-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AlHxUKc+Gd1oj/Q3tRDtWvnawfyXNytXapGjv6PtzqdbBd/leFAbof5Zu6g3uSd0 BAwrwH90x9gcVY6ynC7aXA== 0000741612-99-000019.txt : 19990811 0000741612-99-000019.hdr.sgml : 19990811 ACCESSION NUMBER: 0000741612-99-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19990810 ITEM INFORMATION: FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TNP ENTERPRISES INC CENTRAL INDEX KEY: 0000741612 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 751907501 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08847 FILM NUMBER: 99682077 BUSINESS ADDRESS: STREET 1: 4100 INTERNATIONAL PLZ STREET 2: PO BOX 2943 CITY: FORT WORTH STATE: TX ZIP: 76113 BUSINESS PHONE: 8177310099 8-K 1 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 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. 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. 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 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. EX-99 2 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. 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 EX-99 3 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. 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. 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. 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. 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. 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. 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 EX-99 4 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. 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 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. EX-99 5 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. 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 EX-99 6 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. 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 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 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. EX-99 7 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. 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: 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. 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. 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 ============== 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 ===============
ANNEX IV TNP Enterprises Texas-New Mexico Power Company 1st Quarter 1st Quarter --------------- ------------------------------ 1998 1999 1998 LTM 1998 1999 1998 LTM 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
EX-99 8 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). 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 EX-99 9 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 EX-99 10 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. 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: 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. 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. 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. 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 ==========
ANNEX IV TNP Enterprises Texas-New Mexico Power Company 1st Quarter 1st Quarter -------------------- -------------------------------- 1998 1999 1998 LTM 1998 1999 1998 LTM 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
EX-99 11 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. * * * * * 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 -----END PRIVACY-ENHANCED MESSAGE-----