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EXECUTION COPY

EXHIBIT 10.4

$480,000,000

TERM LOAN AGREEMENT

among

PNM RESOURCES, INC.,
as the Borrower,

THE LENDERS IDENTIFIED HEREIN,

AND

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

DATED AS OF APRIL 18, 2006

LEHMAN BROTHERS INC.,
as Sole Lead Arranger and Sole Book Manager

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Table of Contents
 
 

 
Page
    SECTION 1 DEFINITIONS AND ACCOUNTING TERMS
1
1.1
Definitions.
1
1.2
Computation of Time Periods and Other Definitional Provisions.
14
1.3
Accounting Terms/Calculation of Financial Covenants.
14
1.4
Time.
14
1.5
Rounding of Financial Covenants.
14
1.6
References to Agreements and Requirement of Laws.
14

 
    SECTION 2 TERM LOAN
15
2.1
Term Loan Commitments.
15
2.2
Procedure for Term Loan Borrowing.
15
2.3
Repayment of Term Loans.
15
2.4
Continuations and Conversions.
15
2.5
Minimum Amounts.
16
2.6
Evidence of Debt.
16

 
    SECTION 3 GENERAL PROVISIONS APPLICABLE TO TERM LOANS
16
3.1
Interest.
16
3.2
Payments Generally.
17
3.3
Prepayments.
17
3.4
Fees.
18
3.5
Payment in full at Maturity.
18
3.6
Computations of Interest and Fees.
18
3.7
Pro Rata Treatment.
19
3.8
Sharing of Payments.
19
3.9
Capital Adequacy.
20
3.10
Eurodollar Provisions.
20
3.11
Illegality.
20
3.12
Requirements of Law; Reserves on Eurodollar Loans.
21
3.13
Taxes.
21
3.14
Compensation.
24
3.15
Determination and Survival of Provisions.
24

 
    SECTION 4 CONDITIONS PRECEDENT TO CLOSING
24
4.1
Closing Conditions.
24

 
    SECTION 5 REPRESENTATIONS AND WARRANTIES
27
5.1
Organization and Good Standing.
27
5.2
Due Authorization.
27
5.3
No Conflicts.
27
5.4
Consents.
27
5.5
Enforceable Obligations.
27
5.6
Financial Condition.
28
5.7
No Material Change.
28
5.8
No Default.
28
5.9
Litigation.
28
5.10
Taxes.
28

 
 
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5.11
Compliance with Law.
29
5.12
ERISA.
29
5.13
Use of Proceeds; Margin Stock.
30
5.14
Government Regulation.
30
5.15
Solvency.
30
5.16
Disclosure.
30
5.17
Environmental Matters.
30
5.18
Material Leases.
30
5.19
Material Lease Interest Payments and Discount Rate.
31
5.20
Certain Documents.
31

 
    SECTION 6 AFFIRMATIVE COVENANTS
31
6.1
Information Covenants.
31
6.2
Financial Covenants.
33
6.3
Preservation of Existence and Franchises.
33
6.4
Books and Records.
34
6.5
Compliance with Law.
34
6.6
Payment of Taxes and Other Indebtedness.
34
6.7
Insurance.
34
6.8
Performance of Obligations.
34
6.9
Use of Proceeds.
34
6.10
Audits/Inspections.
34
6.11
Ownership of Certain Subsidiaries.
35

 
    SECTION 7 NEGATIVE COVENANTS
35
7.1
Nature of Business.
35
7.2
Consolidation and Merger.
35
7.3
Sale or Lease of Assets.
35
7.4
Affiliate Transactions.
36
7.5
Liens.
36
7.6
Accounting Changes.
37
7.7
Burdensome Agreements.
37

 
    SECTION 8 EVENTS OF DEFAULT
37
8.1
Events of Default.
37
8.2
Acceleration; Remedies.
39
8.3
Allocation of Payments After Event of Default.
40

 
    SECTION 9 AGENCY PROVISIONS
41
9.1
Appointment and Authority.
41
9.2
Rights as a Lender.
41
9.3
Exculpatory Provisions.
41
9.4
Reliance by Administrative Agent.
42
9.5
Delegation of Duties.
42
9.6
Resignation of Administrative Agent.
42
9.7
Non-Reliance on Administrative Agent and Other Lenders.
43
9.8
No Other Duties, Etc.
43
9.9
Administrative Agent May File Proofs of Claim.
43

 
    SECTION 10 MISCELLANEOUS
44
10.1
Notices; Effectiveness; Electronic Communication.
44

 
 
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10.2
Right of Set-Off.
46
10.3
Successors and Assigns.
46
10.4
No Waiver; Remedies Cumulative.
49
10.5
Attorney Costs, Expenses, Taxes and Indemnification by Borrowers.
49
10.6
Amendments, Etc.
50
10.7
Counterparts.
51
10.8
Headings.
51
10.9
Survival of Indemnification and Representations and Warranties.
51
10.10
Governing Law; Venue; Service.
52
10.11
Waiver of Jury Trial; Waiver of Consequential Damages.
52
10.12
Severability.
52
10.13
Further Assurances.
53
10.14
Confidentiality.
53
10.15
Entirety.
53
10.16
Binding Effect; Continuing Agreement.
53
10.17
Regulatory Statement.
54
10.18
USA Patriot Act Notice.
54
10.19
Acknowledgment.
54
10.20
Replacement of Lenders.
54

 

 
 

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SCHEDULES

Schedule 1.1
Commitments
Schedule 5.18
Material Leases
Schedule 5.19
Material Lease Interest Payments and Discount Rate
Schedule 10.1
Notices
Schedule 10.3
Processing and Recording Fees

EXHIBITS

Exhibit 2.6(b)
Form of Note
Exhibit 2.4
Form of Notice of Continuation/Conversion
Exhibit 6.1(c)
Form of Compliance Certificate
Exhibit 10.3(b)
Form of Assignment and Assumption

 

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EXECUTION COPY

EXHIBIT 10.4

TERM LOAN AGREEMENT
 

THIS TERM LOAN AGREEMENT (this “Credit Agreement”) is entered into as of April
18, 2006 among PNM RESOURCES, INC., a New Mexico corporation (the “Borrower”),
the Lenders party hereto, LEHMAN COMMERCIAL PAPER INC., as administrative agent
(in such capacity, the “Administrative Agent”), and LEHMAN BROTHERS INC., as
sole lead arranger and sole book-manager (in such capacity, the “Arranger”).
 
RECITALS
 
WHEREAS, the Borrower will enter into a transaction whereby, through a
subsidiary, it will acquire all or substantially all of the assets of Twin Oaks
Power and Twin Oaks Power III (as defined herein) (collectively, the “Acquired
Business”; such transaction, the “Acquisition”).
 
WHEREAS, for the purposes of financing the Acquisition and the payment of
related fees and expenses, the Borrower has requested that the Lenders provide a
term loan facility in an aggregate principal amount of $480,000,000; and
 
WHEREAS, the Lenders party hereto are willing to make such term loan facility
available upon and subject to the terms and conditions set forth herein;
 
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
 
SECTION 1
 
DEFINITIONS AND ACCOUNTING TERMS
 
1.1  Definitions.
 
The following terms shall have the meanings specified herein unless the context
otherwise requires. Defined terms herein shall include in the singular number
the plural and in the plural the singular:
 
“Acquired Business” has the meaning set forth in the recitals hereto.
 
“Acquisition” has the meaning set forth in the recitals hereto.
 
“Acquisition Agreement” means the Purchase and Sale Agreement dated as of
January 14, 2006, by and among Twin Oaks Power, LP, Twin Oaks Power III, LP,
Sempra Energy, Altura Power, L.P. and PNM Resources, Inc.
 
“Acquisition Documentation” means collectively, the Acquisition Agreement and
all schedules, exhibits, annexes and amendments thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith,
in each case, as amended, supplemented or otherwise modified from time to time.
 
“Adjusted Eurodollar Rate” means the Eurodollar Rate plus the Applicable
Percentage.
 
 
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“Administrative Agent” means LCPI or any successor administrative agent
appointed pursuant to Section 9.6.
 
“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.1 or such other address or
account as the Administrative Agent may from time to time notify the Borrower
and the Lenders.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
 
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (b) to direct or cause direction of the management and policies
of such corporation, whether through the ownership of voting securities, by
contract or otherwise.
 
“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates and the officers, directors, employees, agents and attorneys-in-fact
of the Administrative Agent and its Affiliates.
 
“Applicable Percentage” means 0.625%; provided, that if at any time the Borrower
shall fail to maintain a Debt Rating of at least BBB- from S&P and of at least a
Baa3 from Moody’s, the Applicable Percentage shall equal 0.875%.
 
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
 
“Arranger” has the meaning set forth in the preamble hereto.
 
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
 
“Assignment and Assumption” means an assignment and assumption substantially in
the form of Exhibit 10.3(b).
 
“Authorized Officer” means any of the president, chief executive officer, chief
financial officer or officer of treasury of the Borrower.
 
“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.
 
“Base Rate” means for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Rate in effect on such day plus½ of 1%. For
purposes hereof: “Prime Rate” shall mean the prime lending rate as set forth on
the British Banking Association Telerate Page 5 (or such other comparable
publicly available page as may, in the reasonable opinion of the Administrative
Agent after notice to the Borrower, replace such page for the purpose of
displaying such rate if such rate no longer appears on the British Bankers
Association Telerate page 5), as in effect from time to time. The Prime Rate is
a reference rate and does not necessarily represent the lowest or best rate
actually available. Any change in the Base Rate due to a change in the Prime
Rate or the Federal Funds Rate shall be effective as of the opening of business
on the effective day of such change in the Prime Rate or the Federal Funds Rate,
respectively.
 
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“Base Rate Loan” means any Term Loan bearing interest at a rate determined by
reference to the Base Rate.
 
“Borrower” has the meaning set forth in the preamble hereto.
 
“Borrower Obligations” means, without duplication, all of the obligations of the
Borrower to the Lenders and the Administrative Agent, whenever arising, under
this Credit Agreement, the Notes, or any of the other Credit Documents.
 
“Business Day” means any day other than a Saturday, a Sunday, a legal holiday or
a day on which banking institutions are authorized or required by Law or other
governmental action to close in New York, New York; provided that in the case of
Eurodollar Loans such day is also a day on which dealings are conducted by and
between banks in the London interbank market.
 
“Capital Stock” means (a) in the case of a corporation, all classes of capital
stock of such corporation, (b) in the case of a partnership, partnership
interests (whether general or limited), (c) in the case of a limited liability
company, membership interests and (d) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person; including, in each case, all
warrants, rights or options to purchase any of the foregoing.
 
“Change of Control” means the occurrence of any of the following: (a) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such
person or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all Capital Stock that such person or group has the
right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of twenty-five (25%) of the Capital Stock of the Borrower entitled
to vote for members of the board of directors or equivalent governing body of
the Borrower on a fully diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right); (b) during any period of 24 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Borrower cease to be composed of individuals (i) who were members of that board
or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or (c) any Person or two or more Persons
acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower, or control over the Voting Stock of the Borrower on a fully-diluted
basis (and taking into account all such Voting Stock that such Person or group
has the right to acquire pursuant to any option right) representing twenty-five
(25%) or more of the combined voting power of such Voting Stock.
 
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“Closing Date” means the date of this Credit Agreement, which is the first date
all the conditions precedent in Section 5.1 are satisfied or waived in
accordance with Section 5.1.
 
“Code” means the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, as amended, modified, succeeded or replaced from time to
time.
 
“Compliance Certificate” means a fully completed and duly executed officer’s
certificate in the form of Exhibit 6.1(c), together with a Covenant Compliance
Worksheet.
 
“Consolidated Capitalization” means, with respect to any Person, the sum of (a)
all of the shareholders’ equity or net worth of such Person and its
Subsidiaries, as determined in accordance with GAAP plus (b) Consolidated
Indebtedness of such Person and its Subsidiaries plus (c) the outstanding
principal amount of Preferred Stock plus (d) 75% of the outstanding principal
amount of Specified Securities of such Person and its Subsidiaries.
 
“Consolidated Indebtedness” means, as of any date of determination, with respect
to any Person and its Subsidiaries on a consolidated basis, an amount equal to
(a) all Indebtedness of such Person and its Subsidiaries as of such date minus
(b) the outstanding principal amount of stranded cost securitization bonds of
such Person and its Subsidiaries minus (c) an amount equal to the lesser of (i)
75% of the outstanding principal amount of Specified Securities of such Person
and its Subsidiaries or (ii) 10% of Consolidated Capitalization (calculated
assuming clause (i) above is applicable).
 
“Consolidated Interest Expense” means, for any period, with respect to any
Person and its Subsidiaries on a consolidated basis, an amount equal to total
interest expense of such Person and its Subsidiaries for such period (including,
without limitation, all such interest expense accrued or capitalized during such
period, whether or not actually paid during such period), as determined in
accordance with GAAP.
 
“Consolidated Net Income” means, with respect to any Person, the consolidated
net income of such Person and its Subsidiaries, as determined in accordance with
GAAP.
 
“Constellation Agreement” means that certain Power Supply and Service Agreement
dated December 22, 2003 between First Choice and Constellation Energy, as
amended, and any future amendments, replacements or extensions thereof (so long
as such amendments, replacements or extensions are not materially less favorable
to the Borrower and its Subsidiaries).
 
“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person with respect to any Indebtedness, liability or
other obligation (the “primary obligation”) of another Person (the “primary
obligor”), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation
 
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against loss or failure or inability to perform in respect thereof; provided,
however, that, with respect to the Borrower and its Subsidiaries, the term
Contingent Obligation shall not include endorsements for collection or deposit
in the ordinary course of business. The amount of any Contingent Obligation of
any Person shall be deemed to be an amount equal to the maximum amount of such
Person’s liability with respect to the stated or determinable amount of the
primary obligation for which such Contingent Obligation is incurred or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder).
 
“Covenant Compliance Worksheet” shall mean a fully completed worksheet in the
form of Schedule I to Exhibit 6.1(c).
 
“Credit Agreement” has the meaning set forth in the Preamble hereof.
 
“Credit Documents” means this Credit Agreement, the Notes, any Notice of
Continuation/Conversion, and any other document, agreement or instrument entered
into or executed in connection with the foregoing.
 
“Debt Rating” means the long term unsecured senior non-credit enhanced debt
rating of the Borrower by S&P and Moody’s.
 
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.
 
“Default” means any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.
 
“Default Rate” means an interest rate equal to two percent (2%) plus the rate
that otherwise would be applicable (or if no rate is applicable, the Base Rate
plus two percent (2%) per annum).
 
“Dollars” and “$” means dollars in lawful currency of the United States of
America.
 
“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person (other than a natural person) approved by
the Administrative Agent and the Borrower (such approval not to be unreasonably
withheld or delayed); provided that (i) the Borrower’s consent is not required
during the existence and continuation of a Default or an Event of Default, (ii)
approval by the Borrower shall be deemed given if no objection is received by
the assigning Lender and the Administrative Agent from the Borrower within five
Business Days after notice of such proposed assignment has been delivered to the
Borrower and (iii) neither the Borrower nor any Subsidiary or Affiliate of the
Borrower shall qualify as an Eligible Assignee.
 
“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, accusations,
allegations, notices of noncompliance or violation, investigations (other than
internal reports prepared by any Person in the ordinary course of its business
and not in response to any third party action or request of any kind) or
proceedings relating in any way to any actual or alleged violation of or
liability under any Environmental Law or relating to any permit issued, or any
approval given, under any such Environmental Law (collectively, “Claims”),
including, without limitation, (a) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (b) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
 
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“Environmental Laws” shall mean any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals, rules of
common law and orders of courts or Governmental Authorities, relating to the
protection of human health or occupational safety or the environment, now or
hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
 
“ERISA Affiliate” means any Person (including any trade or business, whether or
not incorporated) that would be deemed to be under “common control” with, or a
member of the same “controlled group” as, the Borrower or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001 of ERISA.
 
“ERISA Event” means (a) a Reportable Event with respect to a Plan or a
Multiemployer Plan, (b) a complete or partial withdrawal by the Borrower, any of
its Subsidiaries or any ERISA Affiliate from a Multiemployer Plan, or the
receipt by the Borrower, any of its Subsidiaries or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, (c) the distribution by the Borrower,
any of its Subsidiaries or any ERISA Affiliate under Section 4041 or 4041A of
ERISA of a notice of intent to terminate any Plan or the taking of any action to
terminate any Plan, (d) the commencement of proceedings by the PBGC under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower, any of its Subsidiaries or
any ERISA Affiliate of a notice from any Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan, (e) the
institution of a proceeding by any fiduciary of any Multiemployer Plan against
the Borrower, any of its Subsidiaries or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (f) the imposition
upon the Borrower, any of its Subsidiaries or any ERISA Affiliate of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, or the imposition or threatened
imposition of any Lien upon any assets of the Borrower, any of its Subsidiaries
or any ERISA Affiliate as a result of any alleged failure to comply with the
Code or ERISA in respect of any Plan, (g) the engaging in or otherwise becoming
liable for a nonexempt Prohibited Transaction by the Borrower, any of its
Subsidiaries or any ERISA Affiliate, (h) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Code by any fiduciary of any Plan for which the Borrower,
any of its Subsidiaries or any ERISA Affiliate may be directly or indirectly
liable, (i) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if the Borrower, any
of its Subsidiaries or any ERISA Affiliate fails to timely provide security to
such Plan in accordance with the provisions of such sections or (j) the
withdrawal of the Borrower, any of its Subsidiaries or any ERISA Affiliate from
a Multiple Employer Plan during a play year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan.
 
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“Eurodollar Loan” means a Term Loan bearing interest based at a rate determined
by reference to the Adjusted Eurodollar Rate.
 
“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar
Loan, the rate per annum equal to the British Bankers Association LIBOR Rate
(“BBA LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, for Dollar deposits (for delivery
on the first day of such Interest Period) with a term equivalent to such
Interest Period. If such rate is not available at such time for any reason, then
the “Eurodollar Rate” for such Interest Period shall be the rate per annum
determined by reference to such other comparable publicly available services for
displaying eurodollar rates as may be reasonably selected by the Administrative
Agent.
 
“Event of Default” has the meaning set forth in Section 8.1.
 
“Exchange Act” means the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, as amended, modified, succeeded or replaced
from time to time.
 
“Existing Credit Agreement” means the Amended and Restated Credit Agreement,
dated as of August 15, 2005, among the Borrower, First Choice Power, L.P., the
lenders and financial institutions party thereto, Bank of America, N.A., as
administrative agent, and Wachovia Bank, National Association, as syndication
agent, and Citibank, N.A., JPMorgan Chase Bank, N.A. and Union Bank of
California, N.A., as co-documentation agents.
 
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average (rounded upward, if necessary, to a whole multiple of 1/100 of
1%) of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average of the quotations for the day of
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it (rounded upward, if necessary, to
a whole multiple of 1/100 of 1%).
 
“Fee Letters” means (a) the credit facility fee letter, dated January 17, 2006,
among the Borrower, LCPI and Lehman Brothers Inc., as amended, modified,
supplemented or restated from time to time and (b) the administrative agent fee
letter, dated April 142006, among the Borrower and LCPI, as amended, modified,
supplemented or restated from time to time.
 
“Financial Officer” means the chief financial officer, vice president-finance,
principal accounting officer or officer of treasury of the Borrower.
 
“First Choice” means First Choice Power Special Purpose, L.P., a Texas limited
partnership, and its successors.
 
“First Choice Securitization” means the accounts receivable securitization
effected by the Constellation Agreement, and any replacements or extensions
thereof (so long as such replacements or extensions are not materially less
favorable to the Borrower and its Subsidiaries).
 
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“First Mortgage Bonds” means those first mortgage bonds issued pursuant to the
FMB Indenture.
 
“Fiscal Quarter” means each of the calendar quarters ending as of the last day
of each March, June, September and December.
 
“Fiscal Year” means the calendar year ending December 31.
 
“FMB Indenture” means the Indenture of Mortgage and Deed of Trust, dated as of
June 1, 1947, between PSNM and The Bank of New York (formerly Irving Trust
Company), as trustee thereunder, as supplemented and amended.
 
“Foreign Lender” has the meaning set forth in Section 3.13(f).
 
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
 
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession) or that are promulgated by any Governmental Authority having
appropriate jurisdiction.
 
“Governmental Authority” means any domestic or foreign nation or government, any
state or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, any state dental board)
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
 
“Hazardous Substances” means any substances or materials (a) that are or become
defined as hazardous wastes, hazardous substances, pollutants, contaminants or
toxic substances under any Environmental Law, (b) that are defined by any
Environmental Law as toxic, explosive, corrosive, ignitable, infectious,
radioactive, mutagenic or otherwise hazardous, (c) the presence of which require
investigation or response under any Environmental Law, (d) that constitute a
nuisance, trespass or health or safety hazard to Persons or neighboring
properties, (e) that consist of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (f) that
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
 
“Hedging Agreements” means, collectively, interest rate protection agreements,
equity index agreements, foreign currency exchange agreements, option agreements
or other interest or exchange rate or commodity price hedging agreements (other
than forward contracts for the delivery of power or gas written by the Borrower
to its jurisdictional and wholesale customers in the ordinary course of
business).
 
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“Indebtedness” means, with respect to any Person (without duplication), (a) all
indebtedness and obligations of such Person for borrowed money or in respect of
loans or advances of any kind, (b) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments, (c) all reimbursement
obligations of such Person with respect to surety bonds, letters of credit and
bankers’ acceptances (in each case, whether or not drawn or matured and in the
stated amount thereof), (d) all obligations of such Person to pay the deferred
purchase price of property or services, (e) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, (f) all obligations of such Person as lessee
under leases that are or are required to be, in accordance with GAAP, recorded
as capital leases, to the extent such obligations are required to be so
recorded, (g) the net termination obligations of such Person under any Hedging
Agreements, calculated as of any date as if such agreement or arrangement were
terminated as of such date in accordance with the applicable rules under GAAP,
(h) all Contingent Obligations of such Person, (i) all obligations and
liabilities of such Person incurred in connection with any transaction or series
of transactions providing for the financing of assets through one or more
securitizations or in connection with, or pursuant to, any synthetic lease or
similar off-balance sheet financing, (j) the aggregate amount of uncollected
accounts receivable of such Person subject at the time of determination to a
sale of receivables (or similar transaction) to the extent such transaction is
effected with recourse to such Person (whether or not such transaction would be
reflected on the balance sheet of such Person in accordance with GAAP), (k) all
obligations, contingent or otherwise, under the Material Leases, (l) all
Specified Securities and (m) all indebtedness referred to in clauses (a) through
(l) above secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by such Person or is nonrecourse to the credit of such Person.
 
“Indemnified Liabilities” has the meaning set forth in Section 10.5(b).
 
“Indemnitees” has the meaning set forth in Section 10.5(b).
 
“Insured Series First Mortgage Bonds” means First Mortgage Bonds in the
aggregate principal amount of $65,000,000 pledged by PSNM to secure guarantees
of $65,000,000 principal amount of pollution control revenue bonds issued by the
City of Farmington, New Mexico, for the benefit of PSNM, which pollution control
revenue bonds are also supported by a municipal bond insurance policy issued by
AMBAC Indemnity Corporation.
 
“Interest Payment Date” means, (a) as to any Eurodollar Loan, the last day of
each Interest Period applicable to such Eurodollar Loan and the Maturity Date;
provided, however, that if any Interest Period for a Eurodollar Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates and (b)
as to any Base Rate Loan, the last Business Day of each Fiscal Quarter and the
Maturity Date.
 
“Interest Period” means, as to each Eurodollar Loan, the period commencing on
the date such Eurodollar Loan is disbursed or converted to or continued as a
Eurodollar Loan and ending on the date one, two, three or six months thereafter,
as selected by the Borrower on the Closing Date or in any Notice of
Continuation/Conversion; provided that:
 
(a) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;
 
(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and
 
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(c) no Interest Period shall extend beyond the Maturity Date.
 
“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
 
“LCPI” means Lehman Commercial Paper Inc., together with its successors and
assigns.
 
“Lender” means any of the Persons identified as a “Lender” on the signature
pages hereto and any Eligible Assignee which may become a Lender by way of
assignment in accordance with the terms hereof, together with their successors
and permitted assigns.
 
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.
 
“Lien” means any mortgage, pledge, hypothecation, assignment, security interest,
lien (statutory or otherwise), preference, priority, charge or other encumbrance
of any nature, whether voluntary or involuntary, including, without limitation,
the interest of any vendor or lessor under any conditional sale agreement, title
retention agreement, capital lease or any other lease or arrangement having
substantially the same effect as any of the foregoing.
 
“Margin Stock” has the meaning ascribed to such term in Regulation U.
 
“Material Adverse Change” means a material adverse change in the condition
(financial or otherwise), operations, business, performance, properties or
assets of the Borrower and its Subsidiaries, taken as a whole.
 
“Material Adverse Effect” means a material adverse effect upon (a) the ability
of the Borrower to complete the Acquisition, (b) the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole,
(c) the ability of the Borrower or any of its Subsidiaries to perform its
obligations under this Credit Agreement or any of the other Credit Documents or
(d) the legality, validity or enforceability of this Credit Agreement or any of
the other Credit Documents or the rights and remedies of the Administrative
Agent and the Lenders hereunder and thereunder.
 
“Material Lease” means any lease by PSNM of its leasehold interests in (i) Unit
1 or Unit 2, and related common facilities, of the Palo Verde Nuclear Generating
Station or (ii) the electric transmission line, and related facilities, known as
the Eastern Interconnection Project, including, without limitation, any lease
set forth on Schedule 5.18 hereto.
 
“Maturity Date” means April 17, 2007.
 
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
 
“Multiemployer Plan” means any “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA to which the Borrower, any of its Subsidiaries or
any ERISA Affiliate makes, is making or is obligated to make contributions or
has made or been obligated to make contributions.
 
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“Multiple Employer Plan” means a Single Employer Plan to which the Borrower, any
of its Subsidiaries or any ERISA Affiliate and at least one employer other than
the Borrower, any of its Subsidiaries or any ERISA Affiliate are contributing
sponsors.
 
“Net Cash Proceeds” means, in connection with any issuance or sale of equity
securities or debt securities or instruments or the incurrence of loans, the
cash proceeds received from such issuance or incurrence, net of attorneys’ fees,
investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
 
“Note” has the meaning set forth in Section 2.6 (b).
 
“Notice of Continuation/Conversion” means a request by the Borrower to continue
an existing Eurodollar Loan to a new Interest Period or to convert a Eurodollar
Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in the form
of Exhibit 2.4.
 
“Other Taxes” has the meaning set forth in Section 3.13(b).
 
“PBGC” means the Pension Benefit Guaranty Corporation and any successor thereto.
 
“Participant” has the meaning set forth in Section 10.3(d).
 
“Participation Interest” means the purchase by a Lender of a participation in
any Term Loan as provided in Section 3.8.
 
“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, association, trust or other enterprise (whether or
not incorporated), or any Governmental Authority.
 
“Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) which is covered by ERISA and with respect to which the Borrower, any of
its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an “employer”
within the meaning of Section 3(5) of ERISA.
 
“Preferred Stock” means, with respect to any Person, all preferred Capital Stock
issued by such Person in which the terms thereof do not require such Capital
Stock to be redeemed or to make mandatory sinking fund payments.
 
“Prime Rate” has the meaning set forth in the definition of Base Rate in this
Section 1.1.
 
“Pro Rata Share” means as to any Lender at any time, the percentage which the
unpaid principal amount of such Lender’s Term Loans then constitutes of the
aggregate unpaid principal amount of the Term Loans then outstanding.
 
“Prohibited Transaction” means any transaction described in (a) Section 406 of
ERISA that is not exempt by reason of Section 408 of ERISA or by reason of a
Department of Labor prohibited transaction individual or class exemption or (b)
Section 4975(c) of the Code that is not exempt by reason of Section 4975(c)(2)
or 4975(d) of the Code.
 
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“Property” means any right, title or interest in or to any property or asset of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
 
“PSNM” means Public Service Company of New Mexico, a New Mexico corporation.
 
“Register” has the meaning set forth in Section 10.3(c).
 
“Regulations T, U and X” means Regulations T, U and X, respectively, of the
Federal Reserve Board, and any successor regulations.
 
“Reportable Event” means (a) any “reportable event” within the meaning of
Section 4043(c) of ERISA for which the notice under Section 4043(a) of ERISA has
not been waived by the PBGC (including any failure to meet the minimum funding
standard of, or timely make any required installment under, Section 412 of the
Code or Section 302 of ERISA, regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code), (b) any such “reportable event”
subject to advance notice to the PBGC under Section 4043(b)(3) of ERISA, (c) any
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code, and (d) a cessation of operations described
in Section 4062(e) of ERISA.
 
“Required Lenders” means at any time, the holders of more than 50% of the
aggregate unpaid principal amount of the Term Loans then outstanding.
 
“Requirement of Law” means, with respect to any Person, the organizational
documents of such Person and any Law applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
or otherwise pertaining to any or all of the transactions contemplated by this
Credit Agreement and the other Credit Documents.
 
“Responsible Officer” means the president, the chief executive officer, the
co-chief executive officer, the chief financial officer, any executive officer,
vice president-finance, principal accounting officer or officer of treasury of
the Borrower, and any other officer or similar official thereof responsible for
the administration of the obligations of the Borrower in respect of this Credit
Agreement and the other Credit Documents.
 
“Restricted Payment” means, with respect to any Person, any dividend or other
distribution (whether in cash, securities or other property) with respect to any
Capital Stock of such Person.
 
“S&P” means Standard & Poor’s Rating Service, a division of The McGraw-Hill
Companies, Inc. and its successors.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
“Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan or Multiple Employer Plan.
 
“Solvent” means, with respect to any Person as of a particular date, that on
such date (a) such Person is able to pay its debts and other liabilities,
Contingent Obligations and other commitments as they mature in the normal course
of business, (b) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to
 
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engage in a business or a transaction, for which such Person’s assets would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or is to
engage, (d) the fair value of the assets of such Person is greater than the
total amount of liabilities, including, without limitation, Contingent
Obligations, of such Person and (e) the present fair saleable value of the
assets of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured.
 
“Specified Securities” means, with respect to any Person, (a) all preferred
Capital Stock issued by such Person and required by the terms thereof to be
redeemed or for which mandatory sinking fund payments are due, (b) all
securities issued by such Person that contain two distinct components, typically
medium-term debt and a forward contract for the issuance of common stock prior
to the debt maturity, including such securities commonly referred to by their
tradenames as “FELINE PRIDES”, “PEPS”, “HITS”, “SPACES” and “DECS” and generally
referred to as “equity units” and (c) all other securities issued by such Person
that are similar to those described in the forgoing clauses (a) and (b).
 
“Subsidiary” means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50% equity
interest at any time. Any reference to Subsidiary herein, unless otherwise
identified, shall mean a Subsidiary, direct or indirect, of the Borrower. Any
reference to a Subsidiary of the Borrower herein shall not include any
Subsidiary that is inactive, has minimal or no assets and does not generate
revenues.
 
“Taxes” has the meaning set forth in Section 3.13(a).
 
“Term Loan” has the meaning set forth in Section 2.1.
 
“Term Loan Commitment” means as to any Lender, the obligation of such Lender, if
any, to make a Term Loan to the Borrower hereunder in a principal amount not to
exceed the amount set forth under the heading “Commitment” opposite such
Lender’s name on Schedule 1.1 hereto, or, as the case may be, in the Assignment
and Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Term Loan Commitment is $480,000,000.
 
“TNMP” means Texas-New Mexico Power Company, a Texas corporation.
 
“Total Assets” means all assets of the Borrower and its Subsidiaries as shown on
its most recent quarterly consolidated balance sheet, as determined in
accordance with GAAP.
 
“Twin Oaks Power” means Twin Oaks Power, LP, a Texas limited partnership.
 
“Twin Oaks Power III” means Twin Oaks Power III, LP, a Texas limited
partnership.
 
“Type” means, with respect to a Term Loan, its character as a Base Rate Loan or
a Eurodollar Loan.
 
“Voting Stock” means the Capital Stock of a Person that is then outstanding and
normally entitled to vote in the election of directors and other securities of
such Person convertible into or exercisable for such Capital Stock (whether or
not such securities are then currently convertible or exercisable).
 
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1.2  Computation of Time Periods and Other Definitional Provisions.
 
For purposes of computation of periods of time hereunder, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.” References in this Credit Agreement to “Articles”, “Sections”,
“Schedules” or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.
 
1.3  Accounting Terms/Calculation of Financial Covenants.
 
Except as otherwise expressly provided herein, all accounting terms used herein
or incorporated herein by reference shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Administrative Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis. Notwithstanding
anything to the contrary in this Credit Agreement, for purposes of calculation
of the financial covenants set forth in Section 6.2, all accounting
determinations and computations thereunder shall be made in accordance with GAAP
as in effect as of the date of this Credit Agreement applied on a basis
consistent with the application used in preparing the most recent financial
statements of the Borrower referred to in Section 4.1(e). In the event that any
changes in GAAP after such date are required to be applied to the Borrower and
would affect the computation of the financial covenants contained in
Section 6.2, such changes shall be followed only from and after the date this
Credit Agreement shall have been amended to take into account any such changes.
 
1.4  Time.
 
All references to time herein shall be references to Central Standard Time or
Central Daylight Time, as the case may be, unless specified otherwise.
 
1.5  Rounding of Financial Covenants.
 
Any financial ratios required to be maintained by the Borrower pursuant to this
Credit Agreement shall be calculated by dividing the appropriate component by
the other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).
 
1.6  References to Agreements and Requirement of Laws.
 
Unless otherwise expressly provided herein: (a) references to organization
documents, agreements (including the Credit Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Credit Document and (b) references to
any Requirement of Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Requirement of Law.
 
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SECTION 2
 
TERM LOAN FACILITY
 
2.1  Term Loan Commitments. 
 
Subject to the terms and conditions hereof, the Lenders severally agree to make
term loans (each, a “Term Loan”) to the Borrower on the Closing Date in an
amount for each Lender not to exceed the amount of the Term Loan Commitment of
such Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.4.
 
2.2  Procedure for Term Loan Borrowing.  
 
The Borrower shall deliver to the Administrative Agent a notice (which must be
received by the Administrative Agent prior to 10:00 A.M., New York City time,
one Business Day prior to the anticipated Closing Date) requesting that the
Lenders make the Term Loans on the Closing Date. The Term Loans made on the
Closing Date shall initially be Eurodollar Loans. Upon receipt of such notice
the Administrative Agent shall promptly notify each Lender thereof. Not later
than 12:00 Noon, New York City time, on the Closing Date each Lender shall make
available to the Administrative Agent at the Administrative Agent’s Office an
amount in immediately available funds equal to the Term Loan to be made by such
Lender. The Administrative Agent shall make available to the Borrower the
aggregate of the amounts made available to the Administrative Agent by the
Lenders, in like funds as received by the Administrative Agent.
 
2.3  Repayment of Term Loans.  
 
The Term Loan of each Lender shall mature on the Maturity Date and the
outstanding balance of the Term Loans shall be repaid in full on such date. The
Borrower hereby further agrees to pay interest on the unpaid principal amount of
the Term Loans from time to time outstanding from the date hereof until payment
in full thereof at the rates per annum and on the dates set forth in Section
3.1.
 
2.4  Continuations and Conversions.
 
Subject to the terms below, the Borrower shall have the option, on any Business
Day prior to the Maturity Date, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Base Rate Loans into Eurodollar Loans or
to convert Eurodollar Loans into Base Rate Loans. By no later than 11:00 a.m.
(a) on the date of the requested conversion of a Eurodollar Loan to a Base Rate
Loan and (b) three Business Days prior to the date of the requested continuation
of a Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, the
Borrower shall provide telephonic notice to the Administrative Agent, followed
promptly by a written Notice of Continuation/Conversion in the form of Exhibit
2.4, setting forth whether the Borrower wishes to continue or convert such Term
Loans. Notwithstanding anything herein to the contrary, (A) except as provided
in Section 3.11, Eurodollar Loans may only be continued or converted into Base
Rate Loans on the last day of the Interest Period applicable thereto, (B)
Eurodollar Loans may not be continued nor may Base Rate Loans be converted into
Eurodollar Loans during the existence and continuation of a Default or an Event
of Default and (C) any request to continue a Eurodollar Loan that fails to
comply with the terms hereof or any failure to request a continuation of a
Eurodollar Loan at the end of an Interest Period shall be deemed a request to
convert such Eurodollar Loan to a Base Rate Loan on the last day of the
applicable Interest Period.
 
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2.5  Minimum Amounts.
 
Each request for a borrowing, conversion or continuation shall be subject to the
requirements that (a) each Eurodollar Loan shall be in a minimum amount of
$5,000,000 and in integral multiples of $1,000,000 in excess thereof, (b) each
Base Rate Loan shall be in a minimum amount of $3,000,000 and in integral
multiples of $100,000 in excess thereof and (c) no more than five Eurodollar
Loans shall be outstanding hereunder at any one time. For the purposes of this
Section 2.5, separate Eurodollar Loans that begin and end on the same date, as
well as Eurodollar Loans that begin and end on different dates, shall all be
considered as separate Eurodollar Loans.
 
2.6  Evidence of Debt.
 
(a)  The Term Loans made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Term Loans made by the Lenders to the Borrower and the
interest and payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to its Borrower Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error.
 
(b)  The Borrower agrees that, upon the request to the Administrative Agent by
any Lender, the Borrower will promptly execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loans of such Lender,
substantially in the form of Exhibit 2.6(b) (a “Note”) with appropriate
insertions as to date and principal amount; provided, that delivery of Notes
shall not be a condition precedent to the occurrence of the Closing Date.
 
  SECTION 3 
 
GENERAL PROVISIONS APPLICABLE
 
TO TERM LOANS
 
3.1  Interest.
 
(a)  Interest Rate. Subject to Sections 3.1(b), (i) all Base Rate Loans shall
accrue interest at the Base Rate and (ii) all Eurodollar Loans shall accrue
interest at the Adjusted Eurodollar Rate.
 
(b)  Default Rate of Interest.
 
(i)  After the occurrence, and during the continuation, of an Event of Default
pursuant to Section 8.1(a), the principal of and, to the extent permitted by
Law, interest on the Term Loans and any other amounts owing hereunder or under
the other Credit Documents (including without limitation fees and expenses)
shall bear interest, payable on demand, at the Default Rate.
 
(ii)  After the occurrence, and during the continuation, of an Event of Default
(other than an Event of Default pursuant to Section 8.1(a)), at the request of
the Required Lenders, the principal of and, to the extent permitted by Law,
interest on the Term Loans and any other amounts owing hereunder or under the
other Credit Documents (including without limitation fees and expenses) shall
bear interest, payable on demand, at the Default Rate.
 
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(iii)  Interest Payments. Interest on Term Loans shall be due and payable in
arrears on each Interest Payment Date.
 
3.2  Payments Generally.
 
(a)  No Deductions; Place and Time of Payments. All payments to be made by the
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff. Except as otherwise expressly provided herein,
all payments by the Borrower hereunder shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed,
at the Administrative Agent’s Office in Dollars and in immediately available
funds not later than 2:00 p.m. on the date specified herein. The Administrative
Agent will promptly distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.
 
(b)  Payment Dates. Subject to the definition of “Interest Period,” if any
payment to be made by the Borrower shall come due on a day other than a Business
Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected in computing interest or fees, as the case
may be.
 
(c)  Several Obligations. The obligations of the Lenders hereunder to make Term
Loans are several and not joint. The failure of any Lender to make a Term Loan
on the Closing Date shall not relieve any other Lender of its corresponding
obligation to do so, and no Lender shall be responsible for the failure of any
other Lender to so make its Term Loan.
 
(d)  Funding Offices. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Term Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Term Loan in any particular place or manner.
 
3.3  Prepayments.
 
(a)  Voluntary Prepayments. The Borrower shall have the right to prepay its
outstanding Term Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) all prepayments under this Section 3.3(a)
shall be subject to Section 3.14, (ii) Eurodollar Loans may only be prepaid on
three Business Days’ prior written notice to the Administrative Agent, (iii)
each such partial prepayment of Eurodollar Loans shall be in the minimum
principal amount of $5,000,000 and integral multiples of $1,000,000 and (iv)
each such partial prepayment of Base Rate Loans shall be in the minimum
principal amount of $500,000 and integral multiples of $100,000 or, in the case
of clauses (iii) and (iv), if less than such minimum amounts, the entire
principal amount thereof then outstanding.
 
(b)  Mandatory Prepayments. If any Capital Stock shall be issued (other than
issuances pursuant to employee stock plans), or Indebtedness incurred (other
than under the Existing Credit Agreement or pursuant to the issuance of
commercial paper in the ordinary course of business), by the Borrower or any of
its Subsidiaries (other than PSNM and TNMP), then on the date of such issuance
or incurrence, the Term Loans shall be prepaid by an amount equal to the amount
of the Net Cash Proceeds of such issuance or incurrence.
 
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3.4  Fees.
 
(a)  To the extent that any Term Loans remain outstanding on November 15, 2006,
on such date the Borrower shall pay to the Administrative Agent for the account
of each Lender a funding fee equal to 0.50% of the outstanding amount of the
Term Loan of such Lender.
 
(b)  The Borrower agrees to pay to LCPI and the Arranger, for their own
respective accounts, the fees in the amounts and on the dates previously agreed
to in the Fee Letters.
 
3.5  Payment in full at Maturity.
 
On the Maturity Date, the entire outstanding principal balance of all Term
Loans, together with accrued but unpaid interest and all fees and other sums
owing under the Credit Documents, shall be due and payable in full, unless
accelerated sooner pursuant to Section 8.2; provided that if the Maturity Date
is not a Business Day, then such principal, interest, fees and other sums shall
be due and payable in full on the next preceding Business Day.
 
3.6  Computations of Interest and Fees.
 
(a)  Calculation of Interest and Fees. Except for Base Rate Loans that are based
upon the Prime Rate, in which case interest shall be computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, all computations of interest and fees hereunder shall be made on the
basis of the actual number of days elapsed over a year of 360 days. Interest
shall accrue from and including the Closing Date (or continuation or conversion)
to but excluding the last day occurring in the period for which such interest is
payable. Each determination by the Administrative Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.
 
(b)  Usury. It is the intent of the Lenders and the Borrower to conform to and
contract in strict compliance with applicable usury Law from time to time in
effect. All agreements between the Lenders and the Borrower are hereby limited
by the provisions of this subsection which shall override and control all such
agreements, whether now existing or hereafter arising and whether written or
oral. In no way, nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of the Borrower Obligations), shall
the interest taken, reserved, contracted for, charged, or received under this
Credit Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable Law. If, from any possible construction of
any of the Credit Documents or any other document, interest would otherwise be
payable in excess of the maximum nonusurious amount, any such construction shall
be subject to the provisions of this subsection and such documents shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable Law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Term Loans under applicable Law and which
would, apart from this provision, be in excess of the maximum nonusurious
amount, an amount equal to the amount which would have been excessive interest
shall, without penalty, be applied to the reduction of the principal amount
owing on the Term Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount which would
have been excessive
 
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exceeds such unpaid principal amount of the Term Loans. The right to demand
payment of the Term Loans or any other Indebtedness evidenced by any of the
Credit Documents does not include the right to accelerate the payment of any
interest which has not otherwise accrued on the date of such demand, and the
Lenders do not intend to charge or receive any unearned interest in the event of
such demand. All interest paid or agreed to be paid to the Lenders with respect
to the Term Loans shall, to the extent permitted by applicable Law, be
amortized, prorated, allocated, and spread throughout the full stated term
(including any renewal or extension) of the Term Loans so that the amount of
interest on account of the Term Loans does not exceed the maximum nonusurious
amount permitted by applicable Law.
 
3.7  Pro Rata Treatment.
 
Except to the extent otherwise provided herein, each payment or prepayment of
principal of any Term Loan, each payment of interest and each conversion or
continuation of any Term Loans shall be allocated pro rata among the relevant
Lenders in accordance with their Pro Rata Shares. In the event any principal,
interest, fee or other amount paid to any Lender pursuant to this Credit
Agreement or any other Credit Document is rescinded or must otherwise be
returned by the Administrative Agent, (a) such principal, interest or other
amount that had been satisfied by such payment shall be revived, reinstated and
continued in full force and effect as if such payment had not occurred and (b)
such Lender shall, upon the request of the Administrative Agent, repay to the
Administrative Agent the amount so paid to such Lender, with interest for the
period commencing on the date such payment is returned by the Administrative
Agent until the date the Administrative Agent receives such repayment at a rate
per annum equal to the Federal Funds Rate if repaid within two (2) Business Days
after such request and thereafter the Base Rate.
 
3.8  Sharing of Payments.
 
The Lenders agree among themselves that, except to the extent otherwise provided
herein, in the event that any Lender shall obtain payment in respect of any Term
Loan or any other obligation owing to such Lender under this Credit Agreement
through the exercise of a right of setoff, banker’s lien or counterclaim, or
pursuant to a secured claim under Section 506 of the Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable Debtor Relief Law or other similar Law or
otherwise, or by any other means, in excess of its Pro Rata Share of such
payment as provided for in this Credit Agreement, such Lender shall promptly pay
in cash or purchase from the other Lenders a participation in such Term Loans
and other obligations in such amounts, and make such other adjustments from time
to time, as shall be equitable to the end that all Lenders share such payment in
accordance with their Pro Rata Shares. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker’s lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be returned, each Lender which
shall have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise returned.
The Borrower agrees that (a) any Lender so purchasing such a participation may,
to the fullest extent permitted by Law, exercise all rights of payment,
including setoff, banker’s lien or counterclaim, with respect to such
participation as fully as if such Lender were a holder of such Term Loan or
other obligation in the amount of such participation and (b) the Borrower
Obligations that have been satisfied by a payment that has been rescinded or
otherwise returned shall be revived, reinstated and continued in full force and
effect as if such payment had not occurred. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or the Administrative Agent
shall fail to remit to any other Lender an amount payable by such Lender or the
Administrative Agent to such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made
 
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together with interest thereon for each date from the date such amount is due
until the date such amount is paid to the Administrative Agent or such other
Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable Debtor Relief Law or other similar Law, any Lender receives a secured
claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders under this Section 3.8 to
share in the benefits of any recovery on such secured claim.
 
3.9  Capital Adequacy.
 
If any Lender determines that the introduction after the Closing Date of any
Law, rule or regulation or other Requirement of Law regarding capital adequacy
or any change therein or in the interpretation thereof, or compliance by such
Lender (or its Lending Office) therewith, has or would have the effect of
reducing the rate of return on the capital or assets of such Lender or any
corporation controlling such Lender as a consequence of such Lender’s
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and such Lender’s desired return on capital), then from time to
time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction.
 
3.10  Eurodollar Provisions.
 
If the Administrative Agent determines (which determination shall be conclusive
and binding upon the Borrower) in connection with any request for a Eurodollar
Loan or a conversion to or continuation thereof that (i) deposits in Dollars are
not being offered to banks in the applicable offshore interbank market for the
applicable amount and Interest Period of such Eurodollar Loan, (ii) adequate and
reasonable means do not exist for determining the Eurodollar Rate for such
Eurodollar Loan, or (iii) the Eurodollar Rate for such Eurodollar Loan does not
adequately and fairly reflect the cost to the Lenders of funding such Eurodollar
Loan, the Administrative Agent will promptly notify the Borrower and the
Lenders. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Loans shall be suspended until the Administrative Agent revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending Notice
of Continuation/Conversion with respect to Eurodollar Loans or, failing that,
will be deemed to have converted such request into a request for a conversion
into a Base Rate Loan in the amount specified therein.
 
3.11  Illegality.
 
If any Lender determines that any Requirement of Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable Lending Office to make, maintain or fund Eurodollar Loans, or
materially restricts the authority of such Lender to purchase or sell, or to
take deposits of Dollars in the London interbank market, or to determine or
charge interest rates based upon the Eurodollar Rate, then, on notice thereof by
such Lender to the Borrower through the Administrative Agent, any obligation of
such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans
to Eurodollar Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand to the Borrower from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to
Base Rate Loans, either on the last day of the Interest Period thereof, if such
Lender may lawfully continue to maintain such Eurodollar Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Loans. Upon any such prepayment or conversion, the Borrower shall
also pay interest on the amount so prepaid or converted, together with any
amounts due with respect thereto pursuant to Section 3.14.
 
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3.12  Requirements of Law; Reserves on Eurodollar Loans.
 
(a)  Changes in Law. If any Lender determines that as a result of the
introduction of or any change in, or in the interpretation of, any Requirement
of Law, or such Lender’s compliance therewith, there shall be any increase in
the cost to such Lender of agreeing to make or making, funding or maintaining
Eurodollar Loans, or a reduction in the amount received or receivable by such
Lender in connection with any of the foregoing (excluding for purposes of this
Section 3.12 any such increased costs or reduction in amount resulting from (i)
Taxes or Other Taxes (as to which Section 3.13 shall govern) and (ii) reserve
requirements contemplated by subsection (b) below), then from time to time, upon
demand of such Lender (through the Administrative Agent), the Borrower shall pay
to such Lender such additional amounts as will compensate such Lender for such
increased cost or reduction in yield.
 
(b)  Reserves. The Borrower shall pay to each Lender (to the extent such Lender
has not otherwise been compensated therefore hereunder), as long as such Lender
shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurodollar funds or deposits (currently known as
“Eurodollar liabilities”), additional interest on the unpaid principal amount of
each Eurodollar Loan equal to the actual costs of such reserves allocated to
such Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive absent demonstrable error), which, shall be
due and payable on each date on which interest is payable on such Loan; provided
that the Borrower shall have received at least 15 days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 15 days from receipt of
such notice.
 
3.13  Taxes.
 
(a)  Payment of Taxes. Any and all payments by the Borrower to or for the
account of the Administrative Agent or any Lender under any Credit Document
shall be made free and clear of and without deduction for any and all present or
future income, stamp or other taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with
respect thereto, but excluding, in the case of the Administrative Agent and each
Lender, taxes imposed on or measured by its net income, and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which the Administrative Agent
or such Lender, as the case may be, is organized or maintains its Lending Office
(all such non-excluded present or future income, stamp or other taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall
be required by any Requirement of Law to deduct any Taxes from or in respect of
any sum payable under any Credit Document to the Administrative Agent or any
Lender, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.13(a)), the Administrative Agent or such Lender, as
the case may be, receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other Governmental Authority in accordance with applicable
Requirements of Law, and (iv) within 30 days after the date of such payment, the
Borrower shall furnish to the Administrative Agent (which shall forward the same
to such Lender, if applicable) the original or a certified copy of a receipt
evidencing payment thereof, to the extent such receipt is issued therefor, or
other written proof of payment thereof that is reasonably satisfactory to the
Administrative Agent.
 
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(b)  Additional Taxes. In addition, the Borrower agrees to pay any and all
present or future stamp, court or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any payment made
under any Credit Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Credit
Document (hereinafter referred to as “Other Taxes”).
 
(c)  No Deduction for Taxes. If the Borrower shall be required to deduct or pay
any Taxes or Other Taxes from or in respect of any sum payable under any Credit
Document to the Administrative Agent or any Lender, the Borrower shall also pay
to the Administrative Agent (for the account of such Lender) or to such Lender,
at the time interest is paid, such additional amount that such Lender specifies
as necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) such Lender would have
received if such Taxes or Other Taxes had not been imposed.
 
(d)  Indemnification. The Borrower agrees to indemnify the Administrative Agent
and each Lender for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 3.13(d)) paid by the Administrative Agent and such Lender,
and (ii) any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
 
(e)  Exemption from Taxes. In the case of any payment hereunder or under any
other Credit Document by or on behalf of the Borrower through an account or
branch outside the United States, or on behalf of the Borrower by a payor that
is not a United States person, if the Borrower determines that no taxes are
payable in respect thereof, the Borrower shall furnish, or shall cause such
payor to furnish, to the Administrative Agent, an opinion of counsel reasonably
acceptable to the Administrative Agent stating that such payment is exempt from
Taxes. For purposes of this subsection (e), the terms “United States” and
“United States person” shall have the meanings specified in Section 7701 of the
Code.
 
(f)  Foreign Lenders. Each Lender that is a foreign corporation, foreign
partnership or foreign trust within the meaning of the Code (a “Foreign Lender”)
shall deliver to the Administrative Agent, prior to receipt of any payment
subject to withholding under the Code, two duly signed completed copies of
either IRS Form W-8BEN or any successor thereto (relating to such Lender and
entitling it to an exemption from, or reduction of, withholding tax on all
payments to be made to such Lender by the Borrower pursuant to this Credit
Agreement), as appropriate, or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Lender by the Borrower pursuant to
this Credit Agreement) or such other evidence satisfactory to the Borrower and
the Administrative Agent that such Lender is entitled to an exemption from, or
reduction of, United States withholding tax. Thereafter and from time to time,
each such Lender shall (i) promptly submit to the Administrative Agent such
additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities), as appropriate, as may reasonably be requested by
the Borrower or the Administrative Agent and then be available under then
current United States Laws and regulations to avoid, or such evidence as is
satisfactory to the Borrower and the Administrative Agent of any available
exemption from or reduction of, United States withholding taxes in respect of
all payments to be made to such Lender by the Borrower pursuant to this Credit
Agreement, (ii) promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction, and (iii) take such steps as shall not be materially disadvantageous
to it, in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Lending Office) to avoid any
Requirement of Law that the Borrower make
 
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any deduction or withholding for taxes from amounts payable to such Lender. If
the forms or other evidence provided by such Lender at the time such Lender
first becomes a party to this Credit Agreement indicate a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Lender provides the
appropriate forms certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however, that, if at the date of any
assignment pursuant to which a Lender becomes a party to this Credit Agreement,
the assignor Lender was entitled to payments under Section 3.13(a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
assignee Lender on such date. If such Lender fails to deliver the above forms or
other evidence, then the Administrative Agent may withhold from any interest
payment to such Lender an amount equal to the applicable withholding tax imposed
by Sections 1441 and 1442 of the Code, without reduction. If any Governmental
Authority asserts that the Administrative Agent did not properly withhold any
tax or other amount from payments made in respect of such Lender, such Lender
shall indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section 3.13(f), and costs and expenses
(including the reasonable fees and expenses of legal counsel) of the
Administrative Agent. For any period with respect to which a Lender has failed
to provide the Borrower with the above forms or other evidence (other than if
such failure is due to a change in the applicable Law, or in the interpretation
or application thereof, occurring after the date on which such form or other
evidence originally was required to be provided or if such form or other
evidence otherwise is not required), such Lender shall not be entitled to
indemnification under subsection (a) or (c) of this Section 3.13 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender become subject to Taxes because of its failure to deliver
such form or other evidence required hereunder, the Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender in
recovering such Taxes. The obligation of the Lenders under this Section 3.13(f)
shall survive the payment of all Borrower Obligations and the resignation or
replacement of the Administrative Agent.
 
(g)  Reimbursement. In the event that an additional payment is made under
Section 3.13(a) or (c) for the account of any Lender and such Lender, in its
reasonable judgment, determines that it has finally and irrevocably received or
been granted a credit against or release or remission for, or repayment of, any
tax paid or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to such payment, such Lender shall, to the
extent that it determines that it can do so without prejudice to the retention
of the amount of such credit, relief, remission or repayment, pay to the
Borrower such amount as such Lender shall, in its reasonable judgment, have
determined to be attributable to such deduction or withholding and which will
leave such Lender (after such payment) in no worse position than it would have
been in if the Borrower had not been required to make such deduction or
withholding. Nothing herein contained shall interfere with the right of a Lender
to arrange its tax affairs in whatever manner it thinks fit nor oblige any
Lender to claim any tax credit or to disclose any information relating to its
tax affairs or any computations in respect thereof or require any Lender to do
anything that would prejudice its ability to benefit from any other credits,
reliefs, remissions or repayments to which it may be entitled.
 
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3.14  Compensation.
 
Upon the written demand of any Lender, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:
 
(a)  any continuation, conversion, payment or prepayment of any Eurodollar Loan
of the Borrower on a day other than the last day of the Interest Period for such
Eurodollar Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or
 
(b)  any failure by the Borrower (for a reason other than the failure of such
Lender to make a Eurodollar Loan) to prepay, borrow, continue or convert any
Eurodollar Loan on the date or in the amount previously requested by the
Borrower.
 
The amount each such Lender shall be compensated pursuant to this Section 3.14
shall include, without limitation, (i) any loss incurred by such Lender in
connection with the re-employment of funds prepaid, repaid, not borrowed or
paid, as the case may be and (ii) any reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel) incurred and
reasonably attributable thereto.
 
For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.14, each Lender shall be deemed to have funded each Eurodollar
Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or
other borrowing in the London interbank market for a comparable amount and for a
comparable period, whether or not such Eurodollar Loan was in fact so funded.
 
3.15  Determination and Survival of Provisions.
 
All determinations by the Administrative Agent or a Lender of amounts owing
under Sections 3.9 through 3.14, inclusive, shall, absent manifest error, be
conclusive and binding on the parties hereto and all amounts owing thereunder
shall be due and payable within ten Business Days of demand therefor. In
determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods. Section 3.9 through 3.14,
inclusive, shall survive the termination of this Credit Agreement and the
payment of all Borrower Obligations.
 
  SECTION 4
 
CONDITIONS PRECEDENT TO CLOSING
 
4.1  Closing Conditions.
 
The obligation of the Lenders to enter into this Credit Agreement and make the
Term Loans is subject to satisfaction of the following conditions:
 
(a)  Executed Credit Documents. Receipt by the Administrative Agent of duly
executed copies of: (i) this Credit Agreement, (ii) the requested Notes and
(iii) all other Credit Documents, each in form and substance reasonably
acceptable to the Lenders in their sole discretion.
 
(b)  Acquisition. The Acquisition shall have been consummated pursuant to the
Acquisition Documentation in form and substance reasonably satisfactory to the
Lenders, and no provision thereof shall have been waived, amended, supplemented
or otherwise modified in a manner which adversely affects the Administrative
Agent or the Lenders without the consent of the Lenders.
 
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(c)  Authority Documents. Receipt by the Administrative Agent of the following:
 
(i)  Organizational Documents. Copies of the articles of incorporation of the
Borrower, certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction of its
formation and copies of the bylaws of the Borrower, certified by a secretary or
assistant secretary (or the equivalent) of the Borrower to be true and correct
as of the Closing Date.
 
(ii)  Resolutions. Copies of resolutions of the board of directors of the
Borrower approving and adopting this Credit Agreement, the Acquisition
Documentation and the other Credit Documents to which it is a party, the
transactions contemplated herein and therein and authorizing execution and
delivery hereof and thereof, certified by a secretary or assistant secretary (or
the equivalent) of the Borrower to be true and correct and in full force and
effect as of the Closing Date.
 
(iii)  Good Standing. Copies of certificates of good standing, existence or its
equivalent with respect to the Borrower certified as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction of its
formation.
 
(iv)  Incumbency. An incumbency certificate of the Borrower and certified by a
secretary or assistant secretary (or the equivalent) of the Borrower to be true
and correct as of the Closing Date.
 
(d)  Opinions of Counsel. Receipt by the Administrative Agent of opinions of
counsel from outside counsel to the Borrower, in form and substance acceptable
to the Administrative Agent, addressed to the Administrative Agent and the
Lenders and dated the Closing Date.
 
(e)  Financial Statements. Receipt by the Administrative Agent of a copy of (i)
the annual consolidated financial statements (including balance sheets, income
statements and cash flow statements) of the Borrower and its Subsidiaries for
Fiscal Years 2004 and 2005, audited by independent public accountants of
recognized national standing and (ii) such other financial information regarding
the Borrower as the Administrative Agent may reasonably request.
 
(f)   Material Adverse Effect. Since December 31, 2005, there shall have been no
development or event relating to or affecting the Borrower or any of its
Subsidiaries that has had or could be reasonably expected to have a Material
Adverse Effect and no Material Adverse Change in the facts and information
regarding the Borrower and its Subsidiaries as represented to date.
 
(g)  Litigation. There shall not exist any material order, decree, judgment,
ruling or injunction or any material pending or threatened action, suit,
investigation or proceeding against the Borrower or any of its Subsidiaries
except as represented to date.
 
(h)  Consents. All consents, approvals, authorizations, orders, filings and
other actions by or with any Governmental Authority or other Person necessary in
connection with the Acquisition, the financing contemplated hereby, and the
continuing operations of the Borrower and its Subsidiaries and the Acquired
Business shall have been obtained or made and be in full force and effect.
 
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(i)  Officer’s Certificates. Receipt by the Administrative Agent of a
certificate or certificates executed by an Authorized Officer of the Borrower as
of the Closing Date stating that (i) the Borrower and each of its Subsidiaries
are in compliance in all material respects with all existing material financial
obligations and all material Requirements of Law, (ii) there does not exist any
material order, decree, judgment, ruling or injunction or any material pending
or threatened action, suit, investigation or proceeding against the Borrower or
any of its Subsidiaries, (iii) the financial statements and information
delivered to the Administrative Agent on or before the Closing Date were
prepared in good faith and in accordance with GAAP and (iv) immediately after
giving effect to this Credit Agreement, the other Credit Documents, all the
transactions contemplated herein or therein to occur on such date and to the
Acquisition, (A) the Borrower is Solvent, (B) no Default or Event of Default
exists, (C) no default or event of default exists under the Existing Credit
Agreement or under any other material Indebtedness of the Borrower or any of its
Subsidiaries, (D) all representations and warranties contained herein and in the
other Credit Documents are true and correct in all material respects, (E) since
December 31, 2005, there has been no development or event relating to or
affecting the Borrower or any of its Subsidiaries that has had or could be
reasonably expected to have a Material Adverse Effect and there exists no event,
condition or state of facts that could result in or reasonably be expected to
result in a Material Adverse Change and (F) the Borrower is in compliance with
each of the financial covenants set forth in Section 6.2, as of December 31,
2005, as demonstrated in the Covenant Compliance Worksheet attached to such
certificate.
 
(j)  Fees and Expenses. Unless waived by the Person entitled thereto, payment by
the Borrower of all fees and expenses owed by the Borrower to the Administrative
Agent or the Arranger on or before the Closing Date, including, without
limitation, as set forth in the Fee Letters.
 
(k)  Debt Rating. The Borrower’s Debt Rating on the Closing Date shall be BBB-
or better by S&P and Baa3 or better by Moody’s.
 
(l)  PATRIOT Act. The Lenders shall have received, sufficiently in advance of
the Closing Date, all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including without limitation the United States
PATRIOT Act.
 
(m)  Representations and Warranties. The representations and warranties made by
the Borrower in any Credit Document are true and correct in all material
respects at and as if made as of such date.
 
(n)  No Default. There shall not exist any Default or Event of Default under
this Credit Agreement and no default or event of default shall exist under the
Existing Credit Agreement or under any other material indebtedness or agreement
of the Borrower, any of its Subsidiaries or in any way in connection with the
Acquired Business.
 
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  SECTION 5
 
REPRESENTATIONS AND WARRANTIES
 
To induce the Administrative Agent and the Lenders to enter into this Credit
Agreement and to induce the Lenders to make the Term Loans, the Borrower
represents and warrants to the Administrative Agent and the Lenders as follows:
 
5.1  Organization and Good Standing.
 
Each of the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) is duly qualified and in good standing as a foreign entity
authorized to do business in every other jurisdiction where the failure to so
qualify would have a Material Adverse Effect and (c) has the requisite power and
authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted.
 
5.2  Due Authorization.
 
The Borrower (a) has the requisite power and authority to execute, deliver and
perform this Credit Agreement and the other Credit Documents to which it is a
party, to incur the obligations herein and therein provided for and to
consummate the Acquisition and (b) has been authorized by all necessary action
to execute, deliver and perform this Credit Agreement, the other Credit
Documents to which it is a party and the Acquisition Documentation.
 
5.3  No Conflicts.
 
Neither the execution and delivery of this Credit Agreement and the other Credit
Documents, nor the consummation of the financing herein or therein, nor
performance of and compliance with the terms and provisions hereof and thereof
by the Borrower, nor the consummation of the Acquisition contemplated by the
Acquisition Documentation will (a) violate or conflict with any provision of its
organizational documents, (b) violate, contravene or conflict with any law
(including without limitation, the Federal Power Act, as amended), regulation
(including without limitation, Regulation U and Regulation X), order, writ,
judgment, injunction, decree or permit applicable to it, (c) violate, contravene
or conflict with contractual provisions of, or cause an event of default under,
any indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may be bound, the
violation of which would have or would be reasonably expected to have a Material
Adverse Effect or (d) result in or require the creation of any Lien upon or with
respect to its properties.
 
5.4  Consents.
 
No consent, approval, authorization, order, or filing, registration,
qualification or other action by or with any court or other Governmental
Authority or other Person is required in connection with the execution, delivery
or performance of this Credit Agreement, the other Credit Documents or any of
the Acquisition Documentation that has not been obtained or made and is in full
force and effect.
 
5.5  Enforceable Obligations.
 
This Credit Agreement and the other Credit Documents to which it is a party have
been duly executed and delivered and constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, except as may be limited by Debtor Relief Laws or
similar laws affecting creditors’ rights generally or by general equitable
principles.
 
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5.6  Financial Condition.
 
The financial statements delivered to the Lenders pursuant to Section 4.1(e) and
pursuant to Sections 6.1(a) and (b): (i) have been prepared in accordance with
GAAP except that the quarterly financial statements are subject to year-end
adjustments and have fewer footnotes than annual statements and (ii) present
fairly the financial condition, results of operations and cash flows of the
Borrower and its Subsidiaries as of such date and for such periods. No opinion
provided with respect to the Borrower’s financial statements pursuant to
Section 6.1 (or as to any prior annual financial statements) has been withdrawn.
 
5.7  No Material Change.
 
(a)  Since December 31, 2005, there has been no development or event relating to
or affecting the Borrower or any of its Subsidiaries which would have or would
reasonably be expected to have a Material Adverse Effect.
 
(b)  Since December 31, 2005, there has been no sale, transfer or other
disposition by the Borrower or any of its Subsidiaries of any material part of
its business or property, and no purchase or other acquisition by the Borrower
or any of its Subsidiaries of any business or property (including the Capital
Stock of any other Person) material in relation to the financial condition of
the Borrower or any of its Subsidiaries, in each case which is not (i) reflected
in the most recent financial statements delivered to the Lenders pursuant to
Section 4.1(e) or 6.1 or in the notes thereto or (ii) otherwise permitted by the
terms of this Credit Agreement and communicated to the Lenders.
 
5.8  No Default.
 
Neither the Borrower nor any of its Subsidiaries is in default in any respect
under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default would have or would reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default
presently exists and is continuing. No default or event of default exists under
the Existing Credit Agreement or under any material Indebtedness of the Borrower
or any of its Subsidiaries.
 
5.9  Litigation.
 
There are no actions, suits, investigations or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which would have or
would reasonably be expected to have a Material Adverse Effect.
 
5.10  Taxes.
 
Each of the Borrower and its Subsidiaries has filed, or caused to be filed, all
material tax returns (federal, state, local and foreign) required to be filed
and paid all amounts of taxes shown to be due (including interest and penalties)
and has paid all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owed by it, except for such taxes which are not yet delinquent or that
are being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP.
 
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5.11  Compliance with Law.
 
Each of the Borrower and its Subsidiaries is in compliance with all laws, rules,
regulations, orders and decrees applicable to it or to its properties, unless
such failure to comply would not have or would not reasonably be expected to
have a Material Adverse Effect.
 
5.12  ERISA.
 
Except as would not result or reasonably be expected to result in a Material
Adverse Effect:
 
(a)  During the five-year period prior to the date on which this representation
is made or deemed made: (i) no ERISA Event has occurred, and, to the best
knowledge of the Borrower, no event or condition has occurred or exists as a
result of which any ERISA Event would be reasonably expected to occur, with
respect to any Plan; (ii) no “accumulated funding deficiency,” as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no Lien in favor or the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.
 
(b)  The actuarial present value of all “benefit liabilities” under each Single
Employer Plan (determined within the meaning of Section 401(a)(2) of the Code,
utilizing the actuarial assumptions used to fund such Plans), whether or not
vested, did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the current value of the
assets of such Plan allocable to such accrued liabilities, except as disclosed
in the Borrower’s financial statements.
 
(c)  Neither the Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Borrower, is reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization (within the meaning of Section 4241
of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has
been terminated (within the meaning of Title IV of ERISA), and no Multiemployer
Plan is, to the best knowledge of the Borrower, reasonably expected to be in
reorganization, insolvent, or terminated.
 
(d)  No prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or would be reasonably likely to
subject the Borrower or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability.
 
(e)  The present value (determined using actuarial and other assumptions which
are reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower and each ERISA Affiliate for
post-retirement welfare benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the financial statements referenced in Section 6.1 in
accordance with FASB 106.
 
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(f)  Each Plan which is a welfare plan (as defined in Section 3(1) of ERISA) to
which Sections 601-609 of ERISA and Section 4980B of the Code apply has been
administered in compliance in all material respects with such sections.
 
5.13  Use of Proceeds; Margin Stock.
 
The proceeds of the Term Loans will be used solely for the purposes specified in
Section 6.9. None of such proceeds will be used for the purpose of (a) (i)
purchasing or carrying any Margin Stock or (ii) reducing or retiring any
Indebtedness which was originally incurred to purchase or carry Margin Stock, or
(iii) for any other purpose that might constitute this transaction a “purpose
credit” within the meaning of Regulation U or (b) for the acquisition of another
Person unless the board of directors (or other comparable governing body) or
stockholders, as appropriate, of such Person has approved such acquisition.
 
5.14  Investment Company Act.
 
The Borrower is not an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or controlled
by such a company.
 
5.15  Solvency.
 
The Borrower is and, after the consummation of the transactions contemplated by
this Credit Agreement and by the Acquisition Documentation, will be Solvent.
 
5.16  Disclosure.
 
Neither this Credit Agreement, the Acquisition Documentation nor any financial
statements delivered to the Administrative Agent or the Lenders nor any other
document, certificate or statement furnished to the Administrative Agent or the
Lenders by or on behalf of the Borrower in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.
 
5.17  Environmental Matters.
 
Except as would not result or reasonably be expected to result in a Material
Adverse Effect: (a) each of the properties of the Borrower and its Subsidiaries
(the “Properties”) and all operations at the Properties are in substantial
compliance with all applicable Environmental Laws, (b) there is no undocumented
or unreported violation of any Environmental Law with respect to the Properties
or the businesses operated by the Borrower and its Subsidiaries (the
“Businesses”) that the Borrower is aware of, and (c) there are no conditions
relating to the Businesses or Properties that have given rise to or would
reasonably be expected to give rise to a liability under any applicable
Environmental Laws.
 
5.18  Material Leases.
 
Set forth on Schedule 5.18 hereto is a complete and accurate list of the
Material Leases on the date hereof, showing the expiration date and annual
rental cost thereof. PSNM is entitled to exercise all of the rights of lessee
purported to be granted to PSNM under each such Material Lease.
 
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5.19  Material Lease Interest Payments and Discount Rate.
 
Schedule 5.19 hereto, as most recently provided to the Administrative Agent,
sets forth the same (a) amounts with respect to the interest portion of payments
under the Material Leases of PSNM and (b) discount rate used to calculate the
net present value of all amounts payable under the Material Leases as have been
most recently provided (or that PSNM intends to provide shortly) to Moody’s and
S&P or as have otherwise been agreed to by the Required Lenders.
 
5.20  Certain Documents.
 
The Borrower has delivered to the Administrative Agent a complete and correct
copy of the Acquisition Documentation, including any amendments, supplements or
modifications with respect thereto.
 
  SECTION 6
 
AFFIRMATIVE COVENANTS
 
The Borrower covenants and agrees that until the payment in full of all of its
Borrower Obligations:
 
6.1  Information Covenants.
 
The Borrower will furnish, or cause to be furnished, to the Lenders:
 
(a)  Annual Financial Statements. As soon as available, and in any event within
120 days after the close of each Fiscal Year of the Borrower, a consolidated
balance sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such Fiscal Year, together with the related consolidated statements
of income and of cash flows for such Fiscal Year, setting forth in comparative
form figures for the preceding Fiscal Year, all such financial information
described above to be in reasonable form and detail and, in each case, audited
by independent certified public accountants of recognized national standing
reasonably acceptable to the Required Lenders and whose opinion shall be
furnished to the Lenders, and shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope of the
audit or qualified in any respect.
 
(b)  Quarterly Financial Statements. As soon as available, and in any event
within 60 days after the close of each Fiscal Quarter of the Borrower (other
than the fourth Fiscal Quarter), a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries as of the end of such Fiscal
Quarter, together with the related consolidated statement of income for such
Fiscal Quarter and a year to date statement of cash flows, in each case setting
forth in comparative form figures for the corresponding period of the preceding
Fiscal Year, all such financial information described above to be in reasonable
form and detail and reasonably acceptable to the Required Lenders, and, in each
case, accompanied by a certificate of a Financial Officer of the Borrower to the
effect that such quarterly financial statements fairly present in all material
respects the financial condition of such Person and have been prepared in
accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments and except that the quarterly financial statements
have fewer footnotes than annual statements.
 
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(c)  Officer’s Certificate. At the time of delivery of the financial statements
provided for in Sections 6.1(a) and 6.1(b) above, a certificate of a Financial
Officer substantially in the form of Exhibit 6.1(c): (i) setting forth
calculations demonstrating compliance by the Borrower with the financial
covenants set forth in Section 6.2 as of the end of such fiscal period and
(ii) stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent thereof and what
action the Borrower proposes to take with respect thereto.
 
(d)  Reports. Notice of the filing by the Borrower of any Form 10-Q, Form 10-K
or Form 8-K with the SEC promptly upon the filing thereof and copies of all
financial statements, proxy statements, notices and reports as the Borrower
shall send to its shareholders concurrently with the mailing of any such
statements, notices or reports to its shareholders.
 
(e)  Notices. Upon the Borrower obtaining knowledge thereof, the Borrower will
give written notice to the Administrative Agent within ten days of (i) the
occurrence of a Default or Event of Default, specifying the nature and extent
thereof and what action the Borrower proposes to take with respect thereto and
(ii) the occurrence of any of the following with respect to the Borrower or any
of its Subsidiaries (A) the pendency or commencement of any litigation,
arbitration or governmental proceeding against the Borrower or any of its
Subsidiaries which, if adversely determined, would have or would reasonably be
expected to have a Material Adverse Effect, (B) one or more judgments, orders,
or decrees shall be entered against the Borrower or any of its Subsidiaries
involving a liability of $5,000,000 or more, in the aggregate or (C) the
institution of any proceedings against the Borrower or any of its Subsidiaries
with respect to, or the receipt of notice by such Person of potential liability
or responsibility for violation or alleged violation of, any federal, state or
local law, rule or regulation (including, without limitation, any Environmental
Law), the violation of which would have or would reasonably be expected to have
a Material Adverse Effect.
 
(f)  ERISA. Upon the Borrower or any ERISA Affiliate obtaining knowledge
thereof, the Borrower will give written notice to the Administrative Agent
promptly (and in any event within ten days) of any of the following which would
result in or reasonably would be expected to result in a Material Adverse
Effect: (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or would be reasonably expected to lead to,
an ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Borrower or any of its ERISA Affiliates, or of a determination that
any Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment on or
before the due date (including extensions) thereof of all amounts which the
Borrower or any of its Subsidiaries or ERISA Affiliates is required to
contribute to each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code with respect thereto;
or (iv) a change in the funding status of any Plan, in each case together with a
description of any such event or condition or a copy of any such notice and a
statement by an officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which has
been or is being taken or is proposed to be taken with respect thereto. Promptly
upon request, the Borrower shall furnish the Lenders with such additional
information concerning any Plan as may be reasonably requested, including, but
not limited to, copies of each annual report/return (Form 5500 series), as well
as all schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA and
the Code, respectively, for each “plan year” (within the meaning of Section
3(39) of ERISA).
 
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(g)  Debt Ratings. Prompt notice of any change in the Debt Ratings of the
Borrower.
 
(h)  Other Information. With reasonable promptness upon any such request, such
other information regarding the business, properties or financial condition of
the Borrower as the Lenders may reasonably request.
 
Documents required to be delivered pursuant to Section 6.1(a), (b) or (d) (to
the extent any such documents are included in materials otherwise filed with the
Securities and Exchange Commission) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.1; or (ii)
on which such documents are posted on the Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (A) the Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that requests
the Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and
(B) the Borrower shall notify the Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything contained herein, in every
instance the Borrower shall be required to provide paper copies of the Officer’s
Certificate required by Section 6.1(c) to the Administrative Agent. Except for
such Officer’s Certificate, the Administrative Agent shall have no obligation to
request the delivery or to maintain copies of the documents referred to above,
and in any event shall have no responsibility to monitor compliance by the
Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.
 
6.2  Financial Covenants. 
 
(a)  Debt Capitalization . At all times the ratio of (i) Consolidated
Indebtedness of the Borrower to (ii) Consolidated Capitalization of the Borrower
shall be less than or equal to 0.65 to 1.0. For purposes of such calculation,
the portion of Consolidated Indebtedness of the Borrower attributable to
obligations under Material Leases shall be the net present value (using (i) the
discount rate (A) set forth in Schedule 5.19, so long as Schedule 5.19 specifies
the same relevant discount rate as is used in calculating such net present value
provided to Moody’s and S&P or (B) the discount rate used in calculating such
net present value provided to Moody’s and S&P or (ii) any such other rate as
shall be proposed by the Borrower (and agreed upon by the Required Lenders)) of
all amounts payable under the Material Leases.
 
6.3  Preservation of Existence and Franchises.
 
(a)  Except in a transaction permitted by Section 7.2, the Borrower will do (and
will cause each of its Subsidiaries to do) all things necessary to preserve and
keep in full force and effect its existence and rights, franchises and
authority.
 
(b)  The Borrower will maintain (and will cause each of its Subsidiaries to
maintain) its properties in good condition and not waste or otherwise permit
such properties to deteriorate, reasonable wear and tear excepted.
 
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6.4  Books and Records.
 
The Borrower will keep (and will cause each of its Subsidiaries to keep)
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
 
6.5  Compliance with Law.
 
The Borrower will comply (and will cause each of its Subsidiaries to comply)
with all laws (including, without limitation, all Environmental Laws and ERISA
laws), rules, regulations and orders, and all applicable restrictions imposed by
all Governmental Authorities, applicable to it and its properties, if the
failure to comply would have or would reasonably be expected to have a Material
Adverse Effect.
 
6.6  Payment of Taxes and Other Indebtedness.
 
The Borrower will (and will cause each of its Subsidiaries to) pay, settle or
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) all of its other Indebtedness as it shall become due (to
the extent such repayment is not otherwise prohibited by this Credit Agreement);
provided, however, that the Borrower and its Subsidiaries shall not be required
to pay any such tax, assessment, charge, levy, claim or Indebtedness which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) would give rise to an immediate right
to foreclose or collect on a Lien securing such amounts or (ii) would have or
would be reasonably expected to have a Material Adverse Effect.
 
6.7  Insurance.
 
The Borrower will (and will cause each of its Subsidiaries to) at all times
maintain in full force and effect insurance (including worker’s compensation
insurance and general liability insurance) in such amounts, covering such risks
and liabilities and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice.
 
6.8  Performance of Obligations.
 
The Borrower will perform (and will cause each of its Subsidiaries to perform)
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
 
6.9  Use of Proceeds.
 
The proceeds of the Term Loan may be used solely to finance the Acquisition and
to pay related fees and expenses.
 
6.10  Audits/Inspections.
 
Upon reasonable notice and during normal business hours, the Borrower will
permit representatives appointed by the Administrative Agent or the Lenders,
including, without limitation, independent accountants, agents, attorneys, and
appraisers to visit and inspect the Borrower’s property, including its books and
records, its accounts receivable and inventory, the Borrower’s facilities and
its
 
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other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Administrative Agent or such Lender or its representatives to
investigate and verify the accuracy of information provided to it and to discuss
all such matters with the officers, employees and representatives of the
Borrower; provided, that an officer or authorized agent of the Borrower shall be
present during any such discussions between the officers, employees or
representatives of the Borrower and the representatives of the Administrative
Agent or any Lender.
 
6.11  Ownership of Certain Subsidiaries.
 
The Borrower shall (a) at all times, own and control 100% of the Voting Stock of
PSNM and (b) at all times, own and control, directly or indirectly, 100% of the
Voting Stock of TNMP.
 
  SECTION 7 
 
NEGATIVE COVENANTS
 
Unless otherwise approved in writing by the Required Lenders, the Borrower
covenants and agrees that until the payment in full of its Borrower Obligations:
 
7.1  Nature of Business.
 
The Borrower will not materially alter the character of its business from that
conducted as of the Closing Date.
 
7.2  Consolidation and Merger.
 
The Borrower will not (a) enter into any transaction of merger or (b)
consolidate, liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that, so long as no Default or Event of Default shall
exist or be caused thereby a Person may be merged or consolidated with or into
the Borrower so long as the Borrower shall be the continuing or surviving
Person.
 
7.3  Sale or Lease of Assets.
 
The Borrower will not (nor will it permit its Subsidiaries to) sell, lease,
transfer or otherwise dispose of, any of its assets (including, without
limitation, all or substantially all of its assets, whether in one transaction
or a series of related transactions) except (a) with respect to the Borrower,
sales of accounts receivable and energy services contract revenues by PSNM in
connection with sales of accounts receivable and energy services contract
revenues so long as such other sales are non-recourse to the Borrower and are
otherwise on customary market terms; (b) with respect to First Choice, the sales
of accounts receivable in connection with the First Choice Securitization, (c)
with respect to the Borrower, transfers of assets to PNMR Services Company, a
wholly-owned operational services Borrower, in the ordinary course of business,
(d) sales of assets (excluding those permitted in clauses (a), (b) and (c)
hereof) for fair value, if the aggregate value of all such transactions in any
calendar year, does not exceed 25% of the book value of Total Assets of the
Borrower, as calculated as of the end of the most recent Fiscal Quarter, and
(e) sale, lease, transfer or other disposition, at less than fair value, of any
other assets of the Borrower and its Subsidiaries, provided that the aggregate
book value of such assets shall not exceed $10,000,000 in any calendar year.
 
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7.4  Affiliate Transactions.
 
The Borrower will not enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any Affiliate other than
on terms and conditions substantially as favorable as would be obtainable in a
comparable arm’s-length transaction with a Person other than an Affiliate.
 
7.5  Liens.
 
The Borrower will not (nor will it permit its Subsidiaries to) contract, create,
incur, assume or permit to exist any Lien with respect to any of its property or
assets of any kind (whether real or personal, tangible or intangible), whether
now owned or hereafter acquired, securing any Indebtedness other than the
following: (a) Liens securing Borrower Obligations, (b) Liens for taxes not yet
due or Liens for taxes being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof), (c) Liens in respect
of property imposed by law arising in the ordinary course of business such as
materialmen’s, mechanics’, warehousemen’s, carrier’s, landlords’ and other
nonconsensual statutory Liens which are not yet due and payable, which have been
in existence less than 90 days or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof),
(d) pledges or deposits made in the ordinary course of business to secure
payment of worker’s compensation insurance, unemployment insurance, pensions or
social security programs, (e) Liens arising from good faith deposits in
connection with or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (other than obligations in respect
of the payment of borrowed money), (f) Liens arising from good faith deposits in
connection with or to secure performance of statutory obligations and surety and
appeal bonds, (g) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of the
encumbered property for its intended purposes, (h) judgment Liens that would not
constitute an Event of Default, (i) Liens arising by virtue of any statutory or
common law provision relating to banker’s liens, rights of setoff or similar
rights as to deposit accounts or other funds maintained with a creditor
depository institution, (j) any Lien created or arising over any property which
is acquired, constructed or created by the Borrower or its Subsidiaries, but
only if (i) such Lien secures only principal amounts (not exceeding the cost of
such acquisition, construction or creation) raised for the purposes of such
acquisition, construction or creation, together with any costs, expenses,
interest and fees incurred in relation thereto or a guarantee given in respect
thereof, (ii) such Lien is created or arises on or before 180 days after the
completion of such acquisition, construction or creation, (iii) such Lien is
confined solely to the property so acquired, constructed or created and any
improvements thereto and (iv) the aggregate principal amount of all Indebtedness
at any one time outstanding that is secured by such Liens shall not exceed
$50,000,000 (k) any Lien on Margin Stock, (l)  Liens with respect to the
Indebtedness evidenced by the FMB Indenture, but only to the extent of the
Insured Series First Mortgage Bonds, and the “permitted encumbrances” under the
FMB Indenture, (m)  with respect to First Choice, (i) the assignment of, or
Liens on, accounts receivable in connection with First Choice Securitization and
the filing of related financing statements under the Uniform Commercial Code of
the applicable jurisdictions and (ii) other Liens in connection with the
Constellation Agreement, (n) the assignment of, or Liens on, demand, energy or
wheeling revenues, or on capacity reservation or option fees, payable to the
Borrower or any of its Subsidiaries with respect to any wholesale electric
service or transmission agreements, the assignment of, or Liens on, revenues
from energy services contracts, and the assignment of, or Liens on, capacity
reservation or option fees payable to the Borrower or such Subsidiary with
respect to asset sales permitted herein, (o) any extension, renewal or
replacement
 
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(or successive extensions, renewals or replacements), as a whole or in part, of
any Liens referred to in the foregoing clauses (a) through (n), for amounts not
exceeding the principal amount of the Indebtedness secured by the Lien so
extended, renewed or replaced, provided that such extension, renewal or
replacement Lien is limited to all or a part of the same property or assets that
were covered by the Lien extended, renewed or replaced (plus improvements on
such property or assets), (p) Liens on Property that is subject to a Material
Lease that is classified as an operating lease as of the Closing Date but which
is subsequently converted into a capital lease, (q) Liens securing obligations
under Hedging Agreements entered into in the ordinary course of business and not
for speculative purposes, (r) Liens granted by bankruptcy-remote special purpose
Subsidiaries to secure stranded cost securitization bonds, (s) Liens upon any
property in favor of the administrative agent for the benefit of the lenders
under the Existing Credit Agreement (as may be amended, supplemented or
otherwise modified from time to time) securing Indebtedness thereunder and
(t) Liens on Property, in addition to those otherwise permitted by clauses (a)
through (s) above, securing, directly or indirectly, Indebtedness or obligations
of the Borrower and its Subsidiaries arising pursuant to other agreements
entered into in the ordinary course of business which do not exceed, in the
aggregate at any one time outstanding, $50,000,000.
 
7.6  Accounting Changes.
 
The Borrower will not (nor will it permit any of its Subsidiaries to) make or
permit any change in accounting policies or reporting practices, except as
required by GAAP, or as permitted by GAAP, if the amounts involved are not
material.
 
7.7  Burdensome Agreements.
 
The Borrower will not (nor will it permit any of its Subsidiaries to) enter into
any contractual obligation (other than (i) the Credit Documents, (ii) the
Constellation Agreement and related agreements, (iii) with respect to clause (b)
only, restrictions on pledges of Capital Stock of any utility Subsidiary or
significant Subsidiary contained in the indentures, if any, executed in
connection with the issuance of Specified Securities by the Borrower pursuant to
commitments with Cascade Investment, L.L.C. and (iv) the Existing Credit
Agreement (as may be amended, supplemented or otherwise modified from time to
time)) that limits the ability (a) of any Subsidiary of the Borrower to make
Restricted Payments to the Borrower or to otherwise transfer property to the
Borrower or (b) of the Borrower to create, incur, assume or suffer to exist
Liens on its property in favor of the Administrative Agent, for the benefit of
the Lenders.
 
  SECTION 8

 
EVENTS OF DEFAULT
 
8.1  Events of Default.
 
An Event of Default with respect to the Borrower shall exist upon the occurrence
of any of the following specified events (each an “Event of Default”):
 
(a)  Payment. The Borrower shall: (i) default in the payment when due of any
principal of any of its Term Loans; or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any
interest on the Term Loans or of any fees or other amounts owing by it
hereunder, under any of the other Credit Documents or in connection herewith or
therewith.
 
(b)  Representations. Any representation, warranty or statement made or deemed
to be made by the Borrower herein, in any of the other Credit Documents, or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on the date as of
which it was deemed to have been made.
 
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(c)  Covenants. The Borrower shall:
 
(i)  default in the due performance or observance of any term, covenant or
agreement contained in Sections 6.1(e)(i), 6.2, 6.3(a) (solely with respect to
the existence of the Borrower), 6.9, 6.10, 6.11 or 7.1 through 7.7, inclusive;
or
 
(ii)  default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in subsections (a), (b) or (c)(i) of
this Section 8.1) contained in this Credit Agreement or any other Credit
Document and such default shall continue unremedied for a period of at least 10
days after the earlier of the Borrower becoming aware of such default or notice
thereof given by the Administrative Agent.
 
(d)  Credit Documents. Any Credit Document shall fail to be in force and effect
or the Borrower shall so assert or any Credit Document shall fail to give the
Administrative Agent or the Lenders the rights, powers, liens and privileges
purported to be created thereby.
 
(e)  Bankruptcy, etc. The occurrence of any of the following with respect to the
Borrower or any of its Subsidiaries (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for relief in respect
of the Borrower or any of its Subsidiaries in an involuntary case under any
applicable Debtor Relief Law now or hereafter in effect, or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Borrower or any of its Subsidiaries or for any substantial part of their
property or ordering the winding up or liquidation of its affairs; or (ii) an
involuntary case under any applicable Debtor Relief Law now or hereafter in
effect is commenced against the Borrower or any of its Subsidiaries and such
petition remains unstayed and in effect for a period of 60 consecutive days; or
(iii) the Borrower or any of its Subsidiaries shall commence a voluntary case
under any applicable Debtor Relief Law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary case under any such law, or
consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of such Person or
any substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) the Borrower or any of its Subsidiaries admit in
writing its inability to pay its debts generally as they become due or any
action shall be taken by any Person in furtherance of any of the aforesaid
purposes.
 
(f)  Defaults under Other Agreements.
 
(i)  The Borrower or any of its Subsidiaries shall default in the due
performance or observance (beyond the applicable grace period with respect
thereto) of any material obligation or condition of any contract or lease to
which it is a party, if such default would have or would reasonably be expected
to have a Material Adverse Effect.
 
(ii)  With respect to any Indebtedness of the Borrower or any of its
Subsidiaries (other than Indebtedness outstanding under this Credit Agreement)
in excess of $20,000,000 in the aggregate (A) the Borrower or any of its
Subsidiaries shall (x) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to such Indebtedness, or (y)
default (after giving effect to any applicable grace period) in the observance
or performance of any covenant or agreement relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or
 
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relating thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to cause or
permit the holder or the holders of such Indebtedness (or any trustee or agent
on behalf of such holders) to cause (determined without regard to whether any
notice or lapse of time is required) such Indebtedness to become due prior to
its stated maturity; or (B) such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment prior to the stated maturity thereof; or (C) such Indebtedness shall
mature and remain unpaid.
 
(g)  Judgments. Any judgment, order or decree involving a liability of
$20,000,000 or more, or one or more judgments, orders, or decrees involving a
liability of $40,000,000 or more, in the aggregate, shall be entered against the
Borrower or any of its Subsidiaries and such judgments, orders or decrees shall
continue unsatisfied, undischarged and unstayed for a period ending on the first
to occur of (i) the last day on which such judgment, order or decree becomes
final and unappealable and, where applicable, with the status of a judicial lien
or (ii) 60 days; provided that if such judgment, order or decree provides for
periodic payments over time then the Borrower or such Subsidiary shall have a
grace period of 30 days with respect to each such periodic payment.
 
(h)  ERISA. The occurrence of any of the following events or conditions if any
of the same would have or would be reasonably expected to have a Material
Adverse Effect: (i) any “accumulated funding deficiency,” as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, shall exist with respect to any Plan, or any lien shall arise on the
assets of the Borrower or any ERISA Affiliate in favor of the PBGC or a Plan;
(ii) an ERISA Event shall occur with respect to a Single Employer Plan which is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (iii) an ERISA Event
shall occur with respect to a Multiemployer Plan or Multiple Employer Plan which
is, in the reasonable opinion of the Required Lenders, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B) the
Borrower or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of such
Plan; or (iv) any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which would be reasonably expected to subject the Borrower or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA
or Section 4975 of the Code, or under any agreement or other instrument pursuant
to which the Borrower or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
 
(i)  Change of Control. There shall occur a Change of Control.
 
8.2  Acceleration; Remedies.
 
Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may or, upon the request and direction of the Required
Lenders, shall take the following actions without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for herein:
 
(a)  Acceleration of Term Loans. Declare the unpaid principal of and any accrued
interest in respect of all Term Loans and any and all other Borrower Obligations
of any and every kind owing by the Borrower to the Administrative Agent or the
Lenders under the Credit Documents to be due, whereupon the same shall be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
 
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(b)  Enforcement of Rights. To the extent permitted by Law enforce any and all
rights and interests created and existing under applicable Law and under the
Credit Documents, including, without limitation, all rights of set-off.
 
Notwithstanding the foregoing, if an Event of Default specified in Section
8.1(e) shall occur, then all Term Loans, all accrued interest in respect
thereof, all accrued and unpaid fees and other Borrower Obligations owing to the
Administrative Agent and the Lenders by the Borrower hereunder shall immediately
become due and payable without the giving of any notice or other action by the
Administrative Agent or the Lenders, which notice or other action is expressly
waived by the Borrower.
 
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by Law, a
separate right of payment and shall be considered a separate “creditor” holding
a separate “claim” within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
 
8.3  Allocation of Payments After Event of Default.
 
Notwithstanding any other provisions of this Credit Agreement, after the
occurrence and during the continuation of an Event of Default, all amounts
collected or received by the Administrative Agent or any Lender from the
Borrower or any of its Subsidiaries on account of amounts outstanding under any
of the Credit Documents shall be paid over or delivered as follows:
 
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including the reasonable fees and expenses of legal counsel) of the
Administrative Agent or any of the Lenders in connection with enforcing the
rights of the Administrative Agent and the Lenders under the Credit Documents
against the Borrower, ratably among them in proportion to the amounts described
in this clause “FIRST” payable to them;
 
SECOND, to payment of any fees owed to the Administrative Agent or any Lender,
ratably among them in proportion to the amounts described in this clause
“SECOND” payable to them;
 
THIRD, to the payment of all accrued interest payable to the Lenders hereunder,
ratably among them in proportion to the amounts described in this clause “THIRD”
payable to them;
 
FOURTH, to the payment of the outstanding principal amount of the Term Loans,
ratably among them in proportion to the amounts described in this clause
“FOURTH” payable to them;
 
FIFTH, to all other Borrower Obligations which shall have become due and payable
under the Credit Documents and not repaid pursuant to clauses “FIRST” through
“FOURTH” above, ratably among the holders of the Borrower Obligations in
proportion to the amounts described in this clause “FIFTH” payable to them; and
 
SIXTH, the payment of the surplus, if any, to whomever may be lawfully entitled
to receive such surplus.
 
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  SECTION 9
 
AGENCY PROVISIONS
 
9.1  Appointment and Authority.
 
Each of the Lenders hereby irrevocably appoints LCPI to act on its behalf as the
Administrative Agent hereunder and under the other Credit Documents and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Section are solely for the benefit of
the Administrative Agent and the Lenders, and the Borrower shall not have rights
as a third party beneficiary of any of such provisions.
 
9.2  Rights as a Lender.
 
The Person serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account therefor
to the Lenders.
 
9.3  Exculpatory Provisions.
 
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Credit Documents. Without limiting
the generality of the foregoing, the Administrative Agent:
 
(a)  shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;
 
(b)  shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Credit Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Credit Documents), provided that the Administrative
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Administrative Agent to liability or that
is contrary to any Credit Document or applicable law; and
 
(c)  shall not, except as expressly set forth herein and in the other Credit
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower, its Subsidiaries or any of
its Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
 
The Administrative Agent shall not be liable for any action taken or not taken
by it (a) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
 
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circumstances as provided in Sections 10.6 and 8.2) or (b) in the absence of its
own gross negligence or willful misconduct. The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until notice describing
such Default is given to the Administrative Agent by the Borrower or a Lender.
 
The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Credit Agreement or any other Credit Document, (ii)
the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Credit
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.
 
9.4  Reliance by Administrative Agent.
 
The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Term Loan that by its
terms must be fulfilled to the satisfaction of a Lender, the Administrative
Agent may presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender
prior to the making of such Term Loan. The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.
 
9.5  Delegation of Duties.
 
The Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Credit Document by or through any
one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Agent-Related Persons. The
exculpatory provisions of this Section shall apply to any such sub-agent and to
the Agent-Related Persons of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
 
9.6  Resignation of Administrative Agent.
 
The Administrative Agent may at any time give notice of its resignation to the
Lenders and the Borrower. Upon receipt of any such notice of resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders, appoint a successor Administrative Agent meeting
 
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the qualifications set forth above; provided that if the Administrative Agent
shall notify the Borrower and the Lenders that no qualifying Person has accepted
such appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (a) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Credit
Documents and (b) all payments, communications and determinations provided to be
made by, to or through the Administrative Agent shall instead be made by or to
each Lender directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Credit Documents (if not already
discharged therefrom as provided above in this Section). The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Credit Documents, the provisions of this Section and
Section 10.5 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Agent Related Persons
in respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.
 
9.7  Non-Reliance on Administrative Agent and Other Lenders.
 
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Agent-Related
Persons and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Agent-Related Persons and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking
or not taking action under or based upon this Agreement, any other Credit
Document or any related agreement or any document furnished hereunder or
thereunder.
 
9.8  No Other Duties, Etc.
 
Anything herein to the contrary notwithstanding, none of the bookrunner,
arranger or agent listed on the cover page hereof shall have any powers, duties
or responsibilities under this Agreement or any of the other Credit Documents,
except in its capacity, as applicable, as the Administrative Agent or a Lender
hereunder.
 
9.9  Administrative Agent May File Proofs of Claim.
 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower, the Administrative Agent
(irrespective of whether the principal of any Term Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise
 
(a)  to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Term Loans and all other Borrower
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Sections 3.4 and 10.5) allowed in such
judicial proceeding; and
 
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(b)  to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;
 
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 3.4 and 10.5.
 
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the Borrower
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.
 
  SECTION 10
 
MISCELLANEOUS
 
10.1  Notices; Effectiveness; Electronic Communication.
 
(a)  Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:
 
(i)  if to the Borrower or the Administrative Agent, to the address, telecopier
number, electronic mail address or telephone number specified for such Person on
Schedule 10.1; and
 
(ii)  if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.
 
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
 
(b)  Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to Section 2 if such Lender has notified the Administrative
Agent that it is incapable of receiving notices under such
 
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Section by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.
 
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
 
(c)  Borrower Materials/The Platform. The Borrower hereby acknowledges that (i)
the Administrative Agent and/or the Arranger will make available to the Lenders
materials and/or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”). THE PLATFORM
IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO
NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED
OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent
or any of its Agent-Related Persons (collectively, the “Agent Parties”) have any
liability to the Borrower, any Lender or any other Person for losses, claims,
damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) arising out of the Borrower’s or the Administrative Agent’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party;
provided, however, that in no event shall any Agent Party have any liability to
the Borrower, any Lender or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).
 
(d)  Change of Address, Etc. Each of the Borrower and the Administrative Agent
may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.
 
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(e)  Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices purportedly given
by or on behalf of the Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. The Borrower shall
indemnify the Administrative Agent, each Lender and the Agent-Related Persons of
each of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower. All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.
 
10.2  Right of Set-Off.
 
In addition to any rights now or hereafter granted under applicable Law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default and the commencement of remedies described in Section
8.2, each Lender is authorized at any time and from time to time, without
presentment, demand, protest or other notice of any kind (all of which rights
being hereby expressly waived), to set-off and to appropriate and apply any and
all deposits (general or special) and any other indebtedness at any time held or
owing by such Lender (including, without limitation, branches, agencies or
Affiliates of such Lender wherever located) to or for the credit or the account
of the Borrower against obligations and liabilities of the Borrower to the
Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Administrative Agent or the Lenders shall have made
any demand hereunder and although such obligations, liabilities or claims, or
any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. The Borrower hereby agrees that any Person purchasing a
participation in the Term Loans hereunder pursuant to Sections 3.8 or 10.3(d)
may exercise all rights of set-off with respect to its participation interest as
fully as if such Person were a Lender hereunder.
 
10.3  Successors and Assigns.
 
(a)  Successors and Assigns Generally. The provisions of this Credit Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
(except as contemplated by Section 7.2), and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of subsection (b) of this Section,
(ii) by way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section. Nothing in this
Credit Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Agent-Related
Persons of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Credit Agreement.
 
(b)  Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Credit Agreement (including all or a portion of its Term Loans at the time owing
to it); provided that
 
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(i)  except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Term Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each
of the Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met;
 
(ii)  each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Credit
Agreement with respect to the Term Loans assigned;
 
(iii)  the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee in the amount, if any, required as set forth in
Schedule 10.3, and the Eligible Assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.
 
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Credit Agreement and, to the extent of the interest assigned by
such Assignment and Assumption, have the rights and obligations of a Lender
under this Credit Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Credit Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Credit Agreement, such Lender shall cease to be a party
hereto) but shall continue to be entitled to the benefits of Sections 3.9, 3.12,
3.13, 3.14, and 10.5(b) with respect to facts and circumstances occurring prior
to the effective date of such assignment. Upon request, the Borrower (at its
expense) shall execute and deliver a Note to the assignee Lender. Any assignment
or transfer by a Lender of rights or obligations under this Credit Agreement
that does not comply with this subsection shall be treated for purposes of this
Credit Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (d) of this Section.
 
(c)  Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders and principal amounts of
the Term Loans owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Credit Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower at
any reasonable time and from time to time upon reasonable prior notice. In
addition, at any time that a request for a consent for a material or substantive
change to the Credit Documents is pending, any Lender may request and receive
from the Administrative Agent a copy of the Register.
 
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(d)  Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Credit Agreement (including all or
a portion of its Term Loans); provided that (i) such Lender’s obligations under
this Credit Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrower, the Administrative Agent and the Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Credit Agreement.
 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Credit Agreement and to approve any amendment, modification or
waiver of any provision of this Credit Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in
the first proviso to Section 10.6 that affects such Participant. Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.9, 3.12 3.13 and 3.14 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 3.7 as though it
were a Lender, provided such Participant agrees to be subject to Section 3.8 as
though it were a Lender.
 
(e)  Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.9, 3.12, 3.13, or 3.14 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.13 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.13(f) as though it were a
Lender.
 
(f)  Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Credit Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
 
(g)  Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
 
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10.4  No Waiver; Remedies Cumulative.
 
No failure or delay on the part of the Administrative Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower and the Administrative
Agent or any Lender shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Administrative Agent or any Lender would otherwise have. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Lenders to
any other or further action in any circumstances without notice or demand.

10.5  Attorney Costs, Expenses, Taxes and Indemnification by Borrowers.
 
(a)  The Borrower agrees (i) to pay or reimburse the Administrative Agent and
the Arranger for all costs and expenses incurred in connection with the
development, preparation, negotiation and execution of this Credit Agreement and
the other Credit Documents and any amendment, waiver, consent or other
modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all reasonable fees and expenses of legal counsel and all
charges of Intralinks, and (ii) to pay or reimburse the Administrative Agent and
each Lender for all costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Credit Agreement or the other Credit Documents (including all such
costs and expenses incurred during any “workout” or restructuring in respect of
the Borrower Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all reasonable fees and
expenses of legal counsel. The foregoing costs and expenses shall include all
search, filing, recording, and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the Arranger and the cost of independent public accountants and other
outside experts retained by the Administrative Agent, the Arranger or any
Lender. Other than costs and expenses payable in connection with the closing of
the transactions contemplated by this Credit Agreement pursuant to Section
10.5(a) (which shall be payable on the Closing Date unless otherwise agreed by
the Administrative Agent and the Arranger), all amounts due under this Section
10.5 shall be payable within ten Business Days after demand therefor. The
agreements in this Section shall survive the repayment of all Borrower
Obligations.
 
(b)  Whether or not the transactions contemplated hereby are consummated, the
Borrower shall indemnify and hold harmless each Agent-Related Person, each
Lender and their respective Affiliates, directors, officers, employees, counsel,
agents and attorneys-in-fact (collectively the “Indemnitees”) from and against
any and all liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses and disbursements (including
the reasonable fees and expenses of legal counsel) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (i) the execution, delivery, enforcement, performance or administration of
any Credit Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby or in connection with the Acquisition, (ii)
any Term Loan Commitment, Term Loan or the use of the proceeds therefrom, or
(iii) any actual or alleged presence or release of Hazardous Substances on or
from any property
 
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currently or formerly owned or operated by the Borrower, any Subsidiary of the
Borrower, or any Environmental Claim related in any way to the Borrower or any
Subsidiary of the Borrower, (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto or (v)
any civil penalty or fine assessed by the Office of Foreign Assets Control (the
“OFAC”) against, and all reasonable costs and expenses (including counsel fees
and disbursements) incurred in connection with defense thereof, by the
Administrative Agent or any Lender as a result of conduct of the Borrower that
violates a sanction enforced by OFAC (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Credit Agreement, nor
shall any Indemnitee have any liability for any indirect or consequential
damages relating to this Credit Agreement or any other Credit Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date).
 
(c)  To the extent that the Borrower for any reason fails to indefeasibly pay
any amount required under subsection (a) or (b) of this Section to be paid by it
to the Administrative Agent (or any sub-agent thereof) or any Agent-Related
Persons of any of the foregoing, each Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent) or such Agent-Related Persons, as
the case may be, such Lender’s Pro Rata Share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent (or any such sub-agent) in its
capacity as such, or against any Agent-Related Persons of any of the foregoing
acting for the Administrative Agent (or any such sub-agent).
 
All amounts due under this Section 10.5 shall be payable within ten Business
Days after demand therefor. The agreements in this Section shall survive the
resignation of the Administrative Agent, the replacement of any Lender and the
repayment, satisfaction or discharge of all the Borrower Obligations.
 
10.6  Amendments, Etc.
 
No amendment or waiver of any provision of this Credit Agreement or any other
Credit Document, and no consent to any departure by the Borrower therefrom,
shall be effective unless in writing signed by the Required Lenders and the
Borrower, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:
 
(a)  waive any condition set forth in Section 4.1 without the written consent of
each Lender;
 
(b)  extend or increase the Term Loan Commitment of any Lender without the
written consent of such Lender;
 
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(c)  postpone any date fixed by this Credit Agreement or any other Credit
Document for any payment (excluding mandatory prepayments) of principal,
interest or fees or other amounts due to the Lenders (or any of them) hereunder
or under any other Credit Document without the written consent of each Lender
directly affected thereby;
 
(d)  reduce the principal of, or the rate of interest specified herein on, any
Term Loans or (subject to clause (iv) of the second proviso to this
Section 10.6) any fees or other amounts payable hereunder or under any other
Credit Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary to amend the definition of “Default Rate” or to waive any
obligation to pay interest at the Default Rate;
 
(e)  change Section 3.8 or Section 8.3 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender;
 
(f)  change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder without the written
consent of each Lender;
 
(g)  change Section 10.3 in any manner without the written consent of each
Lender; or
 
(h)  release the Borrower from its obligations, or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under (or in
respect of) the Credit Documents without the written consent of each Lender.
 
 
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Credit Agreement or any other Credit Document and (ii) the Fee Letters may
be amended, or rights or privileges thereunder waived, in a writing executed
only by the parties thereto.
 
10.7  Counterparts.
 
This Credit Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.
 
10.8  Headings.
 
The headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Credit Agreement.
 
10.9  Survival of Indemnification and Representations and Warranties.
 
(a)  Survival of Indemnification. All indemnities set forth herein shall survive
the execution and delivery of this Credit Agreement and the making of any Term
Loans and the repayment of the Term Loans and other Borrower Obligations.
 
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(b)  Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Credit Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or Event of Default at the time of any Term Loans, and shall
continue in full force and effect as long as any Term Loan or any other Borrower
Obligation hereunder shall remain unpaid or unsatisfied.
 
10.10  Governing Law; Venue; Service.
 
(a)  THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Any legal action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Credit Agreement, the Borrower hereby irrevocably accepts
for itself and in respect of its Property, generally and unconditionally, the
jurisdiction of such courts.
 
(b)  The Borrower irrevocably consents to the service of process in any action
or proceeding with respect to this Credit Agreement or any other Credit Document
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 10.1, such service
to become effective ten days after such mailing. Nothing herein shall affect the
right of a Lender to serve process in any other manner permitted by Law.
 
10.11  Waiver of Jury Trial; Waiver of Consequential Damages.
 
EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. Each of the parties to this Credit
Agreement agrees not to assert any claim against any other party hereto,
Administrative Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys or agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein and in
the other Credit Documents.
 
10.12  Severability.
 
If any provision of any of the Credit Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
 
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10.13  Further Assurances.
 
The Borrower agrees, upon the request of the Administrative Agent, to promptly
take such actions, as reasonably requested, as is necessary to carry out the
intent of this Credit Agreement and the other Credit Documents.
 
10.14  Confidentiality.
 
Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Credit Document or any
action or proceeding relating to this Credit Agreement or any other Credit
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Credit Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent, any Lender, or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower.
 
For purposes of this Section, “Information” means all information received from
the Borrower or any Subsidiary or any of their respective businesses, other than
any such information that is available to the Administrative Agent or any Lender
on a nonconfidential basis prior to disclosure by the Borrower or any
Subsidiary, provided that, in the case of information received from the Borrower
or any Subsidiary after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
 
10.15  Entirety.
 
This Credit Agreement together with the other Credit Documents and the Fee
Letters represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
 
10.16  Binding Effect; Continuing Agreement.
 
(a)  This Credit Agreement shall become effective at such time when all of the
conditions set forth in Section 4.1 have been satisfied or waived by the Lenders
and it shall have been executed by the Borrower and the Administrative Agent,
and the Administrative Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of the Borrower, the Administrative Agent and each Lender and their respective
successors and assigns.
 
53

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(b)  This Credit Agreement shall be a continuing agreement and shall remain in
full force and effect until all Term Loans, interest, fees and other Borrower
Obligations have been paid in full. Upon termination, the Borrower shall have no
further obligations (other than the indemnification provisions and other
provisions that by their terms survive) under the Credit Documents; provided
that should any payment, in whole or in part, of the Borrower Obligations be
rescinded or otherwise required to be restored or returned by the Administrative
Agent or any Lender, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, then the Credit Documents shall automatically be
reinstated and all amounts required to be restored or returned and all costs and
expenses incurred by the Administrative Agent or any Lender in connection
therewith shall be deemed included as part of the Borrower Obligations.
 
10.17  Regulatory Statement.
 
Pursuant to the terms of an order issued by the New Mexico Public Regulation
Commission and a stipulation that has been approved by the New Mexico Public
Regulation Commission, the Borrower is required to include the following
separateness covenants in any debt instrument:
 
The Borrower, PSNM and TNMP are being operated as separate corporate and legal
entities. In agreeing to make loans to the Borrower, the Borrower’s lenders are
relying solely on the creditworthiness of the Borrower based on the assets owned
by the Borrower, and the repayment of the loan will be made solely from the
assets of the Borrower and not from any assets of PSNM or TNMP; and the
Borrower’s lenders will not take any steps for the purpose of procuring the
appointment of an administrative receiver or the making of an administrative
order for instituting any bankruptcy, reorganization, insolvency, wind up or
liquidation or any like proceeding under applicable law in respect of PSNM or
TNMP.
 
10.18  USA Patriot Act Notice. 
 
Each Lender and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Act.
 
10.19  Acknowledgment. 
 
Section 6 and Section 7 of this Credit Agreement contain affirmative and
negative covenants applicable to the Borrower. Each of the parties to this
Credit Agreement acknowledges and agrees that any such covenants that require
the Borrower to cause any of its Subsidiaries to take or to refrain from taking
specified actions will be enforceable unless prohibited by applicable law or
regulatory requirement.
 
10.20  Replacement of Lenders. 
 
If (a) any Lender requests compensation under Section 3.12, (b) the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.13 or (c) a Lender
(a “Non-Consenting Lender”) does not consent to a proposed change, waiver,
discharge or termination with respect to any Credit Document that has been
approved by
 
54

--------------------------------------------------------------------------------

the Required Lenders as provided in Section 10.6 but requires unanimous consent
of all Lenders or all Lenders directly affected thereby (as applicable), then
the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.3), all of its interests, rights and
obligations under this Agreement and the related Credit Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that:
 
(i)  the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 10.3(b);
 
(ii)  such Lender shall have received payment of an amount equal to the
outstanding principal of its Term Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Credit
Documents (including any amounts under Section 3.14) from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);
 
(iii)  in the case of any such assignment resulting from a claim for
compensation under Section 3.12 or payments required to be made pursuant to
Section 3.13, such assignment will result in a reduction in such compensation or
payments thereafter;
 
(iv)  such assignment does not conflict with applicable Laws; and
 
(v)  in the case of any such assignment resulting from a Non-Consenting Lender’s
failure to consent to a proposed change, waiver, discharge or termination with
respect to any Credit Document, the applicable replacement bank, financial
institution or Fund consents to the proposed change, waiver, discharge or
termination; provided that the failure by such Non-Consenting Lender to execute
and deliver an Assignment and Assumption shall not impair the validity of the
removal of such Non-Consenting Lender and the mandatory assignment of such
Non-Consenting Lender’s outstanding Term Loans pursuant to this Section shall
nevertheless be effective without the execution by such Non-Consenting Lender of
an Assignment and Assumption.
 
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

 

55

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Each of the parties hereto has caused a counterpart of this Credit Agreement to
be duly executed and delivered as of the date first above written.
 
BORROWER:

PNM RESOURCES, INC.
a New Mexico corporation

By: /s/ Wendy A. Carlson   
Name: Wendy A. Carlson
Title: Vice President, Treasury and Taxation

S-1

--------------------------------------------------------------------------------

Signature Page to Amended and Restated Credit Agreement
PNM Resources, Inc.

LENDERS:

LEHMAN COMMERCIAL PAPER INC.,
individually in its capacity as a Lender and in capacity as Administrative Agent

By: /s/ Janine M. Shugan   
Name: Janine M. Shugan
Title: Authorized Signatory

 
 

S-2

--------------------------------------------------------------------------------

Signature Page to Amended and Restated Credit Agreement
PNM Resources, Inc.

LENDERS:

BANK OF AMERICA, N.A.
As a Lender

By: /s/ Kevin P. Bertelsen  
Name: Kevin P. Bertelsen
Title: Senior Vice President

 
 

S-3

--------------------------------------------------------------------------------

Signature Page to Amended and Restated Credit Agreement
PNM Resources, Inc.

LENDERS:

CITICORP NORTH AMERICA, INC.
As a Lender

By: /s/ Stuart J. Gleu   
Name: Stuart J. Gleu
Title: Director

 
 

S-4

--------------------------------------------------------------------------------

Signature Page to Amended and Restated Credit Agreement
PNM Resources, Inc.

LENDERS:

MERRILL LUNCH BANK USA,
As a Lender

By: /s/ Louis Alder   
Name: Louis Alder
Title: Director

 
 

S-5

--------------------------------------------------------------------------------

Signature Page to Amended and Restated Credit Agreement
PNM Resources, Inc.

LENDERS:

MORGAN STANLEY BANK.
As a Lender

By: /s/ Daniel Twenge  
Name: Daniel Twenge
Title: Vice President
 

S-6

--------------------------------------------------------------------------------

 

SCHEDULE 1.1 (a)
 
COMMITMENTS
 
Lender
 
Commitment
 
Lehman Commercial Paper Inc.
$160,000,000.00
Bank of America, N.A.
$ 80,000,000.00
Citigroup Global Markets, Inc.
$ 80,000,000.00
Merrill Lynch Bank USA
$ 80,000,000.00
Morgan Stanley Bank
$ 80,000,000.00
Total
 
$480,000,000.00
 

--------------------------------------------------------------------------------

SCHEDULE 5.18

MATERIAL LEASES
 
 
Description               Expiration   Annual Rent

Palo Verde Unit 1
 
Facility Lease dated as of December 16, 1985 between   1/15/2015   $
5,580,122.54
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 16, 1985, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of December 16, 1985 between   1/15/2015   $
15,693,862.76
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 16, 1985, with Daimler
Chrysler Services North America LLC (as successor to Chrysler
Financial Corporation), as Owner Participant, as amended.

Facility Lease dated as of December 15, 1986 between   1/15/2015   $
4,757,769.00
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 15, 1986, with Palo
Verde 1- PNM [December 75] Corporation (successor-in-interest
to Chase Manhattan Realty Leasing Corporation), as Owner
Participant (Unit 1), as amended.

Facility Lease dated as of July 31, 1986 between     1/15/2015   $ 6,974,313.00
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of July 31, 1986, with Palo
Verde 1- PNM [August 50] Corporation (successor-in-interest
to Chase Manhattan Realty Leasing Corporation), as Owner
Participant (Unit 1), as amended.

Total - Unit 1           $ 33,006.067.10

--------------------------------------------------------------------------------

 
Description       Expiration   Annual Rent

Palo Verde Unit 2

Facility Lease dated as of August 12, 1986 between     1/15/2016   $ 5,742,
060.00
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between     1/15/2016   $
9,958,478.04
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with CGI
Capital, Inc., as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between     1/15/2016   $
9,569,653.00
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with Palo Verde
Leasing Corporation (successor-in-interest to First Chicago Lease
Holdings, Inc.) as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between     1/15/2016   $
4,743,012.00
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with MFS Leasing
Corp. (successor-in-interest to Beneficial Leasing Group, Inc.),
as Owner Participant, as amended.

Facility Lease dated as of December 15, 1986 between      1/15/2016   $
3,272,560.40
PNM and U.S. Bank National Association (successor to
State Street Bank and Trust Company, successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 15, 1986, with Palo
Verde 2- PNM [December 35] Corporation (successor-in-interest
to Chase Manhattan Realty Leasing Corporation), as Owner
Participant (Unit 2), as amended.

Total - Unit 2           $ 33,285.763.44

--------------------------------------------------------------------------------

Description                     Expiration   Annual Rent

Eastern Interconnection Project (EIP)

Amended and Restated Lease dated as of September 1,  4/1/2015      $
2,675,739.30*
1993, between PNM as Lessee, and U.S. Bank National     $ 2,844,913.50
Association (successor to State Street Bank  
and Trust Company,( as successor to The First National
Bank of Boston), as Owner Trustee under a Trust
Agreement dated as of January 2, 1985, with General
Foods Credit Corporation, as Lessor.

Total EIP              $ 2,675,739.30*
                                $ 2,844,913.50
                                                    * 1994 Only

 
 

--------------------------------------------------------------------------------

 
SCHEDULE 5.19

MATERIAL LEASE INTEREST PAYMENTS AND DISCOUNT RATE

Schedule 5.19
Material Lease Interest Payments and Discount Rates
(Numbers in $000)

EIP (Discount Rate 12.85%)

Date
Total Payment
Interest Payment
Principal Payment
Loan Balance EoY
2005
1,299,597
328,435
971,162
1,890,229
2006
608,408
231,380
377,028
1,513,201
2007
642,648
180,402
462,245
1,050,955
2008
683,422
117,815
565,607
485,348
2009
58,795
62,474
-3,678
489,027
2010
112,898
62,962
49,936
439,091
2011
53,990
56,485
-2,495
441,586
2012
498,398
56,811
441,586
0
2013
       
2014
       
2015
       
2016
       
2017
       
2018
       
2019
       
Total
3,958,155
1,096,764
2,861,390
 

PVNGS (Discount Rate 10.25%)

Date
Total Payment
Interest Payment
Principal Payment
Loan Balance EoY
2005
14,380,430
12,148,338
2,232,092
116,288,282
2006
15,239,058
11,919,549
3,319,509
112,968,773
2007
16,147,881
11,579,299
4,568,582
108,400,191
2008
17,117,049
11,111,020
6,006,029
102,394,162
2009
14,895,517
10,495,402
4,400,115
97,994,046
2010
13,670,429
10,044,390
3,626,039
94,368,007
2011
14,513,604
9,672,721
4,840,883
89,527,124
2012
26,655,935
9,176,530
17,479,405
72,047,719
2013
29,233,436
7,384,891
21,848,545
50,199,174
2014
34,358,781
5,145,415
29,213,366
20,985,809
2015
19,428,445
2,151,045
17,277,400
3,708,409
2016
4,088,521
380,112
3,708,409
0
2017
       
2018
       
2019
       
Total
219,729,086
101,208,712
118,520,374
 

 
 

--------------------------------------------------------------------------------

SCHEDULE 10.1
 
NOTICES
 
COMPANY:
 
PNM Resources, Inc.
Alvarado Square
Albuquerque, NM 87158
Attention: Wendy Carlson, Treasurer
Telephone: 505.241.2215
Telecopier: 505.241.2369
Electronic Mail: wendy.carlson@pnmresources.com
Website Address: www.pnmresouces.com
 
ADMINISTRATIVE AGENT:
 
Administrative Agent’s Office
(for payments and Requests for Credit Extensions):
 
Lehman Brothers, Inc..
745 7th Avenue, 5th Floor
New York, NY
Mail Code: 10019
Attention: Michelle Rosolinsky
Telephone: 212-526-6590
Telecopier: 646-758-5015
Electronic Mail: mrosolin@lehman.com
ABA#: 021-0000-89
A/C#: 30434141
A/C Name: LCPI Bank Loans Agency
Ref: PNM Resources

Other Notices as Administrative Agent:
 
Lehman Commercial Paper Inc.
745 7th Avenue, 5th Floor
New York, NY
Mail Code: 10019
Attention: Maria A. McClain
Telephone: 212-526-0859
Telecopier: 917-522-0592
Electronic Mail: adelagar@lehman.com

 

--------------------------------------------------------------------------------

 
SCHEDULE 10.3
 
PROCESSING AND RECORDING FEES
 
The Administrative Agent will charge a processing and recordation fee (an
“Assignment Fee”) in the amount of $2,500 for each assignment; provided,
however, that in the event of two or more concurrent assignments to members of
the same Assignee Group (which may be effected by a suballocation of an assigned
amount among members of such Assignee Group) or two or more concurrent
assignments by members of the same Assignee Group to a single Eligible Assignee
(or to an Eligible Assignee and members of its Assignee Group), the Assignment
Fee will be $2,500 plus the amount set forth below:
 
Transaction
 
Assignment Fee
 
First four concurrent assignments or suballocations to members of an Assignee
Group (or from members of an Assignee Group, as applicable)
 
-0-
 
Each additional concurrent assignment or suballocation to a member of such
Assignee Group (or from a member of such Assignee Group, as applicable)
 
$500
 

--------------------------------------------------------------------------------

 

EXHIBIT 2.6(b)
 
FORM OF NOTE
 

 
Lender: __________________________, 200_
 
FOR VALUE RECEIVED, PNM RESOURCES, INC., a New Mexico corporation (the
“Borrower”), hereby promises to pay to the order of the Lender referenced above
(the “Lender”), at the Administrative Agent’s Office set forth in that certain
Term Loan Agreement dated as of April 18, 2006 (as amended, modified, extended
or restated from time to time, the “Credit Agreement”) among the Borrower, the
Lenders party thereto (including the Lender), Lehman Brothers Inc. as sole lead
arranger and sole book-manager and Lehman Commercial Paper Inc., as
administrative agent (the “Administrative Agent”) (or at such other place or
places as the holder of this Note may designate), the aggregate unpaid principal
amount of the Term Loan made by the Lender to the Borrower under the Credit
Agreement, in lawful money and in immediately available funds, on the dates and
in the principal amounts provided in the Credit Agreement, and to pay interest
on the unpaid principal amount of each Term Loan made by the Lender to the
Borrower, at such office, in like money and funds, at the rates per annum and on
the dates provided in the Credit Agreement.
 
This Note is one of the Notes referred to in the Credit Agreement and evidences
the Term Loans made by the Lender to the Borrower thereunder. Capitalized terms
used in this Note have the respective meanings assigned to them in the Credit
Agreement and the terms and conditions of the Credit Agreement are expressly
incorporated herein and made a part hereof.
 
The Credit Agreement provides for the acceleration of the maturity of the Term
Loans evidenced by this Note upon the occurrence of certain events (and for
payment of collection costs in connection therewith) and for prepayments of Term
Loans upon the terms and conditions specified therein. In the event this Note is
not paid when due at any stated or accelerated maturity, the Borrower agrees to
pay, in addition to principal and interest, all costs of collection, including
reasonable attorney fees.
 
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of the Term Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Credit Agreement or under
this Note in respect of the Term Loan to be evidenced by this Note, and each
such recordation or endorsement shall be prima facie evidence of such
information, absent manifest error.
 
Except as permitted by Section 10.3(b) of the Credit Agreement, this Note may
not be assigned by the Lender to any other Person.
 
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.)
 
 
 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the
date first above written.
 

 
PNM RESOURCES, INC.

By:  
Name:  
Title:  

 

 

--------------------------------------------------------------------------------

EXHIBIT 2.4
 
FORM OF
NOTICE OF CONTINUATION/CONVERSION
 

 
TO:     LEHMAN COMMERCIAL PAPER INC., as Administrative Agent
 
RE:       Term Loan Agreement dated as of April 18, 2006 among PNM Resources,
Inc. (the “Borrower”), Lehman Commercial Paper Inc., as Administrative Agent,
the Lenders named therein and Lehman Brothers Inc. as sole lead arranger and
sole book-manager (as the same may be amended, modified, extended or restated
from time to time, the “Credit Agreement”)
 
DATE:  ___________, 200_
 

1.  
This Notice of Continuation/Conversion is made pursuant to the terms of the
Credit Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.

 

2.  
Please be advised that Borrower is requesting that a portion of the current
outstanding Term Loans advanced to it in the amount of $___________, currently
accruing interest at ____________, be extended or converted as of ________,
200__ at the interest rate option set forth in paragraph 3 below.

 

3.  
The interest rate option applicable to the extension or conversion of all or
part of the existing Term Loans referenced above shall be:

 

a.  
________the Base Rate

 

b.  
________the Adjusted Eurodollar Rate for an Interest Period of:

 
________ one month
________ two months
________ three months
________ six months
 

 
 
 

--------------------------------------------------------------------------------

 

4.  
As of the date hereof, no Default or Event of Default has occurred and is
continuing.

 
PNM RESOURCES, INC.

By:  
Name:  
Title:  

 

 

--------------------------------------------------------------------------------

EXHIBIT 6.1(c)
 
FORM OF
 
COMPLIANCE CERTIFICATE
 
TO:      LEHMAN COMMERCIAL PAPER INC., as Administrative Agent
 
RE:        Term Loan Agreement dated as of April 18, 2006 among PNM Resources,
Inc. (the “Borrower”), Lehman Commercial Paper Inc., as Administrative Agent,
the Lenders named therein and Lehman Brothers Inc. as sole lead arranger and
sole book-manager (as the same may be amended, modified, extended or restated
from time to time, the “Credit Agreement”)
 
DATE:  _____________, 200__
 

Pursuant to the terms of the Credit Agreement, I, ________________, a Financial
Officer of the Borrower hereby certify on behalf of the Borrower that, as of the
quarter ending ___________, 200__, the statements below are accurate and
complete in all respects (all capitalized terms used below shall have the
meanings set forth in the Credit Agreement):
 

a.  
Attached hereto as Schedule 1 are calculations (calculated as of the date of the
financial statements referred to in paragraph c. below) demonstrating compliance
by the Borrower with the financial covenants contained in Section 6.2 of the
Credit Agreement.

 

b.  
No Default or Event of Default exists under the Credit Agreement, except as
indicated on a separate page attached hereto, together with an explanation of
the action taken or proposed to be taken by the Borrower with respect thereto.

 

c.  
The quarterly/annual financial statements for the fiscal quarter/year ended
___________, 200_ which accompany this certificate fairly present in all
material respects the financial condition of the Borrower and its Subsidiaries
and have been prepared in accordance with GAAP, subject to changes resulting
from normal year-end audit adjustments and except that the quarterly financial
statements have fewer footnotes than annual statements.

 
PNM RESOURCES, INC.

By:  
Name:  
Title:  

 

 

--------------------------------------------------------------------------------

SCHEDULE 1
 
TO EXHIBIT 6.1(c)
 

 
FINANCIAL COVENANT CALCULATIONS
 

A.  
Debt Capitalization

 
1.  Consolidated Indebtedness of the Borrower*
$ 
2.  Consolidated Capitalization of the Borrower
$ 
3.  Debt to Capitalization Ratio (Line A1 ¸ A2)
___________ to 1.0
Maximum Permitted
.65 to 1.0

 

 

--------------------------------------------------------------------------------

*     For purposes of such calculation, the portion of Consolidated Indebtedness
attributable to obligations under Material Leases shall be the net present value
(using (i) the discount rate (A) set forth in Schedule 5.19 of the Credit
Agreement, so long as such Schedule 5.19 specifies the same relevant discount
rate as is used in calculating such net present value provided to Moody’s and
S&P or (B) the discount rate used in calculating such net present value provided
to Moody’s and S&P or (ii) any such other rate as shall be proposed by the
Borrower (and agreed upon by the Required Lenders) of all amounts payable under
the Material Leases.
 

 

--------------------------------------------------------------------------------

EXHIBIT 10.3(b)
 
FORM OF
 
ASSIGNMENT AND ASSUMPTION
 

 
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
____________ (the “Assignor”) and _________________ (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Schedule 1 attached hereto (the
“Standard Terms and Conditions”) are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.
 
For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (a) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including, without limitation, any Letters of Credit,
guarantees, and swingline loans included in such facilities) and (b) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (a) above (the rights and obligations sold and assigned pursuant to
clauses (a) and (b) above being referred to herein collectively as, the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
 
1.  Assignor:
 
 __________________________________
2.  Assignee:
 
___________________________________
and is an Affiliate/Approved Fund of __________________
3.  Borrower:
 
PNM Resources, Inc.
 
4.  Administrative Agent:
 
Lehman Commercial Paper Inc. as the Administrative Agent under the Credit
Agreement
 

 
 
 
 

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5.  Credit Agreement:
 
Term Loan Agreement dated as of April 18, 2006 among the Borrower, the Lenders
party thereto, Lehman Brothers Inc. as sole lead arranger and sole book-manager
and the Administrative Agent.
 

6.  Assigned Interest:
 
Aggregate Amount of
Term Loans for
all Lenders
Amount of
Term Loans
Assigned
Percentage Assigned of
Term Loans
$
$
%

 
7.  After giving effect to the foregoing assignment, the Assignor and the
Assignee shall have the following Pro Rata Shares and outstanding Loans:
 

 
Pro Rata Share
Outstanding Term Loans
Assignor
   
Assignee
   

8.  Trade Date: ______________
 
Effective Date: __________ __, 200__
 

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The terms set forth in this Assignment and Assumption are hereby agreed to:
 
ASSIGNOR

[NAME OF ASSIGNOR]

By:  
Name:  
Title:  

ASSIGNEE

[NAME OF ASSIGNEE]

By:  
Name:  
Title:  

Consented to and Accepted if applicable:
 
LEHMAN COMMERCIAL PAPER INC.,
 
as Administrative Agent
 
By:  
 
Name:  
 
Title:  
 
Consented to if applicable:
 
PNM RESOURCES, INC.
 
By:  
 
Name:  
 
Title:  
 
 

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SCHEDULE 1
TO EXHIBIT 10.3(b)
 
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
 
1.  Representations and Warranties.
 
1.1.  Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Credit Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Credit Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Credit Document.
 
1.2.  Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.1 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a foreign lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.
 
 
 

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2.  Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.
 
3.  General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.