeable times) to participate in meetings with prospective investors
and providing such information and assistance as the Take-Out Banks shall
reasonably request during the course of such marketing process.
Section 5. Indemnification and Contribution. You agree to
indemnify the Lenders and each of their respective affiliates and each person
in control of the Lenders and eac h of their respective affiliates and the
respective officers, directors, employees, agents and representatives of the
Lenders and their respective affiliates and control persons, as provided in the
Indemnity Letter dated the date hereof (the "Indemnity Letter") and attached
hereto.
Section 6. Expenses. In addition to any fees that may be
payable to the Lenders hereunder and regardless of whether any of the
transactions contemplated by this letter are consummated, if this letter
agreement is terminated, the Bridge Loan is made available or the Financing
Documentation is executed and delivered, you hereby agree to reimburse the
Lenders for all reasonable fees and disbursements of legal counsel, including
but not limited to the reasonable fees and disbursements of Cahill Gordon
& Reindel, the Lenders' special counsel and consultants, and all of the Lenders'
travel and other reasonable out-of-pocket expenses incurred in connection with
the Transaction or otherwise arising out of the Lenders' commitment hereunder.
Section 7. Termination. The Lenders' commitment hereunder to
provide the Bridge Loan shall terminate, unless expressly agreed to by the
Lenders in their sole discretion to be extended to another date, on the
earlier of (A) February 24, 2000 if no portion of the Bridge Loan has been
funded (other than as a result of failure of the Lenders to fulfill their
obligations hereunder), and (B) the termination of the Merger Agreement in
accordance with the terms thereof. No such termination of such commitment
shall affect your obligations under Sections 5 and 6 hereof or this Section 7,
which shall survive any such termination.
Section 8. Assignment; Syndication. This letter shall not
be assignable by any party hereto without the prior written consent of the other
parties (other than, in the case of the Lenders, to an affiliate of such Lender,
it being understood that any such affiliate shall be subject to the restrictions
set forth in this Section 8); provided, however, that the Lenders shall have
the right, in a manner agreeable to one another, to syndicate the Bridge Loan
and the commitment with respect thereto among banks or other financial
institutions pursuant to the Financing Documentation or otherwise and to sell,
transfer or assign all or any portion of, or interests or participations in,
the Bridge Loan and the commitment with respect thereto and any notes issued
in connection therewith. The Partnership, Newco, XYZ and ABC agree, upon request
of the Lenders, to use reasonable best efforts, whether prior to or after
the funding date of any Bridge Loan, to assist the Lenders in syndicating
the Bridge Loan or the commitment with respect thereto, including, without
limitation, in connection with (x) the preparation of an information package
regarding the Transaction, including the Information and the Projections
described in Section 1 hereof, and (y) meetings and other communications with
prospective Lenders, including making senior management of ABC and other
representatives of the Partnership, XYZ and ABC available (at mutually
agreeable times) to participate in such meetings. The Lenders agree between
themselves that neither the Lenders nor any of their respective direct and
indirect transferees shall syndicate, sell, transfer, assign, participate or
otherwise reduce or transfer their risk (including by way of derivatives or
otherwise)(each, a "Disposition") for 180 days following the date of this letter
with respect to their commitments with respect to the Bridge Loan or, to the
extent the Bridge Loan is funded, any portion of the Bridge Loan, other
than a Disposition thereof by a Lender to one or more of its affiliates
or a Disposition thereof by CIBC, with an option to CMB to participate
pro rata in such Disposition.
Section 9. Miscellaneous. THIS LETTER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS COMMITMENT LETTER IS HEREBY WAIVED. THE PARTNERSHIP HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE
COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE
RELATED TO THIS COMMITMENT LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This
letter (including the provisions of the Indemnity Letter specifically
incorporated herein) embodies the entire agreement and understanding between
you and the Lenders and supersedes all prior agreements and understandings
relating to the subject matter hereof. This letter may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
The Lenders reserve the right to employ the services of their
respective affiliates (including Canadian Imperial Bank of Commerce and Chase
Securities Inc.) in providing services contemplated by this letter and to
allocate, in whole or in part, to their respective affiliates certain fees
payable to the Lenders in such manner as the Lenders and their respective
affiliates may agree in their sole discretion. The Partnership acknowledges that
the Lenders may share with any of their respective affiliates (including
Canadian Imperial Bank of Commerce and Chase Securities Inc.) and such
affiliates may share with the Lenders (in each case, subject to any
confidentiality agreements applicable thereto), any information related to the
Partnership or its affiliates, XYZ, ABC (including information relating to
creditworthiness) or the Transaction.
Each of the parties hereto agree that it will not disclose
this Agreement or the contents hereof to any person without the approval of each
of the Lenders, except that the Lenders may disclose this Agreement and the
contents hereof to their affiliates as provided above and each party may
disclose this Agreement and the contents hereof (i) to officers, employees,
attorneys, accountants and advisors of the parties hereto, XYZ and ABC on a
confidential and need-to-know basis and (ii) as required by applicable law or
compulsory process. The provisions contained in this paragraph shall remain in
full force and effect notwithstanding the termination of this Agreement. This
section shall not preclude the release of information necessary for syndication
of the Bridge Loan.
<PAGE>
If you are in agreement with the foregoing, please sign and
return to the Lenders c/o CIBC World Markets Corp. at 425 Lexington Avenue, New
York, New York 10017 the enclosed copy of this letter no later than 6:00 p.m.,
New York time, on May 24, 1999, whereupon the undertakings of the parties shall
become effective to the extent and in the manner provided hereby. This offer
shall terminate if not so accepted by you on or prior to that time.
Very truly yours,
CIBC WORLD MARKETS CORP.
By: /s/ S. Paul Kovich
-----------------------------
Name: S. Paul Kovich
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Thomas L. Casey
-----------------------------
Name: Thomas L. Casey
Title: Vice President
Accepted and Agreed to as of the date first above written:
SW ACQUISITION, L.P.
a Texas limited partnership
BY: GENERAL PARTNER:
SW I ACQUISITION GP, L.P.,
a Texas limited partnership
BY: GENERAL PARTNER:
SW II ACQUISITION, LLC,
a Texas limited liability company
By: /s/ W.J. Catacosinos
------------------------------
Name: William J. Catacosinos
Title: Manager
ST ACQUISITION CORP.
By: /s/ W.J. Catacosinos
------------------------------
Name: William J. Catacosinos
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Summary of Terms
The following summarizes selected terms of the senior
subordinated increasing rate unsecured bridge loan and term loan facility to be
provided in connection with the proposed acquisition (the "Acquisition") of
Texas-New Mexico Power Company by ST Acquisition Corp., a newly formed
acquisition subsidiary of SW Acquisition, L.P. This Summary of Terms is intended
merely as an outline of certain of the material terms of such credit facilities.
It does not include descriptions of all of the terms, conditions and other
provisions that are to be contained in the definitive documentation relating to
such credit facilities and it is not intended to limit the scope of discussion
and negotiation of any matters not inconsistent with the specific matters set
forth herein. All terms defined in the commitment letter to which this Summary
of Terms is attached and not otherwise defined herein shall have the same
meanings when used herein.
Borrower: ST Acquisition Corp. (the "Borrower").
Lenders: CIBC World Markets Corp.
The Chase Manhattan Bank
Amount: $275.0 million senior subordinated increasing
rate bridge loan(the "Bridge Loan").
Maturity: The commitment shall automatically expire on February
24, 2000 if no portion of the Bridge Loan has been
funded (other than as a result of failure of the
Lenders to fulfill its obligations hereunder). Any
outstanding amount under the Bridge Loan will be
required to be repaid in full on , 2009 (10 years).
Commitment and (i) A cash fee (the "Commitment Fee") of 1.25% of the
Funding Fee: total amount committed shall be earned by the Lenders
upon execution of the Bridge Loan commitment letter
and be due and payable upon the Closing Date (it
being understood that no Commitment Fee is payable
under this clause (i) if the Closing Date does not
occur except to the extent of any Expense Amount paid
under Section 8.02(b or Section 8.02(c) of the Merger
Agreement) and (ii) on the date of funding of the
Bridge Loan (the "Funding Date"), the Borrower shall
pay a cash fee to the Lenders equal to 1.25% of the
aggregate principal amount of the Bridge Loan funded
on the Funding Date.
Ticking Fee A cash fee (the "Ticking Fee") of 0.50% per annum
on the average commitment from signing to funding or
termination of the commitment (it being understood
that no Ticking Fee is payable if the Closing Date
does not occur except to the extent of any Expense
Amount paid under Section 8.02(b) or Section 8.02(c)
of the Merger Agreement).
Use of Proceeds: To fund in part the Transaction and to pay related
fees and expenses.
Interest Rate: Interest on the Bridge Loan will be payable, semi-
annually in arrears. The interest rate will increase
every 90 days subsequent to funding (the "Issue
Date") of the Bridge Loan and will initially be at
the greater of LIBOR + 600 basis points or 11.00% and
will increase thereafter as set forth in the schedule
below (the "Interest Rate").
Days After Funding Incremental Spread
------------------ ------------------
91-180 50 bp
181-270 100 bp
271-365 150 bp
At the first anniversary of the Closing Date the
interest rate on the Bridge Loan shall be fixed at
the sum of (i) 11.00% or LIBOR + 600 bps (whichever
is greater) and (ii) 400 bps. Interest on the Bridge
Loan will be paid in cash to the extent that the
combined sum of the interest on the B ridge Loan is
less than or equal to a rate per annum of 15.00%. To
the extent that such combined sum is greater than
15%, interest above 15% will be paid in debt
securities having terms and provisions identical to
the Bridge Loan, as the case may be.
Ranking: The obligations of the Borrower under the Bridge Loan
will be senior subordinated obligations of the
Borrower and will rank (i) junior in right of payment
only to all senior indebtedness of the Borrower, (ii)
pari passu in right of payment to all senior
subordinated indebtedness of the Borrower and (iii)
senior to any subordinated indebtedness of the
Borrower.
Optional Prepayment: The Bridge Loan will be redeemable, at the option of
the Borrower, at a premium to par for 365 days after
the Closing Date as set forth in the schedule below
plus accrued and unpaid interest if any.
Days After Funding Call Premium
------------------ ------------
0-90 100%
91-180 101.0%
181-270 102.0%
271-365 103.0%
At the first anniversary of the Closing Date, the
Bridge Loan will become non-callable until the fifth
anniversary of the Closing Date and thereafter will
be callable at a premium declining ratably to par at
the eighth anniversary of the Closing Date.
Mandatory Prepayment
and Change in Control: Net proceeds (except for proceeds from the financing
used to consummate the Acquisition) of sales of debt
securities or equity securities, in a public offering
or private placement by the Borrower or any of its
subsidiaries, shall, to the extent permitted, be used
to prepay the Bridge Loan plus accrued interest and
any other amount payable thereunder to the full
extent of the net proceeds so received to the extent
such net proceeds are not used to retire senior bank
debt. The Borrower will be required to make an offer
to purchase all notes outstanding under the Bridge
Loan, to the extent permitted by the Senior Credit
Facilities, as the case may be, upon the occurrence
of a Change of Control (to be defined) at 101% of
principal amount plus accrued interest and otherwise
in a manner reasonably acceptable to the Lenders
and the Borrower.
Participation/Assign-
ment or Syndication: The Lenders may participate out or sell or assign, or
syndicate to other lenders, the Bridge Loan, in whole
or in part, at any time, subject to compliance with
applicable securities laws and the agreement between
themselves.
Debt Security Exchange: The Lenders may at any time after the Closing Date
require that the Borrower exchange the Bridge Loan
for long-term notes with substantially identical
terms to the Bridge Loan, and other terms and
conditions customary for high yield debt securities
issued for cash in the then prevailing market and
acceptable to the Lenders and the Borrower and shall
in addition provide customary registration rights,
including, without limitation, a registered exchange
offer or, if not permitted by applicable law to
effect an exchange offer, demand registrations.
Covenants: The Financing Documentation will contain customary
affirmative and negative covenants (with customary
carve-outs and exceptions), including, without limi-
tation, restrictions on the ability of the Borrower
and its subsidiaries to incur additional indebted-
ness, incur other senior subordinated debt, pay
certain dividends and make certain other restricted
payments and investments, impose restrictions on the
ability of the Borrower's subsidiaries to pay
dividends or make certain payments to the Borrower,
create liens, enter into transactions with affili-
ates, sell assets and merge, consolidate or transfer
substantially all of their respective assets.
Representations and
Warranties: Customary for transactions of this type.
Conditions Precedent: Customary for transactions of this type as set forth
in Section 3 of the bridge loan commitment letter.
Events of Default: Customary for transactions of this type, including,
without limitation, payment defaults, covenant
defaults, bankruptcy and insolvency, judgments, cross
acceleration of and failure to pay at final maturity
other indebtedness aggregating $5 million or more,
subject to, in certain cases, notice and grace
provisions.
Governing Law and Forum: The State of New York.
Indemnification and
Expense Reimbursement: Customary for transactions of this type.
EXHIBIT-99.04
CIBC WORLD MARKETS CORP. THE CHASE MANHATTAN BANK
425 LEXINGTON AVENUE 270 PARK AVENUE
NEW YORK, NY 10017 NEW YORK, NY 10017
July 9, 1999
SW Acquisition, L.P.
c/o CIBC World Markets Corp.
425 Lexington Avenue, 7th Floor
New York, NY 10017
Re: Texas-New Mexico Power Company Acquisition Financing
Ladies and Gentlemen:
Reference is made to the Bridge Loan Commitment Letter dated
May 24, 1999 among CIBC World Markets Corp., The Chase Manhattan Bank and SW
Acquisition, L.P. The parties hereto agree that the section entitled "Mandatory
Prepayment and Change in Control" in Exhibit A to the Commitment Letter shall be
amended to read as follows:
Net proceeds (except for proceeds from the financing used to consummate
the Acquisition) of sales of debt securities or equity securities, in a
public offering or private placement by the Borrower, shall, to the
extent permitted, be used to prepay the Bridge loan plus accrued
interest and any other amount payable thereunder to the full extent of
the net proceeds so received to the extent such net proceeds are not
used to retire senior bank debt. The Borrower will be required to make
an offer to purchase all notes outstanding under the Bridge Loan, to
the extent permitted by the Senior Credit Facilities, as the case may
be, upon the occurrence of a Change of Control (to be defined) at 101%
of principal amount plus accrued interest and otherwise in a manner
reasonably acceptable to the Lenders and the Borrower.
<PAGE>
The parties hereto have caused this Letter Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CIBC WORLD MARKETS CORP.
By: /s/ S. Paul Kovich
-------------------------
Name: S. Paul Kovich
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Thomas L. Casey
-------------------------
Name: Thomas L. Casey
Title: Vice President
SW ACQUISITION, L.P.
a Texas limited partnership
BY: GENERAL PARTNER:
SW I ACQUISITION GP, L.P.,
a Texas limited partnership
BY: GENERAL PARTNER:
SW II ACQUISITION, LLC,
a Texas limited liability company
By: /s/ W.J. Catacosinos
---------------------------------
Name: William J. Catacosinos
Title: Manager
ST ACQUISITION CORP.
By: /s/ W.J. Catacosinos
---------------------------------
Name: William J. Catacosinos
Title: President and Chief
Executive Officer
EXHIBIT-99.05
[Bridge Preferred Commitment Letter]
CIBC WORLD MARKETS CORP. THE CHASE MANHATTAN BANK
425 LEXINGTON AVENUE 270 PARK AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NY 10017
CONTINENTAL CASUALTY COMPANY LAUREL HILL CAPITAL
333 SOUTH WABASH PARTNERS LLC
CHICAGO, ILLINOIS 60685 2 ROBBINS LANE
SUITE 201
JERICHO, NY 11753
May 24, 1999
SW Acquisition, L.P.
c/o CIBC World Markets Corp.
425 Lexington Avenue, 7th Floor
New York, NY 10017
Attention:
Re: Texas-New Mexico Power Company Acquisition Financing
Ladies and Gentlemen:
We understand that CIBC World Markets Corp. ("CIBC") and
certain other investors (the "Equity Investors") through SW Acquisition, L.P.
(the "Partnership") has formed an acquisition subsidiary, ST Acquisition Corp.
("Newco"), which intends to enter into a transaction pursuant to which Newco
will merge (the "Merger") with and into TNP Enterprises, Inc. ("XYZ"), a holding
company that owns Texas-New Mexico Power Company ("ABC"). In connection with the
Merger, the former shareholders of XYZ will become entitled to receive
approximately $590.0 million (or $44.00 per share, net to the seller) in cash
and the Partnership will become the owner of all the issued and outstanding
capital stock of XYZ. We further understand that the funding requirements for
the Merger (including related fees and expenses) will be approximately $640.0
million and such amount, together with ongoing working capital needs, will be
provided solely from (i) a senior secured term loan and revolving credit
facility of Newco (the "Credit Facilities") of up to $165.0 million
(approximately $25.0 million of the revolving credit portion of the Credit
Facilities to be drawn on the closing date of the Merger (the "Closing Date")),
(ii) a backstop facility of ABC with aggregate availability of $428.0 million
(the "Backstop Facility"), (iii) not less than a $100.0 million common equity
investment by the Equity Investors in the Partnership and the investment by the
Partnership in Newco of a portion of such amount which, together with the other
financing, is sufficient to consummate the Merger (the "Equity Financing"), (iv)
the issuance and sale of Preferred Shares (as defined below) and (v) the
issuance and sale of up to $275.0 million aggregate principal amount of debt
securities pursuant to an engagement letter of even date herewith among the
parties hereto ("Debt Securities"). The Merger, the Credit Facilities, the
Backstop Facility, the Equity Financing, the bridge loan contemplated by the
commitment letter among CIBC, The Chase Manhattan Bank ("CMB"), the Partnership
and Newco of even date herewith (the "Bridge Loan"), the issuance and sale of
the bridge preferred stock contemplated by this letter and the issuance and sale
of the Preferred Shares and the Debt Securities are herein collectively referred
to as the "Transaction."
In connection with the Transaction, you have engaged one or more
investment banks reasonably satisfactory to the Purchasers (as defined below) to
sell or place preferred equity securities of Newco (the "Preferred Shares").
You have requested that CIBC, CMB, Continental Casualty Company
("Continental") and Laurel Hill Capital Partners LLC ("Laurel Hill")
(collectively, the "Purchasers") commit to purchase from Newco senior preferred
stock of Newco (the "Bridge Preferred Stock") with a liquidation preference of
up to $32.5 million, $32.5 million, $32.5 million and $2.5 million, respectively
($100.0 million in the aggregate), as described in Section 1 hereof.
Accordingly, subject to the terms and conditions set forth or
incorporated in this letter, the Purchasers agree with you as follows:
Section 1. Purchase of Bridge Preferred Stock. The Purchasers hereby
commit, on an equal, but not joint and several, basis subject to the terms and
conditions hereof and in the Summary Term Sheet attached hereto as Exhibit A
(collectively, the "Term Sheet"), to purchase from Newco senior preferred stock
of Newco on the Closing Date with an aggregate liquidation preference of up to
$100.0 million. The proceeds of the sale of Bridge Preferred Stock shall be used
solely to finance the Merger and to pay fees and expenses incurred in connection
therewith. The principal terms of the Bridge Preferred Stock are summarized in
the Term Sheet.
Unless the Purchasers' commitment hereunder shall have been terminated
pursuant to Section 7, the Purchasers shall have the exclusive right to purchase
the Bridge Preferred Stock and CIBC and CMB or their Affiliates shall have the
exclusive right to purchase any other bridge or interim financing required in
connection with the Transaction.
You hereby represent and covenant that based on your review and
analysis, (a) all information other than Projections (as defined below) which
has been or is hereafter made available to the Purchasers by you or your
representatives, advisors or affiliates in connection with the transactions
contemplated hereby (the "Information") has been reviewed and analyzed by you in
connection with the performance of your own due diligence and, to the best of
your knowledge, is, or in the case of Information made available after the date
hereof will be, correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
known to you and necessary to make the statements contained therein, in the
light of the circumstances under which such statements were or are made, not
misleading, (b) to the best of your knowledge, the consolidated EBITDA of XYZ,
ABC and their consolidated subsidiaries for the year ended December 31, 1998 was
at least $135.0 million and (c) all financial projections concerning ABC, XYZ
and Newco that have been or are hereafter made available to the Purchasers by
you or your representatives, advisors or affiliates in connection with the
transactions contemplated hereby (the "Projections") have been or, in the case
of Projections made available after the date hereof, will be prepared in good
faith based upon reasonable assumptions (it being understood that the
Projections are subject to significant uncertainties and contingencies, many of
which are beyond your control and that no assurance can be given that such
Projections will be realized). You agree to supplement the Information and the
Projections from time to time until the termination of the Purchasers'
commitment hereunder so that the representation and warranty made in the
preceding sentence is correct as of such date. In selling any Bridge Preferred
Stock, the Purchasers will be using and relying on the Information and the
Projections. The representations and covenants contained in this paragraph shall
remain effective until definitive financing agreements are executed and
thereafter the disclosure representations contained herein shall be terminated
and of no further force and effect. For purposes of this Agreement, "EBITDA"
means, for any period, the aggregate amount of Consolidated Net Income (as
defined), after adding thereto interest charges, interest income, income taxes,
depreciation and amortization, amortization of regulatory assets, amortization
or intangibles, non-cash regulatory deferrals and other amortizations,
extraordinary items, and any other non-cash non-recurring items.
The Purchasers shall be entitled to change the terms, structure and/or
pricing of the Bridge Preferred Stock if they determine that such changes are
advisable in order to ensure a successful syndication; provided, however, that
in no event shall the aggregate liquidation preference of the Bridge Preferred
Stock be lowered.
Section 2. Financing Documentation. The purchase of the Bridge
Preferred Stock will be governed by definitive purchase and related agreements
and documentation (collectively, the "Financing Documentation") in form and
substance reasonably satisfactory to the Purchasers and to you. The Financing
Documentation shall be prepared by Cahill Gordon & Reindel, special counsel to
the Purchasers. The Financing Documentation shall contain such covenants, terms
and conditions as are consistent with this letter and the Term Sheet and such
other covenants, terms, conditions, representations, warranties, and remedies
provisions as shall be satisfactory to the Purchasers and you.
Section 3. Conditions. The obligation of the Purchasers under Section 1
of this letter to purchase the Bridge Preferred Stock is subject to fulfillment
of the following conditions:
(a) Merger Agreement. The Partnership and Newco shall have
entered into an agreement relating to the Merger (the "Merger
Agreement") on terms and in form and substance substantially consistent
with the terms of the Merger Agreement reviewed by the Purchasers prior
to the execution by the Partnership of this letter including, without
limitation, the payment to the former shareholders of XYZ of not more
than $44.00 per share, net to the seller in cash. The Merger Agreement
shall not have been amended in any material respect without the
Purchasers' written consent, which consent shall not be unreasonably
withheld. All conditions precedent to the Merger contained in the
Merger Agreement shall have been performed or complied with
substantially on the terms set forth therein and not waived without the
Purchasers' written consent, which consent shall not be unreasonably
withheld and simultaneously with any drawing under the Credit
Facilities, the making of the Bridge Loan or the purchase of Bridge
Preferred Stock, the Merger shall have been consummated.
(b) Financing Documentation. Newco, ABC and the Purchasers
shall have entered into the Financing Documentation relating to the
Bridge Preferred Stock and the transactions contemplated thereby on
terms and in form and substance reasonably satisfactory to the
Purchasers and Newco.
(c) The Credit Facilities, the Backstop Facility and the
Bridge Loan. Newco, ABC and the lenders applicable thereto shall have
entered into documentation with respect to the Credit Facilities and
the Backstop Facility (the "Senior Documentation") and the Bridge Loan
(the "Bridge Loan Documentation") on terms and conditions (including
with respect to funding) and in form and substance reasonably
satisfactory to the Purchasers. All conditions to funding thereunder
shall have been satisfied or waived only with the consent of the
Purchasers, not to be unreasonably withheld. Neither the Senior
Documentation nor the Bridge Loan Documentation shall have been
amended, without the Purchasers' consent, which consent shall not be
unreasonably withheld.
(d) Equity Financing. On or prior to the Closing Date, Newco
shall have received a common equity investment of not less than $100.0
million, which shall be provided by the Equity Investors through the
Partnership. The terms and conditions of the Equity Financing and any
tax sharing arrangement shall be satisfactory to the Purchasers.
(e) No Adverse Change or Development, Etc. (i) There shall not
have occurred since the date of the most recent financial statements of
XYZ a material adverse effect on the rights or remedies of the
Purchasers, or on the ability of Newco to perform its obligations to
the Purchasers or on the business, property, assets, nature of assets,
liabilities, condition (financial or otherwise), results of operations
or prospects of ABC; (ii) trading in securities generally on the New
York or American Stock Exchange shall not have been suspended; minimum
or maximum prices shall not have been established on any such exchange;
(iii) a banking moratorium shall not have been declared by New York or
United States authorities; and (iv) there shall not have been (A) an
outbreak or escalation of material hostilities between the United
States and any foreign power, or (B) an outbreak or escalation of any
other material insurrection or armed conflict involving the United
States or any other national or international calamity or emergency, or
(C) any material change or disruption in the general financial banking
or capital markets of the United States which, in each case, in the
reasonable judgment of the Purchasers would materially and adversely
affect or impair the ability to sell or place the Preference Shares or
the Bridge Preferred Stock.
(f) Capital Structure. The pro forma consolidated capital
structure of Newco, ABC and XYZ, after giving effect to the Transaction
(including all adjustments permitted by Regulation S-X under the
Securities Act of 1933), shall be consistent in all material respects
with the Projections and capital structure contemplated herein.
(g) Governmental and Third Party Approvals. All governmental
and third party approvals required by the Merger Agreement and any
other material governmental and third party approvals required in
connection with the financing contemplated hereby shall have been
obtained on reasonably satisfactory terms and shall be in full force
and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority
that would materially restrain, prevent or otherwise impose material
adverse conditions on the financing thereof.
(h) Financial Statements. The Purchasers shall have received
(i)satisfactory audited financial statements of XYZ and ABC for the
three most recent fiscal years for which such financial statements are
available and (ii)satisfactory unaudited interim consolidated financial
statements of XYZ and ABC for each fiscal month and quarterly period
ended after the latest fiscal year referred to in clause(i) above as to
which such financial statements are available and such financial
statements shall not reflect any material adverse change in the
consolidated financial conditions of XYZ and ABC and their respective
subsidiaries from what was reflected in the financial statements or
projections previously furnished to the Purchasers.
(i) Minimum EBITDA. The Purchasers shall be satisfied that
Consolidated EBITDA of XYZ, ABC and their consolidated subsidiaries for
the latest twelve month period for which the relevant financial
information is available shall equal at least $135.0 million and the
Partnership shall provide support for such calculation of a nature that
is satisfactory to the Purchasers.
(j) Solvency. The Purchasers shall have received a certificate
of Newco satisfactory in form and substance to the purchasers, executed
by the Chief Executive Officer or Chief Financial Officer of Newco,
that shall certify the solvency of Newco and its subsidiaries after
giving effect to the Merger and the other transactions contemplated
hereby.
(k) Power Market Study. The Purchasers shall have received
within 120 days of the date thereof a power market study by a
satisfactory independent power marketing consultant, in form and
substance satisfactory to the Purchasers.
(l) Environmental Audit. The Lenders shall have received
within 120 days of the date of the Commitment Letter to which this term
sheet is attached an environmental audit with respect to certain real
property owned or leased by XYZ, ABC and their subsidiaries from a firm
acceptable to the Lenders, which audit shall not reveal any material
adverse change in XYZ, ABC and their subsidiaries.
(m) Opinions, Representations and Warranties. The Purchasers
shall be entitled to rely on all representations, warranties and
opinions given in connection with the Merger Agreement and shall have
received representations, warranties and legal opinions covering
matters customary for preferred equity financings of the type
contemplated.
(n) Take-Out Banks. You shall have engaged one or more
investment banks satisfactory to the Purchasers (the "Take-Out Banks")
to publicly offer or privately place the Preferred Shares, the proceeds
of which will be used either, in lieu of the Bridge Preferred Stock, to
fund the Merger or, if the Bridge Preferred Stock is outstanding, to
redeem in whole or in part the Bridge Preferred Stock. You and Newco
shall have prepared (and shall have obtained the agreement of XYZ and
ABC to assist in the preparation of) an offering memorandum relating to
the issuance of the Preferred Shares (which offering memorandum shall
contain audited, unaudited and pro forma financial statements meeting
the requirements of Regulation S-X under the Securities Act of 1933, as
amended, of ABC for the periods required of a registrant on Form S-1)
at least30 days prior to funding and the Take-Out Banks shall have been
afforded the opportunity to market and shall have marketed such
Preferred Shares pursuant to such offering memorandum for such a period
as is customary to complete the sale of securities such as the
Preferred Shares. You and Newco shall have used all reasonable
commercial efforts to assist (and shall have obtained the agreement of
XYZ and ABC to assist) the Take-Out Banks in marketing the Preferred
Shares, including, without limitation, having prepared the offering
memorandum relating thereto, having made senior management of XYZ and
ABC and other representatives of the Partnership, XYZ and ABC available
(at mutually agreeable times) to participate in meetings with
prospective investors and having provided such information and
assistance as the Take-Out Banks shall have reasonably requested during
the course of such marketing process.
Section 4. Securities Demand. The Financing Documentation will provide
that upon request (a "Request") from the Take-Out Banks made at any time after
the Closing Date while any amount of the Bridge Preferred Stock is outstanding,
the Partnership, Newco, XYZ and ABC shall take all reasonable actions necessary
or desirable, to the extent within their power, so that the Take-Out Banks can,
as soon as practicable after such Request, publicly offer or privately place
Preferred Shares (the "Initial Request Date"). The Financing Documentation will
also provide that upon notice by the Take-Out Banks (a "Take-Out Securities
Notice"), at any time and from time to time following the Initial Request Date,
Newco, XYZ and ABC will issue and sell Preferred Shares upon such terms and
conditions as specified in the Take-Out Securities Notice; provided, however,
that for either a Request or a Take-Out Securities Notice (i) dividend rates
shall be determined by the Take-Out Banks in light of the then prevailing market
conditions, but in no event shall the dividend rate on the Preferred Shares
exceed 18.00% per annum; (ii) the Preferred Shares will contain such terms,
conditions and covenants as are customary for similar financings and as are
satisfactory in all respects to the Take-Out Bank, after consultation with
Newco, XYZ and ABC; and (iii) all other arrangements with respect to the
Preferred Shares shall be reasonably satisfactory in all respects to the
Take-Out Bank, after consultation with Newco, XYZ and ABC, in light of the then
prevailing market conditions. CIBC and CMB agree that if one of the Take-Out
Banks (the "Electing Bank") provides notice to the other Take-Out Bank (the
"Receiving Bank") that it desires to deliver a Request and Take-Out Securities
Notice and the Receiving Bank does not desire to do so, no Request or Take-Out
Securities Notice will be delivered for 30 days, at which time the Electing Bank
may require the Receiving Bank to join in the delivery of a Request and Take-Out
Securities Notice. The foregoing shall not limit the ability of Newco, XYZ or
ABC to refinance the Bridge Preferred Stock by other means.
In addition, the Partnership, Newco, XYZ and ABC covenant and agree
subsequent to the purchase date of any portion of the Bridge Preferred Stock to
use reasonable best efforts to assist the Take-Out Banks in marketing the
Preferred Shares to refinance the Bridge Preferred Stock, including, without
limitation, preparing an offering memorandum relating thereto, making senior
management of ABC and other representatives of the Partnership, XYZ and ABC
available (at mutually agreeable times) to participate in meetings with
prospective investors and providing such information and assistance as the
Take-Out Banks shall reasonably request during the course of such marketing
process.
Section 5. Indemnification and Contribution. You agree to indemnify the
Purchasers and each of their respective affiliates and each person in control of
the Purchasers and each of their respective affiliates and the respective
officers, directors, managers, employees, agents and representatives of the
Purchasers and their respective affiliates and control persons, as provided in
the Indemnity Letter dated the date hereof (the "Indemnity Letter") and attached
hereto.
Section 6. Expenses. In addition to any fees that may be payable to the
Purchasers hereunder and regardless of whether any of the transactions
contemplated by this letter are consummated, if this letter agreement is
terminated, the Bridge Preferred Stock is purchased or the Financing
Documentation is executed and delivered, you hereby agree to reimburse the
Purchasers for all reasonable fees and disbursements of legal counsel, including
but not limited to the reasonable fees and disbursements of Cahill Gordon &
Reindel, the Purchasers' special counsel and consultants, and all of the
Purchasers' travel and other reasonable out-of-pocket expenses incurred in
connection with the Transaction or otherwise arising out of the Purchasers'
commitment hereunder.
Section 7. Termination. The Purchasers' commitment hereunder to
purchase the Bridge Preferred Stock shall terminate, unless expressly agreed to
by the Purchasers in their sole discretion to be extended to another date, on
the earlier of (A) February 24, 2000 if no portion of the Bridge Preferred Stock
has been purchased (other than as a result of failure of the Purchasers to
fulfill their obligations hereunder), and (B) the termination of the Merger
Agreement in accordance with the terms thereof. No such termination of such
commitment shall affect your obligations under Sections 5 and 6 hereof or this
Section 7, which shall survive any such termination.
Section 8. Assignment. This letter shall not be assignable by any party
hereto without the prior written consent of the other parties (other than, in
the case of the Purchasers, to an affiliate of such Purchaser, it being
understood that any such affiliate shall be subject to the restrictions set
forth in this Section 8); provided, however, that the Purchasers shall have the
right, in a manner agreeable to one another, to sell, transfer or assign all or
any portion of, or interests in, the Bridge Preferred Stock and the commitment
with respect thereto. The Partnership, Newco, XYZ and ABC agree, upon request of
the Purchasers, to use reasonable best efforts, whether prior to or after the
purchase date of any Bridge Preferred Stock, to assist the Purchasers in selling
the Bridge Preferred Stock or the commitment with respect thereto, including,
without limitation, in connection with (x) the preparation of an information
package regarding the Transaction, including the Information and the Projections
described in Section 1 hereof, and (y) meetings and other communications with
prospective Purchasers, including making senior management of ABC and other
representatives of the Partnership, XYZ and ABC available (at mutually agreeable
times) to participate in such meetings. The Purchasers agree among themselves
that neither the Purchasers nor any of their respective direct and indirect
transferees shall sell, transfer, assign or otherwise reduce or transfer their
risk (including by way of derivatives or otherwise) (each, a "Disposition") at
any time with respect to their commitments with respect to the Bridge Preferred
Stock, other than a Disposition thereof by a Purchaser to one or more of its
affiliates or a Disposition thereof by CIBC World Markets Corp., with an option
to CMB, Continental and Laurel Hill to participate pro rata in such Disposition.
Prior to the six-month anniversary of the Closing Date, no Purchaser shall make
or pursue any Disposition of any portion of the Bridge Preferred Stock without
the consent of CIBC. In the case of any Disposition by any party prior to the
six-month anniversary of the Closing Date, such party shall provide each other
Purchaser at such time the option to participate pro rata in such Disposition.
To the extent that any Purchasers sell limited partnership interests of the
Partnership with their Bridge Preferred Stock prior to the six-month anniversary
of the Closing Date, such Purchasers will make available limited partnership
interests of the Partnership to any Purchaser participating in the Disposition
that does not own any such limited partnership interests on terms to be mutually
satisfactory to permit such Purchaser to participate in the Disposition on a pro
rata basis.
Section 9. Miscellaneous. THIS LETTER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS COMMITMENT LETTER IS HEREBY WAIVED. THE PARTNERSHIP HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE
COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO
THIS COMMITMENT LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This letter
(including the provisions of the Indemnity Letter specifically incorporated
herein) embodies the entire agreement and understanding between you and the
Purchasers and supersedes all prior agreements and understandings relating to
the subject matter hereof. This letter may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
The Purchasers reserve the right to employ the services of their
respective affiliates in providing services contemplated by this letter and to
allocate, in whole or in part, to their respective affiliates certain fees
payable to the Purchasers in such manner as the Purchasers and their respective
affiliates may agree in their sole discretion. The Partnership acknowledges that
the Purchasers may share with any of their respective affiliates and such
affiliates may share with the Purchasers (in each case, subject to any
confidentiality agreements applicable thereto), any information related to the
Partnership or its affiliates, XYZ, ABC (including information relating to
creditworthiness) or the Transaction.
Each of the parties hereto agree that it will not disclose this
Agreement or the contents hereof to any person without the approval of each of
the Purchasers, except that the Purchasers may disclose this Agreement and the
contents hereof to their affiliates as provided above and each party may
disclose this Agreement and the contents hereof (i) to officers, employees,
attorneys, accountants and advisors of the parties hereto, XYZ and ABC on a
confidential and need-to-know basis and (ii) as required by applicable law or
compulsory process. The provisions contained in this paragraph shall remain in
full force and effect notwithstanding the termination of this Agreement. This
section shall not preclude the release of information necessary for syndication
of the Bridge Preferred Stock.
<PAGE>
If you are in agreement with the foregoing, please sign and return to
the Purchasers c/o CIBC World Markets Corp. at 425 Lexington Avenue, New York,
New York 10017 the enclosed copy of this letter no later than 6:00 p.m., New
York time, on May 24, 1999, whereupon the undertakings of the parties shall
become effective to the extent and in the manner provided hereby. This offer
shall terminate if not so accepted by you on or prior to that time.
Very truly yours,
CIBC WORLD MARKETS CORP.
By: /s/ S. Paul Kovich
---------------------
Name: S. Paul Kovich
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Thomas L. Casey
---------------------
Name: Thomas L. Casey
Title: Vice President
CONTINENTAL CASUALTY COMPANY
By: /s/ Marilou R. McGirr
----------------------
Name: Marilou R. McGirr
Title: Vice President
<PAGE>
LAUREL HILL CAPITAL
PARTNERS LLC
By: /s/ W.J. Catacosinos
---------------------------
Name: William J. Catacosinos
Title: Manager
Accepted and Agreed to as of
the date first above written:
SW ACQUISITION, L.P.
a Texas limited partnership
BY: GENERAL PARTNER:
SW I ACQUISITION GP, L.P.,
a Texas limited partnership
BY: GENERAL PARTNER:
SW II ACQUISITION, LLC,
a Texas limited liability company
By: /s/ W.J. Catacosinos
-----------------------------
Name: William J. Catacosinos
Title: Manager
ST ACQUISITION CORP.
By: /s/ W.J. Catacosinos
-----------------------------
Name: William J. Catacosinos
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Summary of Terms
The following summarizes selected terms of the senior bridge
preferred stock to be sold in connection with the proposed acquisition (the
"Acquisition") of Texas-New Mexico Power Company by ST Acquisition Corp., a
newly formed acquisition subsidiary of SW Acquisition, L.P. This Summary of
Terms is intended merely as an outline of certain of the material terms of such
preferred stock. It does not include descriptions of all of the terms,
conditions and other provisions that are to be contained in the definitive
documentation relating to such preferred stock and it is not intended to limit
the scope of discussion and negotiation of any matters not inconsistent with the
specific matters set forth herein. All terms defined in the commitment letter to
which this Summary of Terms is attached and not otherwise defined herein shall
have the same meanings when used herein.
Issuer: ST Acquisition Corp. (the "Issuer").
Issue: $100.0 million aggregate liquidation prefe-
rence of Senior Preferred Stock due 2011
(the "Preferred Stock").
Liquidation Preference: $1,000 per share, plus accumulated and
unpaid dividends.
Maturity Date: , 2011 (12 years).
Dividends: Dividends on the Preferred Stock will accrue
semi-annually in arrears and will initially
be set at the greater of LIBOR plus 700
basis points or 12.00%. The dividend rate
will increase on the 91st day subsequent to
funding (the "Issue Date") of the Preferred
Stock and thereafter as set forth in the
schedule below:
Days After Incremental
Funding Spread
---------- -----------
91-180 100 bps
181-270 150 bps
271-365 200 bps
At the one-year anniversary of the Issue
Date the dividend rate on the Preferred
Stock shall be fixed at 18.00%. Dividends
will be payable in kind.
Ticking Fee: A cash fee (the "Ticking Fee") of 0.50% per
annum on the average commitment from signing
to purchase or termination of the commitment
(it being understood that no Ticking Fee is
payable if the Closing Date does not occur
except to the extent of any Expense Amount
paid under Section 8.02(b)or Section 8.02(c)
of the Merger Agreement).
Use of Proceeds: The Issuer will use the net proceeds from
the sale of the Preferred Stock, together
with borrowings under the Credit Facilities,
the net proceeds from the Bridge Loan and
the net proceeds from the Equity Financing,
to fund the Acquisition, to pay related fees
and expenses and for general corporate
purposes.
Optional Redemption: The Preferred Stock will be redeemable at
the option of the Issuer, in whole or in
part, at $1,000 per share plus accrued and
unpaid dividends for a period up to and
including the first anniversary of the Issue
Date. After the first anniversary of the
Issue Date, the Preferred Stock will be non-
callable until after the fifth anniversary
of the Issue Date, at which time the Prefer-
red Stock will be redeemable at the option
of the Issuer, in whole or in part, at a
premium declining ratably to par in year 11.
Change of Control: In the event of a Change of Control (as
defined), the Issuer will be required to
make an offer to purchase all of the out-
standing Preferred Stock at a purchase price
equal to 101% of liquidation preference,
plus accrued and unpaid dividends.
Voting: The Preferred Stock will be non-voting,
except as otherwise required by law. In ad-
dition, if the Issuer (i)fails to make a
mandatory redemption or Change of Control
offer, or (ii) fails to comply with certain
covenants or make certain payments on its
Indebtedness, holders of the Preferred
Stock, voting as a class, will be entitled
to elect the lesser of two directors or that
number of directors constituting at least
25% of the Issuer's board of directors.
Restrictive Provisions: The Certificate of Designation (as defined)
pursuant to which the Preferred Stock will
be issued will restrict, among other things:
the incurrence of additional indebtedness,
the payment of dividends and distribu-
tions,
the creation of liens,
the issuance of stock of subsidiaries,
transactions with affiliates,
the making of certain investments,
asset sales,
merger or consolidation of the Issuer and
its subsidiaries, the transfer of assets.
In addition, the Certificate of Designation
will prohibit the issuance of preferred
stock ranking senior to or pari passu with
the Preferred Stock.
Registration Rights: The Financing Documentation will require
that the Issuer provide customary registra-
tion rights, including, without limitation,
a registered exchange offer or, if not per-
mitted by applicable law to effect an
exchange offer, demand registrations.
Commitment Fee: 1.25% of total commitment amount, earned
upon acceptance of the Commitment Letter but
payable upon the Issue Date (it being under-
stood that no Commitment Fee is payable if
the Issue Date does not occur except to the
extent of any Expense Amount paid under
Section 8.02(b) or Section 8.02(c) of the
Merger Agreement).
Funding Fee: 1.50% of total funded amount of the Prefer-
red Stock, payable upon funding of the
Preferred Stock.
Warrants: Warrants will be made available to facili-
tate the sale of the Preferred Stock by the
Purchasers, exercisable at a nominal strike
price for a period of five years and repre-
senting up to 5.0% of the fully diluted
common equity of the Issuer (the "War-
rants"). In addition, to the extent that
the Preferred Stock has not been refinanced
prior to the first anniversary of the Issue
Date, and any of the Preferred Stock is held
on such date by any of the Purchasers, such
Purchasers shall be entitled to Warrants
remaining after any sale of the Preferred
Stock; provided, that no Purchaser shall
receive a percentage of the total number of
Warrants that exceeds the amount of Pre-
ferred Stock held by such Purchaser divided
by the total outstanding amount of Preferred
Stock.
The Warrants will have customary anti-
dilution protection.
The holders of at least 25% of outstanding
Warrants will have, following the occurrence
of an Exercise Event (as defined herein),
the right to require the Company to effect
demand registrations of the shares of Common
Stock issued or issuable upon the exercise
of the Warrants ("Warrant Shares"); provided
that in lieu of filing such a registration
statement, the Issuer may make an offer to
repurchase all of the Warrant Shares at a
price per share equal to the fair market
value per share of Common Stock (without any
discount for lack of liquidity, the amount
of Common Stock proposed to be sold or the
fact that the shares of Common Stock held by
the holders may represent a minority inte-
rest in a private company) determined by a
nationally recognized investment banking
firm reasonably acceptable to the Issuer and
the Purchasers.
"Exercise Event" means: (i) a Change of Con-
trol (as defined), (ii) seven days prior to
the date on which the Issuer files a regi-
stration statement with respect to a Public
Equity Offering (as defined), (iii) the date
on which any class of equity securities of
the Issuer is listed on a national securi-
ties exchange or authorized for quotation on
the National Association of Securities
Dealers Automated Quotation System or (iv) 5
years from the Issue Date.
Holders of Warrant Shares will also have the
right to include such shares in any regi-
stration statement relating to any common
equity securities of the Issuer under the
Securities Act of 1933 filed by the Issuer
for its own account or for the account of
any of its securityholders (other than (i) a
registration statement on Form S-4 or S-8 or
(ii) a registration statement filed in
connection with an offer of securities
solely to existing securityholders) for sale
on the same terms and conditions as the
securities of the Issuer or any other
selling securityholder included therein,
subject to pro rata reduction to the extent
that the Issuer is advised by the managing
underwriter thereof that the total number of
Warrant shares proposed to be included
therein is such as to materially and
adversely affect the success of the
offering.
Take-Along Rights; Drag-Along Rights. In the
event the Existing Stockholders (as defined)
propose to sell or otherwise transfer shares
of Common Stock of the Issuer, subject
to certain exceptions, in one transaction or
a series of transactions, aggregating 15% or
more of the shares of the Issuer's Common
Stock or 15% or more of the Common Stock
then owned by the Existing Stockholders, the
holders of the Warrants and the Warrant
Shares shall have the right to require the
Existing Stockholders to cause the proposed
purchaser to purchase on the same terms and
conditions from each of them a percentage of
the number of Warrants and Warrant Shares
owned by each such holder equal to the per-
centage such holder's Warrants or Warrant
Shares represent of the outstanding Common
Stock of the Issuer, determined on a fully-
diluted basis. In addition, under certain
circumstances, the Existing Stockholders can
require the holders of Warrant Shares to
sell such Warrant Shares in the event that
the Existing Stockholders sell (i) all or
substantially all of the capital stock of
the Issuer or (ii) all or substantially all
of the Issuer's assets, determined on a
consolidated basis.
EXHIBIT-99.06
May 22, 1999
ST Acquisition Corp.
Senior Secured Credit Facilities
Commitment Letter
ST Acquisition Corp.
c/o CIBC World Markets Corp.
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention:
Ladies and Gentlemen:
You have advised Canadian Imperial Bank of Commerce ("CIBC"),
CIBC World Markets Corp. ("CIBC World Markets"), The Chase Manhattan Bank
("Chase") and Chase Securities Inc. ("CSI") that SW Acquisition, L.P. (the
"Partnership"), a partnership formed by CIBC World Markets and certain other
investors (the "Sponsers"), has formed an acquisition subsidiary, ST Acquisition
Corp. (the "Borrower") which intends to enter into a transaction pursuant to
which the Borrower will merge (the "Merger") with and into TNP Enterprises, Inc.
("TNP"), a holding company that owns Texas New Mexico Power Company ("TNMPCo").
In connection with the Merger, the former shareholders of TNP will become
entitled to receive approximately $590,000,000 in cash ($44 per share net to
each shareholder), and the Sponsers will become the owners of all the issued and
outstanding capital stock of TNP. In such connection, you have requested that
(i) CIBC World Markets and CSI agree to structure, arrange and syndicate senior
secured credit facilities in an aggregate amount of $165,000,000 (the
"Facilities"), (ii) CIBC and Chase commit to provide the entire principal amount
of the Facilities and (iii) CIBC serve as administrative agent for the
Facilities.
Each of CIBC and Chase is pleased to advise you of its
commitment to provide $82,500,000 of the amount of the Facilities upon the terms
and subject to the conditions set forth or referred to in this commitment letter
(this "Commitment Letter") and in the Summary of Terms and Conditions attached
hereto as Exhibit A (the "Term Sheet").
It is agreed that (i) CIBC will act as the sole and exclusive
administrative agent (the "Administrative Agent") for the Facilities and (ii)
CIBC World Markets and CSI will act as co-book managers and co-lead arrangers
for the Facilities, and that each will, in such capacities, perform the duties
and exercise the authorities customarily performed and exercised by it in such
roles. You agree that no other agents, co-agents or arrangers will be appointed,
no other titles will be awarded and no compensation (other than that expressly
contemplated by the Term Sheet and the Fee Letter referred to below) will be
paid in connection with the Facilities unless you and we shall so agree.
CIBC World Markets and CSI intend to syndicate the Facilities
to a group of financial institutions (together with CIBC and Chase, the
"Lenders") identified by CIBC World Markets and CSI in consultation with you.
CIBC World Markets and CSI intend to commence syndication efforts promptly, and
you agree actively to assist CIBC World Markets and CSI in completing a mutually
satisfactory syndication. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the existing lending relationships of TNP, (b) direct contact
between senior management and advisors of TNP and TNMPCo and the proposed
Lenders, (c) assistance in the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection with the
syndication and (d) the hosting, with CIBC World Markets and CSI, of one or more
meetings of prospective Lenders.
CIBC World Markets and CSI will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CIBC World Markets and CSI in their syndication efforts, you
agree promptly to prepare and provide to CIBC, CIBC World Markets, Chase and CSI
all information with respect to the Borrower, the Partnership, TNP, the Merger
and the other transactions contemplated hereby, including all financial
information and projections (the "Projections"), as we may reasonably request in
connection with the arrangement and syndication of the Facilities. You hereby
represent and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to CIBC, CIBC World
Markets, Chase and CSI by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statements of a material fact or omit to
state a material fact necessary to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be made available to
CIBC, CIBC World Markets, Chase and CSI by you or any of your representatives
have been or will be prepared in good faith based upon reasonable assumptions.
You understand that in arranging and syndicating the Facilities we may use and
rely on the Information and Projections without independent verification
thereof.
As consideration for CIBC's and Chase's commitments hereunder
and CIBC World Markets' and CSI's agreements to perform the services described
herein, you agree to pay to CIBC, CIBC, Chase and CSI the nonrefundable fees set
forth in Annex I to the Term Sheet and in the Fee Letter dated the date hereof
and delivered herewith (the "Fee Letter").
CIBC, CIBC World Markets, Chase and CSI shall be entitled,
after consultation with you, to change the pricing, terms and structure of the
Facilities if CIBC, CIBC World Markets, Chase and CSI determine that such
changes are advisable to ensure a successful syndication of the Facilities;
provided the total amount of the Facilities remains unchanged.
CIBC's and Chase's commitments hereunder and CIBC World
Markets' and CSI's agreements to perform the services described herein are
subject to (a) there not occurring or becoming known to us any material adverse
condition or material adverse change in or affecting the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
TNP and their respective subsidiaries, taken as a whole, (b) our not becoming
aware after the date hereof of any information or other matter affecting the
Borrower, the Partnership, TNP or the transactions contemplated hereby which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (c) our satisfaction that prior
to and during the syndication of the Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Borrower or TNP or any affiliate thereof, (d) the
negotiation, execution and delivery on or before the date which is 60 days after
the date of your acceptance of this Commitment Letter of definitive
documentation with respect to the Facilities satisfactory to CIBC, CIBC World
Markets, Chase, CSI and their counsel and (e) the other conditions set forth or
referred to in the Term Sheet. The terms and conditions of CIBC's and Chase's
commitments hereunder and of the Facilities are not limited to those set forth
herein and in the Term Sheet, provided that any additional conditions shall be
reasonable and customary for facilities similar to the Facilities. Those matters
that are not covered by the provisions hereof nor of the Term Sheet are subject
to the approval and agreement of CIBC, CIBC World Markets, Chase, CSI and you.
You agree (a) to indemnify and hold harmless CIBC, CIBC World
Markets, Chase, CSI, their affiliates and their respective officers, directors,
employees, advisors, and agents (each, an "indemnified person") from and against
any and all losses, claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in connection with this
Commitment Letter, the Facilities, the use of the proceeds thereof, the Merger
or any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for any
legal or other expenses incurred in connection with investigating or defending
any of the foregoing; provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent they are found by a final, non-appealable judgment of a
court to arise from the willful misconduct or gross negligence of such
indemnified person, and (b) to reimburse CIBC, CIBC World Markets, Chase, CSI
and their affiliates on demand for all out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facilities and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any indirect or consequential damages
in connection with its activities related to the Facilities.
You acknowledge that CIBC, CIBC World Markets, Chase, CSI and
their affiliates (the terms "CIBC", "CIBC World Markets", "Chase" and "CSI"
being understood to refer hereinafter in this paragraph to include such
affiliates) may be providing debt financing, equity capital or other services
(including financial advisory services) to other companies in respect of which
you may have conflicting interests regarding the transactions described herein
and otherwise. Neither CIBC, CIBC World Markets, Chase nor CSI will use
confidential information obtained from you by virtue of the transactions
contemplated by this Commitment Letter or its other relationships with you in
connection with the performance by CIBC, CIBC World Markets, Chase or CSI of
services for other companies, and neither CIBC, CIBC World Markets, Chase nor
CSI will furnish any such information to other companies. You also acknowledge
that neither CIBC, CIBC World Markets, Chase nor CSI has any obligation to use
in connection with the transactions contemplated by this Commitment Letter, or
to furnish to you, confidential information obtained from other companies.
This Commitment Letter shall not be assignable by you without
the prior written consent of CIBC, CIBC World Markets, Chase and CSI (and any
purported assignment without such consent shall be null and void), is intended
to be solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Commitment Letter may not be amended or waived except by an
instrument in writing signed by you, CIBC, CIBC World Markets, Chase and CSI.
This Commitment Letter may be executed in any number of counterparts, each of
which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. This Commitment Letter and the Fee Letter
are the only agreements that have been entered into between CIBC, CIBC World
Markets, Chase, CSI and you with respect to the Facilities and set forth the
entire understanding of the parties with respect thereto. This Commitment Letter
shall be governed by, and construed in accordance with, the laws of the State of
New York.
This Commitment Letter is delivered to you on the
understanding that neither this Commitment Letter, the Term Sheet nor the Fee
Letter nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person except (a) to your officers, agents and advisors
who are directly involved in the consideration of this matter or (b) as may be
compelled in a judicial or administrative proceeding or as otherwise required by
law (in which case you agree to inform us promptly thereof) and except that this
Commitment Letter and the Term Sheet (but not the Fee Letter or its terms and
substance) may be disclosed to (x) the officers, directors and representatives
of TNP who are directly involved in the consideration of this matter, (y) any
regulatory commission as necessary in seeking regulatory approval of the Merger
or the transactions relating thereto or (z) the shareholders of TNP in a proxy
statement seeking approval for the Merger.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or CIBC's, CIBC World Markets', Chase's or
CSI's commitment hereunder.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter not
later than 12:00 p.m., New York City time, on May 25, 1999. CIBC's and Chase's
commitment and CIBC World Markets' and CSI's agreements herein will expire at
such time in the event CIBC, CIBC World Markets, Chase and CSI have not received
such executed counterparts in accordance with the immediately preceding
sentence.
<PAGE>
CIBC, CIBC World Markets, Chase and CSI are pleased to have
been given the opportunity to assist you in connection with this important
financing.
Very truly yours,
CIBC WORLD MARKETS CORP.
By: /s/ John P. Burke
-----------------------
Title: Executive Director
CIBC World Markets Corp., as Agent
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ John P. Burke
-----------------------
Title: Executive Director
CIBC World Markets Corp., as Agent
THE CHASE MANHATTAN BANK
By: /s/ T. Casey
------------------------
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Jay Schwartz
------------------------
Title: Managing Director
Accepted and agreed to
as of the date first
written above by:
ST ACQUISITION CORP.
By: /s/ W. J. Catacosinos
------------------------
Title:
<PAGE>
Exhibit A
SENIOR SECURED CREDIT FACILITIES
Statement of Indicative Terms and Conditions
SW Acquisition, L.P. (the "Partnership"), a partnership formed
by CIBC World Markets Corp. and certain other investors (the "Sponsors"), have
formed an acquisition subsidiary, ST Acquisition Corp., which intends to enter
into a transaction pursuant to which it will merge (the "Merger") with and into
TNP Enterprises, Inc. ("TNP"), a holding company that owns Texas New Mexico
Power Company, ("TNMPCo"). In connection with the Merger, the former
shareholders of TNP will become entitled to receive approximately $590,000,000
in cash ($44 per share net to each shareholder), and the Sponsors will become
the owners of all the issued and outstanding capital stock of TNP. The sources
and uses of funds needed to effect the Merger and to pay the fees and expenses
in connection therewith are set forth on Annex II hereto (the "Table"). Set
forth below is a statement of indicative terms and conditions for senior secured
credit facilities to be used to finance a portion of the consideration with
respect to the Merger.
I. Parties
Borrower: ST Acquisition Corp. (the "Borrower"). On or promptly
following the Closing Date (as defined below) the Borrower
shall be merged with TNP, and the surviving corporation of
such merger shall thereafter be the Borrower.
Co-Lead Arranger
and Co-Book
Manager: CIBC World Markets Corp. ("CIBC World Markets") and Chase
Securities Inc. ("CSI", and, together with CIBC World
Markets, in such capacity, the "Co-Arrangers")
Administrative
Agent: Canadian Imperial Bank of Commerce ("CIBC" and, in such
capacity, the "Administrative Agent").
Lenders: A syndicate of banks, financial institutions and other
entities, including CIBC and The Chase Manhattan Bank
("Chase"), arranged by the Co-Arrangers (collectively, the
"Lenders").
II. Types and Amounts of Facilities
A. Term Facility
Type and Amount A six-year term loan facility (the "Term Facility") in
of the Facility: an aggregate principal amount equal to $140,000,000
(the loans thereunder, the "Term Loans"). The Term Loans
shall be due and payable on the sixth anniversary of the
Closing Date (as defined below).
Availability: The Term Loans shall be made in a single drawing on the
Closing Date.
Purpose: The proceeds of the Term Loans shall be used to finance a
portion of the Merger and to pay related fees and expenses.
B. Revolving Facility
Type and Amount A three-year revolving credit facility (the of facility:
"Revolving Facility" and, together with the Term Facility,
the "Credit Facilities"; the commitments thereunder, the
"Revolving Commitments") in the amount of $25,000,000 (the
loans thereunder, together with (unless the context other-
wise requires), the Swingline Loans referred to below, the
"Revolving Loans").
Availability: The Revolving Facility shall be available on a revolving
basis during the period commencing on the Closing Date and
ending on the third anniversary of the Closing Date (the
"Revolving Termination Date").
Swingline Loans: A portion of the Revolving Facility not in excess of an
amount to be agreed upon shall be available for swing line
loans (the "Swingline Loans") from CIBC and Chase on same-
day notice. Any such Swingline Loans will reduce
availability under the Revolving Facility on a dollar-
for-dollar basis. Each Lender under the Revolving Facility
shall acquire, under certain circumstances, an irrevocable
and unconditional pro rata participation in each Swingline
Loan.
Maturity: The Revolving Termination Date.
Purpose: The proceeds of the Revolving Loans shall be used to finance
the working capital needs and general corporate purposes of
the Borrower and its subsidiaries in the ordinary course of
business.
III. Certain Payment Provisions
Fees and
Interest
Rates: As set forth on Annex I.
Optional
Prepayments
and Commitment
Reductions: Loans may be prepaid and commitments may be reduced by
the Borrower in minimum amounts to be agreed upon. Optional
prepayments of the Term Loans may not be reborrowed.
Mandatory
Prepayments
and
Commitment
Reductions: The following amounts shall be applied to prepay the Term
Loans and reduce the Revolving Commitments:
(a) 100% of the net proceeds of any sale or issuance of
equity and 100% of the net proceeds of any incurrence of
indebtedness (other than the financings referred to in
paragraphs (b) and (c) of the "Initial Conditions to
Closing" set forth below) after the Closing Date by the
Borrower or any of its subsidiaries; and
(b) 100% of the net proceeds of any sale or other
disposition (including as a result of casualty or
condemnation) by the Borrower or any of its subsidiaries of
any assets, except for the sale of inventory or obsolete or
worn-out property in the ordinary course of business and
subject to certain other customary exceptions (including
capacity for reinvestment) to be agreed upon.
The amounts described above shall be applied, first, to
prepay the Term Loans and, second, to permanently reduce the
Revolving Commitments (with extensions of credit thereunder
being prepaid to the extent the aggregate amount thereof
exceeds the Revolving Commitments as so reduced).
IV. Collateral The obligations of the Borrower in respect of the Credit
Facilities and any interest rate protection agreements in
respect thereof provided by any Lender (or any affiliate of
a Lender) shall be secured by a perfected first priority
security interest in all of the capital stock of TNMPCo.
V. Certain Conditions
Initial
Conditions
to Closing: The availability of the Credit Facilities shall be condi-
tioned upon the satisfaction on or before the date which is
nine months following the date of the Commitment Letter to
which this Term Sheet is attached of conditions precedent
usual for facilities and transactions of this type,
including, without limitation, the conditions set forth
below and customary corporate and document delivery
requirements (the date upon which all such conditions
precedent shall be satisfied, the "Closing Date") (with
references to the Borrower and its subsidiaries in this
paragraph being deemed to include TNP and its subsidiaries
after giving effect to the Merger):
(a) The Borrower shall have executed and delivered
reasonably satisfactory definitive Senior Credit
Documentation (as hereinafter defined).
(b) The Partnership shall have received at least
$100,000,000 in cash from the issuance of partnership
interests to the Sponsors. The Borrower shall have received
at least $100,000,000 in cash from the issuance of its
common stock to the Partnership, at least $100,000,000 in
cash from the issuance of its preferred stock to the
Sponsors and CSI and at least $275,000,000 from the issuance
of its senior subordinated notes or a drawdown under a
senior subordinated bridge facility, each on terms and
conditions reasonably satisfactory to the Co-Arrangers.
(c) TNMPCo shall have obtained a backstop facility in the
amount of $428,000,000 on reasonably satisfactory terms and
conditions, and any existing indebtedness of the Borrower or
any of its subsidiaries due and payable as a result of the
Merger shall have been paid with amounts available under
such backstop facility.
(d) The Merger shall have been consummated in accordance
with applicable law and on reasonably satisfactory terms,
including the payment to the former shareholders of TNP of
not more $600,000,000 in respect of their stock, and
pursuant to reasonably satisfactory documentation, and no
material provision thereof shall have been waived, amended,
supplemented or otherwise modified in any material respect.
(e) The Lenders, the Administrative Agent and the
Co-Arrangers shall have received all fees required to be
paid, and all expenses for which invoices have been
presented, on or before the Closing Date.
(f) All material governmental and third party approvals
necessary or, in the reasonable discretion of the
Co-Arrangers, advisable in connection with the Merger, the
financing contemplated hereby and the continuing operations
of the Borrower and its subsidiaries shall have been
obtained on reasonably satisfactory terms and shall be in
full force and effect, and all applicable waiting periods
shall have expired without any action being taken or
threatened by any competent authority that would restrain,
prevent or otherwise impose material adverse conditions on
the financing thereof.
(g) The Lenders shall have received reasonably satisfactory
evidence that, insofar as can be reasonably foreseen, no
final order with respect to any required approval, and no
change in or event relating to the order of the Public
Utility Commission of Texas dated September 4, 1998, could
reasonably result in any rate plan which would be
significantly less favorable to the Borrower and its
subsidiaries than the Texas Transition to Competition Plan
and the rate plans applicable to the Borrower and its
subsidiaries in the state of New Mexico on the date hereof.
(h) The Lenders shall have received reasonably satisfactory
unaudited interim consolidated financial statements of TNP
for each fiscal month and quarterly period ended after
December 31, 1998 as to which such financial statements are
available and such financial statements shall not reflect
any material adverse change in the consolidated financial
condition of TNP and its subsidiaries from what was
reflected in the financial statements or projections
previously furnished to the Lenders.
(i) The Lenders shall have received a reasonably
satisfactory pro forma consolidated balance sheet of the
Borrower and its subsidiaries as at the date of the most
recent quarterly consolidated balance sheet delivered
pursuant to the preceding paragraph consistent in all
material respects with the pro forma consolidated balance
sheet attached hereto as Annex III (except to the extent of
differences that reflect normal operations of the Borrower
during the period between December 31, 1998 and the date as
of which such pro forma balance sheet shall be prepared).
(j) The Lenders shall be satisfied that consolidated EBITDA
of TNP and its subsidiaries (to be defined in a manner
consistent with the calculation of consolidated EBITDA
attached hereto as Annex IV) for the latest twelve-month
period for which the relevant financial information is
available shall equal at least $135,000,000 and the Borrower
shall provide support for such calculation of a nature that
is satisfactory to the Lenders for inclusion in marketing
materials for the Credit Facilities.
(k) All actions required to perfect the Administrative
Agent's security interest in the collateral under the Credit
Facilities shall have been completed.
(l) The Administrative Agent shall be satisfied that the
insurance programs maintained by TNMPCo and its subsidiaries
are with financially sound and reputable insurance companies
and that insurance is maintained on all property in at least
such amounts and against at least such risks (but including
in any event public liability, product liability and
business interruption) as are usually insured against in the
same general area by companies engaged in the same or a
similar business.
(m) The Lenders shall have received a certificate of the
Borrower, reasonably satisfactory in form and substance to
the Lenders, executed by the Chief Executive Officer or
Chief Financial Officer of the Borrower, that shall certify
the solvency of the Borrower and its subsidiaries after
giving effect to the Merger and the other transactions
contemplated hereby.
(n) The Lenders shall have received within 120 days of the
date of the Commitment Letter to which this term sheet is
attached an environmental audit with respect to certain real
property owned or leased by the Borrower and its
subsidiaries from a firm reasonably satisfactory to the
Co-Arrangers, which audit shall not reveal any condition
which reasonably could be expected to result in a material
adverse change in the business, operations, property,
conditions (financial or otherwise) or prospects of the
Borrower or its subsidiaries, taken as a whole.
(o) The Lenders shall have received within 120 days of the
date of the Commitment Letter to which this term sheet is
attached a technical assessment of the assets of TNP and its
subsidiaries by an independent engineer, in form and
substance reasonably satisfactory to the Administrative
Agent.
(p) The Lenders shall have received within 120 days of the
date of the Commitment Letter to which this term sheet is
attached a power market study, by a reasonably satisfactory
independent power marketing consultant, in form and
substance reasonably satisfactory to the Administrative
Agent.
(q) The Lenders shall have received such legal opinions
(including opinions (i) from counsel to the Borrower and its
subsidiaries, (ii) delivered to the Borrower by counsel to
TNP pursuant to the Merger, accompanied by reliance letters
in favor of the Lenders and (iii) from such special and
local counsel as may be reasonably required by the
Administrative Agent), documents and other instruments as
are customary for transactions of this type or as they may
reasonably request.
(r) The Borrower and TNMPCo shall have entered into a tax
sharing agreement that shall be in form and substance
reasonably satisfactory to the Administrative Agent.
(s) The Administrative Agent shall have received reasonably
satisfactory evidence that, after giving effect to the
Merger, TNMPCo's senior unsecured long term debt will
continue to be rated as investment grade.
On-Going
Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all representations and
warranties in the documentation (the "Senior Credit
Documentation") with respect to the Credit Facilities
(including, without limitation, the material adverse change
and litigation representations) and (b) there being no
default or event of default in existence at the time of, or
after giving effect to the making of, such extension of
credit. As used herein and in the Senior Credit
Documentation a "material adverse change" shall mean any
event, development or circumstance that has had or could
reasonably be expected to have a material adverse effect on
(i) the Merger, (ii) the business, operations, property,
condition (financial or otherwise) or prospects of the
Borrower and its subsidiaries taken as a whole or (iii) the
validity or enforceability of any of the Senior Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder.
VI. Certain
Documentation
Matters
The Senior Credit Documentation shall contain representa-
tions, warranties, covenants and events of default customary
for financings of this type and other terms deemed
appropriate by the Lenders, including, without limitation:
Representations
and
Warranties: Financial statements (including pro forma financial state-
ments); absence of undisclosed liabilities; no material
adverse change; corporate existence; compliance with law;
corporate power and authority; enforceability of Senior
Credit Documentation; no conflict with law or contractual
obligations; no material litigation; no default; ownership
of property; liens; intellectual property; no burdensome
restrictions; taxes; Federal Reserve regulations; ERISA;
Investment Company Act; Public Utility Holding Company Act;
subsidiaries; environmental matters; solvency; labor
matters; year 2000 matters; accuracy of disclosure; creation
and perfection of security interests; and status of Credit
Facilities as senior debt.
Affirmative
Covenants: Delivery of financial statements, reports, accountants'
letters, projections, officers' certificates and other
information requested by the Lenders; payment of other
obligations; continuation of business and maintenance of
existence and material rights and privileges; compliance
with laws and material contractual obligations; maintenance
of property and insurance; maintenance of books and records;
right of the Lenders to inspect property and books and
records; notices of defaults, litigation and other material
events; compliance with environmental laws; further
assurances (including, without limitation, with respect to
security interests in after-acquired property); and
agreement to obtain interest rate protection in an amount
and manner satisfactory to the Administrative Agent.
Financial
Covenants: To include;
1. Minimum interest coverage ratio of the Borrower and
TNMPCo,
2. Minimum fixed charge coverage ratio of the Borrower,
3. Maximum total debt leverage ratio and maximum senior
debt leverage ratio of the Borrower and its subsi-
diaries,
4. Maintenance of a minimum tangible net worth by TNMPCo,
5. Maintenance of a total debt to capitalization ratio by
TNMPCo of not more than 0.65 to 1.
Negative
Covenants: Limitations on: indebtedness; liens; guarantee obligations;
mergers, consolidations, liquidations and dissolutions;
sales of assets; leases; dividends and other payments in
respect of capital stock; capital expenditures; investments,
loans and advances; optional payments and modifications of
subordinated and other debt instruments; transactions with
affiliates; sale-leasebacks; changes in fiscal year;
negative pledge clauses and clauses restricting subsidiary
distributions; changes in lines of business; and changes in
passive holding company status of the Borrower.
Events of
Default: Nonpayment of principal when due; nonpayment of interest,
fees or other amounts after a grace period to be agreed
upon; material inaccuracy of representations and warranties;
violation of covenants (subject, in the case of certain
affirmative covenants, to a grace period to be agreed upon);
cross-default; bankruptcy events; certain ERISA events;
material judgments; actual or asserted invalidity of any
guarantee, security document, security interest or
subordination provision; and a change of control (the
definition of which is to be agreed upon).
Voting: Amendments and waivers with respect to the Senior Credit
Documentation shall require the approval of Lenders holding
more than 50% of the aggregate amount of the Term Loan and
Revolving Commitments under the Credit Facilities, except
that (a) the consent of each Lender directly affected
thereby shall be required with respect to (i) reductions in
the amount or extensions of the scheduled date of
amortization or maturity of any Loan, (ii) reductions in the
rate of interest or any fee or extensions of any due date
thereof and (iii) increases in the amount or extensions of
the expiry date of any Lender's commitment and (b) the
consent of 100% of the Lenders shall be required with
respect to (i) modifications to any of the voting
percentages and (ii) releases of all or substantially all of
the collateral. In addition, "class" voting requirements
shall apply to modifications affecting certain payment
matters.
Assignments and
Participations:
The Lenders shall be permitted to assign and sell
participations in their Loans and commitments, subject, in
the case of assignments (other than to another Lender or to
an affiliate of a Lender), to the consent of the
Administrative Agent and the Borrower (which consent in each
case shall not be unreasonably withheld). Non-pro rata
assignments shall be permitted. In the case of partial
assignments (other than to another Lender or to an affiliate
of a Lender), the minimum assignment amount shall be an
amount to be determined unless otherwise agreed by the
Borrower and the Administrative Agent. Participants shall
have the same benefits as the Lenders with respect to yield
protection and increased cost provisions. Voting rights of
participants shall be limited to those matters set forth in
clause (a) under "Voting" with respect to which the
affirmative vote of the Lender from which it purchased its
participation would be required. Pledges of Loans in
accordance with applicable law shall be permitted without
restriction. Promissory notes shall be issued under the
Credit Facilities only upon request.
Yield
Protection: The Senior Credit Documentation shall contain customary
provisions (a) protecting the Lenders against increased
costs or loss of yield resulting from changes in reserve,
tax, capital adequacy and other requirements of law and from
the imposition of or changes in withholding or other taxes
and (b) indemnifying the Lenders for "breakage costs"
incurred in connection with, among other things, any
prepayment of a Eurodollar Loan (as defined in Annex I) on a
day other than the last day of an interest period with
respect thereto.
Expenses and
Indemnifi-
cation: The Borrower shall pay (a) all reasonable out-of-pocket
expenses of the Administrative Agent and the Co-Arrangers
associated with the syndication of the Credit Facilities and
the preparation, execution, delivery and administration of
the Senior Credit Documentation and any amendment or waiver
with respect thereto (including the reasonable fees,
disbursements and other charges of counsel) and (b) all
out-of-pocket expenses of the Administrative Agent and the
Lenders (including the fees, disbursements and other charges
of counsel) in connection with the enforcement of the Senior
Credit Documentation.
The Administrative Agent, the Co-Arrangers and the Lenders
(and their affiliates and their respective officers,
directors, employees, advisors and agents) will have no
liability for, and will be indemnified and held harmless
against, any losses, claims, damages, liabilities or
expenses incurred in respect of the financing contemplated
hereby or the use or the proposed use of proceeds thereof,
except to the extent they are found by a final,
non-appealable judgment of a court to arise from the willful
misconduct or gross negligence of the relevant indemnified
person.
Governing Law
and Forum: State of New York.
Counsel to
the
Administrative
Agent
and
Co-Arrangers: Simpson Thacher & Bartlett.
<PAGE>
Annex I
to Exhibit A
Interest and Certain Fees
Interest
Rate
Options: The Borrower may elect that the Loans comprising each
borrowing bear interest at a rate per annum equal to:
The ABR plus the Applicable Margin; or
The Eurodollar Rate plus the Applicable Margin.
Provided, that all Swingline Loans shall bear interest based
upon the ABR.
As used herein:
"ABR" means the higher of (i) the rate of interest publicly
announced by CIBC as its prime rate in effect at its
principal office in New York City (the "Prime Rate") and
(ii) the federal funds effective rate from time to time plus
0.5%.
"Applicable Margin" means:
(a) with respect to the Revolving Loans and the Term Loan,
(i) 2.00%, in the case of ABR Loans (as defined below) and
(ii) 3.00 %, in the case of Eurodollar Loans (as defined
below);
"Eurodollar Rate" means the rate (adjusted for statutory
reserve requirements for eurocurrency liabilities) for
eurodollar deposits for a period equal to one, two, three or
six months (as selected by the Borrower) appearing on Page
3750 of the Dow Jones Markets screen.
Interest
Payment
Dates: In the case of Loans bearing interest based upon the ABR
("ABR Loans"), quarterly in arrears.
In the case of Loans bearing interest based upon the
Eurodollar Rate ("Eurodollar Loans"), on the last day of
each relevant interest period and, in the case of any
interest period longer than three months, on each successive
date three months after the first day of such interest
period.
Commitment
Fees: The Borrower shall pay a commitment fee calculated at the
rate of .50% per annum on the average daily unused portion
of the Revolving Facility, payable quarterly in arrears.
Swingline Loans shall, for purposes of the commitment fee
calculations only, not be deemed to be a utilization of the
Revolving Facility.
Default
Rate: At any time when the Borrower is in default in the payment
of any amount of principal due under the Credit Facilities,
such amount shall bear interest at 2.00% above the rate
otherwise applicable thereto. Overdue interest, fees and
other amounts shall bear interest at 2.00% above the rate
applicable to ABR Loans.
Rate and
Fee Basis: All per annum rates shall be calculated on the basis of a
year of 360 days (or 365/366 days, in the case of ABR Loans
the interest rate payable on which is then based on the
Prime Rate) for actual days elapsed.
<PAGE>
Annex II
to Exhibit A
ESTIMATED SOURCES AND USES TABLE
(in $ Thousands)
Sources of Funds:
Cash on Hand $6,929
New Revolving Credit Facility - Holdco $17,245
New Senior Term Facility B - Holdco $140,000
New Senior Notes - Holdco $275,000
Preferred Stock $100,000
Common Stock $100,000
--------------
Total Sources of Funds $639,174
==============
Uses of Funds:
Acquisition Purchase Price $589,674
Repay Holdco Revolving Credit Facility $12,500
Estimated Transaction Costs and Expenses $37,000
--------------
Total Uses of Funds $639,174
==============
<PAGE>
ANNEX III
PRO FORMA CAPITALIZATION
(in $ Thousands)
Revolving Credit Facility - Opco $49,000
First Mortgage Bonds - Opco $100,000
Secured Debentures - Opco $140,000
Senior Notes Opco $174,181
---------------
Total Debt - Opco $463,181
===============
Revolving Credit Facility - Holdco $17,245
Senior Term Loan - Holdco $140,000
Senior Notes - Holdco $275,000
---------------
Total Debt - Holdco $432,245
===============
Preferred Stock - Opco $3,060
Preferred Stock - Holdco $100,000
Common Equity - Holdco $100,000
---------------
Total Equity $203,060
===============
---------------
Total Capitalization $1,098,486
===============
<PAGE>
<TABLE>
<CAPTION>
ANNEX IV
TNP Enterprises Texas-New Mexico Power Company
1st Quarter 1st Quarter
--------------- ------------------------------
1998 1999 1998 LTM 1998 1999 1998 LTM
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Applicable to Common Stock 19.3 3.1 4.6 17.8 34.2 3.8 5.3 32.7
Dividends on Preferred Stock 0.2 0.0 0.0 0.1 0.2 0.0 0.0 0.1
Loss on Discontinued Operations (Net of Taxes) 12.7 - 0.5 12.2 - - - -
Income Taxes 15.5 0.7 2.6 13.6 16.9 1.0 2.8 15.1
Other Interest & Amortization 5.5 1.4 1.1 5.8 5.4 1.4 1.1 5.7
Interest Expense 48.4 10.2 12.5 46.1 48.3 10.1 12.5 45.9
Less: Other Income Net of Taxes (1.2) (0.3) (0.2) (1.2) (0.9) (0.2) (0.1) (1.0)
Depreciation & Amortization 38.1 13.7 9.9 41.9 38.1 13.7 9.9 41.9
EBITDA 138.4 28.9 31.0 136.3 142.1 29.8 31.5 140.5
</TABLE>
EXHIBIT-99.07
July 13, 1999
ST Acquisition Corp.
Senior Secured Credit Facilities
Letter Agreement
ST Acquisition Corp.
c/o CIBC World Markets Corp.
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention:
Ladies and Gentlemen:
Reference is made to the Commitment Letter dated May 22, 1999
among CIBC World Markets Corp., Canadian Imperial Bank of Commerce, The Chase
Manhattan Bank, Chase Securities Inc. and ST Acquisition Corp. The parties
hereto agree that the section titled "Mandatory Prepayments and Commitment
Reductions" in Exhibit A to the Commitment Letter shall be amended to read as
follows:
"The following amounts shall be applied to prepay the Term Loans and
reduce the Revolving Commitments:
(a) 100% of the net proceeds of any sale or issuance
of equity and 100% of the net proceeds of any
incurrence of indebtedness (other than the financings
referred to in paragraphs (b) and (c) of the "Initial
Conditions to Closing" set forth below) after the
Closing Date by the Borrower; and
(b) 100% of the net proceeds of any sale or other
disposition (including as a result of casualty or
condemnation) by the Borrower or any of its
subsidiaries of any assets, except for the sale of
inventory, receivables or obsolete or worn-out
property in the ordinary course of business and
subject to certain other customary exceptions
(including capacity for reinvestment) to be agreed
upon, provided that the amount of such net proceeds
from the sale or other disposition of assets by any
of the Borrower's subsidiaries shall be limited to
the portion thereof that shall remain after such net
proceeds are first applied to prepay any indebtedness
of such subsidiary in accordance with any mandatory
prepayment or redemption provisions thereof and that
shall be able (after receipt of any governmental
approvals now or hereafter required) to be paid as a
dividend by such subsidiary to the Borrower (the
Borrower agreeing to use its best efforts to cause
such dividend to be so paid).
The amounts described above shall be applied, first,
to prepay the Term Loans and, second, to permanently
reduce the Revolving Commitments (with extensions of
credit thereunder being prepaid to the extent the
aggregate amount thereof exceeds the Revolving
Commitments as so reduced).
<PAGE>
The parties hereto have caused this Letter Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
CIBC WORLD MARKETS CORP.
/s/ John Burke
------------------------------------
By: John Burke
Title: Executive Director
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ John Burke
------------------------------------
By: John Burke
Title: Executive Director
THE CHASE MANHATTAN BANK
/s/ Thomas Casey
------------------------------------
By: Thomas Casey
Title: Vice President
CHASE SECURITIES INC.
/s/ Jay Schwartz
------------------------------------
By: Jay Schwartz
Title: Managing Director
AGREED TO AND ACCEPTED:
ST ACQUISITION CORP.
/s/ Theodore Babcock
- ----------------------------------
By: Theodore Babcock
Title: Vice President, Treasurer
and Secretary
EXHIBIT-99.08
July 21, 1999
ST Acquisition Corp.
Senior Secured Credit Facilities
and Senior Backstop Credit Facility
Letter Agreement
ST Acquisition Corp.
c/o CIBC World Markets Corp.
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention: Theodore Babcock
Ladies and Gentlemen:
Reference is made to the Senior Secured Credit Facilities
Commitment Letter dated May 22, 1999 among CIBC World Markets Corp., Canadian
Imperial Bank of Commerce, The Chase Manhattan Bank, Chase Securities Inc. and
ST Acquisition Corp and to the Senior Backstop Credit Facility Commitment Letter
dated May 22, 1999 among CIBC World Markets Corp., Canadian Imperial Bank of
Commerce, The Chase Manhattan Bank, Chase Securities Inc. and ST Acquisition
Corp. The parties hereto agree that clause (d) of the eighth paragraph of each
of the aforementioned commitment letters shall be amended to read as follows:
"(d) the negotiation, execution and delivery on or before the date
which is 120 days after the date of your acceptance of this Commitment
Letter of definitive documentation with respect to the Facilities
satisfactory to CIBC, CIBC World Markets, Chase, CSI and their counsel
and"
The parties hereto have caused this Letter Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
CIBC WORLD MARKETS CORP.
/s/ John Burke
------------------------------------
By: John Burke
Title: Executive Director
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ John Burke
------------------------------------
By: John Burke
Title: Executive Director
THE CHASE MANHATTAN BANK
/s/ Thomas Casey
------------------------------------
By: Thomas Casey
Title: Vice President
CHASE SECURITIES INC.
/s/ Jay Schwartz
------------------------------------
By: Jay Schwartz
Title: Managing Director
AGREED TO AND ACCEPTED:
ST ACQUISITION CORP.
/s/ Theodore Babcock
- ----------------------------------
By: Theodore Babcock
Title: Vice President, Treasurer
and Secretary
EXHIBIT-99.09
May 22, 1999
ST Acquisition Corp.
Senior Backstop Credit Facility
Commitment Letter
ST Acquisition Corp.
c/o CIBC World Markets Corp.
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention:
Ladies and Gentlemen:
You have advised Canadian Imperial Bank of Commerce ("CIBC"),
CIBC World Markets Corp. ("CIBC World Markets"), The Chase Manhattan Bank
("Chase") and Chase Securities Inc. ("CSI") that SW Acquisition, L.P. (the
"Partnership"), a partnership formed by CIBC World Markets and certain other
investors (the "Sponsers"), has formed an acquisition subsidiary, ST Acquisition
Corp. which intends to enter into a transaction pursuant to which ST Acquisition
Corp. will merge (the "Merger") with and into TNP Enterprises, Inc. ("TNP"), a
holding company that owns Texas New Mexico Power Company (the "Borrower"). In
connection with the Merger, the former shareholders of TNP will become entitled
to receive approximately $590,000,000 in cash ($44 per share net to each
shareholder), and the Sponsers will become the owners of all the issued and
outstanding capital stock of TNP. As a result of the Merger outstanding debt of
the Borrower in an aggregate amount of up to $428,000,000 could become due and
payable. In such connection, you have requested that (i) CIBC World Markets and
CSI agree to structure, arrange and syndicate a senior backstop credit facility
in the aggregate amount of $428,000,000 the proceeds of which shall be available
to refinance such debt (the "Facility"), (ii) CIBC and Chase commit to provide
the entire principal amount of the Facility and (iii) CIBC serve as
administrative agent for the Facility.
Each of CIBC and Chase is pleased to advise you of its
commitment to provide $214,000,000 of the amount of the Facility upon the terms
and subject to the conditions set forth or referred to in this commitment letter
(this "Commitment Letter") and in the Summary of Terms and Conditions attached
hereto as Exhibit A (the "Term Sheet").
It is agreed that (i) CIBC will act as the sole and exclusive
administrative agent (the "Administrative Agent") for the Facility and (ii) CIBC
World Markets and CSI will act as co-book managers and co-lead arrangers for the
Facility, and that each will, in such capacities, perform the duties and
exercise the authorities customarily performed and exercised by it in such
roles. You agree that no other agents, co-agents or arrangers will be appointed,
no other titles will be awarded and no compensation (other than that expressly
contemplated by the Term Sheet and the Fee Letter referred to below) will be
paid in connection with the Facility unless you and we shall so agree.
CIBC World Markets and CSI intend to syndicate the Facility to
a group of financial institutions (together with CIBC and Chase, the "Lenders")
identified by CIBC World Markets and CSI in consultation with you. CIBC World
Markets and CSI intend to commence syndication efforts promptly, and you agree
actively to assist CIBC World Markets and CSI in completing a mutually
satisfactory syndication. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the existing lending relationships of the Borrower and TNP, (b)
direct contact between senior management and advisors of the Borrower and TNP
and the proposed Lenders, (c) assistance in the preparation of a Confidential
Information Memorandum and other marketing materials to be used in connection
with the syndication and (d) the hosting, with CIBC World Markets and CSI, of
one or more meetings of prospective Lenders.
CIBC World Markets and CSI will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CIBC World Markets and CSI in their syndication efforts, you
agree promptly to prepare and provide to CIBC World Markets and CSI all
information with respect to the Borrower, the Partnership, TNP, the Merger and
the other transactions contemplated hereby, including all financial information
and projections (the "Projections"), as we may reasonably request in connection
with the arrangement and syndication of the Facility. You hereby represent and
covenant that (a) all information other than the Projections (the "Information")
that has been or will be made available to CIBC, CIBC World Markets, Chase and
CSI by you or any of your representatives is or will be, when furnished,
complete and correct in all material respects and does not or will not, when
furnished, contain any untrue statements of a material fact or omit to state a
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made
and (b) the Projections that have been or will be made available to CIBC, CIBC
World Markets, Chase and CSI by you or any of your representatives have been or
will be prepared in good faith based upon reasonable assumptions. You understand
that in arranging and syndicating the Facility we may use and rely on the
Information and Projections without independent verification thereof.
As consideration for CIBC's and Chase's commitments hereunder
and CIBC World Markets' and CSI's agreement to perform the services described
herein, you agree to pay to CIBC, CIBC World Markets, Chase and CSI the
nonrefundable fees set forth in Annex I to the Term Sheet and in the Fee Letter
dated the date hereof and delivered herewith (collectively, the "Fee Letter").
CIBC, CIBC World Markets, Chase and CSI shall be entitled,
after consultation with you, to change the pricing, terms and structure of the
Facility if CIBC, CIBC World Markets, Chase and CSI determine that such changes
are advisable to ensure a successful syndication of the Facility; provided the
total amount of the Facility remains unchanged.
CIBC's and Chase's commitments hereunder and CIBC World
Markets' and CSI's agreements to perform the services described herein are
subject to (a) there not occurring or becoming known to us any material adverse
condition or material adverse change in or affecting the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
TNP and their respective subsidiaries, taken as a whole, (b) our not becoming
aware after the date hereof of any information or other matter affecting the
Borrower, the Partnership, TNP or the transactions contemplated hereby which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (c) our satisfaction that prior
to and during the syndication of the Facility there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Borrower or TNP or any affiliate thereof, (d) the
negotiation, execution and delivery on or before the date which is 60 days after
the date of your acceptance of this Commitment Letter of definitive
documentation with respect to the Facility satisfactory to CIBC, CIBC World
Markets, Chase and CSI and their counsel and (e) the other conditions set forth
or referred to in the Term Sheet. The terms and conditions of CIBC's and Chase's
commitments hereunder and of the Facility are not limited to those set forth
herein and in the Term Sheet, provided that any additional conditions shall be
reasonable and customary for facilities similar to the Facility. Those matters
that are not covered by the provisions hereof nor of the Term Sheet are subject
to the approval and agreement of CIBC, CIBC World Markets, Chase, CSI and you.
You agree (a) to indemnify and hold harmless CIBC, CIBC World
Markets, Chase, CSI, their affiliates and their respective officers, directors,
employees, advisors, and agents (each, an "indemnified person") from and against
any and all losses, claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in connection with this
Commitment Letter, the Facility, the use of the proceeds thereof, the Merger or
any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for any
legal or other expenses incurred in connection with investigating or defending
any of the foregoing; provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent they are found by a final, non-appealable judgment of a
court to arise from the willful misconduct or gross negligence of such
indemnified person, and (b) to reimburse CIBC, CIBC World Markets, Chase, CSI
and their affiliates on demand for all out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facility and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any indirect or consequential damages
in connection with its activities related to the Facility.
You acknowledge that CIBC, CIBC World Markets, Chase, CSI and
their affiliates (the terms "CIBC", "CIBC World Markets", "Chase" and "CSI"
being understood to refer hereinafter in this paragraph to include such
affiliates) may be providing debt financing, equity capital or other services
(including financial advisory services) to other companies in respect of which
you may have conflicting interests regarding the transactions described herein
and otherwise. Neither CIBC, CIBC World Markets, Chase nor CSI will use
confidential information obtained from you by virtue of the transactions
contemplated by this Commitment Letter or its other relationships with you in
connection with the performance by CIBC, CIBC World Markets, Chase or CSI of
services for other companies, and neither CIBC, CIBC World Markets, Chase nor
CSI will furnish any such information to other companies. You also acknowledge
that neither CIBC, CIBC World Markets, Chase nor CSI has any obligation to use
in connection with the transactions contemplated by this Commitment Letter, or
to furnish to you, confidential information obtained from other companies.
This Commitment Letter shall not be assignable by you without
the prior written consent of CIBC, CIBC World Markets, Chase and CSI (and any
purported assignment without such consent shall be null and void), is intended
to be solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Commitment Letter may not be amended or waived except by an
instrument in writing signed by you, CIBC, CIBC World Markets, Chase and CSI.
This Commitment Letter may be executed in any number of counterparts, each of
which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. This Commitment Letter and the Fee Letter
are the only agreements that have been entered into between CIBC, CIBC World
Markets, Chase, CSI and you with respect to the Facility and set forth the
entire understanding of the parties with respect thereto. This Commitment Letter
shall be governed by, and construed in accordance with, the laws of the State of
New York.
This Commitment Letter is delivered to you on the
understanding that neither this Commitment Letter, the Term Sheet nor the Fee
Letter nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person except (a) to your officers, agents and advisors
who are directly involved in the consideration of this matter or (b) as may be
compelled in a judicial or administrative proceeding or as otherwise required by
law (in which case you agree to inform us promptly thereof) and except that this
Commitment Letter and the Term Sheet (but not the Fee Letter or its terms and
substance) may be disclosed to (x) the officers, directors and representatives
of TNP who are directly involved in the consideration of this matter, (y) any
regulatory commission as necessary in seeking regulatory approval of the Merger
or the transactions relating thereto or (z) the shareholders of TNP in a proxy
statement seeking approval for the Merger.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or CIBC's, CIBC World Markets', Chase's or
CSI's commitment hereunder.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter not
later than 12:00 p.m., New York City time, on May 25, 1999. CIBC's and Chase's
commitments and CIBC World Markets' and CSI's agreements herein will expire at
such time in the event CIBC, CIBC World Markets, Chase and CSI have not received
such executed counterparts in accordance with the immediately preceding
sentence.
<PAGE>
CIBC, CIBC World Markets, Chase and CSI are pleased to have
been given the opportunity to assist you in connection with this important
financing.
Very truly yours,
CIBC WORLD MARKETS CORP.
By: /s/ John P. Burke
---------------------------
Title: Executive Director
CIBC World Markets Corp., as Agent
CANADIAN IMPERIAL BANK OF
COMMERCE
By: /s/ John P. Burke
---------------------------
Title: Executive Director
CIBC World Markets Corp., as Agent
THE CHASE MANHATTAN BANK
By: /s/ T. Casey
---------------------------
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Jay Schwartz
---------------------------
Title: Managing Director
Accepted and agreed to
as of the date first
written above by:
ST ACQUISITION CORP.
By: /s/ W. J. Catacosinos
-------------------------------
Title:
<PAGE>
Exhibit A
SENIOR BACKSTOP CREDIT FACILITY
Statement of Indicative Terms and Conditions
SW Acquisition, L.P. (the "Partnership"), a partnership formed
by CIBC World Markets Corp. and certain other investors (the "Sponsors"), has
formed an acquisition subsidiary, ST Acquisition Corp., which intends to enter
into a transaction pursuant to which it will merge (the "Merger") with and into
TNP Enterprises, Inc. ("TNP"), a holding company that owns Texas New Mexico
Power Company, (the "Borrower"). As a result of the Merger outstanding debt of
the Borrower in an aggregate amount of $428,000,000 could become due and
payable. Set forth below is a statement of indicative terms and conditions for a
senior backstop credit facility to be used to refinance any such debt that
becomes due and payable.
I. Parties
Borrower: Texas New Mexico Power Company ("TNMPCo").
Guarantors: TNP and each direct and indirect subsidiary
of the Borrower.
Co-Lead Arranger
and Co-Book Manager: CIBC World Markets Corp. ("CIBC World
Markets") and Chase Securities Inc. ("CSI"
and, together with CIBC World Markets, in
such capacity, the "Co-Arrangers").
Administrative Agent: Canadian Imperial Bank of Commerce ("CIBC"
and, in such capacity, the "Administrative
Agent").
Lenders: A syndicate of banks, financial institutions
and other entities, including CIBC and The
Chase Manhattan Bank ("Chase"), arranged by
the Co-Arrangers (collectively, the
"Lenders").
II. Type and Amount of
Facility
Type and Amount of Facility: A multiple draw-down bridge term loan
facility (the "Bridge Facility" and, the
loans thereunder, the "Loans") in an
aggregate principal amount equal to
$428,000,000.
Availability: Loans under the Bridge Facility shall be made
from time to time during the period between
the Closing Date and the date that is the
last day of the period (the "Bond Put
Period") on which the First Mortgage Bonds
and the Debentures may be put to Borrower
upon a change of control (plus any customary
settlement period).
Purpose: The proceeds of the Bridge Facility shall be
available to purchase up to $100,000,000
along with accrued interest and fees of the
Borrower's Series U First Mortgage Bonds, up
to $7,900,000 along with accrued interest and
fees of the Borrower's Series M First
Mortgage Bonds (each a "First ----- Mortgage
Bond") and up to $140,000,000 along with
accrued ------------- interest and fees of
the Borrower's Series A Secured Debentures
(the "Debentures") that shall be tendered to
the ---------- Borrower pursuant to an offer
to purchase required by the indentures under
which such First Mortgage Bonds and
Debentures are outstanding as a result of the
Change in Control caused by the Merger. The
proceeds of the Bridge Facility shall also be
available to refinance the outstanding
balance under the Borrower's existing
revolving credit facilities.
Maturity: The date that is 364 days from the Closing
Date (as defined below).
III. Certain Payment Provisions
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be
reduced by the Borrower in minimum amounts to
be agreed upon. Optional prepayments of the
Loans may not be reborrowed.
Mandatory Prepayments and
Commitment Reductions: The commitments under the Bridge Facility
shall automatically be permanently reduced by
the amount of any drawing thereunder and
shall be terminated at the end of the Bond
Put Period.
IV. Collateral The Borrower shall grant a lien in favor of
the Lenders on all First Mortgage Bonds and
Debentures that are repurchased with the
proceeds of the Loans.
V. Certain Conditions
Initial Conditions to Closing: The availability of the Bridge Facility shall
be conditioned upon the satisfaction on or
before the date which is nine months
following the date of the Commitment Letter
to which this Term Sheet is attached of
conditions precedent usual for facilities and
transactions of this type, including, without
limitation, the conditions set forth below
and customary corporate and document delivery
requirements (the date upon which all such
conditions precedent shall be satisfied, the
"Closing Date")
(a) The Borrower shall have executed and
delivered reasonably satisfactory definitive
Senior Credit Documentation (as hereinafter
defined).
(b) The Partnership shall have received at
least $100,000,000 in cash from the issuance
of partnership interests to the Sponsors. ST
Acquisition Corp. shall have received at
least $100,000,000 in cash from the issuance
of its common stock to the Partnership, at
least $100,000,000 in cash from the issuance
of its preferred stock to the Sponsors and
CSI and at least $275,000,000 from the
issuance of its senior subordinated notes or
a drawdown under a senior subordinated bridge
facility, each on terms and conditions
reasonably satisfactory to the Co-Arrangers.
In addition, credit facilities of TNP
aggregating $165,000,000 shall have become
effective on reasonably satisfactory terms
and conditions.
(c) The Merger shall have been consummated in
accordance with applicable law and on
reasonably satisfactory terms, including the
payment to the former shareholders of TNP of
not more $600,000,000 in respect of their
stock, and pursuant to reasonably
satisfactory documentation, and no provision
thereof shall have been waived, amended,
supplemented or otherwise modified in any
material respect.
(d) The Lenders, the Administrative Agent and
the Co-Arrangers shall have received all fees
required to be paid, and all expenses for
which invoices have been presented, on or
before the Closing Date.
(e) All material governmental and third party
approvals necessary or, in the reasonable
discretion of the Co-Arrangers, advisable in
connection with the Merger, the financing
contemplated hereby and the continuing
operations of the Borrower and its
subsidiaries shall have been obtained on
reasonably satisfactory terms and shall be in
full force and effect, and all applicable
waiting periods shall have expired without
any action being taken or threatened by any
competent authority that would restrain,
prevent or otherwise impose material adverse
conditions on the financing thereof.
(f) The Lenders shall have received
reasonably satisfactory evidence that,
insofar as can be reasonably foreseen, no
final order with respect to any required
approval, and no change in or event relating
to the order of the Public Utility Commission
of Texas dated September 4, 1998, could
reasonably result in any rate plan which
would be significantly less favorable to the
Borrower and its subsidiaries than the Texas
Transition to Competition Plan and the rate
plans applicable to the Borrower and its
subsidiaries in the state of New Mexico on
the date hereof.
(g) The Lenders shall have received
reasonably satisfactory unaudited interim
consolidated financial statements of TNP and
of the Borrower for each fiscal month and
quarterly period ended after December 31,
1998 as to which such financial statements
are available and such financial statements
shall not reflect any material adverse change
in the consolidated financial condition of
TNP and its subsidiaries or the Borrower and
its subsidiaries from what was reflected in
the financial statements or projections
previously furnished to the Lenders.
(h) The Lenders shall have received a
reasonably satisfactory pro forma
consolidated balance sheet of TNP and its
subsidiaries and of the Borrower and its
subsidiaries as at the date of the most
recent quarterly consolidated balance sheet
delivered pursuant to the preceding paragraph
consistent in all material respects with the
pro forma consolidated balance sheet attached
hereto as Annex III (except to the extent of
differences that reflect normal operations of
the Borrower during the period between
December 31, 1998 and the date as of which
such pro forma balance sheet shall be
prepared).
(i) The Lenders shall be satisfied that
consolidated EBITDA of TNP and its
subsidiaries (to be defined in a manner
consistent with the calculation of
consolidated EBITDA attached hereto as Annex
IV) for the latest twelve-month period for
which the relevant financial information is
available shall equal at least $135,000,000
and TNP shall provide support for such
calculation of a nature that is satisfactory
to the Lenders for inclusion in marketing
materials for the Bridge Facility.
(j) All actions required to perfect the
Administrative Agent's security interest in
the collateral under the Bridge Facility
shall have been completed.
(k) The Administrative Agent shall be
satisfied that the insurance programs
maintained by TNMPCo and its subsidiaries are
with financially sound and reputable
insurance companies and that insurance is
maintained on all property in at least such
amounts and against at least such risks (but
including in any event public liability,
product liability and business interruption)
as are usually insured against in the same
general area by companies engaged in the same
or a similar business.
(l) The Lenders shall have received a
certificate of the Borrower, reasonably
satisfactory in form and substance to the
Lenders, executed by the Chief Executive
Officer or Chief Financial Officer of the
Borrower, that shall certify the solvency of
the Borrower and its subsidiaries after
giving effect to the Merger and the other
transactions contemplated hereby.
(m) The Lenders shall have received within
120 days of the date of the Commitment Letter
to which this term sheet is attached an
environmental audit with respect to certain
real property owned or leased by the Borrower
and its subsidiaries from a firm satisfactory
to the Co-Arrangers, which audit shall not
reveal any condition which reasonably could
be expected to result in a material adverse
change in the business, operations, property,
conditions (financial or otherwise) or
prospects of the Borrower or its
subsidiaries, taken as a whole.
(n) The Lenders shall have received within
120 days of the date of the Commitment Letter
to which this term sheet is attached a
technical assessment of the assets of the
Borrower and its subsidiaries by an
independent engineer, in form and substance
reasonably satisfactory to the Administrative
Agent.
(o) The Lenders shall have received within
120 days of the date of the Commitment Letter
to which this term sheet is attached a power
market study, by a reasonably satisfactory
independent power marketing consultant, in
form and substance reasonably satisfactory to
the Administrative Agent.
(p) The Lenders shall have received such
legal opinions (including opinions (i) from
counsel to the TNP and its subsidiaries, (ii)
from counsel to the Borrower and its
subsidiaries, (iii) delivered to ST
Acquisition Corp. or the Partnership by
counsel to TNP pursuant to the Merger,
accompanied by reliance letters in favor of
the Lenders and (iii) from such special and
local counsel as may be reasonably required
by the Administrative Agent), documents and
other instruments as are customary for
transactions of this type or as they may
reasonably request.
(q) The Borrower and ST Acquisition Corp.
shall have entered into a tax sharing
agreement that shall be in form and substance
satisfactory to the Administrative Agent.
(r) The Administrative Agent shall have
received reasonably satisfactory evidence
that, after giving effect to the Merger, the
Borrower's senior unsecured long term debt
will continue to be rated as investment
grade.
(s) The Administrative Agent shall have
received reasonably satisfactory evidence
that the Bridge Facility shall be senior debt
of the Borrower.
On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) the accuracy of all
representations and warranties in the
documentation (the "Senior Credit
Documentation") with respect to the Bridge
Facility (including, without limitation, the
material adverse change and litigation
representations) and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Senior Credit Documentation
a "material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (i) the Merger,
(ii) the business, operations, property,
condition (financial or otherwise) or
prospects of the Borrower and its
subsidiaries taken as a whole or (iii) the
validity or enforceability of any of the
Senior Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
VI. Certain Documentation
Matters The Senior Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without
limitation:
Representations and Warranties: Financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority; enforceability
of Senior Credit Documentation; no conflict
with law or contractual obligations; no
material litigation; no default; ownership of
property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment
Company Act; Public Utility Holding Company
Act; subsidiaries; environmental matters;
solvency; labor matters; year 2000 matters;
accuracy of disclosure; creation and
perfection of security interests; and status
of Bridge Facility as senior debt.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested
by the Lenders; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
compliance with environmental laws; further
assurances (including, without limitation,
with respect to security interests in
after-acquired property); and agreement to
obtain interest rate protection in an amount
and manner satisfactory to the Administrative
Agent.
Financial Covenants:
Customary and appropriate for a transaction
for this type, to include but not limited to
the following;
1. Maintenance of a minimum tangible net
worth,
2. Maintenance of a maximum leverage ratio,
3. Maintenance of a minimum consolidated
interest coverage ratio,
4. Maintenance of a minimum fixed charge
coverage ratio, and
5. Maintenance of a total debt to
capitalization ratio of not more than 0.65 to
Negative Covenants: Limitations on: indebtedness; liens;
guarantee obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets; leases;
dividends and other payments in respect of
capital stock; capital expenditures;
investments, loans and advances; optional
payments and modifications of subordinated
and other debt instruments; transactions with
affiliates; sale-leasebacks; changes in
fiscal year; negative pledge clauses and
clauses restricting subsidiary distributions;
and changes in lines of business.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of covenants (subject, in the case
of certain affirmative covenants, to a grace
period to be agreed upon); cross-default;
bankruptcy events; certain ERISA events;
material judgments; actual or asserted
invalidity of any guarantee, security
document, security interest or subordination
provision; and a change of control (the
definition of which is to be agreed upon).
Voting: Amendments and waivers with respect to the
Senior Credit Documentation shall require the
approval of Lenders holding more than 50% of
the aggregate amount of the Bridge Loan,
except that (a) the consent of each Lender
directly affected thereby shall be required
with respect to (i) reductions in the amount
or extensions of the scheduled date of
amortization or maturity of any Loan, (ii)
reductions in the rate of interest or any fee
or extensions of any due date thereof and
(iii) increases in the amount or extensions
of the expiry date of any Lender's commitment
and (b) the consent of 100% of the Lenders
shall be required with respect to (i)
modifications to any of the voting
percentages and (ii) releases of all or
substantially all of the collateral. In
addition, "class" voting requirements shall
apply to modifications affecting certain
payment matters.
Assignments and Participations: The Lenders shall be permitted to assign and
sell participations in their Loans and
commitments, subject, in the case of
assignments (other than to another Lender or
to an affiliate of a Lender), to the consent
of the Administrative Agent and the Borrower
(which consent in each case shall not be
unreasonably withheld). Non-pro rata
assignments shall be permitted. In the case
of partial assignments (other than to another
Lender or to an affiliate of a Lender), the
minimum assignment amount shall be an amount
to be determined unless otherwise agreed by
the Borrower and the Administrative Agent.
Participants shall have the same benefits as
the Lenders with respect to yield protection
and increased cost provisions. Voting rights
of participants shall be limited to those
matters set forth in clause (a) under
"Voting" with respect to which the
affirmative vote of the Lender from which it
purchased its participation would be
required. Pledges of Loans in accordance with
applicable law shall be permitted without
restriction. Promissory notes shall be issued
under the Bridge Facility only upon request.
Yield Protection: The Senior Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve, tax,
capital adequacy and other requirements of
law and from the imposition of or changes in
withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar Loan
(as defined in Annex I) on a day other than
the last day of an interest period with
respect thereto.
Expenses and Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Co-Arrangers associated with
the syndication of the Bridge Facility and
the preparation, execution, delivery and
administration of the Senior Credit
Documentation and any amendment or waiver
with respect thereto (including the
reasonable fees, disbursements and other
charges of counsel) and (b) all out-of-pocket
expenses of the Administrative Agent and the
Lenders (including the fees, disbursements
and other charges of counsel) in connection
with the enforcement of the Senior Credit
Documentation.
The Administrative Agent, the Co-Arrangers
and the Lenders (and their affiliates and
their respective officers, directors,
employees, advisors and agents) will have no
liability for, and will be indemnified and
held harmless against, any losses, claims,
damages, liabilities or expenses incurred in
respect of the financing contemplated hereby
or the use or the proposed use of proceeds
thereof, except to the extent they are found
by a final, non-appealable judgment of a
court to arise from the willful misconduct or
gross negligence of the relevant indemnified
person.
Governing Law and Forum: State of New York.
Counsel to the Administrative
Agent and Co-Arrangers: Simpson Thacher & Bartlett.
<PAGE>
Annex I to
Exhibit A
Interest and Certain Fees
Interest Rate Options:
The Borrower may elect that the Loans
comprising each borrowing bear interest at a
rate per annum equal to:
The ABR plus the Applicable Margin; or
The Eurodollar Rate plus the Applicable
Margin.
Provided, that all Swingline Loans shall bear
interest based upon the ABR.
As used herein:
"ABR" means the higher of (i) the rate of
interest publicly announced by CIBC as its
prime rate in effect at its principal office
in New York City (the "Prime Rate") and (ii)
the federal funds effective rate from time to
time plus 0.5%.
"Applicable Margin" means the per annum rates
set forth on Annex II to Exhibit A.
"Eurodollar Rate" means the rate (adjusted
for statutory reserve requirements for
eurocurrency liabilities) for eurodollar
deposits for a period equal to one, two,
three or six months (as selected by the
Borrower) appearing on Page 3750 of the Dow
Jones Markets screen.
Interest Payment Dates: In the case of Loans bearing interest based
upon the ABR ("ABR Loans"), quarterly in
arrears.
In the case of Loans bearing interest based
upon the Eurodollar Rate ("Eurodollar
Loans"), on the last day of each relevant
interest period and, in the case of any
interest period longer than three months, on
each successive date three months after the
first day of such interest period.
Commitment Fees: The Borrower shall pay a commitment fee
calculated at the per annum rate set forth on
Annex II on the average daily unused portion
of the Bridge Facility, payable quarterly in
arrears.
Utilization Fee: 0.50% of the principal amount of each Loan
payable at the time such Loan is made.
Default Rate: At any time when the Borrower is in default
in the payment of any amount of principal due
under the Bridge Facility, such amount shall
bear interest at 2.00% above the rate
otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear
interest at 2.00% above the rate applicable
to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on
the basis of a year of 360 days (or 365/366
days, in the case of ABR Loans the interest
rate payable on which is then based on the
Prime Rate) for actual days elapsed.
<PAGE>
Annex II
to Exhibit A
Pricing Grid*
Days since Closing Date 1-90 days 91-180 days 181-364 days
- --------------------------------------------------------------------------------
Eurodollar Margin 125 bps 150 bps 175 bps
ABR Margin 25 bps 50 bps 75 bps
Commitment Fee 25 bps 30 bps 37.5 bps
* The pricing terms set forth herein have been determined under the
assumption that the Borrower's senior unsecured long-term debt rating
shall be at least BBB- from Standard & Poor's Ratings Services and at
least Baa3 from Moody's Investors Service, Inc. If such ratings are
lower such pricing terms will be adjusted upwards.
<PAGE>
ANNEX III
PRO FORMA CAPITALIZATION
(in $ Thousands)
Revolving Credit Facility - Opco $49,000
First Mortgage Bonds - Opco $100,000
Secured Debentures - Opco $140,000
Senior Notes Opco $174,181
----------
Total Debt - Opco $463,181
==========
Revolving Credit Facility - Holdco $17,245
Senior Term Loan - Holdco $140,000
Senior Notes - Holdco $275,000
----------
Total Debt - Holdco $432,245
==========
Preferred Stock - Opco $3,060
Preferred Stock - Holdco $100,000
Common Equity - Holdco $100,000
----------
Total Equity $203,060
==========
----------
Total Capitalization $1,098,486
==========
<PAGE>
<TABLE>
<CAPTION>
ANNEX IV
TNP Enterprises Texas-New Mexico Power Company
1st Quarter 1st Quarter
-------------------- --------------------------------
1998 1999 1998 LTM 1998 1999 1998 LTM
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Applicable to Common Stock 19.3 3.1 4.6 17.8 34.2 3.8 5.3 32.7
Dividends on Preferred Stock 0.2 0.0 0.0 0.1 0.2 0.0 0.0 0.1
Loss on Discontinued Operations (Net of Taxes) 12.7 - 0.5 12.2 - - - -
Income Taxes 15.5 0.7 2.6 13.6 16.9 1.0 2.8 15.1
Other Interest & Amortization 5.5 1.4 1.1 5.8 5.4 1.4 1.1 5.7
Interest Expense 48.4 10.2 12.5 46.1 48.3 10.1 12.5 45.9
Less: Other Income Net of Taxes (1.2) (0.3) (0.2) 1.2) (0.9) (0.2) (0.1) (1.0)
Depreciation & Amortization 38.1 13.7 9.9 41.9 38.1 13.7 9.9 41.9
EBITDA 138.4 28.9 31.0 136.3 142.1 29.8 31.5 140.5
</TABLE>
EXHIBIT-99.10
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this
"Amendment"), dated as of August 9, 1999, is entered into by and among SW
Acquisition, L.P., a Texas limited partnership ("Parent"), ST Acquisition Corp.,
a Texas corporation ("Sub"), and TNP Enterprises, Inc., a Texas corporation (the
"Company"). Capitalized terms used in this Amendment without definition shall
have the respective meanings given to them in the Agreement (as defined below).
RECITALS
WHEREAS, the parties entered into that certain Agreement and Plan
of Merger, dated as of May 24, 1999 (the "Agreement"); and
WHEREAS, Parent and the respective Boards of Directors of the Company
and Sub desire to amend the Agreement in accordance with Section 8.03 thereof by
entering into this Amendment in the manner set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and in the Agreement, and other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties agree
as follows:
1. Amendments.
(a) Section 2.01(e)(ii) of the Agreement is hereby amended by
adding the following at the end of such section:
Notwithstanding the preceding, the Texas-New Mexico Power Company
Thrift Plan for Employees shall not be terminated but shall be amended
effective as of the Effective Time to prohibit the issuance or grant by
the Company or any of its Subsidiaries of any interest in respect of
the capital stock of the Company or any of its Subsidiaries.
(b) Section 6.05(a) of the Agreement is hereby amended and restated
in its entirety as follows:
6.05 Employee Benefit Plans. (a) From and after the
Effective Time, Parent shall cause the Company Employee Benefit Plans
in effect at the date of this Agreement (other than the Company's
Equity Incentive Plan and the Company's Non-Employee Director Stock
Plan) to remain in effect until the first anniversary of the Effective
Time or, to the extent such Company Employee Benefit Plans (other than
the Company's Equity Incentive Plan and the Company's Non-Employee
Director Stock Plan) are not continued, Parent will cause to be
maintained until such date benefit plans which are no less favorable,
in the aggregate, to the employees covered by such Company Employee
Benefit Plans, provided, however, that nothing contained herein shall
be construed as requiring Parent or the Surviving Corporation to
continue any specific plan or to grant to any person any right to
acquire any equity securities of Parent, the Surviving Corporation or
any of their respective Subsidiaries, or as preventing Parent or the
Surviving Corporation from (a) establishing and, if necessary, seeking
shareholder approval to establish, any other benefit plans in respect
of all or any of the employees covered by such Company Employee Benefit
Plans or any other employees, or (b) amending such Company Employee
Benefit Plans (or any replacement benefit plans therefor) where
required by applicable law or where such amendment is with the consent
of the affected employees. From and after the Effective Time, Parent
shall honor, and shall cause its Subsidiaries to honor, in accordance
with its express terms, each then existing employment, change of
control, severance and termination agreement between the Company or any
of its Subsidiaries, and any officer, director or employee of such
company, including without limitation all legal and contractual
obligations pursuant to outstanding restoration plans, severance plans,
bonus deferral plans, vested and accrued benefits and similar
employment and benefit arrangements, policies and agreements that have
been disclosed to Parent as of the date hereof and other obligations,
if any, entered into in accordance with Sections 5.0l(b)(ii)(C) and
(H). The officers and directors of the Company and its Subsidiaries are
intended beneficiaries of this Section 6.05.
2. Full Force and Effect. All other terms and provisions of the
Agreement not expressly modified by this Amendment shall remain in full force
and effect and are hereby expressly ratified and confirmed.
3. Section Headings, Construction. The headings of Sections in this
Amendment are provided for convenience only and will not affect its construction
or interpretation. All words used in this Amendment will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
4. Counterparts. This Amendment may be executed in counterparts,
each of which shall b e deemed an original for all purposes and all of which
shall be deemed collectively to be one agreement, but in making proof hereof
it shall be necessary to exhibit only one such counterpart.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
be effective as of the date first written above.
SW ACQUISITION, L.P.
By: SW I Acquisition GP, L.P.,
as General Partner
By: SW II Acquisition, LLC,
as General Partner
By: /s/ William J. Catacosinos
--------------------------------------
Name: William J. Catacosinos
Title: Manager
ST ACQUISITION CORP.
By: /s/ William J. Catacosinos
--------------------------------------
Name: William J. Catacosinos
Title: Chairman, President and
Chief Executive Officer
TNP ENTERPRISES, INC.
By: /s/ Kevern Joyce
--------------------------------------
Name: Kevern Joyce
Title: Chairman, President and
Chief Executive Officer
