Document:

Exhibit

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Exhibit 10.8
COMMERCIAL SUPPLY AGREEMENT
ACTIVE PHARMACEUTICAL INGREDIENT
This Commercial Supply Agreement (this "Agreement"), effective as of the 4th day of June, 2018 (the “Effective Date”), is entered into by and between:
AMAG Pharmaceuticals, Inc., a company incorporated under the laws of State of Delaware, with its principal office located at 1100 Winter Street, Waltham, MA 02451 (“Company”); and
SAFC, Inc., a company organized under the laws of Wisconsin, with its corporate headquarters located at 3050 Spruce Street, St. Louis, Missouri 63103 (“SAFC”).
Company and SAFC are hereinafter sometimes referred to separately as a "Party" or together as the "Parties".
RECITALS
WHEREAS, Company is a biopharmaceutical company engaged in the research and development of products, including the API and the Finished Product (as such terms are hereinafter defined), that utilizes its proprietary technology for the development and commercialization of a therapeutic hormone medicine used to lower the risk of preterm birth in women who are pregnant with one baby and who have previously delivered one baby too early (preterm);
WHEREAS, SAFC develops, manufactures and sells a broad range of biochemicals and organic chemicals globally for use in pharmaceutical development and as APIs, and key components in pharmaceutical manufacturing;
WHEREAS, Company desires to engage SAFC to manufacture the API at commercial scale for use in the Finished Product; and
WHEREAS, SAFC is willing to manufacture and supply to Company the API upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants and agreements contained herein, the Parties hereby agree as follows:
		
	1.
	Definitions and Interpretation

1.1    “Active Pharmaceutical Ingredient” or “API” means hydroxyprogesterone caproate (HPC).
1.2    “Affiliate” means any entity controlling, controlled by or under common control with either Party hereto.  For purpose of this definition, “control” means ownership of over fifty percent (50%) of the equity capital, the outstanding voting securities or other ownership interest of an entity, or the right to receive over fifty percent (50%) of the profits or earnings of an entity.  In the case of non-stock organizations, the term “control” means the power to control the distribution of profits.
1.3    “Analytical Methods” means the set of validated analytical methods related to the Manufacturing of the API as set forth on Appendix 4 hereto. 
1.4    “API Requirements” has the meaning set forth in Section 4.1 hereof.
1.5    “Batch” means the API that results from a single Manufacturing process, inclusive of Materials. 
1.6    “Batch Record” and “Master Batch Record” have the meanings assigned to such terms in the Quality Agreement.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

1.7    “Commencement Date” means the date Company issues its initial binding written purchase order for the commercial supply of API under Section 3.2 below.
1.8    “Commercial Forecast” has the meaning set forth in Section 3.1 hereof.
1.9    “Confidential Information” means with respect to each Party in its capacity as a disclosing party (collectively, "Disclosing Parties," and each a "Disclosing Party") any information disclosed to the other Party (the “Receiving Party”) (in any form, tangible or intangible), including, without limitation, information concerning or relating to any business plans, products, trade secret processes or methodologies, intellectual property, design specifications, finances, customers, suppliers, employees, operation and/or business, technical documents and other proprietary rights and information; which: (a) is identified by the Disclosing Party at the time of disclosure as being of a confidential nature or that is marked as confidential; or (b) would lead a reasonable person, under the circumstances, to understand that such information is confidential or proprietary in nature, regardless of whether so marked; and provided further, that, regardless of whether so marked, all information regarding SAFC's operations, methods, and pricing disclosed by SAFC to Company in connection with this Agreement shall be deemed "Confidential Information" of SAFC and all API, API structure, Specifications, related documents, materials, raw materials, product, product specifications, processes, operations, methods, Master Batch Record, and all and any other documentation, information, templates, and biological, chemical or other materials furnished to SAFC by or on behalf of Company or developed in the course of Manufacturing API other than SAFC Property (collectively, with all associated intellectual property rights) shall be deemed "Confidential Information" of the Company. For clarification, Company will not receive the original of the Master Batch Record.  
1.10    “Current Good Manufacturing Practices” or “cGMP” means all Laws and standards relating to the Manufacture of API, including the then current Manufacturing practices for fine chemicals, active pharmaceutical ingredients, intermediates or bulk products as established by the principles detailed in the guidance documents developed by the International Conference on Harmonization, (b) the U.S. Federal Food, Drug and Cosmetic Act (21 U.S.C. 301 et seq.), (c) relevant United States regulations in Title 21 of the United States Code of Federal Regulations (including Parts 11, 210, and 211), (d) EC Directive 2003/94 EC of October 8, 2003, (e) the EC Guide to Good Manufacturing Practice Parts I and II, and (f) all additional Regulatory Agency documents that replace, amend, modify, supplant or complement any of the foregoing. 
1.11    “Deviation” has the meaning set forth in the Quality Agreement.
1.12    “EMEA” means the European Medicines Agency of the European Union, and any successor thereto.
1.13     “Facility” means (a) SAFC’s facility located at [***], as well as (b) such other facility where API may be Manufactured as approved by Company in writing.
1.14    “Failure to Supply” has the meaning set forth in Section 2.11(a) hereof.
1.15    “FDA” means the United States Food and Drug Administration, and any successor thereto.
1.16    “Finished Product” means the finished dosage form drug product that contains the API.
1.17    “Laboratory” has the meaning set forth in Section 4.2 hereof.
1.18     “Latent Defect” means any deficiency (meaning any API that fails to meet the representations, warranties or other quality requirements set forth in this Agreement) that is not determinable upon a reasonable inspection of the API (based on physical inspection, identity test and review of the certificate of analysis). 
1.19    “Law” means the laws, ordinances, rules, regulations, requirements and lawful orders of any federal, state, local, national or supranational public authority, including child labor laws, whether existing at present or later enacted that may be in effect from time to time, in each case applicable to the performance of this Agreement and/or the Manufacture of API. 
1.20    “Manufacture”, “Manufacturing” or “Manufactured” means all activities related to the manufacturing of the API, or any ingredient thereof, to be undertaken by SAFC in accordance with the terms and conditions of this Agreement 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

and the Quality Agreement, which may include receipt (including testing) and storage of Materials, manufacturing the API for development or commercial sale, packaging the API, in-process and final testing and release of the API (or any component or ingredient thereof), quality assurance activities related to manufacturing, warehousing, release of the API, and regulatory activities related to any of the foregoing.
1.21    “Manufacturing Process” means the instructions, Specifications (as well as specifications for raw materials and excipients), formulae, procedures, tests and standards developed, established and described by Company for Manufacturing API.
1.22    “Marks” has the meaning set forth in Section 11.4 hereof.
1.23    "Materials" means all raw materials, components, and other potential substance-contacting items necessary for, or otherwise used in, the Manufacture of API pursuant to this Agreement, as applicable.
1.24    “Minimum Lead Time” has the meaning set forth in Section 3.2(c) hereof.
1.25    “OOS” (Out of Specification) has the meaning set forth in the Quality Agreement.
1.26    “Quality Agreement” means the Quality Agreement between Company and SAFC attached hereto and incorporated herein by reference as Appendix 1.
1.27    “Records” means SAFC’s records related to the performance of this Agreement, which shall include Manufacturing documents, Batch Records, test results, financial records, reports, correspondence, memoranda, and any other similar documentation related to the performance of this Agreement. 
1.28    “Regulatory Agency” has the meaning set forth in the Quality Agreement.
1.29    “Specifications” means the Manufacturing specifications for the API as set forth in Appendix 2 hereto and/or in the Quality Agreement, as such specifications may be modified from time to time by Company (and in the case of any such modifications, Company shall provide such modifications to SAFC, and the Specifications shall thereafter be deemed to be so modified within a reasonable time without the need to amend this Agreement or the Quality Agreement, as applicable).
1.30    “Term” has the meaning set forth in Section 9.1 hereof.
		
	2.
	Manufacture and Supply of API 

2.1    General Conditions of Supply.  During the Term, SAFC shall Manufacture at the Facility and supply API to Company, and Company shall purchase API from SAFC in such quantities as set forth in Section 2.9 below, subject to the limitations and requirements set forth herein.
2.2    Specifications.  At all times during the Term, SAFC shall Manufacture the API in accordance with cGMPs, Laws, the Specifications and the Quality Agreement.
2.3    Quality Control and Release.  SAFC shall conduct quality control(s) and release(s) of API (including preparing documentation) in accordance with the Quality Agreement.  Company shall have the right to reject API that does not meet the quality control and release testing requirements agreed upon in the Quality Agreement.
2.4    Inspections.  Inspections of the Facilities shall be conducted as specified in the Quality Agreement or as required by the applicable Regulatory Agency.  
2.5    Change Control Program.  The Specifications and Manufacturing Process shall be changed as set forth in the Quality Agreement. Notwithstanding anything herein or in the Quality Agreement to the contrary, any change control procedures described in the Quality Agreement and any changes implemented pursuant to such change control procedures shall, in each instance, comply with the Laws (including cGMPs). Further, for any such change, SAFC shall ensure that all 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

API Manufactured following such change meets the Specifications as amended by such change, and provide Company with all information with respect to the Manufacture of the API in connection with such change needed to amend any regulatory filings maintained with respect to the subject Finished Product.  Company and SAFC shall mutually agree on the allocation of costs of implementing the foregoing changes. 
2.6    Manufacturing at Facility.  Supplier shall Manufacture all API supplied under this Agreement at the Facility.  Manufacturing of API may not be relocated from the Facility without Company's prior written consent, provided that such consent shall not be unreasonably withheld.    
2.7    Subcontracting.  Prior to engaging a given Affiliate or third party to perform any Manufacturing activities under this Agreement, SAFC shall notify Company thereof and discuss such subcontracting with Company; provided that in all cases, SAFC shall not subcontract any of its obligations under this Agreement, including any obligations to Manufacture API, to an Affiliate or third party without the prior written consent of Company and that such consent shall not be unreasonably withheld.  With respect to any subcontracting (including to an Affiliate or a third party), SAFC shall remain fully responsible and liable for all obligations under this Agreement, and fully guarantees and warrants the performance (in accordance with this Agreement) of any responsibilities so subcontracted, and assumes full vicarious liability for such activities performed by any subcontractor.  Without limiting the foregoing, SAFC shall cause any and all such subcontractors to comply with the applicable terms and conditions of this Agreement (including intellectual property ownership provisions and any and all audit and inspection rights).  Any subcontracting of any Manufacturing or other activities under this Agreement shall be subject to the other applicable terms and conditions of this Agreement, in each case, to the extent applicable.  
2.8    Safety of API.  Each Party shall immediately notify the other Party of any unusual health or environmental occurrence relating to API.  Each Party shall advise the other Party immediately of any safety or toxicity problems of which it becomes aware regarding API manufactured under this Agreement.
2.9    Purchase Commitment.
(a)    During the Term and upon the terms and subject to the conditions of this Agreement, and as long as SAFC can demonstrate to Company’s reasonable satisfaction that SAFC: (i) provides conforming Product in accordance with the terms of this Agreement and (ii) can meet the Commercial Assurance (as defined below in Sec. 3.1) production levels, Company  undertakes to purchase from SAFC not less than [***] of API (“Minimum Percentage Requirement”).  The Parties acknowledge that Company placed and SAFC manufactured API for the Work Order dated October 17, 2017 under purchase order 80319 dated November 6, 2017 and Proposal dated March 7, 2018 under purchase order 80767 dated March 16, 2018. The Parties agree that the terms of this Agreement shall apply to the Manufacture of API pursuant only to  Purchase Order 80767, however both Purchase Orders 80319 and 80767 shall apply towards the Minimum Percentage Requirement. [***]. Company agrees to cooperate in a prompt and timely manner with SAFC in any investigation and resolution of any quality issues with the API to enable SAFC to remedy any such issue.  [***].  For clarity, API that is to be used for clinical purposes shall not be included when calculating Total Commercial Volume Requirements.
(b)    At any time and from time to time during the Term, if SAFC believes that Company is not purchasing the Minimum Percentage Requirement, it will provide Company with written notice requesting that Company provide sufficient documentation demonstrating such purchases.  Company shall have [***] after such notice to provide this documentation.  If Company does not provide such documentation within this [***] period or if such documentation does not demonstrate, to SAFC’s reasonable satisfaction, that Company purchased the Minimum Percentage Requirement based on Company’s demand forecast, the Parties will engage in good faith discussions for a period of an additional [***] in an effort to resolve the disagreement.  If the Parties do not reach a mutually acceptable agreement within the foregoing [***] discussion period, then either Party may refer the matter to be resolved by binding arbitration.  The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect at the time of the arbitration to the extent that both Parties are domestic United States companies or in accordance with the International Arbitration Rules of the American Arbitration Association in effect at the time of the arbitration to the extent that one of the Parties is not a domestic United States company, except, in each instance, as such rules may be modified herein or by mutual agreement of the Parties. The seat of the arbitration shall be New York City, New York, USA, and it shall be conducted in the English language.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

2.1    Delay.
(a)    If SAFC is or will be unable, for any reason (including an event of Force Majeure under Section 11.17 hereof), to supply the API in accordance with the quantities and/or delivery dates specified by Company in a purchase order received and accepted by SAFC (provided that such quantities are within the Commercial Forecast and such delivery dates meet the Minimum Lead Time requirements herein) (“Failure to Supply”), SAFC shall immediately upon discovery notify Company in writing of such circumstance.  Within [***] of such Failure to Supply, SAFC shall notify Company of the cause of such failure and shall propose a plan of remediation.
(b)    If such Failure to Supply will continue or does continue for a period of [***], and SAFC is unable to Manufacture the API in quantities necessary to cure the Failure to Supply within [***] after the initial Failure to Supply, then any quantities of API ordered by Company from an alternative supplier of API shall be considered ordered under this Agreement for purposes of calculating whether Company has ordered the Minimum Percentage Requirement.
(c)    SAFC shall promptly notify Company when SAFC can resume supply of API in accordance with this Agreement and provide Company with a firm date for delivery of the API in accordance with Company’s needs.  
		
	3.
	Forecasts, Release, Purchase Orders, Delivery and Storage

3.1    Forecasts. Reasonably in advance of the Commencement Date, Company shall determine its initial estimated purchases of the API from SAFC under this Agreement. Starting shortly after the Effective Date, Company shall deliver to SAFC a written, non-binding, rolling [***] forecast of quantities of API to be purchased (the “Commercial Forecast”), provided that the first [***] of each such Commercial Forecast shall be binding for Company to purchase and SAFC to Manufacture. Further, SAFC shall provide reasonable assurance in writing to Company of SAFC’s ability and capacity to meet not less than [***] of the then current non-binding portion of the Commercial Forecast (as updated from time to time by Company) (“Commercial Assurance”).  The Commercial Forecast shall cover each of the next succeeding [***].  After delivery of the initial Commercial Forecast, the Commercial Forecast shall be updated by Company on a calendar quarterly basis, which update shall include the next successive calendar quarter added to the last period of the previous Commercial Forecast. Although the last [***] of the Commercial Forecast is non-binding, Company understands that SAFC shall use the Commercial Forecast for planning purposes (including raw material acquisitions and investment in equipment and other resources) in order to make available the production capacity required to Manufacture and supply the forecasted amounts of the API within the time frames specified therein and reciprocally SAFC understands that Company has relied on SAFC’s Commercial Assurance in its production and manufacturing arrangements.
3.2    Initial Commercial Supply; Purchase Orders. 
(a)    Company issued Purchase Order 80767 for its initial purchase of API hereunder.
(b)    All purchase orders for API hereunder shall be in minimum batch sizes of [***] each. 
(c)    All purchase orders for API subsequent to the initial purchase order must be issued at least [***] prior to the requested delivery of API thereunder or such shorter time as may be agreed upon by the Parties in writing.  The minimum number of days between the date of a purchase order and the date of delivery of API under this Section 3.2(c)  above shall be referred to hereinafter as the “Minimum Lead Time”.
(d)    Within [***] of receipt of a purchase order, SAFC shall notify Company in writing if it accepts the purchase order; provided that it is understood that SAFC must accept a purchase order if it does not exceed the binding portion of the Commercial Forecast and meets the Minimum Lead Time.  If SAFC fails to respond within [***] of receipt of the purchase order, Company shall follow up with SAFC to determine whether SAFC is in receipt of the purchase order. SAFC shall confirm its receipt of Company’s purchase order within [***] following an inquiry made by Company pursuant to the previous sentence.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(e)    If a purchase order exceeds the binding portion of the Commercial Forecast or does not meet the Minimum Lead Time, SAFC may reject such purchase order if SAFC reasonably determines that it cannot, using commercially reasonable efforts, ship the amount of API ordered by the requested delivery date.  If SAFC accepts such purchase order, it will be required to fill such excess and/or accommodate such shorter lead-time.
(f)    For each purchase of API, the purchase order shall specify: (i) an identification of the API ordered; (ii) quantity requested; (iii) the requested delivery date; and (iv) shipping instructions and address.
(g)    Each purchase order shall give rise to a contract for the purchase of the API under the terms and conditions set forth in this Agreement, to the exclusion of any additional or contrary terms set forth in any purchase order or invoice, unless otherwise explicitly agreed to in writing by the Parties. 
3.3    Cancellation or Deferral.  Without prejudice to the Minimum Percentage Requirements, Company may cancel or defer any purchase order, in whole or in part, without penalty, provided that such cancellation or deferral notice is received by SAFC prior to SAFC's commencement of the actual Manufacture of the applicable API pursuant to such purchase order.  If Company cancels or defers a purchase order, in whole or in part, with less than the aforementioned notice, Company shall reimburse SAFC for the reasonable, non-cancellable, out of pocket costs incurred by SAFC as a result of such cancelation or deferral by Company (and in connection therewith, the Parties shall discuss in good faith and agree to the amount of such costs), provided that SAFC shall use its commercially reasonable efforts to minimize such costs. 
3.4    Release of API.  SAFC shall notify Company when all of the following activities have been completed: (i) the Manufacture of the API is complete, (ii) all Manufacturing records have been reviewed, (iii) all Deviations have been adequately reviewed and approved, and (iv) the API has been released by SAFC in accordance with the Quality Agreement.  SAFC shall use commercially reasonable efforts to target a release date for the API that is [***] after Manufacturing is complete.  If this target cannot be achieved for a batch, SAFC shall notify Company of the reason and a new target release date. SAFC shall deliver all documents required by the Quality Agreement to Company after SAFC’s release of each Batch.
3.5    Delivery, Title and Risk of Loss.  All API supplied by SAFC shall be delivered FCA SAFC’s shipping point within the meaning of Incoterms 2010.  Delivery of the API to the carrier at such SAFC shipping point shall constitute delivery to Company.  Title to and risk of loss of the API sold hereunder shall pass to Company or its designee when the API is delivered to the carrier at SAFC’s shipping point.  The Parties recognise the importance of timely delivery and SAFC will use commercially reasonable best efforts to fulfil its delivery obligations. 
3.6    Packaging.  SAFC will preserve, package, handle, and pack all API to protect the API from loss or damage, in conformance with standard commercial practices, the Specifications, the Quality Agreement and Laws, including cGMPs.
3.7    Storage.  SAFC shall hold all API under the storage conditions established pursuant to the Quality Agreement and in accordance with Laws, including cGMP.  SAFC shall store the API for a period not to exceed [***], at its own cost, after the requested delivery date set forth in the purchase order.  Any API held by SAFC beyond [***] from the requested delivery date shall be subject to a SAFC’s standard storage charges, as such storage charges are communicated to Company reasonably in advance of the end of such [***].
		
	4.
	Rejection, Defects and Non-Conforming Goods

4.1    Nonconforming API.  Within [***] from the date SAFC delivers API (including all release documentation) to Company or to a third party designated by Company, Company shall have the right to inspect and test the API to determine whether such API at the time of delivery did not meet the representations, warranties or covenants specified in Section 6.2(b) (collectively the “API Requirements”).  Any claim by Company that API does not conform to the API Requirements shall be made in writing to SAFC within such [***] period and shall be accompanied by a detailed report of analysis prepared by or on behalf of Company.  Notwithstanding the foregoing, if a defect in the API is a Latent Defect, then such [***] time period shall not apply; provided that Company shall have the obligation to provide such 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

notification to SAFC in writing within [***] after Company’s discovery of such Latent Defect (or within [***] after Company is notified in writing by a third party of such Latent Defect, if later) but in no case later than [***] after the date SAFC delivers API (including all release documentation) to Company or to a third party designated by Company; provided, however, that if SAFC receives stability data that establishes a shelf life of greater than or equal to [***] from the date of Manufacture of the API, then the notification period for a Latent Defect shall be no later than [***] from the date of Manufacture of the API.
4.2    Dispute Concerning Fulfilment of API Requirements.  In the event of a dispute concerning the fulfilment of API Requirements, Company and SAFC shall agree on an independent testing laboratory of recognized standing in the industry selected by SAFC and approved by Company (which approval shall not be unreasonably withheld) (“Laboratory”) to determine whether any such API met the API Requirements.  The findings of the Laboratory shall be binding.  The expenses related to such testing shall be borne by SAFC only if the testing confirms that API Requirements are not fulfilled, and otherwise by Company.  During any period that the Parties are in dispute regarding the conformity of the API, SAFC shall, if requested by Company, replace such quantity of API, and Company shall pay for both the original shipment of API and the replacement shipment of API if the Laboratory confirms the conformity of the original shipment.
4.3    Remedies for Non-Conforming Product.  If any API delivered to Company fails to conform to API Requirements, SAFC, [***] within a commercially reasonable period not to exceed [***] from the date that Company notifies SAFC of such nonconformity.  In addition, if the API is determined not to have met the API Requirements, SAFC shall [***].  Pursuant to written directions from SAFC, Company shall either return the nonconforming API to SAFC or destroy it, in each case, at SAFC’s expense.  If Company is directed to destroy nonconforming API, then Company shall provide SAFC a certificate certifying such destruction. Except for SAFC’s indemnification obligations in respect of third party claims under Section 6.8 below, the remedy under this Section 4.3 shall be Company’s exclusive remedy and SAFC’s sole liability for any claim that API fails to conform to the API Requirements.Deviations and OOS.  The Parties shall cooperate with each other upon request in the investigation and response to any API concerns relating to Deviations and OOS, which may relate to SAFC’s role in the Manufacture of API (in addition to complying with the corresponding provisions in the Quality Agreement).  Further, SAFC shall share with Company any quality assurance or quality control analyses performed or identified trends relating to safety and quality of the API or its Manufacturing process.
		
	5.
	Sales Prices and Terms of Payment

5.1    Currency.  Except as otherwise expressly indicated, all references to "$" or "dollars" in this Agreement refer to the currency of the United States of America.
5.2    Sales Prices. The sales prices for API Manufactured under this Agreement and released by SAFC’s quality assurance department shall be the prices set forth in Appendix 3.  The prices are to be understood as packaged and ready for further processing at the facility of Company or of a third party designated in writing by Company, excluding costs of shipping, insurance and freight and further excluding applicable sales or other taxes (which will be applied as set forth in Section 5.6 hereof).  Except as otherwise expressly indicated, all prices are listed in United States Dollars. 
5.3    Invoices and Payments.  SAFC shall invoice Company at the time of delivery (or partial delivery) of the API.  All undisputed payments are due in full within [***] from the date of receipt of the SAFC invoice.  Undisputed payments shall be made to SAFC in accordance with the instructions on the invoice; provided, that, in the event of a conflict between an invoice and the terms of this Agreement, this Agreement shall control and any additional terms set forth in an invoice shall be null and void.  Except as otherwise expressly indicated, all undisputed payments hereunder shall be made in United States Dollars.
5.4    Overdue Payments.  Company shall pay interest on all past-due amounts (except those subject to a bona fide dispute) at a rate of interest equal to the lesser of [***] per month or the maximum rate permitted by Law.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

5.5    Price Adjustment.  Notwithstanding any other provision of this Agreement to the contrary, no more than once each calendar year of the Term following the first year of the Term, with [***] prior written notice to Company (“Price Adjustment Period”), and in addition to any other price adjustment that may be permitted by this Agreement or otherwise agreed to by the Parties, SAFC may adjust the pricing applicable to Company’s purchases of API for such calendar year by an amount not to exceed [***] from the Effective Date or the date of the last increase pursuant to this Section 5.5, to the date of such written notice to Company; provided that any price adjustment shall apply only to purchase orders submitted following the Price Adjustment Period. 
5.6    Taxes.  
(a)    If Company must withhold from any payment to SAFC under this Agreement any taxes required to be withheld by Company under the applicable laws of any country, state, territory or jurisdiction, such amount shall be paid to the appropriate taxing authorities.  Upon request, Company shall provide SAFC with documentation of such withholding as is reasonably available to allow SAFC to document such tax withholdings for purposes of claiming tax credits and similar benefits.
(b)    Any use tax, sales tax, value added tax, excise tax, duty, custom, inspection or testing fee, or any other tax, fee or charge of any nature whatsoever imposed by any governmental authority on or measured by the transactions between Company and SAFC (except any amounts imposed based upon or attributable to SAFC’s income) shall be paid by Company in addition to any other amounts due hereunder.
		
	6.
	Recall, Warranties, Indemnification and Insurance

6.1    Recall.
(a)    As between the Parties, Company shall have the sole and absolute discretion as to whether to institute a recall or withdrawal of Finished Product or API  (whether instituted at the request of a Regulatory Agency or voluntarily instituted by Company for any reason).  Notwithstanding anything to the contrary contained herein, SAFC shall have no right to institute any recall or withdrawal of any Finished Product or API.  SAFC agrees to abide by all decisions of Company to recall or withdraw Finished Product or API.
(b)    Company shall be responsible for conducting any recall arising out of, related to or in connection with this Agreement (including without limitation any recall of any Finished Product.  SAFC shall co-operate with and give all reasonable assistance to Company in conducting any such recall to the extent it relates to the API.  Subject to Section 11.5 below, SAFC shall bear the reasonably incurred cost and expense of a recall or withdrawal to the extent such recall results from SAFC’s negligence or willful misconduct or breach of this Agreement or the Quality Agreement; provided, however, if such recall or similar action is also the result of Company’s breach of its representations, warranties or obligations hereunder or under the Quality Agreement or also results from Company’s negligence or willful misconduct, then SAFC’s liability for such recall shall be reduced proportionately by the damages or losses attributable to Company.  Otherwise, Company shall bear all costs and expenses associated with any such recall.  In the event of a recall or similar action, each Party shall use commercially reasonable efforts to mitigate the costs associated therewith.
(c)    In the case of a dispute as to the existence or level of nonconforming API in connection with a recall under this Section 6.1, the matter shall be referred to the Laboratory in accordance with Section 4.2 above.  The decision of the Laboratory shall be final and binding on the Parties. 
6.2    SAFC Representations and Warranties.  SAFC hereby represents, warrants and covenants as follows:

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(a)    (i) The execution, delivery and performance of this Agreement does not conflict with, violate or breach any agreement to which SAFC is a party or SAFC’s constituent documents, (ii) SAFC is not prohibited or limited by any law or agreement (to which it is a party) from entering into this Agreement and (iii) the performance of this Agreement will not create any legal conflict with any other business or activity engaged in by SAFC;
(b)    The API at the time of delivery shall (i) have been Manufactured and delivered in compliance with, and shall meet, the Specifications, (ii) be Manufactured in accordance with all Laws (including cGMPs) in effect on the day of delivery, (iii) will conform to the Quality Agreement and the Specifications; (iv) not be adulterated or misbranded within the meaning of the U.S. Federal Food, Drug and Cosmetic Act (the “Act”), or any similar Law of any other jurisdiction, and (v) not be an article that may not, under the provisions of the Act, or any similar Law of any other jurisdiction, be introduced into stream of commerce; 
(c)    SAFC will have obtained and maintained in effect all such approvals and permits as may be required under applicable laws, rules, regulations and requirements to operate the Manufacturing facility for the API for the purposes of Manufacturing API under the Quality Agreement and under this Agreement;
(d)    SAFC will not in the course of performing the Manufacturing obligations hereunder, infringe or misappropriate any intellectual property of any other person, provided, however, that this warranty does not apply to SAFC’s use of any Company Confidential Information used solely in accordance with the terms of this Agreement or the Quality Agreement or other written instructions provided by Company in accordance with the Quality Agreement and used by SAFC in Manufacturing API hereunder.
(e)    SAFC shall not disclose to Company any trade secrets or confidential or proprietary information of any third party without the consent of such third party.
(f)    SAFC agrees that federal securities law may prohibit it, its affiliates and its representatives from purchasing or selling any securities of the Company while it is in possession of material, non-public information of the Company, and that it will not disclose any material, non-public information, directly or indirectly, to any party for the purpose of encouraging such party to trade in the Company’s securities and that it will comply at all times with the applicable Federal Securities Laws and regulations.
6.3    Regulatory Violations.
(a)    SAFC represents and warrants that it does not and will not, and its Affiliates do not and will not, knowingly use in any capacity the services of any person or entity debarred under Section 306 of the Federal Food, Drug, and Cosmetic Act named on the FDA Debarment List (Drug Product Applications) (http://www.fda.gov/ora/compliance_ref/debar/), or otherwise debarred under the corresponding Laws of another jurisdiction.  Where permissible by local Laws, notably regulation on personal data protection, SAFC will as soon as practically possible disclose in writing to Company any information which comes to its attention and indicates that the statement in the preceding sentence is or may be incorrect.  SAFC shall notify Company in writing as soon as practically possible if any Violation (as defined below) occurs or comes to its attention at any time during the Term.  If a Violation exists with respect to any of SAFC’s officers, directors, Key Employees, or Subcontractors, SAFC shall promptly remove such individual(s) or entities from performing any service, function or capacity related to this Agreement.  Company shall also have the right, in its sole discretion, to terminate this Agreement immediately in the event of any such Violation, if such Violation (i) is not cured by SAFC within [***] after receipt of a notification of such Violation from Company or (ii) cannot be cured by SAFC.
(b)    SAFC represents and warrants that SAFC, its Affiliates and their respective officers and directors, and employees in the Manufacture of API, have not been, and will not be, in Violation.  SAFC shall notify Company in writing as soon as practically possible if any such Violation occurs or comes to its attention.  Company shall have the right, in its sole discretion, to terminate this Agreement and/or any purchase order immediately in the event of any such Violation.  The term “Violation” shall mean that either SAFC or its Affiliates or, to SAFC’s knowledge any of their respective officers, directors, or employees Manufacturing API has been: (1) convicted of any of the felonies identified among the exclusion authorities listed on the U.S. Department of Health and Human Services, Office of Inspector General (OIG) website, 

9

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including 42 U.S.C. 1320a-7(a) (https://oig.hhs.gov/exclusions/authorities.asp );  (2) identified in the OIG List of Excluded Individuals/Entities (LEIE) database (https://oig.hhs.gov/exclusions/authorities.asp ) or the U.S. General Services Administration's list of Parties Excluded from Federal Programs (http://www.sam.gov ); or (3) listed by any US Federal agency as being suspended, debarred, excluded, or otherwise ineligible to participate in Federal procurement or non-procurement programs, including under 21 U.S.C. 335a (http://www.fda.gov/ora/compliance_ref/debar/); or (4) listed on the SDN LIST (including  owned by 50% or more by a person listed on the SDN List),  the U.S. Commerce Department’s Denied Persons List (http://www.bis.doc.gov/dpl/thedeniallist.asp) and Entity List (http://www.bis.doc.gov/entities/default.htm), or the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions (http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/e_ctlview.html).
6.4    No Contaminants.  SAFC hereby declares and covenants that as of the Effective Date of this Agreement it is not, and during the Term shall not, produce, package, label, warehouse, quality control test (including in-process, release and stability testing), release or ship any chemical entity classified as penicillins or other beta-lactam antibiotics such as cephalosporins, carbapenems or monobactams; biological preparations containing live viruses or microorganisms, in the Facility.
6.5    Company Representations and Warranties. 
(a)    Company represents and warrants that (i) the execution, delivery and performance of this Agreement does not conflict with, violate or breach any agreement to which Company is a party or Company’s constituent documents, (ii) Company is not prohibited or limited by any law or agreement to which it is a party from entering into this Agreement and (iii) the performance of this Agreement will not create any conflict with any other business or activity engaged in by Company.
(b)    Company represents and warrants that (i) Company has all rights, permissions and licenses required to enter into and perform its obligations under this Agreement, (ii) any intellectual property of Company provided to SAFC under or in connection with this Agreement does not, and will not infringe any patent or other proprietary right of any third party if used in accordance with the terms of the Agreement, Quality Agreement, and any written instructions provided by Company; and (iii) Company shall not disclose to SAFC any trade secrets or confidential or proprietary information of any third party without the consent of such third party.
(c)    Company agrees that federal securities law may prohibit it, its affiliates and its representatives from purchasing or selling any securities of SAFC while it is in possession of material, non-public information of SAFC, and that it will not disclose any material, non-public information, directly or indirectly, to any party for the purpose of encouraging such party to trade in SAFC’s securities and that it will comply at all times with the applicable Federal Securities Laws and regulations.
6.6    Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NEITHER PARTY IS MAKING ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED.
6.7    Company Indemnification.  Company shall indemnify, defend and hold harmless SAFC, its Affiliates and its or their directors, officers and employees from and against all liabilities, losses, damages, fines, penalties, costs and expenses (including without limitation reasonable attorneys’ fees) (collectively, “Losses”), arising from any third party claim, action or demand (“Third Party Claim”), to which SAFC is or may become subject to the extent relating to or arising out of or are alleged or claimed to relate to or arise out of or in connection with: 

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(a)    any breach by Company of any of its (or any of its Affiliate’s) obligations or representations and warranties under this Agreement;
(b)    any negligent act or omission or willful misconduct by Company, its Affiliates or its or their directors, officers, employees, agents or subcontractors related to its activities under this Agreement and the Quality Agreement, or related to the API or the Finished Product;
(c)    the labeling, marketing, distribution, offer for sale or sale by Company of the API or the Finished Product (or any other product, good or service in connection with this Agreement);
(d)    the use and/or consumption of the API,  or the use and/or consumption of Finished Product, in each case by Company, any of its Affiliates or any of its or their officers, directors, employees, agents, subcontractors or licensees; 
(e)    the infringement by the Finished Product, the API and/or the Company’s use of the API and/or the Finished Product of any intellectual property or other proprietary rights of any third party, except to the extent the method of Manufacture of API, or any part thereof, infringes, misappropriates, or otherwise violates the intellectual property rights of or any confidentiality or non-use obligations to any third party (other than a claim to the extent that such claim is based on any know-how or other intellectual property provided by Company);
(f)    SAFC following any of Company’s Specifications in the Manufacture of the API provided in accordance with the Quality Agreement]; or
(g)    any violation of any applicable law or regulation by Company, its Affiliates or its or their officers, directors, employees, agents or subcontractors in the performance of its obligations under this Agreement;
in each case except that Company shall have no obligation to indemnify, defend, and/or hold harmless SAFC, its Affiliates and its or their directors, officers and employees for any Losses or Third Party Claims to the extent that SAFC has an obligation to indemnify Company with respect to such Losses or Third Party Claims pursuant to Section 6.8.
6.8    SAFC Indemnification.  SAFC shall indemnify, defend and hold harmless Company, its Affiliates and its or their directors, officers and employees from and against all Losses arising from any Third Party Claim to which Company is or may become subject to the extent relating to or arising out of or are alleged or claimed to relate to or arise out of or in connection with:
(a)    any breach by SAFC of any of its obligations or representations and warranties under this Agreement or the Quality Agreement;
(b)    any negligent act or omission or willful misconduct by SAFC, its Affiliates or its or their directors, officers, employees, agents or subcontractors related to its activities under this Agreement and the Quality Agreement;
(c)     any claim that the SAFC Property used by SAFC to Manufacture API for Company infringes, misappropriates, or otherwise violates the intellectual property rights of, or any confidentiality or non-use obligations to, any third party (other than to the extent that such claim is based on any know-how or other intellectual property provided by Company); or
(d)    any violation of any applicable law or regulation by SAFC, its Affiliates or its or their officers, directors, employees, agents or subcontractors in the performance of its obligations under this Agreement;
in each case except that SAFC shall have no obligation to indemnify, defend, and/or hold harmless Company, its Affiliates and its or their directors, officers and employees for any Losses or Third Party Claims to the extent 

11

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that Company has an obligation to indemnify SAFC with respect to such Losses or Third Party Claims pursuant to Section 6.7(a) or (b) above.  
6.9    Indemnification Procedure.  Either Party intending to seek indemnification from the other Party under Sections 6.7 or 6.8 above, as the case may be, shall:  (a) give the other Party prompt notice of any such claim or lawsuit; (b) indicate the estimated amount of damages claimed in such claim or lawsuit (if reasonably practicable); (c) provide a copy of the claim or lawsuit served upon it, and (d) fully cooperate with the other Party and its legal representatives in the investigation and defense of any matter which is the subject of indemnification.  A Party against whom indemnification is claimed is referred to as an “Indemnitor” and a Party claiming indemnification is referred to as an “Indemnitee”.  Any Indemnitee shall have the right to employ separate counsel in any such Third Party Claim and to participate in the defense thereof, but the fees and expenses of such counsel shall not be entitled to indemnity hereunder unless (i) the Indemnitor shall have failed, within a reasonable time after having been notified by the Indemnitee of the existence of such Third Party Claim as provided in this Section 6.9, to assume and continue to conduct the defense of such Third Party Claim, (ii) the employment of such counsel has been specifically authorized by the Indemnitor, or (iii) the representation of the Indemnitee by counsel provided by the Indemnitor would be inappropriate due to actual or potential conflicting interests between them, including situations in which there are one or more material legal defenses available to the Indemnitee that are not available to Indemnitor.  No Indemnitor shall, without the written consent of the Indemnitee, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification may be sought hereunder (whether or not the Indemnitee is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (a) includes an unconditional release of the Indemnitee from all liability arising out of such action or claim and (b) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of the Indemnitee.  In no event will an Indemnitee consent to the entry of any judgment or enter into any settlement with respect to any Third Party Claim without the prior written consent of the Indemnitor which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, the failure to give timely notice to the Indemnitor shall not release the Indemnitor from any liability to the Indemnitee to the extent the Indemnitee is not materially prejudiced thereby.
6.10    Company Insurance.  Without limiting its liability under this Agreement (except as may be otherwise expressly provided in this Agreement), during the Term and for [***] after the expiration or termination of this Agreement, Company shall obtain and maintain commercial general liability/product liability insurance with limits of not less than [***] per occurrence for general liability and product liability.  With respect to all insurance coverage required under this Section 6.10, (i) Company shall, promptly upon SAFC’s request, furnish SAFC with certificates of insurance evidencing such insurance and (ii) all policies shall include provisions for at least [***] prior written notice of cancellation.  Such insurance required by this Section 6.10 shall extend coverage to SAFC via a broad form vendor endorsement feature. 
6.11    SAFC Insurance.  Without limiting its liability under this Agreement (except as may be otherwise expressly provided in this Agreement), during the Term and for [***] after the expiration or termination of this Agreement, SAFC shall obtain and maintain commercial general liability/product liability insurance (including through self-insurance) with limits of not less than [***] per occurrence for general liability and product liability.  With respect to all insurance coverage required under this Section 6.11, (i) SAFC shall, promptly upon Company's request, furnish Company with certificates of insurance evidencing such insurance or other similar evidence if self-insured and (ii) all policies shall include provisions for at least [***] prior written notice of cancellation. Company shall be named as an additional insured under the policies of insurance required by this Section 6.11.
		
	7.
	Regulatory Matters; Compliance with Laws

7.1    Regulation of Manufacturing Process.  If SAFC is required by the FDA, EMA, or any other Regulatory Agency to validate or re-validate Manufacturing processes that will impact the Manufacturing of API, SAFC shall notify Company and consult with Company regarding the required activities.  SAFC shall be responsible for the costs of any such 

12

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validation or re-validation that is required due to the non-compliance of the SAFC Manufacturing facility with cGMPs; otherwise any such costs shall be borne by Company provided SAFC obtains Company’s advance written consent prior to incurring such costs.
7.2    Correspondence.  SAFC will notify Company (pursuant to the Quality Agreement) promptly upon receipt of any correspondence from a Regulatory Agency, which relates to the API.  In addition, SAFC shall provide to the Regulatory Agencies all documents and information requested by such authority, and shall submit to all inquiries, audits and inspections by the Regulatory Agencies.
7.3    Compliance with Laws; Authorizations.  In performing this Agreement, each Party shall (i) comply with all Laws and (ii) obtain and maintain all releases, licenses, permits or other authorization required by any governmental body or authority.
7.4    Regulatory Filings.  SAFC shall be responsible for preparing documents to support marketing authorizations or other filing submissions for API, as reasonably required by Company, and shall provide a copy of such documents to Company for review prior to submission to a Regulatory Agency by Company.  SAFC shall continue to provide all such documents reasonably requested by Company for maintenance of Company’s marketing authorizations or other filing submissions.  SAFC shall continue to provide ongoing support reasonably requested by Company for marketing authorization for the Finished Products.  SAFC shall be responsible, at its cost, for receiving and maintaining any Facility licenses, authorizations, accreditations, permits and/or registrations granted or filed with a governmental authority, including those required for Manufacture of API.  SAFC shall also provide Company with all applicable data and other information and certifications related to the Manufacture of API in order for Company to provide the foregoing to any applicable governmental authority.  For clarity, Company shall be permitted to share information provided by SAFC under this Section 7.4 with Affiliates and third parties (including sublicensees and governmental authorities) and such Affiliates and third parties shall be entitled to use such information in support for API or Finished Product.
7.5    Waste.  In connection with the Manufacture of API pursuant to this Agreement, SAFC shall be solely responsible for maintaining safety procedures in connection with the Manufacture of API and for the generation, treatment, storage and/or disposal of waste relating thereto, all of which shall comply with all Law, including all applicable environmental and occupational safety and health requirements in the jurisdiction of the Facility.  
		
	8.
	Confidentiality; Intellectual Property

8.1    Confidentiality Obligations.  In the course of the performance of this Agreement, each Party may, from time to time, disclose its Confidential Information (the “Disclosing Party”) to the other Party or its Affiliates (the “Receiving Party”).  Except as expressly permitted otherwise by the terms of this Agreement, Receiving Party shall:  (i) maintain in confidence and not disclose the Confidential Information of Disclosing Party  to any third party, except on a need-to-know basis to Receiving Party’s (or its Affiliates’) employees and agents to the extent such disclosure is reasonably necessary in connection with Receiving Party’s (or its Affiliates’) activities as expressly authorized by this Agreement and upon obligations of confidentiality similar to those set forth herein; and (ii) not use or grant the use of the Confidential Information of the Disclosing Party for any purpose other than the performance of Receiving Party’s obligations hereunder.  The Receiving Party shall be solely responsible for informing the foregoing persons and entities of the terms of this Agreement, and Disclosing Party’s Confidential Information disclosed to any of the foregoing persons or entities shall be subject to the terms of this Agreement.   The Receiving Party shall be liable for any breach of the provisions of this Agreement by any of its Affiliates, employees, attorneys, officers, advisers and agents. 
8.2    Exceptions.  The provisions of Section 8.1 above shall not apply to any Confidential Information of the Disclosing Party that can be shown by competent evidence by the Receiving Party:
(a)    To have been known to or in the possession of the Receiving Party without any separate obligation of confidentiality before the date of its actual receipt from the Disclosing Party;

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(b)    To be or to have become readily available to the public other than through any act or omission of the Receiving Party in breach of any confidentiality obligations owed to the Disclosing Party;
(c)    To have been disclosed to the Receiving Party, other than under an obligation of confidentiality, by a third party which is not known to the Receiving Party to have had an obligation to the Disclosing Party not to disclose such information to others; or
(d)    To have been subsequently independently developed by the receiving Party without use of or reference or access to the Disclosing Party’s Confidential Information.
8.3    Disclosure Required by Law.  In the event that the Receiving Party is required by judicial or administrative process to disclose Confidential Information, the receiving Party, to the extent permitted by Law, shall promptly notify the Disclosing Party and allow the Disclosing Party a reasonable time to oppose such process or seek a protective order.
8.4    Survival of Confidentiality Obligations.  The confidentiality and non-disclosure obligations imposed by this Agreement shall expire with respect to any particular item of a Disclosing Party's Confidential Information on the [***] anniversary of the date of disclosure of such Confidential Information (and in the case of trade secrets, until such time as such trade secrets are no longer accorded trade secret status under Delaware law). 
8.5    Return of Confidential Information.  Each Receiving Party agrees to either destroy or return all Confidential Information received from a Disclosing Party at the request of the Disclosing Party, except that a Receiving Party may retain in its confidential files one copy of written Confidential Information of the Disclosing Party for compliance purposes only.
8.6    Equitable Relief.  Each Party acknowledges, understands and agrees that a breach of this Article 8 may cause irreparable injury to a Disclosing Party, and that no adequate or complete remedy at law may be available to the Disclosing Party for such breach.  Accordingly, the Parties agree that the Disclosing Party may seek enforcement of this Agreement by injunction.
8.7    Inventions.  SAFC shall keep complete, accurate and dated records of the Manufacturing performed under this Agreement and the data and results thereof.  Any discovery, improvement, process, formula, data, information, invention, know-how, trade secret, procedure, device, or other intellectual property, whether or not protectable under patent, trademark, copyright or similar laws, including any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage or packaging of a compound or product or any discovery or development of a new indication for a compound or product created, conceived, discovered, developed, reduced to practice or otherwise made by or on behalf of either Party or jointly by or on behalf of the Parties that (i) relate to the API or any derivatives thereof or other compounds related thereto (including the making, manufacture or use of any of the foregoing), or (ii) are derived from, based on or arise from the use of the Specifications or any Confidential Information of Company or relate to the Manufacturing Process or otherwise arise from the performance of the Services (each, a “Company Invention”) will be deemed the property of Company and will be owned solely by Company.  Company shall own all right, title and interest in and to any and all Company Inventions and any and all work outputs and reports prepared by SAFC.  SAFC shall, and shall cause its Affiliates to, promptly disclose in writing to Company the discovery, development, making, conception or reduction to practice of any Company Invention and shall and does hereby, and shall cause its Affiliates, employees, agents, subcontractors to, assign to Company any and all right, title or interest SAFC or its Affiliates may have in or to any Company Invention.  SAFC will promptly and fully disclose to Company all such records and Company Inventions.  Such records shall also identify the names of SAFC’s employees, officers or Affiliates who performed the work.  The Company Inventions and the work outputs and reports shall be considered Confidential Information of Company.  SAFC agrees that it shall not publish or present any information related to the Confidential Information of Company, the API or the results thereof or any Company Inventions without the prior written consent of Company.  Notwithstanding the foregoing, Company acknowledges that SAFC possesses certain inventions, processes, know-how, trade secrets, improvements, other intellectual properties and other assets, including but not limited to analytical methods, procedures and techniques, procedure manuals, personnel data, financial information, computer technical expertise and software, which have been independently developed by SAFC and which relate to its business or operations (collectively "SAFC Property").  Company and SAFC agree that SAFC Property includes improvements, enhancements and modifications thereto which are used, improved, modified or developed by SAFC under or during the term of this Agreement and which are and shall remain the sole and exclusive 

14

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property of SAFC subject to Section 8.8(b) below and provided such improvements, enhancements and modifications thereto do not incorporate or rely upon Company Confidential Information or Company Inventions.
8.8    Licenses.  
(a)    During the Term, Company hereby grants to SAFC a royalty-free, non-exclusive license under any know-how, trade secrets, copyrights, designs, databases, discoveries, improvements and/or inventions (whether patentable or not) related to the API or the Manufacture of the API that are owned or controlled by Company and that are useful for SAFC’s performance of its obligations under this Agreement, but only for such purposes and only to the extent useful for SAFC to perform its obligations under this Agreement.
(b)    SAFC must identify and obtain Company’s approval prior to inclusion of any SAFC Property into the API.  To the extent any SAFC Property is incorporated into or otherwise necessary to Manufacture or use API, SAFC shall grant, and hereby does grant, to Company a non-exclusive, worldwide and fully-paid right and license under any such SAFC Property to the extent necessary or useful for Company to Manufacture, use and otherwise commercialize API and Finished Product.
		
	9.
	Term and Termination

9.1    Term.  The initial term of this Agreement shall commence as of the Effective Date and shall continue in full force and effect until the third (3rd) yearly anniversary of the Commencement Date, unless earlier terminated as provided in Sections 9.2 or 9.3 below or elsewhere as provided in this Agreement. Thereafter the Agreement shall be renewed automatically for additional two (2) year terms, unless cancelled by one of the Parties upon at least twelve (12) months prior written notice.  The initial term and any renewal term(s) shall be referred to herein as the “Term”.
9.2    Termination. Notwithstanding the provisions of Section 9.1 above, the Parties may terminate this Agreement in the event of either of the following:
(a)    Termination for Material Breach.  Either Party may terminate this Agreement by written notice at a date set in the notice (allowing at least [***] for cure) in the event of a material breach of this Agreement by the other Party; provided that the breaching Party fails to cure such breach within [***] from the date of such notice.
(b)    Insolvency. If either Party shall become insolvent or shall make or seek to make an arrangement with, or an assignment for the benefit of creditors, or if proceedings in voluntary or involuntary bankruptcy shall be instituted by, on behalf of or against such Party, or if a receiver or trustee of such Party’s assets shall be appointed, or bankruptcy proceedings begin, the other Party may terminate this Agreement, as may be permitted by the applicable Laws, with immediate effect; provided, that in the case of an involuntary proceeding, such other Party may not terminate this Agreement if the petition is dismissed within [***] of filing. 
9.3    Rights and Obligations Upon Termination.
(a)    Return of Inventory and Confidential Information.  In the event of any termination:  (i) SAFC shall return to Company all Company property at Company’s expense, unless such termination shall have been as a result of a breach of this Agreement by SAFC in accordance with Section 9.2(a), in which case such property shall be returned at SAFC’s expense; and (ii) each Party shall return all Confidential Information of the other Party and shall make no further use of such Confidential Information without the prior written consent of the other Party; except that each Party may retain one (1) copy of the other Party’s Confidential Information in confidence for purposes of ensuring compliance with this Agreement and complying with applicable laws. 
(b)    Payments.  Termination of this Agreement shall not release either Party from the obligation to make payment of all amounts then due and payable.  Upon termination of this Agreement by SAFC pursuant to Section 

15

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9.2(a), Company shall take delivery and pay for all API that is subject to an open purchase order (to the extent such API when delivered conforms to the API Requirements), pay all monies due and owing pursuant to this Agreement and reimburse SAFC for its costs for all material, work in process, finished API and all other outstanding inventory (meaning all raw materials that are specifically required and purchased by SAFC for the Manufacture of the API) to the extent that such items were reasonably acquired by SAFC to meet its obligations hereunder in a timely manner, and make such other payments to SAFC as may be set forth in Appendix 3 hereto.
(c)    Technology Transfer.  Upon the expiration or termination of this Agreement, at the election and reasonable expense of Company, SAFC shall assist Company in effecting a smooth transition to an alternate supplier(s) for the Manufacture of API.  In such an event, the Parties shall discuss in good faith the scope of SAFC’s assistance in the technology transfer and reasonable costs payable to SAFC for providing such assistance.  The scope of assistance and related costs and expenses shall be reduced to writing in an Amendment pursuant to Section 11.14 of this Agreement, if during the Term, or in a separate written agreement executed by both Parties.  Without limiting the generality of the foregoing, the scope of the technology transfer may include: (i) allowing representatives of Company (and/or its designees) to observe the Manufacturing Process at the Facilities, on a mutually convenient timetable, (ii) supplying analytical test methods and other testing know-how including method validation reasonably required to perform release testing or other testing as may be required by the applicable Regulatory Agency, (iii) providing Company (and/or its designees) with appropriate quantities of reference standards and samples related to API in order to facilitate its testing, (iv) providing to Company (and/or its designees) copies of updates or changes (after the Effective Date) to all processes, protocols, procedures, methods, tests and other know-how, relating to the Manufacturing of API, and (v) making available to Company (and/or its designees) via telephone or email, on a mutually convenient timetable, reasonable technical assistance with respect to the Manufacture of API.  
(d)    SAFC acknowledges and agrees that, during and after the Term, SAFC shall not use the Manufacturing Process, Specifications or any other Confidential Information of Company or Company Invention to manufacture for or supply to any third party any API. Notwithstanding the foregoing, nothing in this Agreement shall prohibit SAFC from using SAFC Property or general knowledge that is not Company Inventions or Confidential Information of Company in the manufacture or supply of any API or other product to any third party, provided it does not violate any of the terms or conditions in this Agreement.
9.4    Surviving obligations.  Termination or expiration of this Agreement shall not affect any accrued rights or obligations of either Party.  The terms of Sections 1, 2.8,  4.1 through 4.4, 5.4, 6.1, 6.4, 6.6 through 6.11, 7.2, 8, 9.3, 9.4, , 10 and 11 of this Agreement shall survive termination of this Agreement. 
		
	10.
	Governing Law; Dispute Resolution

10.1    Governing Law.  This Agreement shall be governed by, interpreted and construed in accordance with, the laws of the [***], without regard to its conflict of law provisions.  The U.N. Convention on International Sales of Goods shall not apply to this Agreement.
10.2    Good Faith Meeting.  In the event of any dispute arising between the Parties concerning this Agreement, Company and SAFC agree that in the first place they shall promptly meet for good faith discussions in an attempt to negotiate an amicable solution.
		
	11.
	Miscellaneous

11.1    Conditional Effectiveness.  The effectiveness of this Agreement is conditioned upon Company and SAFC duly executing and delivering the Quality Agreement.
11.2    Publicity.  Any public announcement or similar publicity with respect to this Agreement will be issued, if at all, at such times and in such manner as shall be mutually agreed in writing by the Parties.

16

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

11.3    Use of Names.  SAFC shall not use the name of Company, its Affiliates, or the names of their employees or representatives in any advertising materials or in any publication without prior written consent of Company.  Company shall not use the name of SAFC, its Affiliates, or the names of their employees or representatives in any advertising materials or in any publication without prior written consent of SAFC.  Notwithstanding the foregoing, Company shall be entitled to identify SAFC as the source of the API in any regulatory submission without SAFC’s prior written consent.
11.4    Marks.  Each Party reserves all rights to any name, trademark, service mark or logo ("Marks") it may have or hereafter acquire.  Neither Party shall by this Agreement obtain any right, title or interest in or to any Marks of the other Party or its Affiliates.  Accordingly, neither Party shall use any Marks confusingly similar to or likely to cause confusion with the Marks of the other or of any other person or entity.  Each use by a Party of any Marks of the other Party, whether in advertising or marketing materials, websites, company announcements or offering circulars, informational materials, public events, or otherwise, shall be subject to the prior written approval of the other Party.
11.5    Limitation of Liability.  
(a)    NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS) OR ANY SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT OR THE QUALITY AGREEMENT, WHETHER BASED ON CONTRACT, NEGLIGENCE, STRICT LIABILITY, OTHER TORT OR OTHERWISE AND REGARDLESS OF WHETHER ANY PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. FOR PURPOSES OF THIS WAIVER, ANY LIABILITY INCURRED BY EITHER PARTY AS A RESULT OF ANY THIRD PARTY CLAIM IS NOT CONSIDERED AN INDIRECT DAMAGE.; AND
(b)    NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, EXCEPT AS SET FORTH IN SECTION 11.5(d) BELOW, MAXIMUM AGGREGATE LIABILITY OF SAFC AND ITS AFFILIATES TO THE COMPANY AND ITS AFFILIATES FOR A CAUSE OF ACTION (OR RELATED CAUSES OF ACTION) ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE QUALITY AGREEMENT AND/OR THE DELIVERY OF THE API SHALL NOT EXCEED THE AMOUNT ACTUALLY PAID BY COMPANY TO SAFC PURSUANT TO THIS AGREEMENT FOR THE API DURING THE [***] PERIOD IMMEDIATELY PRECEDING THE CLAIM (OR IN THE CASE OF RELATED CAUSES OF ACTION – THE FIRST CLAIM) GIVING RISE TO THE LIABILITY. 
(c)    The foregoing limitations in Section 11.5(a) and (b) above shall survive notwithstanding any failure of essential purpose of a limited remedy.
(d)    NOTWITHSTANDING THE FOREGOING OR ANYTHING WRITTEN IN THIS AGREEMENT TO THE CONTRARY, NOTHING IN THIS SECTION 11.5 OR OTHERWISE IN THE AGREEMENT, IS INTENDED TO LIMIT OR RESTRICT AND SHALL NOT APPLY TO DAMAGES AVAILABLE FOR [***].
11.6    Assignment; Successors; Subcontractors; Third-Party Beneficiaries.  
(a)    Neither Party may assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party, which will not be unreasonably withheld, except that either Party may assign, in whole or in part, without such consent any of its rights or obligations under this Agreement (i) to any Affiliate of such Party, provided that any such assignment to an Affiliate shall not relieve the assigning Party as the primary obligor hereunder, or (ii) in connection with the merger, consolidation or sale of the stock or substantially all of the assets of such Party relating to the performance of this Agreement.  Any assignment in violation of this Section 11.6(a) shall be null and void.

17

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(b)    Subject to the preceding subsection (a), this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the Parties.
(c)    Nothing expressed or referred to in this Agreement will be construed to give any person other than the Parties any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.  This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and assigns.
11.7    Transactions Outside Scope of Agreement.  Other than as expressly provided for otherwise in this Agreement, this Agreement shall in no way limit or restrict the ability of either Party or any Affiliate of such Party to offer its products or services to any other person.
11.8    No Transfer of Rights.  No transfer, grant or license of rights under any patent or copyright or to any intellectual property, proprietary information and/or trade secret is made or is to be implied by this Agreement except as may be expressly stated otherwise herein.
11.9    Independent Contractors.  The Parties undertake to carry out this Agreement as independent contractors.  No franchise, partnership, joint venture or relationship of principal and agent is intended by this Agreement.  Neither Party is authorized, in the name of or on behalf of the other Party, to incur any obligation, receive any benefit or right or otherwise bind the other Party.  All employees, agents, representatives and contractors of a Party are solely those of such Party and no acts thereof will be binding upon the other Party.
11.10    Waiver.  The failure or the delay of any Party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision or of the right of such Party thereafter to enforce such provision.  No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach of this Agreement.
11.11    Severability.  Should any provision of this Agreement become void or be cancelled, then the other provisions shall remain in full force and effect.  If a provision of this Agreement should be void or should be declared void, then the Parties will attempt to replace it by another valid provision or will leave the provision unreplaced by mutual consent.  Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
11.12    Appendices.  All appendices attached hereto are hereby incorporated in and made a part of this Agreement as if fully set forth herein.
11.13    Entire Agreement.  This Agreement, including all appendices hereto, contains the final, complete and exclusive agreement of the Parties relative to the subject matter hereof and supersedes all prior and contemporaneous understandings and agreements relating to its subject matter.
11.14    Amendment.  This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by written amendment signed by the Parties hereto.
11.15    Notices. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), (ii) sent by facsimile (with written confirmation of transmission), (iii) when received by the addressee if sent by registered or certified mail (return receipt requested) or if sent by an internationally recognized overnight delivery service, in each case to the appropriate addresses or facsimile numbers set forth below (or to such other addresses and facsimile numbers as a Party may designate by notice to the other Party):

18

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

If to Company:    AMAG Pharmaceuticals, Inc.
1100 Winter Street
Waltham, MA 02451
Attention: VP, Technical Operations

With a copy to:    AMAG Pharmaceuticals, Inc.
1100 Winter Street
Waltham, MA 02451
Attention: General Counsel
 

If to SAFC:        SAFC, Inc.
645 Science Drive
Madison, WI 53711
Attention: Site Director
            
With a copy to:        EMD Millipore Corporation
Legal Department
400 Summit Drive
Burlington, MA 01803
Attention: General Counsel
11.16    Section Headings; Construction.  The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation.  Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.
11.17    Force Majeure.  Any events that are beyond the reasonable control of a Party to prevent or overcome, such as fire, flood, war, strike, civil unrest, terrorism, natural catastrophes, government acts and regulations, embargos, epidemics, disruptions in the national transportation system, and raw material, energy or water shortages, will free the affected Party for the duration of the event from its obligations (other than the obligation to make payments of money) under this Agreement.  As soon as there is an indication of an event of force majeure, the affected Party will advise the other Party within [***] or as soon as practical of the effect of such event on this Agreement and about the measures to be taken to mitigate such effect.  The Parties are obligated to mitigate damages and to resume the fulfilment of their contractual obligations as quickly as possible.  Notwithstanding anything to the contrary in this Agreement, if a force majeure persists for more than [***], then the Party not affected by such force majeure may terminate this Agreement by written notice to the other Party, with immediate effect.
11.18    Expenses.  Except as otherwise expressly provided in this Agreement, in the appendices hereto or in any agreement or other document expressly referenced herein and forming a part hereof, including the Quality Agreement, each Party to this Agreement will bear its respective expenses incurred in connection the performance of its obligations hereunder.  In the event of termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of a Party arising from a breach of this Agreement by the other.
11.19    Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
11.20    Governing Language. The validity, interpretation, construction and performance of this Agreement shall be in accordance with the English language.  If this Agreement is translated into another language and there is a conflict between the non-English version and the English version, then the English version shall control.  Notwithstanding anything 

19

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

to the contrary in this Agreement or in any other document or agreement, in the event of a conflict between this Agreement and the Quality Agreement, the Quality Agreement shall govern and control with respect to quality-related matters; and this Agreement shall govern and control with respect to all other matters.

[Signature Page Follows]

20

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

IN WITNESS WHEREOF, the Parties intending to be bound by the terms and conditions hereof have caused this Agreement to be signed effective as of the Effective Date by their duly authorized representatives.
	
			
	SAFC, Inc.
	 
	AMAG Pharmaceuticals, Inc.

	

By:_/s/ Michael Trasatti____________
	 
	

By:_/s/ William K. Heiden _________

	Name:__ Michael Trasatti__________
	 
	Name: William K. Heiden                   

	Title:_VP PharmaProcessing Americas__
	 
	Title: President and CEO

21

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

APPENDIX 1
QUALITY AGREEMENT
Quality Agreement between Company and SAFC, as amended, supplemented or restated from time to time (actual version). 
[***]

22

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

APPENDIX 2
SPECIFICATIONS 
[***]

23

APPENDIX 3
PRICING
[***]

24Exhibit

Exhibit 10.1

$50,000,000
TERM LOAN AGREEMENT
between
PNM RESOURCES, INC., 
as Borrower,
and
BANK OF AMERICA, N.A., 
as Lender

DATED AS OF DECEMBER 21, 2018

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
	13
	

	 
	1.3
	Accounting Terms/Calculation of Financial Covenant
	14
	

	 
	1.4
	Time
	15
	

	 
	1.5
	Rounding of Financial Covenant
	15
	

	 
	1.6
	References to Agreements and Requirements of Laws
	15
	

	 
	1.7
	Rates
	15
	

	 
	 
	 
	 

	SECTION 2 CREDIT FACILITY
	15
	

	 
	 
	 
	 

	 
	2.1
	Loans
	15
	

	 
	2.2
	[Reserved]
	16
	

	 
	2.3
	Continuations and Conversions
	16
	

	 
	2.4
	Minimum Amounts
	16
	

	 
	2.5
	[Reserved]
	17
	

	 
	2.6
	Evidence of Debt
	17
	

	 
	 
	 
	 

	SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS
	17
	

	 
	 
	 
	 

	 
	3.1
	Interest
	17
	

	 
	3.2
	Payments Generally
	17
	

	 
	3.3
	Prepayments
	18
	

	 
	3.4
	[Reserved]
	18
	

	 
	3.5
	Payment in Full at Maturity
	18
	

	 
	3.6
	Computations of Interest and Fees
	18
	

	 
	3.7
	[Reserved]
	19
	

	 
	3.8
	[Reserved]
	19
	

	 
	3.9
	Capital Adequacy
	19
	

	 
	3.10
	Eurodollar Provisions
	19
	

	 
	3.11
	Illegality
	20
	

	 
	3.12
	Requirements of Law
	20
	

	 
	3.13
	Taxes
	20
	

	 
	3.14
	Compensation
	21
	

	 
	3.15
	Determination and Survival of Provisions
	21
	

	 
	3.16
	[Reserved]
	21
	

	 
	3.17
	Mitigation Obligations
	21
	

	 
	 
	 
	 

	SECTION 4 CONDITIONS PRECEDENT
	22
	

	 
	 
	 
	 

	 
	4.1
	Closing Conditions
	22
	

	 
	 
	 
	 

	SECTION 5 CONDITIONS TO FUNDING OF LOANS
	24
	

	 
	 
	 
	 

	 
	5.1
	Funding Requirements
	24
	

	 
	 
	 
	 

	SECTION 6 REPRESENTATIONS AND WARRANTIES
	24
	

	 
	 
	 
	 

	 
	6.1
	Organizations and Good Standing
	24
	

	 
	6.2
	Due Authorization
	25
	

	 
	6.3
	No Conflicts
	25
	

	 
	6.4
	Consents
	25
	

i

	
					
	 
	6.5
	Enforceable Obligations
	25
	

	 
	6.6
	Financial Condition
	25
	

	 
	6.7
	No Material Change
	25
	

	 
	6.8
	No Default
	26
	

	 
	6.9
	Litigation
	26
	

	 
	6.10
	Taxes
	26
	

	 
	6.11
	Compliance with Law
	26
	

	 
	6.12
	ERISA
	26
	

	 
	6.13
	Use of Proceeds; Margin Stock
	27
	

	 
	6.14
	Government Regulation
	27
	

	 
	6.15
	Solvency
	28
	

	 
	6.16
	Disclosure
	28
	

	 
	6.17
	Environmental Matters
	28
	

	 
	6.18
	[Reserved]
	28
	

	 
	6.19
	[Reserved]
	28
	

	 
	6.20
	Anti-Corruption Laws and Sanctions
	28
	

	 
	 
	 
	 

	SECTION 7 AFFIRMATIVE COVENANTS
	28
	

	 
	 
	 
	 

	 
	7.1
	Information Covenants
	28
	

	 
	7.2
	Financial Covenant
	31
	

	 
	7.3
	Preservation of Existence and Franchises
	31
	

	 
	7.4
	Books and Records
	31
	

	 
	7.5
	Compliance with Law
	31
	

	 
	7.6
	Payment of Taxes and Other Indebtedness
	32
	

	 
	7.7
	Insurance
	32
	

	 
	7.8
	Performance of Obligations
	32
	

	 
	7.9
	Use of Proceeds
	32
	

	 
	7.10
	Audits/Inspections
	32
	

	 
	7.11
	Ownership of Certain Subsidiaries
	33
	

	 
	 
	 
	 

	SECTION 8 NEGATIVE COVENANTS
	33
	

	 
	 
	 
	 

	 
	8.1
	Nature of Business
	33
	

	 
	8.2
	Consolidation and Merger
	33
	

	 
	8.3
	Sale or Lease of Assets
	33
	

	 
	8.4
	Affiliate Transactions
	33
	

	 
	8.5
	Liens
	33
	

	 
	8.6
	Accounting Changes
	35
	

	 
	 
	 
	 

	SECTION 9 EVENTS OF DEFAULT
	35
	

	 
	 
	 
	 

	 
	9.1
	Events of Default
	35
	

	 
	9.2
	Acceleration; Remedies
	37
	

	 
	9.3
	Allocation of Payments After Event of Default
	37
	

	 
	 
	 
	 

	SECTION 10 [RESERVED]
	37
	

	 
	 
	 
	 

	SECTION 11 MISCELLANEOUS
	38
	

	 
	 
	 
	 

	 
	11.1
	Notices; Effectiveness; Electronic Communication
	38
	

	 
	11.2
	Right of Set-Off
	39
	

	 
	11.3
	Successors and Assigns
	39
	

	 
	11.4
	No Waiver; Remedies Cumulative
	40
	

	 
	11.5
	Attorney Costs, Expenses, Taxes and Indemnification by Borrower
	40
	

ii

	
					
	 
	11.6
	Amendments, Etc.
	41
	

	 
	11.7
	Counterparts
	41
	

	 
	11.8
	Headings
	41
	

	 
	11.9
	Survival of Indemnification and Representations and Warranties
	42
	

	 
	11.10
	Governing Law; Venue; Service
	42
	

	 
	11.11
	Waiver of Jury Trial; Waiver of Consequential Damages
	42
	

	 
	11.12
	Severability
	42
	

	 
	11.13
	Further Assurances
	43
	

	 
	11.14
	Confidentiality
	43
	

	 
	11.15
	Entirety
	44
	

	 
	11.16
	Binding Effect; Continuing Agreement
	44
	

	 
	11.17
	Regulatory Statement
	44
	

	 
	11.18
	USA Patriot Act Notice
	44
	

	 
	11.19
	Acknowledgment
	45
	

	 
	11.20
	Electronic Execution of Assignments and Certain Other Documents
	45
	

	 
	11.21
	No Advisory or Fiduciary Responsibility
	45
	

	 
	11.22
	[Reserved]
	45
	

SCHEDULES
Schedule 11.1    Notices
EXHIBITS
Exhibit 2.1(b)    Form of Notice of Borrowing
Exhibit 2.1(d)    Form of Term Note
Exhibit 2.3    Form of Notice of Continuation/Conversion
Exhibit 4.1(j)    Form of Account Designation Letter
Exhibit 7.1(c)    Form of Compliance Certificate

iii

TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this “Loan Agreement”) is entered into as of December 21, 2018 between PNM RESOURCES, INC., a New Mexico corporation, as Borrower and BANK OF AMERICA, N.A., as Lender.
RECITALS
WHEREAS, the Borrower has requested the Lender provide a term loan facility to the Borrower in an aggregate principal amount of $50,000,000; and
WHEREAS, the Lender has agreed to make the requested term loan facility available to the Borrower on the terms and conditions hereinafter set forth.
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:
“Account Designation Letter” means the Notice of Account Designation Letter dated as of the Closing Date from the Borrower to the Lender in substantially the form of Exhibit 4.1(j).
“Adjusted Base Rate” means the Base Rate plus the Applicable Percentage.
“Adjusted Eurodollar Rate” means the Eurodollar Rate plus the Applicable Percentage.
“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 another Person 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 other Person or (b) to direct or cause direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Percentage” means, (a) for Eurodollar Loans, 0.80% and (b) for Base Rate Loans, 0.00%.
“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 fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1% (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, and (c) the Eurodollar Rate plus 1.00%.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.10 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
“Base Rate Loan” means any Loan bearing interest at a rate determined by reference to the Base Rate.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Borrower” means PNM Resources, Inc., a New Mexico corporation, together with its successors and permitted assigns.
“Borrower Obligations” means, without duplication, all of the obligations of the Borrower to the Lender, whenever arising, under this Loan Agreement, the Note, or any of the other Loan Documents.
“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period made by the Lender pursuant to Section 2.1.
“Business Day” means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in New York, New York, are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any Eurodollar Loan, or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits 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 in Law” means the occurrence, after the date of this Loan Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rules, guideline, requirement  or  directive  (whether  or  not  having  the  force  of  law)  by  any  Governmental  Authority; provided  however,  that  notwithstanding anything  herein  to  the  contrary,  (i)  the  Dodd- Frank  Wall  Street  Reform  and  Consumer  Protection Act   of   2010   and   all   requests,   rules,   guidelines,  requirements  and  directives  thereunder,  issued  in 

2

connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“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 Exchange Act, 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 Exchange Act, 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 percent (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 twenty-four (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; 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 percent (25%) or more of the combined voting power of such Voting Stock.
“Closing Date” means December 21, 2018.
“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.
“Commitment” means, as to the Lender, its obligation to make or maintain a Loan to the Borrower pursuant to Section 2.1 in an aggregate principal amount not to exceed FIFTY MILLION DOLLARS ($50,000,000).
“Compliance Certificate” means a fully completed and duly executed officer’s certificate in the form of Exhibit 7.1(c), together with a Covenant Compliance Worksheet.
“Consolidated Capitalization” means the sum of (a) all of the shareholders’ equity or net worth of the Borrower and its Subsidiaries, as determined in accordance with GAAP plus (b) Consolidated Indebtedness plus (c) the outstanding principal amount of Preferred Stock that is not a component of a Mandatory Security plus (d) 100% of the outstanding principal amount of Equity Preferred Securities of the Borrower and its Subsidiaries plus (e) the aggregate outstanding stated or principal amount of Mandatory Securities minus (f) Securitization Equity.

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“Consolidated Indebtedness” means, as of any date of determination, with respect to the Borrower and its Subsidiaries on a consolidated basis, an amount equal to (a) all Indebtedness of the Borrower and its Subsidiaries as of such date minus (b) an amount equal to the outstanding principal amount of Equity Preferred Securities of the Borrower and its Subsidiaries, provided that the amount deducted pursuant to this clause (b) shall not exceed an amount equal to 15% of the Consolidated Capitalization of the Borrower and its Subsidiaries minus (c) Non-Recourse Securitization Indebtedness minus (d) the aggregate outstanding principal amount of Specified Indebtedness.
“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 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” means a fully completed worksheet in the form of Schedule I to Exhibit 7.1(c).
“Debt Rating” means the long-term, unsecured, senior non-credit enhanced debt rating of the Borrower by S&P and/or Moody’s; provided, however, that if neither S&P nor Moody’s issues a long-term, unsecured, senior non-credit enhanced rating of the Borrower, then the Debt Rating shall be the Borrower’s issuer corporate credit rating by S&P and/or 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.
“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

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 actual or alleged violation of or liability under any Environmental Laws or relating to any permit issued, or any approval given, under any such Environmental Laws (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 Laws 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.
“Environmental Laws” means 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.
“Equity Preferred Securities” means, with respect to any Person, any trust preferred securities or deferrable interest subordinated debt securities issued by such Person or other financing vehicle of such Person that (i) have an original maturity of at least twenty years, and (ii) require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to the first anniversary of the latest Maturity Date.
“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 who together with the Borrower or any of its Subsidiaries is treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
“ERISA Event”  means  the  occurrence  of  any  of  the  following  which,  individually  or  in  the aggregate, has resulted or could reasonably be expected to result, within a reasonable period of time, in liability of the Borrower in an aggregate amount in excess of the Threshold Amount: (a) a Reportable Event with respect to a Single Employer 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  if  withdrawal liability  is  asserted  by  such  plan,  or  the  receipt  by  the  Borrower,  any of its Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan that it is insolvent 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 Single Employer Plan or Multiemployer Plan or the taking of any action to terminate any Single Employer Plan or Multiemployer Plan if the plan assets are not sufficient to pay all plan liabilities, (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 Single Employer 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 determination that any Single Employer Plan or Multiemployer Plan is considered an at-risk plan or plan in endangered or critical status within the meaning of Sections 430, 431 or 432 of the Code or Sections 303, 304 or 305 of ERISA;  (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  Single  Employer  Plan  or  Multiemployer  Plan,  or  (g)  the  withdrawal of the 

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Borrower, any of its Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or a cessation of operations that is treated as such a withdrawal or the termination of a Multiple Employer Plan, where the Borrower, a Subsidiary or an ERISA Affiliate has liability under Section 4062 or 4063 of ERISA.
“Eurodollar Base Rate” means, 
(a)    for any Interest Period with respect to a Eurodollar Loan, the rate per annum equal to the London Interbank Offered Rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such Interest Period) (“LIBOR”) as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Lender 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; and
(b)    for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day; and 
(c)    if the Eurodollar Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Loan Agreement.  
It is understood and agreed that all of the terms and conditions of this definition of “Eurodollar Base Rate” shall be subject to Section 3.10.
“Eurodollar Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.
“Eurodollar Rate” means, with respect to any Eurodollar Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the Eurodollar Base Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
“Event of Default” has the meaning set forth in Section 9.1.
“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 that certain Sixth Amendment and Restatement of Credit Agreement, dated as of July 30, 2018, among the Borrower, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, as it may be amended, amended and restated or replaced from time to time.
“Existing Term Loan Agreement” means that certain Term Loan Agreement dated December 14, 2018, among the Borrower, the lenders party thereto and MUFG Bank, Ltd., as administrative agent, as it may  be amended, amended and restated or replaced from time to time.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System on such day, as published by the Federal Reserve Bank of New York 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 

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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 rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Lender.
“Financial Officer” means the chief financial officer, principal accounting officer or treasurer of the Borrower.
“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.
“Forward” has the meaning set forth in the definition of “Mandatory Security”.
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“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 Laws, (b) that are defined by any Environmental Laws as toxic, explosive, corrosive, ignitable, infectious, radioactive, mutagenic or otherwise hazardous, (c) the presence of which require investigation or response under any Environmental Laws, (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 (i) a Mandatory Security (or any component thereof) or any security convertible or exchangeable into Capital Stock of the Borrower (or cash in lieu thereof) and (ii) 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).
“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 

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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 Equity Preferred Securities and (l) all indebtedness referred to in clauses (a) through (k) 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 11.5(b).
“Indemnitees” has the meaning set forth in Section 11.5(b).
“Interest Payment Date” means, (a) as to any Eurodollar Loan, the last day of each Interest Period applicable to such Loan, the date of any prepayment of the Loans pursuant to Section 3.3 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 third Business Day after the end of each Fiscal Quarter, the date of any prepayment of the Loans pursuant to Section 3.3 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 in its Notice of Borrowing or Notice of Continuation/Conversion; provided that:
(i)    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;
(ii)    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
(iii)    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, and a “Law” means any of the foregoing.
“Lender” means Bank of America, N.A., and its successors and assigns.
“Lender’s Office” means the Lender’s address and, as appropriate, account as set forth on Schedule 11.1 or such other address or account as the Lender may from time to time notify the Borrower.

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 “Lender-Related Persons” means the Lender, together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of the Lender and its Affiliates.
“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.
“Loan Agreement” has the meaning set forth in the Preamble hereof.
“Loan Documents” means this Loan Agreement, the Note, the Notice of Borrowing, any Notice of Continuation/Conversion, and any other document, agreement or instrument entered into or executed in connection with the foregoing.
“Loans” has the meaning set forth in Section 2.1(a).
“Mandatory Security” means a security that is a unit consisting of (a) a contract to purchase Capital Stock of the Borrower (whether expressed as a “purchase contract,” “forward contract” or otherwise) (the “Forward”) and (b) either (1)  Indebtedness of the Borrower or a Subsidiary or (2) Preferred Stock of the Borrower (whether or not convertible into Capital Stock of the Borrower), where such Indebtedness or Preferred Stock is pledged by the holder of such unit to secure its obligations under the Forward.
“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 business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower to perform its obligations under this Loan Agreement or any of the other Loan Documents or (c) the legality, validity or enforceability of this Loan Agreement or any of the other Loan Documents or the rights and remedies of the Lender hereunder and thereunder, provided, however, that a Material Adverse Effect shall not include the effect of a shutdown or closure of the San Juan Generating Station or the Four Corners Power Plant, provided that the Borrower remains in compliance with Section 7.2 of this Loan Agreement.
“Maturity Date” means December 21, 2020.
 “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 accruing an obligation to make contributions or has made or been obligated to make contributions within the preceding seven (7) years.
“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.

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“Non-Recourse Securitization Indebtedness” means, as of any date of determination, (a) all Indebtedness related to State Approved Securitizations up to a maximum amount of $500,000,000 at any one time and (b) all Indebtedness related to the TNMP Securitization up to a maximum amount of $150,000,000 at any time; provided that, in each case, such Indebtedness is non-recourse to the Borrower, other than with respect to Standard Securitization Undertakings.
“Note” means the promissory note, if any, of the Borrower in favor of the Lender evidencing the Loans provided pursuant to Section 2.1, as such promissory note may be amended, modified, supplemented, extended, renewed or replaced from time to time and as evidenced in the form of Exhibit 2.1(d).
“Notice of Borrowing” means a request by the Borrower for a Loan, substantially in the form of Exhibit 2.1(b) or such other form as may be approved by the Lender  (including any form on an electronic platform or electronic transmission system as shall be approved by the Lender) appropriately completed and signed by a Responsible Officer.
“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, substantially in the form of Exhibit 2.3 or such other form as may be approved by the Lender (including any form on an electronic platform or electronic transmission system as shall be approved by the Lender) appropriately completed and signed by a Responsible Officer.
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.
“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended.
 “PBGC” means the Pension Benefit Guaranty Corporation and any successor thereto.
“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.
“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 for cash or to make mandatory sinking fund payments.
“Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by the Lender as its prime rate.  Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs.  The parties hereto acknowledge that the rate announced publicly by the Lender as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
“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.  
“Regulations T, U and X” means Regulations T, U and X, respectively, of the Federal Reserve Board, and any successor regulations.

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“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.
“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 Loan Agreement and the other Loan 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 treasurer 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 Loan Agreement and the other Loan Documents and, solely for purposes of notices given pursuant to Section 2, any other officer or employee of the Borrower so designated by any of the foregoing officers in a notice to the Lender or any other officer or employee of the Borrower designated in or pursuant to an agreement between the Borrower and the Lender.  Any document delivered hereunder that is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower.  To the extent requested by the Lender, each Responsible Officer will provide an incumbency certificate and appropriate authorization documentation, in form and substance reasonably satisfactory to the Lender.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
 “Sanctioned Country” means, at any time, a country, region or territory which is itself subject to or the target of comprehensive country-wide Sanctions (at the time of this Loan Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea, Sudan and Syria).
“Sanctioned Person” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, as published from time to time, (b) a Person named on the lists maintained by the United Nations Security Council, as published from time to time, (c) a Person named on the lists maintained by the European Union, as published from time to time, (d) a Person named on the lists maintained by Her Majesty’s Treasury, as published from time to time, or (e) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a Person resident in a Sanctioned Country, to the extent any Person described in clauses (i), (ii) or (iii) is the subject of a sanctions program administered by OFAC.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union, or any European Union member state.

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“SEC Reports” means (i) the Annual Report on Form 10-K of the Borrower for the Fiscal Year ended December 31, 2017, and (ii) the Quarterly Reports on form 10-Q of the Borrower for the Fiscal Quarters ended March 31, 2018, June 30, 2018 and September 30, 2018.   
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securitization Equity” means, as of any date of determination, with respect to a Subsidiary of the Borrower formed for the purpose of entering into a State Approved Securitization or the TNMP Securitization, all of the equity of such Subsidiary, as determined in accordance with GAAP.
“Single Employer Plan” means any “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) which is covered by Title IV of ERISA, but which is not a Multiemployer Plan and which the Borrower, any Subsidiary or any ERISA Affiliate has maintained, funded or administered for employees at any time within the preceding seven (7) years.
“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 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 Indebtedness” means (a) any Indebtedness that is mandatorily redeemable at maturity for Capital Stock of the Borrower or (b) any Indebtedness that is a component of a Mandatory Security (it being understood that if such Indebtedness is no longer a component of a Mandatory Security, including following settlement of the related Forward, a remarketing of such Indebtedness, or substituting such Indebtedness with other collateral for the related Forward, then such Indebtedness shall not constitute Specified Indebtedness).
“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Borrower or a Subsidiary thereof that are reasonably customary in non-recourse securitization transactions.
“State Approved Securitization” means a securitization financing entered into by PSNM pursuant to existing or future New Mexico statutory authority and regulatory approval by the New Mexico Public Regulation Commission (or any successor commission) (the “NMPRC”) authorizing the imposition on electric customers of a charge to permit the recovery over time of costs identified by a financing order issued by the NMPRC pursuant to statutory authority.  
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Lender is subject for eurocurrency funding (currently referred to  as  “Eurocurrency  Liabilities”  in  Regulation  D  of  the  Federal  Reserve Board).   Such  reserve  percentages  shall  include  those  imposed  pursuant  to  such  Regulation  D  of the Federal Reserve Board.  

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Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to the Lender under such Regulation D of the Federal Reserve Board or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“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” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.
“Threshold Amount” means $20,000,000.
“TNMP” means Texas-New Mexico Power Company, a Texas corporation.
“TNMP Credit Agreement” means that certain Third Amended and Restated Credit Agreement, dated as of September 25, 2017, among TNMP, the lenders party thereto and KeyBank National Association, as administrative agent.
“TNMP First Mortgage Bonds” means those certain first mortgage bonds issued pursuant to the First Mortgage Indenture dated as of March 23, 2009, between TNMP and MUFG Union Bank, N.A. (f/k/a Union Bank, N.A.) (successor to The Bank of New York Mellon Trust Company, N.A.), as trustee thereunder, as it may be supplemented and amended from time to time.
“TNMP Securitization” means a securitization financing entered into by TNMP or a Subsidiary of TNMP relating to regulatory assets, stranded costs, transition property, all rights and property interests (contractual, statutory, regulatory or otherwise) to impose and collect transition charges, including all cash proceeds collected, and accounts receivable arising, therefrom and all rights and interests that may become transition property under the Texas Utilities Code.
“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.
“Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Loan.
“VIE” has the meaning specified in Section 1.3(c).
“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).

1.2    Computation of Time Periods and Other Definitional Provisions.

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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 Loan Agreement to “Articles”, “Sections”, “Schedules” or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits of or to this Loan Agreement unless otherwise specifically provided.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof.

1.3    Accounting Terms/Calculation of Financial Covenant.
(a)    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 Lender hereunder shall be prepared, in accordance with GAAP applied on a consistent basis.  Notwithstanding anything to the contrary in this Loan Agreement, for purposes of calculation of the financial covenant set forth in Section 7.2, all accounting determinations and computations thereunder shall be made in accordance with GAAP as in effect as of the date of this Loan 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(d).  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 covenant contained in Section 7.2, such changes shall be followed only from and after the date this Loan Agreement shall have been amended to take into account any such changes.
(b)    Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein, (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and , except as specifically provided in the definitions of “Consolidated Capitalization” and “Consolidated Indebtedness,” such Indebtedness shall at all times be valued at the full stated principal amount thereof and (iii) in a manner such that any obligations relating to a lease that was accounted for by a Person as an operating lease as of the Closing Date and any similar lease entered into after the Closing Date by such Person shall be accounted for as obligations relating to an operating lease and not as a capital lease.
(c)    All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity (“VIE”) that the Borrower is required to consolidate pursuant to FASB Accounting Standards Codification Topic 810 – Consolidation – Variable Interest Entities as if such variable interest entity were a Subsidiary as defined herein; provided that the financial covenant in Section 7.2 shall be calculated without consolidation of any VIE to the extent the Borrower or its consolidated Subsidiaries have entered into power purchase agreements with such VIE to serve retail customers as a result of the shutdown or closure of the San Juan Generating Station or the Four Corners Power Plant.

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1.4    Time.
All references to time herein shall be references to Eastern Standard Time or Eastern Daylight Time, as the case may be, unless specified otherwise.

1.5    Rounding of Financial Covenant.
Any financial ratios required to be maintained by the Borrower pursuant to this Loan 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 Loan 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 Loan 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.

1.7    Rates.
The Lender does not warrant or accept responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the rates in the definition of “Eurodollar Base Rate”.

SECTION 2
 
CREDIT FACILITY

2.1    Loans.
(a)    Loan.  Subject to the terms and conditions of this Loan Agreement, the Lender agrees to make term loans in Dollars (each a “Loan” and, collectively, the “Loans”) to the Borrower in a single draw on the date hereof in an aggregate principal amount of $50,000,000.  Amounts repaid or prepaid in respect of the Loans may not be reborrowed.  The Commitment of the Lender to make the Loans hereunder shall expire upon the funding of the Loans to the Borrower on the Closing Date.
(b)    Method of Borrowing.  Each Borrowing of Loans shall be made upon the Borrower’s irrevocable notice to the Lender, which may be given by (A) telephone or (B) a Notice of Borrowing; provided, that any telephonic notice must be confirmed immediately by delivery  to  the  Lender  of  a  Notice  of  Borrowing.   Each  such Notice of Borrowing must be received  by  the  Lender  no  later  than  (i)  10:00  a.m.  on  the  Closing  Date  if  the  requested Borrowing  of  Loans  shall  be  comprised  of  Base  Rate  Loans  and  (ii)  12:00 noon three (3) Business  Days  prior  to  the  Closing  Date  if  the  requested  Borrowing  of  Loans  shall  be comprised of  Eurodollar Loans. Each Notice of Borrowing shall set forth (A) the amount requested, (B) the date  of  the  requested  Borrowing,  (C) the Type of Loan, (D) with respect to Loans that will 

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be Eurodollar Loans, the Interest Period applicable thereto, (E) a certification that the Borrower has complied, or, in respect of a Borrowing that shall consist of Eurodollar Loans, intends to comply, in all respects with Section 5.1 and (F) with respect to Loans that will be Eurodollar Loans, compensation provisions substantially consistent with the terms of Section 3.14.  If the Borrower shall fail to specify (1) an Interest Period in the case of a Eurodollar Loan, then such Eurodollar Loan shall be deemed to have an Interest Period of one month or (2) the Type of Loan requested, then such Loan shall be deemed to be a Base Rate Loan.
(c)    Funding of Loans.  Upon satisfaction of the conditions set forth in Section 5.1, the amount of the requested Loans will then be made available to the Borrower by the Lender by wire transfer of such funds in accordance with instructions provided to (and reasonably acceptable to) the Lender by the Borrower or such other means agreed to by the Lender and the Borrower.
(d)    Term Note.  At the request of the Lender, the Loans made by the Lender shall be evidenced by a duly executed promissory note of the Borrower to the Lender in substantially the form of Exhibit 2.1(d).

2.2    [Reserved].

2.3    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 in whole or in part for a subsequent Interest Period, to convert Base Rate Loans in whole or in part into Eurodollar Loans or to convert Eurodollar Loans in whole or in part into Base Rate Loans.  Each continuation of existing Eurodollar Loans and each conversion of Loans from one type to the other shall be made upon the Borrower’s irrevocable notice to the Lender which may be given by (A) telephone or (B) a Notice of Continuation/Conversion; provided, that any telephonic notice must be confirmed immediately by delivery to the Lender of a Notice of Continuation/Conversion.  Each such Notice of Continuation/Conversion must be received by the Lender not later than 12:00 noon (a) two Business Days prior to 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.  Each Notice of Continuation/Conversion shall set forth whether the Borrower wishes to continue or convert such 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.

2.4    Minimum Amounts.
The request for the borrowing of the Loans and each conversion or continuation thereof shall be subject to the requirements that (a) each Eurodollar Loan shall be in a minimum amount of $3,000,000 and in integral multiples of $1,000,000 in excess thereof, (b) each Base Rate Loan shall be in a minimum amount of  $1,000,000  and  in  integral  multiples  of  $100,000  in  excess  thereof  (or  the  remaining  amount  of outstanding Loans) and (c) no more than seven Eurodollar Loans shall be outstanding hereunder at any one time.  For the purposes of this Section 2.4, separate Eurodollar Loans that begin and end on the same date, 

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as well as Eurodollar Loans that begin and end on different dates, shall all be considered as separate Eurodollar Loans.

2.5    [Reserved].

2.6    Evidence of Debt.
The Loans made by the Lender shall be evidenced by one or more accounts or records maintained by the Lender in the ordinary course of business.  The accounts or records maintained by the Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lender 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.  

SECTION 3
 
GENERAL PROVISIONS APPLICABLE 
TO LOANS

3.1    Interest.
(a)    Interest Rate.  Subject to Section 3.1(b), (i) all Base Rate Loans shall accrue interest at the Adjusted 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 9.1(a), the principal of and, to the extent permitted by Law, interest on the Loans and any other amounts owing hereunder or under the other Loan 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 9.1(a)), at the option of the Lender, the principal of and, to the extent permitted by Law, interest on the Loans and any other amounts owing hereunder or under the other Loan Documents (including without limitation fees and expenses) shall bear interest, payable on demand, at the Default Rate.
(c)    Interest Payments.  Interest on 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 Lender at the Lender’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  All payments received by the Lender 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.  

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(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)    [Reserved].
(d)    [Reserved].
(e)    Funding Offices.  Nothing herein shall be deemed to obligate the Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by the Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

3.3    Prepayments.
Voluntary Prepayments.  The Borrower shall have the right to prepay the 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 (3) Business Days’ prior written notice to the Lender, (iii) each such partial prepayment of Eurodollar Loans shall be in the minimum principal amount of $1,000,000 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.  Amounts prepaid pursuant to this Section 3.3(a) shall be applied as the Borrower may elect; provided, however, if the Borrower fails to specify, such prepayment shall be applied by the Lender in such manner as it deems reasonably appropriate.

3.4    [Reserved].

3.5    Payment in Full at Maturity.
On the Maturity Date, the entire outstanding principal balance of all Loans, together with accrued but unpaid interest and all fees and other sums owing under the Loan Documents, shall be due and payable in full, unless accelerated sooner pursuant to Section 9.2; 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 first date of Borrowing (or continuation or conversion) to but excluding the last day occurring in the period for which such interest is payable.  Each determination by the Lender 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  Lender  and  the  Borrower  to  conform  to  and contract in strict compliance with applicable usury Law from time to time in effect.  All agreements 

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between the Lender 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 any Borrower Obligation), shall the interest taken, reserved, contracted for, charged, or received under this Loan Agreement, under the Note or otherwise, exceed the maximum nonusurious amount permissible under applicable Law.  If, from any possible construction of any of the Loan 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 the Lender shall ever receive anything of value which is characterized as interest on the 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 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 exceeds such unpaid principal amount of the Loans.  The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Loan 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 Lender does 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 Lender with respect to the 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 Loans so that the amount of interest on account of the Loans does not exceed the maximum nonusurious amount permitted by applicable Law.

3.7    [Reserved].

3.8    [Reserved].

3.9    Capital Adequacy.
If the Lender determines that any Change in Law has or would have the effect of reducing the rate of return on the capital or assets of the Lender or any corporation controlling the Lender as a consequence of the Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy, liquidity requirements and the Lender’s desired return on capital), then from time to time upon demand of the Lender, the Borrower shall pay to the Lender such additional amounts as will compensate the Lender for such reduction; provided that such determination to charge such additional amounts to the Borrower shall be made in good faith (and not on an arbitrary or capricious basis) and consistent with other similarly situated customers of the Lender after consideration of such factors as the Lender then reasonably determines to be relevant.

3.10    Eurodollar Provisions.
If the Lender 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 Lender of funding such Eurodollar Loan, the Lender  will  promptly  notify  the  Borrower.   Thereafter,  the  obligation  of  the  Lender  to  make  or 

19

maintain Eurodollar Loans shall be suspended until the Lender revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending Notice of Borrowing or 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 Borrowing of or, to the extent permitted hereunder, conversion into a Base Rate Loan in the amount specified therein.

3.11    Illegality.
If the Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for the Lender or its applicable Lending Office to make, maintain or fund Loans the interest rate on which is determined by reference to the Eurodollar Rate, or materially restricts the authority of the 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 the Lender to the Borrower, any obligation of the Lender to make or continue Eurodollar Loans or Base Rate Loan as to which the interest rate is determined with reference to the Eurodollar Base Rate or to convert Base Rate Loans to Eurodollar Loans shall be suspended until the Lender notifies 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 the Lender, prepay or, if applicable, convert all Eurodollar Loans of the Lender to Base Rate Loans as to which the interest rate is not determined with reference to the Eurodollar Base Rate, either on the last day of the Interest Period thereof, if the Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if the 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.

3.12    Requirements of Law.
If the Lender determines that as a result of any Change in Law, there shall be any increase in the cost to the Lender of agreeing to make or making, funding, continuing, converting or maintaining Loans, or a reduction in the amount received or receivable by the 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 (a) Taxes covered by Section 3.13 and (b) the Statutory Reserve Rate covered by the definition of Eurodollar Rate), then from time to time, upon demand of the Lender, the Borrower shall pay to the Lender such additional amounts as will compensate the Lender for such increased cost or reduction in yield; provided that, such determination to charge such additional amounts to the Borrower shall be made in good faith (and not on an arbitrary or capricious basis) and consistent with other similarly situated customers of the Lender after consideration of such factors as the Lender then reasonably determines to be relevant.

3.13    Taxes.
If  any  payments  to  the  Lender  under  this  Loan  Agreement  are  made  from  outside  the  United States, the Borrower will not deduct any foreign taxes from any payments it makes to the Lender.  If any such foreign taxes are imposed on any payments made by the Borrower (including payments under this paragraph), the Borrower will pay the taxes and will also pay to the Lender, at the time interest is paid, any additional  amount  which  the  Lender  specifies  as  necessary  to  preserve  the  after-tax  yield  the  Lender would  have  received  if  such  taxes  had  not  been  imposed.   As  soon  as  practicable  after  any  payment of taxes by the Borrower to a Governmental Authority, as provided in this Section 3.13, the Borrower will deliver  to  the  Lender  the  original  or  a  certified  copy  of  a receipt issued by such Governmental Authority evidencing such payment, a copy of any return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

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3.14    Compensation.
Upon the written demand of the Lender, the Borrower shall promptly compensate the Lender for and hold the 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 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 the 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 the Lender shall be compensated pursuant to this Section 3.14 shall include, without limitation, (i) any loss incurred by the 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 Lender under this Section 3.14, the 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 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 (10) Business Days of demand therefor.  In determining such amount, the Lender may use any reasonable averaging and attribution methods.  Section 3.9 through 3.14, inclusive, shall survive the termination of this Loan Agreement and the payment of all Borrower Obligations.

3.16    [Reserved].

3.17    Mitigation Obligations.
If the Lender requests compensation under Section 3.9 or Section 3.12, or requires the Borrower to pay any Taxes pursuant to Section 3.13 or additional amounts to the Lender or any Governmental Authority for the account of the Lender pursuant to Section 3.13 or if the Lender gives a notice pursuant to Section 3.11, then, at the request of the Borrower, the Lender shall use reasonable  efforts  to  designate  a  different  Lending  Office  for  funding  or  booking  its  Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of the Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.9, Section 3.12 or Section 3.13, as the case may be, in the future or eliminate the need for the notice pursuant to Section 3.11, as applicable, and (ii) in each  case,  would  not  subject  the  Lender  to  any  unreimbursed  cost  or  expense  and  would not otherwise be disadvantageous to the Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by the Lender in connection with any such designation or assignment.

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SECTION 4
 
CONDITIONS PRECEDENT 

4.1    Closing Conditions.
The obligation of the Lender to enter into this Loan Agreement and to make the Loans on the Closing Date is subject to satisfaction of the following conditions:
(a)    Executed Loan Documents.  Receipt by the Lender of duly executed copies of: (i) this Loan Agreement, (ii) the Note to the extent requested by the Lender, and (iii) the Notice of Borrowing.
(b)    Authority Documents.  Receipt by the Lender 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 Loan Agreement and the other Loan 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 a certificate 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 certified by a secretary or assistant secretary (or the equivalent) of the Borrower to be true and correct as of the Closing Date.
(v)    Termination of Term Loan Agreement.  Evidence reasonably satisfactory to the Lender of the termination and cancellation and repayment of all indebtedness and other obligations under that certain Term Loan Agreement dated December 21, 2016, by and among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, which repayment shall occur substantially concurrently with the funding of the Loans hereunder and the application of the Loan proceeds in whole or in part to repay such indebtedness.
(c)    Opinions of Counsel.  Receipt by the Lender of opinions of counsel from counsel to the Borrower (which may include in-house counsel with respect to matters of New Mexico law), in form and substance acceptable to the Lender, addressed to the Lender and dated as of the Closing Date.
(d)    Financial Statements.  Receipt by the Lender of a copy of (i) the annual consolidated financial statements (including balance sheets, income statements and cash flow 

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statements) of the Borrower and its Subsidiaries for Fiscal Years 2016 and 2017, audited by independent public accountants of recognized national standing, (ii) the consolidated balance sheet, income statement, and statement of cash flows of the Borrower and its Subsidiaries for each of the Fiscal Quarters ended March 31, 2018, June 30, 2018 and September 30, 2018, together with a year to date statement of cash flows and (iii) such other financial information regarding the Borrower as the Lender may reasonably request.  The Lender acknowledges that the items described in clauses (i) and (ii) above have been posted on the Borrower’s website at the website address listed on Schedule 11.1 and are therefore deemed to have been received by the Lender.
(e)    [Reserved].
(f)    Material Adverse Effect.  Since December 31, 2017, except as disclosed in the SEC Reports, (i) 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 (ii) no Material Adverse Change shall have occurred in the facts and information regarding the Borrower and its Subsidiaries as disclosed in the Borrower’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2017.
(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 disclosed in the SEC Reports.
(h)    Consents.  All necessary governmental, shareholder and third party consents and approvals, if any, with respect to this Loan Agreement and the Loan Documents and the transactions contemplated herein and therein shall have been received and no condition or Requirement of Law exists which would reasonably be likely to restrain, prevent or impose any material adverse conditions on the transactions contemplated hereby and by the other Loan Documents.
(i)    Officer’s Certificates.  Receipt by the Lender of a certificate or certificates executed by a Responsible 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  except  as  disclosed  in  the  SEC  Reports,  (iii)  the  financial  statements  and information delivered to the Lender on or before the Closing Date were prepared in good faith and  in  accordance  with  GAAP  and  (iv)  immediately  after  giving  effect  to  this  Loan Agreement, the other Loan Documents and all the transactions contemplated herein or therein to occur on such date, (A) the Borrower is Solvent, (B) no Default or Event of Default exists, (C) all  representations  and  warranties  contained  herein  and  in  the  other  Loan  Documents  are true and correct in all material respects, (D) since December 31, 2017, except as disclosed in the SEC  Reports,  (i)  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 (ii) no Material Adverse Change has occurred in the facts and information regarding the Borrower and its Subsidiaries as disclosed in the Borrower’s Annual Report  on  Form  10-K  for the Fiscal Year ended December 31, 2017 and (E) the Borrower is in compliance with the financial covenant set forth in Section 7.2, as of September 30, 2018, as demonstrated in the Covenant Compliance Worksheet attached to such certificate.

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(j)    Account Designation Letter.  Receipt by the Lender of an executed counterpart of the Account Designation Letter.
(k)    PATRIOT Act.  The Borrower shall have provided to the Lender the documentation and other information reasonably requested by the Lender in order to comply with requirements of the PATRIOT Act.
(l)    Fees and Expenses.  Unless waived by the Person entitled thereto, payment by the Borrower of all attorneys’ fees and expenses owed by it to the Lender on or before the Closing Date.
(m)    Other.  Receipt by the Lender of such other documents, instruments, agreements or information as reasonably requested by the Lender.

SECTION 5
 
CONDITIONS TO FUNDING OF LOANS

5.1    Funding Requirements.
In addition to the conditions precedent set forth in Section 4.1 of this Loan Agreement, the Lender shall not be obligated to make the Loans unless the following conditions are satisfied as of the Closing Date:
(a)    [Reserved]
(b)    Representations and Warranties.  The representations and warranties made by the Borrower in any Loan Document are true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) at and as if made as of such date except to the extent they expressly and exclusively relate to an earlier date.
(c)    No Default.  No Default or Event of Default shall exist and be continuing either prior to or after giving effect to the requested Borrowing.
The delivery of the Notice of Borrowing shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b) and (c) above.

SECTION 6
 
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Loan Agreement and to induce the Lender to extend the credit contemplated hereby, the Borrower represents and warrants to the Lender as follows:

6.1    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

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 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.

6.2    Due Authorization.
The Borrower (a) has the requisite corporate power and authority to execute, deliver and perform this Loan Agreement and the other Loan Documents and to incur the obligations herein and therein provided for and (b) has been authorized by all necessary action to execute, deliver and perform this Loan Agreement and the other Loan Documents.

6.3    No Conflicts.
Neither the execution and delivery of this Loan Agreement and the other Loan Documents, nor the consummation of the transactions contemplated herein and therein, nor performance of and compliance with the terms and provisions hereof and thereof by the Borrower will (a) violate or conflict with any provision of its organizational documents, (b) violate, contravene or conflict with any law, 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.

6.4    Consents.
No consent, approval, authorization or order of, or filing, registration or qualification with, any court or Governmental Authority or third party is required in connection with the execution, delivery or performance of this Loan Agreement or any of the other Loan Documents that has not been obtained or completed.

6.5    Enforceable Obligations.
This Loan Agreement and the other Loan Documents 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.

6.6    Financial Condition.
The financial statements delivered to the Lender pursuant to Section 4.1(d) and pursuant to Sections 7.1(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 4.1(d) or 7.1(a) (or as to any prior annual financial statements) has been withdrawn.

6.7    No Material Change.
(a)    Since December 31, 2017, except as disclosed in the SEC Reports, there has  been  no  development  or  event  relating  to  or  affecting  the  Borrower  or any of its

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 Subsidiaries which would have or would reasonably be expected to have a Material Adverse Effect.
(b)    Since December 31, 2017, 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 Lender pursuant to Section 4.1(d) or 7.1 or in the notes thereto or (ii) otherwise permitted by the terms of this Loan Agreement and communicated to the Lender.

6.8    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.

6.9    Litigation.
Except as disclosed in the SEC Reports, 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.

6.10    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 (i) the amount of which, individually or in the aggregate, is not material, or (ii) 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.

6.11    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.

6.12    ERISA.
(a)    Except as would not result or reasonably be expected to result in a Material Adverse Effect:
(i)    Each Single Employer 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,  regulations  and  published

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 interpretations thereunder, except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired.  Each Single Employer Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired.  No liability has been incurred by the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties assessed with respect to any Single Employer Plan or any Multiemployer Plan except for a liability that could not reasonably be expected to have a Material Adverse Effect;
(ii)    No ERISA Event has occurred or is reasonably expected to occur;
(iii)    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 Single Employer 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.
(iv)    No proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to the best of the knowledge of the Borrower after due inquiry, threatened concerning or involving (i) any employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by the Borrower or any ERISA Affiliate (a “Welfare Plan”), (ii) any Single Employer Plan or (iii) any Multiemployer Plan.
(v)    Each Welfare Plan 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.
(b)    The Borrower represents and warrants as of the Closing Date that the Borrower is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans or the Commitment.

6.13    Use of Proceeds; Margin Stock.
The proceeds of the Borrowings hereunder will be used solely for the purposes specified in Section 7.9.  None of such proceeds will be used (a)(i) for the purpose of purchasing or carrying any Margin Stock or (ii) for the purpose of 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.

6.14    Government Regulation.
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.

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6.15    Solvency.
The Borrower is and, after the consummation of the transactions contemplated by this Loan Agreement, will be Solvent.

6.16    Disclosure.
Neither this Loan Agreement nor any financial statements delivered to the Lender nor any other document, certificate or statement furnished to the Lender 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.

6.17    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 Laws 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 or to any Environmental Claim.

6.18    [Reserved].

6.19    [Reserved].

6.20    Anti-Corruption Laws and Sanctions.
The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance by the Borrower, any Subsidiary and their respective directors, officers and employees with the Anti-Corruption Laws and applicable Sanctions.  The Borrower, any Subsidiary and to the knowledge of the Borrower or such Subsidiary their respective officers, directors and employees, are in compliance with the Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) the Borrower, any Subsidiary or to the knowledge of the Borrower or such Subsidiary any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any third party that will act in any capacity on behalf of or at the direction of the Borrower or any Subsidiary in connection with or will benefit from the credit facility established hereby, is a Sanctioned Person.  No Borrowing, use of proceeds or other transactions by the Borrower or any Subsidiary contemplated by this Loan Agreement will knowingly violate any Anti-Corruption Law or applicable Sanctions.

SECTION 7
 
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the payment in full of all Borrower Obligations: 

7.1    Information Covenants.
The Borrower will furnish, or cause to be furnished, to the Lender:

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(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 commencing with the 2018 Fiscal Year, 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 Lender and whose opinion shall be furnished to the Lender, 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.  To the extent that any VIEs have been consolidated with the Borrower in the preparation of the financial statements furnished pursuant to this Section 7.1(a) (as contemplated in Section 1.3(c)), the Borrower shall deliver to the Lender with such financial statements a reconciliation of such financial statements that excludes the impact of such consolidation.
(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 commencing with the Fiscal Quarter ending March 31, 2019 (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 Lender, 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.  To the extent that any VIEs have been consolidated with the Borrower in the preparation of the financial statements furnished pursuant to this Section 7.1(b) (as contemplated in Section 1.3(c)), the Borrower shall deliver to the Lender with such financial statements a reconciliation of such financial statements that excludes the impact of such consolidation.
(c)    Officer’s Certificate.  At the time of delivery of the financial statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of a Financial Officer substantially in the form of Exhibit 7.1(c): (i) setting forth calculations demonstrating compliance by the Borrower with the financial covenant set forth in Section 7.2 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 Lender within ten (10) 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 

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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 $20,000,000 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 Laws), 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 Lender 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 unfavorable determination letter from the IRS regarding the qualification of a Single Employer Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by the Borrower or any ERISA Affiliate of the PBGC’s intent to terminate any Single Employer Plan or to have a trustee appointed to administer any Single Employer Plan, (iii) 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 insolvent (within the meaning of Title IV of ERISA); or (iv) the Borrower obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Single Employer Plan under a distress termination within the meaning of Section 4041(c) of ERISA.  Promptly upon request, the Borrower shall furnish the Lender with such additional information concerning any Single Employer 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).
(g)    Debt Ratings.  Prompt notice of any change in its Debt Ratings.
(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 Lender may reasonably request.
Documents required to be delivered pursuant to Section 7.1(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  11.1;  or  (ii)  on  which  such  documents  are  posted  on  the Borrower’s behalf on an Internet or intranet website, if any, to which the Lender has access (whether a commercial,  third-party  website  or  whether  sponsored  by  the  Lender);  provided  that:  (A)  the  Borrower shall deliver paper copies of such documents to the Lender if the Lender requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Lender and (B) the Borrower shall notify the Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Lender 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 7.1(c) to the Lender.  Except for such Officer’s Certificate,  the  Lender  shall  have  no  obligation  to  request  the  delivery  or  to  maintain  copies  of  the 

30

documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery.

7.2    Financial Covenant.
The ratio of (a) Consolidated Indebtedness to (b) Consolidated Capitalization shall be less than or equal to 0.70 to 1.0 as of the last day of any Fiscal Quarter.

7.3    Preservation of Existence and Franchises.
(a)    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 all material 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; provided that this Section 7.3(b) shall not prevent the Borrower or any Subsidiary from discontinuing the operation or the maintenance of any of the properties if such discontinuance is desirable in the conduct of its business and the Borrower has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

7.4    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).

7.5    Compliance with Law.
(a)    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.
(b)    Without limiting clause (a) above, the Borrower will, and will cause each of its Subsidiaries to, ensure that no person who owns a controlling interest in or otherwise controls the Borrower or any Subsidiary is or shall be a Sanctioned Person.
(c)    The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with the Anti-Corruption Laws and applicable Sanctions.
(d)    The Borrower shall, and shall cause each of its Subsidiaries to, provide such information and take such actions as are reasonably requested by the Lender in order to assist the Lender in maintaining compliance with the PATRIOT Act and applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Beneficial Ownership Regulation.

7.6    Payment of Taxes and Other Indebtedness.

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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 Loan 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.

7.7    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.

7.8    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 agreements, indentures, mortgages, security agreements or other debt instruments to which it is a party or by which it is bound, the failure to perform which could reasonably be expected to have a Material Adverse Effect.

7.9    Use of Proceeds.
The proceeds of the Borrowings may be used solely (a) to refinance Indebtedness of the Borrower, (b) to pay fees and expenses required by the Loan Documents and (c) for general corporate purposes of the Borrower (including, but not limited to, working capital and capital expenditures).  The Borrower will not request any Borrowing, and the Borrower shall not use, and shall use commercially-reasonable efforts to ensure that any Subsidiary and its or their respective directors, officers and employees shall not use, the proceeds of any Borrowing directly or, to the knowledge of the Borrower, indirectly (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person in violation of applicable Sanctions, or in any Sanctioned Country in violation of applicable Sanctions.

7.10    Audits/Inspections.
Upon reasonable notice and during normal business hours and subject to the Borrower’s applicable safety protocols, the Borrower will permit representatives appointed by the Lender, 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 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 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 Lender.

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7.11    Ownership of Certain Subsidiaries.
The Borrower shall at all times, (a) own and control 100% of the Voting Stock of PSNM and (b) own and control, directly or indirectly, 100% of the Voting Stock of TNMP.

SECTION 8
 
NEGATIVE COVENANTS
Unless otherwise approved in writing by the Lender, the Borrower covenants and agrees that, until the payment in full of all Borrower Obligations:

8.1    Nature of Business.
The Borrower will not materially alter the character of its business from that conducted as of the Closing Date.

8.2    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.

8.3    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) sales or transfers of accounts receivable and related rights to payment in connection with a State Approved Securitization, sales or transfers of stranded costs and related rights to payment in connection with a TNMP Securitization  and other sales and transfers of accounts receivable and related rights to payment so long as such other sales and transfers are non-recourse to the Borrower (other than with respect to Standard Securitization Undertakings) and are otherwise on commercially reasonable terms; (b) sales of assets (excluding those permitted in clause (a) 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, as calculated as of the end of the most recent Fiscal Quarter; and (c) the sale, lease, transfer or other disposition, at less than fair value, of any other assets, provided that the aggregate book value of such assets shall not exceed $20,000,000 in any calendar year.

8.4    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.

8.5    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  the  Borrower  Obligations,  (b)  Liens  for taxes not yet due or Liens for taxes

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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 secured by such Liens shall not exceed $50,000,000 at any one time outstanding, (k) any Lien on Margin Stock, (l) the assignment of, or Liens on, accounts receivable, stranded costs and related rights to payment in connection with (i) a State Approved Securitization, (ii) the TNMP Securitization and (iii) any other accounts receivable securitization so long as such other securitization is non-recourse to the Borrower (other than with respect to Standard Securitization Undertakings) and is otherwise on commercially reasonable terms, and the filing of related financing statements under the Uniform Commercial Code of the applicable jurisdictions, (m) 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, (n) Liens on assets of TNMP to the  extent  such  Liens  are  not  prohibited  by  (i)  the  TNMP  First  Mortgage  Bonds  or  the  indenture pursuant  to  which  the  TNMP  First  Mortgage  Bonds  are  issued,  as the TNMP First Mortgage Bonds or such indenture may be amended, supplemented, refunded or replaced from time to time, or (ii) the TNMP Credit Agreement, as such TNMP Credit Agreement may be amended, restated or replaced from time to time, but subject in each case to Section 7.2 of this Loan Agreement, (o) any extension, renewal or replacement (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 lease that is classified as an operating lease as of the Closing Date but which is subsequently converted to 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) 

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Liens upon any property in favor of the administrative agent for the benefit of the lenders (the “Revolving Loan Administrative Agent”) under the Existing Credit Agreement (or any refinancing thereof, including any increases in the amount thereof) securing Indebtedness thereunder and/or in favor of the administrative agent for the benefit of the lenders (the “Term Loan Administrative Agent”) under the Existing Term Loan Agreement (or any refinancing thereof, including any increases in the amount thereof) securing Indebtedness thereunder; provided that (i) the Borrower Obligations shall concurrently be secured equally and ratably with (or prior to) such Indebtedness under the Existing Credit Agreement (or any refinancing thereof, including any increases in the amount thereof) or under the Existing Term Loan Agreement (or any refinancing thereof, including any increases in the amount thereof) so long as such other Indebtedness shall be secured and (ii) the Borrower, the Revolving Loan Administrative Agent (or the administrative agent under any refinancing of the Existing Credit Agreement), the Term Loan Administrative Agent (or the administrative agent under any refinancing of the Existing Term Loan Agreement) and the Lender, shall have entered into such security agreements, collateral trust and sharing agreements, intercreditor agreements and other documentation deemed necessary by the Lender in respect of such Lien on terms and conditions acceptable to the Lender (including, without limitation, with respect to the voting of claims and release or modification of any such Lien or all or any portion of the collateral 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 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.

8.6    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.

SECTION 9
 
EVENTS OF DEFAULT

9.1    Events of Default.
An Event of Default 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 the Loans; or (ii) default, and such default shall continue for three (3) or more Business  Days,  in  the  payment  when  due  of  any  interest  on  the  Loans  or  of  any fees or other amounts owing hereunder, under any of the other Loan 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 Loan 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.
(c)    Covenants.  The Borrower shall:
(i)    default in the due performance or observance of any term, covenant or agreement contained in Sections 7.1(e)(i), 7.2, 7.3(a) (solely with respect to the existence of the Borrower), 7.9, 7.10, 7.11 or 8.1 through 8.6 inclusive; or

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(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 9.1) contained in this Loan Agreement or any other Loan Document and such default shall continue unremedied for a period of at least 30 days after the earlier of a Responsible  Officer of the Borrower becoming aware of such default or notice thereof given by the Lender.
(d)    Loan Documents.  Any Loan Document shall fail to be in force and effect or the Borrower shall so assert or any Loan Document shall fail to give the Lender the material 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 sixty (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 Loan Agreement) in excess of $40,000,000 in the aggregate (A) the Borrower or such Subsidiary 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 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.

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(g)    Judgments.  Any judgment, order or decree involving a liability of $40,000,000 or more, or one or more judgments, orders, or decrees involving a liability of $80,000,000 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 (i) an ERISA Event or (ii) the Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Single Employer Plan or Sections 412 or 430 of the Code, the Borrower or any ERISA Affiliate is required to pay as contributions thereto and which are in excess of the Threshold Amount.
(i)    Change of Control.  There shall occur a Change of Control.

9.2    Acceleration; Remedies.
Upon the occurrence and during the continuation of an Event of Default, the Lender may take the following actions without prejudice to the rights of the Lender to enforce its claims against the Borrower, except as otherwise specifically provided for herein:
(a)    Acceleration of Loans.  Declare the unpaid principal of and any accrued interest in respect of all Loans and any and all other Borrower Obligations of any and every kind owing by the Borrower to the Lender under the Loan 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.
(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 Loan Documents, including, without limitation, all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(e) shall occur, then all Loans, all accrued interest in respect thereof, all accrued and unpaid fees and other Borrower Obligations owing to the Lender hereunder shall immediately become due and payable, in each case without the giving of any notice or other action by the Lender, which notice or other action is expressly waived by the Borrower.

9.3    Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Loan Agreement, after the occurrence and during the continuation of an Event of Default, all amounts collected or received by the Lender on account of amounts outstanding under any of the Loan Documents shall be first applied to the Borrower Obligations in such order as determined by the Lender in its sole discretion and then, to the extent there is any surplus, such surplus shall be paid to the Borrower or whomever may be lawfully entitled to receive such surplus.

SECTION 10
 
[RESERVED] 

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SECTION 11
 
MISCELLANEOUS

11.1    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 address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 11.1.
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 systems to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b)    Electronic Communications.  The Lender 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 Lender 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)    [Reserved].  
(d)    Change of Address, Etc.  Each of the Borrower and the Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  
(e)    Reliance by Lender.  The Lender shall be entitled to rely and act upon any notices (including telephonic Notices of Borrowing) 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 Lender and the Lender-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 Lender may be recorded by the Lender, and each of the parties hereto hereby consents to such recording.

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11.2    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 9.2, the 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 the Lender (including, without limitation, branches, agencies or Affiliates of the Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lender hereunder, under the Note, the other Loan Documents or otherwise, irrespective of whether the Lender 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 the Lender subsequent thereto.  The Borrower hereby agrees that any Person purchasing a participation in the Loans hereunder pursuant to Section 11.3 may exercise all rights of set-off with respect to its participation interest as fully as if such Person were the Lender hereunder.

11.3    Successors and Assigns.
(a)    Successors and Assigns Generally.  The provisions of this Loan 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 Lender, and the Lender may not assign or otherwise transfer any of its rights or obligations hereunder except (i) by an assignment in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (c) of this Section, or (iii) by way of pledge or assignment of a security interest in accordance with the provisions of subsection (d) of this Section.
(b)    Assignments by Lender.  The Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Loan Agreement; provided, that, unless such assignment is to an Affiliate of the Lender:
(i)    the aggregate amount of the principal outstanding balance subject to such assignment shall not be less than $5,000,000, except in the case of an assignment of the entire remaining amount of the Loan or unless the Borrower consents to such assignment; and
(ii)    the Borrower shall have consented to such assignment (such consent not to be unreasonably withheld), unless an Event of Default has occurred and is continuing.
(c)    Participations.  The Lender may at any time, without the consent of, or notice to, the Borrower, sell participations to any Person in all or any portion of the Lender’s rights and/or obligations under this Loan Agreement; provided that (i) the Lender’s obligations under this Loan Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the Borrower for the performance of such obligations, and (iii) the Borrower shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Loan Agreement.  Any agreement or instrument pursuant to which the Lender sells such a participation shall provide that the Lender shall retain the sole right to enforce this Loan Agreement and to approve any amendment, modification or waiver of any provision of this Loan Agreement.

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(d)    Certain Pledges.  The Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Loan Agreement (including under the Note, if any) to secure obligations of the Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Lender from any of its obligations hereunder or substitute any such pledgee or assignee for the Lender as a party hereto.

11.4    No Waiver; Remedies Cumulative.
No failure or delay on the part of the Lender in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Borrower and the 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 Loan 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 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 Lender to any other or further action in any circumstances without notice or demand.

11.5    Attorney Costs, Expenses, Taxes and Indemnification by Borrower.
(a)    The Borrower agrees (i) to pay or reimburse the Lender for all costs and expenses incurred in connection with the preparation, negotiation and execution of this Loan Agreement and the other Loan 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 (ii) to pay or reimburse the Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Loan Agreement or the other Loan 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 Lender and the cost of independent public accountants and other outside experts retained by the Lender.  Other than costs and expenses payable in connection with the closing of the transactions contemplated by this Loan Agreement pursuant to this Section 11.5(a) (which shall be payable on the Closing Date unless otherwise agreed by the Lender), all amounts due under this Section 11.5 shall be payable within ten (10) Business Days after demand therefor.  The agreements in this Section shall survive the termination of the Commitment and repayment of all other Borrower Obligations.
(b)    Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold harmless each Lender-Related Person, the Lender and their respective Affiliates, directors, officers, employees, counsel, agents, advisors 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  Loan  Document  or  any  other  agreement, letter  or  instrument  delivered  in  connection  with  the  transactions  contemplated 

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thereby or the consummation of the transactions contemplated thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, or (iii) any actual or alleged presence or release of Hazardous Substances on or from any property 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), whether brought by a third party or by the Borrower or any Subsidiary, and regardless of whether any Indemnitee is a party thereto or (v) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof, by the 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 SyndTrak or other similar information transmission systems in connection with this Loan Agreement, nor shall any Indemnitee have any liability for any special, punitive, indirect or consequential damages relating to this Loan Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date).
(c)    [Reserved].
All amounts due under this Section 11.5 shall be payable within ten (10) Business Days after demand therefor.  The agreements in this Section shall survive the termination of the Commitment and the repayment, satisfaction or discharge of all the other Borrower Obligations.

11.6    Amendments, Etc.
No amendment or waiver of any provision of this Loan Agreement or any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by the Lender and the Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

11.7    Counterparts.
This Loan 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.  Delivery of an executed signature page of this Loan Agreement by facsimile transmission or other secure electronic format (.pdf) shall be effective as delivery of a manually executed counterpart hereof.

11.8    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 Loan Agreement.

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11.9    Survival of Indemnification and Representations and Warranties.
(a)    Survival of Indemnification.  All indemnities set forth herein shall survive the execution and delivery of this Loan Agreement, the making of any Loan and the repayment of the Loans and other Borrower Obligations hereunder.
(b)    Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan 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 Lender, regardless of any investigation made by the Lender or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or Event of Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Borrower Obligation hereunder shall remain unpaid or unsatisfied.

11.10    Governing Law; Venue; Service.
(a)    THIS LOAN AGREEMENT AND THE OTHER LOAN 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.  Any legal action or proceeding with respect to this Loan Agreement or any other Loan 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 appellate courts thereof, and, by execution and delivery of this Loan 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 Loan Agreement or any other Loan Document by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address for notices pursuant to Section 11.1, such service to become effective ten days after such mailing.  Nothing herein shall affect the right of the Lender to serve process in any other manner permitted by Law.

11.11    Waiver of Jury Trial; Waiver of Consequential Damages.
EACH OF THE PARTIES TO THIS LOAN AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.  Each of the parties to this Loan Agreement agrees not to assert any claim against any other party hereto, the 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 Loan Documents.

11.12    Severability.
If any provision of any of the Loan 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.

42

11.13    Further Assurances.
The Borrower agrees, upon the request of the Lender, to promptly take such actions, as reasonably requested, as is necessary to carry out the intent of this Loan Agreement and the other Loan Documents.

11.14    Confidentiality.
The Lender 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, or required to be disclosed to, any rating agency or regulatory authority purporting to have jurisdiction over it or an Affiliate (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 Loan Document or any action or proceeding relating to this Loan Agreement or any other Loan 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 Loan 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) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided for herein, (h) with the consent of the Borrower or (i) 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 Lender or any of its 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 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.
THE LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH FURNISHED TO IT PURSUANT TO THIS LOAN AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS LOAN AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH  MAY  CONTAIN  MATERIAL  NONPUBLIC  INFORMATION  ABOUT  THE BORROWER   AND   ITS   RELATED   PARTIES   OR   THEIR   RESPECTIVE   SECURITIES.  

43

ACCORDINGLY, THE LENDER REPRESENTS TO THE BORROWER THAT IT HAS IDENTIFIED ON SCHEDULE 11.1 A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

11.15    Entirety.
This Loan Agreement together with the other Loan Documents 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 Loan Documents or the transactions contemplated herein and therein.

11.16    Binding Effect; Continuing Agreement.
(a)    This Loan 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 Lender and it shall have been executed by the Borrower and the Lender, and the Lender shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of the Lender, and thereafter this Loan Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns.
(b)    This Loan Agreement shall be a continuing agreement and shall remain in full force  and  effect  until  all  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 Loan 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 Lender, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, then the Loan Documents shall automatically be reinstated and all amounts required to be restored or returned and all costs and expenses incurred by the Lender in connection therewith shall be deemed included as part of the Borrower Obligations.

11.17    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 and PSNM 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; 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.

11.18    USA Patriot Act Notice.
The Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, it is  required  to  obtain,  verify  and  record  information  that  identifies  the  Borrower,  which  information

44

 includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the PATRIOT Act.

11.19    Acknowledgment.
Section 7 and Section 8 of this Loan Agreement contain affirmative and negative covenants applicable to the Borrower.  Each of the parties to this Loan 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.

11.20    Electronic Execution of Assignments and Certain Other Documents.
The  words  “execute,”  “execution,”  “signed,”  “signature,”  and  words  of  like  import  in  any Loan Document or any other document to be signed in connection with this Loan Agreement, any other document  executed  in  connection  herewith  and  the  transactions  contemplated  hereby  shall  be  deemed to  include  electronic  signatures,  the  electronic  matching  of  assignment  terms  and  contract  formations on  electronic  platforms  approved  by  the  Lender,  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, physical  delivery  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; provided that notwithstanding anything contained herein to the contrary the Lender is under no obligation to agree to accept electronic signatures in any  form  or  in  any  format  unless expressly agreed to by the Lender pursuant to procedures approved by it; provided further without limiting the foregoing, upon the request of the Lender, any electronic signature shall be promptly followed by such manually executed counterpart.

11.21    No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Loan Agreement provided by the Lender are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Lender, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) the Lender has no obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and the Lender has no obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

11.22    [Reserved].
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

45

Each of the parties hereto has caused a counterpart of this Loan Agreement to be duly executed and delivered as of the date first above written.
	
		
	BORROWER:
	PNM RESOURCES, INC., 
a New Mexico corporation

By:    /s/ Joseph D. Tarry            
Name:  Joseph D. Tarry
Title:  Vice President, Controller and Treasurer

Signature Page to
PNM Resources, Inc. Term Loan Agreement

LENDER:
BANK OF AMERICA, N.A., individually in its capacity as the Lender 

By:         /s/ David R. Barney            
Name:  David R. Barney
Title:  Senior Vice President

Signature Page to
PNM Resources, Inc. Term Loan Agreement

SCHEDULE 1.1(a)
PRO RATA SHARES
	
			
	Lender
	Commitment
	Pro Rata Share

	Bank of America, N.A.
	$50,000,000
	100.000000000%

	TOTAL
	$50,000,000.00
	100.000000000%

SCHEDULE 11.1
NOTICES
Borrower:
PNM Resources, Inc.
414 Silver Ave.  SW, MS0905
Albuquerque, New Mexico 87102-3289
Attention: Joseph D. Tarry, Vice President, Controller and Treasurer 
Telephone No.: (505) 241-4672
Fax No.: (505) 241-4314
E-mail: cashdesk@pnmresources.com
Address for notices as Lender:
Bank of America, N.A.
Mail Code: AZ1-200-22-50
201 East Washington Street, Floor 22nd 
Phoenix, Arizona 85004-2428 
Attention: Jennie Carrubba 
E-mail:jennie.carrubba@baml.com
with a copy to: CreditServicesOps-ratelocks@bankofamerica.com

Address for notices as Credit Contact:
Bank of America, N.A.
Mail Code: AZ3-566-02-20
14636 North Scottsdale Road
Suite 200
Scottsdale, Arizona 85254
Attention: David Barney
Telephone No.: (480) 624-0596
Fax No.: (312) 453-5567
E-mail: david.r.barney@baml.com

Lender Wiring Instructions:
On file with the Borrower and the Lender.

EXHIBIT 2.1(b)
FORM OF  
NOTICE OF BORROWING

TO:    BANK OF AMERICA, N.A., as Lender
		
	RE:
	Term Loan Agreement dated as of December 21, 2018 between PNM Resources, Inc.  (the “Borrower”) and Bank of America, N.A., as Lender (the “Lender”) (as the same may be amended, modified, extended or restated from time to time, the “Loan Agreement”).

DATE: _______________________, 201__
		
	1.
	This Notice of Borrowing is made pursuant to the terms of the Loan Agreement.  All capitalized terms used herein unless otherwise defined shall have the meanings set forth in the Loan Agreement.

		
	2.
	Please be advised that the Borrower is requesting a Loan on the terms set forth below:

(a)    Principal amount of requested Loan    $______________
(b)    Date of requested Loan (the “Borrowing Date”)    ________________
(c)    Interest rate applicable to the requested Loan:
(i)    _________    Adjusted Base Rate
(ii)     _________    Adjusted Eurodollar Rate for an Interest Period of:
________    one month
________    two months 
________    three months 
________    six months
		
	3.
	The undersigned hereby certifies that the following statements will be true on the Borrowing Date:

(a)    The representations and warranties made by the undersigned in any Loan Document are true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) at and as if made as of such date except to the extent they expressly and exclusively relate to an earlier date.
(b)    No Default or Event of Default exists or shall be continuing either prior to or after giving effect to the Loan made pursuant to this Notice of Borrowing.
(c)    Subsequent to the funding of the requested Loan, the aggregate principal amount of the Loans will not exceed the aggregate amount of the Lender’s Commitment.
		
	4.
	The undersigned hereby acknowledges and agrees that the Borrower shall indemnify the Lender in accordance  with  Section  3.14  against  any  loss,  cost or expense incurred by the Lender as a result 

of any failure by the Borrower to borrow the Loan requested by the Borrower in this Notice of Borrowing on the Borrowing Date.
PNM RESOURCES, INC., a New Mexico corporation

By:         
Name:         
Title:         

EXHIBIT 2.1(d)
FORM OF TERM NOTE
Lender:  ______________________________    ___________________, 201__
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 Lender’s Office set forth in that certain Term Loan Agreement dated as of December 21, 2018 (as amended, modified, extended or restated from time to time, the “Loan Agreement”) between the Borrower and Bank of America, N.A., as Lender (the “Lender”) (or at such other place or places as the holder of this Note may designate), the aggregate unpaid principal amount of the Loan made by the Lender to the Borrower under the Loan Agreement, in lawful money and in immediately available funds, on the dates and in the principal amounts provided in the Loan Agreement (but, in any event, no later than the Maturity Date), and to pay interest on the unpaid principal amount of the Loan made by the Lender, at such office, in like money and funds, for the period commencing on the date of the Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Loan Agreement.
This Note is the Note referred to in the Loan Agreement and evidences the Loan made by the Lender to the Borrower thereunder.  Capitalized terms used in this Note have the respective meanings assigned to them in the Loan Agreement and the terms and conditions of the Loan Agreement are expressly incorporated herein and made a part hereof.
The Loan Agreement provides for the acceleration of the maturity of the Loan evidenced by this Note upon the occurrence of certain events (and for payment of collection costs in connection therewith) and for prepayment of the Loan 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 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 Loan Agreement or under this Note in respect of the 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 11.3(b) of the Loan 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.
[signature page follows]

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the date first above written.
PNM RESOURCES, INC.,
a New Mexico corporation

By:         
Name:         
Title:         

EXHIBIT 2.3
FORM OF  
NOTICE OF CONTINUATION/CONVERSION
TO:    BANK OF AMERICA, N.A., as Lender
		
	RE:
	Term Loan Agreement dated as of December 21, 2018 between PNM Resources, Inc.  (the “Borrower”) and Bank of America, N.A., as Lender (the “Lender”) (as the same may be amended, modified, extended or restated from time to time, the “Loan Agreement”).

DATE: _______________________, 201__
    
		
	1.
	This Notice of Continuation/Conversion is made pursuant to the terms of the Loan Agreement.  All capitalized terms used herein unless otherwise defined shall have the meanings set forth in the Loan Agreement.

		
	2.
	Please be advised that the Borrower is requesting that a portion of the current outstanding Loan in the amount of $_______________ , currently accruing interest at ________________, be extended or converted as of ____________________ , 201_ 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 Loan referenced above shall be:

a.    ________     the Adjusted 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.

[signature page follows]

PNM RESOURCES, INC.,
a New Mexico corporation

By:         
Name:         
Title:         

EXHIBIT 4.1(j)
FORM OF  
ACCOUNT DESIGNATION LETTER
[Date]
Bank of America, N.A. 
[address]
Attention: [______________]
Ladies and Gentlemen:
This Account Designation Letter is delivered to you by PNM RESOURCES, INC. (the “Borrower”), a New Mexico corporation, under Section 4.1(j) of the Term Loan Agreement, dated as of December 21, 2018 (as amended, restated or otherwise modified from time to time, the “Loan Agreement”), by and between the Borrower and Bank of America, N.A., as Lender (the “Lender”).
[The Lender is hereby authorized to disburse all Loan proceeds into the following account, unless the Borrower shall designate, in writing to the Lender, one or more other accounts:
A/C#    ______________
ABA     ______________
Reference:]
IN WITNESS WHEREOF, the undersigned has executed this Account Designation Letter this [__] day of _______________, 20__.
PNM RESOURCES, INC., 
a New Mexico corporation

By:         
Name:         
Title:         

EXHIBIT 7.1(c)
FORM OF  
COMPLIANCE CERTIFICATE
TO:    BANK OF AMERICA, N.A. as Lender
		
	RE:
	Term Loan Agreement dated as of December 21, 2018 between PNM Resources, Inc.  (the “Borrower”) and Bank of America, N.A. (the “Lender”), as the same may be amended, modified, extended or restated from time to time, the “Loan Agreement”).

DATE: _________________, 201__
    
Pursuant to the terms of the Loan Agreement, I, ______________________, [Title of Financial Officer] of PNM Resources, Inc., hereby certify on behalf of the Borrower that, as of the [Fiscal Quarter] [Fiscal Year] ended _______________, 201__, the statements below are accurate and complete in all respects (all capitalized terms used below shall have the meanings set forth in the Loan Agreement):
a.    Attached hereto as Schedule 1 are calculations (calculated as of the date of the annual financial statements delivered in accordance with Section 7.1(a) of the Loan Agreement or as of the date of the quarterly financial statements referred to in paragraph c. below) demonstrating compliance by the Borrower with the financial covenant contained in Section 7.2 of the Loan Agreement.
b.    No Default or Event of Default exists under the Loan 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.    [Attached hereto as Schedule 2 are the quarterly financial statements for the fiscal quarter ended ______________, 201__ and such quarterly financial statements] [The quarterly financial statements for the fiscal quarter ended ______________, 201_, delivered electronically pursuant to the last paragraph of Section 7.1 of the Loan Agreement,] 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 audit and normal year-end audit adjustments and except that the quarterly financial statements have fewer footnotes than annual statements].1 
[signature page follows]

_________________________
1 Use the first bracketed language when delivering paper copies of quarterly financial statements and the second bracketed language when delivering financial statements electronically.

PNM RESOURCES, INC., 
a New Mexico corporation

By:         
Name:         
Title:         

SCHEDULE 1  
TO EXHIBIT 7.1(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    .70  to 1.0

SCHEDULE 2  
TO EXHIBIT 7.1(c) 
[ QUARTERLY] [ANNUAL] FINANCIAL STATEMENTS
[Attached]

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