AGREEMENT AND PLAN OF MERGER
dated as of May 24, 1999
by and among
SW ACQUISITION, L.P.
ST ACQUISITION CORP.
and
TNP ENTERPRISES, INC.
TABLE OF CONTENTS
This Table of Contents is not part of the
Agreement to which it is attached but is inserted
for convenience only.
Page No.
ARTICLE I
THE MERGER
1.01 The Merger............................................................................................1
1.02 Closing...............................................................................................1
1.03 Effective Time........................................................................................1
1.04 Articles of Incorporation and Bylaws of the Surviving Corporation.....................................2
1.05 Directors and Officers of the Surviving Corporation...................................................2
1.06 Effects of the Merger.................................................................................2
1.07 Further Assurances....................................................................................2
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock...........................................................................2
2.02 Exchange of Certificates..............................................................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification........................................................................6
3.02 Capital Stock.........................................................................................7
3.03 Authority Relative to this Agreement..................................................................8
3.04 Non-Contravention; Approvals and Consents.............................................................8
3.05 SEC Reports and Financial Statements.................................................................10
3.06 Absence of Certain Changes or Events.................................................................10
3.07 Absence of Undisclosed Liabilities...................................................................11
3.08 Legal Proceedings....................................................................................11
3.09 Information Supplied.................................................................................11
3.10 Permits; Compliance with Laws and Orders.............................................................12
3.11 Compliance with Agreements; Certain Agreements.......................................................12
3.12 Taxes................................................................................................13
3.13 Employee Benefit Plans; ERISA........................................................................15
3.14 Labor Matters........................................................................................19
3.15 Environmental Matters................................................................................20
3.16 Regulation as a Utility..............................................................................21
3.17 Insurance............................................................................................21
3.18 Intellectual Property Rights.........................................................................22
3.19 Vote Required........................................................................................22
3.20 Opinion of Financial Advisor.........................................................................22
3.21 Company Rights Agreement.............................................................................22
3.22 Article IX of the Company's Articles of Incorporation and
Article 13 of the TBCA Not Applicable..............................................................23
3.23 Year 2000............................................................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.01 Organization and Qualification.......................................................................23
4.02 Authority Relative to this Agreement.................................................................24
4.03 Non-Contravention; Approvals and Consents............................................................24
4.04 Legal Proceedings....................................................................................25
4.05 Information Supplied.................................................................................25
4.06 Ownership of Company Common Stock....................................................................26
4.07 Financing............................................................................................26
4.08 Capitalization of Sub................................................................................27
4.09 Fraudulent Conveyance................................................................................27
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Covenants of the Company.............................................................................28
5.02 No Solicitations.....................................................................................31
5.03 Company Rights Agreement.............................................................................32
5.04 Third Party Standstill Agreements....................................................................32
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality...............................................................33
6.02 Preparation of Proxy Statement; Offering Materials...................................................33
6.03 Approval of Shareholders.............................................................................34
6.04 Regulatory and Other Third Party Approvals...........................................................34
6.05 Employee Benefit Plans...............................................................................35
6.06 Directors' and Officers' Indemnification and Insurance...............................................35
6.07 Expenses.............................................................................................37
6.08 Brokers or Finders...................................................................................37
6.09 Takeover Statutes....................................................................................37
6.10 Conveyance Taxes.....................................................................................37
6.11 Gains Tax............................................................................................37
6.12 Conduct of Business of Parent and Sub................................................................38
6.13 Rate Matters.........................................................................................38
6.14 Financing............................................................................................38
6.15 Notice and Cure......................................................................................40
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger...........................................40
7.02 Conditions to Obligation of Parent and Sub to Effect the Merger......................................41
7.03 Conditions to Obligation of the Company to Effect the Merger.........................................43
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination..........................................................................................43
8.02 Effect of Termination................................................................................45
8.03 Amendment............................................................................................46
8.04 Waiver...............................................................................................46
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and Agreements................................47
9.02 Notices..............................................................................................47
9.03 Entire Agreement; Incorporation of Exhibits..........................................................48
9.04 Public Announcements.................................................................................48
9.05 No Third Party Beneficiary...........................................................................49
9.06 No Assignment; Binding Effect........................................................................49
9.07 Headings.............................................................................................49
9.08 Invalid Provisions...................................................................................49
9.09 Governing Law........................................................................................49
9.10 Enforcement of Agreement.............................................................................49
9.11 Certain Definitions..................................................................................50
9.12 Counterparts.........................................................................................51
GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings ascribed to
them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.11(a)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 5.02
"Antitrust Division" -- Section 6.04
"Articles of Merger" -- Section 1.03
"Backstop Commitment Letter" -- Section 4.07(a)
"Backstop Financing" -- Section 4.07(a)
"Backstop Lenders" -- Section 4.07(a)
"beneficially" -- Section 9.11(b)
"business day" -- Section 9.1l(c)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Section 2.02(e)
"Commitment Letters" -- Section 4.07(a)
"Company" -- Preamble
"Company Budget" -- Section 5.01(b)(ii)(D)
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.0l
"Company Employee Benefit Plan" -- Section 3.13(b)(i)
"Company Financial Statements" -- Section 3.05(a)
"Company Material Adverse Effect" -- Section 9.11(d)
"Company Options" -- Section 2.01(e)(i)
"Company Option Plans" -- Section 3.02(a)
"Company Permits" -- Section 3.10(a)
"Company Preferred Stock" -- Section 3.02(a)
"Company Rights" -- Section 3.02(a)
"Company Rights Agreement" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05(a)
"Company Shareholders' Approval" -- Section 6.03
"Company Shareholders' Meeting" -- Section 6.03
"Confidentiality Agreement" -- Section 6.01
"Constituent Corporations" -- Section 1.01
"Consideration Commitment Letters" -- Section 4.07(a)
"Contracts" -- Section 3.04(a)
"control," "controlling," "controlled by"
and "under common control with" -- Section 9.11(a)
"Debt Financing" -- Section 4.07(a)
"Defined Benefit Plan" -- Section 3.13(g)
"Definitive Debt Financing Agreements" -- Section 6.14(a)
"Definitive Preferred Stock Agreements" -- Section 4.02
"Dissenting Share" -- Section 2.01(d)(i)
"DOE" -- Section 3.05(b)
"Effective Time" -- Section 1.03
"Environmental Claims" -- Section 3.15(h)(i)
"Environmental Laws" -- Section 3.l5(h)(ii)
"Environmental Permits" -- Section 3.15(b)
"Equity Documents and Agreements" -- Section 4.07(b)
"Equity Financing" -- Section 4.07(a)
"Equity Investors" -- Section 4.07(a)
"ERISA" -- Section 3.13(b)(i)
"ERISA Affiliate" -- Section 3.13(b)(iii)
"Exchange Act" -- Section 3.04(b)
"Excluded Transactions" -- Section 3.21
"Expense Amount" -- Section 8.02(b)
"Extended Termination Date" -- Section 8.01(b)(i)(y)
"FERC" -- Section 3.05(b)
"Final Order" -- Section 7.01(e)
"Financing Parties" -- Section 6.14(c)
"FTC" -- Section 6.04
"Gains Tax" -- Section 6.11
"General Partner" -- Section 4.07(b)
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(g)
"Hazardous Materials" -- Section 3.15(h)(iii)
"HSR Act" -- Section 3.04(b)
"Indemnified Liabilities" -- Section 6.06(a)
"Indemnified Parties" -- Section 6.06(a)
"Initial Termination Date" -- Section 8.01(b)(i)
"Intellectual Property" -- Section 3.18
"knowledge" -- Section 9.l1(e)
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material," "material adverse effect" and "materially adverse"
-- Section 9.11(f)
"Merger" -- Preamble
"Merger Price" -- Section 2.01(c)(i)
"NMPRC" -- Section 3.04(b)
"Offering Materials" -- Section 6.02(b)
"Option Amount" -- Section 2.01(e)(i)
"Options" -- Section 3.02(a)
"orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Disclosure Letter" -- Section 4.03(b)
"Partnership Subscription Agreements" -- Section 4.07(a)
"Partnership Investors" - Section 4.07(a)
"Payment Agent" -- Section 2.02(a)
"Payment Fund" -- Section 2.02(a)
"PBGC" -- Section 3.13(g)
"person" -- Section 9.11(g)
"Plan" -- Section 3.13(b)(ii)
"Plan of Merger" -- Section 3.03
"Power Act" -- Section 3.04(b)
"Preferred Stock Investors" -- Section 4.07(a)
"Preferred Stock Commitment Letters" -- Section 4.07(a)
"Proxy Statement" -- Section 3.09
"PUCT" -- Section 3.04(b)
"PUHCA" -- Section 3.16
"Release" -- Section 3.15(h)(iv)
"Representatives" -- Section 9.11(h)
"Required Approvals" -- Section 7.01(e)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.05(a)
"Senior Debt Commitment Letter" -- Section 4.07(a)
"Senior Debt Financing" -- Section 4.07(a)
"Senior Lenders" -- Section 4.07(a)
"Specified Compensation and Benefit Programs" -- Section 3.13(l)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Sub Preferred Stock" -- Section 2.01(a)
"Subordinated Debt Commitment Letter" -- Section 4.07(a)
"Subordinated Debt Financing" -- Section 4.07(a)
"Subordinated Lenders" -- Section 4.07(a)
"Subsidiary" -- Section 9.11(i)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Surviving Corporation Preferred Stock" -- Section 2.01(a)
"Tax" and "Taxes" -- Section 3.12
"TBCA" -- Section 1.01
"Termination Fee" -- Section 8.02(b)
"TNMP" -- Section 3.13(l)
"Transfer Taxes" -- Section 6.11
"Year 2000 Compliant" -- Section 3.23
This AGREEMENT AND PLAN OF MERGER, dated as of May 24, 1999
(this "Agreement"), is made and entered into by and among SW Acquisition, L.P.,
organized and existing under the laws of Texas ("Parent"), ST Acquisition Corp.,
a Texas corporation wholly owned by Parent ("Sub"), and TNP Enterprises, Inc., a
Texas corporation (the "Company").
WHEREAS, the Boards of Directors of Sub and the Company have
each determined that it is advisable and in the best interests of their
respective shareholders to consummate, and Parent, Sub and the Company have
approved, the business combination transaction provided for herein in which Sub
would merge with and into the Company and the Company would become a
wholly-owned subsidiary of Parent (the "Merger"); and
WHEREAS, each of Parent, Sub and the Company desires to make
certain representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01.....The Merger
. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.03), Sub shall be
merged with and into the Company in accordance with the Business Corporation Act
of the State of Texas (the "TBCA"). At the Effective Time, the separate
existence of Sub shall cease and the Company shall continue as the surviving
corporation in the Merger (the "Surviving Corporation"). Sub and the Company are
sometimes referred to herein as the "Constituent Corporations". As a result of
the Merger, the outstanding shares of capital stock of the Constituent
Corporations shall be converted or cancelled in the manner provided in Article
II.
1.02.....Closing
. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at the offices of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., local time, on the
third business day following satisfaction of the conditions set forth in Article
VII, unless another date, time or place is agreed to in writing by the parties
hereto (the "Closing Date"). At the Closing there shall be delivered to Parent,
Sub and the Company the certificates and other documents and instruments
required to be delivered under Article VII.
1.03.....Effective Time
. At the Closing, articles of merger (the "Articles of
Merger") shall be duly prepared and executed by the Company and Sub and
thereafter delivered to the Secretary of State of the State of Texas (the
"Secretary of State") for filing as provided in Article 5.04 of the TBCA, as
soon as practicable on the Closing Date. The Merger shall become effective upon
the issuance of a certificate of merger (the "Certificate of Merger") by the
Secretary of State (the date and time of such issuance being referred to herein
as the "Effective Time").
1.04.....Articles of Incorporation and Bylaws of the Surviving
Corporation
. At the Effective Time, (i) the articles of incorporation of
the Sub as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by law and such articles of incorporation, and (ii) the bylaws of
Sub as in effect immediately prior to the Effective Time shall be the bylaws of
the Surviving Corporation until thereafter amended as provided by law, the
articles of incorporation of the Surviving Corporation and such bylaws.
1.05.....Directors and Officers of the Surviving Corporation
. The directors and the officers of Sub immediately prior to
the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
articles of incorporation and bylaws.
1.06.....Effects of the Merger
. Subject to the foregoing, the effects of the Merger shall
be as provided in the applicable provisions of the TBCA.
1.07.....Further Assurances
. Each party hereto will, at or after the Effective Time,
execute such further certificates, documents, instruments, deeds, bills of sale,
assignments and assurances and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, privileges,
rights, approvals, immunities and franchises of either of the Constituent
Corporations or to effect the other purposes of this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.01 ....Conversion of Capital Stock
. At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof:
(a)......Capital Stock of Sub. Each issued and outstanding
share of the common stock, no par value, of Sub ("Sub Common Stock") shall be
converted into and become one fully paid and nonassessable share of common
stock, no par value, of the Surviving Corporation ("Surviving Corporation Common
Stock"). Each issued and outstanding share of preferred stock, no par value, of
Sub ("Sub Preferred Stock") shall be converted into and become one fully paid
and nonassessable share of preferred stock, no par value of the Surviving
Corporation ("Surviving Corporation Preferred Stock"). Each certificate
representing outstanding shares of Sub Common Stock and each certificate
representing outstanding shares of Sub Preferred Stock shall at the Effective
Time represent an equal number of shares of Surviving Corporation Common Stock
and Surviving Corporation Preferred Stock, respectively.
(b)......Cancellation of Treasury Stock and Stock Owned by
Parent and Subsidiaries. All shares of common stock, no par value, of the
Company ("Company Common Stock") that are owned by the Company as treasury stock
and any shares of Company Common Stock owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined in Section 9.11) of Parent shall be canceled
and retired and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor.
(c)......Exchange Ratio for Company Common Stock.
(i) Each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 2.01(b)
and other than Dissenting Shares (as defined in Section 2.01(d))) shall
be converted automatically into the right to receive $44.00 in cash
(the "Merger Price").
(ii) All shares of Company Common Stock converted in
accordance with paragraph (i) of this Section 2.01(c) shall no longer
be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Price per share, upon the surrender of
such certificate in accordance with Section 2.02, without interest,
subject to any applicable withholding tax.
(d)......Dissenting Shares.
(i) Notwithstanding any provision of this Agreement to the
contrary, each issued and outstanding share of Company Common Stock,
the holder of which has not voted in favor of the Merger, has perfected
such holder's right to dissent in accordance with the applicable
provisions of the TBCA and has not effectively withdrawn or lost such
right to dissent (a "Dissenting Share"), shall not be converted into or
represent a right to receive the Merger Price pursuant to Section
2.01(c), but the holder thereof shall be entitled only to such rights
as are granted by the applicable provisions of the TBCA; provided,
however, that any Dissenting Share held by a person at the Effective
Time who shall, after the Effective Time, withdraw such person's
objection to the Merger or such person's demand for payment or lose the
right to dissent, in either case pursuant to the TBCA, shall be deemed
to be converted into, as of the Effective Time, the right to receive
the Merger Price pursuant to Section 2.01(c).
(ii) The Company shall give Parent (x) prompt notice of any
written objections to the Merger received in compliance with Article
5.12 of the TBCA, withdrawals of any such objections, and any other
instruments served pursuant to Article 5.12 of the TBCA relating to a
shareholder's right to dissent received by the Company and (y) the
opportunity to direct all negotiations and proceedings with respect to
demands made by dissenting shareholders for the payment of the fair
value of the Company Common Stock held by them. The Company will not
voluntarily make any payment with respect to any such demands, and will
not, except with the prior written consent of Parent, settle or offer
to settle any such demands.
(e) Stock Option Plans.
(i) The Company shall take all actions necessary to provide
that, immediately prior to the consummation of the Merger, (x) each
outstanding option to acquire shares of Company Common Stock (the
"Company Options") granted under any of the Company Option Plans (as
defined in Section 3.02(a)), whether or not then exercisable or vested,
shall become fully exercisable and vested, (y) each Company Option
which is then outstanding shall be canceled and (z) in consideration of
such cancellation, and except to the extent that Parent or Sub and the
holder of any such Company Option otherwise agree, the Company (or, at
Parent's option, Parent or Sub) shall pay to such holders of Company
Options an amount in respect thereof equal to the product of (A) the
excess, if any, of the Merger Price per share over the per share
exercise price thereof and (B) the number of shares of Company Common
Stock subject thereto (the "Option Amount") (such payment to be net of
applicable withholding taxes); provided that the foregoing shall not
require any action which violates the Company Option Plans.
(ii) Except as provided herein or as otherwise agreed to by
the parties and to the extent permitted by the Company Option Plans,
(x) the Company shall use all reasonable efforts to provide that (A)
the Company Option Plans shall terminate as of the Effective Time and
(B) either the provisions in any other plan, program or arrangement
providing for 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 shall be deleted, or such plan,
program or arrangement shall terminate as of the Effective Time, and
(y) the Company shall use all reasonable efforts to ensure that
following the Effective Time no holder of Company Options or any
participant in the Company Option Plans or any other such plans,
programs or arrangements shall have any right thereunder to acquire any
equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
(f)......Restricted or Performance Stock. The Company shall
take all actions necessary to provide that each share of restricted or
performance stock granted under the Company Option Plans shall become fully
vested and free of restrictions no later than the consummation of the Merger and
that any holder of a restricted or performance stock grant may elect to
authorize the Company to retain a number of shares of Company Common Stock from
such grant having an aggregate value (based upon the Merger Price per share)
equal to any withholding taxes applicable to the vesting of such grant, in lieu
of the payment of such amount in cash.
2.02 ....Exchange of Certificates
. (a) Payment Agent. At the Closing, Parent shall cause the
Surviving Corporation to deposit with a bank or trust company designated before
the Closing Date by Parent and reasonably acceptable to the Company (the
"Payment Agent"), a cash amount equal to the aggregate Merger Price to which
holders of shares of Company Common Stock shall be entitled upon consummation of
the Merger, to be held for the benefit of and distributed to such holders in
accordance with this Section. The Payment Agent shall agree to hold such funds
(such funds, together with earnings thereon, being referred to herein as the
"Payment Fund") for delivery as contemplated by this Section, and upon such
additional terms as may be agreed upon by the Payment Agent, the Company and
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the cash amounts to which holders of shares of Company Common Stock shall be
entitled, Parent and the Surviving Corporation shall in any event be liable, and
Parent and the Surviving Corporation shall make available to the Payment Agent
additional funds, for the payment thereof. The Payment Fund shall not be used
for any purpose except as expressly provided in this Agreement.
(b)......Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall cause the
Payment Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares are converted pursuant to
Section 2.01(c) into the right to receive the Merger Price (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Price. Upon surrender of a Certificate for cancellation to the
Payment Agent, together with such letter of transmittal duly executed and
completed in accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor payment of the dollar amount
representing the Merger Price per share of Company Common Stock represented
thereby, subject to any applicable withholding tax, which such holder has the
right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger, including any interest accrued in respect of the Payment
Fund. In the event of a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, the Merger Price may be
issued to a transferee if the Certificate representing such Company Common Stock
is presented to the Payment Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. The Surviving Corporation shall pay all fees and
expenses of the Payment Agent in connection with the distribution of the Merger
Price. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Price per share of
Company Common Stock represented thereby as contemplated by this Article II,
together with the dividends, if any, which may have been declared by the Company
on such shares of Company Common Stock in accordance with the terms of this
Agreement and which remained unpaid at the Effective Time.
(c)......No Further Ownership Rights in Company Common Stock.
All cash paid upon the surrender for exchange of Certificates in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock represented thereby,
subject, however, to the Surviving Corporation's obligation to pay any dividends
which may have been declared by the Company on such shares of Company Common
Stock in accordance with the terms of this Agreement and which remained unpaid
at the Effective Time. Other than with respect to transfers of Dissenting
Shares, from and after the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates (other than Certificates
representing Dissenting Shares) are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Section.
(d)......Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the shareholders of the Company for
one (1) year after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any shareholders of the Company (other than
holders of Dissenting Shares) who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) as general creditors for
payment of their claim for the Merger Price per share. Neither Parent nor the
Surviving Corporation shall be liable to any holder of shares of Company Common
Stock for cash representing the Merger Price delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e)......Withholding Rights. Parent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as Parent
is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
3.01.....Organization and Qualification
. Each of the Company and its Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate 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 incorporated,
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 Company Material Adverse Effect (as defined in Section 9.11).
Each of the Company and its Subsidiaries is duly qualified, licensed or admitted
to do business and is in good standing in each jurisdiction in which the
ownership, use or leasing of its assets and properties, or the conduct or nature
of its business, makes such qualification, licensing or admission necessary,
except for such failures to be so qualified, licensed or admitted and in good
standing which, individually or in the aggregate, are not having and could not
be reasonably expected to have a Company Material Adverse Effect. Section 3.01
of the letter dated the date hereof and delivered to Parent and Sub by the
Company concurrently with the execution and delivery of this Agreement (the
"Company Disclosure Letter") sets forth (i) the name and jurisdiction of
incorporation of each Subsidiary of the Company, (ii) its authorized capital
stock, (iii) the number of its issued and outstanding shares of capital stock
and (iv) the record owners of such shares. Except for interests in the
Subsidiaries of the Company and as disclosed in Section 3.01 of the Company
Disclosure Letter, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity (other than non-controlling investments in the ordinary
course of business). The Company has previously delivered or made available to
Parent correct and complete copies of the articles of incorporation and bylaws
(or other comparable charter documents) of the Company and its Subsidiaries.
3.02.....Capital Stock
. (a) The authorized capital stock of the Company consists
solely of 50,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, no par value ("Company Preferred Stock"), none of which Company
Preferred Stock is issued and outstanding. As of May 21, 1999, 13,401,680 shares
of Company Common Stock were issued and outstanding, no shares were held in the
treasury of the Company, and the only shares reserved for issuance as of such
date consisted of 796,947 shares which were reserved or held for issuance under
the Company's Equity Incentive Plan, 9,525 shares which were reserved or held
for issuance under the Company's Non-Employee Director Stock Plan, 528,516
shares which were reserved or held for issuance under the Texas-New Mexico Power
Company Thrift Plan for Employees (such Plans, the "Company Option Plans"), and
939,526 shares which were reserved or held for issuance under the Company's
Direct Stock Purchase Plan. Since such date, except as set forth in Section 3.02
of the Company Disclosure Letter, as of the date of this Agreement, there has
been no change in the number of issued and outstanding shares of Company Common
Stock or shares of Company Common Stock held in treasury or reserved for
issuance. All of the issued and outstanding shares of Company Common Stock are,
and all shares reserved for issuance will be, upon issuance in accordance with
the terms specified in the instruments or agreements pursuant to which they are
issuable, duly authorized, validly issued, fully paid and nonassessable. Except
pursuant to this Agreement and the Amended and Restated Rights Agreement dated
as of August 11, 1998, as amended, by and between the Company and The Bank of
New York, as Rights Agent (the "Company Rights Agreement"), pursuant to which
the Company has issued rights (the "Company Rights") to purchase shares of
Company Common Stock, and except as set forth in Section 3.02 of the Company
Disclosure Letter (which includes, without limitation, a list of all currently
outstanding awards under the Company Option Plans or under any other plan,
program or arrangement providing for 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), as of the date of this Agreement, there are
no outstanding subscriptions, options, warrants, rights (including "phantom"
stock rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with respect
thereto.
(b)......Except as disclosed in Section 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of any liens, claims, mortgages, encumbrances, pledges, security interests, and
charges of any kind (each a "Lien"). Except as disclosed in Section 3.02 of the
Company Disclosure Letter, there are no (i) outstanding Options obligating the
Company or any of its Subsidiaries to issue or sell any shares of capital stock
of any Subsidiary of the Company or to grant, extend or enter into any such
Option or (ii) voting trusts, proxies or other commitments, understandings,
restrictions or arrangements in favor of any person other than the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company with respect to
the voting of or the right to participate in dividends or other earnings on any
capital stock of any Subsidiary of the Company.
(c)......Except as disclosed in Section 3.02 of the Company
Disclosure Letter, there are no outstanding contractual obligations of the
Company or any Subsidiary of the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or any capital stock of any
Subsidiary of the Company or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary of the
Company or any other person, other than in the ordinary course of business
consistent with past practice.
(d)......Section 3.02(d) of the Company Disclosure Letter sets
forth a true and complete statement of the maximum contractual borrowing limit,
if any, under all loan agreements (including indentures) providing for credit to
the Company or any of its Subsidiaries in excess of $10 million and a true and
complete statement of the total indebtedness of the Company and each of its
Subsidiaries outstanding on May 21, 1999 under such agreements.
3.03.....Authority Relative to this Agreement
. The Company has the requisite corporate power and authority
to enter into this Agreement and, subject to obtaining the Company Shareholders'
Approval (as defined in Section 6.03), to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly approved by
the Board of Directors of the Company, the Board of Directors of the Company has
recommended adoption of the plan of merger contemplated hereby (the "Plan of
Merger") by the shareholders of the Company and directed that the Plan of Merger
be submitted to the shareholders of the Company for their consideration, and no
other corporate proceedings on the part of the Company or its shareholders are
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby, other than obtaining the Company Shareholders' Approval.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery of this Agreement by
Parent and Sub, this Agreement constitutes a legal, valid and binding obligation
of the Company enforceable against the Company 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).
3.04.....Non-Contravention; Approvals and Consents
. (a) Except as disclosed in Section 3.04 of the Company
Disclosure Letter, the execution and delivery of this Agreement by the Company
do not, and the performance by the Company of its obligations hereunder and the
consummation by it of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a 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 Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of (i) the articles of incorporation or
bylaws (or other comparable charter documents) of the Company or any of its
Subsidiaries, or (ii), subject to the obtaining of the Company Shareholders'
Approval and the taking of the actions described in paragraph (b) of this
Section, (x) any legislative or regulatory enactment, statute, ordinance, law or
regulation (together, "laws") existing on the date of this Agreement, or any
judgment, decree, order, writ, permit or license (together, "orders"), of any
court, tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision (a "Governmental or
Regulatory Authority") applicable to the Company or any of its Subsidiaries or
any of their respective assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession, contract,
lease or other instrument, obligation, rate, rate schedule, tariff; utility
service agreement or like document filed with or approved by any Governmental or
Regulatory Authority, or agreement of any kind (together, "Contracts") to which
the Company or any of its Subsidiaries is a party or by which the Company 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 Company Material Adverse Effect, or a material
adverse effect on the ability of the Company to consummate the transactions
contemplated by this Agreement.
(b)......Except (i) for the filing of a premerger notification
report by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
for the filing of the Proxy Statement (as defined in Section 3.09) with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), (iii) for the filing of the Articles of Merger and other
appropriate merger documents required by the TBCA with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Constituent Corporations are qualified to do business and the issuance of
the Certificate of Merger by the Secretary of State, (iv) for (x) the approval
of the Public Utility Commission of Texas ("PUCT") under Texas law, to the
extent required by the Texas Public Utility Regulatory Act and for (y) the
approval of the New Mexico Public Regulation Commission ("NMPRC") under New
Mexico law, to the extent required by the New Mexico Public Utility Act, (v) for
the filing of an application under Section 203 and any directly related section
of or regulation under, the Federal Power Act (the "Power Act") for the sale or
disposition of jurisdictional facilities of the Company, or an order under the
Power Act disclaiming jurisdiction over this merger, and (vi) as disclosed in
Section 3.04 of the Company Disclosure Letter, 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 Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound for the execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder or the consummation by it of the transactions contemplated hereby,
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 Company Material Adverse Effect or a
material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.05.....SEC Reports and Financial Statements
. (a) The Company delivered or made available to Parent prior
to the execution of this Agreement a true and complete copy of each form,
report, schedule, registration statement, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto) filed by
the Company or any of its Subsidiaries with the SEC since December 31, 1995 (as
such documents have since the time of their filing been amended or supplemented,
the "Company SEC Reports"), which are all the documents (other than preliminary
material) that the Company and its Subsidiaries were required to file with the
SEC since such date. As of their respective dates, the Company SEC Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), or the Exchange Act, as the case may be, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted by
Form 10-Q of the SEC) and fairly present in accordance with generally accepted
accounting principles (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments (which, for periods
subsequent to December 31, 1998, are not expected to reflect a Company Material
Adverse Effect)) the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in Section 3.05 of the Company
Disclosure Letter, each Subsidiary of the Company is treated as a consolidated
subsidiary of the Company in the Company Financial Statements for all periods
covered thereby.
(b)......All material filings required to be made by the
Company or any of its Subsidiaries since December 31, 1995, under the Power Act
and applicable state laws and regulations, have been filed with the Federal
Energy Regulatory Commission (the "FERC"), the Department of Energy (the "DOE")
or any appropriate state Governmental or Regulatory Authorities (including,
without limitation, the Public Utility Commission of Texas and the New Mexico
Public Regulatory Commission), as the case may be, including all material
written forms, statements, reports, agreements and all material documents,
exhibits, amendments and supplements appertaining thereto, including but not
limited to all material rates, tariffs, franchises, service agreements and
related documents; and all such filings complied, as of their respective dates,
in all material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder.
3.06.....Absence of Certain Changes or Events
. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, (a) since December 31, 1998, there has not been
any change, event or development having, or that could be reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect, and
(b) except as disclosed in Section 3.06 of the Company Disclosure Letter,
between such date and the date hereof (i) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice and (ii) neither the Company nor any of its Subsidiaries has
taken any action which, if taken after the date hereof, would constitute a
breach of any provision of clause (ii) of Section 5.01(b).
3.07.....Absence of Undisclosed Liabilities
. Except for matters reflected or reserved against in the
balance sheet as of December 31, 1998 included in the Company Financial
Statements, as disclosed in Section 3.07 of the Company Disclosure Letter, or as
disclosed in the Company SEC Reports filed since such date, neither the Company
nor any of its Subsidiaries had at such date, or has incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its consolidated Subsidiaries (including the
notes thereto), except liabilities or obligations (i) which were incurred in the
ordinary course of business consistent with past practice or, (ii) which have
not been, and could not be reasonably expected to be, individually or in the
aggregate, to have a Company Material Adverse Effect.
3.08.....Legal Proceedings
. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement or in Section 3.08 of the Company Disclosure
Letter, (i) there are no actions, suits, arbitrations or proceedings pending or,
to the knowledge of the Company, threatened against, relating to or affecting,
nor to the knowledge of the Company are there any Governmental or Regulatory
Authority investigations, reviews or audits pending or threatened against,
relating to or affecting, the Company 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 Company Material Adverse Effect or a material
adverse effect on the ability of the Company to consummate the transactions
contemplated by this Agreement, (ii) there have not been any significant
developments since December 31, 1998 with respect to any actions, suits,
arbitrations, proceedings, investigations, reviews or audits disclosed in the
Company SEC Reports filed prior to the date of this Agreement or in Section 3.08
of the Company Disclosure Letter, and (iii) neither the Company nor any of its
Subsidiaries is subject to any order of or any investigation, rate suspension or
other proceeding by or before any Governmental or Regulatory Authority which
individually or in the aggregate, is having or could be reasonably expected to
have a Company Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the transactions contemplated by this
Agreement.
3.09.....Information Supplied
. The proxy statement relating to the Company Shareholders'
Meeting (as defined in Section 6.03), as amended or supplemented from time to
time (as so amended and supplemented, the "Proxy Statement"), and any other
documents to be filed by the Company with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will not, on the date of its filing or, in the case of the
Proxy Statement, at the date it is mailed to shareholders of the Company and at
the date of the Company Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Parent or Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC. The Proxy Statement and any such other
documents filed by the Company with the SEC under the Exchange Act in connection
with the Merger and the other transactions contemplated hereby will comply as to
form in all material respects with the requirements of the Exchange Act. Neither
the information supplied or to be supplied by or on behalf of the Company and
its Subsidiaries for inclusion, nor the information incorporated by reference
from documents filed by the Company or any of its Subsidiaries with the SEC, in
any of the Offering Materials (as defined in Section 6.02(b)) will as of the
date of such Offering Materials and on the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
3.10.....Permits; Compliance with Laws and Orders
. (a) The Company and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of, and have made all
required rate, tariff and other filings with all Governmental and Regulatory
Authorities necessary for the lawful conduct of their respective businesses as
currently conducted (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a Company Material Adverse Effect. The Company and its
Subsidiaries are in compliance with the terms of the Company Permits, except
failures so to comply which individually or in the aggregate, are not having and
could not be reasonably expected to have a Company Material Adverse Effect.
(b)......Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, the Company and its Subsidiaries are not in
violation of or default under any law or order of any Governmental or Regulatory
Authority, except for such violations or defaults which individually or in the
aggregate, are not having and could not be reasonably expected to have a Company
Material Adverse Effect.
3.11.....Compliance with Agreements; Certain Agreements
. (a) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party thereto is in
breach or violation of, or in default in the performance or observance of any
term or provision of, and no event has occurred which, with notice or lapse of
time or both, could be reasonably expected to result in a default under, (i) the
articles of incorporation or bylaws (or other comparable charter documents) of
the Company or any of its Subsidiaries or (ii) any Contract to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective assets or properties is bound, except in
the case of clause (ii) for breaches, violations and defaults which individually
or in the aggregate, are not having and could not be reasonably expected to have
a Company Material Adverse Effect.
(b)......Except as disclosed in Section 3.11 of the Company
Disclosure Letter or in the Company SEC Reports filed prior to the date of this
Agreement or as provided for in this Agreement, as of the date hereof, neither
the Company nor any of its Subsidiaries is a party to any oral or written (i)
consulting agreement that (A) involves the annual payment or potential payment,
pursuant to the terms of any such consulting agreement by the Company of more
than $100,000 individually or $1,000,000 in the aggregate and (B) is not
terminable on thirty (30) days' or less notice, (ii) Contracts with any person
containing any provision or covenant prohibiting or materially limiting the
ability of the Company to engage in any business activity or compete with any
person or prohibiting or materially limiting the ability of any person to
compete with the Company, (iii) partnership, joint venture, shareholders' or
other similar Contracts with any person, (iv) Contracts relating to the future
disposition or acquisition of any assets of the Company with a value of more
than $100,000 individually or $1,000,000 in the aggregate, or (v) other
Contracts (other than Company Employee Benefit Plans) that (A) involve the
payment or potential payment, pursuant to the terms of any such Contract, by or
to the Company of more than $100,000 annually and (B) cannot be terminated
within thirty (30) days after giving notice of termination without resulting in
any material cost or penalty to the Company.
3.12 Taxes.
For purposes of this Agreement, "Taxes" (including, with correlative meaning,
the word "Tax") shall include any and all federal, state, county, local, foreign
or other taxes, charges, imposts, rates, fees, levies or other assessments
imposed by any Governmental or Regulatory Authority, including, without
limitation, all net income, alternative minimum, gross income, sales and use, ad
valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance, withholding or other taxes, fees, assessments or other similar
charges of any kind whatsoever, together with any interest and penalties (civil
or criminal) on or additions to any such taxes. Except as specifically
identified in Section 3.12 of the Company Disclosure Letter:
(a) Filing of Timely Tax Returns. The Company and each of its
Subsidiaries have timely filed (or there has been timely filed on their behalf)
all material Tax returns and reports required to be filed by or on behalf of
each of them under applicable law. All such Tax returns and reports were and are
in all material respects true, complete and correct. Neither the Company nor any
of its Subsidiaries has requested any extension of time within which to file any
Tax return or report, which Tax return or report has not since been timely
filed.
(b) Payment of Taxes. The Company and each of the Company's
Subsidiaries has, paid all Taxes that are shown as due in all Tax returns and
reports.
(c) Tax Reserves. The accrual for Taxes on the most recent
Company financial statements contained in the Company SEC Reports reflects an
adequate reserve for all Taxes payable by the Company and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements.
(d) Tax Liens. There are no Liens for Taxes upon the assets,
properties or business of the Company or any of its Subsidiaries except Liens
for Taxes not yet due or being contested in good faith through appropriate
proceedings and for which adequate reserves have been established in the most
recent financial statements of the Company contained in the Company SEC Reports.
(e) Waivers of Statute of Limitations. Neither the Company nor
any of its Subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax returns or reports.
(f) Expiration of Statute of Limitations. The statutes of
limitations for the assessment of all Taxes with respect to all material Tax
returns or reports of the Company and its Subsidiaries for all Tax periods have
expired. Prior to the date of this Agreement, the Company has provided Parent
with written schedules of (i) the Tax years of the Company and each of its
Subsidiaries for which any statute of limitation with respect to any Tax has not
expired and (ii) with respect to any franchise Tax and any Tax based on net
income, gross receipts or gross income, for all Tax years of the Company and
each of its Subsidiaries for which the statutes of limitations have not yet
expired, those years for which examinations by a Governmental or Regulatory
Authority have been completed, those years for which examinations by a
Governmental or Regulatory Authority are presently being conducted, and those
years for which examinations by a Governmental or Regulatory Authority have not
yet been initiated. To the knowledge the Company, no deficiency for any Taxes
has been proposed, asserted or assessed against the Company or any of its
Subsidiaries that has not been resolved and, at the amount so resolved, paid in
full.
(g) Audit, Administrative and Court Proceedings. No audits or
other proceedings by any Governmental or Regulatory Authority are presently
pending, or, to the knowledge of the Company or any of its Subsidiaries,
threatened, with regard to any Taxes or tax returns or reports of the Company or
any of its Subsidiaries.
(h) Powers of Attorney. Each power of attorney currently in
force that has been granted by the Company or any of its Subsidiaries concerning
any Tax matter is disclosed in Section 3.12(h) of the Company Disclosure Letter.
(i) Tax Rulings. Neither the Company nor any of its
Subsidiaries has received or requested a Tax ruling or entered into a closing
agreement with any Governmental or Regulatory Authority that would have effect
after the Closing Date.
(j) Availability of Tax Returns. The Company has made
available to Parent complete and accurate copies of (i) all Tax returns or
reports for open years, and any amendments thereto, filed by or on behalf of the
Company or any of its Subsidiaries, (ii) all audit reports or written proposed
adjustments (whether formal or informal) received from any Governmental or
Regulatory Authority relating to any Tax return or report filed by or on behalf
of the Company or any of its Subsidiaries and (iii) any Tax ruling or request
for a Tax ruling applicable to the Company or any of its Subsidiaries and
closing agreements entered into by the Company or any of its Subsidiaries.
(k) Tax Sharing Agreements. Neither the Company nor any of its
Subsidiaries is a party to, is bound by, or has any obligation under, any
agreement relating to the allocation or sharing of Taxes or has any liability
for the Taxes of any person other than the Company or its Subsidiaries, as a
transferee, or successor or otherwise (including, without limitation, any
liability under Treasury Regulations Section 1.1502-6 or any similar provision
of state, local or foreign law).
(l) Code Section 341(f). Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Code Section 341(f) or has agreed
to have Code Section 341(f)(2) apply to any disposition of a subsection (f)
asset (as that term is defined in Code Section 341(f)(4)) owned by the Company
or any of its Subsidiaries.
(m) Code Section 168. No property of the Company or any of its
Subsidiaries is property that the Company or any of its Subsidiaries or any
party to this transaction is or will be required to treat as being owned by
another person pursuant to the provisions of Code Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or is "tax exempt
use property" within the meaning of Code Section 168(h).
(n) Code Section 280G. Neither the Company nor any of its
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments that under Code Section 280G will not be deductible.
(o) Code Section 6662. Each of the Company and its
Subsidiaries has disclosed on its federal income Tax returns each position taken
therein that could give rise to a substantial understatement of United States
federal income Tax within the meaning of Code Section 6662.
(p) Code Section 481 Adjustments. Neither the Company nor any
of its Subsidiaries is required to include in income for any Tax period ending
after the date hereof any adjustment pursuant to Code Section 481(a) by reason
of a voluntary change in accounting method of the Company or any of its
Subsidiaries, nor has the IRS proposed any such adjustment or change in
accounting method.
(q) Acquisition Indebtedness. No indebtedness of the Company
or any of its Subsidiaries is "corporate acquisition indebtedness" within the
meaning of Code Section 279(b) or an "applicable high yield discount obligation"
within the meaning of Code Section 163(i).
(r) Consolidated Tax Returns. Neither the Company nor any of
the Company Subsidiaries has ever been a member of an affiliated group of
corporations (within the meaning of Code Section 1504(a)) filing consolidated
Tax returns, other than the affiliated group of which the Company is the common
parent.
(s) 5% Foreign Stockholders. The Company is not a "United
States real property holding corporation" within the meaning of Code Section
897(c)(2) and based on any Schedule 13D and 13G filings with the SEC with
respect to the Company and any other relevant information within the Company's
knowledge, no foreign person has owned 5% or more of the outstanding shares of
the Company Common Stock at any time during the five year period ending on the
Closing Date.
3.13.....Employee Benefit Plans; ERISA
. (a) Except as described in the Company SEC Reports filed
prior to the date of this Agreement or as would not have a Company Material
Adverse Effect, (i) all Company Employee Benefit Plans (as defined below) are in
compliance with all applicable requirements of law, including without limitation
ERISA (as defined below) and the Code, (ii) neither the Company nor any of its
Subsidiaries has any liabilities or obligations, other than for payment of
benefits in accordance with their respective terms, with respect to any such
Company Employee Benefit Plans, whether accrued, contingent or otherwise, nor to
the knowledge of the Company are any such liabilities or obligations expected to
be incurred, and (iii) each Company Employee Benefit Plan that is intended to
qualify under Section 401(a) of the Code is qualified under that Section, and,
if applicable, each such Plan also complies with the requirements of Section
401(k) of the Code. Except as specifically disclosed in Section 3.13 of the
Company Disclosure Letter, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any Company
Employee Benefit Plan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any employee. The only management, employment, deferred compensation,
consulting, termination, change-in-control, severance, or similar agreements or
policies applicable to the Company or any of its Subsidiaries are the agreements
and policies specifically referred to in Section 3.13 of the Company Disclosure
Letter. Except as disclosed in Section 3.13 of the Company Disclosure Letter, no
compensation award, benefit or payment, and no acceleration of the
exercisability or vesting of any such award, benefit or payment, provided under
the terms of any Company Employee Benefit Plan will be disallowed as a deduction
to the Company, any Subsidiary of the Company or the Parent under Sections 280G
or 162(m) of the Code.
(b)......As used herein:
(i) "Company Employee Benefit Plan" means any Plan entered
into, established, maintained, sponsored, contributed to or required to
be contributed to by the Company or any of its Subsidiaries for the
benefit of the current or former employees or directors of the Company
or any of its Subsidiaries and existing on the date of this Agreement
or at any time subsequent thereto and on or prior to the Effective Time
and, in the case of a Plan which is subject to Part 3 of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder ("ERISA"), Section 412 of the Code or
Title IV of ERISA, at any time during the five-year period preceding
the date of this Agreement;
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing, savings,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation,
day or dependent care, legal services, cafeteria, life, health,
medical, accident, disability, workmen's compensation or other
insurance, severance, separation, termination, change of control or
other benefit plan, agreement, practice, policy, program or arrangement
of any kind, whether written or oral, including, but not limited to any
"employee benefit plan" within the meaning of Section 3(3) of ERISA;
and
(iii) "ERISA Affiliate" means any person, who is under common
control with the Company within the meaning of Section 414 of the Code.
(c)......Complete and correct copies of the following
documents have been made available to Parent, as of the date of this Agreement:
(i) all material Company Employee Benefit Plans and any related trust agreements
or related insurance contracts and pro forma option agreements, (ii) the most
current summary plan descriptions of each Company Employee Benefit Plan subject
to the requirement to give a summary plan description under ERISA, (iii) the
most recent Form 5500 and Schedules thereto for each Company Employee Benefit
Plan subject to such reporting, (iv) the most recent determination of the
Internal Revenue Service with respect to the qualified status of each Company
Employee Benefit Plan that is intended to qualify under Section 401(a) of the
Code, (v) the most recent accountings with respect to each Company Employee
Benefit Plan funded through a trust, and (vi) the most recent actuarial report
of the qualified actuary of each Company Employee Benefit Plan with respect to
which actuarial valuations are conducted.
(d)......Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or Section 3.13 of the Company Disclosure
Letter, neither the Company nor any Subsidiary of the Company maintains or is
obligated to provide material benefits under any life, medical or health Plan
(other than as an incidental benefit under a Plan qualified under Section 401(a)
of the Code) which provides benefits to retirees or other terminated employees
other than benefit continuations rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(e)......Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or Section 3.13 of the Company Disclosure
Letter, neither the Company, any Subsidiary of the Company any ERISA Affiliate
nor any other corporation or organization controlled by or under common control
with any of the foregoing within the meaning of Section 4001 of ERISA has any
material liability resulting from contribution or withdrawal from a
"multiemployer plan", as that term is defined in Section 4001 of ERISA. With
respect to each "multiemployer plan", as defined above, in which the Company,
any Subsidiary of the Company or any ERISA Affiliate participates or has
participated, (i) neither the Company, any Subsidiary of the Company nor any
ERISA Affiliate has incurred or would reasonably be expected to incur, any
material withdrawal liability, (ii) neither the Company, any Subsidiary of the
Company nor any ERISA Affiliate has received any notice in the past five years
that (A) any such plan is being reorganized in a manner that will result, or
would reasonably be expected to result, in material liability, or (B) increased
contributions of a material amount may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, or (C) any such plan is, or would
reasonably be expected to become, insolvent, and (iii) to the knowledge of the
Company, there are no PBGC (as defined below) proceedings against any such Plan.
(f)......Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or Section 3.13 of the Company Disclosure
Letter, to the knowledge of the Company, no event has occurred, and there exists
no condition or set of circumstances in connection with any Company Employee
Benefit Plan, under which the Company or any Subsidiary of the Company, directly
or indirectly (through any indemnification agreement or otherwise), could
reasonably be expected to be subject to material liability under Section 409 of
ERISA, Section 502(i) of ERISA, Title IV of ERISA or Section 4975 of the Code.
(g)......No transaction contemplated by this Agreement will
result in any material liability to the Pension Benefit Guaranty Corporation
("PBGC") under Section 302(c)(11), 4062, 4063, 4064 or 4069 of ERISA, or
otherwise, with respect to the Company, any Subsidiary of the Company, Parent or
any corporation or organization controlled by or under common control with any
of the foregoing within the meaning of Section 4001 of ERISA, and, to the
knowledge of the Company, no event or condition exists or has existed which
would reasonably be expected to result in any material liability to the PBGC
with respect to Parent, the Company, any Subsidiary of the Company or any such
corporation or organization. Except as set forth in Section 3.13 of the Company
Disclosure Letter, no "reportable event" within the meaning of Section 4043 of
ERISA has occurred with respect to any Company Employee Benefit Plan that is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA (a "Defined Benefit Plan") other than "reportable events" as to which the
requirement of notice to the PBGC within thirty days has been waived, and other
than reportable events that are not reasonably likely to result in material
liability. Except as set forth in Section 3.13 of the Company Disclosure Letter,
no Defined Benefit Plan has incurred any accumulated funding deficiency whether
or not waived.
(h)......Except as set forth in Section 3.13 of the Company
Disclosure Letter, no employer securities, employer real property or other
employer property is included in the assets of any Company Employee Benefit
Plan.
(i)......No stock appreciation rights are outstanding under
the Company Option Plans or any other plan or arrangement maintained by the
Company or any affiliate of the Company.
(j)......There are no pending or threatened claims by or on
behalf of any Company Employee Benefit Plan, by any Person covered thereby, or
otherwise, which allege violations on the part of the Company, any Subsidiary or
any fiduciary of any such Company Employee Benefit Plan reasonably expected to
result in a material liability to the Company, any Subsidiary or Parent.
(k)......The fair market value of the assets of each Defined
Benefit Plan, as determined as of the last day of the plan year of such plan
which coincides with or first precedes the date of this Agreement, was not less
than the present value of the projected benefit obligations under such plan at
such date as established on the basis of reasonable actuarial assumptions
applicable under such Defined Benefit Plan used by the Company in preparing its
financial statements at such date and, to the knowledge of the Company, there
have been no material changes in such values since such date.
(l)......Termination Benefits. Section 3.13 of the Company
Disclosure Letter contains a schedule showing the Company's good faith estimate
of the present value as of December 31, 1998 of the monetary amounts that could
become payable (including tax indemnification payments in respect of income
and/or excise taxes), and identifying the in-kind benefits that could become
due, as a result of the consummation of the Merger under the Specified
Compensation and Benefit Programs (as defined herein) for each of the Company or
any of its Subsidiaries and each officer or other employee of the Company,
Texas-New Mexico Power Company ("TNMP") or any other Subsidiary of the Company
individually. For purposes hereof, "Specified Compensation and Benefit Programs"
shall include all employment agreements, change in control agreements, severance
or special termination agreements, severance plans, pension, retirement or
deferred compensation plans for non-employee directors, supplemental executive
retirement programs, tax indemnification agreements, outplacement programs, cash
bonus programs, stock appreciation rights, phantom stock or stock unit plans,
and health, life, disability and other insurance or welfare plans or other
arrangements, but shall not include any tax-qualified pension, profit-sharing or
employee stock ownership plan or any Company Option Plan. For purposes of
preparing the Disclosure Letter, the present value of the benefits payable under
the Specified Compensation and Benefit Programs shall be determined as follows:
(i) it shall be assumed that a change of control of the Company occurs on
December 31, 1998 and that each person entitled to benefits under the Specified
Compensation and Benefit Programs is discharged as of December 31, 1998; (ii) it
shall be assumed that all compensation levels remain constant; (iii) it shall be
assumed that the present value of any payment or benefit which would be due and
payable before December 31, 1998 is equal to the amount of such payment or the
cost of such benefit; (iv) the present value of any payment or benefit that
would be due and payable after December 31, 1998 shall be computed using the
interest rate specified by the applicable plan for purposes of valuing lump sum
payments or if no rate is specified, an assumed interest rate of 6% per annum,
compounded annually; and (v) that all accrued benefits under all tax-qualified
plans are 100% vested. The entire present value of the benefits payable under
the Specified Compensation and Benefit Programs is set forth on Section 3.13 of
the Company Disclosure Letter, which specifies the portion thereof that has been
accrued as a liability on the financial statements of the Company as of February
28, 1999.
3.14.....Labor Matters
. (a) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or in Section 3.14(a) of the Company
Disclosure Letter there are no material controversies pending or, to the
knowledge of the Company, threatened between the Company or any of its
Subsidiaries and any representatives of its employees, and, to the knowledge of
the Company, there are no material organizational efforts presently being made
involving any of the now unorganized employees of the Company or any of its
Subsidiaries. Since December 31, 1995, there has been no work stoppage, strike
or other concerted action by employees of the Company or any of its Subsidiaries
except as would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(b)......Except as disclosed in Section 3.14(b) of the Company
Disclosure Letter,
(i) no current or former employee has made, or has threatened
to make, any claim against the Company or any of its Subsidiaries or
filed any complaint or charge with the U.S. Equal Employment
Opportunity Commission, any state or local fair employment agency, any
federal, state or local Department of Labor, any federal, state or
local governmental agency or unit responsible for enforcing any laws,
rules or regulations enacted for the protection of employees or any
other Governmental or Regulatory Authority or any agency or
organization providing an alternative dispute resolution mechanism for
disputes or claims of current or former employees.
(ii) the Company is not aware of any state of facts, or the
occurrence of any event, relating to the employment practices of the
Company or any of its Subsidiaries or any act or omission by any
officer, director or employee of the Company or any of its Subsidiaries
that might reasonably be anticipated to result in any liability of, or
the imposition of a penalty or lien on, or any claim against, the
Company or any of its Subsidiaries or any of their respective assets or
properties.
3.15.....Environmental Matters
. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement or in Section 3.15 of the Company Disclosure
Letter and except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect:
(a) (i) Each of the Company and its Subsidiaries is in
compliance with all applicable Environmental Laws (as hereinafter
defined); and
(ii) Neither the Company nor any of its Subsidiaries has
received any written communication from any person or Governmental or
Regulatory Authority that alleges that the Company or any of its
Subsidiaries is not in such compliance with applicable Environmental
Laws.
(b)......Each of the Company and its Subsidiaries has obtained
all permits and other governmental authorizations (collectively, the
"Environmental Permits") necessary under applicable Environmental Laws for the
construction of its facilities and the conduct of its operations, as applicable,
and all such Environmental Permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency approval, and
the Company and its Subsidiaries are in compliance with all terms and conditions
of the Environmental Permits.
(c)......There is no Environmental Claim (as hereinafter
defined) pending:
(i)......against the Company or any of its Subsidiaries;
(ii) to the knowledge of the Company, against any person or
entity whose liability for any such Environmental Claim the Company or
any of its Subsidiaries has retained or assumed either contractually or
by operation of law; or
(iii) against any real or personal property or operations
which the Company or any of its Subsidiaries owns, leases or manages,
in whole or in part.
(d)......To the knowledge of the Company, there have not been
any Releases (as hereinafter defined) of any Hazardous Material (as hereinafter
defined) that would be reasonably likely to form the basis of any material
Environmental Claim against the Company or any of its Subsidiaries, or against
any person whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have been retained or assumed by contract, other
agreement or by operation of law.
(e)......To the knowledge of the Company, with respect to any
predecessor of the Company or any of its Subsidiaries, there is no Environmental
Claim pending or threatened in writing, and there has been no Release of
Hazardous Materials in each case that would be reasonably likely to form the
basis of any Environmental Claim.
(f)......The Company has disclosed to Parent all material
facts of which it is aware and reasonably believes are likely to form the basis
of a Environmental Claim against the Company or any of its Subsidiaries arising
from (x) current environmental remediation or mining reclamation costs of the
Company, its Subsidiaries or such remediation or reclamation costs known to be
required in the future under any applicable Environmental Law, or (y) any other
obligation of the Company or its Subsidiaries under any applicable Environmental
Law.
(g) Neither the Company nor any of its Subsidiaries have
entered into any agreements with any person requiring the Company or any of its
Subsidiaries to indemnify, reimburse or provide contribution to such other
person for any matter related to Environmental Laws, Hazardous Materials or the
environment, except for such matters that have been fully resolved and for which
the Company or any of its Subsidiaries has no further monetary or non-monetary
obligation.
(h)......As used in this Section 3.15:
(i) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demand letters, directives,
claims, liens, investigations or written notices alleging liability
under or violation of any applicable Environmental Law by any person or
entity (including any Governmental or Regulatory Authority) including,
without limitation, claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any
Hazardous Materials;
(ii) "Environmental Laws" means all current Federal, state and
local laws, rules and regulations relating to pollution or protection
of the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection of
human health as it relates to the environment including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
generation, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(iii) "Hazardous Materials" means any petroleum or petroleum
products, radioactive materials, asbestos, polychlorinated biphenyls,
and any other chemical, material, substance or waste, regulated under
any applicable Environmental Law; and
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal or leaching or
migration into the environment.
3.16.....Regulation as a Utility
. The Company is exempt from all provisions (other than
Section 9(a)(2)) of the requirements of the Public Utility Holding Company Act
of 1935, as amended (the "PUHCA"), pursuant to the provisions of Section 3(a)(1)
in accordance with Rule 2 of the SEC under the PUHCA. Section 3.16(a) of the
Company Disclosure Letter sets forth a list of each Subsidiary of the Company
which either (i) is a "public utility company", a "gas utility company" or an
"electric utility company" under the PUHCA, (ii) qualifies as an exempt
wholesale generator under the PUHCA or as a "qualifying facility" under the
Public Utility Regulatory Policies Act of 1978, (iii) is a "public utility"
under the Power Act or (iv) is a "public utility" or is franchised to provide
any utility services under any applicable state law.
3.17.....Insurance
. Except as set forth in Section 3.17 of the Company
Disclosure Letter, each of the Company and its Subsidiaries is, and has been
continuously since January 1, 1996, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary in
all material respects for companies conducting the business conducted by the
Company and its Subsidiaries during such time period. Except as set forth in
Section 3.17 of the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries has received any notice of cancellation or termination with
respect to any material insurance policy of the Company or any of its
Subsidiaries. The material insurance policies of the Company and each of its
Subsidiaries are valid and enforceable policies and will remain in effect
following the Merger.
3.18 Intellectual Property Rights.
The Company and its Subsidiaries have all necessary right,
title and interest in, or a valid and binding license to use, all Intellectual
Property (as defined below) individually or in the aggregate material to the
conduct of the businesses of the Company and its Subsidiaries taken as a whole.
Except as set forth in Section 3.18 of the Company Disclosure Letter, neither
the Company nor any Subsidiary of the Company is in default (or with the giving
of notice or lapse of time or both, would be in default) under any license to
use such Intellectual Property, to the Company's knowledge such Intellectual
Property is not being infringed by any third party, and neither the Company nor
any Subsidiary of the Company is infringing any Intellectual Property of any
third party, except for such defaults and infringements which, individually or
in the aggregate, are not having and could not be reasonably expected to have a
Company Material Adverse Effect. For purposes of this Agreement, "Intellectual
Property" means patents and patent rights, trademarks and trademark rights,
trade names and trade name rights, service marks and service ▇▇▇▇ rights,
service names and service name rights, copyrights and copyright rights and other
proprietary intellectual property rights and all pending applications for and
registrations of any of the foregoing.
3.19.....Vote Required
. Assuming the accuracy of the representation and warranty
contained in Section 4.06, the affirmative vote of the holders of record of at
least two-thirds of the outstanding shares of Company Common Stock with respect
to the adoption of the Plan of Merger is the only vote of the holders of any
class or series of the capital stock of the Company required to adopt the Plan
of Merger and approve the other transactions contemplated hereby.
3.20.....Opinion of Financial Advisor
. The Company has received the opinion of Warburg Dillon Read
LLC, dated the date hereof, to the effect that, as of the date hereof, the
Merger Price to be received in the Merger by the shareholders of the Company is
fair from a financial point of view to the shareholders of the Company, and a
true and complete copy of such opinion has been delivered to Parent at or prior
to the execution of this Agreement.
3.21.....Company Rights Agreement
. As of the date hereof and after giving effect to the
execution and delivery of this Agreement, each Company Right is represented by
the certificate representing the associated share of Company Common Stock and is
not exercisable or transferable apart from the associated share of Company
Common Stock, and the Company has (i) taken all necessary actions so that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated (which transactions shall not be deemed to include any
transaction other than the Merger, as may be amended from time to time, pursuant
to which Parent, Sub or any Equity Investor (as defined in Section 4.07(a)), or
any of them acting as a group for purposes of Rule 13-d under the Exchange Act,
purchases or otherwise acquires beneficial ownership of 10% or more of any
voting securities of the Company (the "Excluded Transactions")) hereby will not
result in a "Distribution Date", a "Triggering Event" or a "Stock Acquisition
Date" (as defined in the Company Rights Agreement) and (ii) amended the Company
Rights Agreement to render it inapplicable to this Agreement and the
transactions contemplated by this Agreement (which transactions shall not be
deemed to include any Excluded Transaction).
3.22.....Article IX of the Company's Articles of Incorporation
and Article 13 of the TBCA Not Applicable
. The Company has taken all necessary actions so that neither
the provisions of Article IX of the Company's articles of incorporation nor the
provisions of Article 13 of the TBCA will, before the termination of this
Agreement, apply to this Agreement, the Merger or the other transactions
contemplated hereby (which transactions shall not be deemed to include any
Excluded Transaction).
3.23.....Year 2000
. The Company and its Subsidiaries have put into effect
reasonable and customary practices and programs (which include communications
with third party vendors and service providers on whom it relies to determine
whether such parties have put into effect practices and programs which will
enable their material software, hardware and equipment (including
microprocessors) to be Year 2000 Compliant (as defined below)) designed to
enable all material software, hardware and equipment (including microprocessors)
that are owned or utilized by the Company or any of its Subsidiaries in the
operations of its or their respective business to be capable, by December 31,
1999, of accounting for all calculations using a century and date sensitive
algorithm for the year 2000 and the fact that the year 2000 is a leap year and
to otherwise continue to function without any material interruption caused by
the occurrence of the year 2000 (such capabilities are herein referred to as
being "Year 2000 Compliant"). Except as set forth in Section 3.23 of the Company
Disclosure Letter, the Company has received from its material third party
vendors and service providers on whom it relies a statement to the effect that
such parties have put into effect practices and programs designed to enable
their material software, hardware and equipment (including microprocessors) to
be Year 2000 Compliant.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
4.01.....Organization and Qualification
. Parent is duly formed, validly existing and in good standing
under the laws of its jurisdiction of formation 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 on Parent and its Subsidiaries taken
as a whole. Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate 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 incorporated, 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 on Parent and
its Subsidiaries taken as a whole. Each of Parent and Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby. Parent has previously delivered or made available to the
Company correct and complete copies of the certificate of formation of Parent
and of the articles of incorporation and bylaws of Sub. Parent has no
subsidiaries other than Sub.
4.02.....Authority Relative to this Agreement
. Each of Parent and Sub has the requisite partnership or
corporate, as applicable, power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly and validly approved by all
necessary partnership or corporate action, as applicable, and by Parent in its
capacity as the sole shareholder of Sub, and no other proceedings on the part of
Parent or Sub or Sub's shareholders are necessary to authorize the execution,
delivery and performance of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby.
Notwithstanding the foregoing, further action may be necessary to authorize the
issuance of shares of Sub Preferred Stock pursuant to the Preferred Stock
Commitment Letters (as defined in Section 4.07) and to authorize the definitive
agreements and documents relating to the Sub Preferred Stock (the "Definitive
Preferred Stock Agreements") and the Definitive Debt Financing Agreements (as
defined in Section 6.14(a)) and the transactions contemplated thereby and any
such necessary action shall be taken prior to the Closing. This Agreement has
been duly and validly executed and delivered by each of Parent and Sub and,
assuming the due authorization, execution and delivery of this Agreement by the
Company, constitutes a legal, valid and binding obligation of each of Parent and
Sub enforceable against each of Parent and Sub 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).
4.03.....Non-Contravention; Approvals and Consents
. (a) The execution and delivery of this Agreement by each of
Parent and Sub do not, and the performance by each of Parent and Sub of its
obligations hereunder and the consummation of the transactions contemplated
hereby 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 (other than Liens contemplated by the Commitment Letters)
upon any of the assets or properties of Parent or any of Parent's Subsidiaries
under, any of the terms, conditions or provisions of (i) the certificate of
formation of Parent or the certificates or articles of incorporation or bylaws
(or other comparable charter documents) of any of Parent's Subsidiaries, or (ii)
subject to the taking of the actions described in paragraph (b) of this Section,
(x) any laws existing on the date hereof or orders of any Governmental or
Regulatory Authority applicable to Parent or any of Parent's Subsidiaries or any
of their respective assets or properties, or (y) any Contracts to which Parent
or any of Parent's Subsidiaries is a party or by which Parent or any of Parent'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 Parent
and Sub to consummate the transactions contemplated by this Agreement.
(b)......Except (i) for the filing of a premerger notification
report by the ultimate parent(s) of Parent under the HSR Act, (ii) for the
filing of the Articles of Merger and other appropriate merger documents required
by the TBCA with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Constituent Corporations are
qualified to do business and the issuance of the Certificate of Merger by the
Secretary of State, (iii) for (x) the approval of the PUCT under Texas law, to
the extent required by the Texas Public Utility Regulatory Act and for (y) the
approval of the NMPRC under New Mexico law, to the extent required by the New
Mexico Public Utility Act, (iv) for the filing of an application under Section
203 and any directly related section of, or regulation under, the Power Act for
the sale or disposition of jurisdictional facilities of the Company or for
waiver of Power Act jurisdiction over this transaction, and (v) as disclosed in
Section 4.03 of the letter dated the date hereof and delivered to the Company by
Parent and Sub concurrently with the execution and delivery of this Agreement
(the "Parent Disclosure Letter"), 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 Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries or any of their respective assets or
properties is bound for the execution and delivery of this Agreement by each of
Parent and Sub, the performance by each of Parent and Sub of its obligations
hereunder or the consummation of the transactions contemplated hereby, 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
Parent and Sub to consummate the transactions contemplated by this Agreement.
4.04.....Legal Proceedings
. There are no actions, suits, arbitrations or proceedings
pending or, to the knowledge of Parent or Sub, threatened against, relating to
or affecting, nor to the knowledge of Parent or Sub are there any Governmental
or Regulatory Authority investigations or audits pending or threatened against,
relating to or affecting, Parent 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
Parent and Sub to consummate the transactions contemplated by this Agreement,
and neither Parent 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
Parent and Sub to consummate the transactions contemplated by this Agreement.
4.05.....Information Supplied
. Neither the information supplied or to be supplied by or on
behalf of Parent or Sub for inclusion, nor the information incorporated by
reference from documents filed by Parent or any of Parent's Subsidiaries with
the SEC, in the Proxy Statement or any other documents to be filed by Parent,
Sub or the Company with the SEC or any other Governmental or Regulatory
Authority in connection with the Merger and the other transactions contemplated
hereby will on the date of its filing or, in the case of the Proxy Statement, at
the date it is mailed to shareholders of the Company and at the date of the
Company Shareholders' Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. All such documents filed by Parent or Sub with
the SEC under the Exchange Act in connection with the Merger and the other
transactions contemplated hereby will comply as to form in all material respects
with the requirements of the Exchange Act.
4.06.....Ownership of Company Common Stock
. As of the date hereof, none of Parent or any of Parent's
Subsidiaries or other affiliates, either individually or as part of a group for
purposes of Rule 13-d under the Exchange Act, beneficially owns any shares of
Company Common Stock, except for such shares held in the ordinary course of
business by any affiliate of Parent which do not, in the aggregate, equal or
exceed ten percent 10% or more of the outstanding shares of Company Common
Stock.
4.07.....Financing
. (a) Parent has, on or prior to the date hereof, entered into subscription
agreements (the "Partnership Subscription Agreements") dated the date hereof
pursuant to which the subscribers thereunder (the "Partnership Investors") have
agreed, subject to the terms and conditions contained in the Partnership
Subscription Agreements and no other conditions, to provide an aggregate of $100
million to Parent in cash for partnership interests in Parent. Sub has, on or
prior to the date hereof, entered into one or more commitment letters (the
"Preferred Stock Commitment Letters") dated the date hereof pursuant to which
the proposed purchasers thereunder (the "Preferred Stock Investors"; and,
together with the Partnership Investors, the "Equity Investors") have agreed,
subject to the terms and conditions contained in the Preferred Stock Commitment
Letters and no other conditions, to provide an aggregate of up to $100 million
of funds to Sub in cash for shares of preferred stock of Sub, which shares of
preferred stock will contain terms substantially the same as those set forth on
Exhibit A to the Preferred Stock Commitment Letters (as such terms may be
amended in accordance with the terms of the Preferred Stock Commitment Letters
and Section 6.14 hereof prior to the Effective Time). The financing to be
provided to Parent and Sub pursuant to the Partnership Subscription Agreements
and the Preferred Stock Commitment Letters is sometimes referred to herein as
the "Equity Financing." Parent and Sub have, on or prior to the date hereof,
entered into a commitment letter (the "Subordinated Debt Commitment Letter"),
with CIBC World Markets Corp. and The Chase Manhattan Bank (the "Subordinated
Lenders") pursuant to which the Subordinated Lenders have committed, subject to
the conditions contained in the Subordinated Debt Commitment Letter and no other
conditions, to provide an aggregate of up to $275 million to Sub in cash as a
senior subordinated increasing rate bridge loan to Sub, which senior
subordinated increasing rate bridge loan will contain terms substantially the
same as those set forth on Exhibit A to the Subordinated Debt Commitment Letter
(as such terms may be amended in accordance with the terms thereof and Section
6.14 hereof prior to the Effective Time) (the "Subordinated Debt Financing").
Sub has, on or prior to the date hereof, entered into a commitment letter (the
"Senior Debt Commitment Letter"), and, together with the Partnership
Subscription Agreements, the Preferred Stock Commitment Letters and the
Subordinated Debt Commitment Letter (the "Consideration Commitment Letters"),
with CIBC World Markets Corp., Canadian Imperial Bank of Commerce, The Chase
Manhattan Bank and Chase Securities, Inc. pursuant to which the Canadian
Imperial Bank of Commerce and The Chase Manhattan Bank (the "Senior Lenders")
have committed, subject to the conditions contained in the Senior Debt
Commitment Letter and no other conditions, to provide an aggregate of up to $165
million to Sub in cash as a senior secured credit facility to Sub, which senior
secured credit facility will contain terms substantially the same as those set
forth on Exhibit A to the Senior Debt Commitment Letter (as such terms may be
amended in accordance with the terms thereof and Section 6.14 hereof prior to
the Effective Time) (the "Senior Debt Financing"). The aggregate cash amount
committed to be provided under the Consideration Commitment Letters is
sufficient to pay the aggregate Merger Price per share and the aggregate Option
Amounts and to make all other necessary payments of fees and expenses required
to be paid by Parent and Sub in connection with the transactions contemplated by
this Agreement. Sub has, on or prior to the date hereof, entered into a
commitment letter (the "Backstop Commitment Letter" and, together with the
Consideration Commitment Letters, the "Commitment Letters") with CIBC World
Markets Corp., Canadian Imperial Bank of Commerce, The Chase Manhattan Bank and
Chase Securities, Inc. pursuant to which Canadian Imperial Bank of Commerce and
The Chase Manhattan Bank (the "Backstop Lenders") have committed, subject to the
conditions contained in the Backstop Commitment Letter and no other conditions,
to provide up to $428 million in cash of senior debt financing to TNMP after the
Effective Time to refinance certain outstanding indebtedness of TNMP and its
Subsidiaries which may become due and payable as a result of the Merger, which
senior debt financing will contain terms substantially the same as those set
forth on Exhibit A of the Backstop Commitment Letter (as such terms may be
amended in accordance with the terms thereof and Section 6.14 hereof prior to
the Effective Time) (the "Backstop Financing" and, together with the
Subordinated Debt Financing and the Senior Debt Financing, the "Debt
Financing").
(b)......Parent has previously provided the Company with true
and complete copies of (i) each Commitment Letter entered into on or prior to
the date hereof, (ii) the form of partnership agreement of the Parent, (iii) the
form of articles of incorporation of Sub, (iv) the partnership agreement and all
other organization and formation documents of the general partner of the Parent
(the "General Partner"), (v) the limited liability company regulations and all
other organization and formation documents of the general partner of the General
Partner and (vi) the form of each other agreement to which Sub, Parent or the
General Partner, on the one hand, and any Financing Party, an affiliate of a
Financing Party or any other person, on the other hand, to be entered into on
the date hereof and relating to any equity interest of Sub, Parent or the
General Partner (the documents and agreements referred to in clauses (ii)
through (v) are referred to herein as "Equity Documents and Agreements").
4.08.....Capitalization of Sub
. The authorized capital stock of Sub consists of (i)
1,000,000 shares of common stock, no par value per share, 100 of which shares,
as of the date of this Agreement, are validly issued and outstanding, fully paid
and nonassessable and are owned by Parent free and clear of all Liens and (ii)
1,000,000 shares of preferred stock, no par value, none of which is issued and
outstanding.
4.09.....Fraudulent Conveyance
. Assuming the accuracy of the representations and warranties
made by the Company in this Agreement, neither Parent nor Sub has any reason to
believe that the financing to be provided to Parent and Sub to consummate the
Merger will cause (i) the fair salable value of the Surviving Corporation's
assets to be less than the total amount of its existing liabilities, (ii) the
fair salable value of the assets of the Surviving Corporation to be less than
the amount that will be required to pay its probable liabilities on its existing
debts as they mature, (iii) the Surviving Corporation not to be able to meet its
obligations as they mature or become due as the result of the Merger or (iv) the
Surviving Corporation to have an unreasonably small capital with which to engage
in its business.
ARTICLE V
COVENANTS OF THE COMPANY
5.01.....Covenants of the Company
. At all times from and after the date hereof until the
Effective Time, the Company covenants and agrees as to itself and its
Subsidiaries that (except as set forth in Section 5.01 of the Company Disclosure
Letter, expressly contemplated or permitted by this Agreement, or to the extent
that Parent shall otherwise previously consent in writing):
(a)......Ordinary Course; No Breach. The Company and its
Subsidiaries shall (i) conduct their respective businesses only in, and neither
the Company nor any such Subsidiary shall take any action except in, the
ordinary course consistent with past practice and (ii) use all commercially
reasonable efforts to comply with the provisions of this Agreement and provide
for the truthfulness of its representations on and as of the Closing Date.
(b)......Certain Restricted Actions. Without limiting the
generality of paragraph (a) of this Section, (i) the Company and its
Subsidiaries shall use all commercially reasonable efforts to preserve intact in
all material respects their present business organizations and reputation, to
keep available the services of their key officers and employees, to maintain
their assets and properties in good working order and condition, ordinary wear
and tear excepted, to maintain insurance on their tangible assets and businesses
in such amounts and against such risks and losses as are currently in effect, to
preserve their relationships with Governmental and Regulatory Authorities,
customers and suppliers and others having significant business dealings with
them and to comply in all material respects with all laws and orders of all
Governmental or Regulatory Authorities applicable to them; provided that no
action by the Company or its Subsidiaries, with respect to matters specifically
addressed by any provision of Section 5.01(b)(ii) shall be deemed a breach of
Section 5.01(b)(i) unless such action would constitute a breach of one or more
of such provisions of Section 5.01(b)(ii); and (ii) without the prior written
consent of Parent, which consent shall not be unreasonably withheld, the Company
shall not, nor shall it permit any of its Subsidiaries to:
(A)......amend or propose to amend its articles of
incorporation or, except to the extent required by law, bylaws (or other
comparable corporate charter documents);
(B)......(w) declare, set aside or pay any dividends on or
make other distributions in respect of any of its capital stock, except that the
Company may continue the declaration and payment of regular quarterly cash
dividends on Company Common Stock, with usual record and payment dates for such
dividends in accordance with past dividend practice, and except for the
declaration and payment of dividends by a wholly-owned Subsidiary solely to its
parent corporation, and dividends and distributions declared and paid by its
Subsidiaries with respect to shares of preferred stock or similar obligations of
the Company's Subsidiaries outstanding on the date hereof, (x) split, combine,
reclassify or take similar action with respect to any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect to
in lieu of or in substitution for shares of its capital stock, (y) adopt a plan
of complete or partial liquidation or resolutions providing for or authorizing
such liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (z) directly or indirectly redeem,
repurchase or otherwise acquire any shares of its capital stock or any Option
with respect thereto other than redemptions, repurchases and other acquisitions
in the ordinary course of business consistent with past practice, including
purchases, redemptions and other acquisitions (1) in connection with the
administration of employee benefit, direct stock purchase and dividend
reinvestment plans as in effect on the date hereof in the ordinary course of the
operation of such plans and (2) required by the respective terms of any such
security outstanding on the date hereof;
(C)......issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any Option
with respect thereto (other than (x) the issuance of Company Common Stock
granted under the Company's Nonemployee Director Stock Plan, outstanding on the
date of this Agreement and in accordance with their present terms, (y) the
issuance by a wholly-owned Subsidiary of its capital stock to its parent
corporation, and (z) the issuance of Company Common Stock or Company Rights
pursuant to the Company Rights Agreement in accordance with the terms thereof),
or modify or amend any right of any holder of outstanding shares of capital
stock or Options with respect thereto (except determinations with respect to the
Company Rights in compliance with Section 5.03);
(D)......except to the extent provided for in the most recent
business plan and operating and capital budgets approved by the Company's Board
of Directors (the "Company Budget"), acquire (by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets (other than inventory and other
assets to be sold or used in the ordinary course of business consistent with
past practice);
(E)......except as set forth in Section 5.01(b)(ii)(E) of the
Company Disclosure Letter and other than dispositions in the ordinary course of
its business consistent with past practice of assets which are not, individually
or in the aggregate, material to the Company and its Subsidiaries taken as a
whole, sell, lease, grant any security interest in or otherwise dispose of or
encumber any of its assets or properties, except to the extent provided for in
the Company Budget;
(F)......except to the extent required by applicable law or to
the extent provided for in the Company Budget, (x) permit any material change in
(A) any pricing, marketing, purchasing, investment, accounting (unless required
by changes in generally accepted accounting principles after the date hereof),
financial reporting, inventory, credit, allowance or tax practice or policy or
(B) any method of calculating any bad debt, contingency or other reserve for
accounting, financial reporting or tax purposes or (y) make any material tax
election or settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(G)......(x) except as set forth in Section 5.01(b)(ii)(G) of
the Company Disclosure Letter or to the extent provided for in the Company
Budget, incur (which shall not be deemed to include entering into credit
agreements, lines of credit or similar arrangements until borrowings are made
under such arrangements) any material indebtedness for borrowed money or
guarantee any such indebtedness (net of any amounts of any such indebtedness
discharged during such period), or (y) voluntarily purchase, cancel, prepay or
otherwise provide for a complete or partial discharge in advance of a scheduled
repayment date with respect to, or waive any right under, any material
indebtedness for borrowed money, except to the extent consistent with past
practice (1) drawings under credit lines existing at the date of this Agreement
or renewals or replacements thereof and (2) obligations evidenced by debt
securities issued by a Subsidiary of the Company for the purpose of financing
investments or capital expenditures permitted under this Agreement or
refinancing existing indebtedness or preferred stock obligations of such
Subsidiary on terms no less favorable to such Subsidiary;
(H)......enter into or except as may be required by applicable
law, adopt, amend in any material respect or terminate any Company Employee
Benefit Plan, or other agreement, arrangement, plan or policy between the
Company or one of its Subsidiaries and one or more of its directors, officers or
employees, or, except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company and its
Subsidiaries taken as a whole, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any plan or arrangement in effect as of the date hereof;
(I)......enter into any Contract or, except as may be required
by applicable law, amend or modify any existing Contract, or engage in any new
transaction outside the ordinary course of business consistent with past
practice or not on an arm's length basis, with any affiliate of the Company or
any of its Subsidiaries;
(J)......willfully take or fail to take any action that would
or is reasonably likely to result (i) in a material breach of any provision of
this Agreement, or (ii) in any of its representations and warranties set forth
in this Agreement being untrue on and as of the Closing Date;
(K)......initiate any material actions, suits, arbitrations or
proceedings other than in the ordinary course of business consistent with past
practice;
(L)......take any action that would be reasonably likely to
jeopardize the qualification of any material amount of outstanding revenue bonds
which qualify on the date hereof under Section 142(a) of the Code as "exempt
facility bonds" or as tax-exempt industrial development bonds under Section
103(b)(4) of the Internal Revenue Code of 1954, as amended, prior to the
enactment of the Tax Reform Act of 1986;
(M)......make any capital expenditures or commitments for
additions to plant, property or equipment constituting capital assets in excess
of the Company Budget approved by the Board of Directors of the Company or any
of its Subsidiaries, except as set forth in Section 5.01(b)(ii)(M) of the
Company Disclosure Letter;
(N)......make any change in the lines of business in which it
participates or is engaged;
(O)......except as may be required by applicable law, engage
in any activities which would cause a change in its status, or that of its
Subsidiaries under the PUHCA or under the Power Act, including any action or
inaction that would cause the prior approval of the SEC under the PUHCA to be
required for the consummation of the transactions contemplated hereby, or that
would impair the ability of the Company or Parent or any Subsidiary of Parent to
claim any exemption under the PUHCA or that would subject Parent or any
Subsidiary of Parent to regulation under the PUHCA (other than Section 9(a)(2)
or as an exempt holding company under the PUHCA) following the Merger;
(P)......except as may be required by applicable law, agree or
consent to any material agreements or modifications of (i) material existing
agreements with any Government or Regulatory Authority in respect of the
operations of their businesses, or (ii) material rates, charges, service
agreements or other like agreements filed with and subject to approval by any
Governmental or Regulatory Authority, except where following discussion with the
relevant authority such agreements or modifications are imposed upon the
Company;
(Q)......except as set forth in Section 5.01(b)(ii)(Q) of the
Company Disclosure Letter or to the extent provided for in the Company Budget,
(i) commence construction of any additional generating,
transmission or delivery capacity, or
(ii) obligate itself to purchase or otherwise acquire, or to
sell or otherwise dispose of, or to share, any additional generating,
transmission or delivery plants or facilities;
(R)......buy or sell any energy futures or forward contracts
or energy transportation futures or forward contracts, or options on any of the
foregoing; or
(S)......enter into any Contract, commitment or arrangement to
do or engage in any of the foregoing.
(c) Advice of Changes. The Company shall confer on a regular
and frequent basis with Parent with respect to its business and operations and
other matters relevant to the Merger, and shall promptly advise Parent, orally
and in writing, of any change or event having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company and
its Subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated hereby; provided that the Company shall not be
required to make any disclosure to the extent such disclosure would constitute a
violation of any applicable law.
5.02.....No Solicitations
. Prior to the Effective Time, the Company agrees (a) that
neither it nor any of its Subsidiaries or other affiliates shall, and it shall
use its best efforts to cause their respective Representatives (as defined in
Section 9.11) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders) with
respect to a merger, consolidation or other business combination including the
Company or any of its Subsidiaries or any acquisition or similar transaction
(including, without limitation, a tender or exchange offer) involving the
purchase of (i) all or any significant portion of the assets of the Company and
its Subsidiaries taken as a whole, (ii) 10% or more of the outstanding shares of
Company Common Stock or (iii) 10% of the outstanding shares of the capital stock
of any Subsidiary of the Company (any such proposal or offer being hereinafter
referred to as an "Alternative Proposal"), or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person or group relating to an Alternative Proposal
(excluding the transactions contemplated by this Agreement), or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal;
(b) that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties with respect to any of
the foregoing, and it will take the necessary steps to inform such parties of
its obligations under this Section; and (c) that it will notify Parent
immediately if any such inquiries, proposals or offers are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it or any of such persons or groups;
provided, however, that nothing contained in this Section 5.02 shall prohibit
the Board of Directors of the Company from (i) furnishing information to (but
only pursuant to a confidentiality agreement in customary form) or entering into
discussions or negotiations with any person or group that makes an unsolicited
bona fide Alternative Proposal, if, and only to the extent that prior to receipt
of the Company Shareholder Approval, (A) the Board of Directors of the Company,
based on advice from outside counsel, determines in good faith that such action
is required for the Board of Directors to comply with its fiduciary duties to
shareholders imposed by law, (B) the Board of Directors has reasonably concluded
in good faith, after consultation with its financial advisor, that (1) if such
Alternative Proposal contains cash consideration, the person or group making
such Alternative Proposal will have adequate sources of financing to consummate
such Alternative Proposal and (2) such Acquisition Proposal could reasonably
lead to a transaction that is more favorable to the Company's shareholders than
the Merger, (C) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or group, the Company provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or group, which
notice shall identify such person or group in reasonable detail, and (D) the
Company keeps Parent reasonably informed of the status of any such discussions
or negotiations; and (ii) to the extent required, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Alternative Proposal.
Nothing in this Section 5.02 shall (x) permit the Company to terminate this
Agreement (except as specifically provided in Article VIII), (y) permit the
Company to enter into any agreement with respect to an Alternative Proposal for
so long as this Agreement remains in effect (it being agreed that for so long as
this Agreement remains in effect, the Company shall not enter into any agreement
with any person or group that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement under the
circumstances described above)), or (z) affect any other obligation of the
Company under this Agreement.
5.03.....Company Rights Agreement
. Except to the extent required by applicable law or to the
extent that the Board of Directors of the Company, based on advice from outside
counsel, determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to shareholders imposed by law,
prior to the Effective Time, without the prior written consent of Parent, the
Company will not take any action with respect to, or make any determination
under, or amend the Company Rights Agreement, including a redemption of the
Company Rights.
5.04.....Third Party Standstill Agreements
. During the period from the date of this Agreement through
the Effective Time, neither the Company nor any of its Subsidiaries shall
terminate, amend, modify or waive any material provision of any confidentiality
or standstill agreement to which it is a party. During such period, the Company
shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including, but not limited to, by obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court having jurisdiction.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01.....Access to Information; Confidentiality
. The Company shall, and shall cause each of its Subsidiaries
to, throughout the period from the date hereof to the Effective Time, (i)
provide the Parent and, at Parent's request, its Representatives with full
access to the Company's facilities, upon reasonable prior notice and during
normal business hours, and to all officers, employees, agents and accountants of
the Company and its Subsidiaries and their respective assets, properties, books
and records, but only to the extent that such access does not unreasonably
interfere with the business and operations of the Company and its Subsidiaries,
and (ii) furnish promptly to such persons (x) a copy of each report, statement,
schedule and other document filed or received by the Company or any of its
Subsidiaries pursuant to the requirements of federal or state securities laws
and each material report, statement, schedule and other document filed with any
other Governmental or Regulatory Authority, and (y) all other information and
data (including, without limitation, copies of Contracts, Company Employee
Benefit Plans and other books and records) concerning the business and
operations of the Company and its Subsidiaries as Parent or any of such other
persons reasonably may request. No investigation pursuant to this paragraph or
otherwise shall affect any representation or warranty contained in this
Agreement or any condition to the obligations of the parties hereto. Any such
information or material obtained pursuant to this Section 6.01 shall constitute
"Confidential Information" (as such term is defined in the Confidentiality and
Non-Disclosure Agreement dated as of December 4, 1998 between the Company and
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. (now CIBC World Markets Corp.), as amended (the
"Confidentiality Agreement")) and Parent and Sub each hereby agree to be bound
by the Confidentiality Agreement as if it were the Recipient (as defined in the
Confidentiality Agreement).
6.02.....Preparation of Proxy Statement; Offering Materials
. (a) The Company shall prepare and file with the SEC the
Proxy Statement as soon as reasonably practicable after the date hereof, and
shall use its best efforts to have the Proxy Statement cleared by the SEC. If at
any time prior to the Effective Time any event shall occur that should be set
forth in an amendment of or a supplement to the Proxy Statement, the Company
shall prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Parent, Sub and the Company shall
cooperate with each other in the preparation of the Proxy Statement, and the
Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information, and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC with respect to the Proxy Statement. The Company
shall give Parent and its counsel the opportunity to review the Proxy Statement
and all responses to requests for additional information by and replies to
comments of the SEC before their being filed with, or sent to, the SEC. Each of
the Company, Parent and Sub agrees to use its best efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC and to cause the Proxy Statement to be mailed to the holders
of Company Common Stock entitled to vote at the Company Shareholders' Meeting at
the earliest practicable time.
(b) The Company shall, and shall cause its Subsidiaries to,
use all commercially reasonable efforts to cooperate with and assist Parent and
Sub in preparing such information packages and offering materials as the
Financing Parties may reasonably request (collectively, the "Offering
Materials") for use in connection with the offering and/or syndications of
partnership interests, preferred stock, debt securities and loan participations
contemplated by the Commitment Letters, including, without limitation, making
senior management and other representatives of the Company and its Subsidiaries
available (at mutually agreeable times) to participate in meetings with
prospective investors and providing such information and assistance as the
Financing Parties may reasonably request in connection therewith.
6.03.....Approval of Shareholders
. The Company shall, through its Board of Directors, duly call, give notice of,
convene and hold a meeting of its shareholders (the "Company Shareholders'
Meeting" for the purpose of voting on the Plan of Merger (the "Company
Shareholders' Approval") as soon as reasonably practicable after the date
hereof. Subject to the exercise of fiduciary obligations as advised by outside
counsel (i) the Company shall, through its Board of Directors, include in the
Proxy Statement the recommendation of the Board of Directors of the Company that
the shareholders of the Company adopt the Plan of Merger, and (ii) the Company
shall use its best efforts to obtain such adoption.
6.04.....Regulatory and Other Third Party Approvals
. Subject to the terms and conditions of this Agreement and
without limiting the provisions of Sections 6.02 and 6.03, each of the Company,
Parent, and Sub will proceed diligently and in good faith to, as promptly as
practicable, (i) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
third parties required of Parent, Sub, the Company or any of their Subsidiaries
to consummate the Merger and the other matters contemplated hereby, including
obtaining the approval of the PUCT under Texas law, to the extent required by
the Texas Public Utility Regulatory Act and the approval of the NMPRC under New
Mexico law, to the extent required by the New Mexico Public Utility Act and
complying with the filing and approval requirements of the FERC and the
approvals set forth in Section 6.04 of the Company Disclosure Letter, and (ii)
provide such other information and communications to such Governmental or
Regulatory Authorities or other third parties as the other party or such
Governmental or Regulatory Authorities or other third parties may reasonably
request in connection therewith. In addition to and not in limitation of the
foregoing, each of the parties will (x) take promptly all actions necessary to
make the filings required of Parent, Sub, and the Company or their affiliates
under the HSR Act, (y) 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 (z) 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 Merger or the other matters contemplated by this Agreement commenced by
either the FTC or the Antitrust Division or state attorneys general.
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 Option Plans) 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 Option Plans) 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.
(b)......Prior to the Closing, the Company shall, and shall
cause TNMP to, use its best efforts to enter into an employment agreement,
substantially in the form provided by Parent to the Company prior to the date
hereof (an "Employment Agreement"), with each individual listed in Section 6.05
of the Parent Disclosure Letter, which provides for the payment to each such
individual of the amounts set forth opposite such individual's name therein.
6.06.....Directors' and Officers' Indemnification and Insurance
. (a) From and after the Effective Time and until the fourth
anniversary of the Effective Time and for so long thereafter as any claim for
indemnification asserted on or prior to such date has not been fully
adjudicated, the Surviving Corporation shall indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, a director or officer of the Company or any
of its Subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs and expenses (including reasonable attorneys' fees), liabilities,
judgments and settlement amounts that are paid or incurred in connection with
any claim, action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed prior to, at or
after the Effective Time) that is based on, or arises out of, the fact that such
Indemnified Party is or was a director or officer or agent of the Company or any
of its Subsidiaries and relates to or arises out of any action or omission
occurring at or prior to the Effective Time ("Indemnified Liabilities"), and
(ii) all Indemnified Liabilities based on, or arising out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case to the
fullest extent a corporation is permitted under applicable law to indemnify its
own directors or officers, as the case may be; provided that the Surviving
Corporation shall not be liable for any settlement of any claim effected without
its written consent. Without limiting the foregoing, in the event that any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Party (whether arising prior to or after the Effective Time), (w)
the Surviving Corporation will pay expenses in advance of the final disposition
of any such claim, action, suit, proceeding or investigation to each Indemnified
Party to the full extent permitted by applicable law; provided that the person
to whom expenses are advanced provides any undertaking required by applicable
law to repay such advance if it is ultimately determined that such person is not
entitled to indemnification; (x) the Indemnified Parties shall retain counsel
reasonably satisfactory to the Surviving Corporation; (y) the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties (subject to the final sentence of this paragraph) promptly
as statements therefor are received; and (z) the Surviving Corporation shall use
all commercially reasonable efforts to assist in the defense of any such matter.
Any Indemnified Party wishing to claim indemnification under this Section, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Surviving Corporation, but the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability which
it may have under this paragraph except to the extent such failure materially
prejudices the Surviving Corporation. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties in which case, the Indemnified Parties may retain more than one law
firm.
(b)......Except to the extent required by law, until the
fourth anniversary of the Effective Time, Parent will not take any action so as
to amend, modify, limit or repeal the provisions for indemnification of
Indemnified Parties contained in the certificates or articles of incorporation
or bylaws (or other comparable charter documents) of the Surviving Corporation
and its Subsidiaries (which as of the Effective Time shall be no more favorable
to such individuals than those maintained by the Company and its Subsidiaries on
the date hereof) in such a manner as would adversely affect the rights of any
Indemnified Party to be indemnified by such corporations in respect of their
serving in such capacities prior to the Effective Time.
(c)......For a period of four years after the Effective Time,
Surviving Corporation shall cause to be maintained in effect policies of
directors' and officers' liability insurance maintained by Company as of the
date hereof; provided, that Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms that are no less
advantageous with respect to matters occurring prior to the Effective Time to
the extent such liability insurance can be maintained annually at a cost to
Surviving Corporation not greater than 200 percent of the current annual
premiums for such directors' and officers' liability insurance, which existing
premium costs are set forth in Section 6.06(c) of the Company Disclosure Letter;
provided, further, that if such insurance cannot be so maintained or obtained at
such cost, Surviving Corporation shall maintain or obtain as much of such
insurance as can be so maintained or obtained at a cost equal to 200 percent of
the current annual premiums of Company for its directors' and officers'
liability insurance.
(d)......The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and each
party entitled to insurance coverage under paragraph (c) above, respectively,
and his or her heirs and legal representatives, and shall be in addition to, and
shall not impair, any other rights an Indemnified Party may have under the
certificate or articles of incorporation or bylaws of the Surviving Corporation
or any of its Subsidiaries, under the TBCA or otherwise.
6.07.....Expenses
. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such cost or expense.
6.08.....Brokers or Finders
. Each of Parent and the Company represents, as to itself and
its affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except Warburg Dillon Read LLC, whose fees and
expenses will be paid by the Company in accordance with the Company's agreement
with such firm (a true and complete copy of which has been delivered by the
Company to Parent prior to the execution of this Agreement), and CIBC World
Markets Corp., whose fees and expenses will be paid by Parent in accordance with
Parent's agreement with such firm (a true and complete copy of which has been
delivered by Parent to the Company prior to the execution of this Agreement),
and each of Parent and the Company shall indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with respect to
any other such fee or commission or expenses related thereto asserted by any
person on the basis of any act or statement alleged to have been made by such
party or its affiliate.
6.09.....Takeover Statutes
. If any "fair price", " moratorium", "control stock
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the Merger or the transactions contemplated hereby, (which
transactions shall not be deemed to include any Excluded Transaction) the
Company and the members of the Board of Directors of the Company shall grant
such approvals and take such actions as are reasonably necessary so that the
Merger or the transactions contemplated hereby (which transactions shall not be
deemed to include any Excluded Transaction) may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the Merger or
the transactions contemplated hereby (which transactions shall not be deemed to
include any Excluded Transaction).
6.10.....Conveyance Taxes
. The Company and Parent shall cooperate in the preparation,
execution and filing of all returns, questionnaires, applications or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
6.11.....Gains Tax
. The Company shall pay, without deduction or withholding from
any amount payable to the holders of Company Common Stock, any Tax on gains
derived from real property transfers (the "Gains Tax"), real estate transfer
Tax, real property transfer Tax and stock transfer Tax (the "Transfer Taxes")
imposed by any State of the United States (and any penalties and interest with
respect to such taxes), which become payable in connection with the transactions
contemplated by this Agreement, on its own behalf or on behalf of the
shareholders of the Company. The Company and Parent shall cooperate in the
preparation, execution and filing of any required returns with respect to such
taxes (including returns on behalf of the shareholders of the Company) and in
the determination of the portion of the consideration allocable to real property
of the Company and its Subsidiaries in any jurisdiction. The terms of the Proxy
Statement shall provide that the shareholders of the Company shall be deemed to
have agreed to be bound by the allocation established pursuant to this Section
in the preparation of any return with respect to the Gains Tax and the Transfer
Taxes and any similar taxes, if applicable.
6.12.....Conduct of Business of Parent and Sub
. Prior to the Effective Time, except as may be required by
applicable law and subject to the other provisions of this Agreement, Parent
shall, and cause Sub to, (a) perform its obligations under this Agreement in
accordance with its terms, (b) not incur directly or indirectly any liabilities
or obligations other than those incurred in connection with the Merger
(including, without limitation, the Equity Financing and the Debt Financing),
(c) not engage directly or indirectly in any business or activities of any type
or kind and not enter into any agreements or arrangements with any person, or be
subject to or bound by any obligation or undertaking, which is not contemplated
by this Agreement and (d) not create, grant or suffer to exist any Lien upon its
properties or assets which would attach to any properties or assets of the
Surviving Corporation after the Effective Time other than as contemplated by the
Equity Financing, the Subordinated Debt Financing and the Senior Debt Financing.
6.13.....Rate Matters.
Neither Company nor any of its Subsidiaries shall initiate a
general rate case in any jurisdiction in which it does business without first
consulting with Parent and obtaining Parent's approval during the period
commencing on the date hereof and ending on the Effective Date. During this same
period, neither the Company nor any of its Subsidiaries shall propose, make or
agree to make any changes in rates or charges, standards of service or
accounting from those each has in effect on the date hereof without first
consulting with and obtaining the approval of the Parent. Neither the Company,
nor any of its Subsidiaries, shall effect any agreement, commitment, arrangement
or consent, whether written or oral, formal or informal, with respect to any of
the foregoing without first consulting with Parent and obtaining Parent's
approval. Notwithstanding this Section 6.13, Company and its Subsidiaries shall
be able (i) to initiate, file, and proceed to conclusion, the New Mexico general
rate case required by Case No. 2718; (ii) to initiate, file, and proceed to
conclusion any fuel reconciliation case required by the rules of the
Governmental or Regulatory Authorities having jurisdiction over the Company or
its Subsidiaries; and (iii) initiate, file, and proceed to conclusion any other
proceeding required by the laws of any jurisdiction in which Company or its
Subsidiaries does business, or the rules of any Governmental or Regulatory
Authority having jurisdiction over the Company or its Subsidiaries; provided
that prior to any filing pursuant to Section 6.13(i), (ii), or (iii), the
Company or its Subsidiaries shall consult with, and give notice of such filing
to, Parent.
6.14.....Financing.
(a) Each of Parent and Sub agrees that it will not, without the prior consent
of the Company (which consent shall not be unreasonably withheld), enter into
any material amendment to, or modification or waiver of, any of the Commitment
Letters, the Equity Documents and Agreements, Definitive Preferred Stock
Agreements or the definitive agreements relating to the Debt Financing (the
"Definitive Debt Financing Agreements") if such amendment, modification or
waiver would (i) reduce the aggregate amount of funds committed under the
Commitment Letters, (ii) add significant additional conditions to the
consummation of the transactions contemplated by the Commitment Letters, the
Equity Documents and Agreements or the Definitive Debt Financing Agreements or
(iii) have a significant adverse affect on or significantly delay the receipt of
any of the Required Approvals (as defined in Section 7.01(e)) or the
consummation of the Merger. Parent shall enforce, to the fullest extent
permitted under applicable law, the provisions of the Commitment Letters and
(after the same have been entered into) the Definitive Preferred Stock
Agreements and the Definitive Debt Financing Agreements, including, but not
limited to, obtaining injunctions to enforce specifically the terms and
provisions thereof in any court having jurisdiction. Parent and Sub shall use
their best efforts to fulfill all of their obligations under, cause all
conditions to funding to be fulfilled under, and cause the funding to occur
under the Commitment Letters, the Definitive Preferred Stock Agreements and the
Definitive Debt Financing Agreements as promptly as reasonably practicable.
Parent shall give the Company prompt written notice of (i) any material breach
or threatened material breach by any party of the terms or provisions of the
Commitment Letters, Equity Documents and Agreements, Definitive Preferred Stock
Agreements or Definitive Debt Financing Agreements, (ii) any termination or
threatened termination of any of the Commitment Letters, Equity Documents and
Agreements, Definitive Preferred Stock Agreements or Definitive Debt Financing
Agreements, or (iii) any exercise or threatened exercise of any "market out" or
"material adverse change" condition under any of the Commitment Letters, Equity
Documents and Agreements, Definitive Preferred Stock Agreements or Definitive
Debt Financing Agreements. Prior to the expiration of any Commitment Letter
relating to the Sub Preferred Stock, the Senior Debt Financing or the
Subordinated Debt Financing, to the extent that Parent determines that it is
reasonably likely that the Initial Termination Date will be extended pursuant to
the provisions of Section 8.01(b)(i)(y), Parent shall use its best efforts to
secure an extension of the expiration date of such Commitment Letter to the
Extended Termination Date.
(b)......Parent's and Sub's obligations under Section 6.14(a)
shall not be construed in any way as restricting the ability of Parent or Sub to
modify or otherwise alter the terms, conditions or relative amounts of any debt
or equity financing as long as such modification or alteration does not (i)
reduce the aggregate amount of funds committed under the Commitment Letters
entered into on or prior to the date hereof, (ii) add significant additional
conditions to the funding contemplated by any Commitment Letter entered into on
or prior to the date hereof, or (iii) have a significant adverse affect on or
significantly delay the receipt of any of the Required Approvals (as defined in
Section 7.01(e)) or the consummation of the Merger.
(c)......In connection with the negotiation and execution of
the Definitive Debt Financing Agreements, the Company will, at the request of
Parent, make the same representations and warranties to each Equity Investor,
the Senior Lender, the Subordinated Lender and the Backstop Lender, as the case
may be (the "Financing Parties") as are made by the Company to Parent in Article
III hereof, and any others customarily requested by such Financing Parties, and
shall deliver such other documents, instruments, certificates or opinions as are
customary in financings of this type, and pledge, grant security interests in,
and otherwise grant liens on its assets pursuant to such agreements, provided
that no obligation of the Company under any such agreement, pledge, or grant
shall be effective until the Effective Time.
(d)......The obligations contained in this Section 6.14 are
not intended, nor shall they be construed, to benefit or confer any rights upon
any third party.
6.15.....Notice and Cure.
Each of Parent, Sub, and the Company will notify the other of, and will use
all best efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practical after it becomes known to such party, that
causes or will cause any covenant or agreement of Parent, Sub, or the Company
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of Parent or the Company contained in this Agreement.
Each of Parent, Sub, and the Company also will notify the other in writing of,
and will use all best efforts to cure, before the Closing, any violation or
breach, as soon as practical after it becomes known to such party, of any
representation, warranty, covenant or agreement made by Parent, Sub, or the
Company. Each of Parent, Sub and the Company will promptly advise the others,
orally and in writing, of any change or event, including any complaint,
investigation or hearing by any Governmental or Regulatory Authority (or
communication indicating the same may be contemplated) or the institution or
threat of litigation having, or which, insofar as can be reasonably foreseen,
could have a material adverse effect on the ability of any party hereto to
consummate the transactions contemplated herein. No notice given pursuant to
this Section shall have any effect on the representations, warranties, covenants
or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
ARTICLE VII
CONDITIONS
7.01.....Conditions to Each Party's Obligation to Effect the
Merger.
The respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a)......Shareholder Approval. The Plan of Merger shall have
been adopted by the requisite vote of the shareholders of the Company under the
TBCA and the Company's articles of incorporation.
(b)......HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(c)......No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any law or order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
(d)......Power Act The final approval of the FERC under the
Power Act with respect to the Merger and the transactions contemplated by this
Agreement, or an order of the FERC disclaiming jurisdiction over this Merger,
shall have been obtained.
(e)......Governmental and Regulatory and Other Consents and
Approvals. Other than the filing provided for by Section 1.03, all consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority (including, without limitation, under the Texas Public
Utility Regulatory Act, the New Mexico Public Utility Act, the Power Act and HSR
Act) or any other public or private third parties (the "Required Approvals")
required of Parent, the Company or any of their respective Subsidiaries to
consummate the Merger and the other matters contemplated hereby, the failure of
which to be obtained or taken could be reasonably expected to have a material
adverse effect on Parent and its Subsidiaries or the Surviving Corporation and
its Subsidiaries, in each case taken as a whole, or on the ability of Parent and
the Company to consummate the transactions contemplated hereby, shall have been
obtained and become Final Orders (as defined below), and the Final Orders shall
not, individually or in the aggregate, contain terms or conditions that would
have, or would reasonably be expected to have a material adverse affect on the
Surviving Corporation and its Subsidiaries, taken as a whole. A "Final Order"
means an action by the relevant Governmental or Regulatory Authority that has
not been reversed, stayed, enjoined, set aside, annulled or suspended, with
respect to which any waiting period prescribed by applicable law before the
transactions contemplated hereby may be consummated has expired or been
terminated, and as to which all conditions to the consummation of such
transactions prescribed by applicable law, regulation or order have been
satisfied.
7.02.....Conditions to Obligation of Parent and Sub to Effect
the Merger.
The obligation of Parent and Sub to effect the Merger is further subject to
the fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Parent and
Sub in their sole discretion):
(a)......Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement that is
qualified by materiality shall be true and correct, and each of such
representations and warranties that is not so qualified shall be true and
correct in all material respects, in each case, as of the Closing Date as though
made on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date, except as affected by the transactions contemplated by
this Agreement, and the Company shall have delivered to Parent a certificate,
dated the Closing Date and executed in the name and on behalf of the Company by
its Chairman of the Board, President or any Senior Vice President, to such
effect.
(b)......Performance of Obligations. The Company 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 Company at or prior to the Closing, and the Company shall have delivered to
Parent a certificate, dated the Closing Date and executed in the name and on
behalf of the Company by its Chairman of the Board, President or any Senior Vice
President, to such effect.
(c)......Material Adverse Effect. Since the date of this
Agreement, no Company Material Adverse Effect shall have occurred and there
shall exist no facts or circumstances arising after the date hereof, which in
the aggregate would, or insofar as reasonably can be foreseen, could, when taken
together with any breaches or violations of any representations, warranties,
covenants and agreements of the Company contained herein, result in a Company
Material Adverse Effect.
(d)......Required Approvals. Parent shall be reasonably
satisfied 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 PUCT dated September 4, 1998, could reasonably result in any rate
plan which would be significantly less favorable to the Surviving Corporation
and its Subsidiaries than the Texas Transition Plan to Competition and the rate
plans applicable to the Company and its Subsidiaries in the State of New Mexico
on the date hereof.
(e)......Company Rights Agreement. On or prior to the Closing
Date, the Company Rights shall not have become exercisable or transferable apart
from the associated shares of Company Common Stock, no "Stock Acquisition Date",
"Triggering Event" or "Distribution Date" (each as defined in the Company Rights
Agreement) shall have occurred and the Company Rights shall not have become
nonredeemable, in each case other than as a result of actions by Parent or any
of its affiliates.
(f)......Financing. All conditions to the availability of the
financings contemplated by the Commitment Letters, Definitive Preferred Stock
Agreements and the Definitive Debt Financing Agreements shall have been
fulfilled or waived and all proceeds of such financings shall have been received
by Parent and Sub; provided, that this condition shall not be applicable if the
failure of Parent or Sub to receive the proceeds of such financing shall have
been occasioned by action or the failure to take action by Parent or Sub which
action or inaction also constitutes a breach of any material covenant,
representation or warranty of such party hereunder.
(g) Additional Documents. The Company shall have delivered to
Parent or Sub or its lenders such additional customary certificates, opinions of
counsel and other documents as Parent's or Sub's lenders shall reasonably
request.
(h) .....Options; Restricted Stock. All of the Options under
the Company Option Plans shall have been validly cancelled and none shall remain
outstanding and all of the shares of restricted stock under the Company Option
Plans shall constitute fully vested, issued and outstanding shares no later than
the Effective Time, and no holder of Company Options or any participant in the
Company Option Plans or any other Plan shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
of their respective Subsidiaries.
(i) Dissenting Shares. Holders of not more than five percent
(5%) of the outstanding shares of Company Common Stock shall have perfected such
holder's right to dissent in accordance with the applicable provisions of the
TBCA and shall not have withdrawn or lost such rights.
(j) Employment Agreements and Severance Agreements. The
Company and/or TNMP, as the case may be, shall have entered into an Employment
Agreement with each of the first four individuals listed in Section 7.02 of the
Parent Disclosure Letter, and with not less than one-half of the individuals
listed under the caption "Designated Employees" therein, and Parent shall be
reasonably satisfied, as of the Closing Date, that the aggregate cash amounts
that could become payable (including tax indemnification payments in respect of
income and/or excise taxes) to the individuals listed in Section 7.02 of the
Parent Disclosure Letter under the Specified Compensation and Benefit Programs
of the Company as a result of this Agreement, the negotiation thereof or the
consummation of the Merger shall not exceed $4,428,000.
(k) Proceedings. All proceedings to be taken on the part of
the Company in connection with the Closing of the transactions contemplated by
this Agreement and all documents incident thereto shall be reasonably
satisfactory in form and substance to Parent, and Parent shall have received
copies of all such documents and other evidences as Parent may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
7.03.....Conditions to Obligation of the Company to Effect the
Merger.
The obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a)......Representations and Warranties. Each of the
representations and warranties made by Parent and Sub in this Agreement that is
qualified by materiality shall be true and correct, and each of such
representations and warranties that is not so qualified shall be true and
correct in all material respects, in each case, as of the Closing Date as though
made on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date, except as affected by the transactions contemplated by
this Agreement, and Parent and Sub shall each have delivered to the Company a
certificate, dated the Closing Date and executed in the name and on behalf of
Parent by any authorized officer and in the name and on behalf of Sub by its
Chairman of the Board, President or any Vice President, to such effect.
(b)......Performance of Obligations. Parent and Sub 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
Parent or Sub at or prior to the Closing, and Parent and Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed in
the name and on behalf of Parent by any authorized officer and in the name and
on behalf of Sub by its Chairman of the Board, President or any Vice President,
to such effect.
(c)......Proceedings. All proceedings to be taken on the part
of Parent and Sub in connection with the Closing of the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Company, and the Company
shall have received copies of all such documents and other evidences as the
Company may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01.....Termination
. This Agreement may be terminated, and the transactions contemplated hereby may
be abandoned, at any time prior to the Effective Time, whether prior to or after
the Company Shareholders' Approval:
(a)......By mutual written agreement of the parties hereto
duly authorized by action taken by or on behalf of their respective Boards of
Directors;
(b)......By either the Company or Parent upon written
notification to the non-terminating party by the terminating party:
(i) at any time after the date which is nine (9) months
following the date of this Agreement (the "Initial Termination Date");
provided, however, that
(x) the right to terminate the Agreement under this
Section 8.01(b)(i) shall not be available to any party whose
breach of any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to
occur on or before such date; and
(y) if, on the Initial Termination Date, the
conditions to the Closing set forth in Section 7.01(c), (d) or
(e) shall not have been fulfilled, but all other conditions to
the Merger shall be fulfilled or shall be reasonably capable
of being fulfilled within six months, then the Initial
Termination Date shall be extended to the date which is six
(6) months from the Initial Termination Date (the "Extended
Termination Date");
(ii) if the Company Shareholders' Approval shall not be
obtained by reason of the failure to obtain the requisite vote upon a
vote held at a meeting of such shareholders, or any adjournment
thereof, called therefor;
(iii) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement, which breach is not
curable or, if curable, has not been cured within thirty (30) days
following receipt by the non-terminating party of notice of such breach
from the terminating party;
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making
illegal or otherwise restricting, preventing or prohibiting the Merger
and such order shall have become final and nonappealable; or
(v) if any occurrence or circumstance results in a failure to
satisfy the conditions set forth in Section 7.01(e).
(c)......By the Company if the Board of Directors of the
Company determines in good faith, based on advice from outside counsel, that
termination of the Agreement is required for the Board of Directors to comply
with its fiduciary duties to shareholders imposed by law by reason of an
unsolicited bona fide Alternative Proposal meeting the requirements of clauses
(A) and (B) of Section 5.02 having been made; provided that the Company shall
have complied with the provisions of clauses (C) and (D) of Section 5.02 and
shall notify Parent within two (2) business days of its intention to terminate
this Agreement or enter into a definitive agreement with respect to such
Alternative Proposal, but in no event shall such notice be given less than
twenty-four (24) hours prior to the public announcement of the Company's
termination of this Agreement; and provided, further that the Company's ability
to terminate this Agreement pursuant to this paragraph, (c) is conditioned upon
the prior payment by the Company to Parent of any amounts owed by it pursuant to
Section 8.02(b);
(d)......By Parent (i) if the Board of Directors of the
Company (or any committee thereof) shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of this Agreement or the Plan
of Merger or shall have recommended or taken no position with respect to an
Alternative Proposal to the shareholders of the Company or shall resolve to take
any of the foregoing actions, or (ii) if the Company shall amend, take any
action with respect to or make any determination under the Company Rights
Agreement which could reasonably be expected to be adverse to Parent, the
Surviving Corporation or any of their respective Subsidiaries or on the ability
of the Company, Parent or Sub to consummate the transactions contemplated
hereby;
(e)......By the Company if any of the Commitment Letters,
Definitive Preferred Stock Agreements or Definitive Debt Financing Agreements
shall have been terminated at any time when Parent would not be entitled to
terminate this Agreement pursuant to Section 8.01(b) or Section 8.01(d) and,
within ten (10) business days after any such termination, such Commitment
Letter, Definitive Preferred Stock Agreements or Definitive Debt Financing
Agreement shall not have been replaced; or
(f) By Parent if any occurrence or circumstance results in a
failure to satisfy the conditions set forth in Section 7.02(d).
8.02.....Effect of Termination.
(a) If this Agreement is validly terminated by either the Company or Parent
pursuant to Section 8.01, this Agreement will forthwith become null and void and
there will be no liability or obligation on the part of either the Company or
Parent (or any of their respective Representatives or affiliates), except (i)
that the provisions of Sections 6.01 (with respect to confidentiality), 6.07,
6.08, and 9.10 and this Section 8.02 will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve any party hereto
from liability for willful breach of its representations, warranties, covenants
or agreements contained in this Agreement, and (iii) as provided in paragraph
(b) below.
(b)......In the event that any person or group shall have made
an Alternative Proposal and thereafter (i) this Agreement is terminated (x) by
the Company pursuant to Section 8.01(c) or, (y) by Parent pursuant to Section
8.01(b)(iii) or Section 8.01(d), or (ii) this Agreement is terminated (x) by
either party pursuant to (A) Section 8.01(b)(ii) and such Alternative Proposal
is made known to the Company's shareholders generally or (B) Section 8.01(b)(iv)
or Section 8.01(b)(v), (y) by Parent pursuant to Section 8.01(f) or (z) by the
Company pursuant to Section 8.01(b)(i) and, in the case of this clause (ii)
only, the Board of Directors of the Company recommends such Alternative
Proposal, or a definitive agreement with respect to such Alternative Proposal is
executed, within one year after such termination, then the Company shall pay to
Parent, by wire transfer of same day funds, either on the date contemplated in
Section 8.01(c) if applicable, or otherwise, within two (2) business days after
such amount becomes due, a termination fee of $20 million (the "Termination
Fee"), plus an amount equal to $10 million, constituting reimbursement of
expenses incurred or to be incurred by Parent and Sub in connection with this
Agreement and the transactions contemplated hereby, without any requirement that
Parent or Sub account for actual expenses (the "Expense Amount").
(c)......In the event that this Agreement is terminated (i) by
either party (x) pursuant to Section 8.01(b)(i) if, on the Extended Termination
Date, the conditions to the Closing set forth in Section 7.01(e) shall not have
been fulfilled, but all other conditions to the Merger shall have been fulfilled
(or waived), or (y) pursuant to Section 8.01(b)(ii), 8.01(b)(iv) or 8.01(b)(v),
or (ii) by Parent pursuant to Section 8.01(b)(iii), Section 8.01(d) or Section
8.01(f), in any case, in circumstances in which the amounts set forth in clause
(b) above are not payable, the Company shall pay to Parent, by wire transfer of
same day funds, within two (2) business days after such amount becomes due, an
amount equal to the Expense Amount; provided, however, that with respect to any
termination under this paragraph (c) pursuant to Section 8.01(b)(i), Section
8.01(b)(iv), Section 8.01(b)(v) or Section 8.01(f), the Expense Amount shall be
reduced to an amount equal to $7 million; and provided further that if the
amounts set forth in clause (b) above thereafter become payable pursuant to
Section 8.02(b), amounts paid to Parent and Sub under this Section 8.02(c) shall
be credited against such amounts. Notwithstanding the foregoing, (i) if the
failure to obtain any Required Approval is due solely to a lowering by Standard
& Poor's Ratings Services, ▇▇▇▇▇'▇ Investors Services or Duff & ▇▇▇▇▇▇ Credit
Rating Co. of the credit ratings assigned to the senior debt securities of TNMP
to a level which is below "investment grade", and such lowering was directly
caused by the composition and terms of the Equity Financing and the Debt
Financing, then no Expense Amount shall be payable by the Company pursuant to
clause (c)(i)(x) above, and (ii) if any Equity Investor (x) would, upon
consummation of the Merger, become subject to regulation as a public utility
holding company under the PUHCA and (y) as a result thereof, such Equity
Investor terminates its obligations under any Commitment Letter entered into on
or prior to the date hereof, and thereafter this Agreement is terminated by the
Company pursuant Section 8.01(e), then no Expense Amount shall be payable by the
Company.
(d)......The Company acknowledges that the agreements
contained in the preceding paragraphs (b) and (c) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
Parent and Sub would not enter into this Agreement; accordingly, if the Company
fails promptly to pay the amount due pursuant to such paragraph, and in order to
obtain such payment, Parent and Sub commences a suit which results in a judgment
against the Company for the fee set forth in such paragraph, the Company shall
pay to Parent or Sub, as the case may be, its costs and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amount of the fee at the prime rate of ▇▇▇▇▇▇ Guaranty
Trust Company of New York in effect on the date such payment was required to be
made.
8.03.....Amendment.
This Agreement may be amended, supplemented or modified by action taken by or
on behalf of Parent and the respective Boards of Directors of the Company and
Sub at any time prior to the Effective Time, whether prior to or after the
Company Shareholders' Approval shall have been obtained, but after such adoption
and approval only to the extent permitted by applicable law. No such amendment,
supplement or modification shall be effective unless set forth in a written
instrument duly executed by or on behalf of each party hereto.
8.04.....Waiver.
At any time prior to the Effective Time any party hereto, by action taken by
or on behalf of its Board of Directors, may to the extent permitted by
applicable law (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto or (iii) waive compliance with any of
the covenants, agreements or conditions of the other parties hereto contained
herein. No such extension or waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party extending the time
of performance or waiving any such inaccuracy or non-compliance. No waiver by
any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01.....Non-Survival of Representations, Warranties,
Covenants and Agreements.
The representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall not
survive the Merger but shall terminate at the Effective Time, except for the
agreements contained in Article I and Article II, in Sections 6.05, 6.06, 6.07,
6.08, 6.10 and 6.11 and this Article IX and the last sentence of Section 6.01,
which shall survive the Effective Time.
9.02.....Notices.
All notices, requests and other communications hereunder must be in writing
and will be deemed to have been duly given only if delivered personally or by
facsimile transmission or mailed (first class postage prepaid) to the parties at
the following addresses or facsimile numbers:
If to Parent or Sub, to:
SW I Acquisition GP, L.P.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇ ▇▇▇▇
If to the Company, to:
TNP Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
All such notices, requests and other communications will (i)
if delivered personally to the address as provided in this Section, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given upon receipt, and
(iii) if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
9.03.....Entire Agreement; Incorporation of Exhibits.
(a) This Agreement supersedes all prior discussions and agreements among the
parties hereto with respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall survive the execution and delivery of
this Agreement in accordance with its terms, and contains, together with the
Confidentiality Agreement, the sole and entire agreement among the parties
hereto with respect to the subject matter hereof
(b)......The Company Disclosure Letter, the Parent Disclosure
Letter and any Exhibit attached to this Agreement and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
9.04.....Public Announcements.
Except as otherwise required by law or the rules of any applicable securities
exchange or national market system, so long as this Agreement is in effect,
Parent and the Company will not, and will not permit any of their respective
Representatives to, issue or cause the publication of any press release or make
any other public announcement with respect to the transactions contemplated by
this Agreement without the consent of the other party, which consent shall not
be unreasonably withheld. Parent and the Company will cooperate reasonably with
each other in the development and distribution of all press releases and other
public announcements with respect to this Agreement and the transactions
contemplated hereby, and will furnish the other with drafts of any such releases
and announcements as far in advance as reasonably practicable.
9.05.....No Third Party Beneficiary.
The terms and provisions of this Agreement are intended solely for the benefit
of each party hereto and their respective successors or permitted assigns, and
except as otherwise expressly provided for herein, it is not the intention of
the parties to confer third-party beneficiary rights upon any other person.
9.06.....No Assignment; Binding Effect.
Neither this Agreement nor any right, interest or obligation hereunder may be
assigned by any party hereto without the prior written consent of the other
parties hereto and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
9.07.....Headings.
The headings used in this Agreement have been inserted for convenience of
reference only and do not define, modify or limit the provisions hereof.
9.08.....Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law or order, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (iii) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
9.09.....Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Texas applicable to a contract executed and performed in such
State, without giving effect to the conflicts of laws principles thereof.
9.10.....Enforcement of Agreement.
(a) The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not performed in accordance
with its specified terms or was otherwise breached. It is accordingly agreed,
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of competent jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
(b) Notwithstanding the provisions of Section 9.10(a), in the
event of a termination of this Agreement pursuant to which a payment is made in
full compliance with Section 8.01(b), (c) or (d), the receipt of such payment
shall serve as liquidated damages with respect to any breach of this Agreement
by the party who has made such payment giving rise to such termination, and the
receipt of any such payment shall be the sole and exclusive remedy (at law or in
equity) with respect to any such breach. Further, notwithstanding any of the
terms or provisions of this Agreement, the Company agrees that neither it nor
any person acting on its behalf may assert any claim or cause of action against
any of the Equity Investors or any of their respective affiliates (other than
Parent or Sub), agents, officers or employees (excluding for this purpose any
claim solely against the general partner of Parent for injunctive relief) in
connection with or arising out of this Agreement or the transactions
contemplated hereby.
9.11.....Certain Definitions. As used in this Agreement:
(a)......the term "affiliate," as applied to any person, shall
mean any other person directly or indirectly controlling, controlled by, or
under common control with, that person; for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b)......a person will be deemed to "beneficially" own
securities if such person would be the beneficial owner of such securities under
Rule 13d-3 under the Exchange Act, including securities which such person has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time);
(c)......the term "business day" means a day other than
Saturday, Sunday or any day on which banks located in the State of Texas or the
State of New York are authorized or obligated to close;
(d)......the term "Company Material Adverse Effect" means an
event, change, cause or effect which is materially adverse to the business,
properties, assets, liabilities, prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a whole;
(e)......the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to the Company, the knowledge of any of the
Company's executive officers or directors;
(f)......any reference to any event, change or effect being
"material" or "materially adverse" or having a "material adverse effect" on or
with respect to an entity (or group of entities taken as a whole) means such
event, change or effect is material or materially adverse, as the case may be,
to the business, properties, assets, liabilities, prospects, condition
(financial or otherwise) or results of operations of such entity (or of such
group of entities taken as a whole);
(g)......the term "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act);
(h)......the "Representatives" of any entity means such
entity's directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives; and
(i)......the term "Subsidiary" means, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which more than fifty percent (50%) of either the equity
interests in, or the voting control of, such corporation or other organization
is, directly or indirectly through Subsidiaries or otherwise, beneficially owned
by such party.
9.12.....Counterparts.
This Agreement may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first above written.
SW ACQUISITION, L.P.
By: SW I Acquisition GP, L.P.,
as General Partner
By: ▇▇ ▇▇ Acquisition, LLC,
as General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Manager
ST ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
TNP ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer