Document:

exh10-2_033110.htm

Exhibit 10.2

FOURTH AMENDMENT TO CREDIT AGREEMENT

    THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of March 22, 2010 among PNM RESOURCES, INC., a New Mexico corporation (the "Company"), FIRST CHOICE POWER, L.P., a Texas limited partnership ("FCP", collectively with the Company, the "Borrowers" and each individually, a "Borrower"), the Lenders party hereto, and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such capacity, the "Administrative Agent").  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement (as defined below).

R E C I T A L S

WHEREAS, the Borrowers, the Lenders party thereto and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement, dated as of August 15, 2005 (as amended or modified from time to time, the "Credit Agreement");

WHEREAS, the Borrowers have requested a non-pro rata reduction in the Revolving Committed Amount under the Credit Agreement as described below; and

WHEREAS, the Lenders are willing to agree to such non-pro rata reduction, subject to the terms set forth herein as more fully set forth below.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

A G R E E M E N T

1.           Amendment to Credit Agreement.

(a)         On the Effective Date (as defined in Section 3 below), the Commitment of Aurora Bank FSB (formerly known as Lehman Brothers Bank, FSB, and hereinafter "Aurora") under the Credit Agreement, whether used or unused, is irrevocably reduced to zero ($0.00) and, from and after the Effective Date, Aurora shall have no further obligation to fund any amount or extend any credit under the Credit Documents.

(b)         On the Effective Date, Aurora shall receive from the Borrowers all outstanding amounts of principal of Revolving Loans then due and owing to Aurora and all accrued interest with respect thereto.  Aurora agrees that, upon receipt of the amounts in the preceding sentence, it shall have been paid in full for all Revolving Loans, all interest with respect thereto and all fees owed to it under the Credit Agreement and it shall not be entitled to any other amounts under the Credit Agreement except, if applicable, (i) as set forth in Section 2 below and (ii) any fees provided under Section 3.4 of the Credit Agreement as to which Aurora and the Borrowers have otherwise reached agreement on the Effective Date and that have been communicated in writing to the Administrative Agent.

(c)           The Revolving Committed Amount is reduced by the amount of Aurora's Commitment from $600,000,000 to $568,000,000 and the definition of "Revolving Committed 

 

  

  

  

Amount" in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"Revolving Committed Amount" means FIVE HUNDRED SIXTY-EIGHT MILLION DOLLARS ($568,000,000) or such other amount, as it may be reduced from time to time in accordance with Section 2.1(d) or increased pursuant to Section 2.1(f).

(d)           Schedule 1.1(a) to the Credit Agreement is amended and restated in its entirety in the form of Exhibit A attached to this Amendment.

2.           Surviving Provisions.  The Borrowers and Aurora hereby agree that, for any actions taken prior to the Effective Date, Sections 3.15, 11.1(e), 11.5 and 11.9 of the Credit Agreement shall continue in effect for the benefit of Aurora in accordance with the terms thereof.

3.           Effectiveness; Conditions Precedent.

This Amendment shall be effective on the date (the "Effective Date") on which:

(a)           the Administrative Agent shall have received copies of this Amendment duly executed by the Borrowers, the Lenders, Aurora and the Administrative Agent; and

(b)           Aurora shall have received from the Borrower payment of the amounts described in Section 1(b) above.

4.           Ratification of Credit Agreement.  The term "Credit Agreement" as used in each of the Credit Documents shall hereafter mean the Credit Agreement as amended and modified by this Amendment.  Except as herein specifically agreed, the Credit Agreement, as amended by this Amendment, is hereby ratified and confirmed and shall remain in full force and effect according to its terms.  Each party hereto acknowledges and consents to the modifications set forth herein and agrees that, other than as explicitly set forth in Section 1 above, this Amendment does not impair, reduce or limit any of its obligations under the Credit Documents (including, without limitation, the indemnity obligations set forth therein) and that, after the date hereof, this Amendment shall constitute a Credit Document.

5.           Authority/Enforceability.  Each party hereto represents and warrants as follows:

(a)           It has taken all necessary action to authorize the execution, delivery and performance of this Amendment

(b)           This Amendment has been duly executed and delivered by such Person and constitutes such Person's legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(c)           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 by such Person of this Amendment.

6.           Representations and Warranties.  Each Borrower represents and warrants to the Lenders that (a) the representations and warranties of such Borrower set forth in Section 6 of the Credit 

 

  

  

  

Agreement are true and correct as of the date hereof, unless they specifically refer to an earlier date, (b) no event has occurred and is continuing which constitutes a Default or an Event of Default, and (c) it has no claims, counterclaims, offsets, credits or defenses to its obligations under the Credit Documents or to the extent it has any they are hereby released in consideration of the Lenders entering into this Amendment.

7.           No Conflicts.  Neither the execution and delivery of this Amendment, nor the consummation of the transactions contemplated herein, nor performance of and compliance with the terms and provisions hereof by any Borrower will (a) violate, contravene or conflict with any provision of its respective articles or certificate of incorporation, bylaws or other organizational or governing document, (b) violate, contravene or conflict with any law, rule, regulation, order, writ, judgment, injunction, decree or permit applicable to a Borrower, (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 a Borrower is a party or by which it or its properties may be bound or (d) result in or require the creation of any Lien upon or with respect to a Borrower's properties.

8.           Counterparts/Telecopy.  This Amendment 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 executed counterparts by telecopy or by electronic format (pdf) shall be effective as an original.

9.           GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

[remainder of page intentionally left blank]

 

  

  

  

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

BORROWERS:

PNM RESOURCES, INC.,

a New Mexico corporation

By:           /s/ C.N. Eldred                                               

Name:      C.N. Eldred                                                     

Title:        EVP & CFO                                                    

FIRST CHOICE POWER, L.P.,

a Texas limited partnership

By: First Choice Power GP, LLC, its general partner

By:                                                                               

Name:                                                                              

Title:                                                                            

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

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

BORROWERS:

PNM RESOURCES, INC.,

a New Mexico corporation

By:                                                               

Name:                                                               

Title:                                                               

FIRST CHOICE POWER, L.P.,

a Texas limited partnership

By: First Choice Power GP, LLC, its general partner

By:       /s/ Brian Hayduk                                                    

Name:  Brian Hayduk                                                                    

Title:   President                                                         

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

ADMINISTRATIVE AGENT:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:          /s/ Maria A. McClain                                                               

Name:        Maria A. McClain                                                     

Title:         Vice President                                                               

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

LENDERS:

BANK OF AMERICA, N.A.,

as a Lender and L/C Issuer

By:          /s/ Patrick N. Martin                                                             

Name:         Patrick N. Martin                                                   

Title:          Senior Vice President                                                              

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender and L/C Issuer

By:          /s/ Yann Blindert                                                                              

Name:          Yann Blindert                                                                                        

Title:          Vice President                                                                                         

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

UNION BANK, N.A.

By:          /s/ Efrain Soto                                                                                         

Name:          Efrain Soto                                                                               

Title:          Vice President                                                                                     

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

JPMORGAN CHASE BANK, N.A.

By:           /s/ Helen D. Davis                                                                                 

Name:      Helen D. Davis                                                                                                 

Title:        Vice President                                                                                                             

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

CITIBANK, N.A.

By:           /s/ Todd C. Davis                                                                                  

Name:      Todd C. Davis                                                                                                  

Title:        Vice President                                                                                                  

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

BANK OF AMERICAN, N.A., successor by merger to MERRILL LYNCH BANK USA

By:         /s/ Patrick Martin                                                                                        

Name:     Patrick Martin                                                                                                       

Title:       Senior Vice President                                                                                          

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

MORGAN STANLEY BANK, N.A.

By:         /s/ Melissa James                                                                                 

Name:    Melissa James                                                                                                

Title:      Authorized Signatory                                                                                   

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

UBS LOAN FINANCE LLC

By:           /s/ Irja R. Otsa                                                                                              

Name:     Irja R. Otsa                                                                                          

Title:       Associate Director                                                                            

By:           /s/ Mary E. Evans                                                                            

Name:      Mary E. Evans                                                                                            

Title:      Associate Director                                                                           

 

 

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

WILLIAM STREET COMMITMENT CORPORATION

By:           /s/ Andrew Caditz                                                                                     

Name:      Andrew Caditz                                                                                                    

Title:        Authorized Signatory                                                                                        

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (fka

CREDIT SUISSE, CAYMAN ISLANDS BRANCH)

By:           /s/ Nupur Kumar                                                                                   

Name:      Nupur Kumar                                                                                                  

Title:        Vice President                                 

By:           /s/ Lynne-Marie Paquette                                                                     

Name:      Lynne-Marie Paquette                                                                                    

Title:        Associate                                          

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

WELLS FARGO BANK, N.A.

By:           /s/ Yann Blindert                                                                               

Name:      Yann Blindert                              

Title:        Vice President                                                                                             

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

US BANK NATIONAL ASSOCIATION

By:           /s/ Holland H. Williams                                                                              

Name:      Holland H. Williams                                                                                   

Title:        Portfolio Mgr                                                                                              

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

HSBC BANK USA, NATIONAL ASSOCIATION

By:           /s/ James B. Kaiser                                                                     

Name:           James B. Kaiser                                                                               

Title:           Senior Vice President                                                                       

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

THE BANK OF NEW YORK MELLON

By:           /s/ Mark W. Rogers                                                                         

Name:      Mark W. Rogers                                                                              

Title:       Vice President                                                                                            

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

ROYAL BANK OF CANADA

By:           /s/ Jay T. Sartain                                                                          

Name:      Jay T. Sartain                                                                                         

Title:       Authorized Signatory                                                                           

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

BANK HAPOALIM BM

By:           /s/ Helen H. Gateson                                                                               

Name:      Helen H. Gateson                                                                          

Title:        Vice President                                                                                         

By:           /s/ Frederic S. Becker                                                                              

Name:      Frederic S. Becker                                                                         

Title:        Senior Vice President                                                                             

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

BANK OF ALBUQUERQUE, N.A.

By:           /s/ John M. Valentine                                                                                 

Name:     John M. Valentine                                                                            

Title:     SVP                                               

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

COMPASS BANK

By:           /s/ Ellen Wamser                                                                        

Name:      Ellen Wamser                                                                                       

Title:        Vice President                                                                                      

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

SOUTHWEST SECURITIES FSB

By:           /s/ Michael D. Jarrett                                                                                    

Name:           Michael D. Jarrett                                                                           

Title:           Chief Credit Officer                                                                                    

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

Aurora hereby agrees to and acknowledges the terms of this Amendment and agrees and consents to its Commitment under the Credit Agreement being irrevocably terminated in full.

AURORA BANK FSB

By:           /s/ Theodore Janulis                                                                         

Name:           Theodore Janulis                                                                          

Title:           Chairman                                    

PNM RESOURCES, INC.

FOURTH AMENDMENT TO CREDIT AGREEMENT

  

  

  

Exhibit A

to Fourth Amendment to Credit Agreement

SCHEDULE 1.1(a)

PRO RATA SHARES

	
Lender

	
Commitment

	
Pro Rata Share

	
 

Bank of America, N.A.

	
$60,000,000

	
10.563380282%

	
 

Wachovia Bank, National Association

	
$60,000,000

	
10.563380282%

	
 

Union Bank of California, N.A.

	
$60,000,000

	
10.563380282%

	
 

JPMorgan Chase Bank, N.A.

	
$42,000,000

	
7.394366197%

	
 

Citibank, N.A.

	
$42,000,000

	
7.394366197%

	
 

Merrill Lynch Bank USA

	
$32,000,000

	
5.633802817%

	
 

Morgan Stanley Bank

	
$32,000,000

	
5.633802817%

	
 

UBS Loan Finance LLC

	
$27,000,000

	
4.753521127%

	
 

William Street Commitment Corporation

	
$21,000,000

	
3.697183099%

	
 

Credit Suisse, Cayman Islands Branch

	
$32,000,000

	
5.633802817%

	
 

Wells Fargo Bank, N.A.

	
$19,500,000

	
3.433098592%

	
 

U. S. Bank National Association

	
$25,000,000

	
4.401408451%

	
 

HSBC Bank USA, National Association

	
$25,000,000

	
4.401408451%

	
 

Mellon Bank, N.A.

	
$21,000,000

	
3.697183099%

	
 

Royal Bank of Canada

	
$21,000,000

	
3.697183099%

	
 

Bank Hapoalim BM

	
$16,000,000

	
2.816901408%

	
 

Bank of Albuquerque, N.A.

	
$12,500,000

	
2.200704225%

	
 

Compass Bank

	
$10,000,000

	
1.760563380%

	
 

Southwest Securities Bank

	
$10,000,000

	
1.760563380%

	  	  	  
	
Total

	
$568,000,000

	
100.000000000%exh10-3_033110.htm

Exhibit 10.3

PNM RESOURCES, INC.

2010 OFFICER INCENTIVE PLAN

INTRODUCTION

 

PNM Resources, Inc. (the “Company”) has adopted the PNM Resources, Inc. Second Amended and Restated Omnibus Performance Equity Plan (the “PEP”), which was approved by the Company’s shareholders and became effective in May 2009. The Company also has adopted this 2010 Officer Incentive Plan (the “Plan”) for the purpose of providing annual cash-based incentive awards (each an “Award”) to eligible Officers (as defined below).1  The Awards payable to Officers under the Plan are intended to qualify as Performance Cash Awards granted pursuant to Section 9.4 of the PEP.  In the case of Officers who are Covered Employees as defined by the PEP, the portion of the Award that is based on Performance Criteria specified in Section 2.1(dd) of the PEP shall be treated as a separate grant that is intended to qualify as a Performance-Based Performance Cash Award granted pursuant to Section 12 of the PEP.

 

Capitalized terms used in the Plan and not otherwise defined herein shall have the meanings given to them under the terms of the PEP.

 

 ELIGIBILITY

 

All Officers of the Company and its Affiliates are eligible to participate in the Plan with the exception of the First Choice Power, L.P. (“FCP”) or Optim Energy, LLC (“Optim”) officers, who may be eligible to participate in other incentive plans.  For purposes of the Plan, the term “Officer” means any employee of the Company or any Affiliate (other than FCP or Optim) who has the title of Chief Executive Officer, President, Executive Vice President, Senior Vice President or Vice President and who is in salary grade H18 or higher.

 

PLAN OBJECTIVES

 

The Plan is designed to motivate and reward eligible Officers for benefiting the Company’s shareholders by achieving and exceeding the Performance Goals (as defined below) established for such Officers.

 

 PERFORMANCE PERIOD

 

The period over which the Officer’s performance will be measured for purposes of determining whether Awards are payable under the Plan began on January 1, 2010 and ends on December 31, 2010 (the “Performance Period”).  The Board Governance and Human Resources Committee (the “Committee”) of the Company’s Board of Directors (the “Board”), in its sole discretion, reserves the right to adjust, amend or suspend the Plan during the Performance Period.

 

 

  

1 The Plan was originally signed by Alice Cobb, SVP and CAO on March 31, 2010.  This version of the Plan represents a conformed version of the Plan document signed on March 31, 2010 which incorporate Ms. Cobb’s handwritten amendments to the original Plan.

  

1

  

AWARD DETERMINATION

 

Awards are based on the Earnings Per Share (“EPS”) levels set forth in Table 1 below, the weighting between Corporate and Business Area goals as described in Table 2 and Award levels achieved as described in Table 3.

 

Earnings Per Share

 

First, for any Awards to be payable to eligible Officers, the Company must achieve the Threshold EPS level set forth in Table 1 below.  If the Company does not achieve the Threshold EPS level, no Awards are payable under the Plan to any Officers.

 

For purposes of the Plan, the Company’s EPS will be the net earnings, excluding non-recurring items that do not factor into ongoing earnings, divided by the average number of common shares of PNM Resources, Inc, common stock used to calculate diluted EPS as reported in the Company’s 10-K filed for 2010.  The Committee’s determination of the EPS shall be binding and conclusive.

 

TABLE 1:

 

	  	
PNMR EPS

	
No Award

	
Less than $0.60

 

	
Threshold

	
Greater than or equal to $0.60 and less than $0.64

 

	
Target

	
Greater than or equal to $0.64 and less than $0.75

 

	
Maximum

	
Greater than or equal to $0.75

 

 

 

If the Threshold, Target or Maximum EPS level is achieved, the aggregate potential Awards payable to the Officers at that level of performance (e.g., the aggregate level of Awards payable at Threshold, Target or Maximum as shown in Table 3 below) will make up the Potential Award Pool.  If the actual EPS exceeds the minimum level for that performance level by at least $0.01, but is less than the maximum level for that performance level (e.g., if the actual EPS exceeds $0.60 but is less than $0.64) the Potential Award Pool will be increased by using straight line interpolation between the size of the Potential Award Pool based on the attained level (e.g., Threshold) and the size of the Potential Award Pool at the next higher level (e.g., Target). The Potential Award Pool is capped at the Maximum Award level. The Committee has the discretion to increase the Potential Award Pool by an amount less than amount determined by using straight-line interpolation.

 

Corporate and Business Area Scorecards

The Corporate Goals Scorecard and Business Area Scorecards with each Performance Measure are defined and maintained by the PNM Resources, Inc. Management Systems Group.  The performance of the Chief Executive Officer (“CEO”), Senior Officers (Executive 

 

  

2

  

Vice Presidents and Senior Vice Presidents), and Vice Presidents will be measured against their respective Scorecards based on the weightings set forth in Table 2.

TABLE 2:

	
Scorecard Results

	
Scorecard Level

	
Corporate Weighting

	
Business Area Weighting

	
CEO & Senior Officers

	
100%

	
0%

	
Vice Presidents

	
50%

	
50%

Performance Award Pools

The Performance Award Pool for each Business Area is the amount that could be paid in the aggregate to the Officers included in that Business Area based on performance alone (i.e. determined without regard to any limitations based on EPS levels set forth in Table 3).  The Performance Award Pool for a Business Area will be determined by using the following multi-step process:

 

	
a)  

	
Select the Scorecard results from the appropriate Corporate Goal and/or Business Area Scorecards;

 

	
b)  

	
Then multiply each result by the appropriate weighting for the Scorecard as set forth in Table 2 above;

 

	
c)  

	
Then multiply the total Officer salaries for that Business Area times the Target Award Level as set forth in Table 3 below;

 

	
d)  

	
Then multiply the result of each Scorecard (step b) times the result of Officer salaries (step c); and

 

	
e)  

	
Sum the results for the Vice President participants.

 

Award Levels

For purposes of the Plan, the Chief Executive Officer, the Executive Vice President, and the Senior Vice Presidents are measured 100% on the Corporate Goals Scorecard and Vice Presidents are measured 50% on the Corporate Goals Scorecard and 50% on the Business Area Goals Scorecard as set forth in Table 2 above.

 

The amount of the potential Award payable to any Officer based upon his or her Business Area’s level of achievement of its Performance Goals, expressed as a percentage of the Officer’s base salary determined as of January 1, 2010, is as follows:

 

TABLE 3:

 

	
Award Levels

	
Threshold

	
Target

	
Maximum

	
CEO

	
28.0%

	
70.0%

	
140.0%

 

  

3

  

 

	  	  	  	  
	
Senior Officers

	
20.0%

	
50.0%

	
100.0%

	  	  	  	  
	
Vice-Presidents

	
12.6%

	
31.5%

	
63.0%

The Selected Award Pool for a Business Area will be allocated among the Officers in that Business Area based upon the amount potentially payable to that Officer, as determined in accordance with Table 3, for the level of performance (Threshold, Target or Maximum) attained by Corporate and/or the relevant Business Area, as compared to the similar amounts payable to all Officers of that Business Area at the relevant performance level.  The Selected Award Pool, the amount that will actually be paid to the Officers included in the appropriate Business Area, will equal the lesser of the Potential Award Pool (which as noted above is based solely on the EPS level) or the Performance Award Pool (which is based solely on performance as measured and calculated in accordance with the process above).

 

In no event will the amount payable to an Officer exceed the indicated percentage of the Officer’s base salary, as in effect on January 1, 2010, as determined in accordance with Table 3.

AWARD APPROVAL AND PAYOUT TIMING

 

In January 2011, the Committee will determine and certify the level of Awards, if any, payable for the Performance Period in the manner described above.  The final Awards calculation and recommendation to the Committee by management is reviewed and certified by the VP, Human Resources, Director, Audit Services, Director, Management Systems group, and Corporate Controller respectively.  The Board then will approve the CEO’s Award and the Committee will have final approval authority for all other Officer Awards.  To the extent Awards are payable under the Plan, the Company will make such payment on or before March 15, 2011 in a single lump sum cash payment subject to applicable withholding as described below.

 

PROVISIONS FOR A CHANGE IN CONTROL

 

If a Change in Control occurs during the Performance Period and the Officer still is employed by the Company or an Affiliate (for purposes of this section, Optim and FCP are not included as Affiliates) at the end of the Performance Period, the Officer may be entitled to receive an Award for such Performance Period.  If the Plan is modified after the occurrence of a Change in Control in a manner that has the effect of reducing the amounts otherwise payable under the Plan, the Officer shall receive, at a minimum, an Award equal to 50% of the Maximum Award available under this Plan for the Performance Period.  Such Award will be payable in a single lump sum cash payment on or before March 15, 2011.

 

PRO-RATA AWARDS FOR PARTIAL SERVICE PERIODS

 

In certain circumstances (as set forth below) Officers may or may not be eligible for a Pro-rata  Award under the Plan.

 

The following Officers may be eligible for a Pro-rata Award:

 

	
-  

	
Officers who are newly hired during the Plan Year and are employed by the Company or an Affiliate (including FCP or Optim) on the day on which Awards are distributed for the Performance Period.

 

  

4

  

	
-  

	
Employees or Officers who are promoted, transferred or demoted during the Performance Period and are employed by the Company or an Affiliate (including FCP or Optim) on the day on which Awards are distributed for the Performance Period.

 

	
-  

	
Officers who are on leave of absence for any full months during the Performance Period and are employed by the Company or an Affiliate (including FCP or Optim) on the day on which Awards are distributed for the Performance Period.

 

	
-  

	
Officers who terminate employment with the Company or an Affiliate during the Performance Period due to Impaction (as defined in the PNM Resources, Inc. Non-Union Severance Pay Plan), Retirement on or after the Officer’s Normal Retirement Date, Change in Control (as defined in the PNM Resources, Inc. Officer Retention Plan) or Disability (as defined in the PNM Resources Executive Savings Plan II).

 

	
-  

	
Officers who die during the Performance Period, in which case the Award will be paid to the spouse of a married Officer, including same sex spouse, or the estate of an unmarried Officer.

 

The following Officers are not eligible for any Award, including a Pro-rata Award:

 

Officers who:

 

	
  

	
-Terminate employment with the Company or an Affiliate on or before the date on which Awards are distributed for the Performance Period for any reason other than death, Impaction, Retirement, Change in Control or Disability;

 

	
  

	
- Elect voluntary separation or Retirement in lieu of termination for performance or misconduct.

 

If an Officer is eligible for a Pro-rata Award, it will be calculated based on the number of full months that the Officer was actively employed at each eligibility level during the Performance Period compared to the number of full months included in the Performance Period.  (Note:  Any month in which an Officer is actively on the payroll for at least one day will count as a full month.) Any Pro-rata Awards to which an Officer becomes eligible pursuant to this paragraph will be paid to the Officer in a single lump sum cash payment subject to applicable withholding on or before March 15, 2011.

 

ETHICS

 

The purpose of the Plan is to fairly reward performance achievement.  Any Officer who manipulates or attempts to manipulate the Plan for personal gain at the expense of customers, other employees, or the Company or its Affiliates, will be subject to disciplinary action, up to and including termination of employment, and will forfeit and be ineligible to receive any Award under the Plan.

 

NONTRANSFERABLE

No Award may be assigned or transferred by an Officer other than by will or the laws of descent and distribution of the State in which the Officer is employed.

 

  

5

  

WITHHOLDING

The Company or any Affiliate has the authority and the right to deduct or withhold, or to require an Officer to remit to the Company, an amount sufficient to satisfy federal, state, and local and foreign taxes (including the Officer’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of this Plan.  Any potential payment to an Officer under the terms of this Plan also is subject to withholdings and deductions by the Company or any Affiliate, and the Officer hereby authorizes the Company or any Affiliate to apply such withholdings and deductions to liquidate and reduce any outstanding debt or unpaid sums owed by the Officer to the Company or any Affiliate or to the successor of either of them.

 

NO RIGHTS OF OWNERSHIP

While the Plan is intended to provide Officers with the opportunity to share in the success of the Company and its Affiliates, the Plan is merely an incentive plan and does not give any Officer any of the rights of ownership of the Company or any Affiliate or provide any security interest in any assets of the Company or any Affiliate.

 

CONTINUATION OF EMPLOYMENT

 

This Plan shall not be construed to confer upon any Officer any right to continue in the employment of the Company or any Affiliate and shall not limit the right of the Company or any Affiliate, in its sole discretion, to terminate the employment of any Officer at any time, or in accordance with any written employment agreement the Company and Officer may have.

 

Approved by:

 

/s/ Alice A. Cobb                                                                

Alice A. Cobb, SVP and Chief Administrative Officer

March 31, 2010                                                                    

Date

  

6

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